AFRICAN DEVELOPMENT BANK

KINGDOM OF MOROCCO

NATIONAL RURAL ROADS PROGRAMME

APPRAISAL REPORT

INFRASTRUCTURE DEPARTMENT

MAY 2007

TABLE OF CONTENTS PROJECT INFORMATION SHEET, CURRENCY EQUIVALENTS, LIST OF TABLES, LIST OF ANNEXES, ACRONYMS AND ABBREVIATIONS, BASIC DATA, PROJECT LOGICAL FRAMEWORK, EXECUTIVE SUMMARY. i-viii

I- ORIGIN AND HISTORY OF THE PROJECT 1 II- TRANSPORT SECTOR 2 2.1 Overview of Sector 2 2.2 Different Modes of Transportation 3 III- ROAD SUB-SECTOR 4 3.1 Road Sub-sector Administration 4 3.2 Government Policy and Strategy 6 3.3 Rural Roads Programmes 6 IV- THE PROJECT 11 4.1 Project Design and Rationale 11 4.2 Project Area and Beneficiaries 14 4.3 Strategic Context 14 4.4 Project Objectives 15 4.5 Description of NRRP2 16 4.6 Description of the Project Financed by the Bank 16 4.7 Components of the Project Financed by the Bank 16 4.8 Description of Project Activities Financed by the Bank 16 4.9 Environmental Impact 18 4.10 Project Cost 19 4.11 Sources of Finance and Expenditure Schedule 21 V- PROJECT IMPLEMENTATION 22 5.1 Executing Agency 22 5.2 Implementation and Supervision Schedules 23 5.3 Supervision 23 5.4 Procurement Arrangements 24 5.5 Disbursement Arrangements 25 5.6 Monitoring and Evaluation 26 5.7 Financial Reporting and Auditing 26 5.8 Aid Coordination 26 VI- PROJECT SUSTAINABILITY AND RISKS 27 VII- PROJECT BENEFITS 27 7.1 Economic Analysis 27 7.2 Financial Analysis 29 7.3 Social Impact Analysis 30 7.4 Sensitivity Analysis 32 VIII- CONCLUSIONS AND RECOMMENDATIONS 32 8.1 Conclusions 32 8.2 Recommendations 33

This report has been prepared by Messrs A. BENDJEBBOUR, Civil Engineer, OINF.2; A.S. BA, Transport Economist, OINF.2; W. RAÏS, Financial Analyst, MAFO and Mr. GOETZE, Environmentalist, following a mission to Morocco in February 2007. For further information concerning this report, please contact the above-mentioned persons or Mr. J. RWAMABUGA, Division Manager, OINF.2 or Mr. G. MBESHERUBUSA, Director, OINF.

LIST OF TABLES No. of Table Title Page 3.1 Classified Road Network 5 3.2 Road Expenditure by Source and by Category of Expenditure 8 3.3 Contributions under Partnership Agreements 9 4.1 Financing of the First Phase of the NRRP2 20 4.2 Summary of Estimated Project Cost by Component of the ADB part 20 4.3 Summary of Project Cost by Category of Expenditure 21 4.4 Sources of Finance of the Project 21 4.5 Expenditure Schedule by Component 21 4.6 Expenditure Schedule by Source of Finance 21 5.1 Provisional Implementation Schedule 23 5.2 Schedule of Monitoring Activities 23 5.3 Arrangements for the Procurement of Works and Services 24 7.1 Financing Plan of the First Phase of the NRRP2 32

LIST OF ANNEXES No. of Annex Number of pages 1. Map of the 23 Provinces Covered by the Bank’s Project 1 2. Organization Chart of the Road Fund (CFR) 1 3. Organization Chart of the Project Management Unit (PMU) 1 4. Operations Financed by Bank (tarred roads) 1 5. Operations Financed by the Bank (Earth Roads) 1 6. Detailed Costs and Operations Financed by the Bank 1 7. Estimated Costs of Works Supervision and Coordination Team 1 8. Implementation Schedule 1 9. Vehicle Operating and Road Maintenance Costs and Traffic Composition 1 10. Methodology and RED Model 1 11. Contribution by Source of Finance/financial simulations 2 12. Sensitivity Test/Resources Allocated by the FSR for Rural Roads 2 13. Road Sector Equilibrium (2006-2030) 1 14. ESMP and Impact assessment 7 15. Bank Group Ongoing Operations in Morocco (March 2007) 1

CURRENCY EQUIVALENTS, ACRONYMS AND ABBREVIATIONS Currency Equivalents

(February 2007) Monetary unit = dirham (DH) UA 1 = DH 12.7221 UA 1 = Euro 1.15034 Euro 1 = DH 11.05943

Fiscal Year 1 January - 31 December

ACRONYMS AND ABBREVIATIONS

AFD = Agence Française de Développement AADT = Annual Average Daily Traffic ADB = African Development Bank ADI = Accessibility Difference Index ADM = National Highways Company of Morocco AFESD = Arab Fund for Economic and Social Development BD = bidding documents CES = civil engineering structure CFR = Road Fund CGNC = General Accounting Standardization Code CNER = National Studies and Research Centre DH = dirham DPE = Provincial Directorate of Equipment DRCR = Directorate of Roads and Road Traffic DRE = Regional Directorate of Equipment DSR = Directorate of Road Safety DTR = Directorate of Road Transport EIB = European Investment Bank ERR = economic rate of return ESDP = Economic and Social Development Plan ESMP = Environmental and Social Management Plan EU = European Union FEEP = Preliminary Environmental Assessment Sheet FKDEA = Kuwait Fund for Arab Economic Development FSR = Special Road Fund GDP = Gross Domestic Product GNA = Unprocessed natural sand-gravel aggregate for base course (30% or more crushed) GNB = Unprocessed natural sand-gravel aggregate for base course GNF = Unprocessed natural sand-gravel aggregate for subbase course IDB = Islamic Development Bank IGF = General Inspectorate of Finance JBIC = Japan Bank for International Cooperation NHDI = National Human Development Initiative NPV = net present value NRRAI = National Rural Roads Accessibility Index NRRP = National Rural Roads Programme ODEP = Ports Authority ONCF = National Railways Authority ONDA = National Airports Authority ONT = National Transport Authority OPEC = Organization of Petroleum Exporting Countries PMU = Project Management Unit PRST = Transport Sector Reform Programme PST = Transport Sector Programme RAM = Royal Air Maroc RBCSP = Results-Based Country Strategy Paper REFT = Low Traffic Load Economic Roads SAAN = National Highways Armature Plan SNAT = National Territorial Development Plan TIC = Internal Tax on Petroleum Products (fuel) UA = ADB Unit of Account WB = World Bank

AFRICAN DEVELOPMENT BANK GROUP

BP. 323 TUNIS 1002 - BELEVEDERE Tel: (216) 71.10.28.40 / 71.10.33.12 Fax: (216) 71.25.33.04 / 71.33.36.80

PROJECT INFORMATION SHEET

The information given hereunder is intended to provide guidance to prospective suppliers, contractors, consultants and all persons interested in the procurement of goods and services for projects approved by the Boards of Directors of the Bank Group. More detailed information can be obtained from the Executing Agency of the Borrower. COUNTRY : Kingdom of Morocco PROJECT TITLE : National Rural Roads Programme (NRRP2) – Project for the

construction 460 km of surfaced roads and 226 km of earth roads.

BORROWER : Road Fund (CFR)

BP 6465, Madinet Al Irfane 10100 - Rabat – Morocco Tel: 212- 37.71.32.41; Fax: 212-37.71.35.26

GUARANTOR : Government of Morocco LOCATION : Rural areas (23 provinces of the country, as regards the part

financed by the Bank) EXECUTING AGENCY : The Directorate of Roads and Road Traffic (DRCR) through its

Project Management Unit (PMU) which is responsible for coordination, and its de-concentrated services: Regional and Provincial Directorates (DRE/DPE) as concerns the direct monitoring of project implementation. Hay Ryad - Rabat - Morocco Tel: 212- 37.71.32.41; Fax: 212-37.71.35.26

PROJECT DESCRIPTION : The project financed by the Bank is part of the NRRP2 and

concerns the construction of 460 km of surfaced roads and 226 km of earth roads including drainage structures and related minor works (signposting, school fence walls, building of water points, bus shelters, etc). The surfaced road development works consist in laying an improved subgrade with overlying subbase and base courses on a double-layer surface dressing. The earth road development involves the construction of similar structures with intensive compaction of the final coating without surfacing. The roads have with one-metre wide shoulders and concrete ditches for drainage along them.

TOTAL PROGRAMME COST : UA 560.14 million ADB GROUP LOAN :

(a) Amount : UA 38.71 million or about Euro 45 million (b) Conditions :

(i) Duration : 20 years, including a 5-year grace period (ii) Currency and interest rate : Euro – fixed rate (iii) Repayment : In 30 (thirty) semi-annual instalments.

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OTHER SOURCES OF FINANCE FOR THE FIRST PHASE OF NRRP2

Donor Euro Million UA Million WORLD BANK 50.00 43.24 EIB 60.00 51.89 AFD 50.00 43.24 ADB 45.00 38.71 AFESD 40.91 35.38 OPEC 20.45 17.69 S/Total External Financing 266.36 230.34 Hassan II Fund 9.09 7.86 Local governments 78.82 68.16 State budget and FSR 293.45 253.77 S/Total Gvt. Financing 381.36 329.80 Grand Total 647.73 560.14

LOAN APPROVAL DATE : June 2007 PROJECT START-UP DATE AND DURATION : End 2007 /4 years DISBURSEMENT : A special account will be opened for payment of the cost of

works. The direct payment method will be used for contract amounts exceeding UA 20 000.

PROCUREMENT OF WORKS AND SERVICES: Works Road construction and related works will be procured through local competitive bidding. Services The project will be managed by the Project Management Unit (PMU) and the deconcentrated units of the Directorate of Roads and Road Traffic (DRCR) (Regional and Divisional Directorates). The geotechnical control of works will be funded by the Government and assigned to various Moroccan laboratories (public and private) through local competitive bidding. The auditing of the project will be entrusted to an external auditing firm and financed by the AFD. ENVIRONMENTAL CATEGORY OF THE PROJECT :The project is classified under category II.

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Year MOROCCO Africa DevelopingCountries

DevelopedCountries

Basic Indicators

Total Population (million) 2005 31.5 904.8 5 253.5 1 211.3Urban Population (% of Total) 2005 58.9 38.9 43.1 78.0Population Density (per Km²) 2005 44.3 29.9 60.6 22.9Gross National Income (GNI) per capita 2004 1 520 811 1 154 26 214Labour force participation - Total (%) 2003 41.4 43.4 45.6 54.6Labour force participation - Female (%) 2003 35.1 41.1 39.7 44.9Gender-Related Development Index Value 2003 0.616 0.460 0.694 0.911Human Development Index (Rank among 174 countries) 2003 124 n.a. n.a. n.a.Population living below $ 1 a day (%) 2004 14.2 45.0 32.0 20.0

Demographic IndicatorsPopulation Growth Rate - Total (%) 2005 1.5 2.1 1.4 0.3Population Growth Rate - Urban (%) 2005 2.7 3.4 2.6 0.5Population < 15 years (%) 2005 31.1 41.5 32.4 18.0Population > 65 years and above (%) 2005 4.8 3.4 5.5 15.3Dependency Ratio (%) 2005 56.0 81.4 57.8 47.8Sex : Ratio (per 100 female) 2005 98.8 99.8 102.7 94.2Female Population 15-49 years (%) 2005 31.2 26.7 27.1 25.0Life Expectancy at Birth - Total (years) 2005 70.4 51.2 64.1 76.0Life Expectancy at Birth - Female (years) 2005 72.7 52.0 65.9 79.7Crude Birth Rate (per 1000) 2005 22.6 36.8 22.8 11.0Crude Death Rate (per 1000) 2005 5.7 15.0 8.7 10.4Infant Mortality Rate (per 1000) 2005 34.0 83.6 59.4 7.5Infant Mortality Rate less than 5 years (per 1000) 2005 41.0 139.6 89.3 9.4Index Fertility Rate (per female) 2005 2.7 4.8 2.8 1.6Maternal Mortality Rate (per 100000) 2003 160 622.9 440 13Women Using Contraception (%) 2004 63.0 26.6 59.0 74.0

Health and Nutrition IndicatorsPhysicians (per 100000 people)* 2004 54.1 38.2 78.0 287.0Nurses (per 100000 people)* 2004 86.4 110.7 98.0 782.0Birth attended by Trained Health Personnel (%) 2004 63.0 43.7 56.0 99.0Access to Safe Water (% of Population) 2002 80.0 64.5 78.0 100.0Access to Health Services (% of population)* 2000 62.4 61.7 80.0 100.0Access to Sanitation (% of population) 2002 61.0 42.4 52.0 100.0Percentage of Adults (aged 15-49) Living with HIV/AIDS 2003 0.1 6.4 1.3 0.3Incidence of Tubercolosis (per 100000) 2003 105.0 406.4 144.0 11.0Child Immunization Against Tuberculosis (%) 2004 95.0 78.2 82.0 93.0Child Immunization Against Measles (%) 2004 95.0 68.8 73.0 90.0Underweight Children (% of children under 5 years) 2003 7.0 39.0 31.0 …Daily Calorie Supply per Capita 2003 3 098 2 439 2 675 3 285Public Expenditure on Health (as % of GDP) 2002 1.5 2.7 1.8 6.3

Education IndicatorsGross Enrolment Ratio (%)Primary School - Total 2002/03 110.0 96.7 91.0 102.3

COMPARATIVE SOCIO-ECONOMIC INDICATORSMOROCCO

T d t lité i f til ( 1000)

RNB par habitant $EU

0

200

400

600

800

1000

1200

1400

1600

1999

2000

2001

2002

2003

2004

MOROCCO Afrique

Taux de croissance démoghraphique (%)

0.0

0.5

1.0

1.5

2.0

2.5

2000

2001

2002

2003

2004

2005

MOROCCO Afrique

Espérance de vie à la naissance (ans)

111213141516171

2000

2001

2002

2003

2004

2005

MOROCCO Afrique

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EXECUTIVE SUMMARY 1 History of the Project 1.1 Rural development is one of the grassroots policy objectives advocated by the Moroccan Government and represents a major challenge in the overall development of the Kingdom. It calls for full and active participation of all Moroccan stakeholders in addressing many concerns, particularly: (i) the balanced development of the country; (ii) the consolidation of national solidarity through the reduction of regional disparities; and (iii) the improvement of the socioeconomic conditions of the people by promoting employment, reducing poverty and preserving the country’s natural resources. 1.2 In this connection, basic infrastructure, in particular access roads, is a key element of the social and economic development strategy for rural areas. Indeed, rural roads facilitate the rural populations’ access to basic social services, guarantee trade and increase the value of local resources. To implement this strategy, the Government has put in place rural development programmes and the resources necessary to speed up the construction of basic facilities, in order to meet pressing needs to open up the territory within a reasonable period of time. 1.3 Hence, following the first National Rural Roads Programme (NRRP1) completed in 2005, a second National Rural Roads Programme (NRRP2) was formulated by the Government, with the aim of taking the level of provision of road access to the rural populations to 80% by 2015. The NRRP 2 will therefore help bring the populations closer to administrative and economic centers, enable them to produce more and at lower cost, increase their incomes and improve their social welfare. The programme covers 15 560 km of rural roads, comprising 65% of surfaced roads and 35% of earth roads, which will be constructed in two phases: 2005-2010 and 2010-2015. The Bank’s intervention concerns 460 km of surfaced roads and 226 km of earth roads and is part of the first phase of a total stretch of about 7780 km. 1.4 The programme is among the Government’s priority actions in the transport sector for the 2006-2010 period and is in line with the Bank’s strategy in Morocco. 2 Purpose of the Bank Loan The purpose of the ADB loan is to finance 460 km of surfaced roads and 226 km of earth roads across 23 provinces of the country. 3 NRRP2 and Bank Project Objectives At the sector level, the NRRP2 seeks to reduce rural poverty and curtail regional disparities. The specific objective of the Bank’s project is to contribute to providing the rural populations access routes and outlets and to and improving transport services in rural areas.

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4 Brief Description of the Bank’s Project Rural roads under the programme which will be financed by the Bank are part of the first phase of the NRRP2 and are presented in Annexes 4 and 5. With the exception of the Bank and the EIB, the programme approach has been adopted by all other donors for the implementation of the NRRP2. The Bank’s intervention will concern: 460 km of roads of a six – metre wide subgrade including a one – metre shoulder on either side with a four - metre wide double-layer surfacing of the central strip; (ii) 226 km of earth roads of the same width but with intensive compaction of the final layer of the subgrade; and (iii) the construction of drainage structures and signposting. For drainage of the developed roads, box drains, culverts and gutters will be constructed to drain water from the wadies of the region whose regimens are very irregular. 5 Cost of the NRRP2 and Bank Project The estimated cost of the first phase of the NRRP2 is DH 7 125.00 million or UA 560.14 million. The Bank’s contribution to the implementation of the first phase of the NRRP2 amounts to about UA 39 million of the total tax exclusive cost of the project. 6 Sources of Finance for the First Phase of the NRRP2 Several donors are contributing to the financing of the programme in parallel. Loan agreements between the CFR and other donors have been signed and copies of these transmitted to the Bank. As the table below shows, the Government’s contribution to the financing of the first phase of the NRRP2 is about 59% of the total cost of the programme.

Detailed Financing Plan of the First Phase of the NRRP2

Source of Finance DH Million Euro Million UA Million % WORLD BANK 550 50.00 43.24 7.72 EIB 660 60.00 51.89 9.26 AFD 550 50.00 43.24 7.72 ADB 495 45.00 38.71 6.95 AFESD 450 40.91 35.38 6.32 OPEC 225 20.45 17.69 3.16 S/Total External Financing 2 930 266.36 230.35 41.12 Hassan II Fund 100 9.09 7.86 1.40 Local governments 867 78.82 68.16 12.17 State Budget and FSR 3228 293.45 253.77 45.31 S/Total Government Financing 4 195 381.36 329.80 58.88 Grand Total 7 125 647.73 560.14 100.00 7 Project Implementation For this programme, the Road Fund (CFR) is the Borrower and the State is the guarantor. The CFR is a corporate entity. Its financial resources are made up of appropriations from the State budget, the Special Road Fund (FSR) and partnerships (contributions of Provinces, regions and local governments) and loans contracted from various donors. The management and monitoring of the implementation of the programme components funded by the Bank will be carried out by the Directorate of Roads and Road

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Traffic (DRCR) through its Project Management Unit (PMU) which is responsible for the coordination and its de-concentrated units, namely the Regional and Provincial Directorates (DRE/DPE). The Project Management Unit is within the DRCR. It has engineers, technicians and accountants and conducts the technical monitoring and coordination of the project as well as the interface with donors. 8 Conclusions and Recommendations 8.1 Conclusions The Bank intends to finance part of the first phase of the NRRP2 and thus contribute to improving the living conditions of people in rural areas. The programme seeks to build capacities for the transport of persons and agricultural produce from these remote areas. It will help develop deprived rural areas and improve the standard of living of these people who are living at the threshold of absolute poverty. 8.2 Recommendations It is recommended that a loan guaranteed by the Moroccan State guarantee, not exceeding Euro 45 million be granted to the Road Fund (CFR) to contribute to the implementation of the first phase of the NRRP2 as described in this appraisal report.

