CIRCULATING COPY >

IQ BE RETURNED TO REPORTS DESK

DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Not For Public Use

Report No. P-1216a-GA

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

TO SOCIETE D'ENERGIE ET D'EAU DU GABON

WITH THE GUARANTEE OF THE GABONESE REPUBLIC

FOR A WATER SUPPLY PROJECT IN LIBREVILLE

April 12, 1973

This report was prepared for official use only by the Bank Group. It may not be published, quotedor cited without Bank Group authorization. The Bank Group does not accept responsibility for theaccuracy or completeness of the report.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALEMRS

Currency Unit : CFAF Franc (CFAF)US$1.00 : CFAF 230CFAF 1.00 : US$0.004CFAF 1 million : us$h, 3h7

FISCAL YEAR s Jan. 1 - Dec. 31

ITTERNATIOT'AT BMT FOR PRCOHSTUTCTTTN AMTD TTVFT,0PM""T

PnRT ANT) RE:COT(frNDATTON OF T1!r PPFSTTlE!T

TO THE EXEMCUTIVE DIRECTORS ON A PROPOSED LOA.TO SOCIETE D'ENERGTE ET D'FAU DU GABON'

TITIF.' P GUARANTEE OF ThIE GABONESE REPUBLICFOR A T-7Er SUPPLY PROJTCT IN LIEREVILLE

1. I subh:it tbe follouling report and recormendation on a nroposed loan-to Societe d'Tnergie et d'Eau du Gabon with the guarantee of the Governmentfor the equivalent of Us$Q.5jmillion to help finance a project for the extensionand ii.nrovement of the water supply system of Libreville. The Loan will havea term of 25 years, including 4 years of grace, with interest at 7 1/4 percentp.er annuM. The Caisse Centrale de Cooperation Economique (CCCE) will make aloan for tl:e same project. equivalent to US$4.3 million, for 17 years with 4years of -race and with interest at 5 percent per annum.

PART I - THE ECONOM1Y

2. The Report entitled 'The Current Economic Situation and Prospectsof Gabon", 'No. ATJ- 99a was distributed to Executive Directors on Decem.ber 17,1971. A mission in Novenher/December 1972 reviewed recent developments,particularly in the field of public finance; its findings are reflected inthis section and the country data in Annex 1.

3. Gabon, half the size of France, has a population of about 500,000.Its econorn c growYth in recent years has been impressive -- an average annualrate of 11 percent in current prices, or 6-7 percent in real terms. Gabon'sgrowth is primarily hased on the output of its export industries, e.g. oil,timber, manganese, and uranium. As a result of the expl.oitation of theseresources, per canita GDP in 1971 reached about U'.$900, the third highestin Africa. Gabon's exnort industries are largely built withi foreign privatecapital anri managed by expatriates. A considerable part of the income frommodern sector production is transferred abroad. Thus, per capita GYP issignificnntly belowq UgW)O.

4. The rise in petroleun; production, now exceeding 6 million tons ayear, and in petroleum prices was the most ir,portant factor contributing torecent economic growth. Petroleoum accounts for an estimated 28 percent ofGDP. Timber production, which accounts for 8 percent of GDP, has recentlyincreased at a yearly rate of 5 percent. 'Manganese output, which accountsfor close to 10 percent of CDP, reached 2 million tons last year. Anothermajor factor in the rise of value added has been the high rate of publicwo rlk s .

5. Ranid economic growth has drawn an increasing part of the popula-tion into the miodern urban sector. In fact, almost one third of the popU-lation now depends o-n this setctor For its li.velihood, an unusually high

percentns-e For Africa. Increasin,, emnloy-,ent opportunities have attracted moreandl ore Feople from the countryside to thie oities. However, rapid urbaniza-tion has c re-ted' demalnin's for piibl ic servirc.c hi7ch arc far from being- net.

rvly one qlnarter of TiLTrevill-?'s dwellings, largely upper-cla-ss, have elec-

t-ricity anol water connections. For the l ass of urban dwellersr In Librevil.le,imnrovement in living conditions has not kept pace witlh rising incomes.

