Economic and Social Council

 Distr. GENERAL
22 April 1997
                                                        ENGLISH
                                                        ORIGINAL: FRENCH

Substantive session of 1997
Geneva, 30 June-25 July 1997
Item 10 of the provisional agenda*

     * E/1997/100.
                             REGIONAL COOPERATION

                  Project for a Europe-Africa permanent link
                        through the Strait of Gibraltar

                         Note by the Secretary-General


1.   The Secretary-General has the honour to transmit to the Economic
and Social Council the report prepared in accordance with Council
resolution 1995/48 by the Executive Secretaries of the Economic
Commission for Europe and the Economic Commission for Africa on the
work that has been done in connection with the project to establish a
Europe-Africa permanent link through the Strait of Gibraltar.

2.   The Economic and Social Council has taken an interest in this
project since 1982 following a decision by the Governments of Morocco
and Spain to carry out joint studies on the feasibility of the project
as part of an agreement on bilateral cooperation adopted on 24 October
1980.  Since then the Council has regularly requested the two regional
commissions to keep track of the progress of studies relating to the
project and to inform the Council of any developments.


                                     ANNEX

         Project for a Europe-Africa permanent link through the Strait
         of Gibraltar:  report on studies and activities carried out  
                          during the period 1995-1996


                                   CONTENTS

                                                            Paragraphs Page

INTRODUCTION ...............................................    1 - 5    3

 I.   BASIC OPTION ACCEPTED ................................    6 - 7    4

II.   PROVISIONAL EVALUATION OF THE BASIC OPTION ...........    8 - 27   5

      A. Technical aspects ................................     9 - 13   5

      B. Project costs ....................................    14 - 16   6

      C. Traffic projections ..............................    17 - 23   7

      D. Economic viability of the basic option ...........       24     8

      E. Financial viability of the basic option ..........    25 - 27   9

III.  FUTURE DEVELOPMENTS ..................................      28    10

IV.   OTHER ACTIVITIES CARRIED OUT WITHIN THE CONTEXT OF THE
      PROJECT ..............................................   29 - 31  10


                                 INTRODUCTION


1.   In its resolution 1995/48 of 27 July 1995, the Economic and Social
Council requested the Executive Secretaries of the Economic Commission for
Africa and the Economic Commission for Europe to take an active part in the
follow-up to the project for a Europe-Africa permanent link through the Strait
of Gibraltar and to report to the Council at its substantive session of 1997.

2.   This report is a response to that request.  It was drawn up jointly by
the two regional commissions and gives a brief overview of the progress made
following studies carried out up until 1996.  It also takes account of other
project-related activities organized further to Council resolution 1995/48
under the joint auspices of the two regional commissions and the International
Tunnelling Association (ITA), a non-governmental organization in consultative
status with the Council.

3.   It should be recalled that studies designed to advance the project have
been carried out jointly by the Governments of Morocco and Spain since
24 October 1980, the date on which the two Governments adopted a bilateral
agreement on the subject.  This agreement which was later expanded by a
supplementary agreement of 27 September 1989, formally establishes both
Governments' commitment to make a joint study of the feasibility of the
project, stipulates the creation of a standing intergovernmental Joint
Committee which was to be responsible for carrying out the agreement, and two
State companies, one in Morocco and the other in Spain, which were to be
responsible for conducting the studies.  These companies, which have been
working alongside the Joint Committee since 1981, are, on the Spanish side,
Sociedad de Estudios para la Comunicacio'n Fija a trave's del Estrecho de
Gibraltar (SECEG), which has its head office in Madrid, and on the Moroccan
side, Socie'te' Nationale d'Etudes du De'troit (SNED), whose head office is in
Rabat.  The studies are carried out either by the two research companies
directly, or through scientific institutions from both countries or national
or international firms of consultants and surveyors with whom the companies
have concluded agreements or contracts for services.

