Ecuador - Second Guayaquil Port Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4828 PROJECT COMPLETION REPORT ECUADOR - LOAN 1255-EC SECOND GUAYAQUIL PORT PROJECT December 13, 1983 Latin America and the Caribbean Regional Office This doment has a resticted disdrbutlon and may be used by recipients only In the performance of their official duties. Its contents may not otherwie be disclosed without World Bank authorIzation.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT ECUADOR - LOAN 1255-EC Second Guayaquil Port Project Table of Contents Page No. Preface ..... ......... ............ . * * * * * * * * *................... i Basic Data Sheet ...............,. . ii Highlights ........ . , . .... ........................................ lv I. INTRODUCTION .1............. .... -. II. PROJECT PREPARATIO NAND AP PRA IS.AL 1 III. PROJECT IMPLEMNTATION AND COST . . 3 IV. TRAFFIC AND OPERATIONSE................... .. .... *. 9 V. FINANCIAL PERFORMANCE OF THE BORROWEl...... 13 VI. ECONOMIC REEVALUATIONE V A L U A T I ON..... .*. ......... ... 19 VII. ROLE OF THE BANK AMD THE BORROWER 22 VIII. COCLUSIONS.. 23 Tables 1. Actual and Appraisal Estimates of Project Cost .25 2. Schedule of Disbursemets . ........ 26 3. Actual and Projected Traffic Statistics, 1975-1981 27 4. Actual and Projected GPA Traffic, 1975-1981 .28 5. Actual and Projected Allocation of Traffic, 1981 29 6. Actual and Projected Income Statements of the Guayaquil Port Authority...... .30 7. Actual and Projected Balance Sheets of the Guayaquil Port Authoity............. 31 8. Actual and Appriasal Expectations of Project Financing 32 IBRD 11709 (PCR) This document has a restricted distribution and may be used by recipients only in the performance  ECUADOR SECOND PORT PROJECT LOAN 1255-EC Preface 1. The following is the Project Completion Report (PCR) oni the Second Port Project in Ecuador for which Loan 1255-EC (US$33.5 million) was made in May 1976. Board presentation had been delayed about 4 months in order to have a new port legislation approved by the Government. The loan account was closed in December 1981 but disbursements under the loan continued until March 1982 when the last disbursement was processed and funds were exhausted. This PCR was prepared 1982 by the Latin America and Caribbean Regional Office with the assistance of the Borrower and is based on information furnished by the Borrower, as well as that collected during normal supervision of the project. 2. The Operations Evaluation Department (OED) has reviewed the PCR, but the project was not audited. Salient aspects of the project's experience are summarized in the Highlights. 3. The draft PCR was sent to the Borrower for comments and none was received.  - il - PROJECT COMPLETION REPORT BASIC DATA SHEET ECUADOR - LOAN 1255-EC SECOND GUAYAQUIL PORT PROJECT KEY PROJECT DATA Appraisal Item Expectation Actual Total Project Cost (US$ million) 83.6 93.5 Overr.ii () - 11.8 Loan Amount 33.5 33.5 Disbursed - 33.5 Date Physical Components Comnleted 12/79 1/81 Economic Rate of Return (X) 14 9 OTHER PROJECT DATA Original Item Plan (12/74) Actual First Mention In Files 2/72 Government Application - 5/74 Negotiations 11/75 2/76 Board Approval 1/76 5/11/76 Loan Agreemetit Date - 5/24/76 Effectiveness Date 8/24/76 3/11/77 Closing Date 12/31/81 12/31/81 Borrower Autoridad Portuaria de Guayaquil Executing Agency Same Fiscal Year of Borrower Calendar Year Follow-on ProJect Name None  - iii - PROJECT COMPLETION REPORT ECUADOR - LOAN 1255-EC SECOND GUAYAQUIL PORT PROJECT MISSION DATA Sent Month No. of No. of Man- Date of Item by Year Weeks Persons Weeks Report Identification/ Preparation IBRD 8/73 0.5 1 0.5 10/05/73 Pre-Appraisal IBRD 1 12/04/74 Preparation IBRD 2/75 1.0 1 1.0 03/13/75 Preparation IBRD 4/75 1.0 1 1.0 05/02/75 Appraisal IBRD 5/75 2.0 3 6.0 06/01/75 Follow-up Appraisal IBRD 9/75 1.0 1 1.0 10/14/75 Appraisal Updating IBRD 11/75 1.0 4 4.0 12/04175 Co-financing Arrangements IBRD 4/76 0.5 2 1.0 04/19/76 Supervision IBRD 7/76 1.0 1 1.0 08/18/76 Supervision IBRD 5/77 1.0 3 3.0 07/12/77 Supervision IBRD 10/77 1.0 2 2.0 01/13/78 Supervision IBRD 2/78 1.0 2 2.0 03/08/78 Supervision IBRD 8/78 1.0 2 2.0 10/10/78 Supervision IBRD 4/79 1.0 2 2.0 05/09/79 Supervision IBRD 10/79 1.0 2 2.0 11/16/79 Supervision IBRD 4/80 0.5 2 1.0 05/20/80 xupervision IBRD 11/80 0.5 1 0.5 12/19/80 Supervision IBRD 9/81 1.0 1 1.0 10/08/81 Supervision IBRD 2/82 1.0 1 1.0 03/15/82 COUNTRY EXCHANGE RATES Name of Currency Sucre (S/) Year Exchange Rate Appraisal Year US$1 = SI 25 Intervening Years US$1 = S/ 25 Completion Year US$l = S/ 25  - iv - ECUADOR SECOND PORT PROJECT CLoan 1255-EC) HiLlIlghts 1. The project was intended to eliminate existing port congestion and permit coping with forecast traffic. This was to be achieved by strengthening GPA's manageriaL capabilities, increasing operational efficiency and expanding port facilities. To this effect GPA was to: (a) retain consultants to assist in the implementation of cost accounting and management information systems; (b) develop training programs for port workers; and (c) carry out the construction of three new general cargo berths, two of which would eventually become part of the first container terminal in Ecuador; construct a specialized liquid and dry bulk cargo berth; and dredge a new port basin. By means of this port expansion project, port capacity was considerably increased, port zoning was clearly defined with the establishment of three terminals: one for bulk cargo, one for container traffic and another one for general cargo and bananas; and port operations were reorganized increasing the operational efficiency of the port. 2. The project, prior to Board presentation prompted institutional changes that were satisfactoriyimplemented; they consisted of a new port legislation that was approved by the Government and later enacted and the simplification of custom procedures to alleviate existing port congestion (para 2.08). 3. The project was completed before the date estimated during appraisal; actual project cost was about 12% greater than appraisal estimates due mainly to design changes (para 3.08 and 3.09). 4. Physical project components were satisfactorily concluded except for some technical problems of the sugar-handling facilities that have not yet been solved (para 3.01(d)). Some of the technical assistance components of the project were not executed as stipulated in the loan agreement; for example, the cost accounting system was considered by GPA synonimous with computerization, and in the absence of computers, it was not introduced (para 5.22); some limited training of port workers sponsored by others and not financed by the Bank took place in 1977; during project implementation, a National Training Center for port worlFers was built and courses are expected to start shortly (para 2.07); training for the operation of the bulk and container terminals is being financed diractly by GPA (para 3.06). 5. By 1981, general cargo traffic handled at GPA's facilities was about 95% of appraisal forecast; total Guayaquil bulk traffic, also by 1981, was about 83% of forecast, however, practically all of it was handled at private facilities leaving GPA's bulk terminal unused (para 4.06 and 4.09). Container traffic has developed in line with appraisal forecast (para 4.07).  v 6. GPA's financial results were considerably better than anticipated. 1981 net income was about 42X higher than in 1980; operating and wvrrking ratios, rates of return and debt service coverage in general exceeded forecasts (para 5,01). Assets were revalued in 1978 (para 5.24); GPA's accounts and financial statements were audited but audit repors have been delayed (para 5.21). 7. The revaluated EER for the three general cargo berths is estimated at 12% compared with the appraisal estimate of 16%; a lower traffic growth rate was used thar. that estimated at appraisal. Even for the most optimistic scenario, the grain terminal has an unsatisfactory ERR of 3%, the sugar molasses and edible oil fac&lities have marginally acceptable ERRs. The project as a whole has an estimated ERR of 9% as compared with the appraisal estimate of 14% (pares 6.03, 6.07 and 6.08). In retrospect, it appears that the bulk handling facility should not have been included in the project. (Para 8.01). Otherwise, the project generally achieved its objectives.  