6>. The evpeiorment potential of Cahon lies primmarily in the continuedP.x:loit.tior. of its natural resources nodl the profits wbiclh Gabon can retainfror thlis exnJoitation for use in hiTh--rioritv investrents. Cabon's forestreso1mrcfs arc a.on- th-e ric;est in Africa and include a near monopolv of tbeO12''{' tr" , wh.ich comr,ndn, hiigh prices i.r urore. There is potential for

domestic procc,ssinr of lo-,s for export to Furone. Manganese output couldlhc .-lotdl.lec} to nf -.ilio-i tons bny thme early 1V'8r's withi a0ditions to thetransrort srutclo. ude oil oroduction could increasr bo-ond the present

level oF m .-illion tons to alicut 10 million tons a year due to recent dis-coverLes. Cabon has lr-ne untappocd resources of iror. ore. On the otherEhard, agriciilt.re, tl-e T:.ainstci' of msct African economies, has on).ly limited

develoonrr' t possihiliti,. DevelopTet1t of modern ag,riculture is hinderedhy thlc dncman7c for labor in the boomin- urban sector an(d by the loti popula-tion densitv in rural] areas which makes thie cost of adequate road infrastruc-Lure aric. utcrr.sicvu services alitost prolhibitive.

7. The major constraint to the exploitation of Gabon's resource poten-

tial is the lack of adequate transportation. In the immediate future Gabon 'stransport network needs considerable expansion to serve forestry reserves.Should a decision be made to exploit iron ore deposits inland, additionaltransport facilities would be required. It was with this exploitation in mindthat the Gabonese Government has made the construction of a railroad from the

port of Owendo to Booue (337 km inland) the centerpiece of its investmentprogram. Eventually the railroad would be extended to Belinga, the site ofimnortant iron ore deposits, with a connection to Moanda where an expansionof manganese exploitation is envisaged.

3. Anoth er mainr develonmmrt constraint is the shortaQ,e of workersand1 mzna' 0 rn to rieet the labor cema,nr,ds of th-e modern sectnr, and to increaseC:ibonr.cn niart:icin.,ti.on in thlic rig, mnt of tle economy. There i,s a par-

Cl culnarly nicut e' r;h.ortac-e of S1 illt aorners dn teclnic-ians and tlhe education

svstc- lmns, n't borr able to supnpl enoughlI students with the required slills.Althoiv-h CaMpon has ore of the higl est primary school enrollmenit rates in

Arfrtca (probably albout '90 percent), the quality of teachin,- and the orientationOF secondory .duleation- need irmprovremeTt.

a. Gabon's current fivea-year Plan (1971-75) calls for public investmentsof CIMP 65 billion: CFAF ?.".7 billion of x4hich will be provided by Gabonesenublic funrds and' ChA F 3). 7, by e-.ternal firancinp. The, Banl:'s last economicreport, V-AT2Ca, datted Decerber 21, 1971, estimated that public investnent of

between C(AF 46 and 48 billion wotld be more in line with financial avail-abil.i-ties and Cabon's absorptive capacity.

-3-

10. Financing such a reduced program of public investments would stillrequire a major fiscal effort. In recent years, Gabon has had an enviablerecord of rising current public savings before debt service. Current revenues

rose by 16 and 18 percent annually in 1971 and 1972 respectively, largely due

to petroleum taxation, leading to an estimated current budget surplus (beforedebt service) of 24 percent of revenues in these years. However, the Govern-

ment has carried out an ambitious investment program partly financed by

suppliers credits and short-term borrowings. Gabon's debt has risen steeplyand debt service payments may exceed current budget surpluses. According

to recent staff estimates the ratio of debt service to current revenues may

be higher than 29 percent in 1973, and an overall budget deficit is likely

this year. Even assuming some refinancing of existing short-term debt, new

commitments for Plan objectives will have to remain modest. Continuation of

present budgetary trends would deprive Gabon of resources required for high-

priority investments. Hence, it is imperative to more closely evaluate

future investment projects for their impact on development and Governmentrevenues, to refinance the large short-term debt, and to curb future suppliers

credits. Policies to this effect are being discussed with the Government

which has indicated a willingness to consider austerity measures. Given the

favorable prospects for further increases in revenues, the possibilities for

cutting expenditures, and the short-term nature of most of Gabon's debt, the

fiscal situation appears manageable if remedial action is taken soon.