4.   Within the above-mentioned institutional framework, the studies are
being carried out in phases and programmes of studies.  The feasibility
studies currently in progress are a follow-up to the pre-feasibility studies
which were completed in 1990.  The feasibility studies are being conducted in
two stages, the first of which was completed in 1996.  It should be pointed
out that during the first stage of the feasibility studies the two regional
commissions prepared an important evaluation report which they submitted to
the Economic and Social Council at its substantive session of 1993
(E/1993/80).  The important background data contained in this report were used
as reference points for later studies in that first stage.  Attention is also
drawn to the report submitted to the Council at its substantive session of
1995 (E/1995/46).

5.   The feasibility studies conducted during the first stage have made it
possible to select a basic option for implementation of the permanent link
project in order to continue the studies.  The following two sections contain,
respectively, a brief description of this option and a preliminary evaluation
of that option, together with indications regarding the main lines to be
followed in the second stage of the feasibility studies.


                           I.  BASIC OPTION ACCEPTED

6.   Comparisons of the two types of solutions considered at the preliminary
pilot project stage provided ample confirmation that the "tunnel" option was
more realistic and advantageous, from the technical, economic and
environmental standpoint, than the "bridge" option.  This confirmation is
based on the following factors:

     (a) The extent of the technological developments which would still be
required for the "bridge" option;

     (b) The estimated construction cost for the "bridge" option is
approximately four to six times higher overall than that of the "tunnel"
option;

     (c) Unlike the "bridge" option, the "tunnel" option lends itself to
development in phases, which would make a significant difference in economic
terms;

     (d) Environmental criteria, particularly as regards interference with
shipping through the strait, strongly favour the "tunnel" option.

7.   The essential characteristics of the basic option accepted are as
follows:

     (a) The link would consist of a tunnel-type structure drilled under the
sill of the strait;

     (b) The operation would be a rail-ferry type of operation designed to
carry both rail traffic in regular trains and road traffic, which would be
carried on shuttle trains, between a Spanish terminal and a Moroccan terminal.
The structure would consist of two parallel rail tunnels with a single track
and a service tunnel situated midway between the two;

     (c) Construction of the structure would follow the principle of first
building the undersea portion of the service tunnel as a reconnaissance
gallery (phase 0);

     (d) Subsequently the work would be executed in two stages:  the single-
track stage (phase 1) which would involve construction of only one of the
proposed rail tunnels - together with all elements necessary to put it into
service, including the terminals and the underground sections of the service
tunnel; and the two-track stage (phase 2) consisting essentially of adding the
second rail tunnel as soon as the amount of traffic justified doing so;

     (e) The rail and road connections with the Moroccan and Spanish networks
and the relevant accessory facilities would be built by the respective
administration, and part of the construction costs thereof would be charged to
the project based on criteria of economic utility;

     (f) As a preliminary evaluation, the basic option is also determined by
the following characteristics:

     (i) It was assumed that, during the single-track phase, the system would
         take some time to reach saturation point; accordingly, the
         preliminary economic analysis was limited, at this point in time, to
         this phase of the project;

    (ii) The estimated construction and operating costs, estimates of traffic
         and toll revenue and assessment of the project's economic impact
         correspond to the baseline cases considered in the respective
         studies;

   (iii) Estimates of the cost of connections and accessory facilities and
         how these would be divided, were based, at this stage on summary
         estimates;

    (iv) The institutional arrangement accepted for the preliminary economic
         and financial analysis is one which would combine a private
         concessionaire and public funding, whereby the licensors - the
         administrations - would turn over the reconnaissance tunnel to the
         concessionaire free of charge and the latter would subsequently
         incorporate it into the project as a pilot tunnel and service
         tunnel; he would build the project and operate it at his own risk
         for the duration of the concession and hand the entire project back
         to the administrations when the concession lapsed.


                II.  PROVISIONAL EVALUATION OF THE BASIC OPTION

8.   The basic option accepted for the permanent link in the Straits of
Gibraltar prompts the following preliminary comments:


                             A.  Technical aspects

9.   The general concept of the basic option as a rail-ferry tunnel - that
would take both regular trains and road traffic on rail shuttles - with two
single-track one-way tunnels and a service tunnel situated midway between the
two is considered appropriate.