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KINGDOM OF MOROCCO First Phase of the NRRP2 – Project to improve 460 km of surfaced roads and 226 km of earth roads

Project Logical Framework : Author : A. Bendjebbour

HIERARCHY OF OBJECTIVES

EXPECTED OUTPUTS SCOPE PERFORMANCE INDICATORS

INDICATIVE TARGETS AND SCHEDULE

ASSUMPTIONS AND RISKS

Goal 1. Poverty reduction in rural areas by providing rural populations with access roads 2. Contribution to the reduction of regional imbalances

Impact ( Long-term outputs) 1. Proper and reliable connection of the rural roads network to the national network

2. Improvement of the living conditions of rural populations

3. Increase in incomes in rural areas (improvement of agricultural production and better access to markets) and improved access by rural populations to socioeducational and health services

Beneficiaries The rural populations

Impact indicators 1. Poverty in rural areas 2. Agricultural production 3. Enrolment in rural areas Sources : National income and living environment surveys. Accident statistics – Reports of the Ministry of Labour and Health – Reports of international institutions Methods : Surveys, studies and reports

Expected long-term progress 1. 30% reduction in poverty in rural areas in 2015 (or 0.5 million rural dwellers) 2. Increase in average household income in rural areas from DH 2000 in 2005 to DH 3000 in 2015 (NB : SMIG (minimum guaranteed inter occupational wage) = DH 2200 in Morocco) ; 3. Increase in enrolment in general in rural areas from 56% on average in 2005 to 70% in 2012.

Project objective

1. Contribution to the provision of road access to rural populations in the 23 Provinces covered by the project

2. Improvement of the supply of transport and contribution to the reduction of disparities between provinces in the provision of transport services

Impact (Medium-term outputs) 1. Provision of road access to 2.9 million people. 2. Increase of incomes in rural areas through the improvement, in particular, of agricultural production and better access to markets.

3. Improved transport conditions and availability all the time.

4. Improved access to socioeducational, health and security services for children and women in particular. 5. Creation of jobs.

Beneficiaries NRRP2 : About 2.9 million rural people across the country living in the project impact area. ADB Project : A population of about 1.4 million across the Regions and Provinces of : Al Haouz, Azilal, Benslimane, El Jadida, Errachidia, Fes, Ifrane, Khémissat, Khénifra, Khouribga, Marrakech, Meknès, Nador, Ouarzazate, Oujda, Safi, Settat, Sidi Kacèm, Tanger, Taounate, Taroudant, Tetouan, Tiznit.

Impact indicators 1. Access by the populations to an all-weather road 2. Regional disparities 3. Female enrolment ratio

4. Employment

Sources : Statistics, surveys and reports of DRE/DPE and various ministries (transport, labour and social affairs, education, etc.) and international institutions. Methods : NRRP2 monitoring and evaluation system (funded by the World Bank), surveys and studies.

Expected medium-term progress 1. Increase in the accessibility rate : National Rural Roads Accessibility Index rises from 54% in 2005 to 60% in 2007 and to 67% in 2010. 2. Reduction of disparities between Provinces : Accessibility Difference Index (ADI) rises from 0.5 in 2005 to 0.60 in 2008 and to 0.65 in 2010. 3. Increase in the supply of transport through : (i) the reduction of travel time by 50% in 2008 and 75% in 2010 ; and (ii) drop in the cost of transportation of passengers and agricultural produce by 30% in 2008 and 50% in 2010. 4. General increase in enrolment in rural areas from 44% in 2005 to 65% in 2010 (female) and 68% in 2005 to 72% in 2010 (male). 5. Increase and diversification of employment of + 14% in 2010.

Risks 1. Repayment of the Bank loan by the SFR 2. Deferred or non-payment of the contribution of all local governments 3. Lack of maintenance of the rural roads network 4. Underestimation of project costs. Mitigation. 1. The State guarantee could cover this risk, in addition to the agreement signed between the Government and the CFR for this purpose. 2. All local governments have signed agreements with the Ministry of Equipment to pay their contribution to the CFR. 3. A share of the commune budget is earmarked every year for the maintenance of rural roads of each commune concerned. 4. Costs were estimated on the basis of the costs of the NRRP1 and the last contracts signed by the DRCR for similar works, hence the risk of an underestimation is very minimal.

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Inputs and activities 1. Preparation of bidding documents for works and for geotechnical control 2. Contract award 3. Improvement of surfaced roads. 4. Improvement of earth roads. 5. Geotechnical control of works. 6. Procurement and putting in place of signposting equipment 7. Related improvement works (passenger shelters, water points, security facilities at the level of schools) 8. Updating of the Rural Roads Design Guide and putting in place of a system for the regular monitoring of the NRRP2 and rural roads. 9. Technical and financial auditing services Financial Resources

Cost by Project Component (ADB)

Component UAM DHM A- Construction A1- Improvement of 460.21 km of surfaced roads and related works 27.52 350.14 A2- Improvement of 226.72 km of earth roads 5.99 76.25 A3- Geotechnical control 1.17 14.92 B- Management B1-. Coordination and supervision of works 2.18 27.84 B2-. Technical and financial auditing 0.038 0.47 Physical contingencies 3.69 46.93 Price contingency 2.03 25.81 Grand total 42.63 542.37

Sources of Finance

Sources UAM % ADB 38.71 90.80 AFD 0.038 0.09 Gvt 3.88 9.11 Total 42.63 100

Outputs (Short-term outcomes)

1. 7780 km of rural roads including :

- 460 km of surfaced roads (ADB) ; and ;

- 226 km of earth roads (ADB)

- Geotechnical control of 420+226 km of roads (Gvt) 2. 30 bus shelters constructed (ADB) 3. 16 water points built (ADB) 4. Security facilities built for children (12 school fence walls, crosswalks, building of footways at the level of schools) (ADB) 5. Road signs built (580 vertical road signs (ADB) 6. Updating of the rural roads design guide (Gvt) 7. System for the regular monitoring of the implementation of the NRRP2 and the rural roads network (WB) 8. Technical and financial auditing (AFD)

Beneficiaries

1. Carriers in the project impact area

2. Consultancy firms and the DRCR (DPE/DRE) 3. Job seekers in the project area 4. Moroccan public and private heavy engineering and highway construction companies and public and private geotechnical control laboratories 5. Auditing firm

Outputs indicators 1. Stretch of surfaced roads 2. Stretch of earth roads 3. Number of bus shelters 4. Number of water points built 5. Number of roads signs put up 6. Design guide 7. Morocco’s rural roads network monitoring system 8. Jobs created during project implementation 9. Contracts won by Moroccan companies 10. Annual auditing Sources : Quarterly progress reports of the Executing Agency-Works acceptance reports. Progress reports of NGOs and associations. The Bank’s technical and financial supervision reports. Mid-term review. Audit reports. Construction and geotechnical control contracts. Method : Surveys, studies, reports, signed contracts

1. 460 km of surfaced roads 2. 226 km of earth roads 3. 30 bus shelters constructed 4. 16 water points built 5. 580 road signs put up 6. A new guide updated and adapted to the Moroccan context 7. A system for the real time monitoring of the status of the rural roads network. 8. 2000 jobs created during implementation of the NRRP2 9. 104 works and control contracts signed 10. Auditing contract signed

Risks : 1- Delay in the implementation of operations funded by other donors 2- Slow procurement process and default on the part of stakeholders Mitigation 1- All loan agreements of other donors have been signed and the execution of works on operations funded by them has started normally and will be completed. 2-The level of ownership by the entities concerned (CFR, PMU, DRE and DPE) strengthened by the launching mission and supervision missions (2 per year) ; thoroughness in the selection of companies and consultants and sustained monitoring and supervision by the PMU, DRCR services and the Bank.

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I- ORIGIN AND HISTORY OF THE PROJECT 1.1 The Moroccan Government has undertaken, as part of the effort to attain the Millennium Development Goals (MDG), to provide rural areas with road infrastructure in a bid to improve the socioeconomic conditions of the rural population who represent nearly 66% of the poor in Morocco. In fact, about two thirds of the country’s poor live in remote rural areas without feeder roads and access to basic social and administrative services (schools, health centres, city halls, etc.) In addition, it is noted that economic growth opportunities in these areas are limited because of the difficulty of marketing the agricultural production of the rural populations in local and urban markets. To reverse this trend, the Government devised a strategy to promote the economic activities of these areas. Thus, a first National Rural Roads Programme (NRRP1) was implemented by the Government in 1995. This programme, which consisted in constructing or improving 11 240 km of roads over a ten-year period was completed in 2006. The impacts of the programme were significant and enabled 54% of the rural population to have access to an all-weather road. Recent studies show that the NRRP1 yielded very meaningful results, by contributing to improving enrolment ratios which increased threefold in some villages with an all-weather road. The price of some staples dropped by half. 1.2 Nevertheless, the 54% accessibility rate is relatively low, in view of the Government’s development objectives for the coming decade. Indeed, the Government has to pursue its economic development efforts for the benefit of this disadvantaged national population segment, in order to lay down the bases for a policy that offers sustainable conditions to reduce poverty in rural areas and ensure the homogeneous development of the country. 1.3 A second National Rural Roads Programme (NRRP2) was therefore formulated by the Government with the objective of raising the rural population’s access to roads to 80% by 2015, thus helping to bring the population nearer to administrative and economic centres and enabling them to produce more and cheaper, increase their income and improve their social welfare. This programme covers 15 560 km of rural roads comprising about 65% of surfaced roads and 35% of earth roads. It will be implemented in two phases, 2005-2010 and 2010-2015. The Bank’s intervention consists in improving 460 km of surfaced roads and 226 km of earth roads and is part of the first phase of the NRRP2 covering a stretch of 7 780 km made up of 487 operations across the country. 1.4 The Programme has been the subject of appropriate economic and engineering studies. These studies have demonstrated the case for the NRRP2 and justified the selection of the roads that up the stretch concerned. The Programme is based on various relevant criteria taking into account the contribution to the improvement of road accessibility for the greatest number of people and their connectivity to road networks. It is also the outcome of a participatory approach which consisted in having the priorities identified by the local authorities confirmed beforehand by the populations concerned and validated during provincial council meetings. 1.5 To mobilize the substantial amount of financing needed for the first phase of the NRRP2, the Moroccan Government has put in place a financing system based on the budget of the Directorate of Roads which will bear the cost of about 3 200 km of roads as well as the resources from local governments and the Hassan II Fund and the effort of multilateral donors which will finance the remaining 4 600 km of roads. The NRRP2 in an essential link for the success of the Government’s policy aimed at reducing poverty and achieving the Millennium Development Goals. It is for this purpose that the Road Fund was set up in 2004 with the key mission of seeking and mobilizing additional resources for financing the National Rural Roads Programme. In that context, the Government requested the Bank to finance a part of the first phase of the programme. Following the request, the Bank fielded an identification mission in January 2006 and then an appraisal mission in February 2007. The first phase will be financed through contributions from other donors already involved in the transport sector (World Bank, Agence Française de Développement, EIB, AFESD and OPEC).

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1.6 This report has been prepared on the basis of documents available at the Bank and provided by the CFR and data collected during the above-mentioned missions. The project is among the Government’s priority actions in the transport sector for the 2006-2010 period. It is in line with the Bank’s strategy in Morocco. In fact, the Bank’s Result-Based Country Strategy Paper (RBCSP) for Morocco for the 2007-2011 period retained pillar II relating to the development and revamping of economic infrastructure. This pillar will contribute to achieving economic growth that can reduce unemployment, poverty and social deficiencies in a sustainable manner, particularly in rural areas. II- TRANSPORT SECTOR 2.1 Overview of Sector 2.1.1 Morocco’s transport system comprises 57 226 km of classified roads including about 33.000 km of paved roads carrying a daily average traffic of 2 500 vehicles; 758 km of highways ; 1 907 km of railroad more than 1 003 km of which are electrified; 12 trading ports comprising 150 berths; and 28 domestic and international airports across the country, three (Casablanca, Marrakech and Agadir) of which handle 90% of the traffic. Most local industries as well as the agricultural sector are dependent on road transport. The transport of phosphates is the main activity of the railway industry. Ports handle most of the foreign trade (import/export) traffic. Passenger air transport is a very profitable activity. During the 2000-2005 period, the sector (all modes of transport) accounted for about 6% of GDP, employed 10% of the urban labour force, and accounted for 25% of domestic energy consumption and 15% of the State’s tax revenues. 2.1.2 In view of the important role played by the transport sector, Moroccan authorities have continued, during successive development plans, to take actions to revamp the sector through the improvement and development of infrastructure. Thus, profound reforms were gradually implemented to overcome major constraints to the functioning, development and operation of transport services and infrastructure. The reforms were backed by the Bank and the European Union within the framework of the Transport Sector Reform Programme (TSRP) which was completed in 2005. 2.1.3 The insufficiency and poor quality of infrastructure in rural areas are today the major constraints on the transport sector in Morocco. In fact, the vast majority of the rural population only have access to unpaved and very narrow roads which, in general, could be considered as mere tracks, resulting in a low rate of accessibility. Only 54% of the rural population had access to all-weather rural roads in 2006, which is still short of the set objectives, despite the efforts made by the Government. 2.1.4 In general, the Bank’s assistance strategy in the area of infrastructure is characterized by support to ongoing reforms and strengthening and modernization of the said reforms. The support will be targeted to facilitate private sector participation in investment projects by putting in place a more conducive environment while contributing to updating traditional operators. The strategy is also characterized by projects aimed primarily at reducing poverty by easing the access of the most disadvantaged social strata to services. This approach led the Government to target the rural population by developing a rural road programme aimed at reducing in the coming ten years the isolation of their dwelling areas and providing them with at 80% accessibility to economic and social infrastructure. This will result in a more dense rural road network and greater connectivity with the main national road network .

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2.2 Different Modes of Transportation Road transport 2.2.1 The classified road network managed by the State comprises a total of 57 226 km, including about 33 000 km of paved roads. More than half of the network are tracks. The road network maintenance, modernization and extension needs are significant. In this regard, the Government’s road network management policy in the coming years is focussed on: (i) road protection; (ii) adaptation of the network to traffic trends; and (iii) opening up rural areas to boost economic and social development. Since 1985, the Bank has funded three road projects and a sector programme all of which have been completed, and the Marrakech-Agadir highway project approved by the Bank in July 2006. Because of its structure the Moroccan road network helps to promote cultural (historic sites), natural (Atlas and Sahara) and buccaneer (mountains) tourism along the Mediterranean and Atlantic coasts. It is however inadequate given its present capacity, and in view of the foreseeable increase in demand for transport (Azur Plan with a target of 10 million tourists in 2010). Rail transport 2.2.2 The railway in Morocco is the exclusive estate of the National Railways Authority (ONCF) which manages and operates a 1 907 km line network, including a 1 537 km single track line (80%) and a 370 km double track line (20%). The network also includes a 528 km sidetrack and 201 km separate branch line trackage linking various companies to the national railway system. It should be noted that 53% of the total length of the network, that is 1 003 km, is a 3 000 Volt/dc electrified track, while 904 km are operated by diesel traction. For better fluidity and reduction of running time, dual-track lines are installed in heavy traffic density corridors. The transportation of phosphates is a very profitable activity for the Authority with a fleet of about 1 200 aluminium alloy cars of an overall capacity of 77 600 tonnes. Maritime transport 2.2.3 Morocco’s port infrastructure is made up of 24 ports 12 of which are trading ports with 150 berths along a double sea, Atlantic and Mediterranean, front. It has a total quay length of 25 000 metres. In 2005, maritime transport recorded a total of 11 054 000 passengers and 7.92 million tonnes of freight. Posts handle most of the foreign trade (import/export) traffic and most local industries are dependent on maritime transport. However, marine infrastructure is not adequately maintained primarily because the State does not mobilize sufficient resources every year for this purpose. The Bank and the European Union backed the financing of the transport sector reform programme (TSRP) the maritime component of which is directly concerned with most of the reform measures proposed in this sector. The silting-up of ports is also a major constraint on the optimal operation of marine facilities in Morocco. Air transport 2.2.4 Morocco currently has 28 airports, including 16 international and 12 commercial airports. There are three leading airports, namely Casablanca, Marrakech and Agadir, handling more than 90% of the country’s outbound air traffic. The operation of airports open to public air traffic is entrusted to a public establishment known as the National Airports Authority (ONDA). In 2005, all of the country’s airports handled 8.9 million air passengers, including 6.7 million international, 2.1 million domestic and the rest transit passengers, representing an average increase of 15% over 2004. The average annual increase rate of passenger traffic in the preceding five years was 7.5%. In 2004, there was slightly more than 54 500 tonnes of air freight. That is an increase of 7.57% over 2003. The average annual rate of increase in air freight over the preceding five years was 2.1%. Air transport under the Moroccan flag is carried out by Royal Air Maroc (RAM) which operates on the international market with other companies under foreign flag. RAM has a fleet of

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about 30 aeroplanes; its network covers 30 countries, with 70 stop-overs. RAM is a semi-public company 93% of whose capital is held by the State. A private company, “Regional Air Lines” which was established in 1997, operates, conjointly with RAM, on the domestic market. It also operates on the market round about. Lastly, 24 foreign companies operate regular air services to Morocco. The set objective is to attain an annual passenger traffic growth rate of 9.9% up to 2005 (or a 10.6 million passenger traffic in 2005) and a 3% increase in freight traffic, with a national objective of 10 million tourists in 2010. III- ROAD SUB-SECTOR 3.1 Road Sub-Sector Administration 3.1.1 The Ministry of Equipment and Transport (MET) is in charge of administering the road sub-sector. The ministry is responsible for regulation, supervision, control of the application of texts and compliance with standards through three of its directorates, namely: the Directorate of Roads and Road Traffic (DRCR), the Directorate of Road Transport (DTR) and the Directorate of Road Safety (DSR). In addition, the Directorate of Studies, Planning and Coordination is in charge of the transport sector information system, planning of the development of the sector and coordination of modes of transportation. The Ministry of Equipment and Transport is responsible for the construction and maintenance of rural roads. Road Fund (CFR) 3.1.2 The Road Fund (CFR) was set up in 2004 by Law No. 57-03. It is a public establishment, a legal entitity with financial autonomy placed under the administrative supervision of the Ministry of Equipment and Transport (MET). The main mission of the CFR is to mobilize financial resources, in addition to those of the Special Road Fund (FSR), the State budget and partnership, to finance the implementation of road network improvement, maintenance and operation programmes. The establishment of the CFR should help increase significantly the rate of construction of rural roads (within the framework of the second National Rural Roads Programme) and thus achieve the accessibility objectives set by the Government by 2015. It is expected that the CFR will contribute directly to the financing of the NRRP2 to the tune of about DHM 530 per annum in the form of loans contracted from various donors. Loans contracted by the CFR are secured by the FSR which guarantees, within the framework of an agreement signed between the CFR and the Government (Ministry of Finance), the repayment of the loans. Road network 3.1.3 The road network managed by the State is currently made up of 57 226 km of roads 56% of which are paved. It is significant that an inventory of rural roads was made by the DRCR in 2002. It covered 48 200 km of rural tracks and roads of which about 25 000 km fall under the State’s classified network (national, regional and provincial roads). The inventory established that 19% of the roads are impassable for all vehicle types because of their advanced state of dilapidation, 28% are passable only for four-wheel-drive vehicles or lorries and 53% are passable for all types of vehicles. It is this rural roads inventory that served as a basis for the preparation of the rural roads programmes. Details of the breakdown of the State’s classified network by road category (national, regional and provincial) are shown in the table below:

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Table 3.1 Classified Road Network

Category of Road Paved (km) Unpaved (km) Total (km) % National 9 552 1 736 (598) 11 288 20 Regional 8 520 1 632 (503) 10 152 18 Provincial 14 014 21 772 (7650) 35 786 62 Total 32 086 25 140 (8751) 57 226 100

Figures in parentheses are rural roads of the classified network by category listed by the DRCR in 2002. Road network traffic 3.1.4 Traffic on the road network increased sharply, from 46 million vehicles – km in 2001 to nearly 49 million vehicles – km in 2003, that is a growth of about 3%. There has been a sharper increase of about 7% in traffic over the past two years. About 65% of the traffic is on national roads and highways and 35% on the rest of the network (regional and provincial roads). Maintenance of the National classified road network 3.1.5 The DRCR is in charge of the maintenance and extension of the road network. Its duty is to plan, define specifications and standards, provide and allocate funds, award contracts, supervise works and pay sums due to companies, with the backing of the Special Road Fund (FSR). On the whole, the quality of service of the network is relatively satisfactory. Number of motor vehicles 3.1.6 The number of motor vehicles is about 2 million, 74% of which are light private passenger vehicles and 26% commercial vehicles. This fleet is relatively old; about 70% of the vehicles are more than 10 years old. The proportion of heavy vehicles remained stable in 2006 in comparison with the total number of vehicles recorded in 2005, despite the rapid increase in the registration of new vehicles in this category, which proves that the fleet of heavy vehicles is younger than vehicles in other categories making up the total number of vehicles. Road transport industry 3.1.7 Intercity bus services are provided essentially by private companies or transport cooperatives. After the introduction of competition following the liberalization of transport activities, the heavy transport industry is now entirely operated by the private sector. There are three categories of operators : (i) carriers operating with trucks of less than 8 gross tonnes numbering 230 000; (ii) carriers operating with trucks of more than 8 tonnes numbering 6 100; and (iii) the fleet of 9 000 vehicles for transport on own account belonging to government services and industrial enterprises. Access to the market is regulated by the national transport commission which issues authorizations after administrative and technical verifications of vehicles and carriers. 3.1.8 About 250 carriers have been approved to operate in the international freight sector with a fleet of about one thousand vehicles. In 2005, Moroccan carriers accounted for about 16% of international freight carriage. Spanish and French vehicles together carried about 50% of the freight. Road construction industry 3.1.9 Morocco has a real road construction industry. More than 150 well equipped and experienced Moroccan companies are working in the road construction sub-sector. All these companies are registered and classified according to their performance in the directory of the

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Ministry of Equipment kept by the DRCR and updated every year. Moroccan companies have often successfully taken part in road construction works in Morocco following international competitive biddings for projects funded by the Bank. Road safety 3.1.10 Accident statistics across the Kingdom rank Moroccan roads among the most dangerous in the world. Indeed, 2005 figures are very revealing: 40.515 casualty accidents, 2 900 deaths, 9 990 seriously injured and 50 480 slightly injured persons. With an average of 10 deaths and 114 injured persons a day, traffic accidents are well and truly a national scourge. The very poor state of rural roads if any, the defectiveness and narrowness of their shoulders as well as the absence of road signs are sources of accidents, coupled with the difficulty of evacuating the wounded when casualty accidents occur. In the face of this alarming situation, the Moroccan Government embarked on a comprehensive road safety policy the main thrusts of which are : (i) constant improvement of the road network ; (ii) putting in place related road safety measures (signposting, sensitization, etc.); and (iii) checking of vehicle compliance with technical standards. An institutional road safety framework was prepared, laws regulating specific facilities in vehicles and traffic regulations were implemented. In addition, the Government has put in place a very strong communication strategy, and a behaviour control and appropriate penalties to check this phenomenon. 3.2 Government Policy and Strategy 3.2.1 Government policy seeks to revamp the road transport sub-sector by improving the quality of services provided to users, thus reinforcing its competitiveness, and to liberalize the activities of the sector. Hence, the sector will be able to: (i) face competition on domestic and foreign markets; (ii) meet the increasing needs of the population; and (iii) contribute to enhancing the overall performance of the national economy. To this end, emphasis is explicitly placed on the implementation of major transport projects such as highways. Such large-scale transport projects will help meet tourist and industrial needs and handle the resulting rapidly increasing traffic very safely. 3.2.2 Most of the resources of the road sub-sector have always been earmarked as a matter of priority for national and regional roads of the classified network and the rural areas left in isolation, with the result that poverty is deepened over the entire population, given the difficulties in carrying on sustainable economic activities. Aware of this situation, the Government launched a first rural roads programme (NRRP1) which helped rehabilitate or improve a stretch of 11 240 km of earth roads during the 1995-2005 period; in 2005, this programme raised the road accessibility of rural populations from 20% to 54%. This rate is still inadequate, in view of the significant needs with regard to the opening up of rural areas. To face this economic and social challenge, the Government set itself the objective of improving the accessibility of these deprived regions of Morocco, within the framework of a second Rural Roads Programme (NRRP2) for the coming decade 2006-2015. At the end of the NRRP2, the rate of accessibility is expected to be raised from 54% to 80% in 2015. 3.3 Rural Road Programmes 3.3.1 Almost 19% of Morocco’s population, that is 5.3 million, live below the poverty line and 44%, that is 12 million, are considered as economically vulnerable (at or below 1.5 times the poverty line). Poverty is essentially a rural phenomenon: nearly one out of four Moroccans living in the rural area is poor, compared with one on ten in urban areas. In total, 66% of the poor live in rural areas. The poor in rural areas live in large families with few of their members having a job. The illiteracy rate among these families is 67% as against 34% in urban areas. They are scattered in remote areas.

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3.3.2 The state of poverty of rural areas led the Government to prioritize rural development under the Economic and Social Development Plan (PDES) one of the objectives of which is the reduction of regional disparities by providing road access to disadvantaged rural populations. In this connection, rural roads play a key role in the economic and social development strategy of rural areas. In fact, the access roads will enable rural populations to have access to the paved or improved road network and will increase the value of local agricultural, handicraft and natural resources through trade in and with these regions. Rural roads in Morocco play two key roles : (i) the ensure the connectivity of the network by supplementing services provided by the national road network ; and (ii) they provide the rural population with all-weather access to markets and to essential services such as education and health and, hence, offer them new economic development opportunities. 3.3.3 The Government made a very great effort in implementing, over the 1995-2005 period, the NRRP1 covering a stretch of 11 240 km of rural roads, comprising some 5 140 km of surfaced roads and 6 100 km of earth roads. Despite this vast programme, rural road accessibility remains low in Morocco. Indeed, after the NRRP1, only 54% of the country’s rural population have access to an all-weather road. The population is considered as having rural road access when they live in a village (Douar) of at least 50 households situated less than a kilometre from an all-weather road. Accessibility to rural roads is especially difficult in Morocco for two reasons: brief and heavy rains and frequent floods which cut off roads for hours or days and a very strongly marked relief. 3.3.4 To pursue its action to provide road access, the DRCR conducted an inventory of rural roads in the entire country in 2002 in order to prepare the second rural road programme, the NRRP2. The inventory covered 48 200 km of rural roads and tracks, including 24 685 km belonging to the State’s classified road network (national, regional and provincial roads). It resulted in the adoption of an optimal 15 560 km road programme, including 598 km of national roads, 503 km of regional roads, 7 650 km of provincial roads and 6 808 km of unclassified roads. Some 9 742 km of rural roads have been marked for improvement into surfaced roads, and 5 818 km for development into earth roads. 3.3.5 It should be noted that the rural roads-based strategy significantly supports the National Human Development Initiative (NHDI) launched by the Kingdom of Morocco with the major objective of combating social exclusion particularly in the country’s poorest communes. The particular features of this initiative which reinforces the efforts against poverty and exclusion, are its approach whereby the poorest geographic areas and population segments are targeted, as well as its participatory approach involving the population for better ownership and sustainability of projects and interventions. Financing of the road sub-sector 3.3.6 There are two sources of finance for road infrastructure : (i) the Special Road Fund (FSR) and (ii) the State budget. The FSR, which was set up in 1989, is a special treasury earmarked account managed by the ministry in charge of public works. It is funded by road levies such as: fuel taxes, additional motor vehicle registration tax; and the truck axle tax. The instrument governing the FSR has been amended several times since its inception, essentially to broaden its revenue base. It was in 1995 when the first National Rural Roads Programme (NRRP1) was launched that the resource base of the FSR was broadened in order to secure the necessary financing for the implementation of this programme. This was done by increasing levies on the percentages of domestic consumption taxes on petroleum products which rose from DH 18 per litre of petrol and DH 10 per litre of diesel to DH 41 and DH 23.5 respectively. The resources of the FSR, which were DHM 600 in 1994 before this increase, surged to nearly DH 1.1 billion the following year. In 2004, there was another increase in surtaxes on petroleum products (DH 50 per litre of petrol and DH 32.5 per litre of diesel) which raised the resources of the FSR to about DH 1.6 billion.

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3.3.7 Between 1995 and 2006, road expenditure by source and by category of expenditure was broken down as follows between the national budget and the road fund:

Table 3.2

Road Expenditure by Source and by Category of Expenditure, 1995-2006

Category of Expenditure 1995 96/97 97/98 98/99 99/00 2001 2002 2003 2004 2005 2006

Maintenance of civil engineering structures 58 57 83 61 43 62 64 162 145.8 130 77

Maintenance of road network (periodic maintenance + rehabilitation)

571 601 517 542 584 616 699 746 616.8 630 603

Routine maintenance 64 223 290 243 246 249 235 292 266.6 250 222 Damage by Floods 28 95 176 116 60 83 85 144 118 75 50 Procurement of equipment 18 78 13 63 20.6 25,6 29,3 22 11 45 33 Road safety 12 9 6 24 26 53 37 44 47,7 50 76

Total Maintenance (1) 751 1063 1085 1049 979.6 10.6 1149.3 1410 1205.9 1180 1061 Network extension 618 542 596 518 552 610 666 645 663 780 540 Study 51 87 133 62 70 91 78 99 110 50 128 Road construction (Mediterranean bypass route.) 0 0 0 0 0 0 229 150 200 200 400

Expropriation 40 120.7 69 46.5 67.3 134 104,2 130 57,3 100 86 Total Investments (2) 709 749.7 798 626.5 689.3 835 1077,2 1024 1030,3 1130 1376

TOTAL Expenditure (1+2) 1460 1812.7 1883 1675.5 1668.9 1923.6 2226.5 2434 2236.2 2310 2437 Total DRCR Budget 1960 1934 1985 1991 2048 2244 2352 2442 2168 2326 2437

- including State Budget 880 863 891 862 847 923 1202 1062 563 476 602 - including FSR Revenue 1080 1071 1094 1129 1201 1321 1150 1380 1605 1850 1785

(*) Source: Division of Programming and Financing (DRCR)

3.3.8 In addition to the State Budget and the Special Road Fund, road funding is also obtained from the tolls paid on highways transferred to the National Highways Company of Morocco (ADM) and contributions from local governments that work in partnership with the DRCR for the construction or improvement of rural roads. In 2004, ADM’s toll revenue amounted to DH 534 million, as against DH 475 million in 2003 and DH 353 million in 2001, representing an increase of more than 50% in three years. The increase in revenue is due to the constant commissioning of new highway stretches (including Casablanca-Had Soualem in March 2004) and to the general increase in traffic recorded on the Moroccan road network. Local government contributions to road projects, under partnership agreements with the DRCR, are shown in Table 3.3 below. 3.3.9 The FSR covers only 70% of maintenance needs representing DH 1.72 billion. The rest may be financed by external borrowing. In practice, all maintenance needs are not covered hence about 30% of the network is, on a regular basis, in a bad passable state. The Moroccan authorities have to take the appropriate measures and put in place a framework conducive to optimal maintenance of the road network. The Government accepted, within the framework of support to the TSRP financed by the Bank, to conduct a study, now under way, on the financing of road maintenance in order to take measures to ensure optimum maintenance of the road network including the NRRP2 stretch. 3.3.10 Local governments are also contributing to the financing of the NRRP2. Their financial contributions were thus fixed at 15% of the overall funding of the NRRP2. These financial contributions were confirmed under the agreements signed between the Regions and Provinces and the Ministry of Equipment, and specific agreements signed between provincial directorates and the rural commune s concerned. These agreements formally seal the partnerships between the various stakeholders in the Programme by involving them in the determination of a precise road stretch, the estimated cost of the road programme to be implemented in the region, the breakdown of financing by source, as well as the financial resources mobilization schedule. The contributions of local

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governments under the NRRP2 should amount to DH 160 million on average per year over the 2006-2015 period for the improvement of surfaced roads and earth roads and will be paid to the CFR. It should however be noted that many local governments do not have the financial resources to cover their share of the financing. It is therefore necessary to ensure that their assessed contribution will be paid, in case of default, by the Local Government Directorate or by the FSR (State budget).

Table 3.3 Contributions under Partnership Agreements (DH million)

Year 2001 2002 2003 2004 DRCR contributions 82 96 104 123 Partner contributions (local governments) 21 32 142 91 Total cost 103 129 246 214

3.3.11 Road maintenance expenditure has continued to increase since 1995, in line with the constant expansion of the classified road network. The overall level of financing of road maintenance is considered as appropriate. A large part of funds has been used for the rehabilitation of roads, because of the significant number of roads in a poor state that need to be rehabilitated. Rehabilitation needs should however diminish in future as a larger share of resources is henceforth allocated for the periodic maintenance of roads; that is the repair of surface courses. 3.3.12 Apart from the Bank, international donors intervening in the road sector include the World Bank, European Investment Bank, Arab Fund for Economic and Social Development (AFESD), Japan Bank for International Cooperation (JBIC), Kuwait Fund for Arab Economic Development (FKDEA), Islamic Development Bank (IDB), OPEC and Agence Française de Développement (AFD). The Bank maintains good coordination with these donors through various projects financed in parallel and almost permanent contacts, during various supervision and other missions to Morocco. For the implementation of the NRRP2, the Road Fund (CFR) appealed to several of these international or bilateral institutions for financing and technical assistance. Legal and institutional framework of the CFR 3.3.13 The CFR, which was set up in 2004 by Law No. 57-03, is a public establishment endowed with legal personality and financial autonomy. It is subject to State financial control applicable to public establishments. The mission of the Fund is to seek and mobilize resources with a view to contributing to the financing and implementation of programmes for the construction, improvement, maintenance, adaptation and operation of the road network. It is administered by a Board of Directors composed of representatives of the State which has all the powers and trusts necessary for administering the Fund. The Fund is managed by a Manager who implements the decisions of the Board and commits expenditure, awards contracts, causes accounts to be kept on committed expenditure, settles and records the expenditure and revenue of the Fund. The Manager is also responsible for financial monitoring of the implementation of the Fund’s intervention programmes approved by the Board of Directors. The organization chart of the CFR is attached as Annex 2. Organization and management of the CFR 3.3.14 The Fund is made up of two departments, namely Programmes and Financing. The Programmes Department comprises a programming section and a contracts control and monitoring section. The Accounting and Finance Department is made up of a financing section and an accounting section. Both departments have human resources. The financing function is currently ensured by the head of department.

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Budget system 3.3.15 The Fund’s budget is submitted by the Manager for consideration by the Board of Directors before 15 October of the year preceding the fiscal year concerned and is adopted after approval by the Ministry of Finance. In case of delay in approval, the recurrent budget may be implemented within the limit of 1/12 of provisions made in the budget of the preceding fiscal year while capital expenditure is limited to expenditure committed during the preceding fiscal years. The budget of the CFR comprises: (a) Revenue :

- payments from the State budget ; - payments from the FSR ; - proceeds of loans authorized by the Ministry in charge of Finance ; - repayable advances from the Treasury and local governments; - payments from local governments and all national or international bodies

governed by public or private law ; - donations, legacies and sundry income ; and ; - any other revenue that may be allocated to it by virtue of the laws and

regulations in force.

(b) Expenditure : - expenditure relating to the construction, improvement, maintenance,

adaptation and operation of the road network ; - repayment of advances and loans as well as related expenses ; and - capital expenditure and operating expenses of the CFR.

Training 3.3.16 The CFR has quite a vast training plan to substantially improve the performance of its staff. The training programme is adopted on the basis of needs expressed at the end of each year. Thus, for 2007, plans have been made to train 11 workers in basic financial and accounting concepts and financial analysis. The training budget rose from DH 50 000 in 2006 to DH 101 250 in 2007, representing an increase of about 100%. Accounting and auditing of accounts 3.3.17 The Fund has an accounting information and management system based on (a) reliable and exhaustive recording rules; (b) a manual of accounting procedures covering the areas of organization, and evaluation and accounting rules; and (c) inventory and archiving procedures. 3.3.18 The CFR is required to keep two separate accounts: budget accounts and general accounts in accordance with the General Accounts Standardization Code (CGNC) as appended to Decree No. 2-89-61 of 10 November 1989. Although cost accounting is not a regulatory obligation, the Fund is planning to institute it fairly quickly (provided for in the terms of reference of the technical assistance contract with a consultancy firm). Internal control 3.3.19 The Fund’s internal control system helps guarantee a separation of functions similar to the structure applicable to the execution of public expenditure through three levels of control involving (a) the Manager of the Fund who schedules the payment; (b) the State controller for an a priori control at the commitment level ; and (c) the paymaster at the payment level . Both a priori and payment control phases of the Fund are simplified, compared to the State budget expenditure execution procedure.

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Auditing 3.3.20 There is no provision on the internal auditing of the Fund. Concerning external auditing, as a public establishment, the Fund is subject to external auditing by the Court of Auditors (auditing every five years, on average) as well as auditing by the General Inspectorate of Finance (IGF) whose general inspection service is multivalent and covers the entire public sector. The audit results of the 2005 fiscal year are conclusive and are a true reflection of the property and financial situation of the CFR as at 31 December 2005, the outcome of its operations and the cash flow for the fiscal year, in accordance with internationally accepted accounting principles. IV- THE PROJECT 4.1 Project Design and Rationale 4.1.1 One of the major problems of the road sector in Morocco is the low rate of accessibility of the rural populations. Most roads providing access to the rural populations are unpaved and are often mere tracks that are poorly or not all developed. In addition, the technical standards of the roads are very low and constitute the major causes of the frequent cut-offs of roads. The roads very quickly become impassable because of weathering and deterioration due to traffic. 4.1.2 With the construction and improvement of 11 240 km of rural roads, the NRRP1 significantly contributed in 2005 to overcome this constraint on more than 2.9 million people by providing them with a road accessibility rate of 54%. This rate is inadequate, given the needs of the people. Hence a second programme (NRRP2) was designed for improving additional 15 560 km of roads, including about 65% of surfaced roads and 35% of earth roads. It is a logical follow-up to the NRRP1 and will help link more than 80% of the rural population to all-weather roads and improve their living conditions by providing them better access to socioeducational and health services and overcoming major constraints on agricultural development and poverty reduction. 4.1.3 The design of the NRRP2 drew on lessons learnt from the NRRP1. The participatory approach was prioritized at the level of local governments, elected officials and civil society. The key criteria used in the design of this programme are access of the rural population to an all-weather road network (density of population without road access) and reduction of disparities between the provinces of the Kingdom. The technical design built on the experience of works executed under the NRRP1 and on the specifics of each area, especially the environmental component.

