Philippines - Provincial Ports Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 14712 PROJECT COMPLETION REPORT REPUBLIC OF THE PHILIPPINES PROVINCIAL PORTS PROJECT (LOAN 2823-PH) JUNE 26, 1995 Infrastructure Operations Division Country Department I East Asia and Pacific Region This document 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 without World Bank authorization.  Republic of the Philippines Provincial Ports Project - Loan 2823-PH CURRENCY EQUIVALENTS Currency Unit - Philippine Peso (P) US$1 = P27.00 (at completion - 31 December 1993) US$1 = P20.00 (at appraisal - December 1986) WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (kin) = 0.62 miles (mi) 1 square meter (sq m) = 10.76 square feet (sq ft) 1 square kilometer (sq km) = 0.4 square miles (sq mi) 1 hectare (ha) = 2.47 acres (ac) 1 kilogram (kg) = 2.2046 pounds (lbs) 1 metric ton (mt) = 2,205 pounds (lbs) FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS COA - Commission on Audit DOTC - Department of Transportation and Communications ICB - International Competitive Bidding IBRD - International Bank for Reconstruction and Development LA - Loan Agreement LCB - Local Competitive Bidding MARINA - Maritime Industry Authority MIS - Management Information System(s) PA - Project Agreement PCR - Project Completion Report PMO - Project Management Office PPAR - Project Performance Audit Report PPA - Philippine Ports Authority SAR - Staff Appraisal Report  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation June 26, 1995 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Philippines Provincial Ports Proiect (Loan 2823-PH) Attached is the Project Completion Report (PCR) on the Philippines: Provincial Ports project (Loan 2823-PH, approved in FY87) prepared by the East Asia and Pacific Regional Office with Part II contributed by the Borrower. The Loan for US$32 million equivalent was closed on June 14, 1994, twelve months after the original schedule. Final disbursement took place in May 1994; a balance of about US$1.9 million was canceled. The loan was the fourth to assist the port system of the Philippines. Project design included follow up on institutional components initiated under the earlier (FY81) Third Ports project. Physical objectives were to expand and improve port capacity, through (i) rehabilitation and construction of facilities; and (ii) feasibility and detailed engineering studies for future projects. Institutional project objectives were to strengthen the institutional setup for the management of secondary ports, through (i) technical assistance for training and for developing a Management Information System (MIS), and (ii) studies, especially to prepare cost-based tariffs. The main physical component-expansion of six provincial ports and rehabilitation of fifteen others-was successfully completed after delays. The pre-investment feasibility and engineering studies were also completed. The institutional component was, however, not implemented. The Borrower stopped work early on the MIS system; money already spent under an earlier project was wasted. No training took place either because Government prohibited overseas training or because the port authority showed no interest for on-site training. The port tariff study, whose need had been identified under an earlier project, did not result in changes in tariff structure. The major recommendations for improving fire fighting arrangements were shelved for future consideration. The PCR covers all key areas but lacks detailed economic and financial data to support its analysis. It estimates the economic rate of return of the project at 32 percent, higher than at appraisal, in part because the growth rate of traffic was more than double the appraisal estimate. Overall, the finances of the Philippines Port Authority are sound. Port charges, however, appear to be biased to the benefit of slhips rather than of cargo; the issue is being pursued in the proposed Maritime Improvement project as a follow up on the port tariff study under the Provincial Ports project. Because of the failure of institutional development on1 a fourth project in the same sector, the Operations Evaluation Department rates the outcome as marginally satisfactory, sustainability as likely, and the institutional development as negligible. No audit is planned. Attachument This document 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 without World Bank authorization.   FOR OFFICIAL USE ONLY REPUBLIC OF THE PHILIPPINES PROVINCIAL PORTS PROJECT - LOAN 2823-PH PROJECT COMPLETION REPORT Table of Contents Page No. Preface ...... Evaluation Surimmary.... Part I - Project Review from Bankl's Perspective 1. Project Identity ................ . .. .. . 1 2. Background ...........1..,,..... , 3. Project Objectives and Description. 2 4. Project Design and Organization . 2 5. Project Implementation. 3 6. Project Results. 4 7. Project Sustainability. 5 8. IDA Performance. 5 9. Borrower Performance. 5 10. Project Relationship . 6 11. Consulting Services and Contractors. 6 12. Project Documentation and Data . ........................................... 6 II. Part II - Project Review from Borrower's Perspective. 7 III. Part III - Summary of Statistical Data Table 1: Related Bank Loans and/or IDA Credits. 8 Table 2: Project Timetable .9 Table 3: Credit Disbursements A. Cumulative Disbursements .......................... 