10.  The single-track phase of the basic option would require maintaining a
high level of quality of service in the system, particularly when operations
were approaching saturation point.

11.  The maximum value adopted for the gradients/slopes of the structure
(25:1,000) is unprecedented in large underwater railway tunnels.  This will
make it necessary to equip some heavy freight convoys with additional traction
and to maintain an exceptionally high level of quality of operating systems
which, added to the requirements in this respect mentioned above, could prompt
a downward revision of the saturation capacity attributed to the single-track
tunnel.

12.  At the current stage of geological and geotechnical knowledge of the
site, there are favourable prospects for the technical feasibility of the
proposed tunnels at an acceptable level of assurance, this being understood in
the context of the practical needs for detailed information and the practical
difficulties of meeting those needs through off-shore surveying.  In this
context, the following research needs to be carried out - it is, in fact,
envisaged in the companies' work plan - insofar as technically viable:

     (a) Determination, by means of appropriate mechanical and/or geophysical
surveys, of the thickness of the recent Quaternary formations covering the
deepest areas of the sill of the strait;

     (b) Completion of a deep drilling survey, which was not done in 1995.

13.  Within the geological-geotechnical framework provided by the studies of
the physical environment, the technical feasibility of the structure was
established in the preliminary pilot project for the basic option with a high
level of reliability.  Certain technical problems will have to be investigated
further, however; these problems relate mainly to the choice of the most
appropriate type of tunnel boring machine in relation to the geomechanical
characteristics of the ground formations, and the choice of certain
specialized techniques relating to, inter alia, monitoring of progress,
possible treatment of problematic ground formations and protection against
possible leaks of water and gas.  In this respect, it is considered necessary,
as in fact envisaged by the companies, to make a detailed study of these
problems in the near future through:

     (a) Studies, in the context of the detailed pilot project, of the
underwater section of the service tunnel, taking into account the latest
results obtained from geotechnical experimentation structures;

     (b) Detailed technical follow-up of similar structures currently under
construction which are of interest to the project and, in general, engineering
studies which have been envisaged.


                               B.  Project costs

14.  The project costs which have been used for this provisional evaluation
are derived, as regards the permanent link structure as such, from the
preliminary pilot project for the basic option.  These costs, which have been
established by analytical methods for construction operations, show in
principle a reasonably stable sensitivity to the likely variations of the main
external factors.  As to their reliability, the tests made in this respect
tend to support the conclusion that the costs have been estimated in the
context of the basic pilot project with conservative margins which will need
to be refined later, since the width of these margins is currently difficult
to specify.

15.  For reasons associated with the proper management of the study process,
accentuated by the importance of taking into account construction costs when
determining the economic feasibility of the project, it is felt necessary to
continue the efforts to analyse cost sensitivity and reliability, both in
conjunction with the activities for the monitoring of related structures,
referred to above, and through alternative cost engineering approaches or
methods involving consultation with experts.

16.  Since the cost of the connecting and accessory structures associated
with the project is very high, it is essential to refine the estimates of
these costs and how they would be divided and, perhaps, show how these
structures would fit in with the relevant master plans of each country.


                            C.  Traffic projections

17.  The models used for traffic projections seem to be technically well
suited to estimating the amount of traffic diverted and engendered.  However,
the process of improvement which is under way, must be accelerated
particularly along the lines envisaged, so as to:

     (a) Recalibrate the models, statistically and structurally, on the base
year 1995, in a similar manner to the last recalibration;

     (b) Increase the specificity of models in the area which would be
heavily influenced by the project and in the strait area through the
elaboration of a "zoom" model, with a view to modelling trade patterns and
traffic routing in greater detail.

18.  The methods used for projecting the traffic created, although
technically excellent, probably underestimate the potential volume of local
traffic created by the permanent link, associated measures and, possibly,
voluntary policies for the development of the strait region.  Consequently, a
new approach needs to be developed, in conjunction with or in the context of
the regional impact study envisaged, in order to take these effects more fully
into account.

