The W'orld Bank
FOR OFFICIAL USE ONLY fiLE CL 1V
Report No. 2160-UNI
FORESTRY PLANTATION PROJECT
STAFF APPRAISAL REPORT
March 14, 1979
West Africa Projects DepartmentAgriculture Division
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.
Currency Unit = Naira (N)US$1 = N 0.65
N 1 = US$1.54
WEIGHTS AND MEASURES(Metric System)
1 cubic meter (m ) = 1.31 cubic yards
1 hectare (ha) = 2.47 acres
1 kilometer (km) 2 = 0.62 mile
13square kilometer (km ) = 0.386 square miles
m3 (r) = Solid cubic meter of roundwood
m (ub) = Cubic meter of wood under bark
3 (without bark)
in (s) = Solid cubic meter of sawnwood
ANSG = Anambra State GovernmentAPMU = Agricultural Projects Management Unit for Western Africa
BPCC = Budget and Policy Coordinating Committee
CCF = Chief Conservator of ForestsERR = Economic Rate of ReturnFDA = Forestry Division of MANR, Anambra StateFDF = Federal Department of ForestryFMAWR = Federal Ministry of Agriculture and Water Resources
FMG = Federal Military GovernmentFRIN = Forest Research Institute of Nigeria
GDP = Gross Domestic ProductGNP = Gross National ProductICB = International Competitive BiddingLGC = Local Government CouncilMANR = Ministry of Agriculture and Natural Resources
ODSG = Ondo State GovernmentOGSG = Ogun State GovernmentPBMD = Planning, Budgeting and Monitoring Division
PMU = Project Management Unit
April 1 - March 31
FOR OFFICIAL USE ONLY
FORESTRY PLANTATION PROJECT
STAFF APPRAISAL REPORT
Table of Contents
I. BACKGROUND .............................................. 1
II. THE FORESTRY SECTOR ...... ............................... 1
A. The Economy .. 1............. IB. Contribution of the Forestry Sector to the Economy . 2C. Forest Resources and Industries .................... 2D. Financing the Sector ............................... 4E. Institutions and Manpower ..... .................... 5F. Objectives, Strategies and Policies ................ 6G. Bank Involvement in the Forestry Sector ........... . 7
III. THE PROJECT AREA ....... ................ . 7
A. Physical Features .................................. 7B. Infrastructure and Social Services .............. ... 8
IV. THE PROJECT ............................................. 9
A. Project Objectives ............ ..................... 9B. Project Description ................................ 9C. Costs and Financing Arrangements ................ ... 15D. Procurement and Disbursement ....................... 19E. Budgets, Accounts and Audit ........................ 21
V. TECHNOLOGY AND PRODUCTION S'PECIFICATIONS ......... ....... 21
A. Plantation Development ............ .. ................ 21B. Land and Plantation Road Development ........ ....... 23
VI. PROJECT IMPLEMENTATION .................................. 24
A. Organization and Management ........................ 24B. Staffing ........................................... 25C. Monitoring and Evaluation .......................... 26
This Staff Appraisal Report is based on the findings of a Bank appraisalmission which visited Nigeria in ApriL/May 1978 composed of Messrs. van dePoll, Fishwick, Ranganathan, de Vries (Bank), Read, Hewlett, Easton, Brisbourne(Consultants), Baykal (FAO).
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
Table of Contents (Continued) Page No.
VII. MARKETS AND PRICES ...................................... 27
VIII. FINANCIAL ANALYSIS ...................................... 29
IX. BENEFITS AND JUSTIFICATION .............................. 30
A. Benefits ............ 30B. Economic Analysis .................................. 32
X. RECOMMENDATIONS AND AGREEMENTS REACHED .................. 34
TABLES IN TEXT
1. Project Cost Summary .................................... 172. Proposed Financing Plan by Major Expense Category ....... 18
1. List of Documents and Data Available in the Project File2. Supporting Tables
Table 1. Summary of Project Costs (in N '000)Table 2. Summary of Project Cost (in US$'000)Table 3. Ondo State Subproject Costs (in N'000)Table 4. Ogun State Subproject Costs (in N'000)Table 5. Anambra State Subproject Costs (in N'000)Table 6. Technical Assistance (in N'000)Table 7. Estimated Schedule of DisbursementsTable 8. Illustrative State Government Cash Flow (Ondo or Ogun State) (in N'000)Table 9. Ondo and Ogun Subprojects: Calculation of Economic Rate
of Return (N'000)Table 10. Anambra State Model: Costs and Benefits of Pine Plantation
per HectareTable 11. Gmelina Plantation Production from Ogun and Ondo Subprojects
3. Establishment of Project Management Unit (PMU) andBudget and Policy Coordinating Committee (BPCC)
1. World Bank 19309 Organization of Plantation Projects inOndo and Ogun States
2. World Bank 19310 Federal Department of Forestry Organization
1. IBRD 13785R Project Areas2. IBRD 13786 Vegetation Zones
FORESTRY PLANTATION PROJECT
1.01 The Federal Military Government of Nigeria (FMG) has requested the
Bank Group to assist in financing a forestry plantation project in the Ondo,
Ogun, Cross River and Anambra States. An identification mission visited
Nigeria in March 1977, and agreement was reached on location, concept and
preparation arrangements for the project. Subsequently, an FAO/World Bank
Cooperative Program preparation mission visited Nigeria in May 1977 and
submitted its report in October 1977. The Cross River State subproject was
subsequently excluded from the project, because of its low rate of return,
and because only 3,000 ha of new plantings were required to ensure sufficient
pulp wood supplies to the Itu pulp mill, which can be established by the State
1.02 The project, which would be the first comprehensive Bank investment
in the forestry sector in Nigeria, is expected to:
(a) assist in meeting part of Nigeria's increasing demand
for utility-grade timber;
(b) provide pulpwood for a Federal pulp and paper mill
presently under construction in Ogun State; and
(c) strengthen Federal Departmlent of Forestry (FDF) plan-
ning capabilities of the forestry sector.
II. THE FORESTRY SECTOR
A. The Economy
2.01 Nigeria. The Federal Republic of Nigeria comprises 19 States and
covers a total land area of 924,000 km2. Total 1977 population is estimated
at roughly 79 million, which is nearly 20% of the total for the African con-
tinent. Average GDP per capita (estimated at around US$420 in 1977) is low
and unevenly distributed; income in rural areas is considerably lower.
2.02 Economic Trends. The Nigerian economy is dominated by the oil
sector, which accounts for about 30 percent of GDP, over 90 percent of export
earnings and 80 percent of Government revenue. The increase in oil prices in
1973/74 enabled the Government to embark on a massive investment program and
this contributed to GNP growth averaging 6 percent per annum between 1973 and
1977. However, growth was concentrated in those sectors that benefited in
particular from the rapid expansion in Government expenditure, i.e. infra-
structure, education and large scale manufacturing, and performance of the
productive sectors, notably agriculture, has been disappointing.
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2.03 The unprecedented rise in public spending (Federal current ex-penditure increased from US$1.1 billion in 1973/74 to US$4.2 billion in1977/78, and capital expenditure from US$1.2 billion to US$9.7 billion)quickly exhausted the oil-produced internal and external surpluses, andNigeria now faces considerable fiscal and balance of payments constraints.The economy was unable to generate goods and services at the rate demanded,and consequently the domestic price level rose by an average of 26 percentper annum between 1975 and 1977. Oil production in Nigeria is not expectedto rise much above the present level during the 1980s and overall growthprospects for the economy are therefore considered modest.
2.04 One of the fastest growth sectors in Nigeria has been that ofconstruction, which caused a steep increase in the demand for wood products,especially sawn timber, wood-based panels and construction poles. The growthin the domestic market was so strong that exports of wood and wood productswere prohibited in 1976, and wood is now being logged at a rate greatlyexceeding the natural wood increment.
B. Contribution of the Forestry Sector to the Economy
2.05 Up to 1960, forestry accounted for over 6 percent of GDP. Sincethen, its share has declined to around 2.5 percent in the early seventies.The increase in oil prices and the consequent increase in the contributionof Government services to GDP caused a further relative decline to around2.0 percent in 1977, when total value added in this sector amounted to aboutN 0.4 billion (about US$0.62 billion). The declining importance of forestryas a foreign exchange earner has followed a similar course from 5 percent inthe early sixties to less than 1 percent a decade later. The forestry sectorprovides employment for about 1.5 million people of which the vast majorityare employed in the collection of firewood and in the production of poles.The production and processing of logs in the high forest zone involves onlyabout 50,000 people.
2.06 The decline in the relative importance of forestry cannot be ex-plained solely by the strong growth in the oil and government services sectors,in that forestry has also become less important relative to agriculture. In1960, forestry accounted for 10 percent of the total value added in agricul-ture, but ten years later this figure had been reduced to 6 percent, due bothto the continuing clearing of natural forest for agricultural purposes and tothe failure to develop forest plantations before actual wood supplies fellshort of requirements.
C. Forest Resources and Industries
2.07 The population pressure in Nigeria has led to a continuous con-version of forests into agricultural lands. In order to prevent the totaldepletion of Nigerif's forest resources, the Federal Government to date hasset aside 95,000 km of forests, about 10 percent of Nigeria's total landarea, as forest reserves Of the reserves, which are the sole responsibilityof the States, 75,000 km are located in the Savannah Zone, and 20,000 km
in the High Forest Zone. The Savannah forests produce fuelwood and poles, andmake no contribution to the supply of sawlogs. The latter product is suppliedfrom the High Forest Zone. Near y a]l areas of High Forest outside thereserves, estimated at 50,000 km in the 1940's, are being transformed inrtoagricultural land, and sawlog supplies from these are expected to be totallyexhausted by 1990. Thus, the 20,000 km of forest reserves in the High ForestZone will soon be the only source of sawlogs in Nigeria.
2.08 An inventory made by the FAO/UNDP High Forest Development Project inIbadan shows that, of the 2 million hectares of High Forest Reserves, about1.6 million hectares are economically accessible Sor exploitation. With anannual natural increment of sawlogs of 31 to 1.5 m (r) 1/ per hectare, annualsustainable yield is about 2 million m (r). Higher output from the same areacan only be obtained at the expense of future yields by overcutting, or byincreasing the number of utilizable species, and/or by establishing plantationswith fast-growing species. Therefore, immediate priorities now recognizedby Government are to manage these forests more rationally on a sustained yieldbasis; to resist pressures for de-reservation and to investigate and developmarkets for the lesser known species; and to increase the annual rate ofplanting with fast-growing species. By the end of 1976, about 115,000 ha ofplantations had been established, of which 34% could be utilized as pulpwood.However, the current rate of planting, averaging about 10,000 ha annually,is inadequate to meet expected demand (para 2.20).
2.09 The sawmilling industry, producing about 1 million m (s) 2/ an-nually, located in the High Forest Zcone, is fairly well developed. Thecountry has a total of about 500 privately owned sawmills, 80 percent of whichare found in the Western and Mid-Western part of the country, Of this total,there are 23 large sawmills with a total output of 230,000 m annually thatproduce an accurately sawn and well graded product. In comparison, theproduct of the small mills is of poor quality, but production costs are lower,and it is acceptable for most local uses.
2.10 Five plywood mills produce 74,000 m 3/ of plywood per year. Twonew mills3and the expansion of one existing mill will bring total capacity to110,000 m in 1980. Four particle board mills Ire expected to come on streambefore 1980, with a total capacity of 103,000 m . There are no known plansfor production of fiberboard, and with this exception, prospective production
1/ (r) = roundwood (logs).
2/ m (s) - the volume of planks measured after converting logs (r) in asawmill. Approximately 50% of log is converted to planks.
3/ Including 11,000 m from a plywc,od mill which came on stream in early1978.
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capacity in wood-based panels is more than sufficient to supply the domestic
market, and it is not inconceivable that the present ban on the export ofwood products will be lifted for wood-based panels once the mills now underconstruction are in operation.
2.11 At present, Nigeria has only one paper mill at Jebba (Kwara State)producing 12,000 tons of primarily industrial paper from imported pulp and
waste paper. However, two new mills are under construction, each with pulping
facilities that are expected to start production in 1981. One mill at Itu,Cross River State, should produce 100,000 tons of newsprint per year, and the
other mill at Iwopin, Ogun State, 65,000 tons of fine paper, plus 54,000 tons
of pulp for export. Additionally, the existing mill at Jebba is to be expanded
and converted to produce 60,000 tons of industrial paper a year from its own
short fiber pulp. The increased output should be readily taken up by thedomestic market, except for part of the newsprint, which would initially beexported.
2.12 The mills have been designed to use Gmelina arborea 1/ as pulpwood.Plantings are about sufficient for the Itu mill, but have fallen far short
for the Iwopin mill, and because of the current low rate of planting, the millwill face serious shortages until 1990 when production from the Bank assistedproject will be on stream. Studies have shown that the Iwopin mill is finan-
cially viable because of its design and location. Although the stumpage rates
used in the studies for the pulpwood were unrealistically low, analysis has
shown that the financial viability is relatively insensitive to higher stumpagerates (Project File Supplement 6). The extended Jebba mill will initially usemixed woods from the Savannah forests until the production of the speciallyestablished Gmelina plantations produce sufficient pulpwood. All three mills
will import long fiber pulp. It should, however, be possible to grow longfiber material in Nigeria, and trials to grow Pinus caribaea should be estab-
lished to determine the economics of producing long fiber pulpwood at differentlocations.
D. Financing the Sector
2.13 The sawmilling, plywood and veneer industries are traditionallyfinanced by the private sector. They are generally profitable and sufficientfinancing seems to be available for expansion. The pulp and paper mill
capacity (230,000 tons) now under construction, costing about N 400 million,has been largely financed by the Federal and State Governments.
2.14 The logging industry is wholly private. The larger wood-based indus-tries generally conduct their own logging operations, with small industries
buying logs from independent loggers. The production of wood through forest
plantations is wholly financed by the Federal and State Governments. For
1/ At fast-growing exotic tree planted in Nigeria since the 1920's,and producing an excellent short fiber pulpwood.
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the next 15 to 20 years, about N 40 million (in 1978 terms) 1/ will be neededannually for plantation establishment if Nigeria wants to remain self-sufficient in wood supplies. Since the present revenue of about N 6 millionper year, collected by State Governments from log extraction, is unrealisticallylow, increasing stumpage fees should be a priority to generate income for thisplantation program.
E. Institutions and Manpower
2.15 There are two Federal institutions concerned with forestry inNigeria: the Federal Department of Forestry (FDF) and the Forest ResearchInstitute of Nigeria (FRIN). The FDF, established in 1971, is a departmentof the Federal Ministry of Agriculture and Water Resources (FMAWR), and ischarged with:
- formulating a national forest policy;
- promoting forestry projects that are of nationalinterest, and channelling Federal funds to financesuch projects to the States; and
- coordinating and monitorin;g State forestry activities.
The FRIN, operating independently, is responsible for forestry research inNigeria, and its relationship to the FDF and the State Forest Services ismainly that of a consultant.
