Translated Document

AFRICAN DEVELOPMENT BANK

MOROCCO

RAILWAY INFRASTRUCTURE REINFORCEMENT PROJECT

APPRAISAL REPORT

OITC DEPARTMENT January 2016

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TABLE OF CONTENTS

I. STRATEGIC GUIDELINES AND RATIONALE OF THE PROJECT ……………………1

1.1. Key Development Constraints ...................................................................................................... 1 1.2. Project Linkage with Country Strategy and Objectives ............................................................... 1 1.3. Rationale for Bank Involvement .................................................................................................. 2 1.4. Coordination of Technical and Financial Partners ....................................................................... 2

II. PROJECT DESCRIPTION ………………………………………………………………3

2.1. Project Objectives and Components ............................................................................................. 3 2.2. Technical Solutions Adopted and Alternative Solutions Considered .......................................... 3 2.3. Type of Project ............................................................................................................................. 4 2.4. Project Cost Estimate and Financing Mechanisms ...................................................................... 4 2.5. Project Area and Beneficiaries ..................................................................................................... 5 2.6. Participatory Approach to Project Identification, Design and Implementation ........................... 6 2.7. Bank Group Experience and Lessons Reflected in Project Design .............................................. 6 2.8. Key Performance Indicators ......................................................................................................... 7

III. PROJECT FEASIBILITY ……………………………………………………………...7 3.1. Economic and Financial Performance .......................................................................................... 7 3.2. Environmental and Social Impact ................................................................................................ 8

IV. IMPLEMENTATION 11 4.1 Implementation Arrangements ................................................................................................... 11 4.2 Procurement Arrangements ........................................................................................................ 11 4.3 Financial Management and Disbursement Arrangements .......................................................... 12 4.4 Monitoring of Project Activities ................................................................................................. 13 4.5 Governance ................................................................................................................................. 14 4.6 Sustainability .............................................................................................................................. 14 4.7 Risk Management ....................................................................................................................... 15 4.8 Knowledge Development ........................................................................................................... 15

V. LEGAL INSTRUMENT 15 5.1. Legal Instrument ........................................................................................................................ 15 5.2. Conditions Associated with the Bank’s Intervention ................................................................. 15 5.2.1. Conditions Precedent to Loan Effectiveness .............................................................................. 15 5.2.2. Condition Precedent to First Loan Disbursement. ........................................................................ 16 5.2.3. Other Conditions ........................................................................................................................ 16 5.2.4. Commitments ............................................................................................................................. 16

VI. RECOMMENDATION………………………………………………………………………16

Annex I: Comparative Socio-Economic Indicators of Morocco ……………………………I

Annex II: Table of Bank Operations in Morocco as of 14 Sept. 2015……………………...……..II

Annex III: Main related Projects Financed by the Bank and other Development Partners of

Morocco over the last ten years………………………………………………..………..III

Annex IV: Map of the Project Area……………………………………………………………..….IV

LIST OF TABLES AND GRAPHS

Table 2.1: Project Components ................................................................................................... 3

Table 2.2: Alternative Solutions Considered and Reasons for Rejection ................................... 4

Table 2.3: Summary of Estimated Costs per Component for the Whole Project ....................... 4

Table 2.4: Summary of Costs per Expenditure Category for the Whole Project ....................... 4

Table 2.5: Summary of Project Costs by Financing Source ....................................................... 5

Table 2.6: Estimated Project Costs by Component and by Financing Source (in USD million)5

Table 2.7: Expenditure Schedule by Financing

Source…………………………………………………………………………..……5

Table 4.1: Project Monitoring and Supervision ........................................................................ 14

Currency Equivalents

October 2015

UA 1 = 1.404 USD

UA 1 = 13.669 MAD USD 1 = 9.738 MAD

Fiscal Year

1st January – 31st December

Weights and Measures

1 metric ton = 2204 pounds

1 metre (m) = 3.28 feet

1 millimetre (mm) = 0.03937 inch

1 kilometre (km) = 0.62 mile

1 hectare (ha) = 2.471 acres

i

ACRONYMS AND ABBREVIATIONS

ADB African Development Bank

ADS Agency for Social Development

AFD French Development Agency

AFESD Arab Fund for Economic and Social Development

APA Advanced Procurement Action

CE-BSG Centre of Excellence for Gender-Sensitive Budgeting

CGEM General Confederation of Enterprises in Morocco

CSP Country Strategy Paper

CWR Continuous Welded Rail

DEPP Directorate for Public Enterprises and Privatization

DFCG Directorate for Finance and Management Control

DPD Detailed Preliminary Design

EAP Environmental Action Plan

EBRD European Bank for Reconstruction and Development

EIB European Investment Bank

EMS Environmental Management System

ESIA Environmental and Social Impact Assessment

ESMP Environmental and Social Management Plan

EU European Union

GSB Gender-Sensitive Budgeting

GWh Gigawatt/hour

HCP High Commissioner for Planning

HSL High-speed line

IGF General Inspectorate of Finance

INDH National Human Development Initiative

inhab Inhabitants

IRR Internal rate of return

JICA Japanese International Cooperation Agency

KFAED Kuwait Fund for Arab Economic Development

LC Local currency

LTS Long-term strategy (of the Bank)

MAD Moroccan Dirham

MEF Ministry of the Economy and Finance

METL Ministry of Equipment, Transport and Logistics

Mn Million

NGO Non-governmental organization

NPV Net present value

NTCD Net of taxes and customs duties

ONDH Human Development Observatory

PA Project area

PAP Project Affected Persons

PEE Public Establishments and Enterprises

PHSE Hygiene and Health Plan

PIC Infrastructure and Traffic Pole

ii

PROJECT INFORMATION SHEET

PSSE Environmental Surveillance and Monitoring Framework

RP Resettlement plan

SDF Saudi Development Fund

UA Unit of Account

UFA Usable Farm Area

UIC International Union of Railways

USD United States dollar

WB World Bank

Client Information

Borrowers: NATIONAL RAILWAYS AUTHORITY (ONCF)

Project Title: RAILWAY INFRASTRUCTURE REINFORCEMENT PROJECT

Project Area: REGIONS OF CASABLANCA-SETTAT AND MARRAKECH-SAFI

Executing Agencies: NATIONAL RAILWAYS AUTHORITY (ONCF)

1. Financing Plan

Source Amount (MAD

million)

Amount (UA

million)

Amount (USD

million)

Instrument

ONCF 2,831.84 207.17 290.81 Own resources

AfDB 1093.49 80.00 112.30 Project loan

TOTAL 3,925.33 287.17 403.11

2. Key Financial Information of the AfDB

Loan currency Dollar (USD)

Interest Type Floating base rate with a free fixing option

Base rate (floating) 6-month LIBOR

Contractual margin 0.60% (60 basis points (bp))

Funding margin The Bank’s cost of borrowing relative to six-month EURIBOR. This margin

is reviewed every 1st January and 1

st July

Service commission Not applicable

Administrative costs Not applicable

Other Fees None

Tenor 20 years

Grace period 5 years

3. Duration – Main stages (projected)

Activities (Month, Year)

Approval of the concept note 5 September 2015

Project approval 27 January 2016

Date of signature of loan and guarantee agreements 3 April 2016

Effectiveness 25 May 2016

Completion date 31 December 2019

Date of last disbursement on the loan 31 December 2020

Last reimbursement of loan 15 June 2036

iii

EXECUTIVE SUMMARY

General Overview of Project

1. The Tangier-Marrakech railway line covered by this project, comprises the Kenitra-Rabat-

Casablanca and the Casablanca-Settat-Marrakech lines, linking the South to both the North and the East

of the country. Given its strategic position within the national railway network, the Kenitra-Casablanca

line is a vital link between the economic centres of Tangier (North), Oriental and Casablanca (Centre).

Considering that it accounts for almost 50% of freight (excluding phosphate) traffic and 70% of passenger

traffic, this line plays a significant commercial role in the activities of the National Railways Authority

(ONCF). Meanwhile, the Casablanca-Marrakech line links Casablanca, the national economic

megalopolis, to Marrakech, the tourism capital of the Kingdom.

2. Providing this railway line with infrastructure that is tailored to market needs in competitiveness

terms (travel time and quality of service) was planned in several phases. The infrastructure currently

under construction has a physical execution rate of 75%. The project comprises works on: (i) the Kenitra-

Rabat-Casablanca line, comprising the reinforcement of existing tracks, including the construction of a

third 148-km railroad for freight between Zenata and Kenitra; and (ii) the Casablanca-Marrakech line,

which involves the upgrading and partial doubling of 38 km of the track between Settat and Marrakech.

The phase targeted by the project relates to: (i) complete doubling of 141 km of the track between Settat

and Marrakech; and (ii) the construction of 5 (five) modern railway stations between Tangiers and

Casablanca. Its total estimated cost, net of taxes and customs duties, is MAD 3.925 billion or USD 403.11

million. It will be co-financed by ONCF for USD 290.81 million and the Bank for a loan of USD 112.3

million. The relevant activities will be implemented between 2015 and 2020.

3. Apart from the benefits related to increased railway traffic between Casablanca and Marrakech,

the project will generally help to enhance the logistical competitiveness of the national economy. Its

direct beneficiaries are users of railway transport and project area communities. This project is expected

to: (i) ease the traffic between Casablanca and Marrakech; (ii) increase the operational efficiency of the

Casablanca-Marrakech line and expand the accommodation capacity of the Tangiers and Casablanca

railway stations; and (iii) improve the living standards and socioeconomic conditions of project area

communities.

Needs Assessment

4. The Casablanca-Marrakech line has witnessed a sharp increase in transport demand, driven by

the socioeconomic, cultural and tourism potential of both cities and the actions executed by ONCF to

implement the commercial strategy. For instance, passenger traffic has increased by 20% in five years,

rising from 3.82 million in 2010 to 4.6 million in 2014, representing an average yearly increase of 4.75%.

Meanwhile, freight traffic surged from 142,000 tons in 2013 to 207,000 tons in 2014, representing an

increase of approximately 47%. Passenger flows are projected to rise to 4.78 million by end-2015 and

7.41 million by 2020. This growth is expected to continue at an average annual rate of 4% during the next

decade. Goods traffic is expected to rise to 217,000 tons by end-2015 and 504,000 tons by 2020, and then

grow by a steady average annual rate of 5% subsequently.

5. The Settat-Marrakech segment currently has constraining characteristics, in particular a single

141 km track, partially doubled over 38 km with a low curve radius (300 metres) in certain places. If no

action is taken, the outcome would be: (i) saturation of the line with 28 trains per day; (ii) delays and

cumulative delays for passengers; (iii) difficulties in managing time slots reserved for track maintenance;

and (iv) precarious safety along the track. The minimum capacity required to meet the demand for

passenger traffic alone is estimated at 36 trains per day by 2020. Consequently, there is need to

programme the operations to eliminate the constraints along this line in order to cope with the projected

transport demand.

iv

Value-added of the Bank

6. In Morocco, the Bank financed many operations in all sectors, and especially in several transport

sub-sectors. In the railway sub-sector in particular, the Bank financed three projects, namely: the transport

sector rehabilitation project which had a rail component (1993), the railroad rehabilitation project (1998),

and the project to increase the capacity of the Tangier-Marrakech railway line (2010) which is currently

under construction. Execution of the first two projects helped to expand the operational capacity of the

ONCF, thereby improving the quality of services offered and boosting its revenue. With the relevant

gains from these projects and reorganisation of ONCF structures into different business poles, the ONCF

is now equipped to satisfy customer needs. The relevant operational experience and technical expertise in

implementing such projects have been factored into the design of this project and will also be considered

during the implementation phase.