10 B. Disbursements by Category .10 Table 4: Project Implementation. 11 Table 5: Project Costs and Financing A. Project Costs ........... , , 12 B. Project Financing. 13 Table 6: Project Results A. Economic Impact ............... . . . . . ... 14 B. Financial Impact .14 C. Studies .15 Table 7: Status of Covenants .16 Table 8: Use of IDA Resources A. Staff Inputs .............. 13 B. Missions .19 This document has a restricted aistribution and may be used by recipients only in the performance of their offcia duies It cotens ay not otherwise be disclosed without World Bank authorization.   PCR - Evaluation Summary ii Provincial Ports Project - Ln. 2823-PH REPUBLIC OF THE PHILIPPINES PROVINCIAL PORTS PROJECT - LOAN 2823-PH PROJECT COMPLETION REPORT PREFACE This is the Project Completion Report (PCR) for the Provincial Ports Project in the Republic of the Philippines, for which IBRD Loan 2823-PH in the amount of US$32 million was approved on 26 May 1987, signed on 30 June 1987 and became effective on 12 November 1987. The loan was closed on 31 December 1993, after being granted an extension of 12 months. The total amount disbursed was $30,065,959.84, the final disbursement was made on 10 May 1994 and the balance of $1,934,040.16 was cancelled on the same date. The account was closed on 14 June 1994, when final recoveries of the Special Account were made. The PCR was jointly prepared by the Infrastructure Operations Division, Country Department 1 of the East Asia and Pacific Region (EAlIN) (Preface, Evaluation Summary and Parts I and III), and by the Project Management Office (PMO) of the Philippine Ports Authority (PPA) (Part II), and is based, inter alia, on the International Bank for Reconstruction and Development's (IBRD) Staff Appraisal Report (SAR); the Loan Agreement (LA); the Project Agreement (PA); supervision reports; PPA's own records, project completion report and monthly progress reports; correspondence between IBRD, the Borrower and PPA; and internal IBRD memoranda.   PCR - Evaluation Summary iii Provincial Ports Project - Ln. 2823-PH REPUBLIC OF THE PHILIPPINES PROVINCIAL PORTS PROJECT - LOAN 2823-PH PROJECT COMPLETION REPORT EVALUATION SUMMARY Objectives The Provincial Ports Project was designed to strengthen the institutional setup for the management of secondary and tertiary ports in the Philippines and help expand and improve port capacity by: (a) expansion of facilities at six ports and rehabilitation/maintenance work at six others, with further provision for rehabilitation at ten additional ports to be identified; and (b) technical assistance in project implementation, financial management, training and studies needed for further development of the port system in the country. To accomplish these objectives the project would: (a) expand facilities at six selected development ports; (b) rehabilitate/maintain existing facilities at six selected rehabilitation ports, and ten additional ports to be identified and selected according to criteria reviewed and approved by the Bank; (c) procure equipment for communications, water supply and sewerage, management information systems (MIS) and fire fighting; (d) provide technical assistance to PPA for design and construction supervision, MIS, feasibility studies for future port projects, special studies and training; and (e) provide training of personnel in port planning, design, management and operations. Implementation Experience The Provincial Ports Project was appraised in August/September 1986 and negotiations were held in April 1987. The Loan was approved on 26 May 1987, signed on 30 June 1987 and became effective on 12 November 1987. The IBRD Loan (Ln 2823-PH) for the project amounted to US$32.0 million. The loan closed on 31 December 1993 after having been extended for one year. The loan account closed on 14 June 1994, $30,065,959.84 having been disbursed. The balance of $1,934,040.16 was cancelled on 10 May 1994, when the final disbursement was made. The project made a good start, because the first twelve works contracts had been identified and designed during the implementation of the Third Ports Project (Ln. 1855-PH). Eleven of these twelve contracts started in late September or early October 1987. Many of them, however, were extensively delayed for various reasons and though eight of them had been completed by mid-1990, the last one was not completed until early 1993.  PCR - Evaluation Summary iV Provincial Ports Project - Ln. 2823-PH During the project nine further ports were identified as requiring urgent rehabilitation and work on these started in early 1990. One port was deleted because of damage incurred by a major earthquake and the remaining eight were finally completed at the end of 1993, when the loan closed. Technical assistance and consulting services included studies on implementing the MIS, port tariff rationalisation, fire fighting needs, watersupply, communications and port operations, feasibility studies to select the additional port works to be included, detailed design of works to be carried out under the proposed Maritime Improvement Project and training of staff as well as assistance for design and construction supervision for port works. Project Results The main component of this project, the civil works, was successfully completed after some delays and after the loan