11. In view of its strong export position and prospects, its record

public savings and its potential for further growth, Gabon is creditworthyfor the proposed loan.

PART II - BANK GROUP OPERATIONS IN GABON

12. Annex II contains a summary statement of Bank loans as bf February 28,

1973 and notes on the execution of ongoing projects.

13. Our first operation was a 1959 Bank loan of US$35 million toCOMILOG, a mining company which helped finance construction of facilities

to extract and transport ore from a manganese mine at Moanda in SouthernGabon to the Ocean port of Pointe Noire in the People's Republic of the

Congo. The project is operating successfully and COMILOG prepaid the Bank

loan last year. After independence, the emphasis in Bank lending was on

transport infrastructure. Two loans, one of US$12 million in 1964 and

another of US$6 million in 1969, financed the construction of roads to

open up new forest areas for timber production and to promote general devel-

opment in these areas. Construction of the roads has been completed, the

quality of the work is good, and a surplus under the 1969 loan is being used

to strengthen the Government's road maintenance capability.

14. In 1968, the Bank began to widen its assistance to Gabon and to

tackle the human resource constraint. A loan of US$1.8 million helped improve

primary and secondary teacher training, vocational training, and secondary

- 4 -

education. Despite some initial delays in implementation the project isnow completed. A joint UNESCO/Bank identification mission has returnedfrom Gabon to formulate a second education project. This project is likelyto emphasize rural and technical professional training and could be presentedto the Board in 1974.

15. The largest project ever considered by the Bank in Gabon is theOwendo-Booue railroad project. This project consists of a 337 km heavy-dutytrack from Owendo to Booue as the first section of the Owendo-Belinga rail-road (about 260 km), feeder roads, and timber port facilities at Owendo.A recently completed appraisal of the project concluded that without reason-able assurance that the iron ore mine at Belinga would be opened in the nearfuture, construction of the railroad now would be premature. If transportfacilities are developed mainly to serve new forest areas, a river/road pro-ject is the most economical alternative. At a considerably lower investmentcost, it would yield a very high proportion of the logging benefits whichwould be generated by the railroad. The Gabonese Government was recently in-formed of our conclusions but does not appear prepared to accept them.

16. If the railroad is constructed and its financing plan requires asubstantial equity contribution by Gabon and a heavy debt service burden forthe country, Gabon's ability to contribute to other projects would be severelycurtailed. This would limit future Bank lending to Gabon to a minimum programof urgently needed social investments such as the proposed water supply proj-ect and possibly another education project as identified by the recent Bank/UNESCO mission (paragraph 14). Conversely, if Gabon decides to postpone con-struction of the railroad or manages to finance a high proportion of the rail-road investment through foreign grants and soft loans, a larger Bank lendingprogram could be considered.

PART III - THE PUBLIC UTILITIES SECTOR

17. Urbanization in Gabon has been rapid. Between 1960 and 1970,the number of people living in settlements of 2,000 inhabitants and aboverose from 74,000 to 160,000. The population is heavily concentrated intwo towns: Libreville which has 90,000 inhabitants, and Port Gentil, with45,000. While the average population growth of the whole country is onlyabout 1 percent, the population in a city like Libreville increases at anaverage annual rate of 7 percent or more. Thus, the capital annually absorbs1-2 percent of the entire population of Gabon.

18. The rural exodus to the coastal cities has outpaced the availabilityof urban services, especially water and sewerage. Libreville's populationis poorly served with potable water and sanitation conditions are bad,especially in the lower-income areas. The only organized drainage andsewerage system is limited to the center of Libreville; for the rest of thecitv, drainage is by ditches and streams which flow into the sea. The Govern-ment has requested that UNDP finance a 2 1/2-year pre-investment study for

drainage and sewerage in Libreville. The study is expected to start in mid-1973, and will be carried out by the World Health Organization (WHO).

