Document of

The World Bank

FOR OMCL41 USE ONLY

Repot No.13929-MAU

IMPLEMENTATION COMPLETION REPORT

ISLAMIC REPUBLIC OF MAURITANIA

PUBLIC ENTERPRISE SECTOR ADJUSTMENT PROGRAM(Credit 2166-MAU)

JANUARY 26, 1995

Industry and Energy DivisionWestern Africa DepartmentAfrica Region

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

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CURRENCY EQUIVALENTS

Currency unit = Ouguiya (UM)US$1.00=UM 110*

UM 1.00 = US$0.009** At the time of the Implementation Completion Report mission

WEIGHTS AND MEASURES

Metric system

FISCAL YEAR OF BORROWER

January I - December 31

ABBREVIATIONS AND ACRONYMS

AfDB African Development BankCFD Caisse francaise de developpementCRSP Cellule de rehabilitation du secteur parapublic [Parastatal Sector Rehabilitation Agency]EEC European Economic CommunityECU European Currency UnitEIB European Investment BankEPIC Etablissement public industriel et commercial [Industry and trade-related public enterprise]FADES Arab Fund for Economic and Social DevelopmentIDA International Development AssociationITU International Telecommunications UnionKfW Kreditanstalt fir WiederaufbauNASR Nationale d'assurances et de reassurances [Insurance company]OECF Overseas Economic Cooperation FundOPT Office des postes et des telecommunications [Post and telecommunication company]PANPA Port autonome de Nouakchott - Port de I'amitiePE Public EnterprisePESAP Public Enterprise Sector Adjustment ProgramSEM Socite d'economie mixte [Mixed-economy company]SMAR Societe mauritanienne d'assurances et de reassurances [Insurance company]SMCP Societe mauntanienne de commercialisation de poissons [Fisheries marketing board]SMCPP Societe mauritanienne de commercialisation de produits patroliers [Oil marketing board]SN Soci&e nationaleSNIM Societe nationale industrielle et miniere [Mining company]SONELEC Societe nationale d'eau et d'electricite [Water and electricity company]SONIMEX Societe nationale d'import-export [Import-export company]UPU Universal Postal Union

FOR OFFICIAL USE ONLY

TABLE OF CONTENTS

Page No.

Preface...

Evaluation Summary ........ .

PART I -- PROGRAM IMPLEMENTATION ASSESSMENT ............. I

A. Background ..... ......... .. 1............... B. Statement/Evaluation of Objectives .................... 2C. Achievement of Objectives . ...................... 3D. Major Factors Affecting the Programn .................. 10E. Program Sustainability 1.......................... I F. Bank Performance ........... .. 11.............. 1G. Borrower Performance ........... .. ............. 12H. Assessment of Outcome ......................... 13I. Future Operations . ..... . . . . ......... . . . . . . . . 13J. Key Lessons Learned ...... . . . . . . . . . . . . . . . . . . . . 14

PART II -- STATISTICAL ANNEXES ..... . . . . . . . . . . . . . . . . . . . 15

Table 1 Summary of Assessments ..... . . . . . . . . . . . . . . . . 15Table 2 Related Bank Loans/Credits ..... . . . . . . . . . . . . . . . 16Table 3 Program Timetable ..... . . . . . . . . . . . . . . . . . . . 17Table 4 Credits Disbursements: Cumulative Estimated and Actual ..... . 17Table 5 Key Indicators for Program Implementation and Operation . . . . . 17Table 6 Studies Included in Program ................ 18Table 7 : Program Costs . . . . . . . . . . . . . . . . . . . . . . . . . 18Table 8 : Program Financing . . . . . . . . . . . . . . . . . . . . . . . . 18Table 9 : Status of Legal Covenants . . . . . . . . . . . . . . . . . . . . 19Table 10: Bank Resources: Staff Inputs . . . . . . . . . . . . . . . . . . . 24Table 11: Bank Resources: Staff Missions . . . . . . . . . . . . . . . . . 25

APPENDIXES .26

A. Mission's Aide-Memoire ...... . . . . ........ . . . . . . . 26B. Cofinancier Contribution to the ICR . . ..... .. . . . . . . . . . . 32C. Miscellaneous Appendixes . . .34

D. Map . .. .. .. .. . . .. . . . .. . . . . . . . . . . . . . . . . . 36

iD.Map...36~~~~~~ ..

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

IMPLEMENTATION COMPLETION REPORT

ISLAMIC REPUBLIC OF MAURITANIA

PUBLIC ENTERPRISE SECTOR ADJUSTMENT PROGRAM[Credit 2166-MAU]

PREFACE

This is the Implementation Completion Report (ICR) for the Public Enterprise Sector AdjustmentProgram (PESAP) in Mauritania, for which Credit 2166-MAU in the amount of SDR 30.70 million (US$40 million equivalent) was approved on June 26, 1990 and made effective on August 29, 1990. This Creditwas further subject to four amcndments under which additional financing totaling SDR 7.38 million (US$10 million equivalent) was approved. The four Amending Agreements were signed on November 20, 1990,November 18, 1992, January 25, 1993 and April 26, 1994, respectively.

The Credit was closed on August 3, 1994, compared with the original closing date scheduled onDecember 3 1, 1992. The first tranche, released upon effectiveness, was fully disbursed by December 31,1990; the second and third tranches were released on March 31, 1993 and March 31, 1994, respectively.The Credit was filly disbursed by July 18, 1994. Cofinancing for the Project was provided by Germany,Japan, the African Development Bank and the Arab Fund for Economic and Social Development.

The ICR was prepared by Jean-Michel N. Happi, Industry and Energy Division, Western Africa,Africa Region, and Jean-Pierre Thibaut, Consultant. Comments have been received from Silvia B. Sagan',Sector Operations Division Chief and Emmerich S. Schebeck, Project Adviser. Borrower's andcofinanciers' evaluation of the PESAP as well as their comments on the draft ICR were invited, butcomments were received only from Japan. These comments are included as appendixes to the ICR.

Preparation of this ICR was begun during the Bank's final completion mission of September 5 to18, 1994. It is bascd on material in the Program file, including President's Report, Letters of DevelopmentPolicy, supcrvision reports, progress reviews on the occasion of tranche releases and related documents.The Borrower contributed to the preparation of the ICR by contributing views reflected in the mission'saide-memoire.

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PUBLIC ENTERPRISE SECTOR ADJUSTMENT PROGRAM[Credit 2166-MAU]

ISLAMIC REPUBLIC OF MAURITANIA

EVALUATION SUMMARY

Introduction

1. The Program under review (Credit 2166-MAU) for SDR 38.08 million, follows three precedingoperations w'ith public enterprise components in Mauntania since 1985: (a) a Structural Adjustment Credit(Cr. 1812-MAU), (b) a Rehabilitation Loan for SNIM (Ln. 2643-MAU); and (c) a Public EnterpriseTechnical Assistance and Rehabilitation Credit (Cr. 1567-MAU). These projects supported, inter alia,reforms aiming at liberalizing the economy, improving the performance of public enterprises andencouraging pnvate sector activity. The last credit focused on improvement of the legal and institutionalframework for the public enterprise sector, revision of incentives policies, rehabilitation of individualenterpnses and introduction of other measures to rationalize and irprove the efficiency of the sector.

Statement and Evaluation of Pro2ram Obiectives

2. The pnmary objective of the PESAP was to support the extension of the Governement's structuraladjustment program aimed at deepening the reforms in the PE sector. Actions under the Program included:(i) modification of the legal and institutional framework with the objective of increasing public enterprise(PE) autonomy and financial control, (ii) financial restructuring programs for key enterprises remaining inthe sector, particularly SNIM, the iron ore mining company, which is by far the largest enterprise in thecountry; and (iii) a program of divestiture aimed at reducing the number of enterpnses in the public sector.

3. The PESAP's conceptual foundation and formulation were sound. In order to promote achievementof its overall objectives, the Program's action plan was sequenced into three series of reforms and activities,whose implementation was monitored through the three tranches of the Credit. The objectives (i) and (ii)above were clear, pertment and realistic. But the action plan was too ambitious regarding certainobjectives under (ii), mainly those related to the State divestiture from mixed-economy companies createdin partnership with foreign governments. It did not adequately anticipate the political, diplomatic and legalobstacles of such divestiture, given in particular the complex financial mechanisms by which theseenterpnses were created and which need to be tackled.

Implementation Experience and Results

4 The PESAP is rated "satisfactory". Its implementation benefited from the experience of thepreceding Public Enterpnse Technical Assistance and Rehabilitation Project (Cr. 1567-MAU). It was alsofacilitated by the Public Enterprise Technical Assistance and Institutional Development Project (Cr. 2167-MAU), prepared in parallel with the PESAP and which provided support to the Government for carryingout the Program The Progran faced senous difficulties arising from uncertainties and delays in themobilization of its co-financing. Implementation start-up also suffered a one-year lag in 1990, mainly due

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to the Gulf War and misunderstandings bv the "Cellule de rehabilitation du secteur parapublic" (CRSP,the implementing agency) of the need to ensure that funds in the Credit 1567-MAU were adequatelydevoted to the implementation of the measures foreseen under the PESAP.

5. The PESAP was further hampered by delays in releasing the second tranche of the Credit. Thistranche release was scheduled in 1991. At the time of the visit of the supervision mission in September199 1, all of the specific conditions relative to the release had been met. However, because there was noagreement with the Government on an acceptable macroeconomic framework, the release of the tranchewas not recommended until December 1992, after agreement was reached on the Fourth Year PolicyFramework Paper covenrng the penrod 1992-1995. Finally second tranche release occurred in March 1993.As a result of all these factors, it was agreed to postpone the Credit closure date to December 1994, whichis two years after its onrginal schedule.

6. However, from 1991 the Program gained a new impetus thanks to firm Government commitment toreforms, good performance of the implementing agency and a forceful supervision by the Bank. Thisfurther enabled the PESAP to substantially achieve most of its major goals. These achievements are likelyto be sustainable, although many issues remain pending and need to be strengthened for the PESAP to fullyattain its long term development objectives. The following provides a summary of these achievements andpending issues.

7. The PE legal and institutional framework has been fundamentally reformed within the context ofthe PESAP. New laws were enacted which enable PE managers to enjoy effective autonomy in their day-to-day operations, and lead Government to exercise its control through its representatives to the enterprises'Boards. Financial control over PEs, however, remains weak, due in part to the weaknesses of the auditingand accounting procedures, requirements and standards in Maunrtania. This issue is being tackled by theGovernment and will also be addressed in the framework of the impending Financial and Private SectorDevelopment Project. (paragraphs 9-12)

8. The financial restructuring of SNIM was outstanding and the company's long-term viability hasbeen restored. OPT (post and telecommunications), PANPA (port) and SONELEC (water, energy) havealso been successfully rehabilitated and should improve their performance under their on-going "contract-plans". These contract-plans provide performance objectives and the necessary management actions fortheir achievement by each enterprise, as well as the relevant Government's commitments. Within thiscomponent of the PESAP, however, the restructuring of Air-Mauritania appears to be deficient. Thiscompany remains in a critical situation, although it benefited from heavy technical assistance costing overhalf a million dollars, not to mention the overall resources provided to the company in the context of itsfinancial restructuring. In retrospect, it seems that its contract-plan was signed to meet the Creditconditionalities rather than to provide an effective framework and incentive for its in-depth restructuring.(paragraphs 13-24)

9. The Government also intended to divest itself from all loss-making mixed-economy companies(MECs). This objective was partially achieved. Government has reduced its majority shareholding from 20MECs at the beginning of the PESAP to 10 MECs as of today. Out of these 10 MECs only fourenterprises are still experiencing losses, and two among these four enterprises will be divested soon. TheGovernment further intends to fully divest itself from all the remaining 17 MECs in which it still holdseither majority or minority participations. However, as stated above, there are some doubts on its ability topromptly withdraw from most MECs in which foreign governments are stockholders. (paragraphs 29-30)

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10. The Government has abolished the monopoly of SONIMEX on rice, tea and sugar importation.This company was successfully restructured and there has been no shortage of these commodities nor hasthere been price speculation since the liberalization. From this point of view, the demonopolization hassubstantially attained its short-term objectives. But the conditions for this liberalization to yield its fullbenefits (to consumers, private sector and the Government) have not yet been met. Two major risks arepending: (i) the risk that the former State monopoly evolves into a de facto private monopoly or oligopoly,if appropriate actions are not taken to promote effective competition, including ensuring fair access toforeign exchange by all importers; and (ii) the risk of collapse of SONIMEX, if the company cannotcompete with the private sector on a fair basis. Moreover, it is also worth noting that the collapse ofSONIMEX could open room for uncontrolled price speculation which might have a severe impact ondomestic producers of rice. However, as part of measures toward the liberalization of the exchangesystem, the Government has introduced a mechanism of auctions for import authorizations, which wasextended to all imports except petroleum and those by the fisheries sector and SNIM. This mechanism wasintended to reduce distortions in the incentive system and to promote better competition among importers,including SONIMEX. Its functioning however needs to be further improved. The Financial and PrivateSector Development Project under preparation will help the Government tackling some of these issues, bysupporting further liberalization of the foreign exchange system and improving the regulatory and incentiveframework for effective competition and private sector development. (paragraphs 33-38)