closing date had been extended by one year. The results have been beneficial to the inter-island and international freight and passenger traffic through the provision of improved facilities for handling both cargo and passengers. Because of the reduction in value of the Peso in relation to the US Dollar during the period of the project, more work was carried out for about the same US Dollar cost as that forecast at appraisal. The post-project Economic Rate of Return (ERR) for the project is estimated to be 32% as compared to the SAR's ERR of 27%. Cargo throughput at most of the twelve original ports has greatly exceeded the appraisal forecast, costs have not increased and therefore the project returns are very satisfactory. On the other hand, the technical assistance achieved only moderate success. The MIS study was stopped by COA part way through on the grounds that the COA system will be more useful, the tariff study has in part been acted upon, the fire fighting study recommendations have largely not been implemented, the communications and port operations studies were cancelled and the training, in addition to being curtailed by the government's ban on overseas travel for study, was not carried through with any energy or conviction. Sustainability It is expected that the economic benefits generated by the project works will be sustained in view of the higher than forecast traffic levels. In order to bring itself up to date technologically, PPA must be allowed to implement a meaningful MIS improvement related to its port operations. The main risk to the sustainability of the project benefits is that inadequate provisions are made for routine and periodic maintenance in future years or that the economy falls again into recession and traffic levels fall appreciably. The risk of inadequate maintenance has been addressed, at least in part, by PPA, which has instituted a more rigourous system of inspection and maintenance. It is expected that the forthcoming Maritime Improvement Project would also address some of the more serious maintenance problems at major ports.  PCR - Evaluation Summary V Provincial Ports Project - Ln. 2823-PH Findings and Lessons Learned This was overall a reasonably successful project, much of the credit for which must go to the coordination achieved between the Bank staff and PPA and to the technical assistance consultants who helped PPA supervise the civil works. The main lessons that should be learned by the Bank and the Borrower are: (a) more rigourous prequalification of contractors must be carried out in the future, especially in relation to their financial resources and capability for completing the works successfully; (b) the training programme must be planned to ensure that its content is appropriate and that it is implemented in a timely manner; (c) better continuity of Bank supervision should be provided; and (d) improvement and augmentation of PPA's maintenance resources, planning and operations would reduce the need to periodically rehabilitate port facilities.   PCR - Part 1 1 Provincial Ports Project - Ln. 2823-PH REPUBLIC OF THE PHILIPPINES PROVINCIAL PORTS PROJECT - LOAN 2823-PH PROJECT COMPLETION REPORT PART I. PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity - Project Name ........... Provincial Ports Project - Loan No ........... 2823-PH - Loan Amount .... ....... US$32.0 million - RVP Unit ........... East Asia Region - Country ........... Republic of the Philippines - Sector ........... Transport - Subsector ........... Port 2. Background 2.01 At the time of appraisal the Philippines transport system was composed of over 161,000 km of roads. 131 national ports, 265 private ports and about 400 loading points as well as railways and airports. The system was, and still is, predominately bimodal, with road and sea transport generally complementing rather than competing with each other. Road transport handled 90% of the country's passenger movement and 65 % of freight movement, while sea transport handled 7% of passengers and 35% of freight. 2.02 Together with much of the country's infrastructure, the condition of many port facilities was not good. During the economic and financial difficulties of the early 1980s, insufficient funds were released by the Government for maintenance expenditures, which resulted in deterioration of port infrastructure and equipment. Problems included insufficient dredging, dilapidated piers, badly maintained access roads and lack of lighting and communication systems. Considering the importance of infrastructure maintenance for efficient port operations, it was important to ensure that the Philippine Ports Authority (PPA) would have the necessary budget to carry out the required maintenance works to arrest further deterioration of port infrastructure. 2.03 Among the Bank's principal objectives in transport sector lending in the Philippines has been to improve the infrastructure of the country and to assist in strengthening the respective institutions. Commencing with the first port loan in 1961, the Bank has had a long association with the Philippines ports subsector and was instrumental in the creation of PPA in 1974. Three completed port projects had financed the expansion and improvement of PPA's major ports, so the next step was to improve secondary and tertiary ports in the provinces. This was in line with the Government's and the Bank's strategy for alleviating the conditions in some of the more underdeveloped areas of the country. Therefore. during the Third Ports Project (Loan 1855-PH), a feasibility study was conducted to select  PCR - Part 1 2 Provincial Ports Project - Ln. 2823-PH provincial ports which needed to be developed to cater for increasing traffic ("development ports") and others which needed some repair and upgrading ("rehabilitation ports"). 