Knowledge Management

7. The main potential lessons from this project will come from the monitoring mechanism that will

be established to document its outcomes and impact. That mechanism will comprise: (i) monitoring of the

various project activities executed by ONCF; (ii) impact assessment at project completion by

beneficiaries, including rail transport users, through periodic opinion polls commissioned by the ONCF;

and (iii) analysis of the level of attainment of targeted development objectives, to be executed by High

Commission for Planning (HCP) and the Human Development Observatory (ONDH). The reports

produced for this purpose should be widely disseminated to various project stakeholders.

v

RESULTS-BASED LOGICAL FRAMEWORK OF THE PROJECT Country and Project Title: Morocco - Railway Infrastructure Reinforcement Project.

Project goal: To enhance the competitiveness of the Casablanca-Marrakech railroad as well as the living conditions of project area communities.

RESULTS CHAIN

PERFORMANCE INDICATORS MEANS OF

VERIFICATION

RISKS/ MITIGATIVE MEASURES Indicators

(including ISCs) Baseline Situation Target

IMP

AC

T Help to increase the volume of

railway transport between

Casablanca and Marrakech

Number of passengers

transported

Tonnage of freight transported

In 2014:

4.6 million passengers

207,000 tons

In 2020:

7.41 million passengers, with

55% being women; 504,000 tons

Sources:

Reports of

MICIEN/METL/HCP/ONDH

Risks

Competition with the pipeline for the transport of phosphate.

Mitigative Measures

The new passenger and freight strategies of the ONCF focus on the

diversification of activities, including freight (oil, cereals, materials,

etc.). Furthermore, all the product types from the OCP cannot be transported by pipeline.

OU

TCO

MES

1. Easing of traffic between

Casablanca and Marrakech;

2. Operational efficiency is

improved on the lines concerned;

3. Living conditions of PA

communities improved;

1.1. Number of passenger trains

1.2. Number of freight trains

2.1. Time gain

3.1. Number of jobs created

during the works

3.2. % of PA women with less

than MAD 1000 per month

In 2015:

1.1. 24 trains/day

1.2. 5 trains/day

2.1. 3h 37 min.

3.1. 0

3.2. 20%

In 2020:

1.1. 36 trains/day

1.2. 12 trains/day

2.1. 2 h 59 mn.

3.1. 75,000 man-days of work (including 22% for

women)

3.2. 15%

Sources:

Reports from ONCF/HCP/ONDH

OU

TPU

TS

1. Construction of rail infrastructure; 1.1 Railroad constructed and

equipped;

1.2 Railway station constructed

and equipped; 1.3 Repair workshop

constructed and equipped;

In 2015:

In 2020:

1.1. 141 km

1.2. 10,000 m2

1.3. 5,000 m2

Sources: Consultancy offices /

ONCF

Risks

(i) Delays in raising counterpart resources;

(ii) Increase in construction costs;

(iii) Procurement bottlenecks/delays that result in late commencement of works;

(iv) Environmental risk.

Mitigative Measures

(i) The ONCF has sufficient self-financing capacity. Furthermore,

the ONCF can also resort to bond issues;

(i) Estimates based on current unit prices on the market, taking into account physical and financial contingencies;

(ii) Sound knowledge of the Bank’s procurement rules and

procedures and recourse to APAs;

(iii) Close monitoring of the implementation of the environmental

and social management plan.

2. Related Works; 2.1. Number of pedestrian

overpasses constructed

2.2. Number of vehicular overpasses constructed

2.3. Number of automatic gates

constructed; 2.4. Protective fencing

constructed 2.5. Number of gender initiatives

implemented.

2.1. 5

2.2. 40

2.3. 3

2.4. 150 km

2.5. 25

3. Project management and

coordination services

3.1. Number of progress

monitoring and outcome

assessment reports 3.2. Number of annual project

account audit reports

3.1. 8

3.2. 3

KEY

AC

TIV

ITIE

S COMPONENTS RESOURCES (IN USD MILLION)

1. Construction of rail infrastructure;

2. Related Works;

3. Project management

4. and coordination services

1. Construction of rail infrastructure; 344.70

2. Related Works: 45.06

3. Procurement of land and vacation of the project right-of-way: 10.27

4. Project management and coordination services: 3.08

TOTAL RESOURCES: 403.11

vi

INDICATIVE PROJECT IMPLEMENTATION SCHEDULE

Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec Jan Feb M ar Apr M ay Jun Jul Aug Sept Oct Nov Dec Jan Feb M ar Apr M ay Jun Jul Aug Sept Oct Nov Dec Jan Feb M ar Apr M ay Jun Jul Aug Sept Oct Nov Dec Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec

1. Project approval and loan effectiveness

1.1. Project approval by the Board of Directors

1.2. Signature of loan and guarantee agreements

1.3. Effectiveness of the loan agreements

2. Construction of rail infrastructure

2.1. Complete doubling of the Settat-Marrakech track

2.1.1. Construction works on infrastructure and bridge structures

between Imfout and Skhours

2.1.2.Rehabilitation works on bridge structures between Casablanca

and Marrakech

2.1.3. Laying of the track between Settat and Marrakech

2.1.4. Laying of the catenary between Settat and Marrakech

2.1.5. Refurbishment of stations between Settat and Marrakech.

2.1.6. Construction and equipment of sub-stations

2.1.7. Supply of railway engines for doubling of the track

2.2. Refurbishment of the railway stations and the Casablanca triangle

2.2.1.Refurbishment of the railway stations and the Casablanca

triangle

2.2.2. Refurbishment of the Casablanca passenger station

2.3. Construction of stations

2.3.1. Construction of the Rabat Agdal station

2.3.2. Construction of the Kénitra station

2.3.3. Construction of the Casablanca passenger station

2.3.4. Construction of the Rabat city station

2.3.5. Construction of the Tangier station

3. Ancillary works

3.1. Safety at track crossings

3.1.1. Construction of engineering structures

3.2. Construction of workshops for roll ing stock

3.2.1.Construction of a workshop for roll ing stock at the Marrakech

station

3.2.2.Construction of a workshop for roll ing stock at the Kénitra

station

3.2.3.Construction of a workshop for roll ing stock at the Casa Voy

station

Activities2018 2019 20202015 2016 2017

1

REPORT AND RECOMMENDATIONS FROM BANK GROUP MANAGEMENT TO THE BOARD OF

DIRECTORS CONCERNING AN ADB LOAN TO THE NATIONAL RAILWAYS AUTHORITY OF

MOROCCO TO FINANCE THE RAIL INFRASTRUCTURE REINFORCEMENT PROJECT

Management submits this report and recommendations on a proposal to award an AfDB loan of USD

112.3 million to the National Railways Authority to finance the railway infrastructure reinforcement

project.

I. STRATEGIC GUIDELINES AND RATIONALE OF THE PROJECT

1.1. Key Development Challenges

1.1.1 Morocco recorded robust economic performance with an expected growth rate of 5% in 2015,

despite a difficult international and regional context. This growth, however, is mainly driven by the

agricultural sector and does not create enough jobs for newcomers into the job market. Consequently,

over the last 10 years, the country has embarked on transforming its economic model through the

Emergence Plan (2006) and the Industrial Strategy (2014). This plan and strategy defined a general

development framework, comprising sectors in which Morocco has a competitive advantage: offshoring,

automobile, aeronautics, electronics, agro-food and textiles-leather. To support the implementation of this

strategy, substantial quantitative and qualitative efforts were made to develop and modernize transport

infrastructure.

1.1.2 However, the growth diagnosis conducted by the Bank in 2014 revealed the need to improve

infrastructure access in rural inaccessible areas. In particular, it revealed that the railway network is

inequitably distributed on the national territory. Furthermore, an effort has to be made to develop

logistical poles that facilitate the higher volume of flows, cut goods transport costs and create

employment within the country. Similarly, the transportation of goods by rail is relatively poorly

diversified due to the lack of logistical connections. It follows therefore that the railway network presents

enormous opportunities for economic and social development. The railway line covered by the current

project links Casablanca to Marrakech, among others. Transport demand has skyrocketed on this line,

driven by the steady socioeconomic, cultural and touristic dynamism of these cities. This trend is also

driven by the actions executed under the trade strategy implemented by the National Railways Authority

(ONCF).

1.1.3 For instance, passenger traffic has increased by 20% in five years, rising from 3.82 million in

2010 to 4.6 million in 2014, or an average yearly increase of 4.75%. Meanwhile, freight traffic surged

from 142,000 in 2013 to 207,000 tons in 2014, representing an increase of approximately 46%. Passenger

flows are projected to rise to 4.78 million by end-2015 and 7.41 million by 2020. This growth should

continue at an average annual rate of 4% in the next decade. Goods traffic should rise to 217,000 tons by

end-2015 and 504,000 tons by 2020, and grow by a steady average annual rate of 5% subsequently. Given

the current situation, especially on the Settat-Marrakech segment which has a single track over 141 km,

that is partially doubled over 38 km with a low curve radius (300 m) in places, the maximum transport

volume along the Casablanca-Marrakech line is only 28 trains/day. The minimum capacity required to

meet the demand for passenger traffic alone is estimated at 36 trains/day by 2020. There is need therefore

to eliminate the constraints along this line in order to cope with the projected transport demand. Besides,

according to (i) various satisfaction surveys commissioned by ONCF and targeting railway transport

users, and (ii) capacity analysis studies, there is an urgent need to improve on the quality of services and

expand the intake capacity of the railway stations currently in operation.

1.2. Project Linkage with Country Strategy and Objectives

This project is consistent with the priorities outlined in Morocco's economic and social development

programme for 2012-2016. It seeks to address the competitiveness challenge and preserve Morocco's

macroeconomic viability with a view to generating sustained and inclusive growth that can sustainably

improve the living conditions of the people.

2

The project is also consistent with the Strategy of the Ministry of Equipment, Transport and Logistics

(METL) for 2012-2016, especially its Pillar I on “Transport Infrastructure Development”. This strategy

seeks to boost the harmonious development of transport infrastructure in accordance with international

standards, in a manner that enhances the Kingdom's connectivity to major international centres that

import and export goods and raw materials and, consequently, the competitiveness of the entire national

territory. This will be done by constructing an efficient, profitable and durable multimodal transport

system that facilitates passenger and goods mobility.

1.3. Rationale for Bank Involvement

The Bank's involvement in this project is justified by its consistency with Pillar II (“Support to green

infrastructure development”) of the AfDB’s 2012-2016 Country Strategy Paper (CSP) for Morocco.

Indeed, it mirrors the Bank's determination to focus its operations, between 2015 and 2016, on aspects

that support Morocco in the effective transformation of its economic model. Such aspects are the

promotion of value chains especially in the export sector, improvement of the business environment,

connection of businesses to markets through export zones, and hinterland development to boost the

competitiveness of the economy and open up access to the various regions. Furthermore, the project is

consistent with the Bank's 2013-2022 Ten-Year Strategy which gives priority to infrastructure and private

sector development. Moreover, this project is fully consistent with the Bank's new guidelines on transport

infrastructure which recommend greater diversification of its portfolio and especially greater involvement

in the railway sub-sector.