11. The Government has completed the settlement of its net balance of cross-debts with publicenterprises. In view of avoiding recurrence of arrears, it has increased its budgetary allocations for theCentral Administration's consumption of water, electricity and telephone, which rose from around 1% ofthe budget in 1989 to nearly 7% in 1994. Nowadays, each year allocations are determined from the billingof the preceding twelve months' actual consumption and take into account expected tariff increases and thenet balance of arrears, if any. The Government also implemented a forceful and successful action plan toreduce the Central Administration's consumption. The results of this action plan which is expected to yieldsavings amounting UM 150 million should be seen as from the end of the current fiscal year. Hence,PESAP's objective of increasing financial discipline in Government's relationships with public enterpriseshas been substantially achieved and is likely to be sustainable. However, two major issues remainunsolved : (i) the reimbursement of arrears and unpaid water and electricity consumption by customerswhose billing is guaranteed by Government (e.g. hospital, army); and (ii) the reimbursement to OPT of feesit pays on behalf of Government to international organizations of post and telecommunications.(paragraphs 26-28)

Future Operations and Key Lessons Learned

12. Given the need to consolidate the reforms achieved under the PESAP in view of their sustainability,the PE Technical Assistance and Institutional Development Project (Cr. 2167-MAU) should continue toprovide relevant support to Government in the short-run. This Project will reinforce (a) improvement ofaccounting and auditing practices and of financial control over PEs; (b) introduction of efficient costaccounting systems within most PEs; (c) rehabilitation of Air-Mauritania; and (d) divestiture ofGovernment from the mixed-economy companies in which it is still shareholder.

13. Some other issues which emerged in the course of the Program require long-term solutions whichcould be addressed in future projects under preparation. Such issues include (i) the weaknesses ofincentives for cffective private sector development after liberalization and privatization; (ii) inefficiencies inthe auction svstem for foreign cxchange allocation to importers; (iii) issues related to the gradualliberalization of fisheries exports, particularly, the complete demonopolization of SMCP (the fish

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marketing board) and the dismantling of its remaining exclusive export rights. and (iv) the complction ofthe tax reform for the fish sector and the clearing of SMCP's role in foreign currency control and in thecollection of taxes from fisheries exports. Moreover, SNIM's outstanding pcrformance and managementcapacity is a valuable example of public enterprise success whose expcriencc should be disseminated.Relevant studies and experience sharing initiatives should be carricd out for that purpose.

14. Four main lessons can be drawn from the PESAP implementation expcriencc. First, economicliberalization does not necessarily translate into competitive markets and private sector development, butmay lead to private monopolies, if the liberalization proccss is not accompanied bv appropriate mcasures toensure fair competition between the entreprencurs involved - both public and private.

15. Second, experience of the PESAP also stresses the need for a prefeasibilty study which should helpassess and design the most appropriate conditions to implement a divcstiture program. If such a study hadbeen carried out during the preparation of the PESAP, it would have clearly identificd the peculiarities ofcertain mixed-economy companies and the constraints to be addressed in order to facilitate their divestiturewithin a more realistic timeframe.

16. Third, in rehabilitating public enterprises, financial restructuring is not an end by itself If in themeantime the enterprise management does not implemcnt forceful reforms to improvc the managementsystem and the enterprise productivity and to significantly rcducc its operating costs, the financialrestructuring would have little impact in the long run.

17. Last but not least, within the framework of PE sector adjustmcnt operations, important rcsourcesare sometimes allocated directly to enterprises to carry out their financial rcstructuring. In this context theBank should be more demanding on the quality of management and design explicit criteria to monitorenterprise performance improvements. The signing of a "contract-plan" ;s not a sufficient criteria to ensurethat an enterprise will effectively implement the reforms rcquired to restore its profitability. It should bereinforced by specific performance objectives whose satisfactory achievement should also be reflectedin the legal covenants or conditionalities, as appropriate

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PUBLIC ENTERPRISE SECTOR ADJUSTMENT PROGRAM[Credit 2166-MAU]

ISLAMIC REPUBLIC OF MAURITANIA

PART I -- PROGRAM IMPLEMENTATION ASSESSMENT

A. BACKGROUND

1. For most of the 1970s and early 1980s, Mauritania's economic development has been uneven andmarked bv major financial imbalances. Exogenous factors significantly contributed to the deterioration ofthe countrv's economic and financial situation. Successive periods of drought led to rapid desertification,declining farm production and deepened dependence on food aid. At the same time, iron ore exports whichaccounted for over 60% of the country's export earnings shrank, heavily hit by a world steel market crisis.The adverse impact of these factors was aggravated bv weak economic management. During this period,the Government embarked on large public investment program financed almost entirely through externalborrowing. The program channeled resources towards low-yielding projects and led to a large external debtand a heavy debt service burden. Domestic demand was sustained by an excessive growth of publicexpenditures, which in turn contnbuted to large balance of payments deficits. Price distortions andregulated market for agnrcultural and industnral products discouraged the development of private activities.At the same time, public enterpnse (PE) performance was sharply deteriorating. These enterprisesoperated with high losses, mounting arrears, a rising debt burden and increasing illiquidity, and many reliedon monopolv privileges. Their bad performance mainly owed to rapid changes in their extemalenvironment, poor investment choices, weak management, lack of financial discipline, overstaffing andinappropriate and ill-defined relations between the Government and the PEs.

2. Against this background, the Govemment launched an adjustment program in 1985 aimed at layingthe foundation for sustained growth and restoring the balance of payments to a viable position. Thisprogram also included Important reform initiatives specifically aimed at liberalizing the economy,improving the performance of public enterprises and encouraging private sector activity. The program wassupported by a Structural Adjustment Credit (Cr. 1812-MAU), a Rehabilitation Project for SNIM, the ironore mining company (Ln. 2643-MAU), an Industnal Development Project (Cr. 1572-MAU), and a PublicEnterprise Technical Assistance and Rehabilitation Project (Cr. 1567-MAU). Under this last Project,reforms in the public enterprise sector were undertaken in five main areas, including improvement of thelegal and institutional framework for the public enterpnse sector; revision of incentives policies;identification of enterprises to be restructured, pnrvatized or liquidated; rehabilitation of individualenterprises; and introduction of other measures to rationalize and improve the efficiency of the sector.

3. But continued financial desequilibria in the sector led the Government to formulate, in consultationwith IDA, the Public Enterprise Sector Adjustment Program (PESAP). This Program was embodied in theGovernment's letter on Sector Development Policy. It was also part of the Bank's assistance strategy toMauntania. Implementation of measures under the PESAP both depended on adherence to the overallmacrofranework and was essential to meeting overall macroeconomic targets. Thus, maintenance ofappropnate macroeconomic policies, consistent with the directives outlined in the Policy Framework Paper,was a condition of Credit tranche release.

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B. STATEMENT/EVALUATION OF OBJECTIVES

4 The primary objective of the PESAP was to extend and deepen Government's structural adjustmentreforms in the PE sector. It specifically aimed at

(i) fundamentally modifying the legal and institutional framework governing the sector so thatPE pnrvatization would be facilitated, more autonomy would be provided to enterprises andfinancial control would be improved;

(ii) financially restructuring key enterprises, including SNIM and Air-Mauritania; and

(iii) substantially reducing the role of the State and facilitating increased private sectorparticipation by privatizing and liquidating public enterprises and elininating Statemonopolies.

5. The objectives under (i) and (ii) above were relevant, clearly stated, defined by realisticmeasures, and, as appropriate, by quantitative norms making it possible to track their implementationprogress. On the other hand, certain objectives under (iii), relating to divestiture were unrealistic. Inparticular, the Prograrn did not take sufficiently into account the length of time needed to settle all thefinancial, legal and diplomatic issues involved in Government withdrawal from certain mixed-economycompanies (MECs) in which foreign Governments were also shareholders. A prefeasibility study ofthe divestiture process, carried out prior to the PESAP action plan, would have made it possible toidentify more appropriate implementation conditions.

6. Implementation of the PESAP was facilitated by the Public Enterprise InstitutionalDevelopment and Technical Assistance Project (Credit 2167-MAU), prepared in parallel with theadjustment operation, and which provided additional support to Government to carry out the reformsunder the Program. The linking of these two credits (2166 and 2167) proved effective, even though asexplained below it was a very risky undertaking. It encouraged the Government, on the one hand, tocarry out institutional and structural reforms in the parastatal sector, and on the other, to provideincentives for the enterprises to carry out the restructuring measures specified in the PESAP, inparticular those whose implementation was a condition of release of the Credit 2166 tranches.However, this involved the risk that certain measures would be adopted in order to formally fulfill theconditions of release, while the actual objectives of the reform and their sustainable consolidation wererelegated to second place. In retrospect, this risk was limited to only one enterprise. Moreover, thelinking of the two credits made it difficult to perform an ex-post evaluation of the PESAP alone. Thiswas because certain objectives were defined within the PESAP framework while the resources for theirimplementation came under the Credit 2167-MAU. The present evaluation of the PESAP consequentlytakes into account its complementarity and interaction with the Technical Assistance Project.

7. Four other major risks identified at the start of the Program were also likely to adversely affectimplementation of the PESAP. First of all, the risk that the Government could find it politicallyunsustainable to continue the process of liberalization of the economy and engage in privatization andliquidation activities. Second, the risk that the adjustment program would be too restrictive, basicallyfrom the standpoint of Government expenditures, given the additional outlays that would have to bemet following repatriation of groups returning from Senegal. Third, the risk that implementation ofthe PESAP (and the Technical Assistance Project) might prove too demanding for the limitedcapabilities of the Mauritanian administration in that domain. Lastly, there were major uncertainties

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concerning the variations in the dollar rate of exchange and in the price of iron, and their impact on theSNIM restructuring project. However, upon completion of implementation of the PESAP, it appearsthat (i) the Government's firm commitment and political will, (ii) the efforts made by the CRSP and thetechnical support it received, and (iii) SNIM's capacity for adaptation and its performance record wereall factors which, each in its own field, made it possible to overcome those risks and successfullyimplement the program.

C. ACHIEVEMENT OF MAJOR OBJECTIVES

8. As discussed below, the objectives of the PESAP have been substantially achieved. Given thenature of the program, no provision was made for calculating internal rate of return or discounted netvalue. As designed, the Program constituted a pertinent approach for achieving the desired objectives.

(i) Reform of the legal and institutional framework

9. The legal and institutional framework for the parastatal sector was thoroughly overhauled.New legislation was enacted concerning the public enterprises, providing for their classification bystatus (Societe nationale, Societe d'economie mixte, or Etablissement public industriel et commercial),setting down their rules of operation, and identifying their respective supervisory bodies. All publicenterprises have been reclassified under these three categories. Under the new legislation, publicenterprises are granted full autonomy in their day-to-day management, and Government intervention isstrictly limited to major strategic decisions. These companies no longer require prior authorizationfrom their supervisory ministries except with respect to the composition of their procurementcommittees, adoption of their investment programs, and signature of a medium-term plan or contract-plan. Government oversight will henceforth be exercised via their boards of directors. It was notedthat these new provisions are being effectively implemented by the enterprises and their supervisoryministries, whose commitment to both the spirit and the letter of this approach was evident. However,a very few cases were noted where the operation of the boards of directors was in need ofimprovement, specifically from the standpoint of the effective exercise of their prerogatives in terms oforientation and supervision of the enterprise concerned.

10. As part of the actions to improve management of the enterprises and to make their executivebodies (board of directors, general manager) more accountable, it was planned that the enterpriseswould put in place appropriate accounting systems and budgetary procedures. Such methods wouldenable them to produce reliable year-end financial statements and to formulate accurate financialprojections for the next fiscal year. As of this date, substantial efforts have been in the area of generalaccounting, and most of the enterprises are now producing their annual financial statements by thedeadline specified by law (end March), whereas before the PESAP these statements were usuallysubmitted on average 9-1 1 months late.

