Nicaragua - Port of Corinto Project

LZ- 1 13 -V, R E S T R I C T E D Q RETURN TO Report No. T.O, 104-b REPORTS DESK FILE, cop WITHIN ONE WEEK This document was prepared for internal use in the Bank. In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVEILOPMENT DEVELOPMENT OF PORT OF CORINTO NI CARAGUA May 14, 1956 Department of Technical Operations  CURRENCY EQUIVALENTS (Selling Rates) U.S. $1 * 7.05 cordobas I cordoba w U.S. $0.14 1 million cordobas a U.S. $141,844 .7TTT O - LTO I R;"-QIT0 DESK3 ROOM' A-124 BY:i JWkfv 3( -7c  1tI I C A R. A G U A! DEVIELOPMET OF POIr OF CORINTO TIELL OF CO IT T3T8 Paragr ,phs SXuruMary I - VII I Introduction 1 - 3 II E2xiting Nicaraguan Port Facilities 4 - 20 Ill Descr,ption of the Project 21 - 29 IV Present Traffic and Probable Future Traflfic L>evelonment 30 39 V Port Re-crcniues and Expenditures 4o 42 VI Lconomic Justif iCation 143 - 7 VII Proposed Reorganization O -52 VILI Cornclus'ons and R.ecormmendations 53 -56 A?F1I 7P1IOE A. Map of Nicaragua B. Port of Cor1nto C. Si te Plan D. Imports and Zxrorts through Corinto E. Exports through Corinto c.nd San Juan F. Total Estimated Cost of Project G. Port Revenues in 1954 and Average Charge/Ton H. Pro-Forma Income Statement - 1959  N1 I C A R A 0 U A IU}h KARY I In August l955 the Gove.rnnient of Nicaragua requested a loan of '.3e6 million for the rehabilitation of the Port of Corinto. The pro- posed project included the construction of a new quayj the relocation of the railway line into Coriiitoy the corxstruction of a water supply system to serve the city of Corinto as well as the port, and the con, struction of a marine repair shop. The relocation of the railway would have required th-e construction of a new bridge and the Goverrnent proposed to build a combired rail and highway bridge wh.ch T;ould also carry the proposed extension of the Hanagua-Chinandega all-weather highway into Corinto. IL '7ith the loan aoplication the Govermrent subpiitted the reoort of a firm of consulltng engineers i*ho had been engaged to studv the port facilities4 III* A Bark Mi1ission visited iicaragus in Leptember 1955 to st.udyT the economic and technical aspects of the project. The .ission found the project generally sound but was of th1e opinion that the rail,cay re- location and shin repair shon were not needed at this ti'me, and that the project should be confined to the extension to the docking and cargo hantdling facilities and the water suroply system. The Government is requesting the Bankts approval to modify the existing Loan 81-N1I to include both a highwiay bridge and the 15 mile highway from Chinandega to Corinto. IVY The growth of Ni caraguaIs foreign t rade in recent years has rendered existing port facilities inadequate. The rapid increase in traffic through Corinto, the principal port, has resulted in serious congestion, and excess traffic has had to be diverted to otlher ports. Poor management and conflicting authlority over port operations hove added to these difficulties. V. Corinto has the best deep water harbor on the Test Coast of Nicaragua and serves the rnost highly developed azea of the country. It is thus the logical location for a nort development program. The steady growrth of exports and imports justifies the improvements of the port. VI. The project as modified by the Government and as reconraended by the iassion consists of: (1) a new 1,2C0 foot quay w-ith necessary services, (2) cargo handling equipment, and (3) a water supply system to suoply water for both the port and the city of Corinto, part of the  cost of 1,vhich would be borne by the Govermlent or thie city. On the basis of reasonable estimat es, the project ixr-uld cost 13.2 ,:nillion in foreign currency and 10.87 million cordobas (X1.51 -million equivalent) in local currency. TII. The Government has established an autoaonoue port a&thority and h&s agreed- to scoure the seiqvices of an experienced port manager, the project is considered suitable f7or a 3n'- loan to t1ie woit t^ovity in the arnount of ~3.2 million U.S. An appropriate tenn .wiould be 20 years with a 3 year grace period. I. INTPInuuU1TIC!5 1. In August l9e5, the Government of Nicaragla requested the Bank to consider a loan for '.3,600,000 to finance the foreign exchange costs of a project for the rehabilitation of the F:ort of Corinto. The project included the follo&ing: (1) TDe construction of a new qLuay .;ith suitable transit sheds, cargo handling equipment, etc. (2) The construction of a i,ater sup,ply system to supply potable ,-ater for both the port and the city of Corinto. (3) The relocation of the railioad line into Corinto and the construction of a combined railroad and highwnay bridge. (4) The construction of a ship repair shop. The Govern-aent also indicated its interest in a ihighway connection to the port but proposed to request the inclusion of the highvray under the present Hi,gh-ay