I. INTRODUCTION 1.01 Ecuador tias four deepwater commercial ports, two oil terminals and two fishing ports. Other minor ports and a large number of private wharves and river moorings complete the country's port system. Guayaquil Is Ecuador's main commercial port as it handles over 80% of all seabound traffic excluding oil and bananas. Existing facilities at Guayaquil prior to the second port project referred to in this report, consisted of five deepwater berths built between 1958 and 1963 with Bank participation (para 2.01). * 1.02 Traffic growth at the port of Guayaquil increased after 1972 as a consequence of the accelerated economic growth of the country. Traffic increased from 1.2 million ton in 1972 to about 2.2 million in 1977 and about 2.8 million in 1981 (Table 3). 1.03 The combination of traffic growth, inefficient port operations and inadequate cargo-clearance procedures, coupled with weak management at Guayaquil port during the early 1970s, led eventually to port congestion which, by 1975, prompted the three main shipping conferences to impose port surcharges. The general objective of the second port project was to provide additional port capacity to cope with forecast traffic up to 1985 (para 2.07), through improvement of operating procedures and additional specialized facilities. 1.04 This project Completion Report (PCR), has been prepared with the assistance of the Borrower, who prepared a preliminary completion report for Bank review and provided necessary operational, financial and technical data, and is based also on information obtained from LAC Informatiou Center, and project appraisal and supervision reports. This PCR corresponds to the Second Guayaluil Port project financed by Loan 1255-EC for US$33.5 million to the Guayaquil Port Authority (GPA). 1I. PROJECT PREPARATION AND APPRAISAL Background 2.01 The Bank'3 participation in the port subsector began in 1958 with the Loan 212-EC for the first port project which helped to finance the construction of existing facilities at Guayaquil prior to the expansion project referred to in this report. CPA was established in 1958 in connection with the construction of that project. Origin and Project Preparation 2.02 GPA first approached the Bank in 1972 to seek financing for new port equiipment and additional port facilities. The Bank immediately expressed interest in the proposed project. After consultations with the Government and GPA, the Bank expressed its view that, in order to assess overall existing and future port  -2- requirements, the Government and GPA should (a) undertake the improvement of cargo-clearance procedures and introduce institutional changes for the operational efficiency of the existing port facilities at Guayaquil, and (b) await the completion of an ongoing general study of Ecuadoran ports being prepared by foreign consultants retained by the Government. 2.03 While the general port study was being completed, GPA retained consultants for the preparation of a feasibility study for the proposed Guayaquil port expansion project, incorporating the most relevant findings of the general study. Appraisal of the Project 2.04 In October 1974, the Bank reviewed the completed feasibility study and found it unsatisfactory, particularly with regard to traffic forecasts, transport economics and engineering work. After extensive Bank consultations with the GPA and the Government, an agreement was reached on the scope of the project. The project was appraised by the Bank in May 1975. 2.05 Two important issues remained outstanding after appraisal which the Bank decided had to be resolved prior to Board presentation: (a) GPA should adopt institutional framework adequate to improve the operational efficiency of the port and (b) in view of the steadily increasing local and foreign cost estimates, the estimates needed to be reviewed to establish the proposed loan amount. 2.06 These issues were satisfactorily dealt with as follows: (a) new port legislation was approved by the Government and later enacted in April 1976 (para 2.08); (b) increased cargo storage charges and some simplification of customs procedures were Introduced to alleviate existing port congestion; and (c) the review of project cost estimates resulted in a total project cost of US$83.6 million with a foreign exchange component of US$56.7 million (Table 1). Project Objectives and Description 2.07 The objectives of the project were to increase the capacity and operational efficiency of the port of Guayaquil to enable it to eliminate congestion and cope with forecast traffic. To achieve these objectives, the project included the construction of: (a) one specialized berth equipped to handle dry- and liquid-bulk cargo, (b) three deepwater berths, one of which was designed to support container cranes; (c) a shallow water berth for small floating craft; (d) open and covered storage areas; (e) port workshops and ancillary buildings; and (f) dredging to widen an access channel and a new turning basin and for removing upper layers of soil unsuitable for the construction of these facilities. An option to build a fourth deepwater berth originally contemplated by GPA, but not included in the project, was eventually abandoned. To improve port efficiency, the project also included technical assistance for training of port workers and GPA personnel.  -3- Institutional Changes 2.08 The establishment of a new port legislation, promoted by and satisfactory to the Bank (para 2.06) was enacted one month after the loan became effective. The Government also undertook the review of salaries of GPA's qualified staff, the simplification of customs procedures and auctioning of abandoned cargoes. III. PROJECT IMPLEMENTATION 3.01 Project implementation was delayed by a series of difficulties. These included: (a) design of the dredging slope that apparently was not suitable to the adverse soil conditions prompted disputes between the consultants, GPA and the lowest evaluated bidder, and ultimately led to arbitration and design changes. This resulted in increased construction costs of about US$13.4 million and delays of about eight months; (b) a legal dispute between the dredging subcontractors and Ecudoran custom authorities concerning minor irregularities in compliance with import regulations resulted in further delays; (c) other technical problems, also related to adverse soil conditions, arose during the construction period:' shed design had to be modified; some utility ducts had to be replaced, shed walls and floors suffered settlement and cracks. Most of these problems were solved during the construction period; others are still being solved; (d) unsatisfactory performance of sugar-handling facilities included in the project which has not yet been solved. This problem, and some of those mentioned in paragraph 3.01(c), prompted GPA to withhold the retention guarantee established in the construction contract. This led to long and acrimonious disputes between the GPA, the contractor and the consultants, and settlement is still pending. The Bank has been closely following the events, trying, with some success, to convince all parties to enter into an amicable and satisfactory settlement; and (e) the lack of continuity in port management hindered the project's orderly implementation. Between 1975-1981, GPA had ten presidents, ten general managers, two administrative directors, four finance directors, two operation directors and three chief engineers. The large turnover of executives meant often conflicting policies, instructions and, from time to time, different understanding of intricate details of the project.  