2.16 The State Forest Services are directly responsible for the actualmanagement of the forest reserves as well as for the control of the exploita-tion of non-reserved forests. Each State has a Department of Forestry withinthe Ministry of Agriculture and Natural Resources (MANR), headed by a ChiefConservator of Forests (CCF). The function of the State Forest Services hasbeen protection and control of the e:xploitation of the natural forests.Except for the pulpwood plantation programs, plantation activity has beenminimal and has not been related to any specific programs and targets.
2.17 Nigeria's forestry sector is reviewed twice a year by the NationalForestry Development Committee, consisting of the heads of all public forestryagencies, with responsibility to the National Council for Agriculture andRural Development. The effectiveness of the Committee is limited by the lackof a comprehensive forestry development plan, and by the lack of systematicState statistics on forestry activities.
2.18 As in other sectors in Nigeria, one of the main problems is thescarcity of qualified manpower in forestry. In the public forest services,
1/ Establishment of 25,000 ha of plantation per year at N 1,600 per ha.
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vacancies range from 20 percent upwards of approved positions. Indications
are that there will be about 200 vacancies in the professional grades in the
early 1980's. Similarly, at the technical level there will be a shortage
of not less than 2,500 technicians. The professional training capability
at the University of Ibadan, and technical training facilities for Forest
Assistants at Ibadan and Jos are insufficient, and even with new forestry
training facilities being planned, it will be a long time before trained
manpower output will meet requirements. In the meantime, however, the project,
at Federal level, would be advising the Government in staff training and
education, and would assist in preparing training projects for possible future
Bank lending (para. 4.12 and 4.13). In addition, better utilization of
existing manpower is possible and should be pursued.
F. Objectives, Strategies and Policies
2.19 Forest policy objectives as formulated in the Third National Develop-
ment Plan include:
- increasing wood supplies by establishing plantations
of fast-growing species;
- promoting forest industries through tariff policies
and by exploring ways in which lesser known species
can be used in industries such as furniture andmatch making;
- ensuring an adequate supply of pulpwood for the proposed
pulp and paper mills; and
- promoting fire prevention, watershed management
and soil conservation through forest planting and
The policy does not quantify targets against which actual achievements can be
evaluated. It is therefore necessary to prepare a long-term comprehensive
forestry plan, detailing demand and alternative supply services, and the proj-
ect would assist Government in preparing such a plan (para. 4.12).
2.20 Total demand for wood products in Nigeria exceeds 52 million m
annually, 90% of which (49 million m ) is consumed as fuelwood and buildingpoles by the rural and low income Irban population. The demand for industrial
wood products, about 3.1 million m 3of roundwood equivalent in 1177, is ex-
pected to increase to 5.7 million m in 1985, and 11.7 million m in 1995, which
would require a planting program of at least 25,000 ha per year from now until
1995. Fuelwood supplies will not constitute a problem in the South of Nigeria,
but the North, where there are already scarcities in most of the large cities,
will face serious shortages of this commodity.
2.21 To execute a planting program of 25,000 ha per year, a considerable
strengthening of forestry institutions and management in Nigeria would be
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required. At the Federal level, more attention should be given to the plan-ning function, and an effort should be made to improve data collection fromthe States. At the State level, Forest Services should improve their capacityto implement large scale planting programs.
2.22 The increasing importance of plantation-grown wood should not leadto a neglect of the productive capacity of the natural forests. By 1995,these forests will still produce around 17 percent of Nigeria's industrialwood requirements. The production from the natural forests can be improvedby: introducing lesser known species into the market; exercising a tightercontrol over logging practices; preventing illegal felling and farming inthe forest reserves; and by resisting pressures to dereserve forest areasfor agricultural production. The introduction of efficient fire protectionmeasures should benefit the development of both plantations and naturalforests. The UNDP/FAO High Forest Project includes these measures in itsprogram of work (para. 4.17).
G. Bank Involvement in the Forestry Sector
2.23 The Bank has assisted in small forestry components for firewoodand poles in two agricultural development projects (Lafia-Loan 1454-UNI,Ayangba-Loan 1455-UNI), both are in their first year of operation and arebeing implemented satisfactorily. Hcowever, this project will be the firstcomprehensive Bank assistance to the forestry sector in Nigeria, and isfully in line with the recent Forestry Sector Policy Paper. 1/ The latteremphasizes the importance of the development of forest plantations in ruralareas, and stresses the crucial role of management and institution buildingin the development of the forestry sector. The proposed project covers bothof these objectives.
III. THE PROJECT AREA
A. Physical Features
3.01 Location. The project areas (Map IBRD 13785) cover 11,300 ha ofthe Omo forest reserve in Ogun State, 11,300 ha of the Oluwa forest reservein Ondo State and 1,600 ha in the proposed Mbanasa forest reserve in AnambraState. The areas in the Omo and Oluwa Forest Reserves have been heavilyexploited by concessionaires over the past 25 years and contain relativelyfew acceptable species of exploitable size. The total size of these reservesis about 260,000 ha, with 11,000 ha cif Gmelina established, thus, sufficientland will be available for a long-term plantation program. No difficulty isforeseen in gazetting the Mbanasa reserve, following the promulgation of theLand Use Decree of March 1978. However, a condition of disbursement againstthe Anambra subproject would be the gazetting of this forest reserve, thelegal procedures for which are well-advanced.
1/ IBRD Report No. 1778, September 15, 1977.
3.02 The population residing adjacent to the Omo and Oluwa reserves
is relatively light, and there is very little land pressure. The situation
around Mbanasa is different; however, the land set aside for plantation
development has soils mainly unsuitable for agriculture, and the best use
of the land would be to convert it to forest by planting.
3.03 Topography and Soils. In all the project areas, the land is
between 100 and 300 m above sea level, and is undulating with occasionally
steep slopes and hilly outcrops. The High Forest soils in Omo and Oluwareserves are dominantly ferralitic, old and highly weathered. The major
geological formations over the whole region are crystalline rocks of thepre-Cambrian Basement Complex, with frequent outcrops of granites, gneisses,
quartzites and schists. The surface horizons are usually loamy or sandy,
becoming heavier with depth, and are moderately acid. Kaolinite is the
dominant clay mineral, giving a low base exchange capacity. They are charac-
terized by the quick and complete transformation of organic matter and the
rapid removal by leaching of its decomposition products, soluble salts,exchangeable bases and silica. Agricultural potential of these soils is only
fair. Although these areas, after being clear felled and burned, can produce
food crops, the rapid decline in nutrient status will, under the existing
techniques, allow productive cropping for only 1 to 2 years. The hydro-
morphic soils of the valley bottoms suffer from impeded drainage, but are
sufficiently fertile to produce a variety of food crops including rice.
3.04 Apart from small tracts of shallow soils and lateritic outcrops, the
soils of the Mbanasa project area are deep and sandy, excessively drained andvery erodible. Due to the very light vegetation cover, they have a lower
initial organic matter content than soils in the High Forest Zone, and are
correspondingly less suitable for agricultural cropping.
3.05 Vegetation (MAP IBRD 13786). The plantation projects in the Ogun
and Ondo States lie within the High Forest. The Mbanasa reserve lies in
the Derived-Savannah, with only a few tree species left, and the vegetation
mainly consisting of perennial grasses such as Andropogon Sp. and Hyparrhenia
3.06 Climate. Annual rainfall in the 3 project areas varies from around
1,500 mm to 1,800 mm, most of it falling from March to October. Rainfall dis-tribution is bi-modal, with a marked decline in August. Radiation, tempera-ture and sunlight hours peak in January/February, and are at their lowest inJuly/August when dull overcast conditions are experienced.
B. Infrastructure and Social Services
3.07 The two High Forest areas lie close to one of the country's main
highways (Lagos-Benin), and are both served by a good all-weather road.
Within the forest reserves, there are numerous logging roads of various
qualities. Forest products are therefore easily transported from the reserves
to the larger towns in Southwest Nigeria, including the pulp and paper mill
at Iwopin. The road network in the Mbanasa area is less adequate, but a
new highway is being constructed from Enugu, which will make access to theproject easier. The sandy tracks wi'thin the area linking the surroundingvillages are generally in poor condi'tion.
3.08 The social services provicied within and adjacent to the 3 projectareas are poor, as no rural electrif'ication and basic water supply systemsexist. Furthermore, health services and schools are in very short supplyin the area.
IV. THE PROJECT 1/
A. Project Objectives
4.01 The project consists of 3 subprojects, namely two identical largescale Gmelina plantation projects in Ondo and Ogun States respectively, and atrial pine plantation project in Anambra State. Project objectives, which arein full accord with Federal and State Government policies (para 2.19) are toincrease roundwood production from plantation development to meet part ofNigeria's increasing demand for utility-grade timber; to provide short fiberpulpwood from thinnings of these plantations for a pulp and paper mill; toprovide employment and social servic:es and to increase local food productionin the rural areas; to improve forest plantation management in 3 States, andstrengthen the FDF's sector planning capabilities; to carry out trials withpines to assess the viability of projects to supply long fiber pulpwoodto Nigeria's pulp and paper industries. The project, which comprises only a5-year time slice, is part of a long-term plantation development program inthe country.
B. Project Description
4.02 Summary. The project to be implemented during the 5-year period1979-1984 would involve:
Forest Plantation and Food Crop Production
- Establishment of 11,300 ha of Gmelina plantations ineach of the Omo and Oluwa forest reserves, locatedin Ogun and Ondo States re!spectively;
- establishment of 1,600 ha of Tropical Pine and Eucalyptustrials in the proposed Mbanasa forest reserve in AnambraState, and introductory trials of Tropical Pine in selectedforest reserves in Ogun and Ondo States, and other selectedareas;
1/ See Project File (Annex 1).
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maintenance and protection of the existing Gmelina plantationof about 7,000 ha in Omo forest reserve and about 4,000 hain Oluwa forest reserve;
establishing adequate plantation protection systems,including the erection of fire towers and the establish-ment of radio communication; and
increasing food production by allowing 1,400 ha of Taungya 1/farming annually, and by planting 500 ha of maize annuallyon a pilot basis, using mechanization and minimum tillagemethods in newly cleared areas of forest prior to plantingthem with trees.
- constructing project offices, workshops, and staff andforest villages, improving electricity, water supplies andother services in the 3 project areas;
- constructing about 610 km of primary plantation roads and930 km of plantation tracks, and maintaining selected existingand new plantation roads; and
- clearing about 27,000 ha of degraded High Forest, and1,600 ha of light Savannah woodland for plantation andinfrastructure development.
Institutional Support and Technical Assistance
- strengthening the management of the State plantationprojects and the monitoring and planning capabilitiesof FDF by providing the required technical, administrativestaff and logistical support;
- provision of in-service and overseas training; and
- provision of consultancy services to assist FDF and theStates to review forestry policies; provision of technicalconsultancies aiming at introducing new technologies inthe forestry sector and preparation of future forestryprojects.
/ Taungya - local farmers are allocated temporary plots in the forestreserve and are allowed to intercrop with annual food crops making useof the fertility of the forest soil until the plantation-grown treesclose canopy, when they are allocated fresh areas.
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Forest Plantation and Food Crop Production
4.03 Gmelina. The two plantation subprojects in theForest Zone in the Ondo and Ogun States would establish a total of 22,600 haof Gmelina plantation. Before the areas are mechanically cleared, salvagelogging of the remaining utilizable trees would be carried out by "treetakers." They would remove trees which are still in demand by the numeroussawmills in the High Forest Zo e. The area to be cleared by the project willproduce an estimated 700,000 m of logs for these sawmills, amounting toabout 7% of their present estimated annual input. About 45 million open-rootGmelina seedlings would be established in the nurseries. Seedlings would beplanted ouit in an annual planting program reaching 3,000 ha in Year 4 in eachsubproject. The plantation would supply pulpwood from thinnings in Year 8,and sawlogs and Dulpwood in Year 16 after planting.
4.04 Tropical Pines in the Derived Savannah. The trial plantationproject in Anambra State would establish 1,600 ha of Tropical Pines, and wouldinclude some eucalyptus. Nurseries would raise a total of 2.6 million pinesand eucalyptus seedlings in pots. T'he plantation would assess the viabilityof supplying long fiber pulpwood on a 15 year rotation, and/or sawlogs andpoles on a longer rotation to be determined once growth rates have beenmeasured. The integration of grazing with plantation management for theproduction of sawlogs on reduced rotations will be investigated. The silvi-culturalist in charge of the trial pLantation in Mbanasa would also conductsmal!L scale introductory pine trials for the production of long fiber pulpwoodin areas near the pulp and paper mills.
4.05 Tree Farming. The replacemnent of the traditional bush fallow witha plantation fallow of Gmelina for the maintenance of soil fertility, and theprovision of a cash income for the farmer will be investigated.
4.06 Food Production. Food production would be promoted through about5,000 Taungya farmers who would farm about 1,400 ha annually in the two HighForest project areas. Areas allocated to Taungya farmers would be cleared bythe farmers, except for large trees which would be cleared by the project.After harvest, these areas would be planted with trees. Extension advice inimproved technology and basic managemnent of food crops such as maize andyams would be provided by the project. In view of the rapid canopy closureof the Gmelina trees, farming will be possible for only one season. In addi-tion to the Taungya farming, the two subprojects would each carry out pilotmechanized maize production on 250 ha annually prior to tree planting, theOutput of which would be used for ani.mal feed. After clearing, the debriswouicl be slowly burned in situ to ensure maximum increase in pH, essential formaize production in these soils. A rmechanized minimum tillage approach wouldbe introduced to protect the fragile top soil. The concept of utilizing thefertility of the forest soil without interfering with the development of the
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planted trees, conforms to the FMG desire to increase food production for thenation. This program would be carefully monitored, and after 3 years, wouldbe reviewed as to its appropriateness.
4.07 Civil Works. Infrastructural development, which represents themajor part of the project development costs, consists of the construction ofhousing, buildings, workshops, stores and roads, and the provision of somebasic social services in forest villages (school, dispensary, community hall),including water supply and electricity. Ondo and Ogun subprojects will eachhave an administrative center consisting of a project office, mechanicalworkshop and storage facilities, staff and labor housing, water and electri-city supplies and community services. Because of the trial nature of theAnambra project, facilities would be kept to a minimum. To save cost andtime, the use of prefabricated wooden units built on concrete slabs for staffhousing and offices are proposed. These are available on short delivery fromlarge manufacturing plants, which also provide assistance in erecting theunits. Provision of labor quarters is made for half of the permanent laborforce as the remainder will be supplied from nearby villages.
4.08 Some old logging roads exist in the project areas, but to facilitateinitial planting, firebreaks and subsequent maintenance, it is necessary toprovide each subproject with a basic road system. Most of these roads wouldeventually be used for log extraction. However, there is no justification tomaintain these roads to a logging standard, so that upgrading would be theresponsibility of the log extraction agency at the appropriate time. Roadconstruction would be carried out on force account and is based on a road net-work of 2 km all-season plantation roads and 3 km dry-season tracks per 100 haplantation.
4.09 Because of shortage of labor and the required planting target of3,000 ha/year, clearing would have to be mechanized in the Ogun and Ondo sub-projects. It would be carried out by heavy tractors using combinations ofequipment, including tree pushers, bulldozer blades and mounted rakes forwind-rowing. In the savannah area of Anambra State, mechanical clearingby heavy tractor and bulldozer blade is proposed, mainly to remove all stumps,leaving the soils in a condition that would enable tractor-drawn disc ploughsand harrows to cultivate the soils for optimum survival and development ofthe pines and eucalyptus.