1.4. Coordination of Technical and Financial Partners

1.4.1 The Technical and Financial Partners (TFPs) present in Morocco collaborate regularly through

consultations at thematic meetings and sectoral working groups. Regular consultations among TFPs

guarantee the synergy and complementarity of their various operations. Since it was opened in 2006, the

AfDB field office in Morocco has played a key role in consolidating dialogue with the Government and

with other development partners. To enhance the coordination of operations among TFPs, the

Government established the Geographical Information System (GIS) which facilitates real-time

monitoring of various operations by region, sector and invested amount. The GIS is managed by a

steering committee composed of the Ministry of the Economy and Finance (MEF) and focal points of

TFPs. Morocco's five leading TFPs, in addition to the Bank, are France, Spain, World Bank (WB),

European Union (EU) and the European Investment Bank (EIB) with respective commitment levels

ranging from EUR 1.9 to 2.2 billion. Aggregate TFP commitments amount to almost MAD 140 billion, or

over EUR 12 billion.

1.4.2 Several donors operate in Morocco’s transport sector. Apart from the Bank, there are the EIB, the

Islamic Development Bank (IsDB), WB, EBRD, the Arab Fund for Economic and Social Development

(AFESD), the French Development Agency (AFD), the Japanese International Cooperation Agency (JICA), the

Kuwait Fund for Arab Economic Development (KFAED), the Saudi Development Fund (SDF), the Abu Dhabi

Development Fund, Portugal, Italy, Spain and private French banks. Aid coordination is generally the

responsibility of the Ministry of the Economy and Finance (MEF). More specifically, transport sector

coordination is conducted among the main financial partners through a consultative mechanism that includes

periodic meetings between the Bank and development partners represented in the country. Specific meetings

between partners are also organized when necessary and during missions of various partners to share information

on the sector and on the status of various projects and programmes. These meetings provided the Bank with an

opportunity to coordinate and harmonize its sector operations with those of other partners during the preparation

and appraisal missions of this project. Furthermore, since 2013, METL has undertaken to centralize the

coordination of various partner operations within the cooperation unit. The Bank team held consultative

meetings with the main TFPs, including EBRD, AFD and JICA. The working sessions aroused the interest of

these partners in the project.

3

II. PROJECT DESCRIPTION

2.1. Project Objectives and Components

2.1.1 This project is executed as part of the National Transport Sector Development Strategy for 2012-

2016. Specifically, it entails continuing with the upgrade and modernization of infrastructure and services

in order to boost the logistical competitiveness of the national economy by cutting transport costs in

domestic and external trade. The sector objective of the project is to increase the railway transport volume

between Casablanca and Marrakech and enhance the accommodation capacity and quality of service in

the railway stations between Tangiers and Casablanca, so as to address goods and passenger transport

needs by 2020. Specifically, it seeks to: (i) facilitate railway traffic along the Casablanca-Marrakech line;

(ii) enhance the operational efficiency and intake capacity of the railway stations along these segments;

and (iii) improve the living conditions of project area (PA) communities.

2.1.2 The project comprises the following three components: (i) construction of railway infrastructure;

(ii) related infrastructure; and (iii) project management.

Table 2.1 - Project Components

No. Name of Component Cost Detailed Description of Sub-components

A

CONSTRUCTION OF

RAILWAY

INFRASTRUCTURE

USD

344.7

million

A.1. Works: (i) construction of the sub-grade and engineering structures

between Imfout and Skhours (41 km); (ii) laying of the track, catenary,

and sub-station equipment between Settat and Marrakech (141 km); (iii)

refurbishment of the railway stations along the Settat-Skhours and

Benguerir-Sidi Ghanem lines; (iv) construction of railway stations

between Tangiers and Casablanca; and (v) implementation of

environmental protection measures;

A.2. Works Control and Supervision

B RELATED WORKS 45.06

USD

million

B.1. Consolidation of Gender Achievements in the PA : (i) income-

generating activities, multipurpose centres, women's homes (delivery centres for

women), youth support and student residential centres, day-care centres

and preschool infrastructure in poor areas (INDH actions); (ii)

development of local products, individual business platform, capacity-

building through grassroots guidance and the socioeconomic integration

of the youth (ADS actions de l’ADS);

B.2. Safety at Road Crossings: Construction of (i) railroad pedestrian

overpasses; (ii) vehicular overpasses; (iii) protective fencing; (iv)

automatic gates at level crossings; and (v) workshops for rolling stock.

B.3. Works Control and Supervision

C VACATION OF THE

PROJECT RIGHT-OF-

WAY

10.27

USD

million

C.1. Land acquisition;

C.2. Vacation of the project right-of-way

D PROJECT

MANAGEMENT

3.08

USD

million

D.1. Project monitoring and Coordination

D.2. Audit of project accounts

2.2. Technical Solutions Adopted and Alternative Solutions Considered

2.2.1 In 2008, ONCF initiated a study on the capacity of its Tangiers-Casablanca-Settat-Marrakech

railway network, with a view to executing development works on the existing network and addressing

freight and passenger transport concerns in 2015 and 2020. Several scenarios were analysed. Of the three

scenarios (A, B and C) studied, Scenario C, which includes this project, was finally selected for

investment cost optimization reasons relating to rail services and consistent with the strategy adopted by

ONCF to execute its priority development programme under the programme contract (2010-2015).

2.2.2 The alternative chosen for 2020 is the complete doubling of the track between Settat and

Marrakech and a speed increase, which entails making a few rectifications in the curve radius and raising

the superelevations. This involves excavation works to develop a platform over 41 km and a lateral

expansion of close to 4 m on average. Such expansion could go up to 15 m over a continuous segment of

6 km, in the areas where the curve radius has to be rectified. The works will be executed within the

alignment of the current track and will include the extension of hydraulic structures and, in certain places,

4

the expansion of their section. There are also plans to double the bridge structures. Protection of the

earthworks will require anti-contamination geotextiles to prevent the growth of mould and invasive

weeds. The track body will consist of a ballast bed that is 45 cm thick that would ballast the track itself.

The track will consist of a UIC60 continuous welded rail (CWR), supported and stabilized by concrete bi-

block sleepers.

Table 2.2 - Alternative Solutions Considered and Reasons for Rejection

Scenario Brief description

Reason for rejection By 2015 By 2020

Scenario A Settat-Marrakesh

Partial doubling

High-Speed Line (HSL)

between Settat and Marrakech

High cost for the 2015

and 2020 time horizons

Scenario B Settat-Marrakesh

Partial doubling

Speed increase between Casa

and Rabat

Additional speed increase

between Settat and Fès

HSL between Settat and

Marrakesh

High cost for the 2015

and 2020 time horizons

2.3. Type of Project

The project is an investment operation. An AfDB loan is the financing instrument deemed to be the most

adapted to the Bank's involvement in this operation.

2.4. Project Cost Estimate and Financing Mechanisms

2.4.1. The total project cost, net of taxes and customs duties (NTCD), is MAD 3,925.23 billion or USD

403.11 million. The provision for physical contingencies is 7% of the total base cost, while the provision

for price increase is 4% of the total base cost plus physical contingencies. This cost was determined based

on the final draft study (FDS) conducted in September 2014 and recent similar contracts. The summary of

estimated costs by project component is presented in the table below:

Table 2.3: Summary of estimated costs per component for the whole project

COMPONENTS MAD million USD million UA million

F.E. L.C. Total F.E. L.C. Total F.E. L.C. Total

1. Construction of rail

infrastructure

682.88 2,333.08 3,015.96 70.13 239.60 309.72 49.96 170.68 220.64

2. Ancillary works 299.65 94.59 394.25 30.77 9.71 40.49 21.92 6.92 28.84

3. Vacation of the project

right-of-way

- 89.85 89.85 - 9.23 9.23 - 6.57 6.57

4. Project management

and monitoring

- 26.96 26.96 - 2.77 2.77 - 1.97 1.97

Baseline cost 982.54 2,544.39 3,527.02 100.90 261.31 362.21 71.88 186.15 258.03

Physical contingencies 68.78 178.11 246.89 7.06 18.29 25.35 5.03 13.03 18.06

Financial contingencies 42.18 109.24 151.42 4.34 11.22 15.55 3.09 7.99 11.08

Total Cost NTCD 1,093.49 2,831.84 3,925.33 112.30 290.81 403.11 80.00 207.17 287.17

2.4.2. The summary of estimated costs by project category is presented in Table 2.4 below:

Table 2.4: Summary of costs per expenditure category for the whole project

EXPENDITURE CATEGORIES MAD million USD million

F.E. L.C. Total F.E. L.C. Total

1. Works 880.40 2,262.35 3,142.75 90.41 232.33 322.74

2. Goods 89.85 192.29 282.14 9.23 19.75 28.97

3. Services - 89.85 89.85 - 9.23 9.23

4. Miscellaneous 12.28 - 12.28 1 ?26 - 1.26

Baseline cost 982.54 2,544.48 3,527.02 100.90 261.31 362.21

Physical contingencies 68.78 178.11 246.89 7.06 18.29 25.35

Financial contingencies 42.18 109.24 151.42 4.33 11.22 15.55

Total Cost NTCD 1,093.49 2,831.84 3,925.33 112.30 290.81 403.11

5

2.4.3. The project will be financed in parallel and in accordance with the projected schedule below by

the ONCF, using own resources amounting to MAD 2,831,840,000, or 72.14% of the total project cost

NTCD; and by the Bank, through an AfDB window loan of EUR 112.3 million, or 27.86% of the total

project cost. The Bank's contribution will cover approximately 23% of the component on "railway

infrastructure construction" and approximately 76% of the related "related infrastructure” component.

Table 2.5: Summary of project costs by financing source

Financing

Source

MAD million USD million UA million Percentage

F.E. L.C. Total F.E. L.C. Total F.E. L.C. Total

ONCF - 2,831.84 2,831.84 - 290.81 290.81 - 207.17 207.17 72.14%

AfDB 1093.49 - 1093.49 112.30 - 112.30 80.00 - 80.00 27.86%

Total 1,093.49 2,831.84 3,925.33 112.30 290.81 403.11 80.00 207.17 287.17 100.00%

Table 2.6: Estimated project costs by component and by financing source (in USD million)

Components ONCF AfDB TOTAL

1 Construction of rail

infrastructure 239.60 70.13 309.72

2 Ancillary works 9.71 30.77 40.49

3 Vacation of the project right-of-

way 9.23 - 9.23

3 Project management and

monitoring 2.77 - 2.77

Total base costs 261.31 100.90 362.21

Physical contingencies 18.29 7.06 25.35

Financial contingencies 11.22 4.33 15.55

Total Cost NTCD 290.81 112.30 403.11

2.4.4. The expenditure schedule (in EUR million) by financing source is presented in the table below:

Table 2.7: Expenditure schedule by financing source (in USD million)

SOURCE 2015 2016 2017 2018 2019 2020 2021 Total

ONCF 4.98 25.76 60.78 64.07 68.07 40.99 15.89 290.81

AfDB - 37.68 56.18 17.83 0.62 - - 112.30

Total Cost

NTCD 4.98 63.44 116.96 81.90 68.68 40.99 145189 403.11

% of total cost 1.27% 16.15% 29.77% 20.85% 17.48% 10.43% 4.04% 100.00%

2.5. Project Area and Beneficiaries

2.5.1 The direct project area (PA) covers the regions of Casablanca-Settat and Marrakech-Safi, and has

an estimated population of over 8.6 million inhabitants, or over 28% of the national population. It

includes the provinces of Settat, Kelaa des Seraghna and Marrakech. The Settat-Marrakesh railway study

area covers the above territories and their resident population of 1,286,000 inhabitants, or 15% of the

population in the three PA regions.