Procurement 3.02 Procurement was satisfactorily carried out on the basis of international competitive bidding (ICB) for one single package comprising all works and equipment. In hindsight, it appears that the procurement of mechanized bulk-cargo equipment should (i) have been made on the basis of performance specifications instead of on the basis of detailed design, and (ii) been procured separately from the civil works contract. In this way, the equipment contract would have been addressed at specialized manufacturers/suppliers instead of at a civil works contractor. The supplier would then have proposed already tested equipment to meet the performance specifications rather than modify the equipment to meet detailed designs. This might have avoided the technical problems that have prevented the use of the sugar-handling facility. In addition, GPA and the Bank could have encouraged the development of the local industry through a bid packaging waich separated works for which local firms could have successfully bid; this would have probably allowed a more direct participation of local contractors. Project Supervision 3.03 Taking into consideration the difficulties with the consultants' proposed design, and the fact that the same consultants had been involved in a similar problem during the first port project, the Bank advised GPA against retaining them again for the supervision work. However, GPA considered that the replacement of these consultants at such a critical time would cause further delays and awarded the supervision contract to them. GPA, on the other hand, accepted the Bank's recommendations to retain the consulting firm that prepared the revised dredging slope design to act as GPA's technical advisor through periodic visits and technical consultations during the execution of the project. Administration Unit 3.04 At the Bank's request, GPA established a Project Administration Unit (PAU) to monitor and coordinate all project-related activities. The responsibilities of this Unit were gradually increased until it became practically the only communication channel between consultants and contractors with GPA's management. Although this imposed a heavy workload on the PAU, its performance was very good. The PAU's heavy involvement in all technical matters, however, prevented a more active participation of GPA's Technical Department that would probably have been helpful in threshing out numerous technical problems. Project Changes 3.05 Certain changes were made to the project during the execution period. Based on the significant increase of container traffic, GPA decided, with Bank agreement, to eliminate two of the three transit sheds included in the project and replace them with an additional container shed. For same reasons, the dimension of the  -5- container yard was also extended. These changes did not appear to have occasLoned significant additional cosLs. In the light of the continuing rapid trend towards greater containerization, GPA decided to purchase from its resources specialized container-handling equipment which became operational in August 1982. Technical Assistance 3.06 GPA reorganized its Operations Department by creating and staffing three divisions to be responsible for the bulk cargo terminal, the container terminal and the general cargo zone. Technical assistance included in the project for training of GPA's staff in the operation and maintenance of the bulk terminal was not used because such training was provided by the equipment suppliers manufacturers through the main contractor. GPA also decided that the additional technical assistance required to manage and operate the specialized terminals should be carried out under a port management study financed directly by GPA which contract was awarded in April 1982 to a foreign consulting firm. 3.07 During project implementation, a National Training Center for port workers was built in Guayaquil with funds provided by the existing four port authorities of the country. This training center is now completed and courses are expected to start shortly. Project Costs 3.08 The actual final project cost in current prices was S/2,339 million (about US$93.5 million) against the appraisal estimate of S/ 2,091 million or US$83.6 million (including contingencies). The cost overrun, about 12% above appraisal cost estimate in US dollar and in sucres terms, was caused mainly by design changes (para 3.01). Additional costs arising out of current disputes (para 3.01(d)) may yet alter total project cost, although it is expected that these will not be significant. A comparison of detailed cost estimates and actual project cost is given in Table 1. Construction Schedule 3.09 Despite delays in loan effectiveness (project data sheet) and design and legal problems (para 3.01), the project was completed in March 1981 before the estimated appraisal completion date. The completion date stipulated in the construction contract, however, was August 31, 1980; responsibility for this contract delay is still being defined by CPA. Disbursements 3.10 Actual disbursement of loan funds differed considerably from that envisaged in the Loan Agreement. The comparison of appraisal schedule and actual disbursements is given in Table 2; it reflects delays in work commencement and the fact that GPA withdrew funds from the cofinancier, BNS International (Panama), before drawing on Bank loan funds. At appraisal, it bad been expected that the loan would be  -6- disbursed pari passu with that of the cofinancier; Schedule 1 of the loan agreement stipulating the withdrawal of loan proceeds would have allowed GPA to simultaneously use the Bank and the co-lender funds, but GPA decided to fully disburse the co-lender's funds before using the Bank loan. 3.11 The loan amount of US$33.5 million was fully disbursed. At GPA's request, the Bank increased the disbursement percentage from 60% to 90% of foreign expenditures in mid-1979 to adjust for the fact that GPA had not utilized the loan proceeds during the initial phases of construction. In 1981, the undisbursed balance of the loan was sufficient to cover only about 27% of foreign expenditures. The disbursement percentage for the total loan averaged 57% of foreign expenditures.  -7- Allocation of Loan Funds 3.12 A comparison of the loan allocation by category in Schedule 1 of the Loan Agreement, with actual use of fu'ads, is given below. This final allocation of the loan proceeds reflects the reallocation of funds under Category III (b), which were to have been used for technical assistance but not taken up by GPA (para 3.08), to CatL^eory I. Allocation of Loan Funds Actual X of Original 5/76 Actual Disbursement foreign expendi- Category (US$ equivalent) (US$ equivalent) tures disbursed I. Civil works 18,000,000 27,973,848 60X II. Equipment 6,800,000 4,184,612 50% 1II. Consultants and Technical Assistance for: (a) Supervision of construction and procurement of equipment 1,350,000 1,341,540 49% (b) Management, operation and maintenance of bulk cargo terminal 350,000 - - IV. Unallocated 7,000,000 - TOTAL 33,500,000 33,500,000  Performance of Consultants and Contractors 3.13 Problems described in paragraph 3.01, explain the consultants' performance, particularly with respect to the design features of the project. Although the Bank recommended to CPA against retaining the same consultants for the supervision of the project (',ara 3.04), these were hired by GPA and their performance was acceptable during most of the construction period, despite the fact that for sometime the firm was on the verge of bankruptcy. Their performance however was poor during the last stages of construction due to the firm's internal problems that caused continuous changes in project managers. 3.14 The contractors' performance from the point of view of quantity, quality and compliance with design specifications was very good. This is supported by the fact that despite the serious problems encountered (design changes, etc.), the works were practically completed only three or four months after the contract's completion date. The responsibility for delays is still to be determined. Reporting 3.15 Progress reports were regularly sent to the Bank by GPA; their contents were acceptable at the onset, and their quality improved through project implementation.  -9- IV. TRAFFIC AND OPERATIONS A. General 4.01 Traffic through Guayaquil is handled at a number of private installations along the river Guayas and the Estero, as vell as at the GPA wharves. General cargo, sugar, molasses, and bananas are handled at CPA wharves; petroleum products at a specialized terminal, and grain and edible oil are handled at both private and GPA facilities. At appraisal, global trafiic projections for all public and private installations were made by commodity, and traffic allocations between private and GPA facilities estimated, taking into account the new facilities to be provided at the GPA wharves under the project. B. Total Traffic: GPA and Private 'acilities 4.02 Table 3 gives details of appraisal forecasts for total traffic and relates these figures to actual data. A summary is given below: Port Traffic at Guayaquil (000 metric tons) Average Annual Growth (%) 1974 1981 1974-1981 (Actual) Forecast Actual Forecast Actual Exports 802 947 854 2.4 0.9 Imports 994 1,805 2,241 8.9 12.3 Imports (Excluding Petroleum) 923 1,708 1,574 9.2 7.9 Petroleum Products 71 97 667 4.6 37.7 Total 1,796 2,752 3,095 6.3 8.1 Total (Exclusive of Petroleum Products) 1'725 2,655 2,428 6.4 5.0 4.03 Export traffic grew at an average rate of 0.9% p.a. between 1974-1981, as compared to projected growth of 2.4% p.a. The shortfall is mainly explained by consistently lower than expected volumes of sugar and molasses exports. By 1981, it had been expected that sugar exports would increase to 90,000 tons as compared with average annual exports of 72,000 tons between 1970-1975. This forecast was based on assumption of relatively slow increases in world consumption but expanded domestic production. The export of the molasses was expected to grow even faster, from 45,000 tons in 1974 to 120,000 tons by 1981. In the years following the appraisal, however, world sugar prices 1/ fell dramatically from the highs of 1974-1975, and as a consequence domestic production and exports have suffered. Overall, in 1981, sugar and molasses exports were only 40% of forecast levels. In 1982, the combination of drought and poor world sugar prices have resulted in virtually no exports of these commodities. In contrast to sugar and molasses traffic, fish and fish meal products Increased faster than expected at appraisal; actual traffic in 1981 was about three  - 10 - times greater than anticipated. Banana traffic was lower than expected until 1981, when it exceeded appraisal estimates by 11%. 4.04 Import traffic (exclusive of petroleum products) was about 9% below forecast levels, mainly due to shortfalls in the import of metals, fertilizers, vehicles and machinery. The shortfall is mainly explained by somewhat lower than expected economic growth since 1975, mainly due to the sluggish agricultural and industrial sectors. Real GDP was expected to grow by 7% p.a. over the period, as compared with actual growth of 6% p.a. 4.05 Petroleum products were imported at a much higher rate than anticipated. This is due to the fact that the refinery at Esmeraldas was not constructed as anticipated, and because domestic fuel consumption grew at unprecedentedly high rates in the 1970s due in part to large domestic energy price subsidies during that period. C. Traffic Allocations 4.06 Table 4 gives actual and forecasts traffic through GPA facilities between 1975 and 1981, and Table 5 gives the expected and actual allocation of traffic by commodity between the completed GPA facilities and private installations for 1981, the first year the project financed facilities became operational. This table is summarized below, and a comparison between the appraisal assumptions, and actual traffic allocations for the main commodity groups (general cargo, containers, sugar, molasses, cereals, edible oils and fats) is given in paragraphs 4.07-4.10. Allocation of Traffic, 1981 ('000 tons) Forecast Actual GPA GPA GPA GPA General Bulk Private General Bulk Private Cargo Facility Facility Cargo Facility Facility Exports 702 210 35 803 - 51 General 702 - 35 765 - _ Sugar and Molasses - 210 - 38 - 51 Imports a/ 1,178 206 324 980 10 586 General Cargo/Other 1,156 - 184 966 - 265 Wheat, oats, grains - 185 124 11 10 268 Oils and fats 22 21 - 3 - 53 Total 1,880 416 359 1,783 10 637 a/ Exclusive of petroleum products. 1/ World sugar prices in constant 1981 dollars (US$/metric ton) 1974 1,164 1978 204 1975 697 1979 226 1976 389 1980 610 1977 252 1981 374  - 11 - 4.07 By 1981, traffic at the GPA general cargo wharves was about 5% below appraisal estimates. Containerization of cargo has developed in line with that projected at appraisal. In 1981, 160,000 tons were handled in containers. It iB expected that over the next five years, containerized traffic will develop somewhat more rapidly than anticipated at appraisal (largely due to the installation of container crane and availability of handling equipment not envisaged at appraisal), with about 25% of all general cargo containerized by 1985 as compared with 18% previously forecast. 4.08 Although somewhat below appraisal estintates, traffic at GPA's general cargo wharves was relatively strong between 1975-1981, with an average annual growth rate of 5%. In contrast, traffic at GPA's bulk facilities constructed under the project to handle sugar, molasses, grains, oils and fats, has not materialized. At appraisal, it had been expected that part of this traffic would shift from private facilities to GPA bulk wharf when the new facilities came on stream. The lack of bulk sugar and molasses traffic is explained by the fact that the new installations are not yet operational (pare 3.01(d)). When problems with the sugar and molasses handling facilities are corrected, this traffic should be diverted to the bulk facilities as expected at appraisal, though volumes will be lower than forecast due to the state of the world sugar industry (para 4.03). 4.09 At appraisal, it was expected that most grain and cereal imports would divert from private facilities along the river, which have draft limitations of 7 m, to the GPA bulk terminal, as importers took advantage of lower transport costs obtained through the use of larger ships that can be handled at the GPA bulk terminal. It was expected that one large importer would continue to use its own facilities which had a capacity of 124,000 tons/year. This diversion of grain imports has not occurred for a number of reasons. There are now two major importers with private grain handling and storage facilities which have the capacity to handle between 250,000 - 300,000 tons/year. Together, these importers make up 85% of total imports through the Guayaquil river. It has been suggested that given the fact that the capital costs for the private terminal have already been made, the grain importers have had little incentive to minimize variable transport costs because of the structure of Government subsidies on grain products which in effect subsidized inefficiencies along the distribution chain. In October 1982, subsidies on wheat were eliminated, however, and this could result in these importers becoming more sensitive to costs. If this is the case, the GPA's bulk facilities could attract some of this traffic. An additional 50,000 tons of grains and cereals are imported by small companies who use both private and GPA facilities. In October 1982, a Government decree was passed specifying that all of this additional traffic pass through the GPA bulk wharves. 4.10 At appraisal it was expected that all edible oils and fats would pass through CPA's wharves when the bulk facilities were completed; about half of these were expected to be handled at the bulk facilities with the remainder handled as general cargo. In fact, virtually all of this traffic is now handled at private facilities which apparently did not exist when the project was appraised. It is not known the extent to which private facilities were built in response to delays in project execution. D. Operations 4.11 Following operational changes undertaken by GPA at the Bank's request in 1976, congestion of the port areas was gradually reduced, enabling the port to handle  - 12 - about 1.5 million tons in 1979 or 15% more traffic than in 1975 through the existing facilities. By 1980, three of the new berths built under the project became operational and port congestion disappeared completely, prompting shipping lines to eliminate surcharges. 4.12 Container traffic grew from about 3,500 in 1974 to about 17,000 TEU in 1979, before the new facilities were completed; productivity at the time was very low (7 TEU/hour). Containerization started to grow at a faster pace in 1980 when ample container stacking areas provided by the project became available and productivity increased to about 10 TEU/hour. In 1982, this traffic is expected to be over 32,000 TEU, almost identical to appraisal estimates. Containerization will most likely continue to grow at an even faster rate now that the container terminal is fully operational and productivity is expected to be 17 TEUthour. 