19. The proposed project, joint work by SEEG, the Government, CaisseCentrale, and Bank preparation missions, is designed to tackle the waterproblem. At present only one-forth of Libreville's population have householdwater connections. Lower income groups are served by about 40 public stand-pipes located mainly in areas with some planned infrastructure. Squattersettlements are not provided with piped water, and their inhabitants use pol-luted and contaminated water sources (rainwater, ponds, and nearby streams)and are exposed to water-borne diseases. As a result, infant mortality isexceptionaltv high, and the productivity of a large part of the labor forceis impaired.

20. SEEG, a concessionary company with a majority government partici-pation, has the monopoly of the water (and power) supply in Gabon underFrench-type concessions. The Government or local authorities own the in-stallations which SEEG maintains and operates. SEEG levies its own rateson power and water consumption and, on behalf of the Government and localauthorities, collect surchages to cover investment costs. SEEG is wellman-aged and quite capable of executing the project.

21. If present trends continue, we expect that by 1980 more than halfof Gabon's population will live in two cities, Libreville and Port Gentil.This makes it imperative to rationally plan urban infrastructure. Thereis now no comprehensive plan for the development of the capital. Librevilleis spread over a large area, and the scattered, disorganized housing patternmakes it expensive to construct the necessary urban infrastructure such asroads, water supply, drainage, and sewerage. A comprehensive plan for thedevelopment of Libreville is required and the Government will begin such astudy in conjunction with the Libreville Water Supply Project.

22. SEEG is also responsible for power and water supply in other citiesand rural centers in the rest of Gabon. It is subsidizing the operations ofthese facilities from its own revenue and has indicated its intention to con-tinue this practice. At request of the Government, it has been developingpublic utility facilities in selected rural centers which are growing rapidly.

PART IV - THE PROJECT

23. Libreville's water supply originally came from local springs. Withincreasing demand, water had to be brought from the N'toum area, 40 km fromLibreville. It is now expected that peak demand will start exceeding supplvin late 1973.

-6-

24. The proposed project is designed to meet Libreville's estimatedconsumption until 1979 and to improve distribution. The project was pre-pared by SEEG's consultants, SEURECA, in close cooperation with the Bank.The project was appraised 1/ in May/June 1972, and updated in December 1972.Negotiations for the loan were held in Washington with a Gabonese delegationheaded by the Gabonese Ambassador to Washington. CCCE was also representedat these meetings.

Description of the Project

25. The project will consist of the following pTincipal elements:

a) a river diversion scheme, consisting of a weir, a pumpingstation, a pipeline, a power transmission line, and atransformer station;

b) expansion onf a raw water and clear water pumping stationand a water treatment plant at N'toum and a transformerstation;

c) a 40 km treated water pipeline paralleling the existingpipeline between N'toum and Libreville;

d) a storage reservoir to supplement the two existing smallertanks at the head of the distribution system in Libreville,and about 1S km of distribution mains;

e) miscellaneous minor distribution works to improve watersupply to low-income quarters of the city; and

f) consultant 's services for detailed engineering, consultant'sand SEEG's services for supervision of construction.

The project is expected to be in service by 1975, except for the river diver-sio-n scleme Which will be completed in 1976.

26. The project wrill increase overall water supply for Librevilleand provide nore water for the 75 percent of Libreville's population whichnow have at best inadequate access to potable water. High water prices,high connection charges, and long distances to the few public standpipeslhave discouraged lower income groups from using piped water. SEEG and theMunicipality of Libreville have agreed to extend the distribution system,as part of the project, to serve approximately 90 percent of the city'spopulation by 1976 and in particular:

(a) to increase the number of public standpipes fromi 40 to 100;

(b) to reduce water charges by 60 percent for the first 5 m 3monthper house connection and, concurrently, to increase watercharpes for all consumers of more than 16 m3 /month to betterreflect long-term economic costs; and

1/ Appraisal Rleport No. 89a-GA dated April 10, 1973 is being circulatedseparatelv to the Executive Directcrs. A Loan and Project Summary isgiven in Annex III of this report.