Institutional Support and Technical Assistance
4.10 Management and Evaluation. Assistance would be provided to theState Forestry Services in Ogun, Ondo and Anambra for the management of theirexpanded intensive industrial plantation program, and to FDF to improve itsmonitoring and planning capabilities.
4.11 At State level, a substantial increase in local staff and improvedtraining programs would be required. Specialists would be recruited duringthe initial development period to assist in silviculture plantation managementin the engineering, management and maintenance aspects of forest clearing androad construction by heavy machinery, and in all training programs.
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4.12 At Federal level, the marLagement division of FDF would be strength-ened by the provision of 5 specialists. They would provide technical supportin the collection, processing and evaluation of data of the forestry sector,project preparation, applied silviculture research and financial management,and staff training, and would assist the division in setting up a central databank of basic scctor planning and project information.
4.13 Training. The State projects would be in themselves an extensivetraining effort in plantation development operations and would provide a soundbasis for on-the-job training under the supervision of competent senior staff.To supplement the latter, the project would also provide formal training pro-grams either at the project training center to be established in or near Ogunor Ondo State, or at other existing training institutions, or overseas. Theproject training center, to be owned and managed by FDF, for which aboutN 150,000 has been allocated for classrooms, dormitories, and other trainingfacilities, would provide short courses in plantation management for profes-sional foresters from other States, and courses for junior technical staffin silvicultural practices, record-keeping, forest inventory work, equipmentmaintenance, etc. Under the project, consultants would work with theFDF training officer and assist the project management units to establishtraining programs (para 4.15f). The recently established FAO/UNDP ForestMechanization School in Kaduna State would provide training for projectoperators of heavy equipment. Project training courses would be given bysenior project staff and by senior FDF technical staff, including staff ofthe FAO/UNDP Forest Management Capability Project (para 4.17).
4.14 The project would also provide, over a 5-year period, aboutUS$200,000 for approximately 123 manmonths of fellowships as follows:
- 84 manmonths for forest officers in forest clearingoperations and heavy equipment maintenance, silvi-cultural practices, forest: management and fireprotection;
- 24 manmonths for post graduate training in foresteconomics; and
- 15 manmonths for post gracluate forestry trainingto be decided by FDF in consultation with the Bank.
4.15 Consultancy Services. The project would provide 60 manmonths ofconsultant services, costed at about. US$8,000 per manmonth (consisting ofUS$5,000 fees and US$3,000 vehicles, equipment, operating costs, travel andper diem expenses), to assist FDF ar,d the 3 plantation projects in specificareas where local skills are unavailable, or where short-term supplementationis required. While precise details of consultancy would be adjustable duringproject implementation, specifically, the consultants would:
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(a) assist FDF in preparing a feasibility study for a secondphase forestry project. This project would be eithera second time slice of the present proposed project,or could be one of the already identified projects(e.g., plantation development for the Jebba mill(para 2.12), plantation development in the Savannah Zone,firewood plantations, shelterbelt development in SudanZone, forestry training). The consultants (12 manmonths)would provide specialist support to the project staffrecruited to strengthen the management division of FDF;
(b) study the viability of transforming cleared forests intocharcoal, and assess the possibility for marketing charcoalfor local industrial uses. Provision for 6 manmonths, plusthe purchase of portable kilns, have been made;
(c) carry out an evaluation of the prospects of commercial produc-tion of lumber, and seasoning and preservation of timber of15-year old plantation-grown Gmelina (6 manmonths), includingassistance from timber technology laboratories and commercialsawmills;
(d) review forestry tariffs and concession agreements by theState Forestry Services, particularly for those Stateswhere revenues from timber are important to the Stateeconomy. Most fees and royalties (stumpage) paid byloggers to the State have not been revised for years anddo not bear any relation to the value of timber on thedomestic market. Equally, concession agreements betweencompanies and State Governments should be reviewed toensure that revenues paid by concessionaires are consistentwith the changing value of the produce. Consultant specia-lists in forestry law and taxation (10 manmonths) shouldwork in close liaison with FDF and the State forestrydepartments in drawing up their recommendations. In view ofits importance to the financial viability of the plantationproject, an assurance was obtained that MANR of bothOgun and Ondo States would prepare and submit to the Bankbefore March 31, 1980 for review and consultation, proposalsregarding a formula for calculating the stumpage rates forsalvage logs from the natural forest, Gmelina pulpwoodand Gmelina sawlogs.
(e) provide for technical consultancy (14 manmonths) on aperiodic basis to review and make recommendation onimprovements of forest clearing techniques, silviculturalpractices, plantation management, and the mensurationof Gmelina and pine plantations in the three project areas;
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(f) provide assistance in establishing plantation managementand junior technical training courses at the projecttraining ceniter. The consultants (8 manmonths) wouldassist the Project Management Units and FDF to developsuch a program by April 1, 1980, and would visit theproject during the initial years to assess progressof staff training and development. Findings would bereported to FDF and Ogun, Ondo and Anambra States andthe Bank; and
(g) provide technical consultancy (4 manmonths) to assistFDF in interpretation of side-looking airborne radarand satellite imagery.
4.16 The consultants are likely to be recruited either from consultantfirms or as individuals. Assurances were obtained at negotiations thatthe management division of FDF would be responsible for the preparation oftheir detailed terms of reference for review by the Bank, and that consultantsand consultant firms would be appointed with qualifications, experience, andon terms and conditions satisfactory to the Bank.
4.17 The project's technical assistance program is complementary to thetechnical assistance provided by the FAO/UNDP Project (Development of ForestryManagement Capability) which would, in particular, assist FDF to manage thenatural High Forest on a sustained yi(eld basis and the marketing of lesserknown species (para 2.08).
C. Costs and Financing Arrangements
4.18 Cost Estimates. Project costs during the 5-year development periodare estimated at N 51.5 million (US$79.3 million), of which, N 20.1 million(US$31.0 million), or 39%, would be foreign exchange. Cost estimates areincremental and include an estimated N 2.1 million of identifiable in-direct taxes and duties. Base cost estimates are based on prices obtainedduring appraisal, updated to include baseline costs expected at the end of
1978. Costs include:
physical contingencies equal to 5% of base costestimates;
- price contingencies for foreign costs in accordancewith the Bank's general guidelines calculated onbase costs plus physical contingencies compoundedannually, applying the following annual rates ofinflation:
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Inflation Rate %1979 1980-5
Vehicles, Plant Equipment, Spare Parts 6.5 6.0
and Farm Inputs
Civil Works, Buildings, Houses Road
Construction, and Construction Materials 7.5 7.0
Salaries, Consultants and Overseas Training 7.0 7.0
- price contingencies for local costs at 20% compounded annually,
except for salaries and labor employed directly by the project
where an annual estimated rate of 13% is used.
4.19 Total contingencies calculated on the foregoing basis are equivalent
to 31% of total costs, or 46% of baseline costs. This large contingency
component reflects, following the 1975-77 inflation rate of 26% per annum, the
high (20%) annual inflation rate expected in Nigeria during the life of the
Project. Details of project costs are presented in Annex 2 and summarized in
the table on page 17.
4.20. Project costs and price contingencies have been calculated on
the assumption that the exchange rate between the naira and the dollar will
remain fixed at 1.54 throughout the project period. This closely reflects
the experience of recent years during which time the exchange rate changed
relatively little despite a rate of domestic inflation in Nigeria which
consistently exceeded international inflation by a significant margin.
4.21. The estimates of project cost in dollar terms would be affected by
a change in exchange rate policy. If, for example, there were to be a 20%
devaluation to compensate for the system of import duties and export incen-
tives currently in force and if the exchange rate were to be adjusted
thereafter to compensate fully for the difference between domestic and inter-
national inflation projected for future years, then the local component of
project costs would be lower when expressed in dollar terms. Under these
assumptions the local component of project costs would amount to $29.6 million
compared with the $48.3 million estimated on the basis of the present exchange
rate. Total project cost would, therefore, amount to only $60.6 million
(compared with $79.3 million estimated on the basis of the present exchange
rate) and the share of total project cost financed by the Bank loan would be
51 percent (compared with 39 percent estimated on the basis of the present
FORESTRY PLANTATION PROJECT
Project Cost Summary
, of 1 of------ Naira (Thousands) ------ --US$ (Thousands)-- Base TotalLocal Foreign Total Local Foreign Total Cost Cost
BUILDINGS AND SOCIAL SERVICES 4,078.1 3,218.9 7,297.0 6,280.1 4,957.1 11,237.2 21 14
LAND CLEARINGEquipment Cost 492.3 4,293.8 4,786.1 758.2 6,612.5 7,370.7Operating Cost 3,538.0 2,098.6 5,636.6 5,448.5 3,231.8 8,680.3
4,030.3 6,392.4 10,422.7 6,206.7 9,844.3 16,051.0 29 20
ROAD CONSTRUCTIONEquipment Cost 223.2 1,752.8 1,976.0 343.8 2,699.3 3,043.1Operating/Execution Cost 2,186.0 790.4 2,976.4 3,366.5 1,217.2 4,583.7
2,409.2 2,543.2 4,952.4 3,710.3 3,916.5 7,626.8 14 10
PLANTATIONEquipment Cost 86.8 439.7 526.5 133.7 677.1 810.8Operating, Planting andMaintenance Cost 5,028.1 215.7 5,243.8 7,743 ) 332.2 8,075.4
5,114.9 655.4 5,770.3 7,876.9 1,009.3 8,886.2 17 12CROP DEVELOPMENTEquipment Cost 36.8 228.0 264.8 56.7 351.1 407.8Operating Cost and
Farm Inputs 352.6 54.4 407.0 543.0 83.8 626.8389.4 282.4 671.8 599.7 434.9 1,034.6 2 1
MANAGEMENT AND SUPPORT SERVICESVehicles and Equipment 35.5 304.3 339.8 54.6 468.6 523.2Staff Salaries, Wages andOffice Expenses 2,386.5 2,788.5 5,175.0 3,675.3 4,294.3 7,969.6Studies/Consultancy - 315.0 315.0 - 485.1 485.1Training and Fellowships 202.0 127.5 329.5 311.1 196.4 507.5
2,624.0 3,535.3 6,159.3 4,041.0 5,444.4 9,485.4 17 12TOTAL BASELINE COSTS 18,645.9 16,627.6 35,273.5 28,714.7 25,606.5 54,321.2 100
CONTINGENCIESPhysical 932.1 831.4 1,763.5 1,435.3 1,280.4 2,715.7Price 11,792.5 2,671.0 14,463.5 18,160.5 4,113.3 22,273.8
12,724.6 3,502.4 16,227.0 19,595.8 5,393.7 24,989.5 31TOTAL COSTS 31,370.5 20,130.0 51,500.5 48,310.5 31,000.2 79,310.7 100
PERCENTAGE 61 39 100 61 39 100
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4.22 Of the total project cost of N 51.5 million, IBRD would financeN 20.1 million (US$31.0 million) at the lending rate current at the timeof loan approval, repayable over a period of 20 years, including a 5-yeargrace period. The Bank loan would cover 39% of total project costs,equivalent to the foreign exchange costs; FMG would finance N 16.3 million(US$25.1 million), or 32% of total project costs, and the balance N 15.1million (US$23.2 million), representing 29% of the project costs, will beprovided by the three State Governments: Ondo (ODSG N 6.9 million); Ogun(OGSG N 6.9 million); and Anambra (ANSG N 1.3 million). A summary of theproposed financing plan is shown below:
PROPOSED FINANCING PLAN BY MAJOR EXPENSE CATEGORY(in N million)
TOTAL IBRD FMG ODSG OGSG ANSG %
Buildings/Houses, includingSocial Services 12.0 4.6 3.9 1.6 1.6 0.3 23
Vehicles and Equipment 9.2 8.2 0.5 0.3 0.2 - 18
Operating Costs (includingplanting materials and spareparts 24.4 4.0 10.2 4.7 4.7 0.8 47
Management Staff Salariesand Wages 4.0 2.2 0.9 0.3 0.4 0.2 8
Monitoring and EvaluationConsultancy and Training 1.9 1.1 0.8 - - - 4
TOTAL N MILLION 51.5 20.1 16.3 6.9 6.9 1.3 100
TOTAL US$ MILLION 79.3 31.0 25.1 10.6 10.6 2.0
PERCENTAGE 100 39 32 29
4.23 The Bank loan would be made to the Federal Government, who wouldonlend part of it, N 18.8 million (US$29.0 million) on the same terms andconditions to Ondo and Ogun, and possibly on more favourable terms to Anambra,in view of the trial' nature of this subproject, viz. ODSG N 8.7 million(US$13.4 million), OGSG N 8.7 million (US$13.4 million), and ANSG N 1.4(US$2.2 million). The signing of subsidiary loan agreements, satisfactory tothe Bank, between FMG and the three State Governments, covering both onlending
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of the Bank loan and FMG and State Government contributions would be a condi-tion of disbursement against each individual State. Ongoing projects aresuffering from inadequate inflow of funds from Government sources, and inorder to overcome this problem, assurances were obtained during negotiationsthat:
(a) Bank disbursements would be rmade directly to the ProjectManagement Units' (PMU's) commercial bank accounts(para 4.27);
(b) the stumpage fees arising from salvaged logs of naturalforests and from plantation pulpwood and sawlogs would bepaid into the PMU's bank accounts to constitute a revolvingfund to provide sufficient funds enabling the State Govern-ment of Ondo and Ogun to carry out their planned annualplanting programs (para. 8.02);
(c) until such time as sufficient funds are accumulated outof stumpage fees to form a revolving fund and to overcomedifficulties posed by possible delays in supply of localfunds, PMUs and Forestry Division, Anambra (FDA) would beauthorized to establish overdraft facilities equivalentto six months project expenditures based on the approvedannual project budgets, and that the overdraft would beguaranteed by the respective State Governments;
(d) during the 5-year development period, FMG, ODSG, OGSG andANSG would provide their quarterly contributions to therespective project accounts at least 3 months in advance,and in accordance with the approved annual budget; and
(e) at least four months prior to each fiscal year, themanagement of the respective PMUs would submit theirproposed annual budgets, as approved by the Budget andPolicy Coordinating Committee (BPCC) (para 6.02) and theCCF in Anambra, to the FMARD, State MANRS and the Bank.