11. But much progress still needs to be made, since most enterprises do not yet have (i) efficientcost accounting systems enabling them to optimize the quality of their management decisions in manyareas (e.g. pricing tariff policies), or (ii) pertinent methods of financial projection, including medium-term financing plans. This is particularly regrettable in light of the fact that provision is often made incontract-plans for (a) financial compensation payable by the State for any public service obligations theenterprise is required to discharge, or (b) capital increases in the case of investment, while the amountsactually required are not determined with sufficient accuracy in the tables of incomes and expenditures.

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However, these issues are being dealt with in the context of the on-going Public Enterprise InstitutionalDevelopment and Technical Assistance Project (Credit 2167-MAU).

12. Certain reservations should also be expressed regarding the reliability and certification ofcertain financial statements. Enterprise accounts have often been certified without reservation by localexternal auditors [commissaires aux comptes], while international auditing firms (assigned to auditthose same enterprises) have contested them and formulated numerous recommendations for theircorrection. However, it should be noted that this applies primarily to mixed-economy companies(MECs) and that other major PEs (SONELEC, OPT) have made consistent progress in this area sincethe start of the PESAP. Within this new framework for public enterprise supervision, the externalauditors have a particularly important role to play. As of this date, the conditions for access to thisprofession and the procedures for monitoring the activities of its members are not sufficiently rigorousto guarantee the production of accounting data sufficiently reliable to meet international standards.This issue is being tackled by the Government and will also be addressed in the framework of theimpending Financial and Private Sector Development Project.

(ii) Financial restructuring and rehabilitation of the major public enterprises

13. The second set of PESAP objectives contained three components:

- the financial restructuring of SNIM this has had highly satisfactory results;- the restructuring of Air-Mauritania partial results have been obtained; and- the continued implementation of the rehabilitation plans for OPT, SONELEC and PANPA, to

culminate in contract-plans: substantial results have been achieved.

14. SNIM. The objectives of the PESAP concerning SNIM were to rehabilitate its financialsituation, providing it with the means to: (i) maintain its production level at about 10 to 1I milliontons of iron ore a year; (ii) improve its international competitiveness; and (iii) lay the foundations forits long-term viability. These objectives were achieved through successful implementation of thefollowing measures:

(a) financial restructuring of the company, which helped generate a level of cash reserves enoughto: (i) ensure adequate level of mining operations with reasonable levels of working capital;(ii) enable SNIM to meet its debt service obligations; and (iii) ensure that it reasonablycontributes to its investment, including the M'haoudat project;

(b) sustained improvement in productivity, inter alia through the reduction of its costs by close toUS$6.5 million in two years, and launching of an internal re-engineering project;

(c) opening of the M'Haoudat iron ore deposit to replace the depleting Kedia resources, involvinga US$157 million investment cofinanced by several donors; and

(d) substantial improvement of its cash management, enabling the company to tackle the risksassociated with changes in exchange rates, iron prices and interest rates.

15. The positive effects of this restructuring are summarized in Table Al: Trends in SNIM'sPerformance, in Appendixes. The figures reflect the synergy between PESAP's financial contributionand the technical and management efforts made by SNIM, as well as the rigorousness and innovative

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approaches demonstrated by the company in carrying out its reforms. SNIM has fully met theperformance targets of the PESAP, particularly those relating to output, productivity, and profitabilityand indebtedness thresholds, as set out in the medium- and long-term financial projections. Thesecriteria proved particularly useful for the monitoring of its financial restructuring operations.

16. Air-Mauritania. The PESAP's objective regarding Air-Mauritania was to promote itsfinancial restructuring, which in turn would help provide the company with the necessary means toembark on a process of operational recovery. The structural and cyclical causes of the enterprise'sdifficulties were assessed in a strategic and management audit carried out in 1990. This audit stressedthe need to rapidly supplement the financial restructuring activities with the design and implementationof a global recovery plan. A contract-plan was to be signed by the company and the Government tofinalize this procedure and provide a framework of reference for their mutual obligations.

17. Under the PESAP, the company's financial restructuring was gradually implemented throughthe following measures: (i) recapitalization; (ii) rescheduling of the FOKKER debt; (iii) passing on ofthe full share of the debt canceled by the Paris Club; (iv) use of the proceeds of the sale of thepresidential aircraft; and (v) clearance of Government arrears in the area of public service subsidiesand billing for transportation services. These measures have helped to redress the company's balancesheet structure.

18. However, and despite the substantial technical assistance received by Air-Mauritania under theTechnical Assistance Project (2167-MAU), the company fell heavily behind schedule in implementingthe strategic recovery plan that it was to have carried out at the same time in the commnercial, technicaland organizational areas. This delay resulted in the persistence of major operating deficits. Theconsequences could have been catastrophic, perhaps even cancelling out the effects of the financialrestructuring, had an emergency plan not been put into effect at the beginning of 1994. Thisemergency plan comprised a number of measures such as higher fares, elimination of loss-producinginternational routes, reduced service to unprofitable domestic destinations, and strict control overcertain fixed costs. These measures were intended to reduce operating losses by 47% to UM 107million in 1994.

19. As of this date, doubts persist concerning the scale of Air-Mauritania's recovery, given theseverity of its structural problems and the delays in implementation of its overall recovery plan. Insuch a context, the contract-plan which was signed seems to be regarded more as a formal document,meeting one of the conditions of release of the IDA credit, than as a framework of reference againstwhich to measure the company's recovery efforts and effective improvements in its performance data.As liquidation of the company is not an option in Mauritania which has little transport infrastrucrurealternatives, a forceful restructuring of Air-Mauritania's operations need to be implemented. This willforemost require a strong commitment to this restructuring by both the Government and the enterprisemanagement. In that case, the Technical Assistance Project (Cr. 2167-MAU) could provide resourcesto support the restructuring.

20. OPT. The PESAP provided for major changes within the institutional framework of the OPT,rehabilitation of its accounting and financial operations, improvement of its information system, andadoption of a contract-plan with the Government. These objectives have been substantially achieved.OPT has significantly improved the quality of its service and its results. Its profits rose from UM 286million in 1990 to UM 625 million in 1993. A draft contract-plan with the Government was preparedon the basis of OPT's strategic plan, defining its performance targets and the necessary management

5

actions necessary to their achievement, as well as the Government's commitments. This contract-planhas been signed by an Interministerial Committee and accepted by IDA, but it is still awaitingParliamentary approval.

21. Until such time as this contract-plan takes effect, it is particularly important that the spirit inwhich it was conceived and finalized be respected, especially concerning such aspects as financialarrangements (investment and self-financing) and management autonomy, to guard against any changesthat could distort the equilibria and compromise OPT's future performance. A study was also plannedto examine the possible alternatives of splitting up the posts, telecommunications, postal checkingaccounts, and savings bank services, creating subsidiaries to handle the different functions, ormaintaining them in their present situation. This would be carried out within the framework of thestudy on OPT's long-term strategy.

22. SONELEC. Upon the expiry of its first performance contract in 1991, SONELEC signed itssecond three-year performance contract under the PESAP. Within the framework of these contracts,the enterprise has achieved and often exceeded its performance targets, whether at the technical,commercial or financial level. It also received: (i) a large-scale recapitalization by the State (UM 900million); (ii) an authorization to adjust its rates to keep pace with production cost trends; and (iii)payment by the Government of billing arrears in respect of consumption by the various Governmentdepartments. Its income statement reflected its recovery, rising from a loss of UM 380 million in 1989to a profit of UM 225 million in 1993, and a substantial improvement is forecast for 1994.

23. However, SONELEC's recovery is still weak. Since it cannot expect to see its ratessystematically reflect all the increases it experiences in the cost of its inputs, SONELEC will need tointensify its cost reduction, along the lines of its reaction to the devaluation of the ouguiya in 1992.The considerable reduction in its costs and the improvement in its productivity enabled it to achievesubstantial savings (over UM 160 million in 1993) and to concurrently restrict its tariff increases.Nevertheless, these efforts need to be intensified. This is particularly important in view ofSONELEC's investment projects (extension of electricity and water networks), for which it will havesubstantial self-financing needs. It is also a matter of urgency that it finalize the introduction of itscost accounting system to enable accurate determination of its costs by product (water, high- andmedium-voltage electricity) and by cost center. These reforms are essential to the preparation of apertinent pricing policy, which constitutes an essential element in the development of Mauritania'sprivate sector, particularly with respect to the expansion of energy-intensive processing activities in thefisheries sector. In the short run, the Technical Assistance Project (Cr.2167-MAU) will supportSONELEC in setting up reliable cost accounting and forecasting procedures. The company willcontinue its cost reduction efforts under its third performance contract which will be signed in 1995

24. PANPA. The extent of PANPA's rehabilitation under the PESAP has been substantial. Allthe relevant measures were implemented, including privatization of stevedoring operations, staffcutbacks of over 50%, and signature of an infrastructure lease agreement between the Government andPANPA. The port's financial situation improved considerably, rising from a net loss of UM 150million in 1989 to a profit of over UM 50 million in 1993, even after annual rental payments of UM100 million to the Government. The relative drops in imports and in the volume of port activitiesfollowing the recent devaluation of the UM and the CFA franc were reflected in PANPA's turnover,but so far without causing any real reduction in its profitability. In order to strengthen PANPA's long-term viability, a competitive services and pricing strategy should be prepared vis-a-vis competitor ports

6

(e.g. Dakar and Abidjan, serving Mali). A program to retrench supervisory personnel is now underway and should help to make the port's operations more competitive.

(iii) Sector rationalization: financial discipline, divestiture and demonopolization

25. This component of the PESAP focussed on three main objectives. The first concerned thesettlement of Government's arrears and the establishment of financial discipline in its relations withPEs. The second concerned the Government's withdrawal from unprofitable mixed-economycompanies (MECs). The third aimed at abolishing State monopoly on imports of rice, sugar and tea,and at liberalizing the insurance sector. These objectives have to a large extent been achieved, but theyneed to be consolidated.

26. Payment of Government arrears and measures to avoid recurrence. At the start of thePESAP (July 1990), the net balance of cross-debts between the public enterprises and the Governmentstood at UM 689 million of arrears owed by the Government. At the end of the program, all of thisamount had been paid, 58% having been settled using counterpart funds under the PESAP credit, thebalance being covered out of other sources of financing, including debt-equity swaps with privateinvestors within the framework of privatization of SMCPP (Societe de commercialisation des produitspetroliers). Following a partial new build-up of arrears in 1992, the Government again adopted afinancing plan designed to lead to their payment in full by 1995. To avoid all recurrence of arrears,the Government significantly increased the annual consumption allocations appearing in its budget.This systematic inclusion of budgetary provisions covering actual consumption by the Governmentreflects its commitment to the sustainable rehabilitation of its financial relations with the publicenterprises. Also, with the support of the national companies concerned (OPT, SONELEC) itintroduced a forceful system to both monitor and curb Government consumption of the public services,which is expected to yield annual savings in excess of UM150.

27. Budgetary allocations for water and electricity payments rose from UM 80 million in 1990 toUM 700 million in 1994. Each year from now on, these will be calculated on the basis of the previousyear's consumption, adjusted to take account of changes in consumption levels, planned tariffincreases, and the net balance of arrears. Nevertheless, SONELEC is still at considerable risk of arecurrence of Government arrears in respect of Government-backed customers. The levels ofconsumption by customers with this type of guarantee are equivalent to those of the Goverrunentdepartments. Measures to make such customers accountable and to include relevant budgetaryallocations for their consumption should be implemented without delay to avoid any new build-up ofarrears owed by them. Such measures are particularly essential since those customers includeadministrative public establishments whose overall budgetary appropriations should allow them to payfor their own water and energy consumption.

28. Budgetary allocations for telephone consumption rose from UM 60 million in 1990 to UM 520million in 1994. This was accompanied by a program to rationalize and restrict service throughout theentire Government telephone network, which produced highly satisfactory results. Nevertheless, onepoint still needs to be clarified, namely that of Mauritania's subscriptions to international post andtelecommunications organizations, paid by OPT on the Government's behalf but not yet reimbursed bythe Government.

29. Divestiture. One of the Government's objectives under the PESAP was to divest itself fromall nonviable MECs. This objective is in process of being achieved. As of this date, the Government

7

is the majority shareholder in only 10 MECs; this is half the number at the start of the PESAP. Only4 of those 10 recorded losses in 1993, and Government withdrawal from 2 (ALMAP, SAMIA) of those4 is now being negotiated with potential investors. The Government still holds minority participationsin 7 other MECs but intends to fully divest itself from all MECs. (See Table A2: Size of the PESector and Table A3: Performance of Enterprises remaining in the Public Sector, in Appendixes)

30. The modalities for Government divestiture were individually tailored to each enterprise after ithad been audited or evaluated. This approach appears justified, given the financial situation of theenterprises concerned, which were more often liquidated than privatized. On the other hand, PESAP'saction plan covering the divestiture of the (8) MECs with foreign government shareholders wasunrealistic. It did not take account of the diplomatic, legal and financial difficulties involved in thiswithdrawal, overlooking in particular the complexity of the financial arrangements under which theenterprises were originally set up.