2.5.2 The economic activity in the Casablanca-Settat region is dominated by the primary sector

(agriculture and stockbreeding) which employs approximately 50% of the labour force. Hence,

agriculture is crucial to the promotion and development of the region's economic activity. Consequently,

considering that it has a usable farm area (UFA) of 60% of the total regional surface area, the region is

essentially geared towards agriculture. It is one of the most fertile regions in the country. With regard to

stockbreeding, the region has approximately 1.9 million sheep, representing 12.3% of the national sheep

population in 2007. It is home to approximately 389 industrial establishments, or 5% of the industrial

units in the country. The industrial sector permanently employs 21,000 persons and accounts for 5.2% of

the national output. In productivity terms, the leading sector is the agro-food industry with an estimated

output of MAD 4 billion.

6

2.5.3 The Marrakech-Safi region is predominantly rural and reliant on agriculture for the development

of its economic fabric. The UFA is 1,554,500 hectares, or 17.3% of the national UFA. The main product

of the region remains cereals with almost 2.2 million quintals. Moreover, the region’s citrus output is

65,300 tons, or 5.1% of the national output. It has close to 475 industrial establishments, or 6.1% of the

industrial units in the country. The industrial sector permanently employs over 18,200 persons and

generates a turnover of MAD 6.5 billion. The agro-food sector generates the highest output with a little

over MAD 3.5 billion, followed by the chemical and para-chemical industry, and the textiles and leather

industry.

2.6. Participatory Approach to Project Identification, Design and Implementation

2.6.1 It should be recalled that this project is part of the ONCF programme contract for 2010-2015, which

itself derives from the government’s railway strategy in particular and the transport sector in general.

Consequently, the project was designed through a broad participatory approach involving elected

representatives, members of associations, the local community and railway users at various levels. After the

adoption of its programme contract, the ONCF organized information seminars on its investment

programme, as well as sensitization programmes targeting the civilian population, local elected

representatives, government officials, the General Confederation of Enterprises in Morocco (CGEM), NGOs

and associations.

2.6.2 The local population was involved in the selection of various railroad alignment options, in order to

reduce expropriations to a minimum and adopt measures and investments that mitigate noise pollution and

accidents. Satisfaction and traffic surveys targeting the current railroad users concerned also contributed to the

sizing and development of optimal options for ensuring the functionality of railway stations and enhancing the

level of service. The participation of various stakeholders to the project will be sought during project

implementation. Support to consolidate gender achievements will be provided through a participatory approach

as in the other projects/actions of the National Human Development Initiative (INDH)/Social Development

Agency (ADS).

2.7. Bank Group Experience and Lessons Reflected in Project Design

2.7.1 The last review of the Bank's portfolio in Morocco conducted in June 2014 revealed satisfactory

performance with a score of 2.56 out of 3. This performance has remained stable since 2012. The

portfolio is new with an average age of 3 years and contains no project at risk. The main constraints noted

in the execution of investment projects in Morocco relate to: (i) protracted procurement delays; (ii) poor

data quality at commencement for certain operations; (iii) occasional late commencement of certain

operations; and (iv) late submission of audit reports.

2.7.2 The Bank finances several similar operations on the continent. More specifically, it has already

supported three projects in Morocco’s railway sub-sector. These are: (i) rehabilitation of the transport

sector which included a railway component (1993); (ii) railway rehabilitation (1998); and (iii) expansion

of the capacity of the Tangier-Marrakesh railway line (2010). Implementation of the first two projects

contributed to developing the operational capacity of the ONCF, with an improvement in service quality

and an increase in revenue. With the relevant gains from these projects and reorganisation of the

structures of the ONCF into different business poles, the ONCF is now equipped to satisfy customer

needs.

2.7.3 Operational experience and technical expertise in implementing such projects were factored into

project design and will also be considered during the implementation phase. Hence, to mitigate the

consequences of long procurement delays, advance procurement actions (APA) were adopted to ensure

the rapid commencement of works upon approval of the project by the Bank. Furthermore, the ONCF has

sought the Bank's agreement to resort to retroactive financing. Similarly, the project appraisal mission

team was informed that a new external audit firm had been recruited by ONCF for 2016-2018, based on

the Bank’s standard terms of reference.

7

2.8. Key Performance Indicators

2.8.1 In accordance with the components and activities envisaged for this project, the main expected

achievements are: (i) 25 actions/initiatives to build on gender achievements; (ii) 141 km of railway

constructed and equipped; (iii) 10,000 m2

of stations constructed and equipped; (iv) 5000 m2 of rolling

stock repair shops constructed; (v) 5 pedestrian overpasses constructed; (vi) 40 vehicular overpasses

constructed; (vii) 3 automatic gates installed; and (viii) 150 km of protective fencing constructed.

2.8.2 To gauge the achievement status of the project’s development targets, the following outcome

indicators will be monitored: (i) volume of passenger traffic generated by gender; (ii) volume of freight

traffic generated; (iii) gains in travel and waiting times; (iv) number of jobs created by gender; (v) volume

of traffic generated per station; (vi) road safety gains; and (vii) user satisfaction rates per gender.

2.8.3 To ensure that these activities are implemented within the prescribed deadlines, performance

indicators, other than results and impact indicators, were set relative to the Bank's institutional

performance indicators. These include: (i) loan effectiveness deadlines; (ii) deadline for fulfilment of

conditions precedent to first disbursement; (iii) procurement deadlines; (iv) average project progress

status indicator (PI); and (v) changes in the disbursement rate in accordance with the expenditure

schedule. These indicators will be monitored during supervision missions and in the daily management of

the project.

III. PROJECT FEASIBILITY

3.1. Economic and Financial Performance

Economic Feasibility

3.1.1 The economic evaluation of the project is based on a cost-benefit differential analysis between

the "no project" and "project" situations. Its economic life span is 60 years for the infrastructure, 30 years

for the railway infrastructure and 50 years for the stations. In keeping with the recommendations of the

High Commission for Planning in Morocco, a discount rate of 5% was adopted for basic infrastructure

with long-term depreciation. In the baseline (i.e. no project) situation, the values considered for

"passenger” traffic are 24 trains per day, for a travel time of 2 h 45 min between Casablanca and

Marrakech. This yields a volume of 3.48 million passengers/year, at an annual growth rate of 4%. With

regard to "goods” traffic, the daily statistics are five trains per day, with a total freight volume of 207,000

tons/year in 2014, at an annual growth rate of 5%.

3.1.2 In the "project" situation, "passenger" traffic will increase to 36 trains per day, for a travel time

of 2 h 37 min and a waiting time reduced by 30 min. This yields total time savings of 38 minutes, in terms

of reduced travel and waiting times. "Passenger" traffic at commissioning will consist of the normal

traffic, traffic generated by the expanded transport capacity and the improved quality of customer services

(stations and trains) and diverted traffic resulting from the modal shift of passengers from road to rail

transport. Overall, it is estimated at 5.31 million passengers/year in 2018. "Passenger" activity will grow

gradually over a period of 4 years, before reaching cruise speed. The annual traffic growth rate will then

be 4%, corresponding to the variations observed over the last few fiscal years. With regard to goods

traffic, the volume that would be generated by the project is evaluated at 99,000 tons/year at

commissioning. It will grow progressively over a period of 4 years, after which it would reach saturation

point. The annual growth rate will then be 5%, in line with previous trends.

3.1.3 The overall economic investment costs factored into the analysis include: (i) direct investment

costs for infrastructure rehabilitation, procurement of railway equipment and the development of railway

stations; and (ii) indirect costs for infrastructure servicing and maintenance, as well as heavy mid-life

refurbishment of infrastructure and equipment. They were calculated based on financial costs, less taxes

and domestic transfers to the economy. The economic benefits expected by the community can be

subdivided into: (i) time gains for travellers; (ii) value-added in terms of direct, indirect and induced jobs

during infrastructure construction and operation; and (iii) externality gains from the modal shift of

8

"passenger" and "goods” traffic from road to rail transport (reduction of road accidents, reduction of air

pollution on the roads and motorways, reduced road maintenance costs, etc.).

3.1.4 The economic benefits of project implementation during the analysis period yield a 13.5%

economic rate of return (ERR) and a net present value (NPV) of MAD 9,397,900,000. A summary of the

economic analysis is provided in the table below. After conducting the sensitivity test (10% increase in

project costs and 10% reduction in benefits), the project´s ERR finally stands at 11.6%. Hence, the project

is economically profitable to the community and the investment is largely justified.

Economic Parameters Analysed Values Obtained

Economic rate of return (ERR) 13.5%

Net present value (NPV) in MAD million 9,397.9

ERR sensitivity test (+10% of costs and - 10% of benefits) 11.6%

Discount rate 5%

Residual value of the investment after 60 years 1,782.24

Financial Feasibility

3.1.5 The financial internal rate of return (FIRR) is the base indicator retained to assess the project’s

financial performance. This rate is determined based on investment costs (net of customs duties and

taxes), operating and maintenance costs and revenue generated by the project (passengers and goods

transport, lease of the commercial facilities in the stations). Assuming that the real discount rate is 8%

(rate based on the weighted average cost of capital as calculated by ONCF), the FIRR for the base case

scenario is 10.6% and the financial net present value (FNPV) is MAD 1,367 million. A sensitivity test

yielded a FIRR of 8.9%. The financial analysis results show that the project is financially justified.

3.1.6 Despite an investment rate that is unprecedented in the history of the ONCF and the resulting

debt level, the financial situation of the ONCF remains solid for the period under consideration. This

situation is characterized by: (i) substantial self-financing capacity; (ii) a working capital fund that

improves from year to year; (iii) an improving cash position despite a rapid disbursement rate driven by

investments and debt servicing; (iv) a comfortable debt ratio; and (v) a good debt service coverage ratio.

3.2. Environmental and Social Impact

Environment

3.2.1 The project was classified under Category I, in accordance with the Bank's Integrated Safeguards

System requirements. The Environmental and Social Impact Assessment (ESIA) and the accompanying

Environmental Surveillance and Monitoring Plan (ESMP), were drafted in March 2013. It was recognized

as environmentally compliant by Morocco’s Department of the Environment in March 2013. The ESMP

was published in January 2015 on the website of the ONCF and Morocco’s Department of the

Environment/Secretariat of State for the Environment and in August 2015 on the Bank’s website. All

works are carried out within the right-of-way of the existing line, which will simply be expanded without

any particular environmental and social consequences. The works phase will generate the following major

negative impacts: (i) prior compensation of 384 projects affected persons (PAPs), including for loss of

agricultural assets; (ii) displacement of various networks, infrastructure and fencing; (iii) disruption of

certain transverse access roads or motorways (level crossings, overpasses), as well as pedestrian paths;

(iv) disruption of rail traffic by works on the track; (v) gas and dust emissions; (vi) risk of accidental spillage

of pollutants; and (vii) risk of accidental discovery of archaeological or cultural vestiges.

3.2.2 In the operational phase, the main negative impacts will be generated by usage of built

infrastructure and installed equipment, especially the increased frequency of trains and higher traffic

speed. These relate to: (i) risk factors and possible accidents for local residents and road users especially

at level crossings; (ii) greater noise pollution in localities situated near the railway line.

9

3.2.3 The main positive impacts of the project are: (i) greater mobility of passengers between the

Grand Casablanca region and the tourist metropolis of Marrakech; (ii) improved services in the stations;

(iii) job creation; and (iv) facilitation of access to the socioeconomic centres between Grand Casablanca,

Ben Guerrir and Marrakech.