D. Procurement and Disbursement
4.24 Motor vehicles, plant and equipment and spares for forest clearing,and roadmaking equipment and tractors, valued at N 13.2 million (US$20.3 mil-lion) would be procured through international competitive bidding (ICB) and inaccordance with Bank guidelines for contracts over US$100,000, and throughcompetitive bidding and in accordance with local procedures satisfactory tothe Bank for contracts less than US$100,000. For contracts of less thanUS$30,000, local competitive shopping would be acceptable. Items for procure-ment would be bulked to permit optimum use of competitive bidding. In thecase of ICB domestically manufactured goods would be allowed a 15% preferenceor the applicable import duty, whichever is lower when comparing bids withthose of foreign manufacturers. Experience has shown that contracts forhouses, stores, and buildings, which are valued at about N 12.0 million
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(US$18.5 million) are not attractive to foreign contractors due to dispersedlocations and small size of contracts, and would therefore be awarded on thebasis of local competitive bidding with procedures satisfactory to the Bank.Forest clearing valued at N 6.3 million (US$9.6 million) and plantationroads valued at N 4.0 million (US$6.2 million) would be undertaken on forceaccount, except for Anambra plantation roads which would be done under localcompetitive bidding due to the small size of the program. Force account isnecessary because these are ongoing operations and located in areas wherethere are no capable contractors available to do the work. Force accountoperations in Nigeria are cheaper than contractors because of limited capa-bility and capacity and local conditions. The Bank is not financing thelocal cost component of force account. A large part of the project costwould be local salaries and operating expenses valued at ebout N 12.7 million(US$19.6 million) which are unsuitable for competitive bidding. The servicesof consultants valued at N 3.3 million (US$ 5.1 million) would be obtained inaccordance with procedures acceptable to the Bank.
4.25 The Bank loan would be disbursed during 1979-84 as follows (detailsare in Annex 2, Table 7) and expenditures would be fully documented.
CATEGORY I 100% of the foreign exchange expendi- US$16.1 milliontures of directly imported vehicles,tractors forest clearing/roadmakingequipment spare parts and other agri-cultural supplies and equipment or iflocally procured, 89% of these expendi-tures.
CATEGORY II 100% of the foreign exchange expendi- US$7.0 milliontures of directly imported buildingmaterials and equipment, or 38% ofthe total expenditures of buildingsand houses.
CATEGORY III 100% of the foreign exchange expendi- US$5.1 milliontures or 60% of total expenditures ofinternationally recruited staff (in-cluding their salaries, allowancesand recruitment costs), consultancyservices and overseas training forlocal staff.
UNALLOCATED US$2.8 million
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E. Budgets, Accounts and Audit
4.26 FDF, FDA and each PMU would keep records in accordance with soundaccounting practices to reflect its operational and financial position andto provide evaluation data. The accounts would be audited by a firm ofindependent external auditors acceptable to the Bank. The audited accountsand the auditor's report, including a statement as to whether or not Bankfunds had been used for their intended purpose, would be submitted to the Bankwithin four months of the end of the fiscal year. Assurances to this effectwere obtained during negotiations.
4.27 Annual budgets would be prepared by each PMU, FDA and FDF based onappraisal estimates amended where necessary to reflect changes in costs andproject development policies. With the assistance of FDF's Monitoring andEvaluation Unit, a uniform budget format would be introduced in the firstproject year, which would adequately portray project activities unit costsand productivity and form the basis of a proper management information system.Annual budgets would be submitted to the BPCC and in Anambra to the CCF forapproval. The PMUs and FDA would prepare quarterly cash flow statements,which would be submitted to BPCC and CCF, and PMUs and FDA would operate onthe basis of these statements unless informed otherwise. On the basis ofthe approved annual budgets, the Federal and State Governments would makebudgetary allocations and thereafter would make available to PMUs all neces-sary funds quarterly and in advance (para 4.23). Separate bank accountsfor the PMUs would be opened with commercial banks, and initial deposits ofN 0.6 million, N 0.6 million and N 0.2 million respectively in Ondo, Ogun andAnambra would be conditions of disbursement against each individual Statecomponent.
V. TECHNOLOGY AND PRODUCTION SPECIFICATIONS
A. Plantation Development
5.01 Plantation development proposals in the High Forest Zone in Omoand Oluwa Forest Reserves are based on the edaphic and climatic conditionsexisting in these areas, which are suitable for the growth of the exotictree Gmelina arborea. About 10,000 ha of this species have been success-fully established in the two reserves. The species, indigenous to Indiaand Burma, has been grown in Nigeria Since the 1920's and thus far has provenitself to be a rapid grower with few pests and problems in establishment. Alltests on the suitability of the wood f'or pulping have been very favorable,and high quality paper has been manufactured from its pulp. It is also suit-able for match-stick manufacture. Tests on its qualities for peeling havebeen successful but incomplete, due to the small size of logs presentlyavailable. There are no recorded sawnwood tests, but furniture has beenmade from planks converted in local sawmills, and a market has developed forGmelina logs in Anambra State where there is a shortage of indigenous white-wood timber (para 4.15c).
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5.023 At 8 years of age the trees have maximum annual increments of25 m u.b./ha, 1/ after which, height increments become lower, and the annualvolume increment is reduced considerably.3 The accepted annual increment for
sawiogs in natural forests is 1.5 - 2.0 m u.b./ha, which could possibly bedoubled by intensive management. The project proposes growing Gmelina on a15-year rotation to produce sawlogs with an average diameter of 45 cm. Pulp-wood would be produced from thinnings at 7 years of age and from the finalfelling. Ulder these proposals (annex 2, Table 11), the project would produceabout3275 m u.b./ha, namely 75 m gulpwood from 50% thinnings at Year 7, and100 m sawlogs, and a further 100 m pulpwood when clear-felled at Year 15.The natu5al forest production after a long cycle of 80-100 years yields only90-120 m /ha of trees with utilizable trunks over 50 cm diameter.
5.03 Plantations would be established on cleared logged-over forest.Stump plants from project nurseries would be used. Machine weeding wouldbe carried out between the planted lines of trees until the tree canopycloses, after which, manual weeding around the trees would continue for afurther 2 years. About 10% of the annual planting areas would be clearedmanually and let to Taungya farmers who would be responsible for the careand maintenance of the trees planted on their farms for about 2 years. Ineach reserve, 250 ha of land would also be prepared for mechanized maize pro-duction, and trees would be planted after the maize crop had been harvested.
5.04 In the Derived Savannah area of Mbanasa in Anambra State, theclimatic and edaphic conditions are considered to be more suitable for growingtropical pines and selected eucalyptus species. There are no establishedplantations of these species in the area, and the project plantings would beconfined to experimental plantings, but on a scale large enough to justifyclearing and weeding by the machines which would have to be used if large scaleplantings are ever carried out. The tropical pines would produce long fiberpulp, which at present is imported. If demand develops, the plantation couldbe managed to produce sawlogs with intermediate thinnings for posts, poles andpulpwood. The eucalyptus would be grown primarily for the production of poles,but selected species could be managed to produce sawlogs.
5.05 On a rotation sf 15 years, the pines are expected to produce a meanannual increment of A1 m u.b./ha. The total production per ha at this agewould be about 165 m u.b. The indigenous Derived Savannah woodland which isburned regularly has an annual increment of not more than 0 5 m /ha. A wellstocked savannah forest rarely carries more than about 20 m /ha.
5.06 The plantations would be established on land mechanically clearedof the savannah woodland. The ground would be prepared by disc plowing
1/ m u.b. = m under bark (without bark).
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and disc harrowing. Container plants of both the pines and the eucalyptswould be raised in project nurseries, Imported seed would be used. Weedingswould be carried out between the lines by tractor-drawn disc harrows for aperiod of 3 years. Manual weedings around the trees would be done for thesame period. After the first weeding, appropriate fertilizers would beapplied.
5.07 Traditional Taungya farming in the two High Forest subprojects wouldbe permitted, and extension advice to increase output within the farmer's lowrisk system of mixed cropping would be provided. Low cost inputs, especiallyimproved planting material and seed treatment for maize, yam and cassava wouldbe organized by the project and made available through MANR services. Pilotmechanized maize production would be carried out immediately after clearingand burning, and after harvest, these areas would be planted with trees.Maize would be grown by zero tillage, with expected yield of about 2 tonsper ha. The annual output of about 1000 tons would be sold mainly to localstock feed mills.
B. Land and Plantation Road Development
5.08 Proposals for plantation development would require a total of 24,200ha to be cleared and windrowed over a 5-year period. In addition, a basicplantation road and track program of 1,540 km would be implemented. The per kmconstruction costs (excluding overheads and right of way development costs)of plantation roads and tracks are estimated at N 4,200 and N 1,400 respec-tively. For the implementation of this program, Ogun and Ondo subprojectswould each establish a mechanical land clearing and road construction unit,with suitable workshop facilities. In Anambra, land development will becarried out by the project itself, but road construction will be done bycontractors.
5.09 To date, land clearing for forest plantation development has onlybeen undertaken by hand, using local contractors who have often proved un-reliable. Past land clearing programs for forestry plantations in Ondo andOgun (costing about US$450-500/ha) have achieved no more than 1,000 ha perannums, mainly due to labor shortages, particularly during peak farmingactivities. The local contractors would have difficulty in obtaining suffi-cient reliable labor and completing the work on time for programs larger thanthose already accomplished. The successful completion of plantation operationon the scale envisaged depends on a prepared time-table being adhered to.To achieve an annual project plantat:ion program of 3,000 ha in each of theHigh Forest projects, forest clearing will therefore have to be mechanized(at a cost of about US$800/ha) as will weeding operations. Heavy 224 KVtractors are recommended for the forest clearing operations. Plowing anddisc-harrowing would be carried out on the savannah soils where pines andeucalyptus are to be grown. Fifty-six KV agricultural tractors would be usedto weed between the planted lines of trees. Weeding in the High Forest Zonewould initially be carried out by towed crushing rollers, but this techniquemay be modified in the light of experience gained during the project.
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5.10 Plantation roads would mainly be used to transport labor, movementof planting material and other inputs, farm outputs and fire patrols and
fire-fighting access. Eventually, many of the roads would be used for loggingpurposes. The road system would consist of primary plantation roads in a 1 kmx 1 km grid, thereby creating 100 ha blocks for plantations. Inside eachblock, three parallel tracks at 250 m spacing would provide secondary access.
Development on this basis would require 2 km of primary roads and 3 km oftracks for each 100 ha developed. Only the primary roads would be gravelledand compacted and would follow the standard dimensions for local council roads
(6.7 m wide with 3.7 m surfaced with laterite). The Plantation tracks would bebuilt to minimum standard, would not be surfaced and would be located to ensureminimum drainage costs. All primary plantation roads, and depending on need,
some of the access tracks would be maintained annually.
VI. PROJECT IMPLEMENTATION
A. Organization and Management
6.01 The day-to-day management and technical operations of the Ondo andOgun subprojects would be the responsibility of two separate Project Manage-ment Units (PMU), the managers of which would be responsible to the respective
Chief Conservators of Forests of State MANR's, who in turn would report toState Permanent Secretaries. The terms of reference for the PMU are set out
in Annex 3.
6.02 The respective MANR's would each establish a "Budget and Policy
Coordinating Committee" (BPCC) that would be responsible for reviewing budgetand policy matters, not only for the forestry project, but also for otherBank-financed agricultural projects in the respective States. Until now, eachBank-assisted project in Nigeria has established its own Project CoordinatingCommittee to be responsible for overall project policy. However, now thatBank involvement in the sector is increasing, and with certain States operat-ing as many as three or four Bank agricultural projects, it is consideredpreferable to establish a single common committee for each state. Thisapproach could avoid duplication of efforts or inconsistencies in decisionsbetween different projects, and the BPCC is thought more likely to attracthigh-level support from the various participating agencies. If the BPCCestablishes itself as an effective body, its role in State policy-making mighteventually be extended beyond Bank-assisted projects alone to become a usefulforum for the formulation of overall State policy for the agricultural sector.The advisory body to the BPCC would be the existing Planning, Budgeting and
Monitoring Division of MANR. The BPCC would determine common policy issues;have an overall view of a number of project budgets involving a significantportion of the State's agricultural allocations; ensure common conditions ofservice; award major contracts, etc. The BPCC would comprise the Permanent
Secretary of Agriculture (Chairman), Chief Agricultural Officer, Chief Agri-cultural Engineer, Chief Conservator of Forests, Chief Agricultural PlanningOfficer (CAPO), Project Managers of Bank-assisted projects, a representative
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of the Ministry of Finance and Economiic Development, and a representative ofthe Federal Ministry of Agriculture and Water Resources (FMAWR). Representa-tives of other Ministries or agencies would be coopted when required. TheCAPO would be Secretary to the Committee. The terms of reference of theBPCC are given in Annex 3. A condition of loan disbursement against theirindividual State subprojects would be that Ondo and Ogun States had, throughpublication in the official gazette, established their respective PMU andBPCC with terms of reference and composition satisfactory to the Bank.
6.03 To keep the Local Government Councils (LGC) and the local peopleinformed of the project's activities, each PMU would establish a localadvisory committee once the project is operational.
6.04 The project organization in Ogun and Ondo is shown in Chart IBRD19309. The apex of PMU would be the project manager. Reporting to him wouldbe four departments:
- Engineering Services would be responsible for landclearing, roads, buildings and operation of projectworkshops;
- Plantation Services would be responsible fornurseries, planting and maintenance and fireprotection;
- Agricultural Services would be responsible formechanized maize operations and supervision ofTaungya farmers; and
- Finance and Administration would be responsiblefor personnel, accounts, stores and procurement.
6.05 In view of the small size and the trial nature of the trial plan-tation project in Anambra State, it would be implemented by staff of theForestry Division of MANR headed by a silviculturist, who would be directlyresponsible to the State CCF. The silviculturist would be seconded from FDFand would also be responsible for other introductory trials in other States.
6.06 Key staff for each of the Projects in Ondo and Ogun will total 7and will include the Project Manager, senior forester, chief engineer, roadand forest clearing engineer, workshop engineer, chief accountant and farmsupervisor. For Anambra, the key staff will be the silviculturist secondedfrom FDF's Monitoring and Evaluation Unit and the civil engineer (details aregiven in the Project File Supplement 2, Appendix 9, Table 7). Though they arein short supply, all three States have very capable forestry staff at juniorand middle management level; however, very few senior management staff areavailable in Nigeria with relevant background and capability for implementingplantation development programs of the kind proposed. Except for the chiefaccountant, senior foresLer, and civil engineer (Anambra) who can be recruited
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locally, the project has provided funds for international recruitment of keystaff. Assurances were obtained at negotiations that persons with qualifica-tions and experience and on terms and conditions of employment acceptable toLi,- Bai!K would oe appointed to these posts. Further, the appointment of thetwo project managers in Ondo and Ogun States and the silviculturist in AnambraState would be conditions of loan disbursement against each individual Statesubproject. Due to the shortage in junior and middle level forestry staff,assurances were obtained at negotiations that respective MANRs would give highpriority to PMU staff recruitment and as far as possible promptly accede toPMU requests for secondment of technical and other staff to the projects.
6.07 Recruitment of expatriate staff would take place either as estab-lished for ongoing projects, where the Agricultural Projects Management Unitfor Western Africa (APMU) has assisted the State and Federal Government toidentify and appoint the staff, or through the use of a recognized consultantfirm acceptable to the Bank. In the latter case, contracts made with con-sultant firms would have terms, conditions and personnel acceptable to theBank.
C. Monitoring and Evaluation
6 08 The State projects would be responsible for monitoring and evalua-tion and would submit quarterly progress reports to the Bank and FDF. Theformat of these reports would be established when project specialist staffand consultants are appointed. The projects would specifically monitor thenumerous manual and mechanized plantation operations, including growth rateand yield, which would greatly benefit the planning of subsequent projectplantation development. Specialist staff from FDF would provide the projecttechnical support in survey design, data processing and analysis. Throughthe monitoring and evaluation process, PMU would prepare the project comple-tion report.