Loan No. 81-NI. 2. In Sep,te-mber 19$55, a "3ank mission visited Nicaragua to study the economic and technical aspects of the proposed project. The mission found the Project generally sound but concluded that it could be modified by the elimination of items (3) and (4) of the loan application without substantially lessening its value. Relocation of the railroad line had been proposed by thle Governnent to remove the danger of breaching by wave action, but furtlher investVgation indicated that this ;might be accomplished more cheaply by increasing the effectiveness of the Protec- tive works along-, the shore, and that in any event the Railroad should bear the cost rather than the Port. A new highway bridge would be needed to carry the proposed highway connection into Corinto but, like the highNay, could be included in the present Highwray Loan No, 81-NI. It is understood that the Governient is now preparing to request such an axnerdment. With respect to item (4), present and pros-pective ship traffic did not seer, heavy enough to justify a ship- repair shop4 The mission discussed these modifications with tne  Government Which has umcpto the modified nroject including only the proposed new quav wivti shieds and accesscries and part of the cost of the wl ter supp ly system. 3. A ccnsultants r-nort orn the );'ox:o.sed ext-ensTons ant atdditions to the docking facilities was subi;itted nrith the loan request. The mission was of the opinion that the im.provenents to t1h dock facilLties pronosed by the consultants -were technically sound, but it recorrnended a re- duction in the length of the aronosed quay since a study of port traffic 4_ndicated tha t a shorter quxy would meet proLable needs for 15-20 years. ht the request of the Govermrent) the consultants hIzve modified the project and submn.tted re-vised cost estiLmtes. II. EYISTI1O ICAI.GUI ?Th)T I? CI-,ITTLS l!*, wUicarsgua borders cn both the Atlanrtic and Pacific Oceans), but the concentration of der relopricnt in the P .cif ic area has faced. it towards the uesta The cspita1, N:anag;ua, lies close to the Padific (see iap, Appendix .) aid is connected by rail1-aay with the Pacific at th1e port of ,orinto, and Tnractically all of 1Ticaraeua' s eorts originate in the Pactfic aroa. Although 75%, of imports come from- the east coast of the United States, the absence of rail or lhighltray conLnections between the east coast ond the rest cf the country limits tne use of east coast norts evren for innorArDts, and only one r,oint on the east coast, Li D uff, has docking facilities. As a result, over 95% of iNicaragua's Iexorts and imports teass througl Pacific ports. Corinto, the only naturally protected deern water port on tlhe west coast, accounts for about 75% of the country's exocrts and imports. Port of Corinto 5. Corinto is local-ted on the Uorth Pacific Coast of hicaragua (Appendix A) approximatey1 35 miles from the Hionduran bordor and 88 miles by rail from Eanagua, A 3'-6" gauge railroadt 'i th several branches runs fromr Corinto to Managua tI.hrough the fertile northwestern and central western parts of the country. There are no highwTay connections to the nort at oresent, but one is rlanred for early construction. The Government nro-,ses to renuez-t an amendment to Loan iNo. 81-1TI to cover the cost of this cornnection. It will, in general, paraliel the rail- ropd from Corinto to Cih.ran.cieUa, a distance of about 15 rdiles, where it will connect with the road to d lana-ua now being built under Loan Mo. L$-o 6. Corinto has a firie naturally protected harbor (A.onDendix B) and is the best deep water nort on the west coast of ilicaragua, The harbor entrance has a depth of only 26' at present but it can be develoned into a large deep sea harbor with a depth of 35t with very little difficulty whenever this becomes economic ally justifiable. 7, Traffic through the nort has been increasing rapidly for several years, but it has now reached a limit because of inadequate and anti-  -' - quated facilities for doc:king and unloading, an absence of highway connections, and congested railiway faci'Lities, Increasingly, traffic is being diverted to lighterage oorts to the south. 8. The port fa.c LI-it3.s are o-ned by tie raij.road, whicha in turn i3 on.ed and operated by the GovernmaentS. The facilities and stevedoring operations are under a port maragement which in practice is separate from the railway administratior. Other Ports 9. All of 11caragua's other west coast ports are lighterage ports unprotected against heavy seas, Their incluidle Tarnarindo, 35 miles south of Corinto and 38 miles from lianagua, which is now being improved; liasachapa, 65 miles south of Corinto and 36 miles from Managua; and San Juan del Sur (the principal lighterage port), 125 miles south of Corinto and 85 miles from llianagua (Pppendix P), 10. Tamarindo is bein., improved at an estimated cost of half a million dollars primarily as a tem-oor.ry measure to relieve the con- gestion at Corinto urtil facilities at that oort have been enlarged and it has beon connected by hi,hwiay with *iaragua. There is little possibility that a protected deep water harbor can be develzped economically at Tanarindc'o, and it stems probable that little traffic will flow through the port wihen Corinto's oort facllities are exoanded and modernized. Its onll,r advantage Jies in the fact that it is the port closest to iianagua. 