-7-

(c) to facilitate the provision of house connections to thelower and middle income population by eliminating themonthly maintenance charges for meters and connections,and by spreading payment of the connection charges overseveral years.

27. Total cost of the project is estimated at US$19.9 million equiva-lent, with a total foreign exchange component of US$14.3 million. The fol-lowing table shows the breakdown of cost items.

PercentMillions of US$

Local foreign Total

River diversion scheme 0.5 1.2 1.7 9Expansion of N'Tioum facilities 0.6 1.5 2.1 11Pipeline, N'toum Libreville 1.4 5.1 6.5 32Distribution mains andstorage reservoir 0.6 1.6 2.2 11

Miscellaneous 0.2 0.4 0.6 3Sub-total construction 3.3 9.8 13.1 66Consultant's services and project supervision 0.6 1.3 1.8 9Contingencies:

Physical 0.6 1.4 2.0 10Price Escalation 1.2 1.8 3.0 15

TOTAL 5.7 14.3 19.9 100

28. It is proposed that the Bank finance US$9.5 million or 48 percentof total cost; CCCE, US$4.3 million or 22 percent; the Government, US$5.2million or 26 percent; and Municipality and SEEG, IJS$0.9 million or 4 per-cent. The Bank loan corresponds to 66 percent of the estimated foreignexchange cost of US$14.3 million. The CCCE loan will be for 17 years with4 years' grace and 5 percent annual interest. The Government contributionwill be a grant to the MIunicipality.

Administrative Arrangements -- Tariff and Financial Policies

29. SEEG will be the borrower, while the Minicipality will become theowner of the installations in accordance with the concession system. SEEGwould execute the project and be fully responsible for its technical andfinancial operations, including administration of the debt service.

30. Because the concession under which SEEC operates involves the Gov-ernment and the Libreville Municipality, agreement on many issues necessarilyhad to be reached by the Bank with all three parties, in separate documents:

-- 8 -

the Loan Agreement with SEEG, the Guarantee Agreement with the Government,

and the Libreville Agreement with the Municipality.

31. The Government, the Municipality and SEEG have agreed to set and

maintain adequate water tariffs for power and water supply in Gabon so that

thie return on gross fixed assets would be at least 7 percent for all assets

and 8 percent for the Libreville water supply assets (except in 1975-77 when7 percent would be acceptable). Also they will consult with the Bank regard-

ing the yearly investment programs for Libreville water supply, and regarding

financing plans for all major investments in the power and water sectors of

US$2 million or more. SEEG has agreed on a debt service covenant providing

that net revenues of the previous fiscal year must be at least 1.2 times cur-

rent debt service, and it has also agreed not to distribute dividends of more

than 5 percent on the value of its share capital.

Economic Justification

32. The project makes possible the provision of an adequate supply of

potable water to meet the rising needs of Libreville for household, indus-

trial, and commercial consumption. It will make a direct contribution toimprovement of living conditions in Cabons' most important urban center and,through increased productivity, to the national economy. Adequate supply ofpotable water will reduce the incidence of water-borne diseases and increasethe effective supply of labor in a country where practically every able-bodied man can find employment.

33. The return on the investment is expected to be at least 10 per-

cent. This estimate does not take into account other economic benefits

that cannot be quantified, i.e. increased productivity, public health im-

provements, etc.

Procurement and Disbursement

34. Except for minor works (3 percent of total project cost), pro-

curement for all civil works and equipment will be by international com-

petitive bidding. The Government has requested domestic preferences of 15

percent for purchase of materials and equipment. For convenience in disburse-

ment, the Bank will cover 48 percent of total expenditures under each projectcategory, and CCCE 22 percent.

