China - Huangpu Port Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 14770 IMPLEMENTATION COMPLETION REPORT CHINA HUANGPU PORT PROJECT (LOAN 2877/CREDIT 1845-CHA) JUNE 29, 1995 Transport Operations Division China and Mongolia Department East Asia and Pacific Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Name = Renminbi Currency Unit = Yuan (Y) Yuan rate per US$1.0 1985 2.94 1990 4.78 1986 3.45 1991 5.32 1987 3.72 1992 5.53 1988 3.72 1993 5.76 1989 3.76 1994 8.60 1995 8.50 FISCAL YEAR January I - December 31 MEASUREMENT EQUIVALENTS Metric System British/US system I meter (m) 3.281 feet I square meter (m-) 10.764 square feet I cubic meter (mi3) = 35.3 15 cubic feet I kilometer (km) 0.621 mile I ton-km 0.621 ton-mile I ton 2,208 pounds PRINCIPAL ABBREVIATIONS AND ACRONYMS USED Cr - Credit dwt - deadweight ton (for vessel) EIRR - Economic Internal Rate of Return GHB - Guangzhou Harbour Bureau GOC - Government of China HD - Huangpu District HHB - Huangpu Harbour Bureau ICB - International Competitive Bidding ICR - Implementation Completion Report LCB - Local Competitive Bidding LRMC - Long Run Marginal Cost MOC - Ministry of Communications MOF - Ministry of Finance NPV - Net Present Value REIRR - Reevaluated Economic Intemnal Rate of Return RFA - Revaluation on Average Net Fixed Assets RRFA - Rate of Return on Average Net Fixed Assets SAR - Staff Appraisal Report SPC - State Planning Commission teu - twentv-foot equivalent unit (for container) TA - Technical Assistance XTC - Xinsha Terminal Company  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT CHINA HUANGPU PORT PROJECT (LOAN 2877/CREDIT 1845-CHA) CONTENTS Preface ...................................................................................................................... i Evaluation Summary ....................................................... ii PART I: IMPLEMENTATION ASSESSMENT ..................................................... I A. Project Objectives ..................................................1 B. Achievement of Objectives ................................................. 2 C. Major Factors Affecting the Project ..................................... 10 D. Project Sustainability ................................................. 1I E. Bank Performance 1.. F. Borrower Performance ...................................................... 11 G. Assessment of Outcome ...................................................... 11 H. Future Operations ................................................... 12 I. Lessons Learned ....................................................... 12 Table 1: Summary Of Assessments ....................................................... 13 Table 2: Related Bank Loans/Credits ...................................... 14 Table 3: Project Timetable ...................................................... 14 Table 4: Loan Disbursements: Cumulative Estimated and Actual ... 15 Table 5: Key Indicators for Project Implementation . ..................................... 16 Table SB: Training Needs of Xinsha Terminal . .............................................. 17 Table 5C: Procurement (under ICB for over $1.0 mln. contracts) .. 18 Table 6: Key Indicator for Project Operation ................................................. 19 Table 7: Studies Included in Project ....................................... 20 Table 8A: Project Cost ....................................................... 21 Table 8B: Project Financing ............................................. 22 Table 8C: Allocation of Loan Proceeds .................................... 23 Table 9: Economic Cost, Benefit and Major Financial Indicators .. 24 Table 10: Status of Legal Covenants ....................................... 25 Table 11: Bank Resources: Staff Input ..................................... 26 Table 12: Bank Resources: Mission ....................................... 27 APPENDIX A: ICR PREPARATION MISSION'S AIDE-MEMOIRE ... 29 APPENDIX B: BORROWER'S CONTRIBUTION TO THE ICR .. 30 APPENDIX C: MAP ...................................................... 34 ANNEX 1: FINANCIAL ANALYSIS ...................................................... 35 ANNEX 2: ECONOMIC ANALYSIS ....................................................... 39 B. Ship Time Analysis ...................................................... 40 This documnent has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed wihout World Bank authorization.  C. Berth Operations ........................................... 41 D. Economic Costs and Benefits ........................................... 43 E. Overall Economic Reevaluation and Sensitivity Analysis ......................... 44  IMPLEMENTATION COMPLETION REPORT CHINA HUANGPU PORT PROJECT (LOAN 2877/CREDIT 1845-CHA) PREFACE This is the Implementation Completion Report (ICR) for the Huangpu Port Project in China for which Loan 2877 for $63 million and Credit 1845 for $25 million were approved on October 6, 1987. The loan/credit were closed on December 31, 1994, after being extended once for one year. Final disbursement was made on May 4, 1995. The credit was fully disbursed, but $2.23 million of the loan amount was canceled. The ICR was prepared by Messrs. Toshiro Tsutsumi (Task Manager) and Han- Kang Yen (Economic and Financial Analyst) of the Transport Operations Division, China and Mongolia Department of the East Asia and Pacific Region and reviewed by Messrs. Richard Scurfield, Chi 'f, EA2TP and Yo Kimura, Project Adviser, EA2DR. The Borrower provided comments that are included as appendixes. Preparation of this ICR was started just before the project closing date and is based on the material in the project file. The Borrower contributed by preparing its own evaluation of the project execution and initial preparation.   - 11 - CHINA HUANGPU PORT PROJECT (LOAN 2877/CREDIT 1845-CHA) EVALtJATION SUMMARY Objectives Huangpu Port, in the Pearl River estuary, is the largest in South China and serves the Provinces of Guangdong, Guangxi, Hubei and Hunan, among others. It is 130 km northwest of Hong Kong and connected to the South China Sea by a navigation channel. The main objective of the project was to assist the Government of the People's Republic of China (GOC) to relieve congestion in the port of Huangpu and increase its handling capacity. It did this by providing additional facilities and improving the planning, managerial and operational capabilities of its staff. Specifically, the Bank assisted in financing: (a) construction of the new Xinsha terminal (1,700 m long) for coal, iron ore, bulk fertilizer, general cargo, lighters and service boats equipped with a modem cargo handling system, and (b) technical assistance for studies and staff training. Implementation Experience and Results The project became effective on October 3, 1988. Project launch was quick and smooth, with major contracts in civil works awarded shortly after loan effectiveness. The components financed by the Bank Group were completed satisfactorily by December 31, 1994, after a one-year delay in supplying a coal and iron ore handling system. Technical assistance and training have also been satisfactorily implemented. Despite the delay, implementation was considered satisfactory-the main objectives were achieved. The construction of physical components, procurement of equipment and implementation of studies proceeded smoothly, mainly due to their lack of complexity and good coordination between the Guangzhou Harbor Bureau (GHB) and the Ministry of Communications (MOC). The Bank-financed components were implemented by one executing entity, the GHB. Bid evaluations, which in China require two steps-one by the end-user and another by the central evaluation committee-generally required about six months. However, under this project, procurement was about two months shorter, except for the bid for fertilizer unloaders that required 13 months (see paras. 