11. iEasachapa is used at oresent only by the hsso Standard Oil Caapany and thae Texas Comapany to discharge liquid .-etrolcum nroducts. T1he Lsso Company is now in the process o' n.roving to Corinto, but the Texas Coanpany plans to continue using 7asschana. 12. San Juan del Cur handled about 2$j %s ca.rch traffic as 'orinto in 1954., in soite of the fect tlhat it is a much poorer port. Although the snall bay offers some orotection to ships at anchor, all cargo must be lightered. Developmlent to permit deer draft ships to dock seems unlikely. Hovevc r, the l0cation of t1le nort gives it an advaantage over Corinto in southwestern iiicaragua, as far north as ilaragua, the area which it now serves. hlost of the coffee nroduced in this area is shipped from this port. It seems probable, therefore, that evren after the modernization of -ort facilities at Corinto, San Juan del Sur would continue to attract a sizeable amount of traffic from-i south,estern i!icpragua. 13. El Bluff, the only eastcoast port with docking facilities, is a potential site for a deenwater port. At present, its use is restricted by the 12' depth of water over the bar, and the absence of rail or highway connections betwreen the east coast and the rest of the country. Although a highwa7r is ex::ected to be completed by 1958 between Hianagua and Rama, about 420 miles up the Escondido River from El Bluff, obstacles to the use of an east coast port will persist. The Lscondido River  has a depth of' about 30 feet, bu-t a bar at t.he mouth of the river .vith about 9 feet of -rater, as -uell as the ocean 'ber at t'.he entrance to Bluefield 3ay, li mit the size of shippirng that can reach Rama. Even if deep Yrater navigrat-on is eventually opened to haama, the distance from Rama to 2)a nagua (160 miles) ma ces it unli'cely that much of the ezisting e..port trade, thle greeter part of wh-ch originates in estern Nicaragua, ,iould be diverted from thie 1.7est Coast. 14. A deepwater port at :<ma might attract part of the imnport trade, sorre 75cZ of' which cor.es from the east coast of t,e United States, as ,wrell as some oF the coffee grovin in southeastern Nicaragua. By the time such a port is likely to oe availabLe, ho:.ever., the countriy should be able to su,pport deep vfater po:rts on both the east and the west coasts. Port Facilities at lorinto 15. The main cep water docicing fac-ility at Coririto (Appendix C) is a reinforced concrete pier parallel to the shore, $08' long by 51, tmrde, whi-ch is connected to the shore at an angle by a trestle 390' long. Two railway trrc,cs extend out over the trestle and along the face of the pier. '.he pier is supported on reinforced concrete piles with re- inforced concrete beams and cross-braces, and it has a timber deck. There is a two-store-? corrbi4ned office anrc residence for t;e port manager on the northlern end of' the pier; a narror shed which previously extended along rmost of the remainder of thle pier has bean removed. Although it is more than 50 years old, the pier seems to be in fair condition. The fender systerm and severel ipiles along thle front have either been broken out or badly damaged, but these piles along with the f5ender sX.stem Fn- pier deck are being repaired. 16. The -vrater is approximately 221 deep along the northern end of the pier and 30t to 321 along, the southern half. If it becomes necessary in the future, howoiever, it would be possible to increase the deoth along, the entire face of the pier to 30' by dredging without endangering thle safety- oL ti-e structure, thus perritting deeper draft ships to dock alongside. 17. Thaere are no facilities on the pier for bunkering or for sup,\plying fresh water to ships. There is no road connection betwseen the pier and shore, and tractor-trailers and fork lifts cannot operate on the pier becaase of the obstructing railroad tracks. 'T"he tran,asportation equip- ment which consists of a few small diesel locomotives and a limited num,ber of flat cars is insufficient for requirements. The equipment belongs to the railroad but is assi,gned to the port, The stevedoring equipment, such as slings, tackle, etc., is also inadequate for present require-aents. 18. There is no covered storage and no spece for open storage on the pier or i n the imr.mediate shore area belonging to the port. Customs and private cotapanies have a reasonable amount of storage on shore, but it is some distance from the dock.  -6.- 19. In addition to the goverr.uaent-onmed pier, two small private lighterage piers are in operation. One, known as the Mamenic Line pier, was constructed in 1954 and is used exclusively by the Mamenic Line for barging operations. Double railroad tracks, laid flushL with the concrete paving, extend onto the pier. The other, a T-head pier for lightering operations, was recently completed by the Grace Line Company. It was designed for truck, tractor-trailer ar.d fork lift operation, and has no rail connections. It was intended as a relief measure during the period of congestion at the main dock and will probably be abandoned when Grace Line ships can dock at the proposed extension to the goverrment dock. 20. Liquid. cargo, such as petroleum products and molasses, is now handled Arom the north end of the government pier through pipe lines to takks ion the shore. The Xsso Standard Oil S.A. have armroved plans for the construction of a T-head pier and dolphins, approximatelY 500t north of the existing government dock, and the Government has approved this project in principle, '.hen this pier is corpleted, the old pier will be freed of all tankers except molasses ships which can dock along the approach trestle. 111. D-SCRIPTICT1 QF THE PO2E0CT 21, A report submitted to the Nicaraguan 1;inistry of Public Works by Christiani & Nielsen, an engineering and construction firm of Copen- hagen, on the development of harbor facilities in Corinto, proposed the construction of a quay, extending south from the existing pier for a distance of 1,214 feet and in a south-westerly direction at an argle of 137io to the main quay wall for an additional 560 feet (Appendix C). The proposed structure would have been capable of be.thing three large ships. The designs called for a quay of reinforced concrete construction. The area belind the quay wall was to be filled with sand dredged from the harbor. There were to be two transit sheds on the quay and railway tracks were to rvn in front of and in back of the sheds. The consultant estimated that the construction would take Z2 years. 22, After discussion of the project with the mission, the government decided that additional berthing space for two large ships was all that was needed at present. The consultants therefore reduced the length of the proposed new quay to approximately 1,200'. This seems sufficient to meet traffic requirements for 20-25 years. Analysis of traffic prospects, discussed in detail in Section IV below, indicates that about 230,000 tons of dry cargo will move through the port In 1959, the first year when the new facilities are expected to be in operation, and about twice that amount or 460,000 tons, by 1980-85. A study of local conditions indicates that each berth of 600 feet can handle about 200,000 tons per year. Thus, the new quay would have a capacity of 400,000 tons. At the same time, the old pier is being improved and strengthened. If, in addition, new trestles are built to connect the old pier with the shore and permit joint use by it and  .* 7 - the new quay of cargc-handtling equiwnent to be included in the present project, the old pier should easily be a'ole to handle at least 120,000 tons provided it is properly maintained and not overloaded, The entire instal- lation would thus have a capacity of about 520,000 tons per year, or roughly the annual traffic envisaged for 1980-85. 23. When it becomes necessary to construct additional quay space, the question of location will have vo be examined again. According to shipping people familiar with the harbor, there may be heavy surges at the proposed location of the ad&7itional 560 feet of quay. 24 TIn addition to the reduction in the length of the proposed quay, the pioject was modified further by the inclusion of some items not covered in the original estimates. These items were electrical, water and plumbing installations, fire fighting equirpment and office space, 25- The city of Corinto has no water system at present and fresh water is brought in by tank cars. As water will be needed to supply the quay and the-r fire sprinkler system as well as for the clty's needs, the Government proposes to build a supply system to bring potable water to the area. It Is proposed that the project contribute $75,000 towards the foreign exchange costs of the water supply system. 26. The cost of the modified aroject is estimated at the equivalent of UT.S0 $4,742,0o0 (A-ppendix B), including an estimated U.S. $3,200,000 equivalent in foreign exchange and 10,871,000 cordobas in local currency (U.S. $1,542,000 equivalent). The Government is willing to advance the local currency f.unds needed on the same terms as in the case of the Bank- financed power plant (121-NTI), that is, at 2,% interest with amortization at an annual maximum rate of 35. This loan would be subordinated to the proposed Ba;