3. Project Objectives and Description 3.01 Project Objectives. The project was designed to strengthen the institutional setup for the management of secondary and tertiary ports in the Philippines and help expand and improve port capacity by: (a) expansion of facilities at six ports and rehabilitation/maintenance work at six others, with further provision for rehabilitation at ten additional ports to be identified; and (b) technical assistance in project implementation, financial management, training and studies needed for further development of the port system in the country. 3.02 Project Description. The project would: (a) expand facilities at six selected development ports; (b) rehabilitate/maintain existing facilities at six selected rehabilitation ports, and ten additional ports to be identified and selected according to criteria reviewed and approved by the Bank; (c) procure equipment for communications, water supply and sewerage, management information systems (MIS) and fire fighting; (d) provide technical assistance to PPA for design and construction supervision, MIS, feasibility studies for future port projects, special studies and training; and (e) provide training of personnel in port planning, design, management and operations. 4. Project Design and Organization 4.01 This project was the fourth port project to be financed by the Bank in the Philippines and the main components were identified by a feasibility study carried out during the implementation of the Third Ports Project. Of the sixteen ports studied, six development ports and six rehabilitation ports were selected as having the highest priority based on the identification of cargo and passenger traffic growth patterns and shortfalls between existing berth capacities and the facilities expected to be required by 1990. The ports selected as development ports were Calapan, San Jose, Tagbilaran, Nasipit, Surigao and Pulupandan. The rehabilitation ports selected were Bauan, Cagayan de Oro, Sta. Cruz, Legaspi, Tabaco and Pulauan. These twelve ports provided a good geographical spread, covering southern Luzon and adjacent islands, the Visayas and Mindanao. Also, under the Third Ports Project, these ports were studied further and final designs and tender drawings prepared. Ten further ports were to be identified for rehabilitation/maintenance during this project after consultation with the Bank. This would enable the project to respond in a flexible way to additional rehabilitation /maintenance needs. 4.02 The project had a substantial Technical Assistance component built into it, aimed at strengthening the capabilities of PPA. This comprised the finalisation of the Management Information System (MIS) started under the Third Ports Project, feasibility studies for future port projects and special studies on improving communications, port operations, fire fighting, water supply and MIS equipment, as well as design and construction supervision of civil works and a programme of training in port planning, design, management, operations and finance.  PCR - Part 1 3 Provincial Ports Project - Ln. 2823-PH 4.03 Primary responsibility for implementation was to be vested in PPA acting through a central Project Management Office (PMO) and smaller PMOs set up at the affected ports. Foreign technical assistance experts and local consultants were employed to carry out the design, supervision and studies, while the fire fighting study was carried out by the Manila Fire Department and the training programme by the PPA Training Centre. Foreign consulting firms carried out the MIS and Tariff Studies. 4.04 The loan for the project was approved in the sum of US$32.0 million, which was to finance 73% of the total project costs, excluding taxes and duties, which translated into 67% of the civil works costs and 100% of the foreign expenditures for goods and 100% of the costs of consultant services and training. The civil works and technical assistance components were expected to be completed by the end of 1991 and the loan was scheduled to close at the end of 1992. The timing of the project was suitable because of the seriously deteriorated state of many of the ports, the urgent necessity to rehabilitate them, and the budget constraints that prevented PPA from carrying out the works with its own funds. 