9-13). The final project cost was Y 543.69 million plus $86.93 million instead of the Y 668.53 million and $88.0 million estimated at appraisal-lower due to savings in physical contingency and competitive bidding prices. Estimated base costs were nearly  - 111 - correct. Domestic price increase in 1993 did not have a major impact on project cost since the significant civil works were completed before 1993 (para. 20). A total of $2,261,034.18 was canceled. The project's economic rate of return (at completion) was estimated at 32.7 percent against 21.3 percent at appraisal, which is considered satisfactory. GHB's financial performance has so far been satisfactory. However, GHB is currently unable to operate as a financially autonomous corporation, since tariff setting is still controlled by the central Government. Without competition between ports or within the port, liberalization of tariffs is not deemed appropriate. Government still controls tariffs so as to encourage the port to increase efficiency while restraining the opportunities for the port to abuse its position as a regional monopoly. However, in the long term some accommodation will be required and cost increases borne by the port operation must be reflected in higher tariffs. Findings and Lessons Learned The project is sustainable (para. 40). Most importantly, port traffic will grow, due to the rapid economic development of the Guangzhou area. Also, GHB is a financially stable entity. Moreover, with the modem equipment and extensive training provided under the project, GHB has the potential to increase the port's productivity. The findings and lessons from project implementation include the following: (a) Bidding documents for the procurement of large equipment should provide specific postqualification criteria to avoid confusion during the evaluation; (b) Tariffs should be adjusted every year, based on the local price index or some other reasonable indicator. GHB has no authority to set its own tariffs and revenue gains were offset by cost increases that were even higher; (c) GHB still has room to improve performance by improving management techniques and periodically revaluing fixed assets. GHB should also consider introducing competition among terminal operators to improve efficiency; (d) The simple project design, which involved one executing agency under one ministry, is considered a key reason for the satisfactory implementation; and (e) It is recommended that GHB update the master plan of the port periodically, since the port serves one of the country's most rapidly developing areas and traffic patterns will change quickly. Also, the relationship with other nearby ports such as Shenzhen and Hong Kong should be considered.  - 1 - IMPLEMENTATION COMPLETION REPORT CHINA HUANGPU PORT PROJECT (LOAN 2877/CREDIT 1845-CHA) PART I. IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES 1. In the mid-1980s when this project was identified, most of China's ports were badly congested, with shortages of container berths, bulk cargo berths, port equipment, storage yards and transport infrastructure for distribution. Congestion was sufficiently severe as to threaten to hold back further expansion of China's foreign trade. Huangpu Port, South China's largest port and serving Guangdong Province, among others, had become particularly congested due to the port's location at the confluence of three rivers, which merge into the Pearl River estuary between Guangzhou and Hong Kong. The port is some 130 km northwest of Hong Kong and is connected to the South China Sea by a 11 5-km navigation channel. 2. The main project objective was to increase Huangpu port's efficiency in handling bulk and general cargo and by providing specialized berths with modem equipment. Another aim was to improve efficiency over the long term by providing training; and technical assistance for studies relating to: (a) the port's master plan, (b) management and operations, and (c) upgrading of the inlet channel. 3. Development of Huangpu port under the project consisted of: (a) A new Xinsha terminal of five berths-one each for coal, iron ore and bulk fertilizer, and two for general purposes. This component required: (i) Construction of a 600-m quaywall with alongside depth of 11.0 m for coal, iron ore, and bulk fertilizer berths; construction of a 400-m quaywall with alongside depth of 11.0 m for general cargo berths; and construction of a 700-m wharf with alongside depth of 4.0 m for lighters and harbor operations vessels. The quaywalls were designed with alongside depth of 12.5 m for future use; (ii) Basin dredging and land reclamation;  - 2 - (iii) Dredging of a channel east of the new terminal (approximately 7 km); (iv) Construction of various types of infrastructure (to serve the future berths at Xinsha as well as those in the Huangpu project); a. Two railway bridges and two highway bridges; b. Rail lines, roadways and yard pavements; c. Water supply, sewerage and power supply connections; d. Maintenance buildings, auxiliary buildings, etc.; (v) Procurement of ancillary items such as loading/unloading equipment, navigational aids, surveying equipment and boats; (b) Training of personnel in China and abroad in operating and maintaining the new facilities; (c) Technical assistance, including training of counterpart staff in supervising construction, producing specialized designs and managing and operating the port; and (d) Studies, such as an update of the master plan for Huangpu port (which included a review of intermodal cargo distribution in Huangpu and its hinterland), and another to optimize improvements to the inlet channel. B. ACHIEVEMENT OF OBJECTIVES Project Implementation 4. This was the third Bank-assisted port project in China, following the Three Ports Project (Loan 2207, 1982) and the Tianjin Port Project, (Loan 2689, 986). Under the Three Ports (Huangpu, Shanghai and Tianjin) Project, coal and container terminals at Huangpu Port were provided successfully. This project was an extension of Huangpu Port downstream of the Pearl River. 5. After Board approval and before signing of the legal documents, Huangpu Harbour Bureau (HHB) merged with Guangzhou Port to become the Guangzhou Harbour Bureau (GHB). This did not create significant problems, because the new charter was carried out on time and GHB accepted the Project Agreement as negotiated. However, the signing was slightly delayed while the charter for the new agency was prepared. 6. Civil Works. Two civil works contracts were financed by the Bank. The first was for marine works (this included the main quay construction). Construction was initially delayed for about 5-6 months, but this delay was made up after the contractor  - 3 - improved its management techniques, the quantity of construction equipment available on the site was increased and coordination improved between GHB's supervision team and the resident engineer. Also, the local contractor and GHB were initially unfamiliar with international contract procedures (FIDIC). 7. The second contract for construction of land works was satisfactorily implemented and completed in accordance with the progress of the other works such as railway construction and installation of the cargo handling system for coal and fertilizer. GHB retained the supervision consultants for the second contract. Improved familiarization of GHB's supervision team with international practice under the first contract was a factor in the satisfactory implementation of the second contract. 8. In addition to the Bank-financed construction works, GHB contracted many other civil works with local contractors (more than 90 contracts through local funding), which have been satisfactorily completed and coordinated with the Bank-financed component (railway, road, etc.). Procurement for these varied depending on the size and nature of the work, from sole-source basis to local competitive bidding (LCB). Implementation by the local contractors was satisfactory and there were no major problems. 9. Procurement of Equipment. The main equipment was procured through ICB (Table 5C) for handling coal/iron ore, general cargo and fertilizer, along with other equipment (such as tugboats and portal cranes) purchased through cost savings. Procurement was, for the most part, satisfactory. The bid evaluation period was generally two months shorter than that of other similar projects, although some delays occurred with (a) preparing bid documents and evaluating bids, and (b) implementing contracts for the coal/iron ore handling system. 10. Although GHB gained experience in Bank financing under the Three Ports Project, preparation of bid documents was delayed due to the complexity of both coal/iron ore handling system and fertilizer bagging system. With respect to the first of these, GHB needed about two years to prepare bid documents for four ship unloaders, five stackers/reclaimers, and a conveyor and weighing system. The contract amounted to over $40 million. 