4.1.4 The project has been underpinned by appropriate economic and engineering studies. The studies highlighted the rationale of the NRRP2 and also helped determine the road stretches for development into paved and earth roads using a multi-criteria analysis, based mainly on the diagnosis of the initial state of the road section, accessibility criteria and the environmental and social component of the area concerned. The optimization of the design and structure of the carriageway to incorporate the road durability, took into account the aspect of maintenance and the drainage systems. The programme was also designed after a broad-based consultation involving the beneficiaries, local elected officials, representatives of agricultural cooperatives and carriers in each province.

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4.1.5 In structural and geometric terms, the roads were designed in compliance with Instruction No. 451-83 of 6 December 1982 governing routine road construction using unprocessed base course material and low-cost and low traffic road design standards (REFT). The principle is to build flexible roadways resting on mechanically stabilized subgrade using natural, crushed or semi-crushed gravel. To determine the thickness of the course, the method compares the quality of the pavement using the Californian Bearing Ratio (CBR)1, and the specific traffic category, namely category T42. 4.1.6 With respect to the improvement and terrain of the selected road sections, the cross sectional profile of the earth roads presents a 4-m wide pavement with a 2.5% gradient and 1m wide shoulders on each side with 4% gradients. As regards paved roads, the same typical cross section is used, with a double layer pavement and side slopes to ensure the stability of the structure. In terms of structure, the earth roads will have a 20cm thick subbase made of natural stone (NS)3 and a 20cm thick base course made of semi-crushed stone (SCS)4. The paved road designs will have a 20cm thick NS subbase and a 15cm thick base course made of completely crushed stone (CCS)5 covered by two layers. 4.1.7 Considering the rolling and mountainous terrain of the rural areas, to ease the drainage of runoff water from the wadies6 which have an irregular regimen, the project designed structures essentially for drainage along the road to ensure continuity of activities and mobility (people, cattle, etc.) in the area. These light structures include submersible box culverts, pipe culverts or slabs placed at the low points (wadi) and provide a transversal drainage system for the road. These structures have been designed on the basis of hydrological studies of the watershed of the project area. The goal is to mitigate the risk of the structure disrupting the natural flow of rainwater. Apart from the drainage of the rural road network, these structures will help prevent the isolation of villages owing to the access cut-offs often experienced in these areas during winter. For longitudinal drainage as well as the drainage and disposal of surface water, reinforced-concrete drains have been provided along the external sides of the roads. The slopes will be shaped and designed to aid drainage and durability of the road. 4.1.8 Road construction is based on prior analysis of local materials excavated from quarries and subjected to physical and mechanical tests in laboratories. After the material is laid, regular and impromptu controls are effected on the pavement material and hydraulic concrete to ensure compliance with design standards (thickness of courses layers, compactness > 95% OPM (Optimum Proctor) for NS and more than 98% OPM for CCS and SCS). Monitoring indicators 4.1.9 For the purpose of permanent and consistent monitoring of the implementation of the NRRP2 and Morocco’s rural road network in general, a system has been put in place based on extensive field experience and data, with a view to tracking key indicators on improved access and bridging gaps between inaccessible regions. In this respect, the National Rural Road Accessibility Index (NRRAI) has been introduced to measure the impact of the NRRP2 in terms of providing access. The NRRAI represents the percentage of the population with road access; it is defined as the ratio of the rural population with a less - than - one kilometre access to an all-weather road to the

1 CBR : Californian Bearing Ratio measured by soil bearing test. 2Category T4 is the standard design of rural roads. It is the lowest traffic category in the design catalogue. It is equivalent to 5 heavy vehicles daily. An HV = 13 tonne axle load truck. 3 NS Natural Stone used in sub-base construction with a particle size of 0/40 or 0/60 4 Semi-crushed natural stone used in base courses of 0/31.5 (crushed to 30% minimum) 5 Completely crushed stone used in high quality base course construction with grain size of 0/31.5 (completely crushed). 6 Wadi = river with an irregular regime which is very common in North Africa. It dries up in summer and surges in winter(cut-off) owing to the rugged topography and unpredictable rainfall of the region.

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total rural population; only the population living in douars7 of more than 50 households are considered. As to regional disparities, the Accessibility Difference Index (ADI) measures the accessibility disparity among the provinces and is defined as the ratio between the accessibility index of the ten provinces with the lowest levels and the accessibility index of the ten provinces with the highest levels. Previous experiences in the sector 4.1.10 The Bank holds an impressive track record in the implementation of transport sector investment projects in Morocco. In fact, previous Bank interventions in Morocco in the area of transport include a first loan to finance the Secondary and Tertiary Road Programme (STRP) that helped build and develop a major stretch of rural roads, a second loan approved in October 1987 to finance the Transport Sector Programme (PST) covering three modes of transportation (land, air, maritime) for the purpose of improving and strengthening the sector. The Bank also contributed to the financing of the second and third road project in 1991 and 1994 with the DRCR as the Executing Agency. The implementation of the third project delayed owing to procurement difficulties caused by the multiplicity and diversity of some operations as well as the dispersion of local executing agencies. Furthermore, the use of the special account sometimes amounted to problems with the replenishment facility of the account. Today, the Moroccan administration has a perfect mastery of Bank rules and procedures in this area. The implementation performance of transport projects in Morocco is considered satisfactory; this project will tap into the lessons drawn from these experiences. 4.1.11 This project is a logical follow-up to the Bank’s participation in financing road projects in Morocco. The social scope of this project and its special focus on the Moroccan rural population highlight its interest and top priority. The implementation of the NRRP2 is not expected to encounter management problems inasmuch as the key officers of the CFR and Project Management Unit (PMU) are generally from the road sector (DRCR) and were involved in the implementation and completion of Bank financed projects. The experience and lessons garnered from previous projects should help avoid the implementation problems encountered in the past as they will be taken into account in the implementation of this project. In addition, a launching mission will be fielded in order to review in conjunction with the CFR the implementation details of Bank rules applicable to procurement and disbursement. 4.1.12 The NRRP2 design largely drew on the lessons from the implementation of the NRRP1, which was formulated rather hastily, based on knowledge of the rural sector from the 1992 population census. Programming constraints (priority to set operations regardless of accessibility and regional balance criteria) should be avoided in the implementation of the NRRP2 since the findings of the 2004 census are more accurate and, consequently, provide firsthand knowledge on the prevailing situation of rural areas. Prior consultation of the local communities has been conducted by the local authorities allowing the population directly concerned to approve the final design (road type, location, etc....). In fact, the design of the NRRP2 hinges on: (i) sound planning and programming of operations; (ii) motivation of local governments and involvement of the beneficiaries in programme implementation; (iii) optimum financing package; and (iv) nurturing a sense of rural road ownership among local stakeholders for improved operation and maintenance of this utility.

7 Douar is a word of Arab origin referring to a number of houses that form a small village

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4.2 Project Area and Beneficiaries

Project area 4.2.1 The NRRP2 covers all provinces of the Kingdom. The project area spans the territory of Morocco and more specifically agricultural-oriented regions. These are generally landlocked areas in each province. Despite the constraints of remoteness and vulnerability of the agricultural sector to the vagaries of the weather, annual agricultural production from the project area substantially impacts on GDP growth and household incomes owing to the size of the active population earning its livelihood in the sector and the consumption patterns of the population tending to favour local products. Agricultural activities in the Programme area account for up to 14% on average of GDP formation thus emerging as a key area of the Moroccan economy. Rural agriculture in Morocco has a large traditional component dominated by cereals and food crops, an irrigation farming component developed by large holdings and producing mainly cereals and sugar beet as well as the high value-added component of fresh fruits and vegetables. Over the last decade, agricultural value-added varied from DH 36.6 to 65 billion Dirhams. This sector employs 44.4% of the total work force on the national scale and 80.9% on the rural scale. 4.2.2 Production from the NRRP2 area largely contributes not only to meeting food needs (cereals, fruits and vegetables, milk and dairy products, meat) but also to foreign trade. During the period 1990-2000, agricultural exports accounted for close to 17% of the total exports on average. The European Union market buys 76% of Morocco’s agricultural exports. The development of the sector is constrained by several factors such as vulnerability to the vagaries of the weather, isolation of the rural areas and inadequate transport infrastructure, limited size and parcelling out of holdings; low-yielding grazing land and forests, deteriorating water quality and the acceleration of the silting up of dams resulting from over-exploitation of natural resources. The rural economy of this area is subsistent and highly dependent on agriculture. Most of the farmers thrive on a semi-subsistent level, household incomes hover around DH 350 to DH 2 600 monthly.

Project beneficiaries 4.2.3 The population benefiting directly or indirectly from the NRRP2 are the entire rural and isolated population of Morocco of about 3 million, more than 80% of whom are farmers. In this respect, the Bank project will help create conditions for the development of the agricultural sector by providing farmers with all-weather road infrastructure to market their products without any hassle, additional costs and uncertain travel schedules. Farmers of this area will enjoy the transport and export facilities offered by the project which may boost their incomes. The NRRP2 will also create more jobs for the rural population who record the highest unemployment rate in Morocco. The implementation of the project will improve the well-being of the population along the roads by improving access to and efficiency of social services. This vital infrastructure, by providing mobility, will increase access to health services and schools. The illiteracy rate is expected to plummet at the end of the project and access to health care will be remarkably improved.

4.3 Strategic Context 4.3.1 The NRRP2 is a major economic lever in achieving the targets of the National Human Development Initiative (NHDI) and balanced economic development between the provinces of the Kingdom. The NHDI was launched by the King in 2005 to enhance the crusade against poverty and social exclusion. It is based on a specific approach that targets the poorest geographic areas and population segments as well as on a participatory approach involving the population in order to enhance ownership and sustainability of projects and interventions. The Government’s development thrusts spelt out in the Plan presented in 2002 specifically hinge on the substantial contribution of the transport sector to the country’s socioeconomic development. They seek, inter alia, to lay the groundwork for developing the national economy and harnessing the potential of the country’s hinterland and especially the rural areas.

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4.3.2 The main components of the Government’s development agenda were presented to the House of Representatives on 21 November 2002. The objectives of Government are to improve the economic and social conditions of the citizen and position Morocco on the political landscape and global economy. The preparation of the Government’s programme took into account several major concerns, including: (i) achieving a strong economic growth rate of at least 6% per annum to create jobs, reduce poverty and raise, in a sustainable manner, the living standards of the population; and (ii) promoting a social development policy aimed at reducing poverty and persistent social disparities. 4.3.3 In this vein, the Government’s programme has four major thrusts, namely: (i) establishing the rule of law and modernizing public administration; (ii) strengthening and modernizing major infrastructure and superstructure networks; (iii) enhancing the national economic fabric, supporting Morocco’s business community and creating conditions for competition as well as modernizing production methods and factors; and (iv) swiftly filling gaps in social service delivery through outreach policies (policies to combat poverty and bridge social disparities). 4.3.4 This programme aims to carry through ongoing major works and major infrastructure development projects and enable Morocco to, inter alia, boost the value-added of national agricultural, fish and industrial products and mitigate disparities among the rural areas as well as between urban and rural areas. Most local activities depend on road transport, particularly the agricultural sector that is plagued by communication difficulties in transporting products to urban areas and to ports for export. Government intends to satisfy this rural transport need by strengthening transport capacities through the completion of the rural road programme as part of its regional development strategy. 4.3.5 On the strength of lessons learnt from the previous Bank strategy and also the outcome of consultation with other development partners, the Bank’s current strategy will focus on boosting economic growth and fostering human development by improving social service delivery and, ultimately, combating poverty and exclusion. Pillar II of the Bank’s Results-Based Country Strategy Paper (RBCSP) for Morocco for the period 2007-2011 relates to development and improvement of economic and business infrastructure. This pillar will be the bedrock of Bank activities in Morocco with the core objective of contributing genuinely to achieving strong and sustainable economic growth that can drastically reduce unemployment, poverty and social service delivery gaps, particularly in the rural areas. 4.3.6 The implementation of the NRRP2 will contribute significantly to improving the living standard of the rural population in particular and curbing unemployment by promoting the country’s economic development and more specifically the agricultural sector. The Bank views the Government’s development programme implemented since November 2002 as coherent and meaningful in respect of the constraints and potential areas for achieving strong and sustainable economic growth. The programme clearly identified key actions likely to mitigate economic constraints and harness its socioeconomic development potential to the fullest. From this standpoint, the Bank’s intervention is clearly consistent with the development strategy it intends to implement in Morocco. 4.4 Project Objectives On the sector level, the NRRP2 seeks to reduce poverty in rural areas and bridge regional disparities. The project goal is to help provide access to the rural population and improve rural transport services.

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4.5 Description of NRRP2 4.5.1 To achieve its objectives, the NRRP2 will construct a total of 15 560km of rural roads, comprising 9742 km of paved roads and 5818 km of earth roads over the period 2005-2015, at the rate of 1 500km per year. This programme is divided into two phases of 7 780 km each; the first will run from 2005 to 2010 and the second from 2011 to 2015. 4.5.2 Several activities of the first phase of the NRRP2 are already under way, notably those financed by other donors which have all signed loan agreements with the Government, namely the World Bank, EIB, AFD, AFESD and OPEC. Implementation of components of the project financed by the Bank is expected to start around the end of 2007. 4.6 Description of the Project Financed by the Bank Rural roads covered by the programme to be financed by the Bank fall under the first phase of the NRRP2 and are presented in Annexes 4 and 5. On the stretch financed by the Bank, about 65% of rural roads are to be improved into paved roads and 35% into earth roads. The Bank’s intervention will entail the construction of 460km of paved roads of a six metre wide subgrade including one- metre wide shoulders on each side with a four metre wide double-layer surfacing of the central strip, 226 km of earth roads of the same width but with intensive compaction of the final layer of the subgrade, construction of drainage structures and signposting. For the drainage of the roads, box drains, culverts and gutters will be constructed for the wadies of the region whose regimens are very irregular. 4.7 Components of the Project Financed by the Bank The Bank’s participation in the financing of the project will cover: (i) construction of 460km of paved roads and related minor works; (ii) the construction of 226 km of earth roads and; (iii) the coordination and control of works as well as auditing of the project.

4.8 Description of Project Activities Financed by the Bank Construction of paved and earth roads 4.8.1 Works for construction of paved roads include laying a protective course, subgrade, sub-base using 20cm NS, base course using 15cm SCS and double-layer surface. Shoulders are also being built on both sides of the pavement by using and laying paving material on the widths defined in the cross-section, that is, 1m on the ground. 4.8.2 Construction works of earth roads comprises the laying of a protective course, sub-grade, subbase using 20cm of NS and a 15cm thick SCS base course. 4.8.3 Preparatory rights – of way construction works are carried out systematically and precede the execution of any operation, paved and earth roads alike. The preparatory works comprise earthwork (cutting or filling), construction of concrete reinforced ditches, grading of slopes and compacting of the subgrade. Drainage systems 4.8.4 The road drainage system comprises water control structures such as box drains, culverts and gutters. Their construction requires excavation, laying of foundations, gabions and construction of the structure.

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Related works 4.8.5 The procurement and installation of road signals (580 vertical road signs) and related construction works (30 bus shelters for passengers, 16 water points and construction of safety structures in schools, such as: (i) construction of 12 school fence walls; (ii) marking of crosswalks for students; and (iii) construction of footpaths near schools. Inspection and supervision of works 4.8.6 The supervision and monitoring of works will be carried out by teams of qualified experts and technicians working in DRCR offices across the regions and provinces (DRE/DPE). They will be responsible for programming and managing contracts, supervising works, assessing the quality of building materials and drainage systems (filling, cutting, pavement structure, reinforced concrete pipe culverts, hydraulic concrete and reinforced concrete) and preparing progress reports of the project. All documents prepared by DPE/DRE are forwarded to the PMU for verification, approval and signature. The DPE/DRE will use geotechnical laboratories for the geotechnical control of works in the regions and provinces during the lifespan of NRRP2. This component will also conduct specific studies warranted by specific technical problems such as instability of the terrain that may occur during works or environmental issues to be specified. Auditing 4.8.7 An audit of accounts will be conducted yearly by an auditing firm in compliance with Bank rules. The said audit will cover all NRRP2 operations. The auditing services will be financed by the AFD. 4.8.8 The components funded by other donors include institutional support to be provided to the CFR and DRCR as a result of the recent creation and of the CFR (NRRP) and the scope of its mission, as well as lessons learnt from the implementation of the NRRP1. It was useful and necessary to provide the CFR and DRCR with tools and instruments as well as the requisite capacities for rural road network management. To achieve this objective, the institutional support component entails:

(a) updating the rural road design and alignment guide to achieve optimum future design of such structures in Morocco. The current design (NRRP1) is too problematic and costly (over-sized low-traffic earth roads).

(b) developing a monitoring and evaluation system to track progress (accessibility

impact) and the implementation of the NRRP2 (including roads improved outside the programme) at provincial and local government level; disseminating, on a regular basis, programme status reports and accessibility outcomes in order to mainstream rural development programmes and bolster the participation of local authorities and communities, etc; making concrete proposals for thorough, effective and sustainable management of rural roads by the communes and provinces; and strengthening DRCR capacity for conducting environmental and social impact assessment on road projects.

(c) providing technical assistance to the Project Management Unit (PMU) by

seconding qualified experts to it for the duration of the programme to handle specific issues bearing on the workability of flexible pavements, environmental issues, drainage and maintenance systems of flexible pavements. Its intervention may also cover specific issues related to specific slope stabilization studies and detailed environmental impact assessment.