4.13 Operational changes mentioned in paragraph 4.11, together with availability of new berths, have allowed GPA to eliminate lighterage of banana exports. 4.14 Actual operational data for dry bulk cargo is not available because there have been no sugar exports, and grain imports continue to be handled through private facilities (paras 4.08-4.10). However, it is expected that future sugar exports and grain imports should be han4led at the 200 ton/hour rated capacity of the bulk-handling system.  - 13 - V. FINANCIAL PERFORMANCE OF THE BORROWER A. Financial Position of the CPA 5.01 During the project's implementation GPA's actual financial results were considerably better than anticipated. Each year between 1976 to 1980, the actual net income exceeded considerably the forecasted income and in 1981, for which year no forecast was made during appraisal, the net income was about 42% higher than in 1980 (Table 6). Operating ratios, working ratios, rates of return and debt service coverage also consistently exceeded forecasts with the exception of 1980 when both the working and the operating ratios were worse than expected (see para 5.05). Rates of return on net assets employed were not representative prior to 1979 due to the unrealistically low values of the fixed assets. In 1978, the fixed assets were revalued and, after that, the rate of return fell to a plausible level. GPA's Revenues 5.02 The better than expected financial results stem from the higher than forecast operating (and non-operating) revenues. Between 1976 and 1980, the actual operating revenues exceeded the forecast each year. In addition, GPA has had considerable non-operating (net) income in each of the years observed; at appraisal only small non-operating income was forecast until 1977 and losses thereafter. 5.03 GPA revised its tariff schedules in 1976, 1978 and 1980. During project appraisal, tariff increases were envisaged to provide 20% to 25% revenue increase in 1976 and about 25% in 1980. The actual tariff increases, while achieving the desired higher revenues, were obtained from sources other than expected. Storage and shipping dues far exceeded their expected importance, while cargo related revenues in fact were almost the same as forecast. 5.04 The aggregate operating revenues between 1976-1980 exceeded the forecast by some 33%. The higher than anticipated revenues resulted from ship dues and storage fees which were about 58% more than forecast. Storage revenues exceeded expectations by some 98%, basically due to (three) tariff increases which were not forecast during project appraisal and the revenues from shipping fees exceeded the forecast by about 36%, mainly due to different composition of shipping traffic than expected. Cargo related revenues were only about 1% higher than the forecast. The importance of the storage fee as a source of operating revenue has also grown; it represented 29% share of the total operating revenue during the last five years compared to the expected 19%. 5.05 While operating revenues considerably exceeded expectations, total working costs remained close to projected levels until 1979, with the maximum difference from the projections being 11% in that year. However, from 1979 to 1980, due to higher personnel expenses, costs increased by 43% and were about 40% above the forecast. As a result of this, for the first time during the project's life, the  - 14 - working and operating ratios deteriorated beyond the forecast values. 5.06 Until 1979, actual personnel costs increased somewhat faster than envisaged. In 1980 the increase became particularly pronounced; actual personnel costs grew by 48% compared to the previous year and exceeded the forecast by 42%. Both the higher than expected compensations and the higher manning levels were responsible for the increase. Between 1976-1981, compensation per person rose at an average rate of 22% per annum compared to the 15% forecast; employment increased at an annual average rate of 7% in contrast to the less than 1% forecast. In fact during appraisal, no increase in employment was envisaged until 1980 for which year a nominal increase was forecast for operating the bulk cargo facilities. The GPA's port traffic, which grew by about 11% p.a. over this period, probably would not justify a manpower increase (about 30% over the last four years) or the increase in compensation (estimated at 7% p.a. in real terms). 5.07 In spite of the better than expected financial results, earnings did not improve in relation to the cargo handled. While irL 1977 the revenue per ton of cargo handled was about 2.5 times higher than the cost per ton of cargo handled, in 1981 it was only 1.5 times higher. Should this declining trend continue, the port could expect increasingly serious financial difficulties in future years. With the timely implementation of a cost accounting system, tariffs could be designed to maintain an explicit link between revenues and costs and to improve the port's earning potential (see paras 5.23 and 5.24). 5.08 GPA's total assets increased until 1977 as forecast, but with a different composition; the value of the current assets exceeded the forecasts, while the values of net fixed assets fell below. In 1978, 1979 and 1980 values of both the fixed and current assets exceeded their forecast by about 71% for the following reasons: (a) During 1978 GPA revalued its fixed assets increasing the values by about 75%. During project appraisal allowance of 20%-30% increase in asset values was made for a revaluation to be completed in 1976 and an additional 20% for a second revaluation in 1979. The magnitude of the revaluation was underestimated during appraisal; and (b) During 1979 and 1980, the actual values of "construction in progress" were higher than forecast. These reflected some delays in civil works implementation, higher than anticipated project costs due to cost overruns and additional project items. 5.09 GPA's liabilities also reflect the better than expected financial results (Table 7). The lower than projected level of borrowing for project financing, as well as the delay in finalizing the BNS International Loan (see paras 5.11 and 5.12), resulted in lower than expected total debt between 1976 to 1979. Debts began to grow rapidly only from 1980. The lower than anticipated levels of total debt and the stronger equity position are also reflected by the  - 15 - better than forecast debt-equity ratios. CPA has had no difficulty in complying with Covenant 5.07 of the Loan Agreement pertaining to debt service as a proportion of the preceeding year's net revenue. B. Project Financing 5.10 Table 8 compares the forecast and actual project financing according to various sources. It is noted that the actual local currency expenditure was about 30% and the foreign currency expenditure was about 5% above the respective appraisal estimates. GPA financed both these cost overruns, and, in addition, contributed to the project $10 million more than originally was expected; this amount was to have been a Government contribution. GPA's overall involvement in the project was about SI 871 million, or US$16.1 million. The port was able to provide these finances due to its stronger than anticipated financing position. 5.- The Bank financed 57% or US$33.5 million of the foreign exch. ige costs. US$10 million was provided through a loan to the GPA by BN., International (Panama) S.A. under co-financing arrangements with the Bank. 5.12 The finalizing of the US$10 million loan from the Government of Ecuador or from other sources was a condition of the Bank loan effectiveness. At the time the Loan and Guarantee Agreements were signed, the deadline for effectiveness was August 24, 1976. However, the Government was reluctant to finalize the financing arrangements until an accord was reached between the GPA and the contractors on the civil works construction. Consequently, the deadline for effectiveness was twice postponed at the request of the Ministry of Finance, and as the financing arrangements were signed on December 21, 1976, the loan finally came into effect on March 11, 1977. C. Review of Covetants 5.13 The covenants included in the Loan and Guarantee Agreements covered financing, institutional, management areas, and also reflected institution-building components of the project. The principal covenants are discussed below and the related performance records of both the Borrower and the Guarantor are reviewed. Standard covenants which were complied with in a satisfactory manner are not discussed.  - 16 - Guarantee agreement Section 3.02: Repayment of Government Debts to GPA 5.14 At the time of appraisal, the Government's debt to GPA amounted to S/ 35.5 million, and repayment was required by December 31, 1976. The Government has repaid this debt, but during the last five years new obligations were incurred. The GPA now reports that the outstanding debt is S/ 51.2 million. Loan Agreement Section 3.03: Technical Assistance for Manpower Training to Improve Skills of Shore Labor, Stevedores and Equipment Operators 5.15 A series of courses for port workers, the costs of which were not financed by the Bank, was begun in 1977 under the sponsorship of the American Association of Port Authorities. Other training programs undertaken or to be undertaken by GPA are discussed in paragraphs 3.06-3.07. Section 3.04: Hiring of Management and Engineering Experts to Assist in Operation of Bulk Cargo Terminal. 5.16 Provision was made in the contract with the main contractor for the necessary training to be carried out during the erection and trial of the equipment as well as during the guarantee period. Section 3.05: Hiring of Port Operations Expert by December 31, 1976 for Training and Operational Assistance 5.17 Experts were hired in 1977 to prepare a study of port operations. However, the GPA and the Bank found the work to be unsatisfactory and consequently new consultants were retained. The work of the latter was later suspended due to ruling by a government regulatory body which alleged irregularities in the hiring procedure. By December 1981, the difficulties had still not been resolved. A stevedoring operations program was implemented in 1977 with the aid of a Swedish expert. However, training for the operation of the bulk and container terminals has been included in a separate contract recently awarded to a foreign consulting firm (para 3.06); this contract is being financed directly by GPA. Section 4.01: Appropriate Insurance Coverage 5.18 During 1978, the CPA arranged a self-insurance policy which the Bank deemed to be inadequate. In early 1980, an acceptable insurance scheme was introduced. Section 4.03: Establishment of System of Salaries and Benefits for Management Consistent with Need to Employ Qualified and Experienced Personnel 5.19 The rules governing the port authority's discretionary powers regarding personnel compensation were altered in 1976. By  - 17 - virtue of this change, compensation levels for GPA management were raised and in 1977 it appeared to be competitive with those offered by other public and private employers in the Guayaquil area. The management every three years renegotiates employment contracts both with laborers and administrative staff, trying to maintain the competitiveness of the employment conditions offered. The latest negotiations have been completed recently. Subsequent to these negotiations, the compensation of management personnel iB adjusted. Section 4.04: Study on Impact of Conditions of Employment of GPA Employees Upon Efficiency of Operations of Port 5.20 The study, to be completed by June 30, 1977, had not yet been undertaken as of December 1982. Section 5.02: Annual Audit of Accounts and Financial Statements by Extprnal Auditors 5.21 Compliance with this covenant was consistently achieved up to the end of fiscal year 1977. But, it was not until late 1981 or early 1982 that the audited accounts for 1978, 1979 and 1980 were completed. The considerable delays stemmed from the requirement that each year the Government approve the contract between the appointed auditors and the GPA. This approval was usually delayed. Section 5.03: Establishment and Maintenance of Statistical and Cost Accounting Systems 5.22 The original compliance date was December 31, 1976, however, basically due to the delayed loan effectiveness. This date was changed to September 8, 1979. Part of the requirement, the design and application of a statistical system was largely in place by mid-1977. In 1978, the GPA hired Price Waterhouse to design a cost accounting and inventory control system amenable to computerization. By April 1980 the design was completed and submitted to the GPA Board of Directors together with a recommendation to upgrade the port's data processing facilities. Although the Port sought the Government's approval for procuring the appropriate facilities almost immediately, as of now approval has not been received. Since the new system was considered synonymous with computerization, in the absence of the computers, it was not introduced. Current indications are that GPA will be able to obtain the computer in early 1983. 5.23 The Bank has closely monitored GPA's performance under this covenant as it is considered that the introduction of a cost accounting system is an essential prerequisite for efficient management of a port. The non-compliance to date has seriously impeded the GPA's ability to ensure the rational costing of its services and appropriate framing of tariffs. The long delay in setting up a cost accounting system must be viewed with gravity because of the negative implications for efficient port management.  - 18 - Section 5.06: Revaluation of Assets and Preparation of Depreciation Schedule 5.24 This was originally to be carried out by December 31, 1976 but an extension was later granted until September 1979. The revaluation was completed in June 1978.  - 19 - VI. ECONOMIC REEVALUATION A. General 6.01 At appraisal, the economic analysis of the Second Guayaquil Port Project was divided into three parts: (a) three additional general cargo wharves; (b) bulk terminal pier; and (c) total project. The general cargo wharves had an estimated economic rate of return (ERR) of 16%, the bulk terminal 12% and the overall project 14%. The ex-post economic reevaluation follows the methodology used at appraisal except where noted in the following paragraphs. B. General Cargo 6.02 For the general cargo wharves, benefits quantified at appraisal consisted principally of savings in ship turnaround time, savings from avoiding lighterage of bananas and from avoidance of diversion of traffic to other ports. Some savings from the cost of handling containers was also included. In this economic reevaluation, these savings were requantified using actual investment costs and updated productivity figures and traffic forecasts. In addition, the cost of the container crane acquired by GPA in 1982 but not included in the original project has been included as an investment cost. Benefits from reduced container handling costs with the crane and faster ship turnaround have also been included. 6.03 The reevaluated economic rate of return for the three additional general cargo wharves is estimated at 12% as compared with the appraisal estimate of 16%. The lower reevaluated economic rate of return is explained by a 14% real increase in project costs (exclusive of the container crane), longer than expected implementation period which delayed project benefits, and reductions in forecast traffic. While 1981 traffic at the general cargo wharves is only 5% below the appraisal estimate, the reevaluation assumes a somewhat lower growth rate over the life of the project. At appraisal, traffic at the GPA general cargo wharves was expected to increase by 5% p.a. through the 1980s. The reevaluated economic analysis assumes a 3% p.a. traffic growth rate at the GPA general cargo wharves, which is in line with the most recent Bank macroeconomic projections of imports and exports. Bulk Facilities 6.04 The bulk facilities, were reevaluated as a whole, as done at appraisal, using three traffic scenarios. A separate excercise was made to allocate investment costs between the various bulk facilities. This analisis was not made at the time of appraisal. Paragraph 6.05 gives details of the reestimated traffic forecasts and paragraph 6.06 discusses the benefits considered and 6.07-6.08 the reevaluated economic rates of return. 