11. There was also a nine-month delay in the supply of this handling system for coal and iron ore. This was due to (a) special circumstances (prices escalated and domestic steel was in short supply) after the design was produced and (b) the contractor's limited experience in coordinating the various manufacturers (including foreign firms). The joint-venture contractor, which had experience with a similar size project as a subcontractor, was awarded the contract after a long discussion between GOC and the Bank about the contractor's qualifications-on the condition that subcontracted foreign manufacturers would provide performance security. 12. The contractor found it difficult to satisfactorily coordinate its activities with those of the foreign manufacturers (who were assembling the system) and to correct  - 4 - teething problems with various parts of the system discovered during trial runs. GHB delayed approving the system until March 1995, after the required corrections were made. 13. With respect to the fertilizer bagging system, GHB/GOC needed 13 months to evaluate and finalize the bid for one of the ship unloaders. However, the time could have been reduced if the postqualification criteria in the bid documents had been more specific. Moreover, although only two companies bid, the one that was lower had no experience supplying a fertilizer unloader. And, while GHB required bidders to have experience with at least five units of similar or superior types of equipment in the last 10 years, it could not easily conclude if experience with a grain unloader was sufficient. As a result, the lower bidder was found not qualified and the Bank accepted this decision. Once the decision had been made the equipment was delivered in less time than stated in the contract. Thus, the long evaluation period did not affect implementation for the entire fertilizer handling system. 14. Technical Assistance and Training. The project included four studies on (a) special designs for marine structure, (b) management and operations, (c) the master plan and (d) the navigation channel (Table 7, Part II), of which the Bank was supposed to finance (a) and (b). However, foreign consultants found it difficult to acquire the information needed for the studies of management and operations. Therefore, the Bank only financed the special design study which was completed satisfactorily and applied during the construction of the marine works. 15. GHB then combined studies (b) and (c), using local funds and local corsultants. Despite this change implementation of the studies was also satisfactory. For cxample, the management and operation study recommended a specialization and improvement of terminals. Following the recommendations, GHB has converted 2 existing coal berths (#1-2) into a fertilizer terminal, increased storage capacity of the Xingang terminal and improved daily operation through on-the-job training. GHB also has initiated construction of berth Nos. 6-10 by extending the project terminals (berths Nos. 1-5), following the recommendation of the Master Plan Study. Through the improvement, berth capacity has been increased, berths' throughput was raised and vessel berthing time was reduced (see Table 6, Part II). The Master Plan, however, should be updated, since economic, as well as infrastructure, development in this area is significant, and traffic demand projections should be revised in accordance with these changes. 16. Training. GHB established a new terminal company [Xinsha Terminal Company (XTC)] to manage the new facilities financed through the project. Although the number of trained staff was lower than planned (1,398 compared to 1,903), training was considered appropriate and satisfactory (Table 5B, Part II). GHB decided to downsize the new company (XTC). It was able to do this because it extended the mechanized cargo handling system and raised the productivity of the company. Thus, instead of a staff of 1,903, as estimated in the SAR, the company currently has only about 1,000 employees (592 regular staff, and 400 fixed term workers), and also uses another 386 workers from  various other terminal companies when necessary. All staff, including workers in the other companies, were trained under the project. 17. GHB is considered a capable and sustainable company. A total of 162 staff were transferred from the original terminal and office of GHB, and are experienced managers. GHB has sent these and other staff to the several training courses (in management, planning, designing and operation) that were organized by port authorities in developed countries. Domestic training has also been implemented by using a local training center. Project Results 18. All project objectives were achieved during implementation: (a) Bottlenecks at the port were removed with the addition of the five new specialized berths; the handling of coal, iron ore, bulk fertilizer and general cargo using modem equipment; (b) Long-term efficiency gains cannot be documented yet; however, early results are very positive. The project's institutional goals have also been achieved substantially, through the provision of TA; and (c) The project's benefits were also achieved, including savings in (a) cargo- handling costs, (b) ship waiting and berthing time, and (c) cargo handling time. The economic rate of return (ERR) of the project is estimated at 32.7 percent against the 21.3 percent in the SAR. 19. Although the project was modified somewhat, this did not change its overall objectives. The major modification included converting the iron ore berth (No. 2 berth) into one that could also handle coal (to expand coal handling capacity), involving increase in the arnount of equipment purchased. GHB asked the Bank to approve the modification (which was at the No. 2 terminal), at a cost of $8.5 million; the Bank approved the request. No environmental or resettlement problems arose during implementation. 20. The project's final cost is estimated at Y 543.69 million plus $86.93 million, against Y 668.53 million and $88.0 million calculated at appraisal. Total costs were less than estimated, mainly because of the savings gained in physical contingency, and competitive bidding prices. Estimated base costs were nearly correct. No call was made on the physical contingencies (10 percent of the base cost, estimated at $12 million). A total of $2,261,034.18 was canceled. Domestic price hikes in 1993 did not have a major impact on project costs since substantial civil works were completed before this time. 21. Decentralization. Immediately prior to signature of the loan in January 1988, the process of decentralizing the management and financial administration of various ports, from the State (MOC) to the local municipal governments, was begun. Port authorities of the municipalities assumed a large part of the responsibility, handling daily management,  - 6 - operations, construction, budgetary and development functions. However, although major projects and plans affecting the port's long-term development still need to be approved by the MOC, the ports now bear the financial obligations for any loans obtained. As the ports will be covering the loans, the Government reduced the tax rate, by requiring them to make an annual flat rate payment (not based on their earnings). This enhanced the ports' internal cash generation by reducing an annual fixed tax obligation to the Government (in 1988); to date, this arrangement has not changed substantially. 22. Decentralization has given freedom to ports to administer their own financial and management structure. GHB now only needs Government approval for rehabilitation projects of over Y 30 million. Other key financial terms of the restructuring are as follows: (a) a much reduced annual lump sum payment up to 1992: (i) of Y 1.87 million (instead of Y 55.7 million for 1986) for income and adjustment taxes; and (ii) of Y 9.45 million for Government's Energy and Transport Fund, including tax on port construction; and (b) a flat annual contribution of Y 11.0 million from 1993. 23. Reorganization. In December 1987, Huangpu Port (HP) was merged with Guangzhou Port, given the new name of Guangzhou Harbor Bureau (GHB), and became the Huangpu District (HD) of GHB. Financially, lID is the main source of income for GHB. In 1994, for example, HD's total assets, operating revenues and net profits constituted 79.1 percent, 75.8 percent and 77.5 percent, respectively, of GHB's. When figures in this report are compared with those of the SAR, they pertain only to the HD (of GHB). 