6.09 One of the main functions of FDF is to provide overall directionin maximizing Nigeria's forestry exploitation and to provide technical andfinancial support to the States. To assist in carrying out this role, FDFhas established a Forest Management Division (Chart IBRD 19310), which ismainly responsible for monitoring and evaluation of ongoing forestry projectsand planning of the forestry sector, including project preparation. Underthe project, the Division would be strengthened to complement a number ofspecialists (mensuration, plantation and natural forest management) providedby UNDP/FAO assistance (para 4.17). These 5 key staff, forest economist, dataprocessing analyst, financial controller, silviculturist, and training andstaff development officer would be recruited, with qualifications and experi-ence and on terms and conditions of employment acceptable to the Bank. As-surances to this effect were obtained during negotiations. The averagecost of international staff based on standard APMU terms is estimated atUS$5,000 per manmonth.
6.10 The silviculturist's main task would be the establishment of thetropical pine and eucalypts trial plantation in Anambra and conducting intro-ductory pine trials in Cross River, Ondo and Ogun States. The other staff
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would be responsible for monitoring and evaluating the project components,assisting State project staff and FDF zonal offices in survey design, dataprocessing and analysis, and preparing and participating in staff training.In addition, the forest economist wouild assist FDF in planning and projectpreparation; and the financial controller would assist the three subproj-ects and other FDF-sponsored forestry projects in setting up an accountingand management reporting system. Together with the UNDP/FAO staff (para4.17), they would set up and maintain a central data bank of basic planningand progress information for the entire forestry sector in the country.
VII. MARUKTS AND PRICES
7.01 The recent rapid growth in Nigeria's economy, and particularly inthe construction sector, has led to a very strong domestic market for woodand wood products, and prices have increased dramatically. As of April 1,1976, the Government prohibited the export of all wood and wood products.The demand for the project products (pulpwood and utility saw logs) is good,and will improve with growing demand and inadequate supplies from the naturalforest.
7.02 In 1977, Nigeria's iotal consumption of industrial woo9j and wood pro-ducts was about 3.1 million m (r), of which about 2.3 million m (r) weredomestically produced. The balance was imported, mainly as paper and paperproducts.
7.03 Demand for wood and wood products in Nigeria has been forecastusing cross-country F.A.0. studies, 1/ assuming an increase in real percapita income of 2.5 percent pSr anntmi. Total roundwood demind is expectedto increase from 3 1 million m (r) in 1977 to 5.7 million m (r) in 1985,and 11.7 million m (r) in 1995. From this tota demand, sawlog and peelerlogs aSe expected to increase from 2.3 million m (r) in 1977 to 3.8 mil-lion m (r) in 1985, and to 7.0 million m (r) 3in 1995, whereas pulpwood 3requirements would increase from 1.8 million m (r) in 1985 to 4.6 million m(r) in 1995. Domestic production of sawlogs and pulpwood will therefore onlybe able to satisfy domestic demand if a large scale plantation program isstarted immediately (para 2.20).
7.04 Prices for logs on the free market in Lagos now range from N 50 m3(r) (US$77) upwards, which would imply an economic value of at least N 20 m(r) (US$31) for the average type of h,ardwood at the stump (para 8.02). Accord-ing to the latest Bank forecasts, world prices for tropical hardwoods will in-crease substantially in the years to come. The expansion of exports from
1i/ The studies are contained in an unpublished document of F.A.0.
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traditional producing countries is expected to be relatively small and thegrowth of import demand is expected to stimulate exploitation of hithertountouched forests, where production costs are 50 to 100 percent higher thanthose in the current producing regions. The prices of logs are expec-ed tcincrease by about 35 percent from 1978 to 1985. After 1985, real log pricesare expected to increase further at about 3 percent per annum which couldresult in a stumpage value of the project's plantation grown logs of overUS$30/m when the first project fellings take place in 1993.
7.05 About 90% of Nigeria's industrial roundwood production is used forsawn timber. The demand for sawn timber increased sharply in response to theboom in the construction industry, but due to the scarcity Sf sawlogs, pro-duction of 9awn timber increased only slowly from 950,000 m (s) in 1974 to1,100,000 m (s) in 1977 (including ouitput of pit sawins). Prices for util-ity-grade timber th refore rose sharply from N 40 per m (s) (US$62) in early1974 to N 140 per m (s) (US$216) at the end of 1975. Since 1976, prices havestabilized due to the reduced demand following reduction 3of real Governmentcapital expenditures in 1976, and presently prices per m (s) are aroundN 140-16q (US$216-246). Similar quality3timber in Ivory Coast is priced atUS$120 m and in Liberia at US$120-150 m
7.06 Nigeria produces about 63,090 m of plywood annually. Domesticconsumption in 1973 was only 41,000 m , and the subsequent surge in domesticdemand was partially met by reducing exports. In 1936, Nigeria became anet importer of plywood and imports reached 12,0003m in 1977. The currentex-mill price varies betw en N 300 and N 470 peK m (US$462-724). In 1977,Nigeria consumed 75,000 m of plywood, 10,000 m of particle board and 35,000metric tons of fiber board. Demand for the latter two products was wholly metby imports. In the Ivory Coast, plywood sells at about US$300 m ex mill.
7.07 Six plywood and particle board mills are presently under const uc-tion. By 1980, Nigeria's total manufacturing capacity will be 110,000 m ofplywood and 100,000 m of particle board. Com0ined domestic demand for thesetwo products is expected to be about 150,000 m in 1985, so that Nigeria couldagain become a net exporter of wood-based panels in the early 1980's.
Pulp and Paper
7.08 Except for 12,000 tons of locally made industrial paper, all paperand paper products consumed in Nigeria are imported. Total consumption in-creased from 124,000 tons in 1974 to about 181,000 tons in 1976, valued atN 100 million. Despite the fact that imports and consumption dropped in 1977,consumption is expected to increase to 360,000 tons in 1985 and to 900,000tons in 1995. The value of this if imported would amount to nearly N 200and N 500 million respectively.
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7.09 However, Nigeria is rapidly expanding its paper producing capac-ity, which is expected to reach 230,000 tons by the early 1980's. Somepulpwood plantations have been established, but without additional planting,pulpwood will have to be imported (parl 7.03). Presently, the price forimported pulpwood is about US$30 per m . The output of the planned paper millswill be readily absorbed by the domestic market. The Iwopin Mill at fullproduction will export surplus pulp to potential markets in Southern Europeuntil such time as the internal demand for paper matches supply (1990-1995).It is estimated that the mill net price of surplus pulp to Southern Europewould be N 184/air dried ton. The quality of the Gmelina pulp indicates thatit is similar to high grade Scandinavian Birch and at this price it would becompetitive and acceptable in the European market. The newsprint productionof the Itu mill (Cross River State) should reach 100,000 metric ton/yearwhich is not expected to be totally absorbed by the domestic market until1988. It is envisaged that the initial surplus would be exported to neigh-boring countries and possibly to Europe. On an import-substitution basis,the mill net price for sales in Nigeria might be around N 250/ton. For exportto Ghana and Europe the market would be more competitive and a more realisticestimate of mill net revenues for these sales would be N 200/ton.
7.10 Nigeria is a net importer of maize. In 1976, about 10,000 tonswere imported, and in the first 4 months in 1977 alone, imports were about20,000 tons. As of April 1978, an import duty of 20% was imposed. Maizesells for around N 200 per metric ton in the project area. Based on IBRDworld price forecasts, an economic price for 1985 of N 138 per metric tonin 1978 constant prices has been estimated. The small amount of maize pro-duced by the project (1,000 tons per annum) is expected to be easily absorbedby the domestic market.
VIII. FINANCIAL ANALYSIS
Financial Implications to Government
8.01 The financial implications of the project for ONSG and OGSG aresummarized in Annex 2, Table 8. To bring in the full benefits arising fromplantings during 15 years, including capital outlay made during the 5-yearestablishment phase of the project, the cash flow has been projected foran extended period of 30 years. After taking into account the stumpagefees received from salvage logging, pulpwood and sawlogs 1/, the cumulativedeficit rises to N 33.7 million in FY 1993/94, and a positive cash flowarises from FY 1994/95 onwards, eliminating the entire cumulative deficitby FY 1998/99. Annual cash surpluses thereafter average approximately
1/ Based on assumptions in Annex 2, Table 8, footnote 3.
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N 8.6 million after meeting all project costs and debt service. Since theAnambra subproject is experimental in nature and the continuation of plantingswill depend on the outcome of the pine trials carried out during the 5-yearproject, no cash flow for ANSG has been made.
8.02 More wood is being removed from Nigeria's natural forests than isbeing naturally generated. Thus, Nigeria is consuming its forest capital.At the same time, future demands require an immediate buildup of this capitalthrough establishment of plantations. The present State tariff (stumpage)policies, 3allowing loggers to remove wood at an extremely low price (N 2 toN 4 pe5 m for m2st High Forest species (para 7.04) which fetch not less thanN 50/m (US$77/m ) in Lagos) are, therefore, inconsistent with the State plan-tation development programs, which invest huge sums of money in the effortto preserve the same resource for the future (para 2.14). The question ofrealistic stumpage rates should therefore be reviewed for its implications inrespect not only to overall national forest development, but also to thefinancial viability of each individual plantation program. In revising thestumpage rates for the states, the rates for the plantation produce should atleast recover all plantation costs with a reasonable return on capital (para4.15d). During negotiations, assurances were obtained that ONSG and OGSGwould establish appropriate plantation stumpage rates, no later than June 30,1980, to be collected by PMU's in Omo and Oluwa Forest Reserves; and thatthese rates would be calculated to ensure an optimum financial rate of returnto the states from project plantations, which in any event should not be lessthan 11% per annum in real terms. These stumpage rates would be subject toperiodic review. It is unlikely that an increase in stumpage rates would bepassed on to final consumers, since sawmilling will continue to be profitable,and present prices fully reflect the competitive supply and demand situation,and the present levels of trade controls.
IX. BENEFITS AND JUSTIFICATION
9.01 The project would contribute to meeting national objectives ofraising output through efficient utilization of natural resources, protectingthe environment, promoting industrial development coupled with import substitu-tion, and providing employment to the rural population.
Forest Industries Raw Material
39.02 Project output of 2.3 million m of Gmelina would eliminate importof 6% of the country's wood requirements between 1995 and 1999. The logs trans-formed into sawnwood would lead to foreign exchange savings of N 115 million
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(US$177 million). 1/ In addition, the thinnings from the sawlog plantationswould become available at a time when the nearby Iwopin pulp and paper millwould be critically short of pulpwood. Since the most economic alternativeto using Gmelina thinnings would be the importation of pulpwood, the proj-ect would also lead to foreign exchange savings of US$64 million at today'spulpwood prices. 2/ During the 5-year development program, salvage loggingwould be carried out, producing an estimated 700,000 m of logs, valued atN 14 million (US$22 million), representing 7% of the sawmill annual input.
Institution Building and Research
9.03 The project would initiate the establishment of large scale mecha-nized forest plantations in Nigeria, and through the project, Nigeria wouldobtain valuable experience in the implementation of such development. Atthe same time, by providing technical assistance to the Management Divisionof FDF, the Federal planning capacity would be improved. Both benefits areextremely important at a time when large scale planting programs should beplanned and executed in order to satisfy the prospective demand for wood inNigeria.
9.04 The project would also contribute to silvicultural research, boththrough the pine and eucalypt trials in Anambra and other States, and throughthe provision of technical assistance in this field to the Management Divisionof FDF. The pine trials would explore the possibility of growing wood forlong fiber pulp in Nigeria. Nigeria would require about 60,000 metric tons oflong fiber pulp in 1985, and producing this pulp domestically would save anestimated US$24 million annually in pulp imports. 3/ Silvicultural assistanceto FDF should lead to an improved choice of sites and species for futureplanting programs in Nigeria.
9.05 Replacement of the low-value logged-over High Forest by plantationsof fast-growing species would maintain the areas under forest cover, therebyprotecting the natural ecosystem. T'he extremely poor quality savannah wood-land of the Mbanasa area, with its low agricultural potential, would be con-verted into forest plantation, which would reduce the dangers of imminenterosion and would improve the natural ecosystem in this area. This projectmay also prove to be suitable for introducing the integration of forestplantations with cattle grazing.
Forest Village Development and Employment
9.06 Forestry management in the past has been dependent on casual laborof unpredictable reliability. The project will therefore construct permanent
1/ Value US$208/mi3(s) in 1995, with a 37% conversion from round log to sawntimber.
2/ The project will produce about 2 million m of pulpwood (1986-1990)valued at US$32 per m
3/ At an import value of pulp of US$400/ton.
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forest villages in the project areas, providing basic social services, andallocating land around the villages for kitchen gardening for about 1,000workers and their families. The project will result in a net gain of about1,500 Government and seasonal forestry workers, and through the relatedlogging and processing industry, a substantial but unquantifiable number ofother workers.
9.07 In a modest way, the project would contribute to increased localfood production through 5,000 Taungya farmers; at the same time, increasingtheir annual incomes. The incremental return to the farmer of the cropsproduced would be about N 850,000 (US$1.3 million) annually. The annualvalue of the mechanized maize grown for animal feedstuffs would be aboutN 225,000 (US$346,000).
B. Economic Analysis
9.08 On the assumptions given below, the ERR for the two main identicalsubprojects in Ogun and Ondo States has been estimated at about 13% (Annex2, Table 9). Due to the experimental and training nature of the Anambra Statesubproject, and the lack of positive data on yields, a meaningful ERR for thissubproject as a whole cannot be calculated. However, based on rough estimatesfor this type of trial, these activities, if undertaken on plantations of acommercial nature and scale, could be expected to obtain an economic rate ofreturn of about 14% (Annex 2, Table 10).
9.09 The economic rate of return (ERR) was calculated on the basis ofincremental costs and benefits. In estimating the ERR, the following assump-tions and methods were used:
(a) a project life of 30 years for Ogun and Ondo States isassumed, with plantings continuing to Year 15 and withsaw logs being produced from year 16. For Anambra State,the ERR has been based on per ha cost and yield data;
(b) project costs are expressed in 1978 values; allidentifiable taxes and duties on goods and servicesare excluded; price contingencies are excluded,but physical contingencies included; for theopportunity cost of project labor, the market wagerate of N 2.50 per day has been used; all foreignexchange costs were adjusted using a shadow exchangerate 0.8 times the official rate (N 1 = US$1.23);
(c) import parity prices, based on World Bank forecasts,wherever possible, have been used in calculatingthe economic benefits which are expressed in 1978constant terms. In estimating the Naira landed value,the shadow rate of exchange was applied. Short fiberpulpwood and sawlogs produced by the project are valued
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at N 12.7 and N 30 per m respectively by 1995. Thevalue of sawlogs produced during salvage jogging of thenatural forest has been pul: at N 25 per m . Yields ofthe Gmelina plantations are assumed to be 75 m per haat Yeir 7 in the form of thinnings for pulpwood, and200 m peS ha at Year 15, of which 100 m are sawlogs,and 100 m are pulpwood. The yield of salvage loggingthe natural forest before clearing is assumed to be 30 mper ha in Ogun and Ondo. M4aize yields from mechanizedcultivation are assumed to be about 2 ton/ha, valued atN 138/ton; and
(d) unquantifiable benefits from roads and rural infra-structure and preservation of the natural ecosystemshave been excluded from the calculation of the ERR.Costs and benefits to Taungya farming are also excluded.