31. The Government has started to privatize the Societe Mauritanienne de Commercialisation dePoissons (SMCP), the fish marketing board. Having reduced its holdings by half, it now owns 50% ofthe capital, and has pledged to reduce this holding to 35% in the near future. The privatization optionselected calls for the "equitable and broadest possible" equity participation by producers. The privatesector is represented by the two largest national fishery federations (FIAP and FIA Peche), each with a20% holding, and by the banks, with 10%. This partial privatization was followed by reorganizationof the company and implementation of vigorous cost-reducing measures. These measures, combinedwith a favorable business climate characterized by recovering demand and rising world prices,contributed to a significant improvement in SMCP's financial results, with prospects for a close to15% increase in its profits in the first year. This should pave the way either for a dividend distributionto shareholders or, preferably, for a reduction in its marketing commission rates.

32. SMCP still holds exclusive export rights for species subject to the mandatory landingrequirement (essentially cephalopods), which represent some 80% of its turnover, and for which Japanis the principal market. The other segments of fishery activities have been liberalized. TheGovernment plans to maintain SMCP's monopoly for an initial period of five years, even after itstransfer to private-sector majority ownership. This measure is designed to serve as a transition stageprior to full liberalization of the sector. It should facilitate reorganization of the private operatorsalong lines conducive to improvement of their international competitiveness. In addition, maintenanceof the monopoly should enable the Government to continue to exercise control over those exports,which are the country's principal source of foreign exchange and which generate over one quarter ofits budget resources. However, with a view to total liberalization of the sector, the Government willneed to clarify the function presently performed by SMCP as exchange control authority and as areliable collection agency for the tax revenues deriving from those exports. This function, whichhitherto also justified SMCP's monopoly status, should be transferred, if necessary, to other competentadministrative departments.

33. Liberalization of rice, sugar and tea imports (SONIMEX). Provisions were made in thePESAP for the financial recovery of SONIMEX and the gradual demonopolization of its principalimport products (rice, sugar, tea). The objectives of this component were to: (i) liberalize imports ofthose products; (ii) reduce the deficit of the enterprise and the pressure of that deficit on theGovernment budget; and (iii) guarantee the supply of the three commodities under competitiveconditions as to quality and price. Implementation of this strategy could not be conceived without the

8

concurrent implementation of import surveillance and control measures (collection of customs taxesand duty) and of measures to ensure equal access to foreign exchange for all operators.

34. At first glance, the results obtained reflect the objectives set. Thanks to rigorous managementefforts and a favorable (downward) trend in the purchase price of rice, SONIMEX recovered andobtained a substantial profit in 1992. As of today, all of the 3 products have been demonopolized withno shortage of supply or speculative changes in selling prices.

35. However, the sector's present. situation and its long-term risks should be approached with somecaution, primarily because the elimination of SONIMEX' defacto monopoly has in practice resulted ina de facto oligopoly (2 or 3 principal importers), and no true competitive environment has beenestablished. A statistical analysis of import applications and customs declarations clearly indicates thatnot all customs duties are actually being paid by these new private operators. These importers operatewith lower costs than SONIMEX which, by virtue of its legal status, meets all its customs obligationsand thus become less competitive.

36. Moreover, the disparity (in foreign exchange availability and supplier credit terms) between theprivate importers and SONIMEX is highly detrimental to SONIMEX, which has made virtually nomajor purchases since 1993. Thus SONIMEX could become nonviable without a significant volume ofsales to enable it to cover its core costs. It would then be ousted from the sector, and the referencepoint it represents for selling prices (respecting reasonable gross margin rates) would disappear,possibly resulting in upward price drifts on a market dominated by a cartel of private importers.

37. Lastly, it should be stressed that should this process come about, it would severely impact onthe development of local rice production activities. SONIMEX used to buy locally-produced rice atprices well above world market prices, thus providing indirect subsidies to domestic producers onbehalf of Government. This rice is uncompetitive as compared to imports and is unlikely to bepurchased by private importers, unless it is sold well below its production costs.

38. From the above reasons, it therefore appears that efficient supplementary mechanisms need tobe designed and put in place (including, possibly, the option of improving SONIMEX' performance asan operator) if the objectives underlying any process of economic liberalization are to be achieved on asustainable basis and with equity for all (Government and consumers). The Government should alsoredesign its policy in support of domestic rice activities, since SONIMEX's related role as marketingboard is most likely to be discontinued.

39. Demonopolization of the insurance sector. The insurance sector was liberalized as part ofthe PESAP reforms. Soci&g mauritanienne d'assurance et de reassurance (SMAR), which fornerlyheld the insurance monopoly, is in process of judicial liquidation. A new insurance company (NASR)was established, taking over SMAR's now regularized portfolio. The Government proposes to sell66% of NASR's equity to the private sector. Various private investors, including foreign insurancecompanies, have expressed interest in becoming involved in this sector in Mauritania, either through anequity participation in NASR or by establishing new companies. It should be stressed thatdemonopolization of the insurance sector in reality represents no more than a first essential steptowards the development of insurance activities in Mauritania. Such development will not in fact bepossible until the structural causes of SMAR's failure have effectively disappeared. The Governmentis setting up a new regulatory framework, including appropriate legal and institutional arrangements, a

9

new insurance code and investment incentives, to tackle these issues and render the insurance sectormore attractive for private investors.

(iv) Social measures within the PESAP framework

40. The reform of the parastatal sector resulted in the elimination of 1,632 jobs, over 16% of thetotal number of jobs in the sector in 1990. This effect, as well as its induced financial costs, wereidentified before the start of the program. The Government has paid a total of UM 690 million incompensation to the persons thus affected. In addition, it has set up a special unit within the Ministryof Planning, to strengthen its capacity to solve the social problems arising out of the structuraladjustment process.

D. MAJOR FACTORS AFFECTING THE PROGRAM

41. Implementation of the PESAP was affected by several factors. The first, and most serious, ofthese was the Gulf War. The ensuing political and social climate was not very propitious to the conductof reforms, and the conflict also caused the Government to make certain shifts in its priorities. Thesituation also led to delays in visits by supervision missions and foreign consultant assignments.

42. The PESAP was also affected by difficulties in mobilizing all of the cofinancing as originallyscheduled. Japan's contribution was not released until August 1993, and then only in part. This delaywas due to the Japanese Government's disagreement in principle with the Trinidad treatment for therescheduling and writing-off of public debt, concerning which (and its application to Mauritania)discussions were being held with the Paris Club. The Kuwait Fund financing and Arab fundcontributions were held up because of Mauritania's perceived political sympathy for Iraq during theGulf War. Neither the contribution from the African Development Bank nor the increase in theGerman loan could fully make up for this lack of scheduled funding.

43. The Program implementation was further hampered by delays in releasing the second tranche of theCredit. This tranche release was scheduled in 1991. At the time of the visit of the supervision mission inSeptember 1991, all the specific conditions relative to the release had been met. However, because therewas no agreement with the Government on an acceptable macroeconomic framework, the release was notrecommended until December 1992, after agreement was reached on the Fourth Year Policy FrameworkPaper covenrng the penod 1992-1995. Finally the second tranche release occurred in March 1993.

44. In addition to the problems created by the lack of adequate cofinancing, SNIM's action planwas jeopardized by: (i) the sharp drop in iron prices, of over 13% in 1993, or eight points below thelevels of the initial simulations; and (ii) a significant decline in sales, which fell by 24% between 1991and 1992 and by 10% between 1992 and 1993. The plan was saved thanks to the drastic compressionby SNIM of its operating costs and the opening up of the M'Haoudat mines earlier than planned.

45. The devaluation of the ouguiya adversely affected the operating conditions and profitability ofcertain enterprises (SONELEC and Air-Mauritania, in particular). On the other hand, it provedbeneficial for SNIM and SMCP, which are essentially exporting companies. Where Air-Mauritaniawas concerned, the constant changes in its leadership (four Managing Directors in rapid succession infour years) was an additional factor in slowing down implementation of its recovery plan.

10

46. Lastly, as a result of the various elections (presidential and legislative) held in Mauritania from1990 onwards, a number of decisions and the launching of certain of the PESAP's activities fell behindschedule.

E. PROGRAM. SUSTAINABILITY

47. Overall, the ex-post evaluation of PESAP concludes that the reforms carried out aresustainable, although some of them still require consolidation. Where the institutional framework isconcerned, for instance, public enterprises now enjoy true autonomy in their day-to-day management,Government oversight being exercised via their boards of directors. However, the financialsupervision mechanisms (external auditing) need to be strengthened, more from the standpoint of theirpractical operation than from that of the relevant legislation. As indicated above, this issue is beingtackled by Government through the reform of the profession of external auditors.

48. Where restructuring and rehabilitation of the major public enterprises is concerned, SNIM hasnow regained its medium- and long-term viability. The financial situation of OPT, PANPA andSONELEC has improved and should be consolidated within the framework of their performancecontracts. The action plans now in progress under those performance contracts serve to guaranteesustainable success. Only Air-Mauritania's situation remains particularly worrisome, despite the factthat this company also has a contract-plan.

49. Improvements in the financial relations between the Government and the public enterprises arewell under way on a sustainable footing. This is so despite the problems linked to Government-backedcustomers (SONELEC) and the question of the subscriptions to ITU and UPU (OPIT). The systematicinclusion of budgetary allocations to cover the Government's actual water, electricity and telephoneconsumption, and the vigorous efforts to curb such consumption, should prevent any recurrence ofGovernment arrears vis-a-vis those utilities.

50. Some reservations are in order concerning the possibility of rapid Government withdrawalfrom the MECs established in partnership with foreign governments, given the time-consumingdiplomatic negotiations in such withdrawal. Imports of commodities (rice, sugar, tea) have beenliberalized. But the full impact of this liberalization will not be felt until the conditions for effectivecompetition have been established, specifically the provision of competitive access to foreign exchangeand the payment by all importers of relevant customs duties and taxes. The recent signature of acontract with a surveillance company to handle import inspections and control will contribute to theinstallation of these equitable conditions of competition among importers and vis-a-vis the Government.

51. Lastly, the Government's clear commitment to the program of reforms and the effectiveinvolvement of most of the public enterprises managers may be seen as signs that sustainable recoveryis well under way in Mauritania's parastatal sector. Over the short run, the continuation of theTechnical Assistance Project (Credit 2167) will provide support for the consolidation of this recovery.

F. BANK PERFORMANCE

52. The PESAP was identified within the framework of the Public Enterprise Technical AssistanceProject (Credit 1567-MAU). It represented an extension and expansion of that Project, a fact that

11

facilitated its preparation. Implementation of the Program took four years, from credit effectiveness inAugust 1990 to closure in August 1994, overrunning the original schedule by one year and a half. Thetwo extensions of closing date granted by the Bank were most helpful in achieving PESAP's majorobjectives. During that period there were 5 supervision missions, comprising the task manager, Bankexperts and consultants specialized in the different areas covered by the PESAP (e.g. public enterprisereform, performance contract management, air transportation, mining, telecommunications, energy).Supervision slowed down somewhat during the first year of program implementation, owing partly tothe Gulf War. Subsequently, however, the Bank intensified supervision efforts and imposed aconsistently high level of requirements on the Government and CRSP, with respect not only to actualimplementation of the reforms but also to the fulfillment of conditionalities and observance ofdeadlines. Staff continuity and the frequent presence of Bank missions throughout most of the programwere determinant factors in ensuring compliance with those requirements.

53. The various stages of PESAP implementation, and in particular most of the supervision anddisbursement missions, were coordinated with the other donors, regularly with the OECF (Japan), andless frequently with the AfDB, FADES and KfW (Germany). In particular, the mobilization offinancing for SNIM, the execution of its financial restructuring and the recovery of its operations werethe result of far-reaching and fruitful coordination among the Government, SNIM, bilateral donors(Saudi Arabia, Spain, France, Japan) and multilaterals (AfDB, EIB, EEC, Arab Fund), with WorldBank support and coordination.

54. Looking back, it is clear that one of the most important aspects of the PESAP did not receiveadequate analysis during program preparation and implementation, namely the conditions for effectiveprivate sector development following liberalization, demonopolization and privatization. From thisstandpoint, the development objectives targeted by the program will not be fully achieved until thepersistent constraints affecting private sector development (e.g., poor banking system, inefficientbusiness environment, inappropriate foreign exchange allocations) have been removed, inter aliathrough the establishment of conditions for true competition. As indicated above, these issues will betackled by the Financial and Private Sector Development Project under preparation.