24. New Financial Reporting Procedures. Under MOF's instructions, GHB improved its financial accounting procedures in July 1993 to keep in line with international accounting standards. The new accounting and reporting systems will accelerate the commercialization and privatization of the port. 25. Past Financial Performance. The port's financial performance during 1985-94 was satisfactory. A comparison of actual performance with estimates in the SAR for 1985-93 (the last forecast year available in that document) indicates the same average annual growth rate of net profit as in the SAR (14.8 percent), although traffic grew by 11.7 percent per year, instead of the 7.5 percent per year estimated. For example, traffic handled in 1993 was 37 percent higher than the estimate at appraisal (29.8 million tons in the SAR vs. 40.8 million tons in the ICR). The net profit for HP in 1993 was Y 77.4 million (against Y 77.2 million forecast), mainly because the 19 percent annual increase in operating revenues (12.9 percent per year forecast in the SAR) was offset by high operating costs (a growth of 27.8 percent per year instead of the 14.9 percent forecast). In  - 7 - 1994, operating costs grew even more, by 65.2 percent, to Y 615.9 million; during this time, traffic increased by 7.2 percent (to 43.8 million tons). 26. The SAR's conservative financial forecasts were developed when there were rigid tariff and price controls on almost every major commodity at the State level. As a result, cost increases and inflation were rare. In addition, the State had allocated major resources during the previous three decades (including the allocation of traffic for many commodities) and only charged users the planned prices. When the SAR was prepared, there was no indication that either the cost of resources or the rate of inflation would change. Therefore, financial forecasts assumed that port charges would remain virtually constant; and the rate of inflation would be low (in the range of 4.5 percent-7.5 percent during 1986-93). Although reasonable at the time, these assumptions now appear very conservative due to the much higher than expected cost-push inflation. 27. In recent years, price controls were removed from almost all commodities. During 1985-94, despite the strict control of the State on tariff increases, unit tariffs rose by an average of 10.5 percent per year. This increase, however, still could not match the 18.2 percent annual average unit cost hike, mainly due to the increased cost of fuel, materials, wages and depreciation-most of which have to be paid on the basis of market prices; and, increases in the latter have been much faster than in regulated Government tariffs. Highlights of the HD's income statements for selected years, as compared with the SAR forecast, are summarized below with details shown in Table 1.1, Annex 1. 1986 1990 1993 1994 SAR Actual I SAR Actual | SAR Actual | Actual ------------------------(Y n illion) ---------------- ------- Revenue 158.5 168.6 270.3 229.9 379.6 577.8 917.6 Less: Operatingcosts 58.5 72.1 107.1 117.4 158.9 372.9 615.9 Business tax 13.0 6.1 21.9 8.0 29.5 19.6 30.9 Other expense -- -- -- 78.6 163.7 Operating profit 87.0 90.4 141.3 104.5 191.2 106.7 107.1 Less: Nonoperating expense 3.3 3.4 14.9 14.4 54.1 18.3 10.2 Tax 58.1 55.7 11.3 59.9 11.0 11.0 Net profit 25.6 31.3 126.4 78.8 77.2 77.4 85.9 Averagenetfixedassets 526.2 459.1 955.4 609.6 1,311.9 853.3 1,041.3 Return on Average Net Fixed Assets (%) La 16.5 19.7 14.8 17.1 14.6 12.5 10.3 Operating Ratio Lb 40.2 44.4 43.1 52.9 45.4 66.8 69.5 da Return on Average Net Fixed Assets = Operating Profit/Average Net Fixed Assets. Lb Operating Ratio = Operating Costs/(Revenue-Business tax).  - 8 - 28. Operating ratios deteriorated and were higher than the targets (for 1993, 66.8 percent against 45.4 percent in the SAR). This was due to rapid increases in costs with no matching increases in tariffs. Without a reformn in tariffs to expand the port's revenue, it is estimated that operating costs will exceed revenues in 2000 (based on average growth rates of operating costs and revenues during 1985-94). 29. The rate of return on average net fixed assets (RRFA), although still satisfactory, also declined-from 22.9 percent in 1985 to 12.5 percent in 1993 and 10.3 percent in 1994. This was largely because of the port's decreased profitability and the increase in fixed assets (the latter due to the project's completion). 30. GHB's fixed assets are being revalued (RFA) this year (1995). The RFA process should be completed by December 1995 and the overall value is expected to rise by 20 percent-50 percent. Due to this revaluation, the RRFA in 1995 is expected to be under 9 percent and further declines are forecast. 31. Present Financial Performance. Despite the rapid rise in operating costs, the port's financial position was still acceptable at the end of 1994. Debt service in 1993 was the same as the SAR forecast of 1.8 (2.6 in 1994). The percentage of net current assets in the form of cash, however, declined from 67 percent in 1985 to 65 percent in 1993 and 62 percent in 1994. During the same period, the share of accounts receivable increased from 12 percent to 25 percent and 28 percent, respectively. Despite the improved debt and equity ratio of 21.2 percent, the port's current ratio was 0.8 in 1994 (a ratio of less than 1.0 means the port has short-term solvency problems and needs to strengthen its finances). 32. Salient points in the port's balance sheet during these years are found in Table 1.2, Annex 1 and summarized below: 1986 1990 1993 1994 SAR Actual I SAR Actual I SAR Actual I Actual ---------------------------------(Y million--------------------------------- Assets: Net fixed assets: 629.8 1,042.3 629.6 1,297.7 1,000.6 1,082.1 Current assets: 29.3 49.8 94.2 122.1 272.7 382.8 427.9 Special fund assets La: 51.4 43.7 51.4 95.4 51.5 0.2 1.8 Total: 710.5 5i 1,187.9 847. 1,621.9 1.382.8 1,511.8 Liabilat & e uitv: Equity: 541.2 436.7 541.2 471.1 541.2 683.4 794.0 Port dev. funds: -- -- 240.0 16.7 447.8 Long-term debt: 80.0 65.4 298.0 155.6 503.4 285.1 213.9 Current liabilities: 23.4 18.2 42.8 42.4 63.6 414.3 503.9 Special funds: 65.9 68.2 65.9 161.3 65.9 IQWal I70.5 5 1,187.9 847.1 1,621.9 1,382.8 1.511.8 Debt/(debt+equity): 12.9 13.0 35.5 24.8 48.2 29.4 21.2 /a Including the deferred assets.  - 9 - 33. Future Financial Performance. Under present financial arrangements, despite the high increase in operating costs, the port still enjoys relatively healthy liquidity, leverage, and profitability ratios due to the flat lump sum payments made to the State since the port was decentralized in 1988. This arrangement, as indicated previously, has not been altered in the last few years. The port's new responsibility for financing all its capital investments has not yet affected its cash flow (Table 1.3, Annex 1), but this is expected to weigh more heavily in the future. At present, it is implementing the second phase of the Xinsha project, for which an additional five berths will be built adjacent to the Bank-financed berths. Within the next three years, as construction costs will be substantial, there will be a heavy demand for capital. Thus, port authorities should explore many alternatives to improve financial conditions. 