PART V - LEGAL INSTRUMENTS AND AUTHORI[TY

35. The draft Loan Agreement between the Bank and Societe d'Energieet d'Eau du Cabon, the draft Guarantee Agreement between the Gabonese Republic

and the Bank, the draft Libreville Agreement between the Municipality of

Libreville and tihe Bank, the Report of the Committee provided for in ArticleIII, Section 4 (iii) of the Articles of Agreement and the text of a draftresolution approving the proposed Loan are being distributed to the ExecutiveDirectors separately.

- 9 -

36. The draft Loan Agreement for the Libreville Water Supply Projectcontains covenants usually found in the Bank's Agreements for water projects.The major features of the draft Loan Agreement have already been described in

this report. In addition, the following features are of particular interest:

a) the effectiveness of the Caisse Centrale Loan Agreementand approval of the extension of the company's corporatelife by the company's shareholders meeting and an arrange-ment between the Government and the Caisse Autonomed'Amortissement du Gabon for disbursing the Gov-ernment contribution are made additional conditions to theeffectiveness of the Loan Agreement (Section 9.01 of theLoan Agreement); and

b) provisions are made for the suspension of disbursements andacceleration of repayment of the Bank Loan in connectionwith the suspension of disbursements or acceleration ofrepayment of the Caisse Centrale Loan (Section 8.02 (a), (b)and (c) and 8.03 of the Loan Agreement).

37. I am satisfied that the proposed loan would comply with the Articlesof Agreement of the Bank.

PART VI - RECOMIENDATION

38. I recommend that the Executive Directors approve the proposed Loan.

Robert S. McNamaraPresident

Attachments

April 12, 1972

ANNEX IPage 1 of 2 pages

COUNTRY DATA - GABON

AREA 2/ POPULATION DENSITY267,000 kni 0.5million (mid-1912) 2/1.8 per kra

Rate of Growth: 0.8 (from to ) n.a.per km /of arable land

POPULATION CHARACTERISTICS (year) HEALTH (year)Crude Birth Rate (per 1,000) :35 (196o) Population per physician 5,600 (1970Crude Death Rate (per 1,000) :30 (1960) Population per hospital bed 160 (1970Infant Mortality (per 1,000 live births) 230 (196o)

INCOME DISTRIBUTION (year) DISTRIBUTION OF LAND OWNERSHIP (year)% of national income, lowest quintile % owned by top 10% of owners

highest quintile % owned by smallest 10% of owners

ACCESS TO PIPED WATER (year) (by house connections 1972) ACCESS TO ELECTRICITY (year) (1972)% of population - urban 20 % of population - urban 40

- rural centers 10 - rural centers 20

NUTRITION (year) EDUCATION (year)Calorie intake as % of requirements Adult literacy rate % 13 (1960)Per capita protein intake Primary school enrollment % 75 (1970)

1/GNP PER CAPITA in 1970 US $ 591

GROSS NATIONAL PRODUCT IN 197) ANNUAL RATE OF GROWTH (%. constant prices)

US $ Mln. % 1960-65 1966-70 1971

GNP at Market Prices 289.6 100.0 10.0 a/ 12.1 i

Gross Domestic Investment 123.4 42.6Gross National Saving 114.7 39.6Current Account BalanceExports of Goods, NFS 205.4 70.8 19.8 13.3Imports of Goods, NFS 183.5 63.4 16.1 10.2

OUTPUT, LABOR FORCE ANDPRODUCTIVITY IN 197

2/Value Added Labor Force- V. A. Per Worker

US-$ Mln. % % US $ %

Agriculture 31 55.7 17.4 171.530 7h 324Industry 4/ 1?30.0 4o.6 24.744 11 5253Services 57.3 18.0 19.229 8 2979Other 76.9 .21k 18.398 7 4179

Total/Average 319.9 100.0 233.901 100.0 1367 100.0

GOVERNMENT FINANCEGeneral Government Central Government

( Mln.) % of GDP ( CFAF bil.) % of GDP197 197 196 -7 1970 1970 1967-69

Current Receipts 20.6 23.2 21.9Current Expenditure 15.4 17.3 17.3Current Surplus - 5.2 5.9 TU.TCapital Expenditures 7.4 8.3 5.7External Assistance (net)

1/ The Per Capita GNP estimate is at 1970 market prices, calculated by the same conversiontechnique as the 1972 World Atlas. All other conversions to dollars in this table areat the average exchange rate prevailing during the period covered.