55. In conclusion, the Bank's performance may be judged satisfactory at the levels of programidentification, preparation and appraisal, and highly satisfactory from the point of view of supervision.This is reflected in the performance rating (average of 1) appearing consistently in the Form 590s ofthe last 2 years.

G. BORROWER PERFOMANCE

56. Borrower performance was good. The Government demonstrated a clear commitment to thePESAP reforms. It honored its commitments and successfully integrated the PESAP into the moregeneral framework of its macroeconomic consolidation and economic recovery program. By way ofillustration, counterpart funds (which are frequently a problem in the implementation of programs inAfrica) were promptly made available. The Government authorized significant increases in water,electricity, telephone and air transportation tariffs. To ensure that financial relations with the pertinentutilities were restored on a sustainable footing, it increased its allocations for water, electricity andtelephone consumption, which rose from approximately 1 % of the budget in 1989 to close to 7% in1994. It appointed a professional firm for the surveillance of imports, which in turn will contribute to

12

improve fairness in competition and also lead to more accurate customs declarations by and dutycollection from all importers. Overall, and with the exception of Air-Mauritania, the Governmnentacted in accordance with both the spirit and the letter of the conditionalities set down in the CreditAgreement, which were satisfactorily fulfilled.

57. The executing agency (CRSP) played a considerable role in implementation of the program andachievemiient of its objectives. It performed its role of adviser to the Government in the preparation ofkey strategic decisions concerning the program. It also served as coordinator between the Mintrisy ofPlanning and the other technical ministries and departments involved, and supported the enterprises inimplementing the respective measures and action plans. The PESAP has been instrumental instrengthening capacity building at the CRSP which became a key interlocutor in the PE reformprocess. However, a few initial problems were experienced as implementation got under way, due tothe fact that CRSP had not sufficiently grasped the need for careful planning of activities or themodalities for utilizing the proceeds of the Technical Assistance Credit (Credit 2167-MAU) to financeimplementation of the PESAP reforms.

1H ASSESSMENT OF OUTCOME

58. Based on the Bank's ex-post evaluation norms, the PESAP is classified as "satisfactory". Thisassessment is based on the following elements: (i) satisfactory improvements in the institutionalframework for the public enterprises, (ii) the successful financial restructuring of SNIM; (iii) thesubstantial progress made with the rehabilitation plans for SONELEC, PANPA and OPT, andsignature of their contract-plans; (iv) Government withdrawal from certain nonviable MECs; (v)liberalization of imports of commodities (rice, sugar, tea) and demonopolization of the insurancesector, and (vi) the sustainable nature of all of those reforms.

59. However, the program of PE reform and privatization in Mauritania has not been finalized.Some of the reforms initiated under the PESAP still need to be reinforced or completed, including: (a)the improvement of accounting and auditing practices and of financial control over PEs; (b)introduction of efficient cost accounting systems within most PEs; (c) rehabilitation of Air-Mauritania;(d) Government divestiture from the 17 mixed-economy companies in which it is still shareholder; and(e) adoption of measures to avoid recurrence of arrears to SONELEC in respect of Government-backedcustomners, and to OPT in respect of subscriptions to international organizations.

I. FUTURE OPERATIONS

60. As indicated above, activities aimed at consolidating the PESAP reforms will be continuedunder the Public Enterprise Institutional Development and Technical Assistance Project (Credit 2167-MAU) until its completion in 1998. Other problems emerging within the PESAP framework requirelonger-term solutions, such as: (i) the weaknesses of incentives for effective development of theprivate sector following liberalization and privatization; (ii) establishment of a policy for optimalforeign exchange allocation to economic operators; (iii) further liberalization of the fishery sector andsolution of its underlying problems, in particular as regards the termination of SMCP's exclusiveexport riglits for certain species, the reliable collection of tax and customs duty revenue and foreignexchange control within the framework of Government policy; (iv) promotion of a climate propitious

13

to the development of insurance services; and (v) reform of the profession of external auditor. Theseproblems could be addressed within the framework of other projects now at the gestation stage (e.g.the Economic Management Project and the Financial and Private Sector Development Project).Initiatives designed to draw upon SNIM's outstanding performance and management capacities shouldalso be developed so that this experience may be broadly disseminated.

J. KEY LESSONS LEARNED

61. Four main lessons can be drawn from the implementation of the PESAP. The liberalization ofcertain sectors (distribution, trade, services) does not automatically result in the emergence of amodern, competitive market but can rather lead to monopolistic (or quasi-monopolistic) situations tothe benefit of certain private operators, for whomn it represents a 'monopoly rent". Care should betaken in the process of preparing for liberalization, to include an enabling regulatory framework andall the provisions, including incentive and control arrangements essential to the proper operation of acompetitive market (price liberalization, taxation, customs, banking services). At the same time,efforts must be made to interest and stimulate potential new operators.

62. Government's divestiture demands meticulous preparation on a case-by-case basis, involvingmuch more than simply carrying out an accounting audit and an assessment of the value of theenterprise. A prefeasibility study of privatization is essential for assessing the most appropriateimplementation conditions. Thlereafter, strategic analyses of enterprises, of their environment, and ofthe operators in their sectors (both domestic and foreign) need to be performed to examine all possiblescenarios and their advantages and disadvantages on the technical, social, financial, tax, andtechnology transfer levels, for example. This would enable effective and realistic choices to be madeamong the most appropriate divestiture options.

63. In rehabilitating public enterprises, financial restructuring is not an end by itself. If in themeantime the enterprise management does not implement forceful reforms to improvc the managementsvstem and the enterprise productivity and to significantly reduec its operating costs, the financialrestructuring would have little impact in the long run. For instance, SNIM and Air-Mauritania providesuch examples of financial restructuring with and without promising outcome, respectively.

64. Within the framework of PE sector adjustment operations, important resources are sometimesallocated directly to cntcrprises in view of their financial restructuring. In this context the Bank should bcmorc demanding on the quality of management and design explicit criteria to monitor enterpriseperformance improvements. The signing of a contract-plan is not a sufficient criterion to cnsure that anenterprise will effcctively implement the reforms required to restore its profitability. It should bereinforced by specific performance objectives whose satisfactory achievement should also be reflectedin the legal covenants or conditionalities, as appropriate.

14

PUBLIC ENTERPRISE SECTOR ADJUSTMENT PROGRAM[Credit 2166-MAU]

ISLAMIC REPUBLIC OF MAURITANIA

PART II -- STATISTICAL ANNEXES

Table 1 Summary of Assessments

A. Achievements of Objectives Substantial Partial Negligible Not Applicable

Macroeconomic policies O 0 O O

Sector policies 0 U O O

Financial objectives 0 O [ O

Institutional development O El O O

Physical objectives U O O 0

Poverty reduction U O O 0

Gender concerns U U U 0

Other social objectives U 0 U U

Environmental objectives U U U El

Public sector management 0 U U U

Private sector development O 0 U0 0

Other (specify) U U U U

B. Proiect Sustainability Likelv Unlikelv Uncertain

0 0 0

C. Bank Performance Highlv Satisfactory Satisfact Deficient

Identification O D O

Preparation assistance O 0 0

Appraisal 0 0 0

Supervision 0 0 0

IS

1). Borrower Performnance HMOWlv Satisfactorn Satisfactory Deficient

Preparation C E: 0

Implementation 0 0Z 0

Covenant compliance 0 0 E

OYperation (if applicable) 0 0 0:

E. Assessment of Outcome Highly Satisfactory Satisfactotv Unsatisfactorv

0 E0 0

Table 2: Related Bank Loans/Credits

Loan/Credit Title Purpose Year of Approval Status

Preceding Operations

To complement IMF-supported stabilization measures, with structura

- Credit 1812-MAU - reforms in (i) public sector management; (ii) banking sector reforms 1987 Closed

Structural Adjustment Credit (iii) public enterprise reforms; (iv) energy; (v) agriculture and rura

development; (vi) fisheries development; and (vii) private secto

promotion.

- Credit 1567-MAU - tmprovement of PE legal and institutional framework, revision o 1985 Closed

PE Technical Assistance and incentive policies, rehabilitation of individual enterprises, an

Rehabilitation Credit introduction of other measures to rationalize and improve th

efficiency of the PE sector.

- Credit 2643-MAU - Assistance to the rehabilitation of SNIM, the iron ore mining 1986 Closed

Rehabilitation Project for SNIM company.

- Credit 1572-MAU - To support private sector development, by financing studies t 1985 Closed

Industrial Development Project develop appropriate policies for improving sub-sector performanc

and for further expanding the manufacturing sector.

Simultaneous Operation

- Credit 2167-MAU - To provide support and resources to Government to implemen 1990 On-going

PE Technical Assistance and reforms under the PESAP, and strengthen Government capacities t

Institutional Development Credit devise and implement PE refomis, to monitor the sector performanc

and manage it future development.

Planned Operations

Consolidation of banking sector restructuring, improvement o FY 1995/96 Expected

Financial and Private Sector incentives for private sector activities through further liberalization o

Development Project foreign exchange system, upgrading of the legal, regulatory an

judicial environment governing private sector activities, an

enhancement of reforms in the fishing and mining sectors

16

Table 3: Program Timetable

Steps in Program Cycle Date Planed Date actual

Identification April 1988

Preparation

Appraisal January 1990 January 1990

Negotiations May 1990 May 25, 1990

Letter of Development Policy May 1990 May 25, 1990

Board presentation June 1990 June 26, 1990

Signing June 1990 July 18, 1990

Effectiveness July 1990 August 29, 1990

First tranche release July 1990 September 30, 1990

Second tranche release July 1991 March 31, 1993

Third tranche release July 1992 March 31, 1994

Project completion December 1992 Septernber 5-18, 1994

Loan closing December 31, 1992 August 3, 1994

Table 4: Credit Disbursements : Cumulative Estimated and Actual

(US$ thousands) 1990 1991 1992 1993 1994

Appraisal estimate 18,000 30,000 40,000 40,000 40,000

Actual 19,295 19,295 19,295 31,961 42,750

Actual as % of estimate 107% 64.3% 48.2% 79.9% 106.8%

Date of final disbursement: July 18, 1994

Table 5 : Key Indicators for Program Implementation and Operation

The key indicators for program implementation and operations, which were defined in the President's Report,coincided with the different steps of the PESAPs action plan. This action plan was sequenced into three series ofactivities which were monitored throughout implementation and updated in supervision reports. Satisfactory progressin carrying out these activities was among the conditions of release of the successive tranches of the Credit.Therefore, relevant information on these indicators are included in Table 9: Status of Legal Covenants.

17

Table 6: Studies Included in the Program

All studies included in the PESAP were carried out under the Public Enterprise Technical Assistance and LnstitutionalDevelopment Project (Cr.2167-MAU). Detailed information on these studies will be provided within the frameworkof that Project's ICR.

Table 7: Program Costs'(Foreign costs in US$ mnillion)

Item Appraisal estimate | Actual

SNIM - Capital increase 69.00 69.00

SNIM Financial Restructuring 50.00Restructuring of other enterprises 25.00 61.26Settlement of Government arrears to PEs 8.00

Social costs 7.00 7.50Reimbursement of bank deposits _ 3.50Imports Verification -- 3.50

TOTAL 159.00 144.76

Table 8: Program Financing(Foreign costs in US$ mnillion)

Source Appraisal estimate Actual

IDA 40.00 42.75IDA-reflows 10.00 10.41

Cofinancing Institutions - AfDB -- 18.60- Arab Funds 50.00 21.00

Bilateral donors - Spain 5.00- Japan 50.00 38.00- Gennany 4.00 14.00

TOTAL 159.00 144.76

The PESAP did not have local costs per se. All local costs were funded under the PE T'echnical Assistance and InstitutionalDevelopment Project (Cr.2167-MAU), as this Project was designed to support implementation of the PESAP.

18

Table 9: Status of Legal Covenants2

Credit Covenant Present 3

Agreement type status Descnption of covenant CommentsSection

2 02. (b) Financial C The Borrower shall, for the purposes of the Project, Fulfilled.open and maintain in dollars a special deposit accountin BCM on terms and conditions satisfactory to IDA.Deposits into, and payments out of, the Special Accountshall be made in accordance with the provisions ofSchedule 4 of the Development Credit Agreement.

2.04,2.06 Financial c The Borrower shall pay to the Association Fulfilled.semiannually on February 15 and August 15 in eachyear a commitment charge on the principal amount ofthe Credit not withdrawn at a rate to be set by IDA, butnot to exceed 0.5% p.a..