34. For the future critical issues which must be addressed include: (a) Tariffs: To offset the rapid increase in operating costs, port tariffs should be adjusted every year by either referring to the local general price index or charging higher rates for use of the modern, more efficient berths; (b) Revaluation of fixed assets (RFA): To improve the port's financial capacity to replace its aging equipment, RFA should be carried out more frequently than in the past; (c) Investments: Based on current tariffs, port construction will benefit ship and cargo owners more than the port; thus, the ports cannot cover all the costs. For this reason, either tariffs should be further increased, or the Government should finance some of the noncash generated infrastructure investments (including foundations for the berths, channels, breakwaters, and railways/roads in the port); (d) Foreign exchange risks: Due to fluctuations in the foreign exchange rate, the port paid an additional 130.0 million Yuan for its foreign loans (until the end of 1994). If this situation continues, it will deteriorate the port's financial condition. This factor should also be included in tariff adjustments; and (e) Management reforms: Some nonport activities, such as schools and hospitals, should be transferred to local agencies, and their costs not assumed by the port. Economic Evaluation 35. The economic analysis in this report was based on the reevaluation of data on traffic, operational performance, and the economic costs and benefits of project components since estimates were provided in the SAR. The methodology used in the ICR was similar to that in the SAR:  - 10- (a) Capital investment and maintenance costs were revised to reflect December 1994 prices and included in the cost stream; (b) The benefits, also reflected in December 1994 prices, were included and consist of savings in port handling, ship port time (berth and waiting), and cargo port time (berth and waiting); (c) A project life of 20 years was assumed and the capital investment period for all berths was from 1987 to 1994; and (d) Benefits started to accrue for the general cargo berths in 1993. For fertilizer, iron ores and coal berths, benefits began in 1995. 36. When reviewing all the components together, the major negative affects of the increase in economic capital costs (by 14.2 percent), and the lower ship port costs (by 14- 30 percent) were offset by the much higher than expected cargo traffic (by 49 percent) (Annex 2). 37. After reassessing the revised data, the reevaluated economic internal rate of return (REIRR) was 32.7 percent, which is higher than the SAR estimate of 21.3 percent. A detailed analysis is presented in Annex 2. 38. The REIRR and SAR estimates of the project in terms of economic rate of return and net present value (NPV) are given below: SAR ICR Best estimate of rate of return (%) 21.3 32.7 NPV (12%, million Yuan) n.a. 1,756.2 C. MAJOR FACTORS AFFECTING THE PROJECT 39. Major factors affecting the project are summarized as follows: Positive factors include: (a) The regional and national developing economy, which increased port traffic; (b) The Borrower's capacity to implement projects; (c) The simplicity of the project design; and (d) The close relationship between the Borrower and Bank.  Negative factors include: (a) Cost increase during implementation that significantly raised port operating costs and offset the revenue increase; (b) A shortage of materials that delayed the implementation of equipment contracts; and (c) The Borrower's lack of familiarity with preparing bid documents for large, complex equipment. D. PROJECT SUSTAINABILITY 40. The project is considered sustainable. First, it extended the port facilities and improved productivity. Further, port traffic will grow along with the development of the Guangzhou area. In addition, GHB is a financially stable entity with the financial resources needed to maintain and operate the port efficiently. Moreover, with the modem equipment and extensive training offered under the project, GHB has the potential to increase the port's productivity even further and provide service competitively. E. BANK PERFORMANCE 41. The Bank's performance in identifying issues and preparing the project was good. Bank staff resources leading to appraisal were efficient (88.7 staff-weeks) as were those applied to supervision: the annual average input was 9.5 staff-weeks (see Table 12). 42. However, the Bank's performance could have been improved if more specific postqualification criteria had been recommended for bidding documents for large equipment (such as for the coal and iron ore handling system and fertilizer ship unloader). Except for the above, the Bank took a consistent position and provided appropriate guidance, when necessary. F. BORROWER PERFORMANCE 43. The Borrower's performance was generally good and preparation and implementation were adequate. As shown in Table 10, Part II, covenants were mostly met. Although HHB merged with GHB just before signing the legal documents (para. 5), GHB assumed all responsibility for the project and implemented it satisfactorily. G. ASSESSMENT OF OUTCOME 44. This project is assessed as satisfactory because it achieved all major objectives without any major shortcomings.  - 12 - H. FUTURE OPERATIONS 45. The project provided the facilities needed to handle port traffic until around 2000. However, it should now be moving into the next phase, since preparing the plan and constructing facilities will require several years and congestion will mean a loss to the national economy. 46. The port's efficiency and financial performance will need to be monitored in the future, with productivity indicators such as: (a) ship waiting time, and (b) cargo handling volume per day per vessel, and moves (load/unload) of container boxes per hour per crane. These will be available from statistics provided by GHB. 47. GHB has begun to build five additional berths (Nos. 6-10). These will be financed locally and will meet the immediate demands of increased traffic (general cargo and grain). Construction is expected to be completed in 1998. 48. Also, GHB plans to construct new container, coal, grain and petroleum terminals as well as deepen the channels up to 11.5 m based on the recommendations in the master plan and channel studies. GHB would like to request Bank financing when the detailed plan is finalized. Given that Huangpu port is located in the area where economic development is high, the master plan should be frequently updated according to the change in traffic patterns. It is important that development in nearby areas and ports, such as Shenzhen, Hong Kong, and the Pearl River area, be considered. 1. LESSONS LEARNED 49. The key lessons are the following: (a) Bidding documents for procuring large equipment should provide specific postqualification criteria in order to avoid confusion in the evaluation period; (b) Tariffs should be adjusted every year, based on the local price index and cost increase factors such as variation of investment and exchange rate, or some more reasonable indicator(s). Because GHB has no authority to set its own tariffs, its revenue increase was offset by the price increase (that was higher than the tariff increase); (c) GHB still has room to fine-tune performance by improving its management techniques and periodically revaluing its fixed assets. GHB should also consider introducing more competition among terminal operators; and (d) The project's simple design, which involved a single executing agency under a single ministry, is considered a main reason why implementation was satisfactory.  - 13 - PART II: STATISTICAL ANNEXES Table 1: Summary Of Assessments A. Achievement of objectives Substantial Partial Negligible Notapplicabk1 Macro policies x Sector policies x Financial objectives x Institutional development x Physical objectives x Poverty reduction x Gender issues x Other social objectives x Environmental objectives x Public sector management x Private sector development x Other (specify) x B. Project sustainability Likdy Unlikely Uncertain x Highly C. Bank performance satisfactoly Satisfactory Deficient Identification x Preparation assistance x Appraisal x Supervision x D. Boffower prformanc Preparation x Implementation x Covenant compliance x Operation (if applicable) x E. Assessment of outcome x  - 14 - Table 2: Related Bank Loans/Credits Loan/credit title Purpose Year of approval Status Preceding operations 1. Three Ports Project expansion 1982 completed on 6/30/88 2. Tianjin Port Project expansion 1986 completed on 10/31/94 Following operations 1. Dalian Port Project expansion 1988 completed on 12/31/93 2. Ningbo and Shanghai Ports Project expansion 1988 to be completed on 12/31/95 3. Xiamen Port Project expansion 1988 completed on 3/31/95 Table 3: Project Timetable Date Date Item planned actual Identification - 6/84 Preparation 6/84 Appraisal 4/86 7/87 Negotiations 11/86 08/3-7/87 Board approval 01/87 10/06/87 Signature - 06/22/88 Effectiveness - 10/03/88 Project completion 12/31/93 12/31/94 Loan closing 12/31/93 12/31/94  - 15- Table 4: Loan Disbursements: Cumulative Estimated and Actual Penrod Planned Actual Credit (in SDR) Loan (in USS) Disbursements Cum. Disbursements Cum. Disbursements Cum. disbursements disbursements disbursements 7/31/87 - 9/30/87 10/1/87 - 12/31/87 1/1/88 - 3/31/88 2,000,000 2,000,000 4/1/88 - 6/30/88 2,000,000 4,000,000 7/31/88 - 9/30/88 7,000,000 11,000,000 10/1/88 - 12131/88 6,000,000 17,000,000 