5. Project Lnplementation 5.01 Apart from one contract, that for Cagayan de Oro, which started 18 months after the others, the civil works contracts prepared under the Third Ports Project and detailed in the SAR all started promptly in late September or early October 1987. Many of the contracts ran into trouble early on in the contract period for a variety of reasons which included a lack of financial resources on the part of the contractor, bad weather, additional works, delays in the delivery of government supplied materials, unexpected geology, port congestion, shortage of cement and a deteriorating security and economic situation. All the contracts overran their original contract periods and in all cases the PMO granted appropriate contract extensions, the length of which depended on the particular circumstances affecting the contractor. Two contracts, Palupandan and Tagbilaran, were terminated because the contractors showed no signs of being able to complete them, and the works were completed respectively by force account and by another contractor after a further round of bidding. In the end, all the contracts were completed and, in several cases, more work was done than was originally planned. 5.02 After the project started, consultants carried out a study to identify ten other priority provincial ports, as called for in the SAR, and, in the event, nine were selected, Tabaco, Tacloban, Pasacao, Calbayog, Ozamiz, Dumaguete, Ormoc, Masbate and San Fernando. After the completion of detailed design, the contracts were let and the first started in January 1990, with the final one starting in June 1992. San Fernando was cancelled because the devastating earthquake that struck the area in July 1990 severely damaged the port structures and reconstruction was the only alternative. PPA decided to undertake the necessary repairs and improvements using its own funds. Like the first contracts, these eight also went somewhat slowly for many of the same reasons as before, and PPA granted time extensions on all of them. All were successfully completed by the end of the project on 31 December 1993, after the loan closing date had been extended for one year. 5.03 While the civil works were in progress, the technical assistance and training components were also being carried out, at least in part. The MIS study had entered into Phase II when it was stopped by the Commission on Audit (COA) because they claimed that it conflicted with a government-wide study that they were carrying out for integrating all government MIS systems. The study was later abandoned, although PPA did implement some of the recommendations in respect of manual operation  PCR - Part 1 4 Provincial Ports Project - Ln. 2823-PH of the system. The Fire-fighting and Tariff Rationalisation Studies were completed, but the Water Supply, Communications and Port Operations Studies were cancelled as they were either considered to be unnecessary or because approval for them could not be obtained from government. Training did not proceed as planned because the govemrnment imposed a ban on overseas training, so only some of the training that could be done domestically was carried out and even that was not entirely satisfactory. 6. Project Results 6.01 The main component of this project, the civil works, was successfully completed after considerable delays and after the loan closing date had been extended by one year. The results have been beneficial to the inter-island and international freight and passenger traffic through the provision of improved facilities for handling both cargo and passengers. Workmanship was generally adequate and, because of the reduction in value of the Peso in relation to the US Dollar during the period of the project, more work was carried out for about the same US Dollar cost as that forecast at appraisal. 6.02 Generally, the rate of increase of cargo throughput at the twelve original ports has been double the rate assumed in the appraisal forecast. As costs have not increased, project benefits have been taken to be a very conservative 10% over the appraisal estimates. The post-project Economic Rate of Return (ERR) comes out to be a very satisfactory 32%, even though the build up of benefits was slower than forecast because of delays in completing the port works. 6.03 The results of the MIS Study were disappointing. While the study was competently carried out and the recommendations of the first phase were sound, the decision by COA to stop any further work and the implementation of the recommendations was a retrograde step as the study had little in common with the one being carried out by COA. The benefits of an improved MIS are now being withheld from PPA. 6.04 Similarly, the training component was not very successful, partly because of the government ban on overseas travel for study purposes, but also because of a lack of conviction by PPA that the planned training was appropriate and necessary, which translated itself into disinterest and inaction. As a result, only a limited amount of domestic training was carried out. 6.05 The Fire Fighting Study was successfully completed, but the major recommendations were, in PPA' s opinion, too expensive to be implemented at this time and were shelved for consideration in the future. Some minor improvements to the fire fighting systems were, however, carried out. 6.06 The Port Tariff Study was successfully completed, but its recommendations were not readily acceptable to PPA. After consulting with the Bank, some action on adjusting tariffs was taken. 6.07 The study and detailed engineering carried out in respect to a follow up project provided a sound basis for the preparation of the Maritime Improvement Project now being prepared. 6.08 Financially, PPA has succeeded in remaining profitable despite a revaluation of its assets to a more realistic level and the resultant increase in depreciation to be taken into account.  