2.05 / 2.06 Financial C The Borrower shall pay to IDA semiannually on Fulfilled.February 15 and August 15 in each year a servicecharge of 0.75% p.a. on the principal amount of theCredit withdrawn and outstanding.

3. 01. (a) Consultation C The Borrower and the IDA shall from time to time, at Fulfilled.the request of either party, exchange views on theprogress achieved in carrying out the Program and theactions specified in Schedule 3 to the DevelopmentCredit Agreement.

3.01 (b) Consultation c Prior to each such exchange of views, the Borrower Fulfilled.shall furnish to the Association for its review andcomment a report on the progress achieved in carryingout the Program, in such detail as the Association shallreasonably request.

3.02 Procurement C Except as the Association shall otherwise agree, Fulfilled.procurement of the goods to be financed out of theproceeds of the Credit shall be governed by theprovisions of the Schedule 2 to the DCA.

2 The Legal Covenants did not provide for original fulfillment dates.

3 Present status C = complied with

CD = complied with after delay

CP = complied with partially

NC = not complied with

19

Table 9: Status of Legal Covenants (continued 2/6)

Credit Covenant Present

Agreement type status Descnption of covenant Comments

Section

3 03. (a) Subsidiary c The Borrower shall conclude a subsidiary agreement Fulfilled.agreement with SNIM, whereby it shall undertake to pass on, as

an additional equity contribution to the share capital ofSNIM, an aggregate amount of $55,000,000 equivalent,corresponding to a part of the local counterpart fundsgenerated by the sale of the foreign exchange madeavailable to the Borrower under the Program.

3.03. (b) Subsidiary C The subsidiary agreement under paragraph 3.03.(a) Fulfilled.agreement above shall be on such terms and conditions as shall be

acceptable to the Association, including:

(i) an action plan acceptable to the Borrower and theAssociation, giving details of the major actions thatSNIM will be required to undertake in order tostrengthen the management of the Guelbs' plant andimprove its plant availability;

(ii) details of the proposed financial restructuring andoperational plan of SNIM; and

(iii) provisions for a reporting system that will enablethe Borrower and the Association to monitor progressin the implementation of the action plan under sub-paragraph (i) above, and the financial restructuring andoperational plan under sub-paragraph (ii) above.

3.04. Subsidiary C The Borrower shall exercise its rights under the SNIM Fulfilled.agreement Subsidiary Agreement in such manner as to protect the

interests of the Borrower and the Association and toaccomplish the purposes of the Credit and theAssociation and to accomplish the purposes of theCredit and, except as the Association shall otherwiseagree, the Borrower shall not assign, amend, abrogateor waive the SNIM Subsidiary Agreement or anyprovision thereof

3.05. (a) Accounts! C The Borrower shall maintain or cause to be maintained Fulfilled.Audit records and accounts adequate to reflect in accordance

with consistently maintained sound accountingpractices the expenditures financed out of the proceedsof the Credit.

20

Table 9: Status of Legal Covenants (continued 3/6)

Credit Covenant Present

Agreement tvpe status Description of covenant Comments

Section

3.05 (b) Accounts c The Borrower shall Fulfilled.l Audit

(i) have the records and accounts referred to inparagraph 3.05. (a) including those for the SpecialAccount for each fiscal year audited, in accordance withappropniate auditing principles consistently applied, byindependent auditors acceptable to the Association;

(ii) furnish to the Association as soon as available, butin any case not later than six months after the end ofeach such year, a certified copy of the report of suchaudit by said auditors, of such scope and in such detailas the Association shall have reasonably requested; and

(iii) furnish to the Association such other informationconcerning said records and accounts and the auditthereof the Association shall from time to timereasonably request.

3.05. (c) Accounts / c For all expenditures with respect to which withdrawals Fulfilled.

Audit from the Credit Account were made on the basis ofstatements of expenditure, the Borrower shall:

(i) maintain or cause to be maintained, in accordancewith paragraph 3.05. (a) above, records and accountsreflecting such expenditures;

(ii) retain, until at least one year after the Associationhas received the audit report for the fiscal year in whichthe last withdrawal from the Credit Account was made,all records (contracts, orders, invoices, bills, receiptsand other documents) evidencing such expenditures;

(iii) enable the Association's representatives to examinesuch records; and

(iv) ensure that such records and accounts are includedin the annual audits referred to in paragraph 3.05. (b)and that the report of such audit contains separateopinion by said auditors as to whether the statements ofexpenditure submitted during such fiscal year, togetherwith the procedures and internal controls involved intheir preparation, can be relied upon to support therelated withdrawals.

21

Table 9: Status of Legal Covenants (continued 4/6)

Credit Covenant Present

Agreement type status Conditions of Release of Second Tranche CommentsSection

S 3 A. . Sector policy c The Borrower has: Fulfilled.conditionality

budgetary (a) made adequate allocations in the 1991 budget forchange payment of the services of SONELEC, SMCPP and

OPT, and for the surveillance of fishing waters off thecoast of Mauritania, and

(b) taken all other measures necessary to avoidrecurrence of new arrears, including the promptpayment of all amounts due to SONELEC, SMCPP andOPT during the preceding twelve (12) months' period.

S 3 A. 2. Sector policy C The Borrower has reduced by at least fifty percent Fulfilled.

conditionality: (50%) the level of arrears due to public enterprises as ofbudgetary the date of this Agreement, net of arrears due by thechange enterprises themselves, which the Borrower is entitled

to off-set.

S 3 A. 3. Project CP The Borrower has achieved satisfactory progress in the Unsatisfactoryiunpleentauon implemnentation of the restructuring and action plans for implernentation of Airarrangement SONELEC, OPT, Air Mauritania, SMCP and PANPA. Mauritania's action plan.

S 3 A. 4. idem CP The Borrower has concluded performance contracts with Performance contract

Air Mauritania and PANPA. with Air Mauritanma was

signed but not inforced.

S 3 A. 5. iden C The Borrower has: Fulfilled.

(a) achieved satisfactory progress in the implementationof the ftmancial restructuring and operational plan ofSNIM; and

(b) agreed with the Association on a satisfactoryfinancing plan and project management arrangementsfor the development of the new iron ore deposit atM'haoudat.

S 3 A. 6. Monitoring / C The Borrower has conducted a review, satisfactory to Fulfilled.review the Association, of all of its MECs and has taken

necessary steps to phase out of its portfolio not less thanhalf of those whose financial performance has beenfound to be unsatisfactory.

S 3 A. 7. Project C The number of staff employed in public enterprises as of Fulfilled.implementation January 1, 1990 has been reduced by not less than 800

altogether.

22

Table 9: Status of Legal Covenants (continued 5/6)

Credit Covenant type Present

Agreement status Conditions of Release of Second Tranche (continued) Comments

Section

S 3 X 8. Sector policy c The Borrower has, not later than September 30, 1990, Fulfilled.

conditionalitv: abolished the monopoly of SONIMEX on the

admin change importation and distribution of rice.

S 3 A, 9. Sector policy C The Borrower has taken necessary steps to have a study Fulfilled.

conditionality: conducted on the future of SOMIR.

other studies

Many enterprises (EPICs,

S 3 A. 10. Institutional CP The new accounting system and budgetary procedures MECs) are not yet

introduced by the Borrower, to monitor the financial equiped with these

performance of the public enterprise sector, have been accounting systetn and

extended to all enterprises in the sector. budgetary procedures.

S 3 A 11. Project C The Borrower has made satisfactory progress in the Fulfilled.

implementation provision of severance pay and other forms of assistance

in favor of employees who are declared redundant as a

result of the Program.

Credit Covenant Present

Agreement type status Conditions of Release of Third Tranche Comments

Section

S 3 B. 1. Sector policy C The Borrower has Fulfilled.

conditionality:

budgetary (a) made adequate allocations in the 1992 budget for

change payment of the services of SONELEC, SMCPP and

OPT, and for the surveillance of fishing waters off the

coast of Mauritania, and

(b) taken all other measures necessary to avoid

recurrence of new arrears, including the prompt

payment of all amounts due to SONELEC, SMCPP and

OPT during the preceding twelve (12) months' period.

S 3 B 2. Sector policy C The Borrower has completed the full settlement of all Fulfilled.

condiuonality: remaining arrears due to public enterprises as of the

budgetary date of this Agreement, net of arrears due by the

change enterprises themselves, which the Borrower is entitled

to off-set.

S 3 B 3. Project CP Trhe Borrower has maintained satisfactory progress in Implemantation of Air

implementation the implementation of the restructuring and action plans Mauritania's recovery

arrangement for SONELEC, OPT, Air Mauritania, SMCP and plan was not satisfactory.

PANPA.

23

Table 9: Status of Legal Covenants (continued 6/6)

Credit Covenant type Present

Agreement status Conditions of Release of Third Tranche (continued) CommentsSection

This contract was signed by

S 3 B. 4. Project CP The Borrower has concluded a performance contract Government, but still needs

implementation with OPT. l'arliamentary approval to

arrangernent become effective

S 3 B. 5. Project C The Borrower has maintained satisfactory progress in Fulfilled.implementation the implementation of the financial restructuring andarrangement operational plan of SNIM.

S 3 B. 6. Project CP The Borrower has taken all necessary steps to phase out Four loss-mnaking MECs

implementation of its portfolio all those of its MECs whose financial still rernain inarrangement performance has been found to be unsatisfactory. Goverfnment's portfolio.

S 3 B. 7. Sector policy C The Borrower has abolished the monopoly of Fulfilled.conditionality: SONIMEX on all its products.admin change

S 3 B. 8. Project C The Borrower has continued to make satisfactory Fulfilled.implemcntation progress in the provision of severance pay and other

forms of assistance in favor of employees who aredeclared redundant as a result of the Program.

Table 10: Bank Resources: Staff Inputs(Staff Weeks)

Stage of project cycle Planned Revised Actual

Through appraisal (Preparation, preappraisal) 8.0 116.1 110.9

Appraisal 4 Board (Negotiation) 92.0 99.3 48.3

Board 4 Effectiveness 0.0 0.0 0.0

Supervision 141.4 152.6 82.9

Completion 0.0 17.0 18.0

Total 241.4 385.0 260.1

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Table 11: Bank Resources: Staff Missions

Performance rating 4

Stage of Mornh/ Number Days Specialized staff skills Types of problems

project cycle Year of in represented Implementation Development

- - peons field status impact_l

Credit 1567-MAU and

Through 06/88 5 4 Economist, Energy, Mining, preliminary discussions on

aDpraisal Consultants (2) PESAP operation.

10/88 6 21 Economists (2), Petroleum, PE sector assessment and

Mining, Transport, Consultant preparation of lending

operation

11/88 5 11 Economists (2), Sanitary

engineer, Financial analyst, Electricity and water utility

Consultant rehabilitation

l06-07/89 5 26 Economist, Financial analyst, PESAP preappraisal

Mining, Consultants (2)

01-02/90 7 22 Economists (2), Lawyer, PESAP appraisal

Mining, Energy, Financial

___________ _________ analyst, Social aspects

Appraisal 4Board

Board 4Effectiveness

Supervision Overall implementation

I 10-11/90 8 17 Task Manager, PE specialist, review, social aspects,

Energy, Mining, Fisheries, SNIM restructuring,

Lawyer, Airline, Job redeployt cofinancing issues

11 09-10/91 3 39 Task Manager, Mining, 1 2 Implementation delays

Telecom.

III 10-11/92 2 21 Task Manager, Mining 1 I Implementation review

IV 10-11/93 4 10 Task Manager, PE Specialist, I I Implementation review, OPT

Telecom., Mining contrat plan

V 02-03/94 1 22 Task Manager HS HS Implementation review

Completion 09/94 2 14 Economist, Consultant 1 1 ICR preparation

Key to status as shown in Supervision Form 590: rating are HS (highly satisfactory) or from I (highest) to 4 (lowest).

25

PUBLIC ENTERPRISE SECTOR ADJUSTMENT PROGRAM[Credit 2166-MAU]

ISLAMIC REPUBLIC OF MAURITANIA

APPENDIXES

A. Mission's Aide-Memoire

Dimanche 18 septembre 1994

Aide-Memoire de la Mission de Preparation duRapport d'Achevement de la Mise en Oeuvre du PASEP

1. Une mission de la Banque Mondiale composee de Messrs. J-M. Happi, Economiste(AF5IE) et J-P. Thibaut, Consultant, a sejourne en Mauritanie du 5 au 18 septembre 1994. Lamission avait pour objectif de preparer le Rapport d'achevement du Programme d'ajustement dusecteur des entreprises publiques (PASEP).