3.2.4 The main mitigative measures scheduled are: (i) the commitment of businesses to comply with

the ONCF Environmental Management System (EMS) certified as ISO 14004; (ii) provisions governing

work organization and environmental best practices, whose terms of reference and ESMP require the

development of Environmental Action Plans (EAPs) and Hygiene and Health Plans (HHPs). Each of them

will be supplemented by emergency intervention procedures. The mitigating measures for the works

phase, specified in the ESMP, will be included in the terms of reference for contractors and control

missions for implementation. The following technical measures were also factored into project design:

(iii) 33,000 m3 of ballast will be recovered and reutilized; (iv) 3,600 rails of 18 ml will be recovered and

reused for secondary lines and stations; (v) 150,000 m3 of excavated material will be reused for

backfilling. Details on measures taken during the construction and operational phases are provided in the

annexes presenting the ESMP.

3.2.5 The cost of the environmental and social measures outlined in the ESMP shall be included in the

total cost of works. It amounts to MAD 31.52 million, or 1.6% of the net project cost (excluding chance

factors and physical contingencies). Costs relating to surveillance and environmental monitoring activities

shall be borne by the monitoring unit (MU) attached to the ONCF project supervision structure. They

represent a net amount of MAD 0.7 million. Monitoring of the execution of project components and

implementation of the ESMP shall be ensured by the ONCF through its project supervision department.

That department comprises a project impact surveillance and monitoring unit (MU).

Climate Change

3.2.6 Despite the average sensitivity of the region traversed by the railway (heavier rainfall, longer

droughts and higher temperatures), the nature of the railway infrastructure and the specific geometry of

the railway alignment makes it possible to avoid the effects of these changes. The raised railroad bed is

adequately drained. Hence, the continuous welded rail (CWR) makes it possible to safely resist

temperatures of almost 85°C and the new suspended catenary absorbs both winds and dilations caused by

high temperatures. Curve rectification zones will have their embankments stabilized over a stretch of 70

metres. Moreover, the envisaged infrastructure will result in a modal shift from road to railway transport

for a significant share of current and future transport demand between Grand Casablanca and Marrakech.

Hence, the project will contribute to the reduction of emissions, with 6.5 million tons of carbon dioxide

equivalents of greenhouse gases (GHGs) avoided per year. This result should be considered for the entire

life of the infrastructure and compared to the "no project" situation which entails continuing to use the

road network to transport goods and passengers. This reduction of emissions is made possible by the

annual generation of almost 240 GWh of energy by two wind farms (emission-free renewable energy), for

the operation of the ONCF electrical traction network.

Gender and Vulnerable Persons

3.2.7 At the end of 2012, Morocco had 2.74 million employed women (1.03 million in urban areas and

1.71 in rural areas). The female employment rate in 2013 was 22.7% (compared to 66.4% for men).

Within the public service, women accounted for 38.6% of the 860,000 civil servants in 2012 (4.6% higher

than in 2002). They are heavily present in the health (56.61% of the workforce) and justice (48.56%)

departments. Almost seven female civil servants out of ten (67.65%) are managers and two out of 10

(20.88%) are supervisors. The proportion of women executives is higher in regional services (68.81%)

than in the central services (53.41%). It should be noted that the employment rate for women is

characterized by wide regional disparities. It exceeds or is close to 30% in predominantly agricultural

areas: Doukkala - Abda (34.4%); Chaouia-Ouardigha (32.4%); Souss-Massa - Drâa (31.1%), El Gharb

(30.8%) and Marrakech - Tensif-El Haouz (29.3%).

10

3.2.8 Despite persistent inequalities between men and women, it is clear that Morocco has made

significant efforts in gender promotion. Indeed, over the last two decades, constitutional and statutory

reforms have facilitated and driven the participation of Moroccan women in development. Examples

include: (i) implementation by the Government of Morocco, since 2006, of a national strategy for

mainstreaming gender into all public and sectoral policies, as well as a "national strategy to combat

violence against women"; (ii) a State budget "genderization" process launched by MEF as part of public

expenditure reform; and (iii) gender-sensitive budgeting (GSB), introduced since 2005, which has made it

possible to generate knowledge and tools for evaluating public policies from the gender standpoint. When

GSB was launched, it covered four ministries. In 2013, it was extended to over 27 ministries. In June

2013, MEF and UN-Women signed an agreement for 2013-2016 on the establishment and development

of a centre of excellence for gender-sensitive budgeting (CE - GSB) based on capitalization, innovation,

learning and sharing.

3.2.9 As regards combating poverty and social exclusion, Morocco has implemented major structuring

programmes that have had a significant impact on the socioeconomic situation of the poor. Examples

include the actions carried out by the "Pole genre" of ADS and implemented in tandem with INDH

operations. The INDH is currently on its second programme (2005-2010 and 2011-2015). These actions

made it possible to identify: (i) 403 rural councils deemed eligible on the basis of their poverty rate which

is close to or exceeds 30% (from the poverty mapping prepared in 2004); and (ii) 264 urban

neighbourhoods in cities and towns with a population exceeding 100,000 inhabitants.

3.2.10 Within the immediate PA, INDH has, over the past 10 years, funded 2276 projects and 597 actions

for the benefit of 367,349 associations, of which 178,781, or 48.7%, are women's associations. To support

efforts aimed at improving the socioeconomic conditions of women and enhancing their economic

empowerment, the project will help to consolidate INDH actions in the PA. To that end, provision is

made for financing projects and actions that have a significant impact on women. These include: (i)

income-generating activities; (ii) women's homes (delivery centres for women); (iii) support to the youth

and student residential centres; and (iv) day-care centres and preschool infrastructures in poor

neighbourhoods. In this regard, a collaboration agreement will be signed between ONCF and INDH for

the execution of its activities using governance and implementation techniques that have proven their

worth since the launch of INDH activities in 2005. The ADS also has four socioeconomic development

support programmes in the PA as follows: (i) development of local products; (ii) individual

entrepreneurship platforms; (iii) capacity-building through grassroots guidance; and (iv) socioeconomic

integration of the youth. It solicited support for the consolidation of the gender dimension in these

programmes. An agreement will eventually be signed between ONCF and ADS to establish this gender

support in the PA.

Social

3.2.11 According to the results of the 2014 general population and housing census, the legal population

of Morocco, as of 1 September 2014, was 33,848,242, composed of 33,762,036 Moroccans and 86,206

foreigners. The number of households is 7,313,806. Relative to the 2004 census, Morocco’s population

has increased in absolute terms by 3,956,534 inhabitants, representing a general growth rate of 13.2% and

an average annual growth rate of 1.25% from 2004 to 2014, compared to 1.38% for the intercensal period

(1994-2004).

3.2.12 As regards poverty, the various programmes implemented to improve the living conditions of the

people, have had notable effects in this area. Indeed, between 2004 and 2007, the poverty rate was

reduced in all regions of Morocco. Over this period, there was a significant decline in poverty levels. In

absolute terms, this decrease is most notable in the poorest regions according to the 2004 poverty survey.

It is -43.6% in the region of Chaouia-Ouardigha and-41.8% in Marrakech-Tensift-Al Haouz, two areas

which fall within the PA of this project. For their part, almost all the provinces recorded a decline in

poverty (93.5%) between 2004 and 2007.

11

3.2.13 Implementation of this project will further improve the living conditions for the affected

communities and major users of this railway line. Indeed, as already indicated in the section on

environmental impact, this project will (i) create 269,000 man/months of work during the construction

phase (including 22% for women) and 50 permanent jobs during the operational phase; (ii) yield global

time gains (travel and waiting periods) of 38 minutes; and (iii) further increase access to basic

socioeconomic services (administration, health centres, schools), and the main tourist centre of

Marrakech. The construction of these planned facilities (overpasses, footbridges, automatic gates and

protective fencing) will enhance security and safety for passengers and the local population. Actions to

consolidate gender achievements will contribute to improving the socioeconomic conditions of women

and other vulnerable groups.

Involuntary Resettlement

3.2.14 A Comprehensive Resettlement Plan (CRP) was designed in July 2015 and published on the

ONCF website, and its summary was published on the Bank's website in August 2015. The census

conducted by ONCF did not identify any need for population resettlement or displacement of homes. It

solely and exclusively identified the expropriation of strips of land along the existing railroad right-of-

way. The CRP identified 384 landowners who will be affected by the project, for a total land surface area

of almost 35.64 ha. All decrees of expropriation in the public interest, together with the list and status of

the plots concerned, are published in the Official Gazette. They can also be consulted at the ONCF. The

cost of land procurement and vacation of the right-of-way was estimated at MAD 100 million.

IV. IMPLEMENTATION

4.1 Implementation Arrangements

Project implementation will be steered by the Infrastructure and Traffic Pole (PIC) of ONCF which shall

also ensure project management and supervision. This Pole is appropriately organized and has qualified

and experienced staff to carry out this duty through its various services. In this regard, it will rely, inter

alia, on the Projects Department, the Directorate for Project Supervision and the Directorate for

Engineering. Field supervision of the project will be carried out by the Directorate for Project Supervision

which has the competent services and has the necessary means to perform its duties. These teams will

also receive technical assistance from external consulting firms. The measures adopted have proven their

worth in recently completed and ongoing projects, including the construction of Tangier Med and

Taourirt Nador lines, as well as the ongoing project to expand the capacity of the Tangier-Marrakech

railway line.

4.2 Procurement Arrangements

4.2.1. All international competitive bidding (ICB) for works and goods procurements, fully or partially

financed with AfDB loan resources, shall be conducted in accordance with Bank rules and procedures

using its appropriate standard bidding documents. Meanwhile, pursuant to the provisions of the letter of

agreement signed on 31 May 2013 between the Kingdom of Morocco and the Bank on the use of national

procedures for national competitive bidding (NCB) in projects financed by the Bank, all NCBs may be

executed in accordance with Moroccan procurement procedures, using standard BDs jointly prepared to

that end by the Bank and the Kingdom.

4.2.2. The ONCF, through the Directorate for Procurements, will be responsible for the procurement of

goods and works scheduled under this project as detailed in Annex B5. The procurement capacity of the

ONCF was evaluated during project preparation. The evaluation revealed that ONCF has the requisite

resources and experience, meaning that the risk is low. The resources, capacities, expertise and

experience of the ONCF are detailed in Annex B5.

12

4.2.3. The ONCF has made a commitment to the authorities to ensure that the second track between

Settat and Marrakech is fully operational by early 2018, at the latest. To that end, and in accordance with

the provisions of Article 1.9 and Annexes 4 and 5 of the Bank’s Rules and Procedures on the Procurement

of Goods and Works, the ONCF sought and received from the AfDB, an agreement in principle to resort

to advance procurement actions in the procurement of works and goods for the construction of this track.

Similarly, an indicative procurement plan, covering the first 18 months of project implementation, was

also submitted to the Bank which approved it.

4.2.4. For the execution of sub-component B.1 (Consolidation of gender achievements in the PA),

provision is made for the signing of project supervision delegation agreements between the ONCF and

specialized human development agencies in Morocco, such as the INDH and ADS which have wide

experience in this domain. This measure is expected to lead to the appropriate formulation and

harmonious implementation of specific activities in support of women (women’s homes, students’

residential centres, day-care centres, etc.) identified under this project. To that end and given the nature of

such activities, the relevant procurements will be executed through national procedures, in accordance

with the letter of agreement of 31 May 2013 and subjected to an ex poste review by the Bank. Besides,

each project supervision delegation agreement will be accompanied by an appropriate procurement plan.