PCR - Part I 5 Provincial Ports Project - Ln. 2823-PH 7. Project Sustainability 7.01 It is expected that the economic benefits generated by the project will be sustained over the life of the port rehabilitation works provided traffic volume continues at or above the present level. 7.02 In order to bring itself up to date technologically, PPA must be allowed to implement a meaningful MIS improvement related to its commercial port operations. 7.03 The main risk to the sustainability of the project benefits is that inadequate provisions are made for routine and periodic maintenance in future years or that the economy falls again into recession and traffic levels fall appreciably. The risk of inadequate maintenance has been addressed, at least in part, by PPA, which has instituted a more rigourous system of inspection and maintenance. It is expected that the proposed Maritime Improvement Project would also address some of the more serious maintenance problems at major ports. 8. Bank Performance 8.01 The project was well prepared and regularly supervised. The scope of the project was appropriate and addressed several components that needed urgent attention, notably the deterioration of port facilities and the improvement of the management information flow and in the level of training of staff. 8.02 Surprisingly, despite the upheavals of successive reorganizations within the Bank, some continuity of staff was achieved on the financial side, but, on the other hand, there was an undesirably rapid turnover of port engineers, 5 different ones being involved with the project over its lifetime. The success of the project can be attributed more to the good working relationship between the Bank and PPA than to the continuty of staff provided by the Bank, which was particularly poor on the technical side. 8.03 The main lessons that should be learned by the Bank are: (a) more rigourous prequalification of contractors must be carried out in the future, especially in relation to their financial resources and capability for completing the works successfully; (b) the Bank should formulate stronger measures for ensuring that useful, acceptable and needed training components are built into the project the project and that they are executed in a timely manner; and (c) constant reorganisations create havoc with the efficient supervision of projects and run counter to the Bank's avowed intent of serving its Borrowers better; greater efforts should be made to maintain good continuity in supervision staff. 9. Borrower Performance 9.01 The Borrower, as represented by PPA, the executing agency, generally performed very well during the preparation and implementation of the project. However the implementation of the training programme, despite constant urging by the Bank, was left until too late in the project period and, as a result, not very much was achieved. 9.02 The main lessons to be learned by the Borrower, in addition to Para 8.03(a) above, are:  PCR - Part 1 6 Provincial Ports Project - Ln. 2823-PH (a) the training programme must be properly planned to include only that training which is needed and wanted and it should then be energetically implemented at the planned time and not left until the last moment; (b) more resources devoted to maintenance and improved implementation of maintenance planning and operations would reduce the need for periodically rehabilitating deteriorated port facilities. 10. Project Relationship 10.01 Relations between the Bank and PPA were good during the project, and despite the Bank maintaining a relatively poor level of continuity in its project supervision staff, it was possible to develop a close working relationship with PPA's project staff. 11. Consulting Services, Contractors and Suppliers 11.01 Foreign consultants were employed to carry out: (a) the supervision of construction of the works and subsequently the detailed design of the additional port works by providing technical assistance experts to work with a local consultant and advise the PMO; (b) the detailed design, cost estimates, drawings and tender documents for the initial stages of the Maritime Improvement Project; (c) the MIS Study; and (d) the Port Tariff Rationalisation Study. All carried out their responsibilities satisfactorily. 11.02 The Fire Fighting Study was satisfactorily carried out by the Manila Fire Department. 11.03 The civil works contracts were carried out by a large number of foreign and domestic contractors. Most performed adequately, though many were hampered by inadequate financial resources. Two contractors failed to complete their contracts and were terminated. 11.04 Equipment was procured from a number of suppliers. All performed satisfactorily. 12. Project Documentation and Data 12.01 The SAR provided a useful framework for all parties during project implementation. 12.02 The Loan Agreement was well prepared and served its purpose adequately. All covenants were appropriate. 12.03 Information for the PCR was provided by PPA and Bank staff, together with project documentation, Bank files and supervision reports.  PCR - Part II 7 Provincial Ports Project - Ln. 2823-PH REPUBLIC OF THE PHILIPPINES PROVINCIAL PORTS PROJECT - LOAN 2823-PH PROJECT COMPLETION REPORT PART II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE The Borrower completed a detailed and comprehensive Draft Project Completion Report, focused on the implementation of each contract let under the project. The report also included detailed statistical information, drawings and a financial review of the project. The report has been sent to Asia Files and is available upon request.  