19.  In the baseline case of the permanent link, the sensitivity of traffic
projections is low in relation to the likely trends in the evolution of costs
and transport times in the various modes operating in the area affected by the
project.  The sensitivity is more pronounced in relation to variations in
external factors such as a variation in the economic growth scenario or a
decline in ferry fares across the strait.

20.  At the beginning of the current decade, economic growth proved to be
lower than projected in the baseline economic growth scenario, which was drawn
up in the light of the trends observed during the period 1980-1990 and on
which the traffic projections are based.  After 1994, however, there was an
upturn and, according to the competent institutions, economic growth is
expected soon to match - and in some regions of the area covered by the
models, possibly surpass - the baseline scenario until at least 1998.

21.  The traffic models have been tested against the recent past (1990-1994)
with numerically satisfactory results, especially as regards the response of
the models taking into account observed economic growth ("ex post" test). 
These tests, however, have a limited value because of the limitations of the
models - which are designed for the long term - in providing accurate short-
term projections and because of the quality of the statistical data on
observed traffic.

22.  One of the best pilot indicators of the reliability of medium/long-term
traffic projections is probably the rate of traffic increase observed for the
strait corridor without a permanent link, because the projection models are
based on the assumption of an increase in this traffic from the baseline year
(1990).  The test on total passenger traffic, theoretically the most direct,
has been found to be of little value because of statistical shortcomings;
however, the test on vehicular traffic - and therefore, indirectly, on
automobile passenger traffic - has confirmed the projections.  Naturally the
result of this test must be viewed with reservations because of its indirect
nature -  it relates to only one category, albeit very indicative, of traffic
- and because of the quality of the statistics used.

23.  Although the companies have developed a fairly detailed socio-economic
and traffic database, derived mainly from the collection of secondary data,
there is an urgent need at the current stage of studies to undertake,
inter alia, an internal evaluation of the consistency of the data and, above
all, to acquire information directly through surveys and taking counts on the
most significant flows.


                  D.  Economic viability of the basic option

24.  On the basis of the cost and traffic projections associated with the
basic option, an economic analysis of the project has been undertaken, on a
provisional basis, by the method of evaluating the variation in the collective
utility of the project, measured through the surpluses derived by the economic
agents involved in the project area and, specifically, the following:  (a) the
managing body of the project; (b) the transport enterprises affected - air,
maritime and rail transport; (c) the project users; and (d) the public
administrations.  The result obtained for the baseline case from this
preliminary evaluation, which was carried out within the overall context of
the project, corresponds to an internal rate of return of about 15 per cent,
and this figure is relatively sensitive to variations in cost and traffic
projections for the permanent link.  This result, which is relatively
favourable in numerical terms, must be judged, however, in the light of this
sensitivity, taking into account also the following considerations:

     (a) This rate refers to the project surplus generated over the totality
of the vast area of study considered in the traffic models, and not a
particular economic-fiscal system, as is normal in the practice of evaluating
infrastructure projects.  In this respect, the rate which has been calculated
relates to all the "intrinsic" advantages of the project and, consequently, it
is a theoretical internal rate, which is comprehensive in nature;

     (b) Since there are no plans, at this stage in the evaluation process,
to evaluate the profitability of the project in relation to a particular
economic system - for example, Spain+Morocco, or this combination with the
participation of the European Union and the Arab Maghreb Union - it must be
assumed that the "actual" internal rate of return, in relation to a particular
economic area bearing the costs of the project, will be several points lower
than the theoretical rate;

     (c) It should also be noted that the internal rate of return which has
been calculated tends to be conservative, in that it does not take into
account all the economic advantages attributable to the project, such as
certain effects resulting from savings made, particularly in the strait region
itself, whose trend-driven and, possibly, voluntary structural effects are
potentially significant.