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4.9 Environmental Impact Classification 4.9.1 The project is classified under category 2 of Bank environmental rules owing to the relatively low negative direct and indirect impacts. The project does not entail expropriation or population displacement because most of the roads under the NRRP2 follow existing tracks. It is worth noting that although the Bank will finance only part of the NRRP2, environmental and social concerns are mainstreamed into the total length of rural roads to be constructed under this first phase of the Programme. DRCR services have garnered experience on donor procedures and rules applicable to the environment and land occupancy. The project is consistent with efforts at sustainable and equitablex development of Morocco’s policy. The environmental and social management plan is found in Annex 14. Policy, legal and administrative framework 4.9.2 Morocco enacted the Impact Assessment Act 12-03 of 12 May 2003 in December 2003. The act covers only major road infrastructure and makes no provision for rural roads. This explains why since 2004 the DRCR conducts environmental impact assessment using its own standard, the manual of environmental directives, designed during the first National Rural Roads Programme (NRRP1). The manual thoroughly outlines, for each operation, the procedures, responsibilities and assessment tools. An initial environmental impact assessment is conducted on all set operations of the project by way of a Preliminary Environmental Assessment Sheet (FEEP). Based on the findings, a concise Specific Environmental Management Plan (SEMP) is prepared where the impacts are temporary or mild, otherwise, a comprehensive environmental impact assessment and comprehensive SEMP will be conducted if the impacts are substantial. Where the project encroaches on or destroys a sensitive or protected natural area, or causes expropriation or deforestation, it is indispensable to conduct a thorough environmental impact assessment. The Regional Directorate of Equipment (DRE) includes environmental impact assessment, in compliance with the manual, in preparatory studies of operations. The Division of Studies and New Projects (DSNP) of the DRCR approves its decision. The Expropriation and Land Occupancy Act No. 7-81 of 6 May 1982 provides for two types of land acquisition. The Acts sets out two procedures for the transfer of property, namely: amicable settlement and expropriation. The legal expropriation procedure which is two-tiered - administrative and judicial - provides for expropriation subject to compensation of the owner. Expropriation matters are within the purview of the Directorate of Roads and Road Traffic (DRCR). Project impacts 4.9.3 The project has positive impacts for the population of the project area, namely: (i) improvement of rural accessibility and trade, hence, improvement of the living standards of the population; (ii) putting in place of facilities and support measures to enhance road safety, particularly, around schools.; (iii) reduction of nuisances (air and noise pollution) for people living along the roads; (iv) improved access to hospitals and schools leading to a drop in maternal mortality and rise in primary school enrolment, especially for girls, by the construction of all-weather roads; and (v) creation of jobs during the construction and operation phases. 4.9.4 Negative impacts in the construction phase on the natural environment are mainly those of a conventional road construction project, namely: noise and vibrations, dust and gas emissions, hazards caused by dangerous products, release of material, etc. Negative impacts on the human environment such as vibrations and emissions, may affect the health of people living along the roads or workers. Trucks and worksite equipment may also cause accidents.

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4.9.5 Negative impacts in the operation phase on the natural environment are detrimental to the wadies such as accidental spills (spill of hazardous products on the pavement) and erosion, especially water control structures. Project mitigation measures 4.9.6 Measures taken during the construction phase essentially relate to safety measures applicable to the location and operation of construction sites, namely: (i) setting up of construction sites and attendant feeder roads away from sensitive and housing areas; (ii) development of special systems to store hazardous products and mitigate environmental impact and; (iii) organization of construction site operation consistent with standard environmental protection measures. Negative impacts of the construction works will be mitigated by complying with "Environmental Procedures and Best Practices" outlined in the environmental guidelines and rules. Contracts will include all necessary provisions to limit inconveniences relating to works such as: (i) bypasses for free movement of local population, cattle and agricultural machinery, (ii) maintenance of agricultural drainage and irrigation systems during works; and (iii) compensation for harvest loss and destruction or loss of production caused by the works. 4.9.7 Measures to be taken during the operational phase include timely and regular maintenance to prevent erosion and surface water along the road network, control the destruction of forest cover and prevent accidents and fires. The total cost of the environmental protection measures is about DH 2 million; the cost will be borne by the project. 4.9.8 After gauging the positive and negative impacts of the project and on the strength of the project mitigation measures which that its owner has undertaken to implement, the project is environmentally viable. Environmental surveillance procedures applicable during the road construction and operation phases are set out in the Environmental and Social Management Plan (ESMP). The envisaged measures will generally help to mitigate and offset the negative environmental impacts of the project. 4.10 Project Cost 4.10.1 The estimated total cost, inclusive of taxes, of the NRRP2 is DH 11 230.00 million, equivalent to UA 882.7 million. The estimated cost of the first phase of the Programme is DH 7 125.00 million or UA 560.14 million. Taxes amount to DH 750 million, or the equivalent of UA 59 million, and will be borne by the CFR. 4.10.2 Many donors will contribute to the funding of the first phase of the NRRP2 simultaneously. Financing agreements between the CFR and other donors have been signed and copies of the documents have been forwarded to the Bank. Government’s contribution to the financing of the first phase of the NRRP2 represents 59% of the total cost of the Programme. Table 4.1 presents the financing plan of the first phase of the NRRP2.

20Table 4.1

Financing of the first phase of the NRRP2

Source of finance DH Million Euro Million UA Million % WORLD BANK 550 50.00 43.24 7.72 EIB 660 60.00 51.89 9.26 AFD 550 50.00 43.24 7.72 ADB 495 45.00 38.71 6.95 AFESD 450 40.91 35.38 6.32 OPEC 225 20.45 17.69 3.16 Sub-total of external financing 2 930 266.36 230.35 41.12 Hassan II Fund 100 9.09 7.86 1.40 Local governments 867 78.82 68.16 12.17 State budget and FSR 3 228 293.45 253.77 45.31 Sub-Total Government financing 4 195 381.36 329.80 58.88 Grand total 7 125 647.73 560.14 100.00

Part financed by the ADB 4.10.3 The estimated cost net of taxes of the Bank project is DH 542 372 676.00 or Euro 49 041 666.00 (UA 42 632 323.00). Taxes amount to DH 75 932 175.00, equivalent to UA 6 327 682.00, and will be defrayed by the CFR. Costs were estimated on the basis of unit prices or contract prices, previous experience in NRRP1 implementation and results of the recent calls for tenders issued by DRCR in 2005 for similar projects. Unit costs include, in addition to pavement works, the cost of drainage systems, the cost of geotechnical control and costs of related minor works (bus shelters, safety equipment, road signs, building of water points). Physical contingencies are estimated at 10% of the basic cost. The price contingency represents 5% of the basic cost and physical contingencies. Tables 4.2 and 4.3 below give the summary of the estimated cost by component and by expenditure category of the project:

Table 4.2

Summary of Estimated Project Cost by Component

UA thousand DH thousand Euro thousand Component F.E L.C Total F.E L.C Total F.E L.C Total

A- Construction A1- Improvement of 460.21km of paved roads + related works 19265.694 8256.726 27522.420 245100.088 105042.895 350142.982 22162.099 9498.042 31660.141 A2- Improvement of 226.72 km of earth roads 4195.692 1798.154 5993.845 53378.009 22876.289 76254.298 4826.472 2068.488 6894.960 A3- Geotechnical control 0.000 1173.069 1173.069 0.000 14923.905 14923.905 0.000 1349.429 1349.429

Total A 23461.386 11227.949 34689.335 298478.096 142843.089 441321.186 26988.571 12915.959 39904.529 B- Management B1- Coordination and supervision of works 0.000 2188.298 2188.298 0.000 27839.750 27839.750 0.000 2517.287 2517.287 B2- Technical and financial auditing 22.090 14.726 36.816 281.026 187.351 468.377 25.411 16.940 42.351

Total B 22.090 2203.025 2225.114 281.026 28027.101 28308.127 25.411 2534.227 2559.638 Grand total basic costs (A+B) 23483.475 13430.974 36914.449 298759.123 170870.190 469629.313 27013.981 15450.186 42464.167 Physical contingencies 2346.691 1341.993 3688.684 29854.835 17072.968 46927.803 2699.492 1543.748 4243.240

Price contingency 1290.928 738.262 2029.190 16423.321 9392.240 25815.561 1485.007 849.252 2334.259

Total Contingencies 3637.619 2080.255 5717.874 46278.156 26465.208 72743.364 4184.499 2393.000 6577.499

Grand total 27121.095 15511.228 42632.323 345037.279 197335.397 542372.676 31198.480 17843.186 49041.666

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Table 4.3 Summary of Project Cost by Category of Expenditure

UA thousand DH thousand Euro thousand Category of Expenditure F.E L.C Total F.E L.C Total F.E L.C Total

A- Works 23461.386 10054.880 33516.265 298478.096 127919.184 426397.281 26988.571 11566.530 38555.101

B- Services 22.090 3376.094 3398.184 281.026 42951.006 43232.032 25.411 3883.656 3909.067

Basic costs 23483.475 13430.974 36914.449 298759.123 170870.190 469629.313 27013.981 15450.186 42464.167 Physical contingencies 2346.691 1341.993 3688.684 29854.835 17072.968 46927.803 2699.492 1543.748 4243.240

Price contingency 1290.928 738.262 2029.190 16423.321 9392.240 25815.561 1485.007 849.252 2334.259

Grand total 27121.095 15511.228 42632.323 345037.279 197335.397 542372.676 31198.480 17843.186 49041.666

4.10.4 Table 4.4 below gives the estimated cost by category and by source of finance and shows that the Bank’s contribution is UA 38 711 287.00, equivalent to Euro 44 531 141.00, representing about 90.8% of the total project cost exclusive of taxes.

Table 4.4

Sources of Finance of the Project (UA thousand)

Source of Finance F.E. L.C. Total cost % of total ADB 27097.901 11613.386 38711.287 90.80 AFD 23.194 15.463 38.657 0.09 Gov’t 0.000 3882.380 3882.380 9.11 Total 27121.095 15511.228 42632.323 100.00

4.11 Sources of Finance and Expenditure Schedule 4.11.1 The sources of finance and expenditure schedule of the project are shown in the tables below:

Table 4.5

Expenditure Schedule by Component (UA thousand)

Component 2006 2007 2008 2009 2010 Total Construction and control 134.674 134.674 12017.408 12017.408 15753.863 40058.027 Management 253.564 253.564 760.692 760.692 507.128 2535.640 Auditing 7.731 7.731 7.731 7.731 7.731 38.657 Total 395.969 395.969 12785.831 12785.831 16268.722 42632.323 % 0.93 0.93 29.99 29.99 38.16 100.00

4.11.2 Project activities relating to the preparation of bidding documents were launched in 2006. Prospecting activities for deposits of material as well as their analysis and quantity estimates volumes are expected to begin in the second half of 2007. The completion date of the project is 31 December 2010.

Table 4.6

Expenditure Schedule by Source of Finance (UA thousand)

Source of Finance 2006 2007 2008 2009 2010 Total

ADB 11613.386 11613.386 15484.515 38711.287 AFD 7.731 7.731 7.731 7.731 7.731 38.657 Gov’t 388.238 388.238 1164.714 1164.71388 776.476 3882.380 Total 395.969 395.969 12785.831 12785.831 16268.722 42632.323 % 0.93 0.93 29.99 29.99 38.16 100.00

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4.11.3 The tables above show that ADB financing amounts to UA 38 711 287.00, representing 90.8% of the total project cost exclusive of taxes, and the government’s contribution is more than 9%. V- PROJECT IMPLEMENTATION 5.1 Executing Agency The Borrower 5.1.1 The Borrower is the Road Fund (CFR) and the loan is guaranteed by the State of Morocco. The CFR is an entity endowed with legal personality enabling it to contract loans from foreign donors. Its financial resources are made up of appropriations from the State budget, the Special Road Fund (FSR) and Partnership (contributions from provinces, regions and local governments) and loans contracted from various donors. The CFR’s organization chart is given in Annex 2. The Executing Agency 5.1.2 The rural roads programme entrusted to the CFR is implemented by the Directorate of Roads and Road Traffic (DRCR) which acts as the CFR’s delegated contracting authority under an agreement signed with the State (Ministry of Finance and Ministry of Equipment and Transport). The DRCR acts through the Project Management Unit (PMU) which is responsible for the coordination, and its de-concentrated services (Regional and Provincial Directorates of Equipment – DRE/DPE) which conduct the supervision and monitoring of implementation on the ground. Works supervision and monitoring teams are composed of a team leader (civil engineer), 2 technicians (civil engineering and topography) and 1 driver/assistant and a vehicle is assigned to the team on a permanent basis. The PMU is reinforced through technical assistance which is expected, among other things, to review subsequent specific studies relating to the environment, land instability problems, etc. Such organization will enable the DRCR to carry out the monitoring and technical control of works on the ground the determination of bills of quantities, and the certification and billing of works executed. In this regard, the PMU prepares contracts, progress reports, etc. The PMU has engineers, technicians and accountants with proven experience, having participated in and managed similar works. The organization chart of the PMU is attached as Annex 3. The skills of all these entities enabled them to play an active role in the monitoring and implementation of previous road construction projects. The last project financed by the Bank was the Third Road Project. Moreover, the caliber of the PMU’s human resources is an asset for the supervision of the project during its implementation phase. The success and proper supervision of previous projects, from the point of view of both the time frame and cost, are proof of the great expertise of the various services of the DRCR in the area. 5.1.3 Regarding the quality control, public and private specialized geotechnical laboratories will control the works implemented. The auditing of project accounts will be carried out by an external auditing firm whose services will be funded by the AFD. 5.1.4 The PMU will thus centralize all documents relating to the project and handle the interface between the Moroccan Administration and the donors. It will produce general progress reports on the implementation of the NRRP2 as a whole. As the Bank’s approach in this intervention s a project approach, it is essential to separate the Bank components by producing separate reports relating exclusively to road sections financed by the Bank. For better monitoring and transparency of the Bank’s intervention in the NRRP2, the PMU will be requested to prepare half-yearly reports on the monitoring of the Bank’s project. This is a loan condition.

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5.2 Implementation and Supervision Schedules The implementation schedule of the project prepared on the basis of the estimated duration of each of the components spans 4 years from the date of approval of the loan by the Bank. The physical completion of works is scheduled for April 2011. The detailed implementation schedule of the project financed by the Bank is given in Annex 8.

Table 5.1

Provisional Implementation Schedule

Component Preparation of BD

Approval of BD

Bid Invitations

Selection + approval

Start-up of works

Duration(months)

End of works

Donor

A- Construction A1- Improvement of 460.21 km of surfaced roads and related works

July 2007 Aug. 2007 Spt. 2007 Dec. 2007 Jan. 2007 39 April. 2011 ADB

A2- Improvement of 226.72 km of earth roads

July 2007 Aug. 2007 Spt. 2007 Dec. 2007 Jan. 2007 28 May. 2010 ADB

A3- Geotechnical control of works July 2007 Aug. 2007 Spt. 2007 Dec. 2007 Jan. 2007 39 April 2011 Gvt B- Management

B1- Coordination and supervision, Jul. 2005 Dec. 2005 Feb. 2006 April 2006 July 2006 48 July. 2011 WB

B2- Auditing Jul. 2006 March. 2007 April 2007 30 Oct. 2009 AFD

5.3 Supervision The schedule of monitoring activities of components financed by the Bank is as follows:

Table 5.2 Schedule of Monitoring Activities

Approximate

dates Activity Speciality ADB staff

Men/week Joint launching mission (ADB/other donors)

Civil engineer Environmental expert Disbursement officer Procurement officer

4/1 2007

Supervision mission Civil engineer 1/1 Joint supervision mission (ADB/other donors)

Civil engineer Environmental expert

3/2 2008

Supervision mission Civil engineer Procurement expert Environmental expert

3/2

Mid-term review Civil engineer Financial analyst Transport economist Environmental expert Disbursement officer

5/2 2009

Supervision mission Civil engineer Procurement expert Environmental expert

3/2

Supervision mission Civil engineer Procurement expert Environmental expert

3/2 2010

Completion mission Civil engineer Environmental expert Financial analyst Transport economist

4/2

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5.4 Procurement Arrangements 5.4.1 All procurement of works financed by the Bank shall be in accordance with the Bank’s Rules of Procedure for Procurement of Goods and Works or, as appropriate, the Bank’s guidelines for the use of Consultants, using the appropriate Bank standard bidding documents and those approved by it. Detailed procurement arrangements are given in Table 5.3 below.

Table 5.3

Arrangements for the Procurement of Works and Services (UA 103 )

Component Number of contracts

LCB Financing other than ADB

Total

A- Works

A1- construction of 460.21 km of surfaced roads and related works

39 31.788,395 (31.788,395)

31.788,395 (31.788,395)

A2- Construction of 226.72 km of earth roads 19 6.922,891

(6.922,891) 6.922,891

(6.922,891) B- Management B1- Coordination and supervision of works 2.527,485 2.527,485 B2- Geotechnical control of works and specific studies

55 1.354,895 1.354,895

B3- Auditing 1 38,657 38,657

Total 104 38.711,287

(38.711,287) 3.921,036

42.632,323

(38.711,287) - Figures in parentheses concern amounts financed by the Bank - Financing by donors other than the Bank concern the coordination and supervision of works (Gvt), the geotechnical control of works (Gvt) and the technical and financial auditing of the project (AFD). 5.4.2 In view of the number and dispersion of project sites (58 works contracts), relatively small amounts of money for the corresponding contracts as well as the adequate qualification of Moroccan national and local companies, all works financed by the Bank whose contract amounts do not exceed UA 1.5 million will be awarded following local competitive bidding. 5.4.3 The nature of works (construction of surfaced and earth roads) and the repetition of operations led donors, for the implementation of the first phase of the NRRP2, to adopt the type of standard bidding document already approved for all operations. The CFR will prepare the documents in accordance with the said approved standard BD, the publication of LCB, and the award and signature of contracts. Donors will a posteriori conduct the various control operations regarding compliance with the procedure. For procurements financed by the Bank and for consistency in the management of all components of the NRRP2, the standard BD was also approved by the Bank, in compliance with the rule on the origin of goods, works and contractors. 5.4.4 Services relating to the geotechnical control of works could concern many related operations (55 contracts) and will therefore be awarded through local competitive bidding. The cost of the control services will be borne by the Government. 5.4.5 Completion reports will be jointly prepared by the CFR and DRCR following a predetermined schedule. External audits will be conducted by an auditing firm recruited for this purpose. It should be specified that all auditing services are funded by the AFD. The audit also covers procurement and will be carried out annually. 5.4.6 The selection procedure will be based on the comparaison of design proposals and consideration of the lowest bid.

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General Procurement Notice 5.4.7 The text of a General Procurement Notice (GPN) will be agreed with the CFR during negotiations and be issued for publication in Development Business upon approval of the loan proposal by the ADB Board of Directors. Bid examination procedures 5.4.8 Concerning the procurement of works and as with other donors, the control of procurements financed by the Bank will be carried out a posteriori. The executing agency shall keep all contract award documents for subsequent review by the Bank. National laws and regulations 5.4.9 National procurement laws and regulations of the Kingdom of Morocco were examined and considered acceptable. In fact, since 1999, the legal and regulatory framework takes international practices into consideration; it lays down the conditions and forms of award of contracts and the provisions relating to the control and management of contracts; competitive bidding is the basic rule. There is a very decentralized structure of the organization of procurement as concerns technical and financial management and the procedures are clear. However, the time frames for approval of contracts, notification of instructions to contractors and payment of contracts performed are still considered somewhat long. 5.4.10 For this project, the CFR will be responsible for the award of works and services contracts. The CFR’s resources, capacity, expertise and experience were examined and considered to be adequate. The DRCR units prepare BD for works and the control of works, publish calls for tenders, examine bids and draw up contracts which they forward to the PMU for consideration. Contracts are approved by the CFR and transmitted to the DRCR for performance. The monitoring of the performance of contracts will be carried out on the ground by the DRE/DPE, which will also prepare payment certificates for review by the PMU and transmittal to the CFR for approval and payment. 5.5 Disbursement Arrangements 5.5.1 The various services of the CFR involved in the implementation of the project will benefit from a specific workshop on the rules of procedure of the Bank, particularly in the area of disbursement and procurement. 5.5.2 The disbursement methods to be used for this project are the special account and direct payment methods:

(a) The special account method will be used for all expenses relating to works whose

amounts are less than UA 20 000 and whose nature is better suited to this method. The CFR shall provide evidence of the opening of an account at a commercial bank acceptable to the Bank (this is a loan condition). Funds will be deposited into the special account in accordance with the Bank’s procedures on the basis of an annual programme of activities approved before hand by the ADB. A first advance of an amount equivalent to six months of activities will be paid into the special account. Replenishments of the special accounts shall be authorized upon presentation of expenditure supporting documents for at least 50% of the last transfer and all of the previous payments.