2/ Total labor force; unemployed are allocated to sector of their normal occupation.

/ Including forestry.4/ Including mining, energy and construction.E/ Weighted average.

not available. not applicable

,/ Growth rates refer to GDP in current prices.

ANNEX I

Page 2 of 2 pages

COUNTRY DATA - GABON

MONEY, CREDIT and PRICES a 1965 1969 1970 1971 1971 19727CFAF bil. outstanding end period)

Money and Quasi Money 9.40 12.23 13.3C` 1.93Bank Credit to Public Sector - 0.35 0.21 - 1.64 - 2.91Bank Credit to Private Sector 9.10 1V.37 18.0,° 19.33

(Percentages or Index Numbers)

Money and Quasi Money as '6 of GDP .. 11.9 15.1 *

General Price Index (1963 = 100) 105.7 117.5 122 .0 126.8Annual percentage changes in:

General Price Index 2.7 3.8 3.9

Bank credit to Public Sector

Bank credit to Private Sector (1965 = 100) 100.0 157.9 198.7 213.0

BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 196t-70)

bJ1968 1969 1970 US $ Mln %

(Millions US $)Logs & Wood Products 4' 8.3 36.0

Exports of Goods, NFS 183.8 198.4 205.4 Petroleum 86.7 34.8

Imports of Goods, NFS 154.7 198.2 183.5 Manganese 27.3 20.3

Resource Gap (deficit = -) 29.1 4.2 21.9 Uranium 6.8 4.8

Interest Payments (net) - 22.2 - 15.9 - 16.9 All other commodities 5.6 8.1

Workers' Remittances - 10.1 - 12.0 - 13.3 Total 138.3 100 0

Other Factor Payments (net) - - -

Net Transfers 10.5 12.0 10.8 EXTERNkL DEBT, DECEMBER 31, 1970

Balance on Current Account 7.3 - 11.7 2.5US $ Mln

Direct Foreign Investment - 3.2 11.7 1.8

Net MILT Borrowing -0.8 3.9 1.8 Public Debt, incl. guaranteed 95.3

Disbursements *- *- *- Non-Guaranteed Private Debt

Amortization _ *- . Total outstanding & Disbursed 95,3

Subtotal I/

Capital Grants DEBT SERVICE RATIO for 1971

Other Capital (net) 2.8 - 7.- - 3.2 6Other items n.e.i -_5.3 3.5 - 3.2Increase in Reserves (+) 0.8 - - 0.3 Public Debt, incl. guaranteed 7.5

Non-Guaranteed Private Debt

Gross Reserves (end year) Total outstanding & Disbursed

Net Reserves (end year)

RATE OF EXCHANGE IBRD/IDA LENDING, (latest month) (Million US $)

Through Aug.11 1969 IBRD IDA

US $ 1.00 = CFAF 246.85CFAF 1.00 = US $ 0.00405 Outstanding & Disbursed 23.)

Undisbursed _3 --------Since Aug.12 1969 Outstandin incl. Undisbursed 28.7

US $ 1.00 = CFAF 277.71CFAF 1.00 US $ 0.036

1/ Ratio of scheduled Debt Service for 1971 to Exports of Goods and Non-. actor Services.

not available

. not applicablea/ IFS, Sept. 1972

b/ For 1969 a weighted average exchange rate was used: US$ 1.OO=CFAF 258

July 18, 1972EPD/PRD

ANNEX IIPage 1 of 2 pages

THE STATUS OF BANK GROUP OPERATIONS IN GABON

A. STATEMENT OF BANK LOANS AND IDA CREDITS

(as of February 28, 1973)

Loan or US$ millionsCredit Amount (less cancellations)Number Year Borrower Purpose Bank IDA Undisbursed