                  E.  Financial viability of the basic option

25.  The preliminary evaluation of the "purely" financial viability of the
basic option is probably too low (internal rate of return of about
10 per cent) and too sensitive to uncertainties concerning variations in cost
and traffic figures, to make it possible, at least at this stage of the study
process, to envisage having the project financed entirely by the private
sector.

26.  In order to consider the possibilities of setting up the project on the
basis of a scheme which would combine private and public funding, with
sufficient public funds to make the project financially attractive to the
private sector, a provisional evaluation of the basic option has been made in
the following context:

     (a) Under the proposed scheme, the licensor would hand over to the
concessionaire, free of charge, a part of the structure consisting of the
underwater section of the service tunnel, previously constructed by the
licensor as a reconnaissance gallery.  It should be noted that this assumption
- based in any case on the advantages which, in the technical and economic
context of the project, it offers, in principle, over other financially
equivalent joint financing options - is simply a working hypothesis for the
provisional evaluation which has been carried out;

     (b) The project would be constructed by a concessionaire of the
licensing administrations under a conventional concessional regime
(build-operate-transfer) (BOT); the term of the concession would be 40 years
and the percentage of capital initially provided by the concessionaire would
be equivalent to 20 per cent of the total cost of the structure.

27.  In these circumstances, the financial returns on the concessionaire's
capital, measured by the internal rate of return of capital disbursement flows
and distributed dividends, converted into constant prices, would be about
13.5 per cent.  It should be noted that the sensitivity of this indicator to
cost and traffic variations is significantly greater than in the case of the
economic analysis and, as before, the value remains subject to the
reservations inherent in the cost and traffic estimates relating to the basic
option.


                           III.  FUTURE DEVELOPMENTS

28.  The project to establish a permanent link through the Strait of
Gibraltar passed an important milestone in its development when, at the end of
stage 1 of the feasibility phase, a basic option for the continuation of the
studies was selected from among the possible structural options.  These
studies have now entered stage 2 of the feasibility phase, on the basis of a
detailed programme of work drawn up by the Socie'te' Nationale d'Etudes du
De'troit and the Sociedad de Estudios para la Communicacio'n Fija a trave's
del Estrecho de Gibraltar.  The objective of this second stage is essentially
to produce the feasibility study for the permanent link project, for the basic
option which has been selected.  To that end, two fundamental tasks will need
to be carried out during the second stage, namely, the deep drilling survey,
so as to gain more information about the subsoil of the deep areas of the
strait, and additional studies, at the level of the detailed preliminary
project, of the reconnaissance gallery envisaged in the basic option.


               IV.  OTHER ACTIVITIES CARRIED OUT WITHIN THE CONTEXT
                    OF THE PROJECT

Workshop on characterization of tunnel boring machines for tunnelling flyschs
(Tarifa, 20 and 21 February 1997)

29.  Because of the international dimension of the permanent link project,
from the viewpoint of both its economic effects and its technical uniqueness,
the study process, in addition to follow-up from the outset by the Economic
and Social Council through the Economic Commission for Europe and the Economic
Commission for Africa, has featured a number of symposia - four altogether
have been organized so far - and other international meetings devoted to
consideration of different aspects of the project.

30.  Since the time of the last report (E/1995/46), which was submitted to
the Economic and Social Council in 1995, and following Council resolution
1995/48, a workshop of characterization of tunnel boring machines for
tunnelling flyschs was held at Tarifa (Spain) on 20 and 21 February 1997,
under the joint auspices of the two regional commissions and the International
Tunnelling Association (ITA).  The workshop, in which 40 international experts
participated, demonstrated, inter alia, that among the different methods of
tunnelling that are possible, the tunnel boring machine is best suited to a
tunnel under the strait.

31.  Another workshop, on the methodology for establishing the costs of the
construction of tunnels bored with tunnel boring machines, was held at Vienna
on 11 April 1997 on the occasion of the 1997 world congress of the
International Tunnelling Association.


  

Date last posted: 29 November 1999 12:16:05
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