2. La mission remercie le Gouvemement de la Republique Islamique de Mauritanie,notanument les Ministeres du Plan, des Finances, et du Commerce, le Directeur de la CRSP et sescollaborateurs, ainsi que les Directeurs et cadres des entreprises visitees pour leur accueil, leurdisponibilite et leur collaboration aux travaux de la mission.

3. Les points de vue exprimes dans le present Aide-Memoire ne refletent que ceux de lamission. lus n'engageront la Banque Mondiale qu'apres confirmation ecrite par le siege.

4. La mission a foumi au Gouvemement I'appui et les conseils necessaires, afin qu'ilprepare sa propre contribution au Rapport d'achevement (ICR) du PASEP. Le plan operationnelqu'il lui a communique a cet effet est joint en Annexe.

5. Resume: Le texte ci-dessous fait la synthese du Rapport preparatoire d'evaluationretrospective du PASEP, qui est egalement joint en Annexe.

A. Obiectifs du PASEP

6. Le PASEP avait pour objectif de renforcer les reformes structurelles mises en oeuvre parle Gouvemement dans le secteur des entreprises publiques. II visait notamment a (i) ameliorerl'environnement legal et institutionnel des entreprises et leurs relations financi&res avec leGouvemement; (ii) proceder a la restructuration financiere de la SNIM et d'Air-Mauritania etpoursuivre la rehabilitation des societes nationales; et (iii) poursuivre le desengagement de l'Etatdu secteur parapublic.

26

7. Les objectifs (i) et (ii) ci-dessus etaient pertinents, clairement enonces, circonscrits pardes mesures realistes et, lorsqu'appropriees, par des normes quantitatives qui ont permis desuivre le deroulement de chacun des objectifs. Par contre, certains des objectifs (iii) visant audesengagement de l'Etat de certaines societes d'economie mixte, notamment celles constituees enpartenariat avec des Gouvemements etrangers, n'etaient pas realistes et ne tenaient passuffisamment compte des obstacles juridiques et financiers qu'impliquait ce desengagement.

B. Realisation des obiectifs

8. La mission considere que les objectifs du PASEP ont 6te substantiellement realises, maisa des degres divers.

9. Reforme du cadre legal et institutionnel. Le cadre legal et institutionnel du secteurparapublic a ete fondamentalement reform& Les entreprises publiques (SN, SEM) jouissentd'une v6ritable autonomie de gestion courante. Le contr6le du Gouvernement sur ces entreprisess'exerce desormais par l'intermediaire des conseils d'administration. On observe que ces nouvellesdispositions sont effectivement mises en oeuvre par les entreprises et leurs ministeres de tutelle,qui en respectent tant l'esprit que la lettre. Neanmoins, Neanmoins, dans plusieurs cas, lefonctionnement des conseils d'administration devrait etre ameliore, notamment du point de vue del'exercice effectif de ses prerogatives d'orientation et de contr6le de l'entreprise.

10. Des progres substantiels ont ete realis&s dans le domaine de la comptabilite generale,desormais les entreprises produisent leurs etats financiers annuels dans les delais prevus par laLoi. Mais des efforts importants demeurent necessaires en matiere de comptabilite analytique etde methodes de previsions financieres. Nombre d'entreprises ne disposent pas encore de systemed'informations de gestion strategique et budgetaire tres performants. Par ailleurs, il ne semblepas que les commissaires aux comptes remplissent parfaitement leur r6le de contr6le et defiabilisation de l'information comptable et financiere. Les pratiques de cette professionnecessitent d'etre ameliorees.

11. SNIM. Les objectifs du PASEP concernant la SNIM visaient a redresser sa situationfinanci&re, afin de lui foumir les moyens d'ameliorer sa competitivite sur le plan international etretablir les bases de sa viabilite a long terme. Ces objectifs ont ete realises de facon hautementsatisfaisante par la mise en oeuvre reussie des mesures suivantes

* Ia restructuration financiere de la Societe,* une amelioration soutenue de sa productivite,* Ia mise en exploitation des gisements de fer de Mhaoudat, et* I'amelioration substantielle de la gestion de sa tresorerie.

12. Air-Mauritania. Cette entreprise etait egalement directement visee par le projet quiavait fixe comme objectif sa restructuration financiere, ceci devant contribuer a lui donner lesmoyens ndcessaires pour engager son redressement d'exploitation. Les differentes mesures derestructuration financiere suivantes ont ete realisees: (i) recapitalisation, (ii) reechelonnement dela dette FOKKER, (iii) retrocession integrale des parties de la dette annulee par le Club deParis, (iv) affectation du produit de la vente de I'avion presidentiel, et (v) apurement des arrieresde l'Etat.

27

13. Cependant et malgre l'assistance technique importante dont elle a b6n6ficid au titre duprojet d'assistance technique (2167-MAU), on constate un retard considerable dans la mise enoeuvre du plan strategique de redressement que la compagnie aurait du mener de son c6te enparallele sur le plan commercial, technique et organisationnel. Ce retard s'est traduit par lapersistance d'importants deficits d'exploitation, dont les consequences ont risque d'aneantir leseffets a court terme de la restructuration financiere si un plan d'urgence n'avait pas ete mis enoeuvre au debut de 1994. Dans ce contexte, le document que constitue le contrat-plan apparaitdavantage comme un document formel, dans la mesure ou aussi il constituait une conditionnalitede decaissement du credit IDA, que comme un cadre de reference efficace pour la redressementdes operations de la Compagnie.

14. OPT. Le PASEP prevoyait des changements majeurs du cadre institutionnel de l'OPT,la rehabilitation de sa fonction comptable et financiere et l'adoption d'un contrat-plan avec leGouvemement. Ces objectifs sont substantiellement atteints. L'Office a significativementameliore la qualite de ses prestations ainsi que ses resultats. Un contrat-plan avec leGouvemement a e elabore sur la base du plan strategique de l'Office. 11 definit ses objectifs deperformance et les mesures de gestion necessaires A leur realisation, ainsi que les engagements del'Etat. 11 doit faire l'objet de l'approbation du Parlement. Or sa finalisation formelle quiconstituait une des conditionnalites du Credit 2166 n'est pas encore satisfaite. Tant que cecontrat-plan n'est pas en vigueur, une attention particuliere doit etre portee au respect de l'espritqui avait preside A la preparation de son avant-projet, notamment concemant les aspectsfinanciers (investissement et autofinancement) et d'autonomie de gestion.

15. SONELEC. Au terme de son premier contrat-programme arrive a echeance en 1991, laSONELEC a renouvele son second contrat de performance triennal, dans le cadre du PASEP.Dans le cadre de ces contrats, 1'entreprise a atteint et souvent depasse ses objectifs deperformance. Le redressement de la SONELEC demeure toutefois fragile. Ne pouvant pasenvisager la repercussion mecanique sur ses tarifs de toutes les hausses qu'elle subit sur les prixde ses intrants, la SONELEC devra davantage agir sur ses couits. Ses efforts de reductions deses couts et I'amelioration de sa productivite ont besoin d'etre intensifies. II est egalementindispensable qu'elle finalise la mise en oeuvre de sa comptabilite analytique, qui lui est necesairepour I'dlaboration d'une politique de tarification pertinente.

16. PANPA. La rehabilitation du PANPA dans le cadre du PASEP a ete substantielle.Afin de renforcer sa viabilite a long terme, une strategie competitive de services et de tarificationdevra etre elaboree vis-a-vis des ports concurrents (eg. les ports de Dakar et d'Abidjan, pour ladesserte du Mali).

17. Reglement des arrieres de l'Etat et mesures de non-recurrence. La systematisationdes provisions budgetaires couvrant les consommations effectives a la charge du Gouvernementreflete l'engagement de l'Etat A assainir durablement ses relations financieres avec les entreprisespubliques. 11 a aussi mis en oeuvre avec l'appui des societes nationales concemres (OPT,SONELEC) des mesures vigoureuses de contr6le et de limitations des consommations desServices publics. Ces mesures ont contribue A instaurer une discipline financiere dans lesrelations du Gouvemement avec les entreprises publiques. Cet objectif est substantiellementatteint mais a besoin d'etre consolide.

18. Ainsi, les dotations du Budget pour les charges d'eau et d'electricite sont passees de UM80 millions en 1990 A UM 700 millions en 1994. Neanmoins, la SONELEC encourt toujoursdes risques importants de recurrence des arrieres de paiements de l'Etat, au titre des clientscautionnes. Les consommations faisant l'objet d'une telle caution sont du meme ordre de

28

grandeur que celles de l'Administration. Des mesures approprnies et la responsabilite de cesclients par rapport au reglement de leurs consommations doivent etre engagees afin d'eviter lareconstitution des arridres du Gouvemement envers la SONELEC.

19. De meme, les dotations du Budget pour les consommations de telephone sont passees deUM 60 millions en 1990 A UM 520 millions en 1994. Ceci a ete accompagne d'un programmede rationalisation et de restrictions de ltensemble du parc telephonique public dont les resultatssont hautement satisfaisants. Neanmoins, un point d'ombre demeure, a savoir, les cotisations dela Mauritanie a des organisations internationales de poste et de telecommunications, payees parl'OPT pour le compte du Gouvemement mais non remboursees par ce demier.

20. Desengagement de l'Etat des SEM. Le desengagement de l'Etat des SEM s'est fait aucas par cas, selon des modalites definies suite a l'audit (ou levaluation) de chaque entreprise.Cette approche semble justifiee, etant donne la situation financiere des entreprises concemres quiont et6 davantage liquidees que privatisees. Par contre, le plan d'action du PASEP prevoyant leretrait de l'Etat des (8) SEM dans lesquelles des Gouvernements etrangers sont actionnaires etaitirrealiste. 11 ne tenait pas compte des difficultes diplomatiques, juridiques et financieresqu'impliquait ce retrait, et surtout de la complexite des montages financiers par lesquelles cessocietes ont e initialement creees.

21. Liberalisation des importations de riz, du sucre et du the (SONIMEX). De primeabord les resultats obtenus correspondent aux objectifs vises: (i) la SONIMEX grace a derigoureux efforts de gestion et A une evolution favorable (baisse) des cours d'achat du riz a eteredressee et est devenue fortement bendficiaire en 1992 et (ii) A ce jour l'ensemble des troisproduits a ete demonopolise sans qu'il y ait eu carence d'approvisionnement ni de variation detype speculatif sur les prix de vente. II convient cependant d'etre circonspect sur les realitesactuelles de ce secteur et ses risques A terme. Tout d'abord parce que dans la pratique lasuppression du monopole de droit de la SONIMEX s'est transformee en oligopole de fait (2 ou 3gros importateurs), sans que s'instaure un veritable jeu concurrentiel. Par ailleurs, I'analyse desstatistiques de demandes d'importation et des declarations de dedouanement indique clairementque la totalite des droits de douane n'est pas reellement acquittee par ces nouveaux operateurs.Enfin la disparite (de disponibilites de devises et ou de conditions de credit fournisseurs) entre lesimportateurs prives et la SONIMEX , penalise fortement cette derniere. Tout ceci fait que lesregles d'un veritable jeu concurrentiel ne sont pas veritablement remplies vidant ainsi de sasubstance la lib6ralisation du secteur.

22. Demonopolisation du secteur des assurances. Le secteur des assurances a elibdralise dans le cadre des mesures prevues par le PASEP. La Societe Mauritanienned'Assurance et de Reassurance (SMAR) qui detenait ce monopole est en cours de liquidationjudiciaire. Une nouvelle societe d'assurance (la NASR) a ete creee A partir du portefeuille de laSMAR, prealablement assaini. Le Gouvemement envisage de ceder 66% du capital de la NASRau secteur prive et a lance un appel d'offres de privatisation. L'arrivee de nouveaux operateursou actionnaires dependra en realite de la capacite des pouvoirs publics A supprimer lesdysfonctionnements qui ont contribue A la faillite de la SMAR.

C. Facteurs ayant affecte l'execution du PASEP

23. La mise en oeuvre du PASEP a ete affectee par plusieurs facteurs. Le premier d'entreeux et le plus important a et la Guerre du Golfe. Le PASEP a egalement ete perturbe par desdifficultes A mobiliser la totalite des financements dans les delais initialement prevus. Par

29

ailleurs, en plus des incidences des problemes de cofinancement du PASEP, le plan d'action de laSNIM a e mis en peril suite a (i) la forte chute des prix du fer, de plus de 13% en 1993, soit 8points en dessous des cours prevus dans les simulations initiales; et (ii) la baisse significative dela production vendue, de 24% entre 1991 et 1992, puis de 10% entre 1992 et 1993. Ce plan n'apu etre sauve que grace a une compression drastique de ses cofits d'exploitation par la SNIM etla mise en exploitation des gisements de Mhaoudat dans des delais plut6t que prevus. Enfin, ladevaluation de l'ouguiya a eu des incidences defavorables sur les conditions d'exploitation decertaines entreprises (SONELEC et Air-Mauritania, en particulier) dont elle a affecte larentabilite. En contrepartie, elle a profite a la SNIM et la SMCP, qui sont essentiellementexportatrices. Au niveau d'Air-Mauritania, les changements successifs et rapproches de sesdirigeants (4 directeurs generaux s'y sont succedes en quatre ans) ont egalement contribue aralentir la mise en oeuvre de son plan de redressement.