4,777,972.52 4,777,972.52 1/1/89 - 3/31/89 6,000,000 23,000,000 0.00 4,777,972.52 4/1/89 - 6/30/89 5,000,000 28,000,000 2,975,511.80 7,753,484.32 7/31/89 - 9/30/89 9,000,000 37,000,000 0.00 7,753,484.32 10/1/89 - 12/31/89 3,000,000 40,000,000 1,826,377.17 9,579,861.49 1/1/90 - 3/31/90 8,000,000 48,000,000 0.00 9,579,861.49 4/1/90 - 6/30/90 8,000,000 56,000,000 2,300,053.22 11,879,914.71 7/31/90 - 9/30/90 4,000,000 60,000,000 1,638,002.52 13,517,917.23 10/1/90 - 12/31/90 6,000,000 66,000,000 1,526,615.36 15,044,532.59 1/1/91 - 3/31/91 5,000,000 71,000,000 0.00 15,044,532.59 4/1/91 - 6/30/91 4,000,000 75,000,000 2,366,696.43 17,411,229.02 7/31/91 - 9/30/91 2,000,000 77,000,000 0.00 17,411,229.02 10/1/91 - 12/31/91 3,000,000 80,000,000 0.00 17,411,229.02 1/1/92 - 3/31/92 1,000,000 81,000,000 1,020,677.18 18,431,906.20 5,641,295.51 5,641,295.51 4/1/92 - 6/30/92 2,000,000 83,000,000 456,997.44 18,888,903.64 0.00 5,641,295.51 7/31/92 - 9/30/92 3,000,000 86,000,000 430,041.60 19,318,945.24 0.00 5,641,295.51 10/1/92 - 12/31/92 2,000,000 88,000,000 0.00 19,318,945.24 1,162,607.00 6,803,902.51 1/1/93 - 3/31/93 431,414.27 19,750,359.51 869,016.83 7,672,919.34 4/1/93 - 6/30/93 0.00 19,750,359.51 3,420,602.14 11,093,521.48 7/31/93 - 9/30/93 49,640.49 19,800,000.00 11,158,990.41 22,252,511.89 10/1/93 - 12/31/93 10,328,751.65 32,581,263.54 1/1/94 - 3/31/94 2,717,213.30 35,298,476.84 4/1/94 - 6/30/94 7,082,005.05 42,380,481.89 7/31/94 - 9/30/94 6,125,770.26 48,506,252.15 10/1/94 - 12/31/94 7,091,080.87 55,597,333.02 1/1/95 - 3/31/95 1,457,432.74 57,054,765.76 4/1/95 - 6/30/95 3,684,200.00 60,738,965.82 Cancellation: 2,261,034.18  Table 5: Key Indicators for Project Implementation Planned Actual 1987 1988 1989 1990 1991 1992 1993 1994 Item\Year Start Complete Start Complete 1. Barge quay & working craft quay Aug-88 Jun-90 Feb-87 Feb-91 _ 2. Main quay, iron berths No.1-5 Aug-88 Apr-90 Oct-88 Feb-91 3. Construction cofferdam (production & Aug-88 Oct-89 Oct-88 Dec-90 living area, south bank revetnent) 4. Earth filling through pumping Feb-89 Apr-90 Oct-88 Feb-91 (prodiction & living area) 5. Public facilities in the port ( road, yard, May-90 Jul-92 Dec-90 Jul-93 warehouse, water supply & drainage) 6. Installation of equipment & testing Jul-90 Sep-92 Dec-92 Dec-94 7. Public facilities in the living area May-91 Jul-92 Dec-91 Dec-94 8. Water supply outside the port Sep-89 Jul-90 Jun-87 Mar-93 O 9. Power supply outside the port Oct-87 Oct-89 May-87 Dec-90 10. Highways & railways outside the port Jun-88 Sep-91 Oct-89 Dec-93 I1. Highway/railway brighes outside the Oct-87 May-91 Jul-88 May-93 _ port 12. Channel dredging May-90 Jul-92 Jul-90 Dec-92 - - - -------- Planned Actual  - 17- Table 5B: Training Needs of Xinsha Terminal Planned Actual Item Coal Iron Bulk General Multi- Total Coal Iron Bulk General Multi- Total berth ore ferti- cargo purpose berth ore ferti- cargo purpose berth lizer berth berth berth lizer berth berth berth berth Stevedores 46 34 363 230 94 767 200 200 135 535 Equipment drivers 138 51 58 53 31 331 80 40 40 80 30 270 Truck drivers 40 20 30 50 50 30 180 Maintenance technicians 280 30 30 20 20 20 120 Electric workers 60 10 10 10 10 40 Water & sewage workers 50 10 5 5 20 Material labors 50 5 5 10 Management 110 10 20 10 20 5 65 Cargo allocation clerks 40 5 5 10 5 5 30 Warehousemen 60 5 5 10 5 5 30 Tallyman 40 2 2 2 2 8 Civil works maintenance 30 10 10 10 10 10 50 Others 45 15 10 15 40 Total 1 903 200 167 387 402 242 1.398 Distribution by Year: 1989 1990 1991 1992 1993 1994 Total Planned 200 400 600 703 1,903 Actual 88 96 520 164 300 230 1,398 Overseas Training: Person Duration Person*month Management 50 1.0 51.5 Technicians 53 0.7 37.6 Workers 3 0.9 2.7  - 18- Table 5C: Procurement (under ICB for over $1.0 mln. contracts) Prequallfication for civil works PQ Bank's Issuing Closing of PQ Bank's documents no PQ PQ Evaluation no to the Bank objection documents submission to the Bank objection 1. Marine works May-87 Jun-87 Jul-87 Sep-87 Sep-87 Oct-87 2. Land works Mar-89 Apr-89 May-89 Jun-89 Aug-89 Oct-89 Procurement procedures Item Contract Bid docu- Bid Evaluation Signing Evaluation amount ments to opening report to contract period (USS,000) the Bank the Bank (months) Civil works 1. Marine works 30,425 Jun-87 Jan-86 Mar-88 Jul-88 3 2. Land works 9,567 May-89 Jun-90 Jul-90 Sep-90 2 Goods Coal & ore berths: A-l Handling system 41397 Mar-90 Oct-90 Feb-91 Dec-91 4 A-2 Environment protection system 1,233 Mar-90 Oct-90 Jan-91 Jan-92 4 A-3 Power supply & lighting system 2,161 Mar-90 Oct-90 Jan-91 Jan-92 4 General cargo B-I Portal cranes (2 units) 1,120 Aug-90 Jun-91 Oct-91 Dec-91 4 Fertilizer berths: C-1 Screw ship unloader 2,650 Jul-91 Jan-92 Feb-93 Mar-93 13 C-2 Conveying & bagging system 3,450 Jul-91 Jan-92 Jun-92 Aug-92 5 Additional Equipment D- I Portal cranes (7 units) 3,551 Dec-93 Jan-94 Feb-94 Mar-94 I D-2 Tug boats (2 units) 4,680 Dec-93 Jan-94 Feb-94 Mar-94 I D-3 Pushing & collecting machine (I Iunits) 1,145 Dec-93 Jan-94 Feb-94 Apr-94 1  - 19- Table 6: Key Indicator for Project Operation Operational Efficiency (i) Berth Throughput (,000 tons) Existing Planned Actual 1985 1990 1995 2000 1994 Coal 3,620 8,300 10,450 15,450 14,291 Petroleum 2,966 4,500 5,000 7,150 11,936 Iron ores 445 1,200 1,500 1,800 1,077 Steel 2,421 2,480 2,850 3,450 4,027 Construction material 18 0 0 0 121 Cement 348 750 1,150 1,550 1,872 Timber 672 705 970 1,300 704 Non-metallic ore 160 760 850 1,100 335 Fertilizer 1,394 1,850 2,000 2,150 1,478 Salt 108 250 250 300 14 Grain 1,416 1,830 2,300 2,300 3,603 Others 3,235 2,875 5,680 6,450 4,292 IQoal 16803 25.500 33,000 43,000 432750 Containers (,000 TEUs) 309 800 1,500 2,000 1,452 (ii) Average Berth Time of Vessels (Unloading) Coal 7.1 5.2 Petroleum 3.3 3.0 Iron ores 11.1 6.7 Steel 16.7 4.6 Fertilizer 21.2 12.4 Grain 13.4 5.9 Others 13.3 2.1 Container 4.4 0.6 (iii) Average Berth Time of Vessels (Loading) Fertilizer 2.6 3.2 Grain 9.8 1.9 Others 10.0 1.0 Container 2.4 0.7  Table 7: Studies Included in Project Studies Purpose as defined at appraisal Status Impact of study Special Design Review GHB's design and assist in GHB recruited three foreign consulting The consultants'conclusions and preparing the required design for the port's firms and satisfactorily implemented. recommendations were applied to the future expansion. structure design of the project. Management and Identify problems and propose The study was included in the Master Plan The recommendations, such as (a) Operation recommendations to improve the efficiency Study and satisfactorily completed. converting 2 coal berths (# 1-2) to fertilizer Improvement of the port berths and (b) increasing storage capacity at Xingang, were implemented. Updating Master Update the existing master plan of the port The study was completed and submitted to The recommendations of expansion of berths Plan Study (by to meet the requirements of the increasing MOC for review and authorization in (#6-10) have been implemented, and the local funds) traffic up to year 2005. February 1992. construction is underway. o Navigation Channel Estimate the costs of increasing the channel GHB implemented the study with GHB plans to deepen the channel from 9m Study (by local depth and width either by dredging or by consultation of Guangzhou Water to 11.5-12.5m in accordance with the funds) river training works or both, and determine Transportation Engineering & Design recommendation of the study. the economic feasibility of the project and Institute, Chong Shan University, Nanging proper timing. Hydraulic Science Institute, Tianjin Hydraulic Science Institute and the 4th Navigation Design Institute.  - 21 - Table 8A: Project Cost L11 F _mi TobW LaeW Foiw TOAW LA FOMa Toal Losal pam ToWl - (Ya=.OSC- - (USS.OD)- -(YRM.0)- - a00m- 1. Civm WaW Mainwh(coabicUml-5 16,310 25,271 41,531 4,406 6,830 11,238 27,350 67.904 95,254 5,113 9,293 14,406 Bapquqy a _wu'b- 7.481 9,750 17,231 2,022 2635 4,657 33 32,165 40965 1.645 4,402 6,047 Dih 4,332 7,370 11,702 1,171 19m 3,163 6.730 15,052 21,782 1,259 2,060 3,318 DredinnuuumrAdammi.,kqtmy 5.133 31,705 36,833 1,387 ,569 9.956 5,050 3,300 3,850 944 520 1,464 Roadwanymddin p-t 5.510 11,093 16,603 1,489 2gg9 4,487 10Of20 7,65 1,435 1,967 1.090 3.057 Raluymp it 1,832 3I1 2,650 495 221 716 2,536 0 2,536 474 0 474 Powrply inport 2,524 7,300 9,824 632 1,973 2,655 3,004 0 3,004 562 0 562 Waw1wq wp*ymudu_p 1.584 3,106 4,692 423 340 1,268 6,260 4,750 11,010 1,170 650 1,320 Sea p teamipluid 3Il 1,273 2,091 221 344 565 4,670 0 4,670 S73 0 873 Azc.e ol nul dA towe 1,2 S 13,806 15,096 34B 3,732 4,080 680 5,312 5,992 127 727 354 Awalybu0khg 8,693 17,523 26.216 2,349 4,736 7,035 50,150 0 50,150 9,376 0 9,376 Vaddw oeilohard 1,036 3,275 4,311 280 gg5 1.165 23,210 11,392 39,602 5,274 1,559 6,S33 Ta yib S,916 1,025 9,941 2,410 277 2,687 3,669 0 3,669 636 0 636 Pqla nm mdlord omluado 9,620 0 9,620 2,600 0 2,60 0 0 0 0 0 Teat,m. vaNW ooraltin 6,197 0 6,197 1,675 0 1,675 3,337 0 3,337 1,661 0 1,S61 DiP 9.339 1.228 10,567 2,524 332 2AM56 6,416 0 6,416 1,199 0 1,199 Livinm 27,863 3,197 31,065 7,532 a64 8,396 22,173 0 22.173 4,146 0 4,146 Chtd adredging 43,129 49,702 97,831 13,006 13,433 26,441 74,452 0 74,452 13,919 0 13,919 Rsllway ud hjy wayoue ofpcet 44,035 45,547 89,632 11,915 12,310 24,225 99,320 0 99,320 i3,56 0 is,5" Radw nadhinbwaybridge 34,95 35,742 70,337 9,350 9,660 19,010 76.27M 0 76,270 14.259 0 14,259 Waeravdpcw outdapot 10,683 4,048 14,731 2,367 1,094 3,961 3,260 0 6,260 If4 0 1,544 F.mdlfre(ixz 4,081 0 4,033 1,105 0 1,105 9,233 0 9,233 1,736 0 1,736 0 0 0 0 0 Subtoal 260,061 272,7 532144 70,23 73,725 144,012 462S700 143,339 611.039 f6,302 20,301 106,803 2. Eqwmpt TeIacounnubati&navigatoen 0 5,121 5,121 0 1,334 1,384 10,456 10,456 0 1,431 1,431 H:IaMeqon 12,002 157,331 169,333 3,244 42f522 45,766 421.110 421,110 0 57,631 57,631 PotesvnoboazA h 14,422 6,383 20,805 3,898 1,725 5,623 45,261 45,15 91,076 S,462 6,270 14,732 Subtotal 26,424 163,335 195,259 7,142 45,631 52,773 45,261 477,381 522,642 3,462 65.332 73,794 3. Teal AaulnmAUaidng 21,90 5,554 27,144 5,835 If,0 7,336 35,729 9,477 45,206 6,680 1,297 7,977 0 Subtotal 21,590 5,554 27.14 5,335 I,0 7,336 35,729 9.477 45,206 6,630 1,297 7.977 4. T and Duat 45.049 0 45,049 12,175 0 12,175 Total Bue Cost 353.124 447,171 300,295 95,439 120,357 216,296 Physialconbpmcys(IDX) 22,649 44,162 72,811 7,743 11,936 19,679 Total 31,773 491,333 173,106 103,132 132,793 235,975 Pdeeo 08encc 37,152 127,991 215,143 6,076 9,155 15,231 GrndTo 461925 619M2M 1249 109 2l 14194 25L206 51690 625193 U l IOL164 K.23 13573 Exoinaige rat: RMBIO-USS 115349 (htX RMB to USS) USSI.0-RMfB7.307 (tm USS to LMB)  - 22 - Table 8B: Project Financing (US$ million) Source of Financing Planned Actual Local Foreign Total Local Foreign Total IBRD 63.0 63.0 61.9 61.9 IDA 25.0 25.0 25.0 25.0 Governmment 109.3 53.9 163.2 101.6 0.0 101.6 Total 109.3 141.9 251.2 101.6 86.9 188.6  - 23 - Table 8C: Allocation of Loan Proceeds Planned Actual Category Amount of the Amount of the Amount of the Amount of the Credit Allocated Loan Allocated Credit Disbursed Loan Disbursed (in SDR) (in US$) (in SDR) (in US$) (1) Civil Works 17,400,000 8,000,000 15,300,000.00 3,475,081.57 (2) Goods 2,400,000 34,000,000 3,700,000.00 57,224,961.99 (3) Consultants' 0 1,450,000 800,000.00 38,922.26 services and training (4) Unallocated 0 19,550,000 0.00 0.00 Cancellation 2,261,034.18 Total 19,800,000 63,000,000 19,800,000.00 63,000,000.00  -24 - Table 9: Economic Cost, Benefit and Major Financial Indicators SAR ICR Total Traffic (1994): /1 31.3 43.8 Of which: General Cargo (mln. ton) 7.9 13.6 Iron ores (mln. ton) 1.4 1.1 Coal (mln. ton) 7.2 9.9 Financial (1993, in %): Return on average net fixed assets 14.6 12.5 Operating ratio 45.4 66.8 Debt service coverage 1.8 2.6 Debt/(debt + equity) 48.2 21.2 Economic (Decmber 1994 prices): Total cost (million Yuan) 1,077.4 1,181.3 NPV (million Yuan) n.a. 1,834.1 Economic rate of return (in %) 21.3 34.7 /1: Huangpu port district in Guangzhou port  Table 10: Status of Legal Covenents Agreement Section Status Original Date Revised Date Description of Covenant Comments Development 4.01(a) OK 06/22/88 Borrower to maintain proper records Credit and accounts. 4.01 (b) OK Borrower to have accounts audited Audited reports were and furnished to the Bank not later received in time and than six months after the end of each reviewed by Bank. fiscal year. Project 2.01 OK 06/22/88 GHB to undertake a navigation Studies were completed by channel study, update Master Plan GHB and submitted to and a study of intermodal cargo MOC for review in 1992. distribution. 4.01(a) OK GHB to maintain proper records and accounts. 4.01(b) OK GHB to have accounts audited and Audited reports were submitted to the Bank for review not received in time and later than six months after the end of reviewed by Bank. the fiscal year. tlO.doc  - 26 - Table 11: Bank Resources: Staff Input FY 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Total Prepappraisal 15.9 46.9 62.8 Appraisal 23.7 2.2 25.9 Negotations 3.6 7.6 11.2 Supervision 2.5 9.4 11.7 11.6 10.9 9.2 11.2 66.5 Completion Total 166.4  - 27 - Table 12: Bank Resources: Mission Stage of Month/ Number of Days in Specialized Performance rating Types of project cycle year persons field staff skills Implemen- Develop- problems represented tation ment status objectives Identification 04/84 6 5 EGR, EC, FA, OP Preparation 11/84 5 7 EGR, EC, FA, OP Pre-appraisal 05/85 5 14 EGR, EC, FA, OP,PRO Appraisal 03/86 4 14 EGR, EC, FA, OP Supervision 1 09/86 1 4 PRO Supervision 2 10/88 3 5 EGR, FA, OP, 1 1 Supervision 3 09/89 2 4 OP, FAIEC I I Supervision 4 05/90 2 7 OP, FA/EC 2 1 Imple. delay Supervision 5 11/90 2 5 OP, FA/EC 1 1 Supervision 6 08/91 3 4 OP, EGR, FA/EC 2 1 Imple. delay Supervision 7 03/92 2 2 OP, EGR Supervision 8 09/92 2 4 OP, FA/EC 1 1 Supervision 9 03/93 2 5 OP, EGR I 1 Supervision 10 08/93 2 3 OP, EGR 2 2 Imple. delay Supervision 11 12/93 2 3 EGR, FA/EC 2 2 Supervision 12 12/94 2 3 EGR, FA/EC S S Completion   - 29 - Appendix A APPENDIX A: ICR PREPARATION MISSION'S AIDE-MEMOIRE April 7-19, 1995 1. A World Bank mission comprising Messrs. T. Tsutsumi and H. K. Yen visited Huangpu Port from April 7 to 19, 1995 to prepare the Implementation Completion Report (ICR). The mission wishes to thank the officials of the Government of China (GOC), Ministry of Communication (MOC), as well as the management and staff of Guangzhou Harbour Bureau (GHB) for the courtesies and cooperation extended to it during this visit. 2. This Aide-Memoire summarizes the agreements reached with GHB officials on the preparation of the ICR. The agreements of the mission, as incorporated in this Aide- Memoire, are subject to review and confirmation by Bank management. The View of the Bank and GHB 3. The Bank mission and GHB have the same view on the project implementation: The project was satisfactory completed on December 31, 1994. ICR Preparation 4. The Bank started preparation of the ICR from December 1994 (during the previous supervision mission), requesting for GHB providing necessary information and data. The Bank received draft information and data in February 1995. 5. The mission visited the project site and discussed with GHB on the preparation of the ICR. The mission has obtained the necessary information and reached agreement on the following actions to be taken: (a) GHB will review the draft ICR which the Bank ICR mission left; GHB will send their comments to the Bank by May 6, 1995; (b) GHB will send its own evaluation of proJect implementation for Appendix B of the ICR to the Bank by May 13, 1995; (c) the Bank will send a draft ICR to the Borrower, MOC and GHB (to be confirmed by MOC), incorporating the GHB's evaluation by May 20, 1995; (d) the Borrower (MOC and GHB)'s comments will be sent to the Bank by June 5, 1995; and (e) the Bank will finalize the ICR and send to the Board of the Bank by June 30, 1995. April 18, 1995 Huangpu, China  - 30 - Appendix B APPENDIX B: BORROWER'S CONTRIBUTION TO THE ICR PROJECT REVIEW FROM BORROWER'S PERSPECTIVE Section A ' . Xinsha Terminal Project of Huangpu port of Guangzhou Ilarbour Bureau is an important project in China which was implemented by GHB, by applying World Bank loans for in-port project (including marine works, mechanical equipment and major civil construction) through ICB. The in-port project construction was officially commenced in October 1988, and the first construction project was marine works. The major projects had completed and put into operation by the end of 1994. The whole Xinsha Terminal Project is intend to be accepted by the State Planning Committee in the first half of 1995. Berths No. 3 and No. 5 of them put into simple operation in the middle of December of 1992, mainly handling bulk material, and have unloaded and loaded more than 400 tons of bulk materials separately since then. 2. The project design is