(b) The direct payment method will be used for the payment by companies of

substantial works costs (generally more than UA 20 000).

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5.6 Monitoring and Evaluation 5.6.1 Coordination is entrusted to the head of the Project Management Unit. Contract management services and the NRRP2 implementation monitoring service are made up of engineers, technicians and administrative staff with proven experience, having participated in and managed similar works. The PMU, with the support of DRE/DPE services (works supervision and monitoring teams), supervises the technical and administrative aspects of implementation and is responsible for the preparation of bidding documents for works, the administration of contracts and the general supervision of the project. 5.6.2 The CFR shall, through the PMU, transmit to the Bank half-yearly works progress reports. The reports will, among other things, be based on data provided by site progress reports prepared by the DRE/DPE and regularly transcribed into the NRRP2 monitoring and rural roads management system, including services provided by laboratories. 5.6.3 A project launching mission is envisaged, in order to ensure the proper implementation of the project and benefit from lessons learnt from interventions of the Bank in the sector. In this connection, appropriate procurement methods and provisions will be reviewed to meet the implementation requirements of the project. Plans have also been made for a mid-term review and regular multidisciplinary supervision missions, at the rate of two each year. 5.6.4 To monitor the outputs of the NRRP2, the monitoring and evaluation system put in place under the programme and financed by the World Bank will help track data transmitted from Regions and Provinces to the central level (Ministry of Equipment and Transport) for compilation, analysis and decision-making. The use of this efficient road network management tool will be maintained beyond the NRRP2 for: (i) monitoring of all local roads; (ii) management of local roads by the communes concerned (maintenance); (iii) proposing concrete and long-lasting solutions; and (iv) programming appropriate, precise and targeted interventions. 5.6.5 At the end of the implementation of the project, the PMU will prepare a completion report on the project according to the Bank’s standard format. This report will be the reference document for preparation of the Bank’s completion report. 5.7 Financial Reporting and Auditing 5.7.1 The PMU, through its two services “contract management” and “NRRP2 outputs monitoring”, is in charge of accounting and keeping the accounts of the project, in accordance with accounting regulations. The CFR and services of the DRCR have wide experience in project management and have put in place a satisfactory data processing system. 5.7.2 Project accounts are audited by an external auditing firm recruited by the CFR the services of which are funded by the AFD and cover financial and technical as well as procurement aspects of the project. Audit reports shall be prepared annually and transmitted to the Bank no later than six months following the close of each fiscal year. 5.8 Aid Coordination 5.8.1 The NRRP2 is financed in parallel with other donors. Consequently, the Bank paid special attention to collaboration with its partners, such as the World Bank, during the various phases of preparation of the project. Such coordination was carried out through several technical meetings and exchange of information and documents on the various aspects of the projects. The Bank will pursue information sharing with these institutions, either during joint supervision missions planned under the programme or through the PMU.

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5.8.2 It should be noted that all donors contributing to the financing of the first phase of the NRRP2 have already signed their loan agreements. Signed copies of the said agreements were forwarded to the Bank. VI- PROJECT SUSTAINABILITY AND RISKS 6.1 The sustainability of the first phase of the NRRP2 should be ensured, firstly by the participatory approach adopted for the design, financing and implementation of the Programme. The active participation of local governments in the selection and financing of rural road projects should in fact contribute to sustaining the investments made by further empowering the communes and local authorities in the management of their local road networks. By signing specific agreements with the Ministry of Equipment and Transport, these bodies have moreover pledged to take the necessary measures to ensure the effective maintenance of local roads under their responsibility. 6.2 Risks related to inadequate budgets allocated for road maintenance were elaborately analyzed by the Bank. The first detailed evaluations conducted show that resources to be allocated to the FSC in future should be sufficient to enable it to fulfil its main mission which is to satisfy the road maintenance needs of the State’s classified network and also to honour debt to be contracted by the CFR in future for financing the first phase of the NRRP2. 6.3 The technical sustainability of rural road sub-projects is expected to be ensured by the quality of technical, economic, environmental and social studies conducted for the design, implementation and supervision of the said sub-projects. The imminent preparation of a complete road evaluation and design guide financed by the Government should help develop technical standards and construction methods specifically streamlined and adapted to the NRRP2 context. The consolidation of all technical documents and procedures developed for the NRRP2 in this same guide should also facilitate its use and its ownership by all stakeholders in the Programme and more especially by Moroccan consultancy firms. Such consolidation will help in particular ensure that environmental and social constraints are constantly taken into consideration and incorporated in the detail design of rural road sub-projects. 6.4 The Programme’s financial sustainability should be guaranteed by the multi-year programming put in place for its implementation. Such multi-year programming which will be based on annual credit allocations for payments and commitments will, indeed, be better adapted to the implementation cycle of rural road projects. The annual action and financing plans of the CFR will be pursued in line with the physical output objectives set by the DRCR and will be revised, as appropriate, on the basis of the real status of the Programme and its impact on the rural accessibility rate. The action and financing plans will enable the CFR to precisely define its annual drawdown needs and, hence, better manage its financial resources. VII- PROJECT BENEFITS 7.1 Economic Analysis General 7.1.1 Most rural roads under the NRRP2 are very low traffic load tracks. Their improvement significantly contributes to the reduction of the isolation of rural populations and offers possibilities of linkage to essential social and economic infrastructure such as schools, health centres and markets. Other roads under the programme are low traffic load whose development will reduce not only isolation but also transport costs for long distance traffic that they normally carry. The rural roads programme thus retained (15 560 km) is the outcome of a participatory approach process that brought together the Government and all local governments and, hence, beneficiaries. It was decided

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to implement the programme in two five-year phases the first of which covers the 2005-2010 period. The Bank’s intervention will concern part of the first phase. 7.1.2 For projects under the NRRP2, two different approaches were used to assess their economic return according to their nature:

(a) Preference was given to a cost-benefit analysis (CBA) using the RED8 (Roads Economic Decision Model), for low traffic load roads (which record traffic generally more than 30-50 vehicles a day, with a calculation of the economic rate of return (ERR) and the net present value (NPV). This approach can be explained by the fact that these roads not only provide access to rural populations but also augment the Moroccan road network with patterned roads. These roads must have a rate of return of more than 12 percent. The methodology and RED model are summarized in Annex 10.

(b) A cost efficiency analysis (CEA) was chosen for very low traffic load roads

(which receive daily traffic of less than 30-50 vehicles). By their nature, these roads provide access to the most isolated populations and therefore have low population/km rates. An overall analysis of NRRP2 roads thus showed that 2.2 million people and about 590 000 people benefited respectively directly and indirectly from the programme roads, representing a total population of nearly 2.8 million. For very low traffic load roads, it was agreed between donors and the DRCR that a minimum limit of US$ 490 per capita had to be required to include rural road projects in the NRRP2.

7.1.3 The project financed by the Bank is made up of roads bearing traffic of not less than 30 vehicles/day. A cost-benefit economic analysis of each operation was carried out using the RED model. The basic data used by the model included: (i) traffic; (ii) vehicle operation costs; and (iii) road maintenance costs. Traffic 7.1.4 Exhaustive surveys were carried out to assess the volume and composition of traffic on rural roads. The annual traffic growth was estimated at 5% on the basis of past trends (NRRP1 outcomes). The annual average daily traffic varies between 15 and 300 vehicles. The composition of traffic is shown in Annex 9. Operating costs 7.1.5 Operating costs were estimated on the basis of unit costs by type of vehicle. The costs take into account the high rise in the price of fuels. They concern three types of vehicles (privately owned motor vehicles, pick-up trucks, off-road vehicles, light trucks and heavy trucks) as well as the class of paved/unpaved road. Detailed costs are shown in Annex 9 Maintenance costs 7.1.6 The maintenance cost of paved and earth roads were estimated within the framework of the study on the evaluation of the Moroccan road network maintenance strategies on the basis of the level of traffic. Detailed cost tables are presented in Annex 9. 8 The RED model was developed by the World Bank for the economic analysis of low traffic load roads. (cf. SSATP Working Paper No. 78, July 2004 – Rodrigo Archondo-Callao)

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Investment costs 7.1.7 Investment costs are estimated on average at DH/km 450 000 for the improvement of earth roads and DH 1 000 000 for paved roads. 7.1.8 The economic analysis of the first phase (7 780 km) was therefore carried out using the RED model, based on the data mentioned above, namely the volume of traffic, annual maintenance costs as well as vehicle operating costs. The calculation period retained for the model is 15 years, with a 12% discount rate. The result is that the first phase shows an overall ERR of 22% and that roads of a total stretch of 4 800 km show an ERR of at least 12%, 686 km of which are funded by the Bank. These make up 55 operations, 39 for the improvements to paved road standard (460 km) and 19 for the improvements to earth roads (226 km). The projects financed by the Bank show rates of return of at least 17%. These roads with such a high rate of return record traffic loads of more than 40 vehicles a day or currently have very poor traffic conditions (even cut-offs in the winter or rainy season) and very significant benefits derived from the provision of access to users, made possible by the road improvement works on Bank financing. These road sections are presented in Annexes 4 and 5. 7.1.9 Other benefits procured by the NRRP2 roads include their particularly significant impact on the agricultural sector. In fact, they are a decisive factor in facilitating the distribution and development of agricultural production and thus contribute to the marked improvement of productivity in rural areas. In addition, the conditions of easier access offered by the implementation of the rural roads programme will make up a framework conducive to hiring and retention of teaching and medical service staff in these hitherto relatively isolated areas. Also, the improvement of rural road infrastructure will facilitate the reduction of transport fares and substantially increase the net income of farmers. The job opportunities offered the project worksites will have notable impacts on the increase of incomes of the rural populations. All these project benefits, though difficult to measure, are inescapably tangible benefits for the rural populations and militate in favour of the project. 7.2 Financial Analysis 7.2.1 To finance the construction of 15 560 km of roads in the first phase of the NRRP2, the programme’s financing plan put in place by the Government involves four different sources of finance, namely: the State budget; resources from the Special Road Fund (FSR); contributions from local governments; and loans contracted by the Road Fund (CFR) from donors which are secured by the FSR. The main challenge of the financial analysis is to validate the financing package proposed for the NRRP2 and ensure that the FSR’s future resources will be sufficient to enable it both to fulfil its main mission which is to meet the State’s classified road network maintenance needs and to honour the future debt of the CFR. 7.2.2 The total cost of construction of 15 560 km of road planned under the first phase of the NRRP2 is about DH 11 230 billion. The contribution of each of the sources of finance retained by the Government is presented in Annex 11. 7.2.3 To make financial projections concerning the NRRP2, the DRCR and CFR developed a financial model presenting the future flows (application of funds and resources) of the programme. The model is based on separate files primarily showing, for each donor involved in the programme, loan amounts and conditions, as well as drawdown projections. This financial model of the DRCR and CFR also allows the assessment of the FSR’s share of resources earmarked for debt repayment (under NRRP1 and NRRP2), the share devoted to the financing of the programme and the one available for financing the DRCR’s operations.

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7.2.4 The complete financial analysis of the NRRP2 calls for an assessment of the real impact of the NRRP2 on the future equilibrium of the FSR (road sector). More especially, it is necessary to ascertain that, during implementation of the programme and the repayment period of the corresponding loans, the FSR’s resources will be sufficient to both secure the CFR’s debt and meet the State’s classified road network maintenance needs. The impact of the NRRP2 on the equilibrium of the FSR was assessed on the basis of assumptions and considerations taken into account by the CFR and the Bank for the programme. The assumptions and considerations are presented in Annex 11. 7.2.5 As the table in Annex 13 shows, the overall equilibrium of the road sector should be maintained during the next 25 years despite the implementation of the NRRP2. The surplus resources that DRCR would have to finance additional road construction or maintenance works should thus vary, over the period under review, between DHM 201 and DHM 717. CFR debt service 7.2.6 The total amount of resources allocated by the FSR for rural roads and for CFR debt service is DHM 16.54 over the period from 2005 to 2006, the year during which the CFR will pay the last instalment of loans contracted under the first phase of the NRRP2. Detailed resources are presented in Annex 12. 7.2.7 The financial analysis shows that the road sector’s equilibrium is ensured throughout the NRRP2 implementation period (including the loan repayment period). Such equilibrium is dependent on the FSR’s revenue trends and particularly revenue from the internal tax on petroleum products (TIC). A low rate of growth of TIC, coupled with a default of local governments, would entail a review of the programme’s financing plan by increasing the FSR’s resources allocated to the programme. In practice, this should not undermine the overall equilibrium of the programme as the FSR’s resources are adequate to cover the CFR’s debt service and fund applications of the FSR throughout the period under review (2006-2030). 7.3 Social Impact Analysis Impacts on poverty 7.3.1 Social exclusion due to lack of employment in rural areas is characterized by various forms of underemployment and not by chronic unemployment. The positive impact of construction of rural roads will be visible in increased activities due to the creation of jobs for the local workforce. Furthermore, improved accessibility of neighbouring economic centres will have positive impacts on economic activity. In bringing the populations out of isolation through road access, the NRRP2 should have a significant impact on poverty reduction.

Impacts on gender 7.3.2 The situation of women in Morocco has significantly improved over the past ten years. The Moudaouna (the new Family Code) is an important step towards the consideration and advancement of women in Morocco. Regarding education (target 11) and reduction of disparities between men and women (target 12), Morocco is about to overshoot the Millennium Development Goals (MDG). The rate of feminization of the labour force is on the increase. Constraints include the low level of female literacy, especially in rural areas. The NRRP2 should strengthen positive impacts of the NRRP1 on literacy and significantly improve education, in particular girls’ education in rural areas. By facilitating the movement of women, roads offer rural women more opportunities to participate in socioeconomic activities in their region. The existence of a reliable road network also enables them to maintain greater social contacts with their family and surroundings.

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Socioeconomic aspects 7.3.3 The rural economy is a family-based type characterized by heavy dependence on the agricultural sector. Most farmers live at the semi-subsistence level and family monthly incomes are around DH 350 to 2 600. In rural areas, family incomes will increase through the creation of jobs during the construction phase and employment in the operation phase. During the works phase, the direct impact will be an increase in activities entailing the hiring of the local labour force. The project will have a positive impact on employment in the handicraft, lodging and transport sectors. The NRRP2 will also facilitate access to natural sites in the hinterland and consequently promote tourism in the areas crossed. Road-side residents will be reduced on account of regular transport services (bus, “grand taxi” (jitney), combined carrier, etc.). In general, it is established, on the basis of impact studies conducted in Morocco on previous rural road programmes, that the improvement of roads should lead to: (i) improvement of well-being in terms of health (increased routine consultation, better health services, etc.) ; (ii) increase in school enrolment; and (iii) increase in agricultural yield and production value added, etc. Participatory approach 7.3.4 To define the road sections included in the NRRP2, meetings were organized by the Ministry of Equipment and Transport in : (i) regions to present the overall approach and national objectives of the Programme; (ii) Provincial Councils of all Provinces of Morocco, chaired by the Walis and Governors concerned in the presence of council elected officials and beneficiaries, to validate NRRP2 operations proposed at the grassroots level; and (iii) each province for the signing of partnership agreements specific to each of the provinces of Morocco. The goal of the consultations was also to increase the impacts of road projects on the concerned populations especially through:

• the support and participation of all partners for the success of the programme; • the contribution and involvement of local beneficiaries in the implementation of

the programme; • the motivation of local governments to take part in the preparation and

implementation of the programme ; • the streamlining of choices of operations to be scheduled ; and • the development of the sense of ownership of rural roads among local partners for

a better operation of the roads. 7.3.5 Apart from the participation of regions in the preparation of the NRRP2 as a whole, this approach also seeks to ensure the participation of local governments in an optimal and rational financing package for the NRRP2. In this connection, the agreements concluded with the local governments concerned, formally seal the partnership between the various stakeholders of the Programme by involving them in the determination of the layout and estimated cost of the road programme to be implemented in each province, breakdown of financing by source as well as the fixing of the financial resources mobilization schedule. The financial contributions of local governments were thus fixed at 15% of the overall financing of the NRRP2. The agreements also help guarantee the freeing of the rights-of-way of unclassified roads and the subsequent maintenance of the roads by the concerned local governments.

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7.4 Sensitivity Analysis Economic return sensitivity 7.4.1 The Bank requires an ERR of more than 12% for a project to be financed. The sensitivity test consisted in determining respectively the rate of increase in the programme cost and decrease in benefits resulting in this rate. Thus, for the ERR to fall to 12%, the programme cost must increase by 61% or the benefits must decrease by 38%. In fact, this risk is very low because construction costs are expected to be better controlled by the DRCR and drop significantly in view of the implementation of the rural roads design guide in the near future. This guide should, indeed, help define for each project relevant technical standards, namely those offering the best cost/quality – sustainability ratio. Financial equilibrium sensitivity 7.4.2 To ascertain the feasibility of the financing package adopted for the NRRP2, three sensitivity tests were conducted (see Annex 12). As shown in Table 7.1 below, the additional financing requirements for the financing plan of the first phase of the programme amount to DHM 173.4 for scenario 1 and DHM 433.5 for scenario 2. In both cases, these requirements nevertheless represent only 2.4% and 6.08% respectively of the total of the first phase of the NRRP2. This gap could be financed by granting more FSR resources to the programme or by spreading the latter over another year.

Table 7.1 Financing Plan of the First Phase of the NRRP2 (DHM)

Source Scenario 0 (reference) Scenario 1 Scenario 2

Total Amount NRRP2, Phase 1 including : 7.125 7.125 7.125 Loans raised by the CFR 3030 3030 3030 Contributions of local governments 867 693.6 433.5 State budget 400 400 400 Special Road Fund (FSR) 2,828 2,828 2,828 Additional loans 0 173.4 433.5 In % of Total Amount 0 2.43% 6.08%

VIII- CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The project contributes to improving the living conditions of the populations and reducing unemployment by supporting the country’s economic development especially in rural areas. It strengthens the capacities for transporting people and agricultural produce from these remote areas. 8.1.2 The project design will help remove constraints relating to the lack of access to deprived rural areas and improve the standard of living of people living at the extreme poverty line. The project shows an economic rate of return between 15% and over 50%. 8.1.3 The financial analysis shows that with the launching of the NRRP2, the equilibrium of the road sector is ensured throughout the programme implementation period (including the loan repayment period). The equilibrium remains dependent on FSR’s revenue trends, particularly revenue from the internal tax on petroleum products (TIC). Low local government contributions to the programme would entail a complete review of the programme’s financing plan and increasing

33

the FSR’s contribution. In practice, this should not undermine the overall equilibrium of the programme, as the FSR’s resources are sufficient to cover the CFR’s debt service and other FSR fund applications throughout the period under review (2006-2030).