PCR - Part III 8 Provincial Ports Project - Ln. 2823-PH REPUBLIC OF THE PHILIPPINES PROVINCIAL PORTS PROJECT - LOAN 2823-PH PROJECT COMPLETION REPORT PART III - SUMMARY OF STATISTICAL DATA 1. Related World Bank Loans and/or IDA Credits Loan/Credit Purpose Year of Status Comments Title Approval Loan 290-PH Procurement of dredging 1961 Completed Closed 31 Aug 66 First Ports Project equipment No PCR prepared Loan 1048-PH Modernization of inter-island 1974 Completed Closed 30 Jun 81 First Shipping Project fleet, improvement of safety PPAR No. 4910 standards and increase efficiency dated 31 Jan 84 Loan 939-PH Improvement of port facilities 1973 Completed Closed 15 Jul 80 Second Ports Project and procurement of equipment PPAR No. 5698. dated 7 Jun 85 Loan 1855-PH Improvement of port facilities 1980 Completed Closed 30 Jun 86 Third Ports Project and procurement of equipment PCR No. 7570 dated 12/31/88 Proposed Maritime Rehabilitation of facilities at two N/A Under Appraisal scheduled Improvement Project major ports, procurement of preparation for Jun 95 port maintenance equipment and ships for hydrological survey and for the Coast Guard for monitoring ship safety, and carrying out institutional and port reforms Source: Bank Staff  PCR - Part EJ 9 Provincial Ports Project - Ln. 2823-PH 2. Proiect Timetable Date Item Planned Revised Actual First Mention in Files -- 19 Feb 82 Government's Application -- -- N/A Identification Mission -- -- Feb 85 Project Brief -- -- 16 Dec 85 Preparation Mission I -- -- Jul 85 Preparation Mission II -- -- Oct 85 Preappraisal Mission Apr 86 -- Apr 86 Appraisal Mission I Sep 86 -- Aug 86 Appraisal Mission II Sep 86 Loan Negotiations 17 Feb 87 -- 22 Apr 87 Board Approval 31 Mar 87 -- 2 Jun 87 Loan Signature -- -- 30 Jun 87 Loan Effectiveness 29 Sep 87 27 Nov 87 12 Nov 87 Loan Closing Date 30 Jun 91 31 Dec 91 31 Dec 91 Project Completion 31 Dec 92 31 Dec 93 31 Dec 93 Loan Account Closing Date -- -- 14 Jun 94 Source: Bank Staff  PCR - Part HI in Provincial Ports Project - Ln. 2823-PH 3. Loan Disbursements A. Cumulative Estimated and Actual Disbursements (US$ millions) IBRD FY 1988 1989 1990 1991 1992 1993 1994 Estimated 4.5 15.5 22.5 28.5 31.0 32.0 Actual 6.4 9.5 13.8 17.4 23.3 28.0 30.1 Actual as % of Estimate 142 61 61 61 75 88 94 The final disbursement was made on 10 May 94 and US$1.9 million (6% of the loan) was cancelled. Source: Bank Staff B. Disbursements by Category (US$ millions) Amount Allocated Category Appraisal Actual (1) Civil Works 20.0 23.7 (2) Goods 4.5 1.3 (3) Consultants' Services and Training 4.5 5.0 (4) Unallocated 3.0 0.0 Total 32.0 30.1 Source: Bank Staff  PCR - Part III l1 Provincial Ports Project - Ln. 2823-PH 4. Proiect Implementation Comparison Between Proposed and Actual Implementation Bank FY 1987 1988 1989 1 1990 1991 1 1992 1993 1994 Qtr. 3T4 1| 2 314 1112 3 41112 341 2 3 4121123 4 12 I1 2 3 4 4 Cal. Yr. 1987 1988 1989 1990 1991 1992 1993 1994 ACTIVITY Qtr. I12 3 4 1 2 3 1 I 1 2 1 22 4 1 2 3 4 I Board Approval Original Closing Date = Loan Effective Final Closing Date Development Ports - Calapan, Or. Mindoro San Jose, Occ. Mindoro Nasipit, Agusan del Norte Contract rescinded- Pulupandan, Negros Occ. * , , I I completed by Force AccointL Surigao, Surigao del Norte Tagbilaran, Bohol ContractRescinded . . .Con*j* iac Rehabilitation Ports - Bauan, Batangas Pulauan, Zamboanga del Norte Tabaco 1, Albay Legaspi, Legaspi City Cagayan de Oro, Cag. de Oro City Sta. Cruz, Marinduque Additional Rehabilitation Ports - Tabaco 11 Albay Tacloban, Leyte Pasacao, Camtarines Sur Calbayog, Samar Ozamiz, Misanis Or. Dumaguete, Negros 0cc. Ormoc, Leyte Masbate, Masbate - - - - - -: c7= Contract Period Proposed in SAR Original Actual Contract Period Extension to Contract Period _miiii Actual Implementation Period Source: PPA and IDA Staff  PCR - Part III 12 Provincial Ports Project - Ln. 2823-PH 5. Project Costs and Financing A. Proiect Costs (US$ millions) Appraisal Estimate Actual Description Local Costs Foreign Costs Total Local Costs Foreign Costs Total A. Civil Works Construction of Ports t'alapan 0.85 1.24 2.09 0 53 1 18 1.61 San Jose 1.18 2.51 3.69 7: Pulupandan 0.43 0.97 1.40 1.9 l Tagbilaran 1.37 2.33 3.70 2.50 6.31 8.81 Nasipit 2.56 3.47 6.03 1.27 2.85 4.12 Surigao 1.28 3.04 4.32 1.03 2. 11) 3.13 Subtotal 7.67 13.56 21.23 6.39 15.12 21. 51 Rehabilitation of Ports Bauan 0.14 0.19 0.33 (J.08 0.17 0.25 Sta. Cruz 0.15 0.21 0.36 0.10 0.21 0.31 Legaspi 0.16 0.22 0.38 0.07 0.14 0.21 Tabaco 1 0.13 0.17 0.30 0.08 (0.16 0.24 Pulauan 0.52 0.83 1.35 0.42 0.86 1.28 Cagayani De Oro 0.17 0.45 0.62 0.16 0.32 (1.48 Subtotal 1.27 2.07 3.34 0.91 1.86 2.77 Additional Ports Pasacao - - - 0.18 041 0.59 Tabacol1 - - - 0.19 0 44 0.63 Dumaguete - - - 0.41 1.11 1.52 Ormoc - - - 0.47 1.38 1.85 Ozaniis - - - 1.23 0.78 2.01 Tacloban - - - (1.22 0.48 0.70 Calbayog - - - (i ) 4? 