9.10 The Bank is currently reviewing the appropriate shadow exchange rateand other relevant economic parameters for the economic analysis of projectsin Nigeria. If, for purposes of illustration, the project were analysed witha shadow exchange rate of Nl.00:US$1.00 (rather than the shadow rate ofNl.00:US$1.23 used above, or the official rate of Nl.00:US$1.54) the economicrate of return for Ogun or Ondo wouldL go from 13% to 16%. The use of dutiesand quantitative restrictions (includLing outright prohibition) on imports toprotect the balance of payments has increased considerably over the past year.If Nigeria's inflation continues substantially to exceed the rates prevailingamong its trading partners one may expect either some exchange rate adjust-ment, or still further increases in trade controls. The latter option wouldimply an increasing gap between the shadow exchange rate and the officialrate, which would approximately offset the effects of differential rates ofinflation on the economic rate of return (as would progressive exchange rateadjustment) .
Risks and Sensitivity Analysis
9.11 Several tests were made to determine the sensitivity of the ratesof return to various alternative assumptions in respect to the Ogun andOndo State subprojects. The ERR is not very sensitive to changes in theassumptions of costs and benefits because of the long gestation periodof the project. A decrease in total benefits of 20% (or an increase intotal costs of 25%) still results in an ERR of about 11%, and the priceof any individual output can be at least 60% below the price assumed in thisreport without bringing the ERR below 10%. If no shadow rate of exchange isapplied, the ERR would still be about 11%. If new planting ceased at the endof the 5 year project period, instead of continuing for a further 10 years asassumed, the rate of return would be about 11%. The pilot pine plantation inAnambra would have a per ha ERR of over 10% even if costs increased by 50%(or if benefits were reduced by one-third).
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9.12 In respect to the technical package, project risks are minimalsince the package has been successfully tested for many years. Physicalrisks are those associated with the prevalence of fires, which can seriously
-laly in those plantations being managed for sawlog pro-duction. However, the project, through the basic layout of the plantationsand the establishment of fire-fighting units, will greatly reduce this risk.The financial viability of the project plantations could be jeopardized ifthe State Governments fail to increase the present low stumpage rates. How-ever, present indications that State Governments intend to increase thestumpage rates are reinforced by the agreements reached during negotiations.
X. RECOMMENDATIONS AND AGREEMENTS REACHED
10.01 During negotiations, assurances were obtained that:
(a) ODSG and OGSG would prepare in consultation with FDFand send to the Bank, not later than March 31, 1980,for the Bank's review and comments proposals settingout a formula for calculating the stumpage rates to beused for salvage logging of natural forest, Gmelinapulpwood and sawlogs in the Project areas to ensure anoptimum financial rate of return on Project plantationinvestments, such rate to be not less than 11% in realterms (para. 4.15 (d) and para. 8.02);
(b) ODSG and OGSG would cause to be established not later thanJune 30, 1980 a rate of stumpage fees in accordance withparagraph (a) above, and would review periodically suchrate of stumpage fees (para 8.02);
(c) FDF would be responsible for the preparation of detailedterms of reference for consultants for review by theBank; and that consultants and consultant firms would beappointed with qualifications, experience and on termsand conditions satisfactory to the Bank (para 4.16);
(d) Bank disbursement would be made directly to the PMUs' andFDAs' commercial bank accounts (para 4.23);
(e) the stumpage fees arising from salvage logging of naturalforest, plantation pulpwood and sawlogs in the projectareas will be paid into the PMUs' bank accounts to con-stitute a revolving fund (para 4.23);
(f) until such time as sufficient funds are accumulated out ofproject stumpage fees to form a revolving fund, the PMUsand the FDA would be authorized to establish overdraftfacilities equivalent to six months project expenditurebased on the approved annual project budgets, and thatoverdrafts would be guaranteed by the respective StateGovernments (para 4.23);
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(g) FMG and ODSG, OGSG and ANSG would provide their quarterlycontribution to the respective project accounts at leastthree months in advance and in accordance with the approvedannual budget (para 4.23);
(h) at least four months prior to each fiscal year, themanagement of the respective PMUs and FDA would submit theirproposed annual budgets as approved by the BPCCs and theCCF in Anambra, to FMAWR, State MANRs and the Bank (para4.23);
(i) PMUs', FDA's and FDF's audited project accounts and theauditor's reports, including a statement in each case as towhether or not Bank funds had been used for their intendedpurposes, would be submitted to the Bank within four monthsof the end of the fiscal year (para 4.26);
(j) the project manager, chief engineer, road/clearing engineer,workshop engineer, farm manager for the High Forest plan-tation projects (para 6.06) and the forestry economist,data processing analyst, financial controller and trainingand staff development officer and the silviculturist forFDF (para 6.09) would be recruited on terms and conditionsand with qualifications and experience acceptable to the Bank;
(k) the MANRs in Ondo, Ogun and Anambra would give highpriority to PMU staff recruitment and as far as possiblepromptly accede to PMUs' and FDA's requests for secondmentof technical and other staff to the projects (para 6.06);
10.02 Conditions of loan disbursement, as applicable to each subproject,would include:
(a) gazetting of Mbanasa as forest reserve (para 3.01);
(b) signing of the subsidiary loan agreement between theFMG and Ondo, Ogun and Anambra State Governments (para4.23);
(c) opening of a separate bank account for PMU's, with aninitial deposit of N 0.6 million, with a commercialbank, for each subproject in Ogun and Ondo, and N 0.2million for Anambra (para 4.27);
(d) gazette notifications establishing PMU and BPCCfor each of Ogun and Ondo subprojects with terms ofreference and composition acceptable to the Bank(para 6.02); and
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(e) appointment of the project manager in Ondo and OgunStates and the silviculturist in Anambra State (secondedfrom the FDF Monitoring and Evaluation Unit) (para 6.06).
10.03 On the basis of the above assurances and conditions, the projectwould be suitable for a Bank loan of US$31.0 million.
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FORESTRY PLANTATION PROJECT
List of Related Documents and D)ata Available in the Project File
A. FAO/World Bank Cooperative Program, Draft Report of the Nigeria ForestryDevelopment Project. Report No,. 42/77/NIR. 12 (3 volumes), October 20,1977.
B. Supplementary Appraisal Report for Project Operations.
A self-contained report has been prepared to guide project implementation,and contains greater narrative cletail on project components. It containsthe following working supplements:
I. Forestry Sector Survey
II. Industrial Plantation Development
III. Agricultural Development
IV. Civil Works
V. Sawmill Development
VI. Pulp and Paper Development
VII. Manpower and Education
VIII. Technical Assistance and Studies
IX. Financial and Economic Analysis
FORESTRY PLANTATION PROJECT
Summtarv' of Project Coosc(In Neira 000)
FDPONLX 5UBPROJECT OGUN SUBPROJECT ANAM3RA SUiPROJECT _TECNIFCAL ASSISTANCE TOLAI. PROJECT COST
Total Local Fooign Toal Loca Forgl Total ooR Fo-eiA Tota Local Foe Tol Loa oreig Base tst Total
BUILDINGS AND SOCIAL SERVICES 3,110.4 1,723.6 1,386.8 3,110.4 1,723.6 1,386.8 757.2 432.3 324.9 319.0 198.6 120.4 7,297.0 4,078.1 3,218.9 21 14
LAND CLEARINGL.AipN ..l Cost 2,275.9 234.5 2,041.4 2,275.9 234.5 2,041.4 234.3 23.3 211.0 - - - 4,786.1 492.3 4,293,8
Operatig Cosc 23,731 1,0. 31.6 1,7052 1026.4 173.4 127.6 45.8 - _ - 5,636.6 3,538.0 2,098.6
5,007.5 1,939.7 3,067.8 5,007.5 1,939.7 3,087.8 407.7 150.9 256.8 - - - 10,422.7 4,030.3 6,392.4 29 20
ROAD CONSTRUCTIONEqoipt.ent Cost 988.0 111.6 876.4 988.0 111.6 876.4 - - - 1,976.0 223.2 1,752.8
Operataig/Exocoti-o Cost 1,249.4 963.1 286.3 1,249.4 963.1 286.3 477.6 259.8 217.8 - _ _ 2,976.4 2,186.0 798,4
2,237.4 1,074.7 1,162.7 2,237.4 1,074.7 1,162.7 477.6 259.8 217.8 - - _ 4,952.4 2,409.2 2,543.2 14 10
Eqaipeset Cost 220.2 37.0 183.2 220.2 37.0 183.2 86.1 12.8 73.3 - - - 526.5 86.8 439.7
Operating, PlaLting andMaint-na-ce Cost 2,395.2 2,309.5 85.7 2,395.2 2,309.5 85.7 453.4 409.1 44.3 - _ - 5,243.8 5,028.1 215.7
2,615.4 2,346.5 268.9 2,615.4 2,346.5 268.9 539.5 421.9 117.6 - - - 5,770.3 3,114.9 655.4 17 12
CR01 DOVLLOPMNESTEqaip .ent ad Fan Inp.ts 335.9 194.7 141.2 335.9 194.7 141.2 - - - - - - 671.8 389.4 282.4 2 1
MANAGEMENT AND SUPPORT SERVICESV.ehion- Aod EqSFpOet 138.5 13.9 124.6 138.5 13.9 124.6 27.5 2.8 24.7 35.3 4.9 30.4 339.8 35.5 304.3
oSERf Gala-ios, Wlg-s aedOffice opesesp a 1,875.3 839.0 1,036.3 1,875.3 839.0 1,036.3 538.6 302.8 235.8 885.8 405.7 480.1 5,175.0 2,386.5 2,788.5
StLdies/Con..lta. -y - - - - - - 315.0 - 315.8 515.0 315.0
TroRisisg/FOl1osoships - - - - - - - - 32R.5 282.0 127.5 329.5 2012.0 127.5
2,013.8 852.9 1,168.9 2,013.8 852.9 1,160.9 566.1 305.6 260.5 1,565.6 612.6 953.0 6,159.3 2,624.0 3,535.3 17 12
TOTAL BASELINE COSTS 15,320.4 8,132.1 7,188.3 15.320.4 8,132.1 7,188.3 2,748.1 1,570.5 1,177.6 1,884.6 811.2 1,073.4 35,273.5 18,645.9 16,627.6 106
CONTINGENCIESPhyisicl 766.0 406.6 359.4 766.0 406.6 359.4 137.3 78.4 58.9 94.2 40.5 53.7 1,763.5 932.1 831.4
Prce 6,388.3 5,252.9 1,135.4 6.388.3 5,252.9 1,135.4 1,114.9 909.1 205.8 572.0 377.6 194.4 14,463.5 11,792.5 2,671.0
7,154.3 5,659.5 1,494.8 7,154.3 5,659.5 1,494.8 1,252.2 987.5 264.7 666.2 418.1 248.1 16,227.0 12,724.6 3,502.4 31
TOTAL COSTS 22.474.7 13.791.6 8.683.1 22,474.7 13.791.6 8,683.1 4.000.3 2,558.0 1,442.3 2,552.8 1,229.3 1.321.5 51500.5 31,370.5 20,130.0 100
PERCENTAGE 100 61 39 100 61 39 100 64 36 100 48 52 100 61 39
_ 39 _ ~~~~~~~~~~ANNEX 2
HI ~~~~~~~~~~~~~~~~~~~~~Table 2
C ot C. o 'N C
I. C' .- N N N N N N ' ' C . ' ' C' ' N o
oN N 'N.