8.1.4 The CFR’s financial situation shows that despite the heavy debt load owing to the simultaneous construction of many rural road sections, the Fund will be able to honour its financial commitments thanks to the State’s commitment to pay the share of the FSR to it, on the one hand, and to the financial support of local governments through the signing of partnership agreements. 8.1.5 From an environmental and social standpoint, the project will improve the conditions of travelling in the project impact area and offer temporary and permanent employment opportunities. The population of provinces covered will benefit from easier travel, remaining at all times in communication with the rest of Morocco. The number of road cut-offs during the winter period will be reduced in these vulnerable areas. Moreover, there will be no land expropriations and population displacements. The rural road sections retained under the project cross landscapes often covered by plantations and farm land. Studies conducted showed that the environmental impact of the project can be controlled. However, detailed studies will be carried out where problems related to a serious negative impact or to land instability are identified. This aspect concerns all road sections under the first phase of the NRRP2. 8.2 Recommendations In the light of the foregoing, it is recommended that a loan with the guarantee of the State of Morocco of not more than Euro 45 million be granted to the Road Fund (CFR) to implement the project as described in this appraisal report. Besides the usual Bank Group conditions, the loan will be subject to the following special conditions: Conditions precedent to loan effectiveness

(i) The entry into force of the loan agreement shall be subject to the fulfilment by the Borrower and the Guarantor of the specific conditions set out in Section 5.01 of the General Conditions applicable to loan and guarantee agreements.

Conditions precedent to the first disbursement The first disbursement of the loan resources shall be subject to fulfilment by the Borrower, to the satisfaction of the Bank, of the following condition

(i) Provide to the Bank evidence of the opening of a bank account in an establishment acceptable to the Bank (para. 5.5.2)

Other condition

In addition, the Borrower shall:

(i) Provide to the Bank half-yearly status reports on the project, the first of which

shall reach the Bank no later than the end of March 2008 (para. 5.1.4).

ANNEX I KINGDOM OF MOROCCO

RURAL ROADS PROGRAMME (NRRP2)

Map of the 23 Provinces Covered by the Bank’s Project

ANNEX 2

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Organization Chart of the Road Fund

Ministry of Equipment and Transport

Directorate of Roads and Road Traffic (DRRT)

ANNEX 3

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Organization Chart of the Project Management Unit (PMU)

Programme Management Unit Head

Head of CFR Funded Contracts Management

Service

Head of NRRP 2 Outputs Monitoring Service

Secretariat

Mail Office

Management of Certificates and

Payment

Contract Management

Monitoring and Examination of

Financing Documents

CFR

DRCR

ANNEX 4

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

List of Surfaced Roads Improvement Operations Financed by the Bank, Traffic and ERR

DRE/DPE Road No. Link PKD PK.F Length Cost (dh/k) TMJA ERR

Al Haouz NC Abadou / Tamesoult (Ait Iktel) 0.00 10.00 10.00 10 000 50 21%

Azilal P3110 Ait Tamlil - Isoulane 0.00 17.00 17.00 16 000 150 38% Azilal P3113 Arbâa - Tifert - Boutfarda 13.00 26.00 13.00 13 000 100 24%

Benslimane P3336 Bir guettara- mediona 0.00 15.00 15.00 12 000 50 27%

Benslimane P3311 S.Laghlimi-BGE OD mallah 4.00 7.80 3.80 3 200 250 65%

El jadida P3433 P3433-P3431 0.00 2.00 2.00 1 400 70 29%

Errachidia NC RN13 - Ksours 0.00 6.20 6.20 5 000 50 16%

Fes NC Ain chkef-Ouled Tayab 0.00 6.50 6.50 5 500 50 19% Ifrane P7058 P7048 - Limite province 12.00 16.00 4.00 3 200 30 19%

Khémisset P4303+NC Marchouch - P4307 10.60 20.10 9.50 14 500 60 15%

Khénifra P7316 Amarsid-Bertat 0.00 22.00 22.00 13 600 80 33%

Khénifra NC El Borj-Oulghass 0.00 9.00 9.00 7 800 50 25%

Khouribga P3533 Bejâad -MyBouâza 30.00 43.00 13.00 10 000 50 27%

Khouribga P3500 Gnadiz - O.Ftata 0.00 12.00 12.00 10 000 50 27% Khouribga P3500 Gnadiz - O.Ftata 12.00 20.00 8.00 5 000 50 27%

Meknes NC Ait hami - kbala 0.00 4.50 4.50 2 700 50 31% Meknes NC N13-kasbat hrtan 0.00 3.00 3.00 2 000 100 32% Meknes NC Rp 7037 - sidi youssef 0.00 7.00 7.00 3 500 150 49%

Nador NC150 Kariat-Bocana 0.00 14.00 14.00 12 500 50 24% Ouarzazate P1515 Agdez-Afla Ndra 2.00 12.00 10.00 10 000 50 22%

Ouarzazate P1519 Agdez-Mezghita 0.00 10.00 10.00 7 000 50 29%

Oujda NC P6003-S.Lahcen-S.Smail-6048 18.00 28.00 10.00 11 000 50 18%

Oujda P6010 Berkanr- Ain almou 17.00 34.00 17.00 19 000 40 17%

Oujda NC9018-1784 P6003-Sidi Lahcen-sidi Samil 3.00 15.00 12.00 10 400 40 23%

Safi 2100 Sebt Gzoula - P2321 0.00 17.50 17.50 10 345 50 31%

Settat P3333 Aïn Madnat à Sidi Sbaa 61.34 75.34 14.00 11 200 100 29% Settat P3633 Ben Ahmed à M'riziq 0.00 27.21 27.21 21 768 250 59%

Settat P2115 Beni Khlough à Ouled M'rah 74.16 94.16 20.00 16 000 150 45%

Settat P3612 Berrechid à RP 3619 56.30 73.30 17.00 13 600 150 43% Settat P3622 Settat à la RP 3601 5.00 20.00 15.00 12 750 100 29% Settat P3624 Settat à Mrizigue 22.00 40.00 18.00 14 400 400 78%

Sidi Kacem P4571 RP 4232 - RR 408 8.00 19.00 11.00 14 300 50 17%

Tanger NC Melloussa (RP4613)- Khmis Anjra pae Zemmij 0.00 15.00 15.00 15 000 50 20%

Tanger NC RN16-Oued El Mersa 0.00 6.00 6.00 6 000 50 22%

Tanger NC RP4602-RN2 Par Aouama et Azib Abekiou 0.00 6.00 6.00 6 000 50 21%

Taroudant P1733 Ouled Berhil-Talegjount 0.00 15.00 15.00 15 000 175 46% Taroudant P1745 RN10-assaïs 0.00 18.00 18.00 13 000 80 37% Tetouan NC Saddena - al ounasar 0.00 8.00 8.00 11 000 70 21% Tiznit R107 Tassrirt - Tizi - Oumanouz 19.00 33.00 14.00 10 500 40 26% TOTAL 39 460.21 399163

ANNEX 5

KINGDOM OF MOROCCO RURAL ROAD PROGRAMME (NRRP2)

List of Earth Roads Improvement Operations Financed by the Bank, Traffic and ERR

DRE/DPE Road No. Link PKD PK.F Length Cost (dh/k) AADT ERR

Benslimane NC1 RP 3325-Sidi amor 0,00 14,70 14.70 5 800 50 39%

Ifrane NC Berkite-El mers ou Ali 0.00 6.00 6.00 1 800 50 41%

Ifrane NC N8- P7209 0.00 1.50 1.50 1 200 50 41%

Khémisset NC18 RR401 - Ain terzi 0.00 12.50 12.50 8 750 30 16%

Khénifra NC2679 Had Oued Ifrane-Bouchebel 0.00 13.00 13.00 4 000 50 36%

Khénifra NC2615+7624 Tikajouin-Tafassaste 0.00 8.80 8.80 2 650 50 37%

Marrakech NC Oulad Htane - Kettara 0.00 14.50 14.50 5 250 50 31%

Meknes P7060 AAZIB BEN NACER - RIBAA 0.00 3.00 3.00 1 000 300 136%

Meknes P7076 AIT HCEINE - BIR ZAFANE 5.00 8.40 3.40 1 000 50 38%

Meknes NC P7017-P7023 0.00 8.80 8.80 2 600 50 38%

Settat P3630 Aïn Blal à Beni Khloug 0.00 36.00 36.00 12 600 50 31%

Settat P3634 Mechraa El Omri à la RR 308 0.00 25.00 25.00 8 750 100 50%

Settat P3627 Médiouna à Ben Ahmed 0.00 12.00 12.00 4 200 100 50%

Settat P3628 Sidi Boumehdi-Ouled Boualmi Nouaja 0.00 30.00 30.00 10 500 100 44%

Settat P3607 Sidi Rahal Chatii-RP 3606 41.60 61.11 19.51 6 830 120 62%

Taounate NC3294 Bouhouda - Aichtoum 0.00 18.00 18.00 10 000 220 65%

TOTAL 16 226.714 86929.9

ANNEX 6

KINGDOM OF MOROCCO RURAL ROAD PROGRAMME (NRRP2)

Summary of Detailed Cost Estimates by Component and by Source of Finance (UA 103)

ADB AFD GVT Total cost Component F.E. L.C. Total F.E. L.C Total F.E. L.C. Total F.E. F.E. Total

A- Construction A1- Improvement of 460.21 km of surfaced roads + related works 19265.694 8256.726 27522.420 - - - - - - 19265.694 8256.726 27522.420 A2- Improvement of 226.72 km of dirt roads 4195.692 1798.154 5993.845 - - - - - - 4195.692 1798.154 5993.845 A3- Geotechnical control - - - - - - - 1173.069 1173.069 - 1173.069 1173.069 Total A 23461.386 10054.880 33516.265 - - - - 1173.069 1173.069 23461.386 11227.949 34689.335 B- Management B1- Coordination and supervision of works - - - - - - - 2188.298 2188.298 - 2188.298 2188.298 B2- Technical and financial auditing - - - 22.090 14.726 36.816 - - - 22.090 14.726 36.816 Total B - - - 22.090 14.726 36.816 - 2188.298 2188.298 22.090 2203.025 2225.114 Grand total of basic costs (A+B) 23461.386 10054.880 33516.265 22.090 14.726 36.816 - 3361.368 3361.368 23483.475 13430.974 36914.449 Physical contingencies 2346.139 1005.488 3351.627 0.552 0.368 0.920 - 336.137 336.137 2346.691 1341.993 3688.684 Price contingencies 1290.376 553.018 1843.395 0.552 0.368 0.920 - 184.875 184.875 1290.928 738.262 2029.190 Total contingencies 3636.515 1558.506 5195.021 1.104 0.736 1.841 - 521.012 521.012 3637.619 2080.255 5717.874 Grand total 27097.901 11613.386 38711.287 23.194 15.463 38.657 - 3882.380 3882.380 27121.095 15511.228 42632.323

ANNEX 7

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Estimated Costs of Works Coordination and Supervision Component (in DH)

Staff Travelling expenses Logistics

DRE/DPE Engineer (60%)

2 Technicians (CE +

Topo)

Driver (Rodman)

Engineer Technicians Driver (4x4)

vehicle

Reproduction doc. and communication

Total

Al Haouz (10km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856 Azilal (30km) 300 672 378 160 80 620 14 500 40 600 11 600 295 800 23 200 1 145 152 Benslimane(33.5 km) 373 248 469 440 100 080 18 000 50 400 14 400 367 200 28 800 1 421 568 El jadida (2km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856 Errachidia (6.2 km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856 Fes (6.5 km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856 Ifrane (11.5 km) 373 248 469 440 100 080 18 000 50 400 14 400 367 200 28 800 1 421 568 Khémisset (22 km) 274 752 345 560 73 670 13 250 37 100 10 600 270 300 21 200 1 046 432 Khénifra (52.8 km) 514 253 646 784 137 888 24 800 69 440 19 840 505 920 39 680 1 958 605 Khouribga (33 km) 373 248 469 440 100 080 18 000 50 400 14 400 367 200 28 800 1 421 568 Marrakech(14.5 km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856 Meknes (29.7 km) 746 496 938 880 200 160 36 000 100 800 28 800 734 400 57 600 2 843 136 Nador (14 km) 129 600 163 000 34 750 6 250 17 500 5 000 127 500 10 000 493 600 Ouarzazate (20 km) 248 832 312 960 66 720 12 000 33 600 9 600 244 800 19 200 947 712 Oujda (39 km) 445 824 560 720 119 540 21 500 60 200 17 200 438 600 34 400 1 697 984 Safi (17.5 km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856 Settat (233.72 km) 1 566 791 1 970 579 420 108 75 559 211 565 60 447 1 541 404 120 894 5 967 347 Sidi Kacem (11 km) 148 262 186 472 39 754 7 150 20 020 5 720 145 860 11 440 564 678 Tanger (27 km) 404 352 508 560 108 420 19 500 54 600 15 600 397 800 31 200 1 540 032 Taounate (18 km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856 Taroudant (33 km) 290 304 365 120 77 840 14 000 39 200 11 200 285 600 22 400 1 105 664 Tetouan (8 km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856 Tiznit (14 km) 124 416 156 480 33 360 6 000 16 800 4 800 122 400 9 600 473 856

TOTAL 7 309 626 9 193 435 1 959 950 352 509 987 025 282 007 7 191 184 564 014 27 839 750

ANNEX 8

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Provisional Implementation Schedule

Years 2005 2006 2007 2008 2009 2010 2011 Component Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2A- Works A1- Improvement of 460.21 km of surfaced roads and related works

A2- Improvement of 226.72 km of dirt roads

A3-Geotechnical control of works

B- Mnagm’t B1- Coordination and supervision of works

B2- Technical and financial auditing

ANNEX 9 KINGDOM OF MOROCCO

RURAL ROADS PROGRAMME (NRRP2)

Vehicle Operation and Road Maintenance Costs and Traffic Composition

Vehicle Operation Costs (US $/veh/km)

Type of road UNI (IRI) Light

vehicle Pickup Off-road

vehicle

Pickup truck

Heavy vehicle

Surfaced 3 0.19 0.25 0.27 0.76 0.77 5 0.20 0.26 0.29 0.88 0.88

8 0.24 0.32 0.37 1.14 1.13 Un- surfaced 10 0.25 0.35 0.41 1.27 1.26 - 12 0.28 0.39 0.46 1.41 1.41 - 15 0.31 0.45 0.54 1.64 1.65 - 18 0.35 0.53 0.60 1.87 1.89

Current Maintenance Cost by Type of Road and Class of Traffic (in US $/km/yr)

Traffic (in vpd) Un-surfaced Surfaced 30< <50 990 1.177 50< <100 1.319 1.425 100< <250 1.766 1.425 >250 2.290 1.425 UNI (IRI) 10 3

Traffic Composition

(Annual Average Daily Traffic – AADT)

Traffic Light vehicle Pickup

Off-road

vehicle

Pickup truck

Heavy vehicle Total

<30 4 3 2 4 2 15 30< <50 10 7 6 11 6 40 50< <100 40 17 8 8 2 75 100< <250 76 43 9 17 5 150 >250 153 87 18 33 9 300

ANNEX 10

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Methodology and RED Model

1. Two different approaches are generally used to assess the economic return of rural road projects according to type: (i) for roads with a low traffic load [which receive between 30 and 50 vehicles per day (v/d)], preference was given to a cost-benefit analysis (CBA), with the calculation of the economic rate of return (ERR) and net present value (NPV). This approach can be explained by the fact that in addition to opening up rural areas, these roads also help complete the Moroccan road network; (ii) for roads with a low traffic load (less than 30 v/d), cost-benefit analysis (CBA) was preferred. The main aim of most of these roads is to open up the rural areas and to link them up with infrastructure and basic social and economic services (schools, health centres, village markets, etc.). 2. Cost-benefit analysis (CBA): The cost-benefit analysis was carried out following the Roads Economic Decision Model (RED) developed by the World Bank to carry out the economic analysis of investments and maintenance works on roads with a low traffic load. The RED model follows an approach based on surplus road users to assess the savings on the operating cost of the road (vehicle operating cost, cost of travel time, and cost of accidents) which are estimated using cross analyses of the operating costs of the HDM model of the Highway Development and Management System (HDM-4). The RED model is adapted to the characteristics and needs for analysis of roads with a low traffic load, with the uncertainty of evaluation of data, importance of speed estimation and the need to analyze traffic trends in detail. The DRCR staff are familiar with the RED model as they were trained to use it. It is generally accepted that the investments made on each of the rural road projects are expected to produce an internal rate of return (IRR) of more than 12 %. 3. Cost effectiveness analysis (CEA). The cost effectiveness analysis for roads with a very low traffic load will be carried out by calculating the ratio of the total cost of investment per beneficiary. By nature, these roads are used by the most isolated populations of the country and therefore have a low rate of population per kilometre. The calculation of CEA takes into account direct beneficiaries, that is the population living along roads included in the programme (in douars of at least 50 families in a radius of one kilometre around the roads), and indirect beneficiaries, that is the population living along other roads connected to the project road and who use the aforementioned road to get to social and economic service centres. An overall analysis of roads under the NRRP2 therefore showed that 2.2 million people and about 590 000 others respectively benefited directly or indirectly from the programme roads, representing a total population of about 2.8 million. For roads with a very low traffic load, it had been agreed initially with the DRCR that a minimum threshold of US$ 490 per capita was required to include rural road projects in the NRRP2.

ANNEX 11 Page 1 of 2

KINGDOM OF MOROCCO

RURAL ROADS PROGRAMME (NRRP2)

Contribution by Sources of Finance Adopted by the Government (i) Transfers from the State budget to the DRCR for the financing of the

NRRP2 were fixed at an annual amount of DHM 80, representing DHM 400 for each of the two phases.

(ii) A fixed share of the resources of the FSR, that is 45% of the internal tax

on petroleum products (TIC) will be allocated exclusively for the financing of rural roads.

(iii) According to agreements signed between the Ministry of Equipment and

Transport and local governments, the contributions of the latter to the programme were fixed at 15% of the total amount of the NRRP2 initially estimated at DHM 867 for the first phase and DHM 817 for the second phase. These contributions are paid directly to the CFR.

(iv) Loans contracted by the CFR from donors for the financing of the first

phase of the programme amount to DHM 3030.

Financial Assumptions and Simulations - Transfers from the State budget to the DRCR for the financing of the

NRRP2 were fixed at an annual amount of DHM 80, representing DHM 800 for the whole programme.

- The programme is divided into two successive phases. The first phase

covering the period 2005/6-2010 involves investments of about DH 7.1 billion against DH 4.1 billion for the second.

- The contributions of local governments were fixed at 15% of the total

amount of the NRRP2, representing nearly DHM 1.68 for the whole programme and DHM 863 for the first phase or an annual average of DHM 173. However, we fixed this contribution at DHM 134 for 2006 (actual contribution), and at DHM 160 for 2007-20015. These contributions are paid directly to the CFR.

- Given the limited structure of the CFR, its operating costs will remain low

throughout the implementation of the NRRP2, at an annual average of about DHM 6.

- The total resources of the FSR are expected to increase at an annual rate of

2%. - The resources of the FSR earmarked for the NRRP2 (that is 45% of TIC)

amounted to DHM 618 in 2006. These resources are expected to increase

ANNEX 11 Page 2 of 2

at an annual rate of 2%. The rate of increase retained is less than the real increase of TIC in recent years.

- The operating costs of the DRCR, that is DHM 270 per annum, are

considered constant throughout the period. - State budget appropriations for the DRCR were fixed at DHM 400 per

annum. - The funds allocated for the routine maintenance of the road network in

2006 were estimated at about DHM 220 for a paved road network of 32 000 km. In 2015, the stretch of this road network is expected to reach 47 600 km and will require an amount of DH 330 million for maintenance, that is DHM 110 between 2006 and 2015, at a rate of DHM 10 per year (assuming that the maintenance of improved roads will require the same amount as that of built roads). Between 2015 and 2030, this amount will remain constant, since the network will not be extended during this period (end of the NRRP2).