4.3 Financial Management and Disbursement Arrangements

Financial Management

4.3.1. ONCF will be accountable to the Bank for the implementation and financial management of the

project. Financial management was evaluated in accordance with the Bank’s new guidelines and took into

account the current management system as well as the experience acquired by the Directorate for Finance

and Management Control (DFCG) in the management of similar ongoing projects, including the project to

expand the capacity of the Tangiers-Marrakech line. This approach points to the conclusion that the initial

global financial management risk is deemed to be low by the Bank. Nevertheless, the ONCF should

continue with the permanent and efficient use of the existing financial management mechanisms

highlighted in the action plan presented in the annex.

4.3.2. Financial management arrangements: The project will be financially managed by the ONCF,

through DFCG which currently has a staff strength of 72 persons serving in four departments (payment

orders, financial management, accounting and management control). It follows therefore that its financial

management will be fully integrated into that of the ONCF which operates through the following

mechanisms:

i. budget planning by the projects department of the Infrastructure and Traffic Pole (PIC);

ii. monitoring of investment budget execution by the management control departments of

DFCG and PIC;

iii. an internal audit process that is fully integrated into the expenditure approval and control

circuits of the ONCF;

iv. progress reports, including detailed statements on the monitoring of project status (by

component, by contract and by category);

v. management of disbursements denominated in local currency or in foreign exchange;

vi. an information system composed of several integrated applications capable of generating,

inter alia, interim and annual project financial statements based on accounting entries of

commitments and payments in accordance with the accounting system in force; and

vii. an external audit of ONCF and project accounts by an independent audit firm.

4.3.3. These mechanisms utilized and formalized in the ONCF organization manual guarantee

transparency, traceability, asset protection and reliable financial information on funds invested to execute

the project. Nevertheless, sometimes there are delays in the submission of project audit reports to the

Bank. Furthermore, the surveillance of budgetary risk, which is deemed to be low, is ensured by MEF, the

13

Audit Office, the ONCF Board and its various committees (audit and governance committee, investments

committee). The Board is composed of representatives of various ministries, including the Directorate for

Public Corporations and Privatization in MEF (DEPP) whose main mission is to enhance the governance

and efficiency of public corporations. The financial sustainability of the ONCF is ensured through annual

cash-flows and fund-raising on the local bond market. Hence, following this appraisal mission, the overall

project management risk is deemed to be low by the Bank. Given the level of fiduciary risk, the project

will receive only one annual financial management supervision mission.

4.3.4. External audit: The financial statements of the project, prepared by DFCG, will be audited

annually by an external and independent audit firm that will be recruited for the 2016-2018 period. The

audits shall be conducted in accordance with the international audit norms of IFAC and the Bank's terms

of reference (TORs), a copy of which was sent to the ONCF and to the auditor. The audit report,

accompanied by the letter to management on the internal audit of the project, must be transmitted to the

Bank no later than 6 (six) months after closure of the fiscal year concerned. Furthermore, the ONCF, by

virtue of its 100% public shareholding is subject to several financial audits by the State (State auditor

from DEPP) with the possibility of an audit by the Inspectorate General of Finance (IGF) and the Audit

Office (audit operation underway).

4.3.5. Harmonization: The project is financed with Bank loans and self-financing from the ONCF.

Disbursements

4.3.6. Disbursement requests for Bank loan resources shall be presented in accordance with the

provisions of the ADB’s disbursement handbook. In view of the planned activities and procurements,

disbursements will be made through the special account method, the reimbursement method and the direct

payment method. The ONCF has requested and obtained the Bank's permission to resort to advance

procurement actions under the project and sought the Bank's agreement to retroactive financing of up to

EUR 14 million for the procurement of works:

construction of infrastructure and of small and medium-sized engineering structures for

doubling of the track between Imfout and Skhours;

laying of the track between Settat and Marrakech;

laying of the catenary between Settat and Marrakech;

construction and equipment of sub-stations between Settat and Marrakech; and

refurbishment of stations between Settat and Marrakech.

4.3.7. The Bank’s authorization for retroactive financing will ensure the financing of expenditures

made after the date of project approval by the Board of Directors and prior to the date of signature of the

funding agreement, within the limits of the ceiling indicated above.

4.4 Monitoring of Project Activities

4.4.1. The (physical and financial) implementation of the project will be monitored by ONCF and the

service providers that will be selected to execute various project activities. The information collected will

be used to produce periodic project status reports. The project implementation schedule is presented on

Page vii of this report. It especially takes into account the relevant experience of the executing organ in

managing works execution and procurement deadlines and the Bank’s experience in processing files from

similar previous projects. Project activities started after the Bank approved recourse to the APA procedure

(07/10/2015) and are scheduled to end in late 2020. At the Bank, the activities scheduled before and after

loan approval will be monitored according to the indicative schedule below.

4.4.2. As regards assessment of the socioeconomic effects of the project, ONCF could benefit from

studies conducted by several institutions in this domain. These include the High Commission for Planning

(HCP) and the National Human Development Observatory (ONDH). Indeed, the HCP has a mandate to

14

conduct national studies on various aspects of socioeconomic life in Morocco. In 2012, the ONDH

evaluated the impact of INDH actions for 2005-2010. Finally, it should be noted that the ONCF regularly

conducts opinion surveys on customer satisfaction levels. These surveys provide a permanent beneficiary

assessment of the effects of its projects. The studies conducted by these various institutions provide the

necessary information on the socioeconomic impact of this project.

Table 4.1: Project Monitoring and Supervision

Timeframe Stage Process Feedback

Q3 to Q4 -2015 & 2016 & to

Q1-2017

Procurement Approval of BD by the Bank;

launching of competitive bidding by ONCF and bid assessment and award

of contracts

Q1 -2016 Launching of project Field mission Status reports/ Aide mémoire

2016 to 2019 Construction works Field mission/ Supervision Status reports/ Aide mémoire

Q1 -2019

Q1 -2020

Guarantee Term

Field mission Status reports/ Aide mémoire

Project completion report

4.5 Governance

The level of Morocco's fiduciary country risk is moderate, generally due to its satisfactory public finance

management processes (budget planning and budgeting, budget implementation control, management

accounting and preparation of reports, external review and audit). The same applies to budget risk

surveillance (State budget) conducted by DEPP whose main mission is to improve the governance and

efficiency of public establishments and enterprises (PEEs). The governance pattern of DEPP is based on

the following three pillars: (i) professionalization of the PEE Board; (ii) quality of the PEE; and (iii)

utility of State control for the State and for the PEE (modulated control based on the risk level of the

PEE). It follows that DEPP continues to promote the widespread use of internal audit within the PEEs and

certification of their annual accounts by auditors. Furthermore, DEPP has established multi-year

programme contracts aimed at restructuring or developing PEEs, where necessary. It is within such a

governance environment that ONCF operates as one of the public establishments, executing the missions

of public authority delegated to it by the State. With regard to the ONCF in particular, it should be noted

that no complaints have been lodged so far by the bidders after the procurement of works and goods

under the project to increase the capacity of the Tangiers-Marrakech railway line funded by the Bank and

currently underway. The supervision and audit reports have not revealed any particular irregularities.

4.6 Sustainability

4.6.1. Project sustainability depends, to a large extent, on: (i) the technical and financial capacity of the

infrastructure management services to engage in regular and timely routine and periodic maintenance; (ii)

operating conditions; and (iii) the quality of its technical design and works execution. Following a reform

process to streamline its structures, repair and maintenance operations on the infrastructure and facilities

have been outsourced. The hierarchy of operations distinguishes three levels: Level 1 (servicing); Level 2

- light refurbishment (rehabilitation, partial replacement/major operation); and Level 3 - light/heavy

refurbishment (complete replacement, renewal and major operations). The programme is established in

advance and its financing is included in the annual operating budget for routine maintenance, in the

investment budget for rehabilitation of facilities (level 2) and in the five-year budget for complete

renewal.

4.6.2. Depending on the level of complexity, operations management and monitoring services are

provided using internal resources at the regional and central levels. Based on the maintenance

programmes carried out by the ONCF, the maintenance costs for the track and catenary are MAD

50,000/km for the continuous welded rail (CWR) of Settat-Marrakech and MAD 20,000/km for

catenaries. This decline stems from savings in the annual operating budget of the ONCF. Furthermore,

analysis of the project's financial performance shows that the ONCF has sufficient equity to finance

additional maintenance needs generated by the project. Moreover, the technical solutions adopted during

project design comply with the required standards, thus ensuring the sound performance of the facilities,

given their operating costs and the effects of their environment. Furthermore, the steps taken to ensure

15

works control, surveillance and monitoring guarantee their good quality. All these arrangements augur

well for the sustainability of the investments to be made.

4.7 Risk Management

4.7.1. The main risks likely to jeopardize the expected project outcomes and its smooth performance

are: (i) delays in the provision of counterpart resources; and (ii) a decline in phosphate traffic. Indeed,

ONCF generates nearly 50% of its revenue from its commercial contract with OCP to transport

phosphates; (iii) the increase in the cost of works relative to the estimated budget; and (iv) long lead times

and significant delays in the execution of procurements for ongoing projects.

4.7.2. The mitigative measures are as follows: (i) as concerns counterpart funds, the ONCF has sufficient

self-financing capacity estimated at an average of EUR 90 million per year during the project execution

period. Furthermore, the ONCF can also resort to bond issues. The last two operations (October 2011 and

July 2015), for a total amount of MAD 1.5 billion each, were successful. (ii) New passenger and freight

strategies of the ONCF focus on the diversification of activities. On this last point, the Board adopted

measures aimed at intervening in the national logistics development strategy in sectors such as cereals and oil

products, and specifically: (a) the development of cereal silos in the railway stations; (b) the development of

platforms for the installation of hydrocarbons storage facilities; (c) the development of dry ports connected to

the main consumption centres (the MITA logistical area in Casablanca currently operational); and (d)

development of the logistical integrative role for freight in Morocco. Furthermore, all OCP product types

cannot be transported by pipeline, hence the need to resort to the railway. (iii) There are detailed design

studies, a realistic cost estimate, an adequate provision for price contingencies, measures taken to ensure

wide competition during the bidding process. (iv) Lastly, there is perfect understanding by the project

management team, of the Bank's procurement rules and procedures and recourse to advance procurement

actions.

4.8 Knowledge Development

The main potential lessons from this project will come from the monitoring mechanism that will be

established to document its outcomes and its impact. That mechanism will comprise: (i) monitoring of the

various project activities executed by ONCF; (ii) impact evaluation at project completion by

beneficiaries, including rail transport users, through periodic opinion polls commissioned by the ONCF;

and (iii) analysis of the level of attainment of targeted development objectives, to be carried out by the

High Commission for Planning and the Human Development Observatory. The reports produced for this

purpose should be widely disseminated to various stakeholders in this project.

V. LEGAL INSTRUMENT

5.1. Legal Instrument

To finance the project, the Bank will use an AfDB loan of USD 112.3 million granted to ONCF with a

guarantee from the Kingdom of Morocco.

5.2. Conditions Associated with the Bank’s Intervention

5.2.1. Conditions Precedent to Loan Effectiveness

The AfDB loan agreement shall become effective on its date of signature. The AfDB loan guarantee

agreement shall become effective on the date of fulfilment by the Guarantor, to the Bank’s satisfaction, of

the conditions provided for in Section 5.01 of the General Conditions for Loan Agreements and

Guarantee Agreements (sovereign entities).