'N d, I H <I I 'N 'N ' ' 'NN' 'sox <X<N ze
'N OlI ' '' 'N 'N ''' 'N 'C , 'N£
H: 'N C1N' ' 'N r 'N Hr
I l 1 I I C' CCNC ' CC .- '' umCC D n
C CC 'NC' 'N 'N WN~ ON N I C. C'' 'O N o
0 ~ ~ ' C -- 'N .NN' .N .. r^[' rI 'N wN 'N 'N o
'N~~~ a c'N 'N ;r rN' 'N ° N '|N ' N rc
'N H CC 'N 'N 'o .r,. r 0 N wN o N C C..C'N'N'N N.'N o 'N11 U C 'N 'NrC .r oooC rr
C ~ ~ ~ o ol u- rN wC rI'N 'N NC I r N ' N r o0 'N IN'N'N ' 111 e "-'I' 'N 'N-1H " ''N' N '' C. Nf N '' I 'N 'N l ' 02 C '
' 1^| ° 1 'N 'NN' 'N' 'Nocr
C. C - 'N 'N rN C' . - ' N' N ' HI 0u GHI i > ° o | t
- o| r NN' ' cI' O ' r NI o C' 'N 'N'Nrrw _m C r 'C _N 'N 'N rN ; N 'N 'N ' N N N ' ' 'N C' r '.N'NO .|
r 1ru '° NCi'N n |c < ' ° <
'N 'NCI ' N N ' . ' N I' ' O ' N O'lO1 rr~N |r-
'N l'I' 'N -'6
'N ' | O .. 'N '. r'N o N *D... WN _ J 'N 'r N
wl~~~~~~' O C . N ' ' g N r_ O'N ' N 'N uI j1 Xrl-
°z 1 _ 1 1 o rl _ ¢f1 1 | N'N IIJ.-' w 'N'Nw'. |N|
C~~~~~ ~~ ~~~~~~~ G r '_N'|C I n ^os r
0 ~ ~ ~ ~ ~ ~~~~~' 0 'N >'
'C ° 'N 'N 'N 'N ' I
Zl zlu .... G 'IC- 'N HC' CC r' NCL 9
IC. sH P ( Ic P 'N - 'N 0 -CC 'N .CIC 'N'N'wNE L l lH XQ.C 'N 0CI w t '
FORESTRY PLANTATION PROJECT
Ondo State Sobprojent Coats(in Noire 000)
1979/80 1980/81 1981/82 1982/83 1983/84 Total for 1979-1984Total LocaI Foreign Total Local. Foreign Total Local Foreign Total Local Foreign Total Local Foig Tta Local Foreign
Boildings aod Social ServicesIofrsstroct-re 155.0 43.9 111.1 86.0 24.4 61.6 55.2 15.6 39.6 5.0 1.4 3.6 - _ - 301.2 85.3 215.9Buildins, Hoaning and
Foroitore 760.0 469.4 290.6 652,0 402.9 249.1 447.8 267.7 180.1 - - - - - - 1,859.8 1,140.0 719.8Forest Villages - - - 49.4 25.9 23.5 450.0 236.2 213.8 450.0 236.2 213.8 - - - 949.4 498.3 451.1
915.0 513.3 401.7 787.4 453.2 534.2 953.0 519.5 433.5 455.0 237.6 217.4 - - - 3,110.4 1,723.6 1,386.8
Vehioles and EquipmentHeadq-art-rs 78.0 7.8 70.2 60.5 6.1 54.4 - - - - - - - - - 138.5 13.9 124.6.and Clearing 1,610.2 165.9 1,444.3 174.1 17.9 156.2 178.9 18.4 160.5 158.8 16.4 142.4 153.9 15.9 138.0 2,275.9 234.5 2,041.4
Road Construction 690.0 78.0 612.0 90.0 10.2 79.8 36.0 4.0 32.0 7.0 0.8 6.2 165.0 18.6 146.4 988.0 111.6 876.4Plantation 44.6 7.5 37.1 81.4 13.7 67.7 79.2 13.3 65.9 15.0 2.5 12.5 - - - 220.2 37.0 183.2Crop Develop-ent 56.3 7.8 48.5 10.3 1.5 8.8 30.5 4.2 26.3 35.3 4.9 30.4 - - - 132.4 18.4 114.0
2,479.1 267.0 2,212.1 416.3 49.4 366.9 324.6 39.9 284.7 216.1 24.6 191.5 318.9 34.5 284.4 3,755.0 415.4 3,339.6
SUBTOTAL 3,394.1 780.3 2,613.8 1,203.7 502.6 701.1 1,277.6 559.4 718.2 671.1 262.2 408.9 318.9 34.5 284.4 6,865.4 2,139.0 4,726.4
ManagementStaff Selaries and Weges 229.3 76.4 152.9 229.3 76.4 152.9 229.3 76.4 152.9 229.3 76.4 152.9 229.3 76.4 152.9 1,146.5 382.0 764.5BSildiog Maintenance and
Office Expenses 45.9 39.8 8.1 100.4 69.1 31.3 142.1 90.0 52.1 203.2 120.6 82.6 237.2 137.5 99.7 728.8 457.0 271.8275.2 116 .2 159.0 329.7 145.5 184.2 371.4 166.4 205.0 432.5 197.0 235.5 466.5 213.9 202.8 1,875.3 839.0 1,036.3
Operating/Enecution CostLand Cleoring 407.8 245.3 162.5 599.4 363.9 235.5 565.1 358.9 206.2 578.0 366.9 211.1 581.3 370.2 211.1 2,731.6 1,705.2 1,026.4Road Cocntroctcon 130.7 97.3 33.4 236.4 185.3 51.1 281.5 217.3 64.2 291.6 224.8 66.8 309.2 238.4 70.8 1,249.4 963.1 286.3PlaoatLioc 287.0 201.5 5.5 358.2 344.8 13.4 515.5 495.0 20.5 608.5 585.4 23.1 626.0 602.8 23.2 2,395.2 2,309.5 85.7Crop ])eneSopnnnt 24.6 23.7 0.9 36.8 32.3 4.5 42.0 36.1 5.9 47.3 40.1 7.2 52.8 44.1 8.7 203.5 176.3 27.2
850.1 647.8 202,3 1,230.8 926.3 304.5 1,404.1 1,107.3 296.8 1,525.4 1,217.2 308.2 1,569.3 1,255.5 313.8 6,579.7 5,154.1 1,425.6
SUIT)TAT. 1,125.3 764.0 361.3 1,560.5 1,071.8 488.7 1,775.5 1,273.7 501.8 1,957.9 1,414.2 543.7 2,035.8 1,469.4 566.4 8,455.0 5,993.1 2,461.9
COTAI. BASLLI/IE COSTS 4,519.4 1,544.3 2,975.1 2,764.2 1,574.4 1,189.8 3,053.1 1,833.1 1,220.0 2,629.0 1,676.4 952.6 2,354.7 1,503.9 850.8 15,320.4 8,132.1 7,188.3
COTlNG1ON(CIESPhysical 226.0 77.2 148.8 138.2 78.7 59.5 152.7 91.7 61.0 131.4 83.8 47.6 117.7 75.2 42.5 766.0 406.6 359.4Pric 494.2 285.3 208.9 779.6 641.2 138.4 1,410.3 1,169.3 241.0 1,721.4 1,464.3 257.1 1,982.8 1,692.8 290.0 6,388.3 5,252.9 1,135.4
720.2 362.5 357.7 917.8 719.9 197.9 1,563.0 1,261.0 302.0 1,852.8 1,548.1 304.7 2,100.5 1,768.0 332.5 7,154.3 53659.5 1,494.8 J
TOTAL COSTS 5,239.6 1,906.8 3,332.8 3,682.0 2,294.3 1,387.7 4,616.1 3,094.1 1,522.0 4,481.8 3,224.5 1,257.3 4,455.2 3,271.9 1,183.3 22,474 7 13,791.6 8,683 1 .c
FO2M514074 PL441TA0rON PROJOCT
19~79,03 1 -960/81. ---- 09 81 / 2 19S2/23 l9n,.84 TocL1 fo' 1979 190'700, L.-l eI ir Tota1 Local F-iejo Total Local Forig Total Local Foreig005 ren Icd t___
loOp ro coo ~~~~~~ ~~~153.0 43.9 110.1 86.0 24.4 61.6 30.2 15.6 39.6 0.0 1.4 3.6 -- 301,2 853 3 13,9
76.4.0 469.4 290.6 652.0 402.9 249.1 447.8 267.7 192.1 1,os9 8 1.1oceVill 4s. - - 49.4 25.9 23.5 430.0 236.2 215.9 430.0 234.,2 213.9 - -4974 400 3913.0 513.3 40.7 767.4 453.2 3-34.2 033.0 519.5 431.5 4105.0 237.6 217.4 -- 3,110.4 0I,737
75.0 7.0 77.2 83.0 e.0 ooe - -1,613.2 165.9 1,444,3 174 .0 17.9 156.2 178.9 18.4 140.5 154.3 16.4 142.4 103.9 17s.5 130.0 2,2139 2-,5 2(l 0e~~A Cc.0.,co-ocCiOn ~~~~640.0 7a0. 412.0 10.0 10.2 '9.8 34.0 4.0 30.0 7.0 l.a 6.2 165.0 08.6 - 146 4 9880.20. 274i ILooocc L 44.6 7.5 37.1 81.4 13.7 67.7 79.2 13.3 63.9 17.0 3.3 12.3 - .- 220.2 373 43.Cro 1eobpce-t 06.1 7.8 46.5 10.3 1.3 8.8 30.3 4.2 26.3 3-.3 o.q 84.. 3. 04 1, 2,476.1 267.0 2,212.1 416.3 49.4 366.9 32&.6 39.9 204.7 216.1 24.6 191.5 310.9 34.5 244 3711 1. ,4.
2..Y.400.44 ~~~~~~~3,394.1 780.3 2,613.8 1,203.7 503.6 701.1 1,277.6 559.4 718.2 671.1 262,2 408.9 314.9 34 2 DOc 4 4,045.4 2,130.3 4,7'..4
-2044l,lc~d Wagro 229.2 76.4 132.9 229.3 76.1 132.9 229.3 76.4 112.9 229.3 76,4 152.9 229.3 76.4 152.9 2,146.5 382.0 64
003.. Zoao45. 9 39.8 4- .1 100.4 69.1 31.3 142,1 90.0 52.1 203.52 2 6 82.4 237.2 137.5 94.7 724 3 457A 7i2705.2 114.7 059.0 329.7 144.- 464.2 314 6.4 200 3.0 970 3.3 466.3 203.0 252. 1,73
.5 'boron ~~~~~~~~~~400.8 245.3 162.5 599.4 367.9 235.5 36. 2. 0. 7.0 346.9 211.1 581.3 370.2 211.1 2,731.6 1.705.2 1,014 4'.10 Cooo,porOoI.e 130.7 97.3 33,4 536.4 185.3 51.1 281.5 217.3 (4.2 291.6 224.B 66.0 300.2 234.4 70.5 1, 24 9961 0LI Ir, ~200.0 281.5 5,3 356.2 344.8 13.4 515.5 493.0 20.3 606.5 563,4 23.0 620. 642.0 23 2 2. 302,.2 2,235 8Cr- 21.1405 24.4 23.7 3,9 33.4 32.2 4.5 42.0 36.1 1.9 42.3 10.1 7.2 92.8 44.1 0.7 030.4 17,
802.1 447.0 ~~~202.3 1,23,0.0 9,4.3 334.5 1,404.1 1,107.3 296.8 1,525.4 1,217.2 308.2 1, 549. 3 4,5. 340 4,0.
2.1 0~~~~~~~~~, 125.3 764.0 36. ,060.5 1.072,0 4008.7 1,775.3 1.273,7 501.9 1,957.9 1,414.2 543.7 2,035.8 1,469,4 364.4 8,435,2 5,993.1 2, 01,0.7,.~ 44541: COSTS 4,519.4 1,144.3 2,073.1 2,764.2 1.274,4 1,189.8 3,053.1 1,033.1 5,270.0 2,629.0 1,676.4 952.6 2,304.7 1,503.9 550.8 15,224.4 61
P.½'00c21 0~~~~ ~ ~~~~~~2~. 3 7.2 140.8 133.2 70,' 5305 032.7 91.7 61.0 131.4 F63,9 47.2 4 17.7 73.7 412 "..2 2'-f ~~~~~494.2 205.3 208.9 779-. 6441.2 138.4 1,414.3 1,002.2 441-0 1,721.4 1,214'.3 257.1 0,9~22. 44692 0._ 2.. 22 723.2 342.- 337.7 907.4 719.9 192.9 1,563.0 1,261.0 302.0 1,632.8 1,548.1 304.0 2,1000.0 ,6. 332. ,7. .0 .
42.1 42 5,71o1.4 [.94.6 3,32.4 3,02.0 2294.3 ,367.7 ,614.1 3,044.1 1,122. 4,491.43,224511,25.344,45.2 3,21.9 1,03.3 224742241.4911. 25783
FORESTRY PLANTATION PROJECT
Anssbra State Sbp-roisot Cost.(is Nair- 000)
1979/80 1980/81 1981/82 19B2/83 1983/84 Total for 1979-1984Total Local Foreign Totsi LoosE Foreigo Total Local Foreign Totl Loo s Foreisn Total Local Foreion Total Local For-eig
Scildisos and Social Sorvicaslnfrastroctcro 60.0 17.0 43.0 42.7 12.1 30.6 8.0 2.3 5.7 - - - - - - 110.7 31.4 79.3Buildings sod Housing 375.5 232.8 142.7 257.0 159.4 97.6 14.0 8.7 5.3 - _ _ _ _ - 646.5 400.9 245.6
435.5 249.8 185.7 299.7 171.5 128.2 22.0 11.0 11.0 - - - - - - 757.2 432.3 324.9
Vahiclas aod Equippentlleadqosrtara 17.5 1.6 15.7 10.0 1.0 9.0 - - - - - - - - - 27.5 2.8 24.7Lood Clearing 115.5 11.6 103.9 108.0 10.8 97.2 3.6 0.3 3.3 3.6 0.3 3.3 3.6 0.4 3.2 234.3 23.3 211.0Plantution 65.0 9.7 55.3 7.5 1.1 6.4 13.6 2.0 11.6 - - - - - - 86.1 12.8 73.3
198.0 23.1 174.9 125.5 12.9 112.6 17.2 2.3 14.9 3.6 0.3 3.3 3.6 0.4 3.2 347.9 38.9 309.0
SUBTOTAL 633.5 272.9 360.6 425.2 184.4 240.8 39.2 13.3 25.9 3.6 0.3 3.3 3.6 0.4 3.2 1,105.1 471.2 633.9
MonoegeentStaff Salaries and Wages 68.8 37.6 31.2 68.8 37.6 31.2 68.8 37.6 31.2 68.8 37.6 31.2 66.8 37.6 31.2 344.0 188.0 156.0Building Moint.anon. ond
office oEpoc.os 10.9 9.0 1.9 33.0 20.0 13.0 48.7 27.8 20.9 51.0 29.0 22.0 51.0 29.0 22.0 194.6 114.8 79.8
79.7 46.6 33.1 101.8 57.6 44.2 117.5 65.4 52.1 119.8 66.6 53.2 119.8 66.6 53.2 538.6 302.8 235.8
Opor-titn/E-ocotio- CostLand Cleering 23.8 18.4 5.4 37.4 27.3 10.1 37.4 27.3 10.1 37.4 27.3 10.1 37.4 27.3 10.1 173.4 127.6 45.8Road Conotruenion 47.2 27.8 19.4 91.4 49.9 41.5 102.2 55.3 46.9 113.0 60.7 52.3 123.8 66.1 57.7 477.6 259.8 217.8Plantation 49.8 46.0 3.8 66.6 59.9 6.7 107.2 96.7 10.5 113.3 101.8 11.5 116.5 104.7 11.8 453.4 409.1 44.3
120.8 92.2 28.6 195.4 137.1 58.3 246.8 179.3 67.5 263.7 189.8 73.9 277.7 198.1 79.6 1,104.4 796.5 307.9
SU.TOTAL 200.5 138.8 61.7 297.2 194.7 102.5 364.3 244.7 119.6 383.5 256.4 127.1 397.5 264.7 132.8 1,643.0 1,099.3 543.7
TOTAL BASELINE COSTS 834.0 411.7 422.3 722.4 379.1 343.3 403.5 258.0 145.5 387.1 256.7 130.4 401.1 265.1 136.0 2,748.1 1,570.5 1,177.6
CONTCNGENCIESPhysic-l 41.7 20.6 21.1 36.1 18.9 17.2 20.2 12.9 7.3 19.3 12.8 6.5 20.0 13.2 6.8 137.3 78.4 58.9Price 109.9 78.9 31.0 205.2 155.0 50.2 184.8 152.4 32.4 257.2 217.8 39.4 357.8 305.0 52.8 1,114.9 909.1 205.8
151.6 99.5 52.1 241.3 173.9 67.4 205.0 165.3 39.7 276.5 230.6 45.9 377.8 318.2 59.6 1,252.2 987.5 264.7 IT
TOTAL COSTS 985.6 511.2 474.4 965.7 553.0 410.7 608.5 423.3 185.2 643.6 487.3 176.5 778.9 583.3 195,4 4000.3 2,558.0 1,442.3
FORESTRY PLANTATION PROJECT
Technical Assistance(in NnirA 000)
1979/80 1980/81 1981/82 1982/83 1983/84 Total fSo 1979-1984
Total Lc Foign Ttal Local Foeig Total Local Foreign Total Local Foie-To Total Local Foreig Total Local For eig
MONITORING A2D EVALUATION UNIT
loventoect CostBoildings and Houning 319.0 198.6 120.4 - - - - - - - - - - - - 319.0 198.6 120.4
Vehicles sod Motor Cycles 28.9 3.6 25.3 - - - 6.4 1.3 5.1 - - - - - - 35.3 4.9 30.4
SUBTOTAL 347.9 202.2 145.7 - - - 6.4 1.3 5.1 - - - - - - 354.3 203.5 150.8
Recurcent CostStaff Salaries cod Wages 185.3 60.5 124.8 185.3 60.5 124.8 185.3 60.5 124.8 91.7 60.5 31.2 91.7 60.5 31.2 739.3 302.5 436.8
Boildiog Maintenacce, OffieEopenses and Supplies 17.7 14.8 2.9 32.2 22.1 10.1 32.2 22.1 10.1 32.2 22.1 10.1 32.2 22.1 10.1 146.5 103.2 43.3
S--TOTAT 905.0 75.3 12727 217.5 82.6 134.9 217.5 82.6 134.9 123.9 82.6 41.3 123.9 82.6 41.3 885.8 405.7 480.1
TOTAL 550.9 277.5 273.4 217.5 82.6 134.9 223.9 83.9 140.0 123.9 82.6 41.3 123.9 82.6 41.3 1,240.1 609.2 630.9
STIES/CONSVLTANCY 34.2 - 34.2 156.0 - 156.0 52.0 - 52.0 41.6 - 41.6 31.2 - 31.2 315.0 - 315.0
TRAINING/fELLOWSHIPS 52.5 3.0 49.5 213.0 163.0 50.0 30.0 13.0 17.0 24.0 13.0 11.0 10.0 10.0 - 329.5 202.0 127.5
BASELINF COST 637.6 280.5 357.1 586.5 245.6 340.9 305.9 96.9 209.0 189.5 95.6 93.9 165.1 92.6 72.5 1,884.6 811.2 1,073.4
CONTINGENCI ESPhysicAi 31.9 14.0 17.9 29.3 12.3 17.0 15.3 4.8 10.5 9.5 4.8 4.7 8.2 4.6 3.6 94.2 40.5 53.7
Frice 82.1 54.3 27.8 154.6 100.9 53.7 102.6 52.1 30.5 104.8 73.5 31.3 127.9 96.8 31.1 572.0 377.6 194.4
SUBTOTAL 114.0 88.3 45.7 183.9 115.2 . 70.7 117.9 56.9 61.0 114.3 78.3 36.0 136.1 101.4 34.7 666.2 418.1 248.1
TOTAL COSTS 751.6 348.8 402.8 770.4 358.8 411.6 423.8 153.8 270.0 303.8 173.9 129.9 301.2 194.0 107.2 2.550.8 1,229.3 1,321.5 o'N
- 44 - ANNEX 2Table 7
FORESTRY PLANTATION PROJECT
Estimated Schedule of Disbursements
CUMULATIVE DISBURSEMENTAT END OF QUARTER
IBRD FISCAL YEAR AND QUARTER (US$ '000)
1979 /80SEP. 30, 1979 500DEC. 31, 1979 2,250MAR. 31, 1980 4,000JUN. 30, 1980 6,000
1980 /81SEP. 30, 1980 8,000
DEC. 31, 1980 10,200
MAR. 31, 1981 12,400JUN. 30, 1981 14,150
1981/82SEP. 30, 1981 15, 900
DEC. 31, 1981 17,900MAR. 31, 1982 19, 900
JUN. 30, 1982 21,400
1982/83SEP. 30, 1982 22,900
DEC. 31, 1982 24,900
MAR. 31, 1983 26,900JUN. 30, 1983 27, 900
1983/84SEP. 30, 1983 28, 900DEC. 31, 1983 29,950MAR. 31, 1984 31,000
FORESTRY PLANITAT ION PROJECT
1Ior.leStaLe . toe,no Ch FIR. (Rodo or Opun St.,.)