D. Durabilite des reformes

24. Dans 1'ensemble, I'evaluation retrospective du PASEP conclut a la durabilite desreformes mises en oeuvre, meme si certaines d'entre elles necessitent d'etre consolidees. Parexemple, le cadre institutionnel des entreprises publiques est reforme, mais les mecanismes decontr6le financier des entreprises publiques (audits, commissaires aux comptes) doivent etrerenforces, davantage du point de vue de leur pratique que des textes legaux. Au niveau desrestructurations et rehabilitations des grandes entreprises, la viabilite a moyen et long terme de laSNIM est retablie et la situation financiere de l'OPT, du PANPA et de la SONELEC estredressee et devrait se consolider dans le cadre de leurs contrats-programmes, dont les plansd'action en cours d'execution en sont les gages de reussite durable. Seule la situation d'AirMauritanie demeure particulierement pr&occupante bien que cette compagnie soit egalement souscontrat-plan. L'assainissement des relations financieres de l'Etat avec les entreprises publiquesest durablement engage, nonobstant les problemes lies aux clients cautionnes, dans le cadre de laSONELEC, et le probleme des cotisations a l'UIT et a l'UPU, dans le cadre de l'OPT. On peutaussi emettre des reserves sur les possibilites de desengagement a moyen terme de l'Etat desSEM creees en partenariat avec des Gouvemements etrangers, compte tenu des lenteurs desn6gociations diplomatiques que ce desengagement suppose. Les mesures de liberalisation desimportations des produits de base (riz, sucre, the) n'atteindront leurs pleins objectifs que lorsqueles conditions de concurrence effective auront e realisees, notamment l'acces concurrentiel auxdevises et I'acquittement de justes charges douanieres et fiscales par l'ensemble des importateurs.

E. Performance de l'emprunteur

25. Dans 1'ensemble la performance de l'emprunteur a ete bonne. Le Gouvemement a faitpreuve d'une adhesion manifeste aux reformes du PASEP et la CRSP a joue un role considerablepour la mise en oeuvre du Progranune. Neanmoins, on note que l'execution du PASEP a connuquelques problemes a ses debuts, dus au fait que la CRSP ntavait pas suffisamment apprdhendela necessite d'une bonne planification des activites et l'utilisation pertinente des ressources duCredit d'assistance technique (Cr. 2167-MAU) pour la mise en oeuvre des reformes prevues dansle cadre du PASEP.

30

F. Evaluation des resultats

26. En se referant a la grille de classification des procedures d'evaluation retrospective de laBanque et sur la base de ce qui prec&de, la mission est d'avis que le Programme PASEP estclasse comme satisfaisant.

G. Operations futures

27. Des actives visant a consolider les reformes mises en oeuvre dans le cadre du PASEPvont Wre poursuivies par le Projet d'assistance technique et de developpement institutionnel desentreprises publiques (Cr. 2167-MAU) jusqu'a son terme. D'autres problemes qui ont emergesdans le cadre du PASEP requierent des solutions de plus long terme et pourraient etre abordesdans le cadre d'autres projets en gestation (eg., le Projet de gestion economique ou le Projet depromotion du secteur prive). Des initiatives visant a tirer des enseignements des performancesexceptionnelles et des capacites de gestion de la SNIM meriteraient egalement d'etre developpees,afin d'en disseminer l'experience.

H. Principales lecons

28. Au terme de la mise en oeuvre du PASEP on peut en tirer un certain nombred'enseignements. La liberalisation de certains secteurs (distribution, commerce, services) ne setraduit pas automatiquement par I'emergence d'un marche de type concurrentiel moderne maispeut amener a des situations de monopole (ou quasi monopole) si toutes les dispositions et lesmoyens d'incitation et de contr6le (liberalisation des prix, fiscalite, douanes, services bancaires)ne sont pas strictement appliques.

29. Le desengagement de l'Etat d'entreprises non rentables et les privatisations d'entreprisesviables exigent une veritable analyse strategique inteme et externe de l'entreprise, de sonenvironnement et des operateurs du secteur (nationaux et etrangers). Pour les privatisations, ilest preferable d'deaborer un programme veritable, qui definit une approche homogene et dans lecadre duquel le Gouvemement indique clairement le nouveau r6le qu'il entend jouer dans lesactivites industrielles et commerciales.

30. Dans le processus de redressement et de developpement des entreprises, larestructuration financi&re n'est pas une fin en soi, elle n'est qu'un moyen indispensable mais nonsuffisant. Si dans le meme temps une Direction competente et motiv6e ne met pas en oeuvre unprogramme de mesures vigoureuses sur le plan de la qualite, de la reduction des couts et del'amelioration des systemes de gestion, alors le programme est voue a l'dchec et tous les moyensfournis (financiers et assistance technique) n'auront que peu d'impact.

31

PUBLIC ENTERPRISE SECTOR ADJUSTMENT PROGRAM[Credit 2166-MAU]

ISLAMIC REPUBLIC OF MAURITANIA

APPENDIXES (continued)

B Cofinancier Contribution to the ICR

The comments below on the ICR were received from the Overseas Economic Cooperation Fund (OECF) ofJapan. Comments were invited but not received from the other cofinanciers, namely Germany (KfW), theAfrican Development Bank and the Arab Fund for Economic and Social Development.

OECF's comments on the ICR

As a whole, the ICR is well sunmmarized and some beneficial lessons are drawn. Above all, the four lessonsdrawn from the PESAP implementation, which are stated in para. 61-64, are appreciated because theycoincide with what OECF have always supported. Additional findings are as follows:

Para. 5: 'In particular, the Program did not take sufficiently into account the length of time needed tosettle all the financial, legal and diplomatic issues involved in Government withdrawal fromcertain mixed-economy companies."

The OECF is satisfied with this stand of the World Bank, which is in favor of more suitablepolicies to the current situation. In considering the length of needed time, the Government isrecommended to take into consideration not only the above issues but also long-term sectorpolicy and industrial relation among sectors, lest some sector with long-term comparativeadvantage should spoil in the process of structural transformation.

Para. 40: 'The Government has paid a total of UM 690 million in compensation to persons thus affected(job elimination)."

Increase in unemployment will no doubt continue. Furthermore, apart from the "disguisedunemployment" in rural agriculture communities, there rarely exist sectors which create new jobs.The Government is advised to take long-term measures as well as the short-term compensation.Vocational training seems to be one of effective measures, because it contributes to humanresource development and reduction of unemployment.

32

Para. 56: The OECF also feels that the Government's clear commitment to the reform will contribute tothe successful implementation of the PESAP. The OECF always believes that governmentalcomnuitment is a prerequisite for success of structural adjustment.

Para. 61 "The liberalization of certain sectors does not automatically result in the emergence of amodern, competitive market but can rather lead to monopolistic situations to the benefit ofcertain private operators, for whom it represents a monopoly rent."

Even if the liberalization contributes to an activation of some sectors, the macro-economy ofMauritania is not so stabilized as the market can automatically diffuse the liberalization effectinto other sectors. The OECF agrees with liberalization policy and at the same time insiststhat the situation of each country should be taken into consideration. The OECF would like tohighly appreciate the above statement because it conforms to the OECF's opinion and seems tobe favorable to the current situation of Mauritania.

Others Public sector reform aims at an efficiency improvement of public enterprises, an activation ofpnvate sector and a reduction of financial burden of central government. At this stage, it isdifficult to judge the final effect of the PESAP, because the reform is still underway and theobjectives of the reform have natures to be evaluated from long-term point of view. Although thisreport is very significant as an evaluation report immediately after the program completion, re-evaluation after some years will be very effective for a feed-back to next programs.

As mentioned above, one objective of public sector reform is a reduction of fiscal deficit; however,restructuring cost will increase deficit in a short-term. Therefore, the Government has to makecareful implementation plan well coordinated with its macroeconomic policy. It is recommended toexamine the trend of fiscal position of the Govermment, by showing the transfer amount from theGovernment to public enterprises in the report, as well as fiancial performances of the enterprises,which are expressed in the report.

33

PUBLIC ENTERPRISE SECTOR ADJUSTMENT PROGRAM[Credit 2166-MAU]

ISLAMIC REPUBLIC OF MAURITANIA

APPENDIXES (continued)

C. Miscellaneous Appendixes

Table Al: Trends in SNIM Performance

Indicator 1990 1991 1992 1993 1994Volume of output (millions of tons)-projected 11.00 11.00 10.00 10.00 10.00- actual 11.36 10.47 8.01 9.66 10.50- difference +0.36 -0.53 -1.19 -0.34 +0.50Production costs (US$ per ton)- projected 9.8 9.9 10.5 10.7 10.8- actual 11.2 11.9 13.0 10.8 10.0-difference +2.4 +2.0 +2.5 +0.1 -0.8Cash flow (US$ millions)- projected 78.00 72.60 56.50 49.80 43.60- actual 98.20 101.80 72.10 68.00 61.20-difference +20.20 +30.80 +24.40 +17.20 + 17.60Debt service ratio- projected 1.0 1.2 1.2 1.0 1.0- actual 1.0 1.5 0.9 1.1 1.2- difference 0 +0.3 -0.3 +0.1 +0.2Self-financing ratio (in %)- projected 3 15 14 -1 8- actual 7 55 -6 9 25- difference +4 +40 -19 + 10 + 17

Table A2 Size of the Public Enterprise Sector

L.egal Status Number of PEs before the PESAP Nunber of PEs after the PESAP.___________ _ (Year:1990) (Year: 1994)

- SN 0 4Majonty State-owned - EPIC 20 6

-SEV 20 10

Minontv State-owned - SEV 17 7

1TOTAL 57 27

34

Table A3 Performance of Enterprises Remeining in thMe Public Sector(Septembef 1994)

fthousar.d o UM)

ENTERPRISES STATUS % STATE SE - OA RESULT 1990 RESULT 1991 RESULT 192 RESULT 1993

NASP SN 10 0% inur or

OPT SN 100% S ta.mm 286,382: 581,590: 332,1001 e 625,000

SONELEC SN 100% lloamnaty 142,294 152,840 -84,800: 225,000

SMCP SN W's hwenss 81,960 60,913- 31,8471 1,364

CNSS M EPIC 100% .aisemurity 106,222: 643,543: 941,808i 9,810

IMPRIMERIE EPIC 100% pnntinq 2,830 -7,427 -18,483!

PANPA EPIC 100% port 874,612 66,499 44,627 650,536

PAN EAC 100' A part 10,314 -242,100 -171,100 -211,973

SONADER EPIC 100% nr.itwe -617,734 -457,594 -798,7141

SO MR EPIC 100% oil rwhnwy -3,017 -3,039: -e,352i

SOCOGIJ SEU 99% or truZon 3,739. - ,512' 1,468

SAMMA SEM 76% m,rntionbw 4.271: 13,538: 19,428;

SAFA SEM 75% stow -16,778: 29,464 4,839 79,338

SNIM SEM 70% iron are mrinn 1,743,504: 2,224,646 96,211! 422,417

A1R4AE SEl 60% aSilie *673,48a- -153,970- 436,482 263,781

ALMAP SEU . 1% fi5h.nr -924,757 -935,803: -216,OOOi

COMAUNAM SE 61% r mmntmn.rtnrwp 8,425: 1,a84 -16,6521 -68,713

MAUSOV SI&U 61% fishr" 296,024 367,413 170,883. -186,682

SONMEX SEM 51% traed 454,382 428,472: 576,424: 1 6s, I 63

SAMIA SA l 51% aI,etn -1,894 -117,076 -88,414t

SOMACAT ,SA 49% S oo nnhge 4. 168 187: -11,092: 2,900

SMCPP/NAFTEC SEU 34% oil distnbution 1 1 7,94s 53,017 ; -75,283!

SOMAGAZ SEM 34% 9" 16,191 -16,078 46,3456 30,638

SALIMAUREM SEl ; 31% fish.rie_ -211,022 -288,074 -211,0211 -4,844

SIMAR SEU 24% fishness -180,391s1 30,383 -24,547 2,201

MEPP SEU 17% 04i 22,174: 16,086 17,930: 14,706

SPPAM SEM 11% fishernie -117.966. -133,266: -153,717:

35

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