advanced and reliable in general layout, equipment parameters, features and structure type. In general, project objectives are achieved and the project is a success. That greatly expand Guangzhou port's capacity in cargo traffic by 9.1 million tons capacity increasing each year. 3. For construction of the Xinsha project, it adopted large amounts of modem advanced techniques so that major effectiveness have been made. In marine works, new structure type of steel pile cellular structure were used. As a result, construction period has been shortened, cost been saved, the quality of the construction been improved. Meanwhile, a great number of special personnel were trained and grow up. Necessary adjustment of the handling processing line of bulk fertilizer berth has been carried out, that canceled the bulk fertilizer storehouse and the relevant equipment. Thus, it reduced middle links in the line and reduce the investment as well as the maintenance risk for the bulk storehouse and its equipment. The handling processing line of coal and iron ore berth has been considerable improved., the number of necessary equipment increased, so that every position of the whole system has been strengthened, improved the handling capacity to satisfy the need of the great increasing of coal and ore by the Guangdong district. Especially the great improvement for the coal barge loading system to solve some vulnerable spots of the original system. The modification has resulted in a considerable important of perfect technology and the improvement of capacity.  - 31 - Appendix B 4. Construction of the following components such as computer managing system, telecommunication system and VTS, etc. under this project have greatly enhanced the comprehensive capacity and function of Guangzhou port. 5. Procurement of over one-hundred units of handling machine, two tugging port boats, coal and ore handling system equipment and fertilizer handling system equipment in three special berths were carried out strictly in accordance with the Guidelines set by the World Bank through ICB. It provides a solid foundation for the development and traffic increase of Guangzhou port so that it will accelerate the Guangzhou port to be an international modem one. 6. The international supervision system has been imported and the method of Sino- foreign cooperation for the civil works construction supervision was adopted. For the construction of the marine works and land works, a foreign consulting firm was employed to provided consultant and training service, and the supervisors from this company and the personnel of GHB jointly supervised the construction of the marine works and land works. Consultant service by the foreign consultants, construction supervision and local and overseas training enable technical and management staff from GHB to widen their view, learn and obtain some international practice, advanced technology and management experiences which have enhanced the staffs' ability, and ensured the project quality. 7. Particular attention was given to environmental protection in accordance with the regulation of state. Environmental protection facility such as sewage treatment system and dust proof was equipped at the relevant project contract. 8. Equipment procurement under this project was executed by an specific department which comprised experienced persons. They have been trained. They familiar with technical and commercial business affairs, be skillful at computer operation, with good ability in English and rich project managing experience. Therefore, the evaluating speed of the project was quicker compared with other ports. It took generally about four months from the bids opening to supplying evaluation reports to the World Bank, and the quicker ones among them even took only one month. A specific project managing system was organized for the construction of important system bids. 9. The project design was basically undertaken by the Chinese design institute, i.e. the Fourth Design Institute of Navigation Engineering of MOC. In general, the design is a success. The design institute made a great effort to ensure the satisfactory execution of the project. 10. Technical documents for marine works, land works and procurement of equipment system bid were prepared by design institute, and assisted by a foreign company and consultants and GHB; most technical documents for the bids of other equipment procurements were prepared by GHB. Some reliable and pipe techniques were incorporated in the well-drafted technical specification which fully comply with local actual situation. The tendering work was actually successful.  - 32 - Appendix B 11. In accordance with the requirement of port master plan and development, in the last project period, more than 30 units and 2 units of large tugging boat of equipment of six bids were procured by using the Bank's loan savings-more than 10 million Dollars. It has enhanced the comprehensive capacity of Xinsha port. The tendering work by using the Bank's loan savings is a great success, and the speed was quick (it took only one month to evaluate up to supply all the evaluate report to the World Bank). The result of tendering was satisfactory. 12. No. 3 and No. 5 berths began operation simply at the end of 1992, mainly bulk materials handling. There have been nearly 200 ships which were equivalent to more than 4 million tons have been unloaded since them. The situation of the relevant mechanical and electrical equipment as well as facilities in these two berths was quite good. 13. Generally, the project was implemented strictly following the SAR. Marine works, land works, environmental protection system, power supply and lighting system, handling system equipment of fertilizer berths, portal crane and all mobile machinery system were completed and delivered in the contracted period. 14. Only the completion of handling and controlling system in berth No. I and berth No. 2 has delayed for almost one year due to the local situation and experience of the contractor itself. 15. Regarding the evaluation of the screw ship unloader, because there were differences in deciding which bidder was qualified to award the contract, it took a long time to investigate and study, which caused the evaluation prolongation for another eight months. Finally after the joint efforts of both parts of buyer and seller, the implementation progress of this bid satisfied the requirement of which all the equipment of the fertilizer berth completed at the same time. Section B 16. The ICR drafted by the World Bank is comprehensive. It describes completely all the major items of the project executed and analysis provide is mainly correct and complies with the actual conditions. 17. With respect to the data of each item in the list of ICR. We acknowledge that they correct and fully show the overall situation. Section C 18. From the project appraisal to reimbursement deadline, the World Bank was very positive and effective. The Guangzhou Harbour Bureau appreciates all officials and experts from the World Bank who participated in this project for their efforts and their contributions made to the port development. It gave us deep impression of their strong sense of seriously responsibility, scientific way in management and spirit of job respect.  - 33 - Appendix B 19. During the whole implementation period, we have been keeping a close cooperation and mutual respect with the Technical Division, Communication Division, and Disbursement Division of the Bank. Especially with the guidance on all aspects granted by the Bank's experts, Guangzhou Harbour Bureau overcame various difficulties in project executions and completed the project satisfactorily. 20. Each site supervision mission from the World Bank made a significant effect on the project execution. They inspected the site situation twice a year and collected first hand information, resolved problems in the construction to accelerate the construction procedure by strengthening a mutual understanding and trust so that an easy understanding can be reached. The Bank's mission gave us great support on savings application for procurement of container cranes, etc. and also especially extension of closing date and reallocation of the loan. The Bank officers' instruction, understanding and quick responses to our request facilitated implementation.  _ 34 _ Appendix C 0 ' Xx ; 'L Jtf.e- -~ ~ 9 4I - g: Ii~~~~~~~~~OL Ii W,/Sy /;i Ii