230 FR 1959 COMILOG Manganese Mining 35.0 -

385 GA 1964 Gabon Highway Construction 12.0 -

540 GA 1968 Gabon Education 1.8 - 0.2

580 GA 1969 Gabon Highway Construction 6.0 - 1.1

Total 54.8of which has been repaid 31.4

Total now outstanding 23.4

Amount sold 29.1of which has been repaid 23.1 6.0

Total now held by Bank 17.4

Total undisbursed 1.3 1.3

ANNEX IIPage 2 of 2 pages

B. PROJECTS IN EXECUTION

Performance under existing loans and credits has been satisfactory,but not without difficulties.

Education Project; US$1.8 million, Loan No. 540 of June 7, 1968to Government; Closing Date: June 30, 1973; Project implementation wasgenerally satisfactory. Construction of secondary schools was completed in1971 and the teacher training college was completed in 1972. The remainingsite improvements will be completed by June 1973. Delays were encounteredin procuring teaching equipment. There were cost overruns on various con-struction works. Savings on furniture and equipment more than offset thecost overruns on construction. We anticipate that, after the completion ofthe remaining site improvement -- and hence the origi.nal project -- US$130,000

will remain undisbursed. It is proposed that part of this amount be allocatedfor preparation of the second education project.

Second Highwav Project: US$6.0 million, Loan No. 580 of January10, 1969 to Government; ClosingDate: December 31, 1973. This project hasbeen completed except for the procurement of road maintenance equipment. TheGovernment has consulted the Bank on bid results and is in the process ofacquiring the equipment.

ANNEX IIIPage 1 of 2 pages

GABON - LIBREVILLE WATER SUPPLY PROJECT

LOAN AND PROJECT SURIMARY

Borrownr: Societe d'Energie et d'Eau du Gabon (SEEG)

Guarantor: Gabonese Republic

Beneficiary: Municipality of Libreville

Amount: US$9.5 million

Terms: 25 years, four years grace, at 7 1/4 percent interest per annum.

ProtectDescription: The project is designed to relieve a water shortage in the

Libreville area which is expected to occur by the end of

1973, and to make available expanded water supply facilities

to satisfy the city's demand until about 1979. The project

would include (a) a river diversion scheme, (b) extension of

a treatment plant and associated raw water and clear water

pumping stations, (c) a 40 km pipeline, (d) distribution

extensions, and (e) consulting services.

Percent

Millions of USS

Local Foreign Total

River diversion achcme 0.5 1.2 1.7 9

Expansion of N'toxun facilities .< 1.5 2.1 11

Pipeline N'toum Libreville 1.4 5.1 6.5 32

Disbribution mains and storage reservoir 0.6 1.6 2.2 11

Miscellaneous 0.2 0.4 0.6 3

Sub-total construction 3.3 9.8 13.1 66

Consultant's services and project supervision 0.6 1.3 1.8 9

Contingencies:physical 0.6 1.4 2.0 10

price escalation 1.2 1.8 3.0 15

TOTAL 5.7 14.3 19.9 100

ANNEX IIIPage 2 of 2 pages

FINANCING PLAN

Million US$ % of TotalLocal Foreign Total Project Cost

TOTAL 5.6 14.3 19.9 100

Proposed Bank Loan - 9.5 9.5 48CCCE - 4.3 4.3 22

Government 4.7 0.5 5.2 26Municipality and SEEG 0.9 - 0.9 4

Source: Appraisal Report

ESTIMATED DISBURSEIEENTS:

Cumulative Disbursementsat end of FY

FY (US$ Thousand)

1972/731973/74 9001974/75 7,0001975/76 8,2001976/77 9,500

ProcurementArrangements: International competitive bidding according to Bank

guidelines for all major contracts. 15 percentprotection for domestic suppliers.

Consultants: Societe d'Etudes pour l'Urhanisme, l'Equipement etdes Canalisations (SEURECA, France) for preparation oftender documents and assistance in project supervision.

Rate of Return: 10 percent.

Appraisal Report: Number 89a-GA, dated April 10, 1973.