6.05 In the first scenario, it was assumed that the sugar and molasses facilities would be operational by 1983. Traffic in that year is assumed at 1980 levels; thereafter sugar traffic is expected to grow at 5% p.a. and molasses at 6% p.a. This is in line with the most recent Bank economic projections for these exports. By 1985 it is therefore expected that sugar traffic will reach 52,000 tons and molasses to 65,000 tons as compared to appraisal estimates of 101,000 tons and 175,000 tons, respectively. For grains it was assumed that the GPA would capture 100,000 tons of traffic currently handled by the two larger importers and all traffic handled by smaller importers; this represents about 50X of all grain  - 20 - traffic. Imports are projected to grow by 1.5% p.a. thereafter. By 1985, 160,000 tons would be handled by the GPA facility as compared with the appraisal estimate of 290,000 tons. Finally, it was assumed that the GPA facility would capture 50% of the edible oil and fat traffic from private facilities and that this would grow by 6% p.a. Under Scenario II, sugar and molasses traffic remains the same as in Scenario I. It is assumed that the GPA will only be able to attract that grain traffic being imported by small companies without their own facilities, or about 56,C)0 tons in 1985. For edible oils and fats, it is assumed that private facilities will continue to handle the present levels of traffic (about 53,000 tons) and that any additional traffic would be handled through the GPA bulk facility (6,000 tons in 1985). Under Scenario III, the extreme case of all grain traffic being diverted from private facilities to the GPA facility was assumed. Sugar, molasses and edible oils and fats remain as in Scenario I. 6.06 Benefits accruing to the bulk facilities include (a) savings in freight costs from the utilization of larger ships and faster port turnaround, and (b) savings in port cargo handling costs. Because the facilities have not yet been used we have no actual productivity figures or information on changes in ship sizes due to the project. For the purposes of the reevaluation, the ship sizes assumed, with and without the project, at appraisal were accepted, and ship costs at port and at sea updated. Savings in cargo handling costs were reestimated to the 1980 base year by correcting for inflation. 6.07 As shown in the table below, under Scenario I, the bulk handling facility as a whole has a reestimated ERR of 4% as compared with the appraisal estimate of 12%. The sugar, molasses and edible oils have marginally acceptable ERR's while the grain facility has a negative ERR. Under Scenario II, the facility as a whole has a reestimated ERR of 3%. Under the extreme Scenario III, where all grain traffic diverts from private facilities, to the GPA terminal, the grain terminal investment still has an unacceptable ERR of 3%. 6.08 The project as a whole (based on Scenario I and II) has a reestimated ERR of 9% as compared with the appraisal estimate of 14%. Appraisal Reevaluated Economic Economic Economic Rate of Return Investment Rate of Scenario Scenario Scenario Cost Return I II III (millions 1980 US$) (%) (%) (%) General Cargo 75.3 16 12 12 12 Bulk Facilities 35.2 12 4 3 6 Sugar and Molasses 13.7 N/A 9 9 9 Grain 20.1 N/A -3 -9 3 Edible Oils and Fats 1.4 N/A 11 6 11 Total Project 110.5 14 9 9 10 6.09 The poor performance of sugar and molasses exports is mainly caused by the steep drop and subsequent stagnation of world sugar prices. If sugar and molasses exports recover at a faster rate than anticipated here, this investment could have a higher return than that calculated in this excercise.  - 21 - 6.10 In retrospect, however, the grain handling facility should not have been included in the project. At appraisal, more careful analysis of the prospects for the development of private bulk handling facilities should have been carried out. Further, the components of the bulk handling facility should have been analyzed separately to determine the extent to which each was viable on its own. This analisis suggests that relatively high returns for the sugar and molasses terminals anticipated at appraisal masked marginal returns for other facilities. If the grain facility analyzed separately had emerged as a viable sub-project, then the CPA should have entered into agreements with the grain importers for the use of the bulk terminal before loan negotiations. 6.11 An interesting issue which arises out of the analyses made here relates to the allocation of joint investment costs for the bulk terminal to determine the extent to which each facility at the terminal would be viable on its own. For example, if the grain terminal had not been included in the project, it is not clear that there would have been a meaningful decrease in infrastructure costs. Because the data on infrastructure requirements which could be developed in the framework of this PCR was limited, Joint costs were allocated in a fairly simplistic manner in this analysis. Costs were allocated proportional to the share of total bulk tonnage expected at each bulk facility at appraisal. An alternative methodology, which might be investigated for future appraisals of projects with joint costs, would be to determine, for the facility with the largest expected present value of benefits, the minimum infrastructure costs required and the associated economic rate of return. A marginal benefit/cost analysis could then be made for each additional component to be considered for inclusion in the project.  - 22 - VII. THE ROLE 01' THE BANK AND THE BORROWER 7.01 During 1972-1975, the port of Guayaquil started to suffer from considerable port congesti",n. The GPA considered at that time that additional facilities we,e required to relieve such congestion. When the Bank started its participation, the attention was focussed on the operational efficiency of the port and on the institutional aspects of the GPA. After reviewing GPA's proposals, and while the scope of a satisfactory project was being defined, the Bank recommended to GPA some operational changes aimed at improving port productivity. 7.02 With regard to the scope of the project and its contents, the Bank was a key factor is scaling the project down to a reasonable size. However, it appears that GPA and the Bank should have more carefully analyzed the bulk facility, with GPA clearly defining the use of the grain terminal after its completion by entering into agreements with grain importers. 7.03 The fact that GPA had had some previous experience with the Bank may have contributed to facilitate project implementation. However, the lack of continuity on the managerial level played a negative role in dealing with problems during construction (para 3.01(e)). 7.04 Based on design and construction problems that occured during the execution of the first port project, the GPA and the bank should have paid special attention to the adverse soil conditions; the final design prepared by consultants should have been very closely monitored during its preparation stage and more carefully reviewed after its completion (para 3.01). 7.05 Serioub disagreements between the GPA, the consultants and the lowest bidder came to light on the adequacy of dredging slopes-design. Bank participation was relatively important during this process, and disputes were finally settled through arbitration, design changes and additional construction costs. 7.06 Bank supervision was somewhat less than adequate, particularly in connection with some of the technical assistance project components, and compliance with some loan covenants (paras 5.17 to 5.25). Work relationships with the GPA were excellent despite continuous changes within the GPA's top level staff. 7.07 The Bank participation in disputes that arose from defective completion of the works, has been restricted to the observation of events and to attempting to convince the parties involved to solve first the technical problems, and deal later with the corresponding aspects (paras 3.01(c) and (d)).  - 23 - VIII. Conclusions Achievement of Project Objectives 8.01 The project has generally achieved the objectives set up at appraisal: the increased port capacity eliminated port congestion and is expected to be adequate to cope with traffic forecasts until at least 1987. Operational efficiency was also improved (paras 4.11 to 4.14) and with the additional investment of GPA to fully equip the container terminal, port capacity has been further increased and operational efficiency improved. The investment in the bulk terminal, however, has not contributed to achievement of those main objectives. Furthermore, it appears that, in retrospect, the grain handling facilities should not have been included in the project (para 6.10). Economic Results 8.02 Economic benefits of the project have not yet fully come into stream. This is due to: (a) the decline of international sugar prices that have caused the reduction in sugar and molasses exports; and (b) vested interests and Government subsidies to grain imports that have counteracted the incentives to importers to use the GPA's grain-handling facilities. The project's overall EER is 9% as compared to 14% at appraisal. At appraisal, more careful analysis of the prospects for the development of the grain handling facility should have been carried out. Further, the components of the bulk handling facility should have been analyzed separately to determine the extent to which each was viable on its own. GPA should compete for grain traffic as strongly as it can; to do so it should explore the possibility of reducing tariffs, covering as little as short-term marginal costs. If traffic does not materialize after a reasonable time, the facility might be converted to an alternative use, such as a general cargo berth. Financial Results 8.03 GPA's financial situation is good; net income, operating and working ratios exceed appraisal forecasts. Tariffs were Increased more than anticipated but the ratio of average revenue to cost per ton seriously declined due to higher operating cost increases (mainly salaries). A cost accounting system has not yet been implemented, and until it is, tariffs cannot be linked to costs. GPA's fixed assets were revaluated in 1978, bringing rates of return to adequate levels. Project Preparation and Implementation 8.04 Based on technical problems that occurred during the first port project, the Bank should have followed more closely preparation of final design taking into consideration the adverse soil conditions. With regard to specialized grain bulk-hane'.ing facilities included in the project, the Bank should have requested 3PA to take the necessary measures to ensure that, upon completion of the project, grain importers would start using GPA's bulk terminal, and that in the meantime, the private facilities would not be expanded.  - 24 - 8.05 Project implementation schedule proved to be very realistic because despite delays in loan effectiveness and in work commencement (para 3.01), coupled with design changes and arbitration, the project was completed before the appraisal estimated completion date. There were no ma4or procurement problems (para 3.11). Disagreements on adequacy of dredging slopes' design led to disputes and arbitration that, with Bank participation, resulted in decision changes, additional construction costs and delays (paras 3.01 and 7.04). Other disputes arose after the project had been practically completed, concerning construction defects; some of these disputes have not yet been settled. The Bank has been closely following the events, advising the concerned parties, from time to time, to solve first the technical problems and sort out the legal aspects that may be involved later (paras 3.01 and 7.07). Procurement 8.06 Procurement under ICB procedures was satisfactorily carried out. In retrospect, it appears that a better bid packaging could have produced better results technically and have promoted the development of the local construction industry (para 3.02). Borrower 's Participation 8.07 The Bank should have encouraged a wider participation of GPA's technical and operational departments with a double objective: first, to facilitate transfer of technology and experience, and, second, to make a better use of the knowledge of local conditions and allow the designers to take into consideration the existing and planned operational procedures. Project Supervision 8.08 The Bank should have been more deeply involved in monitoring GPA's training program. Compliance with the auditing covenant and the implementation of cost accounting systems could also have been more consistently pursued.  PROJECT COMPLETION REPORT EQIADOR - LOAN 1255-EC SECOND GUAYAQUIL PORT PROJECr Actual and Appraisal Estimates of Project Costs 1/ Actual Cost Contract Appraisal Estimate of Cost- Actual Cost as a Proportion of Project Local Foreign Total Amount Local Foreign Total Appraisal Contract Component (Sucres/lmillions) (US$mlmllions) (US$1milllons) (US$/millions (Sucreslmillions) (US$fmillions) (US$Imillions) Estimate (-) Amount (2) (1) (2) (3) (1) (3)xlOO (1) (2)xlOO Dredging 86.47 15.56 19.49 14.12 81.26 14.37 17.60 110.7 138.0 Wharf Construction 310.23 15.96 28.11 20.42 145.17 19.44 25.23 111.4 137.7 Landworks 332.56 15.49 28.46 18.12 317.00 10.26 23.06 123.4 157.1 Bulk Terminal and Other Equipment 5&.56 6.31 10.60 8.39 50.80 1O.Z3 12.24 86.6 126.3 Consultant ServIces 88.85 2.76 6.18 3.92 73.42 1.97 4.92 125.6 157.7 Technical Assistance 1.71 0.62 0.70 - 5.97 0.36 0.6 116.7 Total 871.00 56.70 93.54 64.97 673.62 56.63 83.6S 111.8 144.0 !( Exclundns interests during construction. / Including contlzzgenclaa. BESI COPY AVAILBLE  - 26 TABLE 2 PROJECT COMPLETION REPORT ECUADOR - LOAN 1255-EC Second Guayaquil Port Project Schedule of Disbursements Actual Total Appraised Estimate Fiscal Year (US$ million) (US$ billion) 1977 1.00 8.70 1978 1.00 18.90 1979 8.10 28.50 1980 20.20 33.30 1981 31.45 33.44 1982 33.50 33.50  gcuaDvO - WAS 1253-tC stcmo GSUATAQDI.L PORT t9t0Ct (aartc tt7 1 ea. )1I" toll Atwlal . t easat Actual Foreeeat Actua ree Awl rivecsaa -AtAcl ter*0 at Actual Frrecast Bar.gan an* flastaes a476s49 563,000 400,a06 s,on'o 413,402 542,000 460Q,10 S$1,000 341,80O I m3,000 511,140 s1m341 51J.44 516.000 C.tt.. 13.202 31,000 33,3I3 33,000 33,113 34,000 58',Sq 36,000 - 38,000 36,291 40,000 33,109 4310(0 Cacao a4d lto&atto 41,316 50.000 36.320 52,004 19,44 53,00 64.361 SS31,0 33,603 1,000 s.m 68,1 40,000 *s,14 1.z.0e f! t$6 Flhu golat 31,41 4 1l,000 31,445 12,000 43,s51 13,000 S0.11 l,C000 31,211 13.000 S112616 I6,00 13*'.. I ,'V0o Sqar 39,333 15,000 28,394 17,000 14,451 50,000 21,536 63,000 53,113 64000. 43,521 61,000 33,219 92,0103 !t.180000 4S.375 52,000 32,0s 0o,oo00 6,2127 10,000 31,342 81,000 53,630 94,000 66,616 106,000 34,416 220.000 Otbat Coe16,U1 .4 U,.oO 103.610 32.000 644,5146 ,ooo 4*,641 66,000 11a,199 16.000 32,ual 81.000 19,3l 00.00 I Total 611,146 69,ttO0 641,911 641,000 101,11 611,%000 131,141 flI.000 145,444 11100 141.111 216.0 $Sf4.2$1 941.0% t.1 - - _ - - - - -_- - - %4 ,I9Ft'Ts resnctem &$#bast 6 bfd,. uea 60,235 15,000 133,032 06.000 446,124 62,000. 23,1961 16,000 336.,21 61,n00 5363,61 11.000 "66.403 l.000 Uhect and Oats 23,031 116,004 206,625 u86,000 246,696 20,41,03 310,311 223,000 251,615 340,000 334,215 362,000 lU.Iol S,') P.Nt &ad u iats ott 31.436 4.000 39.909 1,ooo 62.433 36,000 . - 40,000 43,342 43,0o0 12,164 4S,000 IF,)1 41,o00 hotetls ag ptoductg 19,S026 251.000 201,111 255.000 336,163 330.000 M. 110 4W,.Ofl) 32s56,4 401,0t,2 3Jl5S13 352,00o 2ya.453 430,03) Cheatcal troduets 101,041 116;000 S6,11 126,000 145,606 139,000 110,160 148e000 2124,82 160.000 209.U14 1O2.00 24 6. MA3N0t^ all$ da irate 34.636 32,000 29,487 33.000 3,13 34.000 31,133 36,000 31,llt 36,000 3,661 40,000 o 1.710 &),.(0 tagliter 50,524 136,O00 21,626 124,000 74,155 132,000 54,531 143,000 30,344 274,000 86,012 300n000 1,.2: 317O,005 Tehicles and Ht&Chlsry 116.264 96.000 64,616 109.000 013,496 123,000 103,710 141000 303,102 160.0'1i 14,1SO 1 141,00 OZ4,61 212,n6 Cemuat 14lS91 64.000 36,066 60,000 93,0 0 100,000 26,093 20.000 47,366 20.0D00 1.113 20.000 U34.0f' 20,4:o t0%eg Goods 16,106 100,000 110,0st 101.000 124,014 MAN 10 6.126 122,000 117,6)6 133.000 161,113 11, noo S11.9