16

5.2.2. Condition Precedent to First Loan Disbursement.

Apart from the effectiveness of the Loan Agreement and the loan guarantee agreement, the first

disbursement of loan resources shall be subject to fulfilment by the Borrower, to the Bank’s satisfaction,

of the conditions provided for in Section 12.02(a)(i) and (ii) of the General Conditions.

5.2.3. Other Conditions

Furthermore, the Borrower must provide, to the satisfaction of the Bank, as the works progress and

before any commencement of works in a given area, proof of compensation of persons affected by the

project in the area, in accordance with the Bank's applicable rules and procedures, the environmental and

social management plan (ESMP) and the Comprehensive Resettlement Plan.

5.2.4. Commitments

The Borrower undertakes, to the satisfaction of the Bank, to:

(i) cover the financing gap if the contract amount exceeds the amount of financing raised;

(ii) execute and ensure execution of the project, ESMP and CRP by its contractors, in

accordance with: (a) the Bank's rules and procedures; (b) national laws; and (c)

recommendations, prescriptions and procedures contained in the ESMP and CRP;

(iii) refrain from commencing works on a given area until the affected persons in that area have

been fully compensated;

(iv) provide the Bank with half-yearly reports on ESMP and CRP implementation, including,

where applicable, any shortcomings and corrective actions initiated or to be initiated; and

(v) provide the Bank with any document that is reasonably necessary for monitoring project

implementation.

VI. RECOMMENDATION

Management recommends that the Board of Directors should approve the AfDB loan of USD 112.3

million to the National Railways Authority, with a guarantee from the Kingdom of Morocco, to finance

the rail infrastructure reinforcement project, in accordance with the terms and conditions set forth in this

report.

I

ANNEX I: COMPARATIVE SOCIOECONOMIC INDICATORS OF MOROCCO

Year Morocco Africa

Develo-

ping

Countries

Develo-

ped

Countries

Basic Indicators

Area ( '000 Km²) 2014 447 30 067 80 386 53 939Total Population (millions) 2014 33,5 1 136,9 6,0 1,3Urban Population (% of Total) 2014 58,1 39,9 47,6 78,7Population Density (per Km²) 2014 75,0 37,8 73,3 24,3GNI per Capita (US $) 2013 3 020 2 310 4 168 39 812Labor Force Participation - Total (%) 2014 50,7 66,1 67,7 72,3Labor Force Participation - Female (%) 2014 27,0 42,8 52,9 65,1Gender -Related Dev elopment Index Value 2007-2013 0,828 0,801 0,506 0,792Human Dev elop. Index (Rank among 187 countries) 2013 129 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population)2008-2013 2,6 39,6 17,0 ...

Demographic Indicators

Population Grow th Rate - Total (%) 2014 1,5 2,5 1,3 0,4Population Grow th Rate - Urban (%) 2014 2,1 3,4 2,5 0,7Population < 15 y ears (%) 2014 27,9 40,8 28,2 17,0Population >= 65 y ears (%) 2014 5,0 3,5 6,3 16,3Dependency Ratio (%) 2014 48,3 62,4 54,3 50,4Sex Ratio (per 100 female) 2014 97,8 100,4 107,7 105,4Female Population 15-49 y ears (% of total population) 2014 27,6 24,0 26,0 23,0Life Ex pectancy at Birth - Total (y ears) 2014 71,2 59,6 69,2 79,3Life Ex pectancy at Birth - Female (y ears) 2014 73,0 60,7 71,2 82,3Crude Birth Rate (per 1,000) 2014 22,5 34,4 20,9 11,4Crude Death Rate (per 1,000) 2014 6,3 10,2 7,7 9,2Infant Mortality Rate (per 1,000) 2013 26,1 56,7 36,8 5,1Child Mortality Rate (per 1,000) 2013 30,4 84,0 50,2 6,1Total Fertility Rate (per w oman) 2014 2,7 4,6 2,6 1,7Maternal Mortality Rate (per 100,000) 2013 120,0 411,5 230,0 17,0Women Using Contraception (%) 2014 68,1 34,9 62,0 ...

Health & Nutrition Indicators

Phy sicians (per 100,000 people) 2004-2012 62,0 46,9 118,1 308,0Nurses (per 100,000 people)* 2004-2012 89,0 133,4 202,9 857,4Births attended by Trained Health Personnel (%) 2009-2012 73,6 50,6 67,7 ...Access to Safe Water (% of Population) 2012 83,6 67,2 87,2 99,2Healthy life ex pectancy at birth (y ears) 2012 61,0 51,3 57 69Access to Sanitation (% of Population) 2012 75,4 38,8 56,9 96,2Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2013 0,2 3,7 1,2 ...Incidence of Tuberculosis (per 100,000) 2013 104,0 246,0 149,0 22,0Child Immunization Against Tuberculosis (%) 2013 99,0 84,3 90,0 ...Child Immunization Against Measles (%) 2013 99,0 76,0 82,7 93,9Underw eight Children (% of children under 5 y ears) 2005-2013 3,1 20,9 17,0 0,9Daily Calorie Supply per Capita 2011 3 334 2 618 2 335 3 503Public Ex penditure on Health (as % of GDP) 2013 2,0 2,7 3,1 7,3

Education Indicators

Gross Enrolment Ratio (%)

Primary School - Total 2011-2014 117,5 106,3 109,4 101,3 Primary School - Female 2011-2014 114,5 102,6 107,6 101,1 Secondary School - Total 2011-2014 68,9 54,3 69,0 100,2 Secondary School - Female 2011-2014 63,4 51,4 67,7 99,9Primary School Female Teaching Staff (% of Total) 2012-2014 55,1 45,1 58,1 81,6Adult literacy Rate - Total (%) 2006-2012 67,1 61,9 80,4 99,2Adult literacy Rate - Male (%) 2006-2012 76,1 70,2 85,9 99,3Adult literacy Rate - Female (%) 2006-2012 57,6 53,5 75,2 99,0Percentage of GDP Spent on Education 2009-2012 6,2 5,3 4,3 5,5

Environmental Indicators

Land Use (Arable Land as % of Total Land Area) 2012 18,0 8,8 11,8 9,2Agricultural Land (as % of land area) 2012 0,7 43,4 43,4 28,9Forest (As % of Land Area) 2012 11,5 22,1 28,3 34,9Per Capita CO2 Emissions (metric tons) 2012 1,2 1,1 3,0 11,6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :

UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports.

Note : n.a. : Not Applicable ; … : Data Not Available.

MoroccoCOMPARATIVE SOCIO-ECONOMIC INDICATORS

janvier 2016

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II

ANNEX II: TABLE OF BANK OPERATIONS IN MOROCCO AS OF 14 SEPTEMBER 2015

SECTEUR AGRICOLE 4,7 0,9 3,7 45 670 584 54 710 282 26 654 096 266 28 056 186 48,7% 70,6% 2,4%

1Projet d'ap. tech. prom. jeunes entrepreneurs -

DON PRI 12-janv.-12 4-May-12 4-May-12 31-déc.-15 3,7 0,9 3,8 UC 497 200 497 200 496 965 235 235 100,0% 100,0%

2Projet d'ap. au Prog. nat. d' eco. d'eau d'Irrig.

(PAPNEI)14-déc.-09 01-mai-14 2-Jul-10 31-Dec-16 5,8 0,8 6,7 EUR 44 679 184 53 590 000 25 534 080 28 055 920 47,6% 70,0%

3 Appui tech. dév. Infrastr. d’irrigation - DON PRI 21-févr.-11 17-mars-11 17-mars-11 30-juin-15 4,6 1,0 0,8 UC 494 200 494 200 494 200 0 100,0% 100,0%

SECTEUR TRANSPORTS 5,6 0,9 6,4 450 210 098 540 000 000 121 161 348 112 436 639 306 402 011 28,3% 50,2% 23,7%

4 3ème Projet aéroportuaire 16-avr.-09 8-mai-09 22-oct.-09 31-déc.-15 6,4 1,0 6,3 EUR 200 093 377 240 000 000 44 612 563 112 436 639 82 950 796 35,0% 63,0%

5 Projet d'augm. de capa. Ferrov. Tanger-Marrakech 17-déc.-10 17-mars-11 30-Jun-11 31-déc.-16 4,7 0,8 6,5 EUR 250 116 721 300 000 000 76 548 785 223 451 215 25,5% 40,0%

SECTEUR ENERGIE 2,7 0,4 3,1 844 829 014 1 049 860 000 416 980 856 68 000 000 564 879 144 42,5% 50,8% 46,0%

6 Progr. déve. réseau transp. et réparti. élect. 02-déc.-09 11-déc.-09 29-Apr-10 31-déc.-17 5,8 0,7 4,9 EUR 91 559 394 109 820 000 52 165 533 57 654 467 47,5% 67,0%

Projet de la centrale solaire de Ouarzazate 16-mai-12 19-nov.-12 19-nov.-12 31-déc.-16 3,3 0,7 6,2 EUR 140 065 364 168 000 000 49 628 764 68 000 000 50 371 236 49,6% 100,0%

Projet de la centrale solaire de Ouarzazate (CTF) 16-mai-12 19-nov.-12 19-nov.-12 31-déc.-16 3,3 0,7 6,2 USD 65 461 734 100 000 000 100 000 000 0 100,0% 100,0%

8 Complexe Solaire Ouarzazate NOORo II 03-déc.-14 19-déc.-14 19-déc.-14 31-déc.-19 0,8 0,1 0,5 EUR 61 138 189 72 000 000 11 543 210 60 456 790 16,0% 15,0%

Complexe Solaire Ouarzazate NOORo II (CTF) 03-déc.-14 19-déc.-14 19-déc.-14 31-déc.-19 0,8 0,1 0,5 USD 47 369 288 69 000 000 69 000 000 0 100,0% 40,0%

Complexe Solaire Ouarzazate NOORo III 03-déc.-14 19-déc.-14 19-déc.-14 31-déc.-19 0,8 0,1 0,5 EUR 23 775 962 28 000 000 1 660 365 26 339 635 5,9% 15,0%

Complexe Solaire Ouarzazate NOORo III (CTF) 03-déc.-14 19-déc.-14 19-déc.-14 31-déc.-19 0,8 0,1 0,5 USD 34 325 571 50 000 000 50 000 000 0 100,0% 40,0%

PERG 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 EUR 112 552 525 135 000 000 95 823 370 39 176 630 71,0% 86,0%

Parc Eolien AL KOUDIA AL BAIDA 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 EUR 41 686 120 50 000 000 6 869 614 43 130 386 13,7% 30,0%

Complexe Hydro M'Dez El Menzel 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 EUR 61 695 458 74 000 000 74 000 000 0,0% 0,0%

Parc Eolien Tanger 2 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 EUR 33 348 896 40 000 000 40 000 000 0,0% 0,0%

Step Abdel Moumen 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 EUR 50 023 344 60 000 000 60 000 000 0,0% 0,0%

Parc Eolien AL KOUDIA AL BAIDA (FTP) 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 USD 22 256 990 34 000 000 34 000 000 0,0% 38,0%

Complexe Hydro M'Dez El Menzel (FTP) 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 USD 19 638 520 30 000 000 30 000 000 0,0% 0,0%

Parc Eolien Tanger 2 (FTP) 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 USD 20 293 138 31 000 000 31 000 000 0,0% 0,0%

Step Abdel Moumen (FTP) 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 3,3 0,7 6,3 USD 19 638 520 30 000 000 30 000 000 0,0% 0,0%