- The funds allocated for maintenance (periodic maintenance) in 2006 were

estimated at about DHM 620 for a paved road network of 32 000 km. In 2015 (date of completion of the NRRP2), the stretch of this network will reach 47 600 km and will require DHM 920 for periodic maintenance, that is DHM 300 between 2006 and 2015, at a rate of DHM 30 per year. Thus, maintenance costs (routine and periodic) are estimated at DHM 40 per year between 2006 and 2015. Between 2015 and 2030, this amount will remain constant as the road network will not be extended during this period (end of the NRRP2).

ANNEX 12

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Financial Sensitivity Test

Baseline scenario

This scenario is based on a low increase in revenue from the internal tax on petroleum products (TIC), representing about 2% per annum, thus resulting in a drop in the total resources of the FSR allocated for the first phase of the programme. Scenario 1 (rate of payment of contributions by local governments)

This scenario assesses the impact on the financing of the programme of an 80% payment by local governments of their financial contribution because of limited budgets (especially for poor ones). Scenario 2: (low rate of payment of contributions by local governments)

This scenario assesses the impact on the financing of the programme of a 50% payment by local governments of their financial contribution because of limited budgets (especially for poor ones).

Resources Allocated by the FSR for Rural Roads

(i) DHM 1.28 will be used to repay outstanding loans (including charges and interest) contracted by the CFR from the EIB and AFD within the framework of the NRRP1;

(ii) About DHM 4.8 will be used to repay loans (including charges and interest) contracted by the CFR within the framework of the first phase of the NRRP2;

(iii) About DHM 3.1 will be used to repay loans (including charges and interest) which will be contracted by the CFR within the framework of the second phase of the NRRP2;

(iv) About DHM 4.2 will be contributed by the FSR for the financing of the two phases of the NRRP2;

(v) DHM 149 will be used to cover the operating costs of the CFR; (vi) The balance, that is DHM 3.1, will be used to modernize and improve the road

sector, as well as finance a subsequent third rural roads programme.

Resources of the FSR for Rural Roads

Resources of the FSR for rural roads (DHM) 16539.00Including: Servicing of debts of the CFR (NRRP1) 1283.00Servicing of debts of the CFR (NRRP2) First Phase) 4834.09Servicing of debts of the CFR (NRRP2 Second Phase) 3094.00Overall debt servicing 9211.09Transfer to the CFR for the first phase of the NRRP2 2828.00Transfer to the CFR for the second phase of the NRRP2 1357.00Functioning of the CFR 0.15Other expenses 3142.76

ANNEX 13

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Road Sector Equilibrium (2006 - 2026)

2006 2010 2015 2020 2025 2026 Total resources of FSR 1866 2020 2230 2462 2718 2773 Fuel tax (TIC) including: 1373 1486 1641 1812 2000 2040 45% allocated for NRRP-2 618 669 738 815 900 918 Resources of DRCR of which (a) 1648 1751 1892 2047 2218 2255 Transfer FSR 1248 1351 1492 1647 1818 1855 State budget allocations 400 400 400 400 400 400 DRCR application of funds of which (b) 1648 1751 1892 2047 2218 2255 Operating costs 270 270 270 270 270 270 Maintenance expenses (plus civil engineering structures and safety) 1061 1221 1421 1421 1421 1421 Other investment expenditure 317 260 201 356 527 564

(a)-(b) 0 0 0 0 0 0

ANNEXE 14 Page - 1 - of 7

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Summary Environmental and Social Management Plan

1. Main environmental and social impacts 1.1 The project has positive impacts on the population of the areas covered, namely (i) improvement of accessibility of rural areas and trade, and therefore improvement in the standard of living of the population; (ii) enhancement of road safety and connection of villages; (iii) reduction in nuisances (air and noise pollution) for roadside residents; (iv) improved access to hospitals and schools and therefore reduction in maternal mortality and increase in primary school enrolment, notably for girls, by the construction of all-weather roads; and (v) creation of jobs during the construction and operation phases. Other positive outputs are envisaged like the construction of rainwater drainage facilities that would allow for (i) the protection of built or improved roads; (ii) the natural flow of rivers and preservation of the specific ecology of wadies; and (iii) prevention of isolation of the population over long periods during floods. 1.2 he negative impacts on the natural environment during the construction phase include those of a typical road construction site: noise and vibrations, dust and gas emissions, oil spills, etc. Negative impacts on the human environment such as vibrations and emissions may affect the health of roadside residents or workers. The movement of trucks and construction equipment may also cause accidents. Negative impacts during the road operation phase are likely to induce a number of negative factors due to an increase in traffic and circulation which will affect the physical, biological and human environments: (i) accidental chemical contamination (oils, oil derivatives, etc) may affect the water system, especially the level of rivers and sequoias, and water collection basins for irrigation; (ii) induced modifications may cause erosion, notably at the level of hydraulic structures; (iii) road drainage water comprising heavy metals and hydrocarbons may cause accidental pollution of flora. 2. Mitigation Measures taken during the construction phase first concern precautionary measures relating to the setting up and operation of project sites and will aim at reducing public discomfort to the barest minimum during the construction phase. These include: (i) the setting up of construction sites far from sensitive and dwelling places and (ii) the setting up of special facilities to store dangerous products, and limiting environment hazards; and (iii) the organization of work in the construction site according to standard rules of environmental protection. The negative impacts of construction works will be mitigated by compliance with “Environmental Procedures and Good Practices” described in the Environmental Good Practices Handbook. Contract documents will include all provisions necessary for limiting work-related inconveniences, including waste management, the control of gasoline, fuel-oil and drain oil spills; the protection of vegetation; measures to reduce noise and dust; the control of soil erosion and protection of the quality of water; rehabilitation of areas used to lodge workers and store building materials. Measures to be taken during the operation phase include timely and continuous maintenance to control erosion and drainage along the road, to prevent the degradation of vegetation cover and to limit risks of accidents and fire hazards. 3. Monitoring and Supplementary Initiatives Programme The Project Management Unit (PMU) will be responsible for the management and the direct and regular monitoring of the implementation of actions retained within the framework of the project, with the support of technical assistance. This will enable the PMU to ensure on the ground the monitoring and technical control of the execution of works, the certification of works completed and implementation of Environmental Management Practices (EMP) and the environmental monitoring programme, as well as the conduct, as appropriate, of specific studies related to ground instability during the execution of works or detailed environment-related studies. It will also prepare progress reports and various documents relating to the project. The PMU will centralize all documents and information relating to the programme and will serve as interface between the borrower, the ADB and other donors.

ANNEX 14 Page - 2 - of 7

KINGDOM OF MOROCCO

RURAL ROADS PROGRAMME (NRRP2) 4. Institutional arrangements and capacity-building needs

The provincial and regional services of the DRCR and the PMU will ensure the optimum coordination and management of the various activities and the technical and financial monitoring of the project relating to the implementation of the second National Rural Roads Programme (NRRP2). The technical assistance of the PMU was put in place in January 2007 for a period of 48 months; it will help increase resources for the organizational component and give a beneficial boost guaranting the putting in place of controls and systems of organization necessary for efficient management. It will in particular examine: (i) related points to ensure total compliance with environmental and social standards by drawing up appropriate environmental and social action plans, and (ii) necessary additional studies (environment, stability of slopes, etc.). 5. Public consultations and information dissemination requirements

Roads were retained within the framework of the NRRP2 following a participatory process. The validation of the NRRP2 in provinces was materialized by the signing of framework agreements (16 in all) with Regional Directorates of Equipment (DRE) and regional councils, and by signing specific agreements (59 in all) with Provincial Directorates of Equipment (DPE), provincial councils and rural councils. These agreements formally seal the partnerships between the different stakeholders of the Programme by committing them to the road stretch and the estimated cost of the road programme to be implemented in each province, the distribution of funding by source, as well as the schedule for the mobilization of financial resources. The agreements also help guarantee the freeing of rights-of-way of unclassified roads and subsequent maintenance of these roads by local governments. 6. Cost estimates

The costs of environmental and social measures cannot be estimated precisely at this stage. This is a vast programme with a project approach, whose technical preparation details, as well as environmental and social data will be obtained only this year. Most roads to be improved within the framework of the NRRP2 follow rights-of-way of existing tracks. Lastly, the costs of impact assessments, environmental management plans, expropriation and displacement, as well as contingencies should not exceed 5% of the volume of investment, that is DH 20 million (Euro 2 million). 7. Schedule of implementation and production of reports

Half-yearly progress reports will be sent to the Bank. Environmental and social aspects are treated in these reports according to the following ESMP matrix:

ANNEX 14 Page - 3 - of 7

KINGDOM OF MOROCCO

RURAL ROADS PROGRAMME (NRRP2)

Table 1: Assessment of negative impacts and description of proposed mitigation measures

Nature of negative impacts

Impact

assessment

Intensity, extent, duration importance

Recommended mitigation

measures

Residual impact

Preparatory phase Impact on the natural environment Establishment of construction sites and access development: tree felling and clearing. Disappearance of natural areas, huge natural habitats, biodiversity Landslides, surface failure Gully erosion

Weak. Local. Temporary

Very weak Weak. Local. Permanent

Weak Weak. Local. Permanent

Weak Weak. Local. Permanent

Weak

Make provision for site clean-up after completion of works; reforestation; revegetation; cultivation; Prevent effects on: - Protected natural sites and wildlife areas - Most important habitats or areas of high biodiversity Avoid slope zones and unstable subsurface - Use surface drainage facilities in sensitive areas and slopes - Provide for sufficient size and appropriate location of drainage and box drains to prevent floods - Cover surfaces with stones or concrete - Select locations for borrow sites/quarries and design them on the basis of erosion control problems and subsequent maintenance works

None Very weak Very weak Very weak

Socio-economic impacts Land acquisition and damage of private property Displacement

Weak. Local. Permanent

Weak Weak. Local. Permanent

Weak

Land audit to be carried out; help the population to assert their rights; compensation Audit to be carried out; help the population to assert their rights; compensation

Very weak Very weak

ANNEX 14 Page - 4 - of 7

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Implementation

Nature of negative impact

Impact assessment

Intensity, extent, duration

importance

Recommended mitigation measures

Residual impact

Impact on the natural environment Destruction of vegetation cover, degradation of native communities of flora; Risk for protected animal and plant species; Beauty of landscape; temporary damage during works due to deforestation, topsoil stripping, cutting, excavated materials, waste from construction site. Erosion Increase in finger erosion Contamination of water by gasoline, fuel-oil and drainage oil leakages from construction site equipment Waste from works

Weak. Local. Permanent

Weak Weak. Local. Temporary

Very weak Weak. Local. Temporary

Very weak Average. Local. Temporary

Weak Weak. Local. Temporary

Very weak Weak. Local. Temporary

Very weak Weak. Local. Temporary

Very weak

Restore soil, vegetation cover that is endemic to the area Protect fragile ecosystems by by-passing them; carry out reforestation and revegetation Restore soil to its initial state; reforestation in the surrounding area and carry out revegetation; evacuate waste - Carry out earth movement and clearing only in the dry season - Ensure the proper management of digging and filling to limit soil movement - Create sedimentation tanks - Restore surfaces and undertake revegetation of bare surfaces Size and properly lay out box culverts; put in place appropriate surface drainage facilities Collect and recycle drainage oils; take measures to avoid accidental oil spills and limit them if necessary; limit seepage from construction site Limit waste production during works and re-use waste when this is possible; use suitable waste storage methods; discharge waste in a suitable land fill site.

None None None None Very weak Very weak None

ANNEX 14 Page - 5 - of 7

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Impacts on human environment: Risk of destruction of cereal crops, arboriculture, forest plantations; Risk of destruction of cultural, archaeological and religious heritage Deterioration of rivers (laying of pipes in wadies) and disruption of water use; Public health: waterborne diseases, pollution risk in watersheds Risk of accidents during road works and site operations; movement; Air quality Noise pollution

Weak, Local, Temporary

Very weak Weak, Local, Temporary

Very weak Average, Local, Temporary

Weak Weak, Local, Temporary

Very weak Weak, Local, Temporary

Very weak Weak, Local, Temporary

Very weak Average, Local, Temporary

Weak

Compensation; indemnification; work carried out outside farming season; Rehabilitation of area after competition of works; restoration of topsoil; reforestation; decompacting; revegetation; avoid passage through irrigated land; By-pass classified sites – inform the ministry concerned Use existing infrastructure to cross them; choose crossover points; protect banks; remove all waste; carry out surface drainage Control physical and chemical, bacterial, viral parameters; pesticide concentration, etc.; Apply labour legislation; set up correct worksite signals; site supervision; standardization of construction equipment; etc… Adjust construction equipment to fuel combustion conditions; Adjust construction equipment; work during working hours only;

None None Weak None None None None

Impact on physical environment Excavation, digging; earthwork; soil compaction (movement);

Average, Local, Temporary

Weak

Topsoil stripping and restoration at the end of work; management of quarries; levelling; revegetation; Ploughing after completion of work

Very weak

Operation phase

Nature of negative impacts

Impact assessment

intensity, extent, duration

importance

Recommended mitigation measures

Residual impact

Impacts on physical and human environments Soil erosion risks Air quality Noise pollution Risk of various accidents in facilities

Average, Local, Permanent

Average Weak, Local, Permanent

Weak Weak, Local, Permanent

Weak Serious, Short-term; Local

Serious

Appropriate maintenance of box culverts, road shoulders, construction of concrete ditches, pavement and revegetation Vehicle inspection Vehicle inspection Safety procedures; delimitation of traffic area

Weak Very weak Very weak Weak

ANNEX 14 Page - 6 - of 7

KINGDOM OF MOROCCO

RURAL ROADS PROGRAMME (NRRP2) Table 2: Supervision and monitoring programme

Supervision programme

Body in charge

Monitoring programme

Body in charge

Costs

Preparatory phase Land audit; Land to be bought – identification of rightful owners

Administration, Region, Province and Commune

Verification of proper indemnification

DRCR/DRE/DPE / Council

Special budget

Selection of construction sites; Opening up of access roads

Contractors and environmentalists

Conformity with set objectives and rationalization of operations

DRCR/DRE/DPE / Council

Not applicable

Participatory approach; Involvement of stakeholders

DRCR/DRE/DPE; Wilaya; Commune

Verification of advertisements relating to the project

DRCR/DRE/DPE / Councils

Not applicable

Site operation phase Delimitation of project right-of-way

Company environmentalist

Conformity with area of impact of works on the environment

DRCR/DRE/DPE / Councils

Not applicable

Transportation of various equipment and materials; storage

Company environmentalist

Traffic and road safety; State of ground

DRCR/DRE/DPE / Councils

Included in cost of work

Physical risk of accidents on construction sites and surrounding areas

Contractors Compliance with regulations on works and movement of construction equipment;

DRCR/DRE/DPE / Councils

Idem

Site operations (concrete production control; dust and gas emission control; liquid and solid effluent discharge)

Contractors Compliance with recommendations of environmental impact assessment

DRCR/DRE/DPE / Councils

Idem

Excavation; laying of pipes; laying of electrical transmission lines; construction of drainage structures

Contractors and their environmentalist Compliance with recommendations of environmental impact assessment

DRCR/DRE/DPE / Councils

Included in cost of work

Maintenance of vehicles and site machinery

Contractors and contract-holders

Conformity with recommendations and design standards

DRCR/DRE/DPE / Councils

Idem

Deployment of structures and equipment; electrical connection

Contractors and their environmentalist

Conformity with APD Conformity with environmental impact assessment

DRCR/DRE/DPE / Councils

Idem

ANNEX 14 Page - 7 - of 7

KINGDOM OF MOROCCO

RURAL ROADS PROGRAMME (NRRP2)

Supervision programme

Body in charge

Monitoring programme

Body in charge

Costs

Operation phase Compliance of equipment maintenance with design standards;

Network administrator; DRCR;

Compliance with construction requirements

DRCR/DRE/DPE / Councils

Operating budget

Physicality: impact on landscape; maintenance of pipes; drainage works; buildings; electrical transmission lines

Network administrator; DRCR/DRE/DPE ;

Integration of works into landscape and maintenance – beauty of buildings

DRCR/DRE/DPE / Councils

Operating budget

ANNEX 15

KINGDOM OF MOROCCO RURAL ROADS PROGRAMME (NRRP2)

Bank Group Ongoing Operations in Morocco (March 2007)

Directeur de la CFR : Manager of the CFR Secrétariat et Bureau d’Ordre : Secretariat and Mail Office Gestion du Système d’Information : Information System Management Gestion des Affaires Administratives et Générales :

Administrative and General Affairs Management

Département Programmes : Programmes Department Département Comptable et Financier : Accounts and Finance Department Service Programmes : Programmes Service Service Contrôle et Suivi des Marchés : Contracts Control and Monitoring service Service Financement : Financing Service Service Comptable : Accounting Service Bureau Programmation : Programming Office Bureau Marchés : Contracting Office Bureau Comptabilité Budgétaire : Accounting and Budget Office Bureau Comptabilité Générale : General Accounting Office Bureau Gestion de la Trésorerie : Cash Management Office

Name of project Approval date

Date of signature

Start-up date

Closing date

Amount approved in (UA million)

Amount cancelled (in UA million )

Amount not disbursed (in UA million)

Total disbursed (in UA million )

Net loan amount (in UA million )

% disbursed

Airport capacity improvement and extension project

18/04/01 06/01/02 18/09/02

31/12/06

66.46 0.00 31.20 35.26 66.46 53%

Total transport 66.46 0.00 31.20 35.26 66.46 53% Water sector adjustment programme

03/12/03 14/10/04 29/04/05

31/12/06

183.66 0.00 91.83 91.83 183.66 50%

Eighth AEPA project

24/11/04 07/02/05 24/11/05

31/12/10

56.80 0.00 44.75 12.05 56.80 21.21%

Total water & sanitation

240.46 0.00 136.58 103.88 240.46 43.20%

Electrical interconnection reinforcement project

13/11/02 06/05/03 04/11/03

31/12/07

68.34 0.00 8.54 59.79 68.34 87.48%

Construction of solar power station

02/03/05 29/08/05 07/08/06

31/12/10

116.56 0.00 116.56 0.00 116.56 0

Total energy 184.90 125.1 59.79 184.90 32.33 Quality basic education support

30/11/00 30/05/01 17/09/01

31/12/07

43.30 0.00 32.89 10.40 43.30 24%

Total education 43.30 0.00 32.89 10.40 43.30 24% Medical coverage support programme

12/12/02 25/04/03 20/08/03

31/12/06

93.96 0.00 46.98 46.98 93.96 50%

Total health 93.96 0.00 46.98 46.98 93.96 50% Grand total 629.08 0.00 372.75 256.31 629.08 40.74%

Annex

KINGDOM OF MOROCCO

NATIONAL RURAL ROADS PROGRAMME (PNRR2)

CORRIGENDUM

Title of Project: “RSECOND NATIONAL RURAL ROADS PROGRAMME (PNRR2)” in place of “NATIONAL URAL ROADS PROGRAMME (PNRR2)”.