19995979/00 1900/01 1901102 1902/03 1903/04 0984/85 1985/86 1986107 1987/88 1988/89 1989/90 199/9 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 2009
IBRD L... .1/ 1,150 2,350 2,000 2,000 1,103 - - - --- ---------891G S.b-slo- 2/ 950 1.150 1.550 1.610 1,635 - ----------
Subtotal 0,100 3,500 5,550 3.611 2,019 a
(b) Stw.gR. R-v -.. 2Solo.g. Lo8ggIn 122 462 692 1,330 1,418 1,410 1,418 1,410 1,418 1,418 1,418 1,410 1.418 1,410 1,410 - - - - -Polpoood - - - - - - 551 992 1,379 1,654 1,654 1,654 1.654 1,604 1,654 2,389 2,977 3,491 9.859 3.859 23.704TI.b-r-- - - - - - 2.108 3.794 5.269 6.323 6,323 63.230
Subtutol 122 460 692 1,330 1,418 1,418 1,969 2,410 2,797 3.072 3,022 3,072 3,072 3,072 3,072 4,497 6,771 8,760 10.182 10,183 86.934
SR .1. of Mi.1. 4/ - 34 74 110 158 150 150 158 158 15 058 158 15 0 s 150 150 - - ----
TOTAL CAS0 INFLOW 2,2252 3,996 4,316 5,050 4,394 1,576 2,127 2,568 2,955 3,230 3,230 3,230 3,230 3,230 3,230 4,497 6,771 8,760 10,152 10,182 86,934
(7PtoJeos C.... 5,240 3,682 4.616 4.482 4,455 4,181 6,491 4,288 4,878 4,557 4,493 4.381 4,682 5,994 4,289 150 110 110 110 110 653
(b) D.b5 SoovIRe
I801 L-oCmait tn F-e 61. 48 31 16 4 - - - - ----------Isto..i. 1 4 16 51 45 6 8 4 506 466 425 385 344 303 263 0222 182 141 100 60 20-Frlsotpol - - - - ~ ~ ~~~~ ~~~~ ~~~ ~ ~~- 580 580 580 500 500 580 500 580 500 900 580 580 500 500 563
S.bi.t.1 101 211 346 471 570 1,160 1,127 1,086 1,046 1.005 965 924 883 043 002 762 701 600 640 5s3a
TOTAL CASH OUTFLOW 5,341 3,893 4,962 4,953 5,005 5,349 7,618 5,374 5,924 5.562 5,450 5,305 5,565 6,037 5,091 072 835 790 750 693 65531
NET CASH FLOW/(DoRlnit) (3,019) 103 (646) 105 (631) (5,773 ) (5,491) (2,006) (2,969) (2,332) (2,228) (2.075) (2,335) (3,6073 (1,061) 3,625 5,940 7,970 9,432 9,40 86,2201TOSOJLAT1VE (3,159) (3,016) (3,662) (3,557) (4,~~~~ ~~180) (,91 (13,422) (10,250) (19,2272 (21,5592 (23,102) (23,862) (20,197) (31,004) (33,665) (30,040) (24,1002 (16,1302 (0.6985 2,7991 09.072
1/T 5 _.-2 I 5* o dn peIdo er sreoso fplopl I1Oerotost 7.05. -, _t.t-sdin porti_n; -it ... et f.. 3/45. -s -odi,r...d Portlo-
h/Sug,1 . bosn.ol.s:d ts N5.40/.' -ahIng 821/s' is Y-a 5 Ro- aoeg ogIg 9.8O/,,d~ f-r Plp ..od osd N28. l0/.3 for ti.b.r. A dd-stios of 25% .S. boos .. de b R.... of Rh. h.,.r ac-iug to th. Lo..I GRVopooat ARtlhyJsy.4/ al of malao ba. boo toluae as214/s - -oolsig 628
1/ss,s is 1983/04.I/ Fr0 J)- oRIst. bROlOd. R0550R0 p to 1983/84; tos h.-of-a At. -osoutad is 1983/84 -ost-ts torn..
FORESTRY PLANTATION PROJECT
Ondo and Ogun Subprojects: Calculation of Economic Rate of Return (N'000)
Costs 2/ Benefits 1/
Year Area Local Foreign Total Salvage 3/ Pulpwood Timber Maize TotalPlanted Costs Exchange Costs Logging Benefits(ha) Costs
1 1000 1695 3995 5690 250 2502 1800 1675 1561 3236 450 21 4713 2500 1947 1647 3594 625 42 6674 3000 1782 1264 3046 750 63 8135 3000 1601 1130 2731 750 79 8296 3000 1185 1117 2302 750 79 8297 3000 2178 2054 4232 750 952 79 17818 3000 1343 1265 2608 750 1714 79 25439 3000 1440 1358 2798 750 2388 79 321710 3000 1495 1410 2905 750 2858 79 36871l 3000 1446 1364 2810 750 2858 79 368712 3000 1298 1225 2523 750 2858 79 3687 f13 3000 1510 1423 2933 750 2858 79 3687 414 3000 2067 1950 4017 750 2858 79 3687 a15 3000 1303 1228 2531 750 2858 79 3687 116 57 57 4128 3000 712817 57 57 5144 5400 1054418 57 57 6032 7500 1353219 57 57 6668 9000 1566820 57 57 6668 9000 1566821 57 57 6668 9000 1566822 57 57 3810 9000 1281023 28 28 3810 9000 1281024 28 28 3810 9000 1281025 28 28 3810 9000 1281026 28 28 3810 9000 1281027 28 28 3810 9000 1281028 28 28 3810 9000 1281029 28 28 3810 9000 1281030 41300 3810 9000 12810 PO
ERR = 13.45 M
1/ All foreign exchange costs and benefits were adjusted using a shadow exchange rate 1.25 times the official rate.2/ Including 5 percent physical contingencies, but excluding price contingencies.3/ Net of the value of the land, i.e., n3 atN25 m3 less N500 per hectare cleared.
ANNEX 2Table 10
- 47 -
FORESTRY PLANTATION PROJECT
Anambra State Model: Costs and Benefits of Pine Plantation per Hectare
COSTS 1/ BENEFITS 3/
LOCAL FOREIGN EXCHANGE 2/ TOTALYEAR COSTS COSTS COSTS PULPWOOD YIELD-------------------------- N ------------------------ ---- m3 ------
1 163.98 109.32 273.302 34.35 22.90 57.253 9.51 6.34 15.854 5.46 3.64 9.105 7.50 5.00 12.506 7.50 5.00 12.507 7.50 5.00 12.508 7.50 5.00 12.509 7.50 5.00 12.5010 7.50 5.00 12.5011 7.50 5.00 12.5012 7.50 5.00 12.5013 7.50 5.00 12.5014 7.50 5.00 12.5015 165
ERR = 14.4
1/ In the economic analysis, 20 percent has been added to the above cost figuresto cover administration and overhead costs, and a further 10 percent has beenadded to cover physical contingencies.
2/ Assumed to equal 40% of total costs. Twenty-five percent has to be added to
this column to obtain the 'shadowed' value of the foreign exchange expenditures.3/ Valued at N22.10/m3, a shadow exchange rate has been used.
- 48 - ANNEX 2Table 11
FORESTRY PLANTATION PROJECT
Gmelina Plantation Production from Ogun and Ondo Subprojects
AREA THINNINGS FINAL FELLING(ha) FOR PULP 3 Pulp Sawlogs---------------------------- m -----------------------------
15 200,000 200,000
16 360,000 360,000
17 500,000 500,000
18 600,000 600,000
19 600,000 600,000
- 49 -ANNEX 3Page I
FORESTRY PLANTATION PROJECT
Establishment of Project Management Unit (PMU) andBudget and Policy Coordinating Committee (BPCC)
1. PMU. The two subprojects in Ondo and Ogun States would each have aProject Management Unit (PMU). Each PMU would be responsible to the ChiefConservator of Forests (CCF) for the day-to-day operation of the project. Inparticular, it would be responsible for the carrying out of the objectives asstated in the detailed features of Chapter 4 of this report. PMU would bemanaged by a project manager, who would report directly to the CCF. The mainduties of PMU would include:
(a) implementation of the Forestry Plantation Projectfollowing the guidelines of this report and agreedpolicy decisions made by BPCC in consultation withthe CCF;
(b) preparation of annual budgets and cash flows forapproval by BPCC. In particular, PMU would submitto MANR's Planning, Budgeting and Monitoring Division(PBMD), cash flow statements indicating any changesin requirements for State Government funds due toexpected changes in expenditures and inflow antici-pated from other sources (i.e., stumpage fees).Unless informed to the contrary by BPCC, within3 weeks of submission of such statements to PBMD,the project manager may be authorized to make theproposed expenditures;
(c) operation of the project's bank account;
(d) control and operation of the project's revolvingfund according to project fund allocations fromcollected stumpage fees agreed by BPCC;
(e) in consultation with the CCF, recruitment ofproject junior staff and senior staff withapproval of BPCC;
(f) after consultation with the CCF, the advertising,negotiation, and calling for tenders either inside oroutside the State for the erection of buildings andother civil works, and/or supply of goods and serviesrequired for implementing the project. PMU would beallowed to conclude such contracts only for con-tracts valuied at less than N 30,000. For contractsmor.- then N 30,000, prior approval of BPCC wu-'1 d bcrequired.
- 50 -ANNEX 3Page 2
(g) preparation of reimbursement claims against project
expenditures for submission to the World Bank; and
(h) preparation of quarterly and annual reports for the
simultaneous submission to BPCC, FDF and the World
2. BPCC. The BPCC would be responsible to the Commissioner of MANR,
and assisted by the existing Planning, Budgeting and Monitoring Division,
would review initially only budget and policy matters of Agricultural Bank-
financed projects. It would have the following main functions:
(a) Policy. Reviewing and making recommendations on Project
related agricultural development policies, including those
related to forestry tariffs and concession agreements;
(b) Finance. After review by PBMD, approving annual project
budgets, cash flow statements, and ensuring that sufficient
Government funds are readily available to the project;
approval of independent auditors, project bank accounts,
pricing of agricultural inputs (where relevant), and farm
(c) Staff and Personnel Matters. In consultation with the
Chief Agricultural Officer, the CCF and the respective
project managers responsible for the appointment, transfer
and secondment of all senior project staff, their terms
and conditions of employment and the appointment of con-
sultants including consultancy firms;
(d) Award of Contracts. On the advice of the respective
project managers, be responsible for awarding contracts
valued at N 30,000 or more;
(e) Coordination and Integration. Through its members, be
responsible for the coordination and integration of those
issues relating to MANR and other institutions and the
The Chairman, who will be the Permanent Secretary of MANR, or his representa-
tive shall invite members to meet at such time and place as he may think fit,
but generally not more than 4 months shall elapse between any one meeting and
the next. In the absence of the Chairman, the project managers may call the
BPCC to meet whenever deemed necessary. The membership of the BPCC would
- 51 -ANNEX 3Page 3
Permanent Secretary MANR, Chairman
Chief Agricultural Planning Officer-Secretary
Chief Agricultural Officer
Chief Agricultural Engineetr
Chief Conservator of Forests
Representative, Ministry of Finance and Economic Development
Project Manager - Forestry Project
Project Managers - Other Bank-Financed Projects
Representative, Federal Ministry of Agriculture and Water Resources
NIGERIAFORESTRY PLANTATION PROJECT
ORGANIZATION OF PLANTATION PROJECTS IN ONDO AND OGUN STATES
PCC" -| OTHER STATE
-|ROADS l |NREIS||MECHANIZATION |-|PERSONNEL|
LAND PATTO | TAUNGYA L COUT LCLEARING J EEOMN FARMING
BUILDINGS PATIN ||PROCUREMET |
1/ Permanent Secretary MANR (Chairman). Ministries of Finance and Economic Planning, Chief Agricultural Officer, ChiefConservator of Forests, Chief Planning Officer, Project Managers. Representatives of other Ministries or agericieswould he coopted when required.
World Bank 19309
NIGERIAFORESTRY PLANTATION PROJECT
FEDERAL DEPARTMENT OF FORESTRY ORGANIZATION
STATE FORESTRYDEPARTMENTS DEPARTMENT
AND OFFORESTRY PROJECTS FORESTRY
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