SECTEUR SOCIAL 2,9 1,2 1,1 1 625 806 1 850 544 1 113 735 60,2% 57,7% 0,1%

10 Appui strat. dével. enseig. Privés - DON PRI 11-mars-11 17-mars-11 09-juin-11 31-déc.-14 4,5 1,2 3,0 UC 470 406 470 406 470 406 0 100,0% 100,0%

11 Système Information Carte Sanitaire Don PRI 30-juil.-13 30-dec-13 30-dec-13 31-dec-16 2,1 0,2 UC 380 800 380 800 227 362 153 438 59,7% 60,0%

12 Université numérique UIR 10-oct.-13 27-fev-14 27-fev-14 31-dec-17 1,9 0,2 UC 774 600 774 600 246 632 527 968 31,8% 31,8%

SECTEUR EAU ET ASSAINISSEMENT 3,6 0,7 4,7 296 793 578 350 666 043 73 177 308 56 480 000 259 718 671 24,9% 40,8% 15,4%

Onzième Projet d'AEPA Rabat-Casa 12-mai-10 19-août-10 13-janv.-11 31-déc.-16 5,3 0,8 8,2 EUR 135 321 483 162 310 000 38 949 174 56 480 000 66 880 826 36,8% 60,0%

Onzième Projet d'AEPA Rabat-Casa 12-mai-10 19-août-10 13-janv.-11 31-déc.-16 5,3 0,8 8,2 USD 36 043 231 55 060 000 27 851 703 14 680 000 12 528 297 69,0% 60,0%

14 Douzième projet d'AEP de Marrakech 7-nov.-12 19-déc.-12 19-déc.-12 31-déc.-18 2,9 0,5 1,4 EUR 101 206 800 120 000 000 9 193 152 110 806 848 7,7% 10,0%

Douzième projet d'AEP de Marrakech 7-nov.-12 19-déc.-12 19-déc.-12 31-déc.-18 2,9 0,5 1,4 USD 24 017 070 37 000 000 5 666 322 31 333 678 15,3% 10,0%

15 Etude schéma directeur AEP MOULOUYA- DON 10-janv.-13 22-mai-13 22-mai-13 31-déc.-15 2,7 0,9 4,4 UC 204 994 204 994 204 994 0 100,0% 100,0%

SECTEUR MULTISECTEUR 3,6 0,9 2,7 2 558 772 86 141 412 85 236 799 904 614 98,9% 77,7% 3,8%

16 Projet d'améliorat. du syst. de garantie - DON PRI 19-janv.-11 17-mars-11 17-mars-11 31-déc.-15 4,7 0,9 1,9 UC 464 988 464 988 464 988 0 100,0% 100,0%

17 Projet de renf. du contr. marché. fin. - DON PRI 13-déc.-10 17-mars-11 17-mars-11 31-déc.-14 4,8 1,2 3,1 UC 480 350 480 350 480 350 0 100,0% 100,0%

18Appui à la modernisation du cadre organisationnel

de gestion de la dette - DON PRI27-févr.-13 31-mai-13 31-mai-13 31-déc.-18 2,5 0,4 3,1 UC 536 976 536 976 79 705 457 271 14,8% 30,0%

19Etude sur la croissance et l' emploi au Maroc -

DON PRI 27-juin-12 7-sept.-12 7-sept.-12 31-déc.-15 3,2 0,9 2,4 UC 587 200 587 200 587 200 0 100,0% 100,0%

PACEM 8-juil.-15 28-juil.-15 31-déc.-16 112 500 000 112 500 000 83 250 000

Appui à la Primature (Don PRI)

Etude Stratégique DTFE (DON PRI) 21-mai-15 28-juil.-15 31-déc.-17 UC 797 600

20Projet d'Appui à l'élaboration du code monétaire et

financier marocain - DON PRI20-sept.-12 19-déc.-12 19-déc.-12 31-déc.-15 3,0 0,9 3,0 UC 489 258 489 258 145 986 343 272 29,8% 60,0%

SECTEUR PRIVE 4,9 0,9 7,8 177 133 336 198 877 124 189 600 000 10 391 000 95,3% 95,3% 8,7%

21 Fond Argan pour le développement des infrast. 17-févr.-10 21-juil.-10 21-juil.-10 31-déc.-18 5,6 0,6 5,1 EUR 13 479 000 15 000 000 4 609 000 10 391 000 30,7% 30,7%

22 Prêt à l'Office Chérifien des Phosphates 29-juin-11 10-mai-12 10-mai-12 10-mai-15 4,2 1,1 10,5 USD 163 654 336 250 000 000 250 000 000 0 100,0% 100,0%

Récapitulatif: Répartition sectorielle des opérations Approbations (millions EUR) Situation des décaissements

Montant du portefeuille Total %

En Unités de compte 1 551 105 385 100,0%

Prêts (11 projets) 1 545 724 413 99,7%

Dons (11 projets) 5 380 972 0,3%

En Euros 2 045 188 766

Actuel Proj. 2015

Montant Total des décaissements en Euros 913 924 142 1 169 714 630

Prêts 909 451 188 Dons 4 472 953

Taux de décaissement global 44,69% 57,2%

Prêts 44,62% Dons 63,65%Montant moyen par prêt (en UC) 140 520 401

Delai moyen de mise en vigeur (mois) 4,2 Prêts 5,7 Dons 2,3Age relatif du portefeuille (an) *** 0,8

Age moyen du portefeuille (an) 4,0 Prêts 4,4 Dons 3,4

MAROC - PORTEFEUILLE DES OPERATIONS EN COURS D'EXECUTION AU 14 Septembre 2015

Nbre Nom du ProjetDate

d'approbation

Date de

signature

Date de

mise en

vigueur

Date de

clôture

Age

moyen

projet

(an)

Age

relatif

du

projet

(an)

delai

mise en

vigeur

(mois) en Unités de

compte

en monnaie du

prêt (total par

sect. en EUR)

ActuelProject.

2015

Montant approuvé Décaissement

cumulé en

monnaie du

prêt par projet /

en euro par

secteur

Annulation en

monnaie du

prêt

Montant non

décaissé en

monnaie du prêt

par projet /en

EUR par secteur

7

9

13

Taux décaissements

cumulés (en %) Part

dans le

portefe

uille

Monnaie

du prêt

158

643 634

476

1091

2008 2009 2010 2011 2012

Agric; 6,6%

Transp.; 24,3%

Energ.; 33,7%

Eau/ass.; 21,3%

Multisect.; 5,2%

Sect. privé; 8,8%

71%

50% 51%58%

41%

78%

95%

60%

48%

31% 30%

60%

22%

69%

95%

35%

Tx déc. prév. fin 2015 Tx de décais. 09 Juin 2015

643 634

476

1091

231

321

2009 2010 2011 2012 2013 2014

Agric; 2,5%

Transp.; 24,6%

Energ.; 47,7%Social;

0,1%

Eau/ass.; 15,9%

Multisect.; 0,1%

Sect. privé; 9,0%

III

ANNEX III: MAIN RELATED PROJECTS FINANCED BY THE BANK AND OTHER

DEVELOPMENT PARTNERS OF MOROCCO OVER THE LAST TEN YEARS

FINANCING Date of

signature Amount

BANK EUR million

Marrakech - Agadir Highway Construction Project 15/12/2006 118.60

National Rural Roads Programme (PNR II) 23/11/2007 45

Third Airport Project 08/05/2009 240

Project to increase the capacity of the Tangier-Marrakech railway 17/03/2011 300

Preparation of a programme to strengthen and repair the

infrastructure of 7 (seven) ports 17/03/2011 0.70

Nador West Med Port Complex Construction Project - 112.86

EIB EUR million

National Rural Roads Programme - Phase II - A 17/06/2005 60

Highway Project IV - Tranche B 17/06/2005 70

Fès-Oujda V Highway Construction Project 31/10/2007 180

Tangier Med Port 2nd Terminal Project 24/06/2008 40

National Rural Roads Programme II - B 05/12/2008 60

Highway project VI 22/10/2009 225

Rabat Tramway 22/12/2009 15

Highway project VII 10/11/2010 220

Tangier Med Port 2nd Terminal Project - 2 15/11/2010 200

National Rural Roads Programme II - C 17/05/2012 100

El Jadida-Safi Highway 14/12/2012 240

Road Modernization Programme 19/03/2014 150

Zenata Town Urban Development Project 13/11/2014 7.5

IBRD USD million

National Rural Roads Programme - Phase II - A 12/04/2006 238.07

Promotion of accessibility 03/02/2012 2.85

National Rural Roads Programme - Phase II - B 22/07/2014 95.61

EBRD EUR million

Nador West Med Port Complex Construction Project - 200

JBIC-JICA JPY million

Marrakech - Agadir Highway Construction Project 31/03/2006 17.726

National Rural Roads Programme 15/03/2007 8.439

Arab Fund for Economic and Social Development

(AFESD)

USD million)

Marrakech - Agadir Highway Construction Project 13/03/2006 115.6

Fès-Oujda Highway Construction Project 15/03/2007 111.9

Rabat - Casablanca Highway - 2x3 Lanes Development Project 01/12/2008 74.6

Tangier-Casablanca high-speed train 14/02/2012 108.22

El Jadida-Safi Highway 17/04/2012 108.01

Nador West Med Port Complex Construction Project - 199.01

Kuwait Fund (KFAED) USD million

Marrakech - Agadir Highway Construction Project 20/03/2006 56

Fès-Oujda Highway Construction Project 13/12/2006 56

Road Improvement Project 26/06/2013 125

Port Improvement Project 26/06/2013 455

Saudi Fund (SDF) USD million

Tangier-Casablanca high-speed train 29/02/2012 200

IV

Oujda-Nador Highway Project 11/03/2013 61

Expansion of Sidi Ifni Port 10/10/2014 40

Islamic Development Bank (IsDB) USD million

Marrakech - Agadir Highway Construction Project 01/06/2006 106

Fès-Oujda Highway Construction Project 01/05/2007 124

Second National Rural Roads Programme 05/02/2013 11.06

Rehabilitation and Expansion of Jorf Lasfar Port 27/02/2013 150

Natixis EUR million

Supply of double trainsets for the Casablanca tramway network 20/01/2012 24.14

BNP-Paribas EUR million

Supply of double trainsets for the Casablanca tramway network 02/02/2012 13.65

AFD EUR million

Tangier - Tangier Med New Port Railway Line Project 24/03/2004 25

National Rural Roads Programme (PNR II) 13/02/2004 50

Casablanca-Tangier High-Speed Railway Line Project 13/07/2012 220

Rehabilitation projects for six ports (Tangier, Nador, Safi, Jorf

Lasfar, Kenitra and Cala Iris) 13/12/2012 50

Casablanca Tramway Project 13/12/2012 23

Portugal EUR million

Railway transport: electrification of the Ksar El Kébir/Tangier

segment and Tangier/Tangier-Mediterranean Port Liaison 31/07/2012 6.7

Railway transport: Tangier / Sidi Kacem line: VU

Tangier / Mechraa Bel Ksiri and RAVG D'el Akba, Asilah, Rissani

and Arbaoua

31/07/2012 10.39

Spain EUR million

Studies, supplies, works, testing and commissioning of safety and

signalling facilities in Casablanca Station 16/09/2013 3.33

V

ANNEX IV: MAP OF THE PROJECT AREA

The staff of the ADB Group have provided this map for the exclusive use of readers of this report to which it is appended.

The appellations and the demarcations on this map do not imply any judgment on the part of the ADB Group and its

members concerning either the legal status of a territory or the approval or acceptance of its boundaries.

Project highway: Phase 2

Phase 1: Cameroon side