11.66 Masbate - - - 0) Ic Subtotal 0.98 1.70 2.68 2.99 5.33 8.32 Total - Civil Works 9.92 17.33 27.25 10.29 22.31 32.60 B. Equipment/Govt. Supplied Materials - - - Steel Pipe Piles - - - 0.09 0.92 1.01 Steel Sheet Piles - - - 0.36 1.01 1.37 Rubber Dock Fender - - - 0.06 0.25 0.31 Firefighting Equipment 0.31 0.51 0.82 0.00 0.00 0.00 Communication Equipment 0.33 0.55 0.88 0.00 0.00 0.00 Computer Equipment for MIS 0.51 0.85 1.36 0.00 0.00 0.00 Water Supply, Sewerage & Power 2.60 1.00 3.60 0.00 0.00 0.00 Total - Equipment 3.75 2.91 6.66 0.51 2.18 2.69 C. Technical Assistance Studies Communication Equipment Study 0.05 0.05 0.10 0.00 0 (.iO 0.00 Water Supply Study 0.18 0.00 0.18 0.00 0.00 0.00 Firefighting Equipment Study 0.01 0.04 0.05 0.00 0.01 0.01 MIS Improvement Study 0.40 0.10 0.50 0.04 0.48 0.52 Studies for Future Ports Project 0.50 0.50 1.00 0.00 1.05 1.05 Port Tariff Rationalization Study 0.00 0.00 0.00 0.03 0.23 0.26 Ttaining 0.18 0.46 0.64 0 f1)1 (I 30 0.30 Supervision of Construction (Consultancy Svcs /PPA Supvn) 0.84 1.19 2.03 2.90 3.24 6.14 Total - Technical Assistance 2.16 2.34 4.50 2.97 5.31 8.28 Total Base Cost 15.83 22.58 38.41 13.77 29.80 43.57 Physical Contingencies 1.90 2.71 4.61 0.00 0.00 0.00 Total 17.73 25.29 43.02 13.77 29.80 43.57 Price Contingencies 2.39 1.23 3.62 0.00 0.00 0.0( GRAND TOTAL 20.12 26.52 46.64 13.77 29.8(0 43.57  PCR - Part HI 13 Provincial Ports Project - Ln. 2823-PH B. Project Financing (US$ million) Planned Final Source US$ M % US$ M % IBRD 32.00 69 30.1 69 PPA 14.64 31 13.47 31 Total 46.64 100 43.57 100 Source: Bank Staff  PCR - Part III 14 Provincial Ports Project - Ln. 2823-PH 6. Project Results A. Economic Impact Overall appraisal estimate of ERR for the project = 27% Overall post-project evaluation of ERR for the project = 32% The Appraisal Report estimated the ERR to be 27% for the entire project, based on an annual growth in cargo traffic which averaged out at about 5% per year. Port cargo traffic figures collected during the currency of the project have shown an average rise of about 11.5% per year, with some ports showing losses and others marking up big gains. Despite this large increase in traffic, ship waiting time has not increased and service times have been cut. Because of the increased number of ports rehabilitated under the project, recurrent maintenance costs have been doubled. The benefits accruing to the project have been increased by a very conservative 10% over the estimated benefits, levelling off after the year 2002, when it is considered that the present facilities will be fully utilised. Based on these conservative assumptions, the ERR is calculated to be a very satisfactory 32%. Source: PPA and Bank Staff B. Financial Impact The estimated consolidated balance sheet as of December 31, 1993 shows that PPA has been able to maintain a solid financial position. For the year ended on December 31, 1993, the debt to equity ratio was 26/74 and the current ratio was 1.5:1. These results compare favorably to the results reported for the year ended in 1987 where the debt to equity ratio was 40/60 and the liquidity, as measured by the current ratio was 5:1. In 1991, PPA revalued all of its fixed assets to reflect their estimated replacement cost. This revaluation increased the total fixed assets by 60%. In addition, in 1990 PPA adopted a policy to reflect the foreign denominated debt at current exchange rates which resulted in a 30% increase in the level of long term debt. During the six years ended in 1993, PPA's debt repayments exceeded its new borrowings by P166 million. However, during this time, the value of the Peso declined sharply resulting in a revaluation of the foreign debt and an increase in the level of total long term debt by P1,302 million. Over the six years ended in 1993, operating revenue increased by 100% or 12.2% annually. The largest growth was recorded in the privatized container facility where the revenue grew from P120 million in 1988 to P436 million in 1993. Operating expenses grew more rapidly during this period at 115% or 13.6% annually due primarily to large (22%) increases in personal services, administrative costs (14%), and depreciation on operating fixed assets (10%). The result was that the operating ratio declined from 55% in 1987 to 59% in 1993. The ratio was below the agreed upon level of 65% in each of the years except 1991 when the ratio was 69%. During this period, PPA had no tariff increases, so all of the increase in operating revenue was from increases in traffic levels. However, with the operating fixed assets being revalued effective in 1991, and no tariff increases, the return on net fixed assets in operation (ROA) declined from 8% in 1987, to 11.7% in 1990, to 6.4% in 1991, and 4.6% in 1993. With a tariff increase in 1994, the ROA should increase in 1994. Cash generated from operations was also satisfactory over the period with the requirement for PPA to finance at least 30% of its capital spending from internally generated sources being met in each of the six years. Source: PPA and Bank Staff  PCR - Part m 15 Provincial Ports Project - Ln. 2823-PH C. Studies Studies Purpose as Defined Status Impact of Study at Appraisal Improvement of (a) Review the MIS designed Not completed. After Very little. Some manual PPA's MIS during the Third Ports Project, Phase 1, COA stopped procedures recommended modify it so that it can be any further work as it under the Phase I report were implemented on a modular basis claimed that the study implemented, but no and prepare a detailed design; conflicted with the equipment was purchased to (b) Develop and implement a aims of a government- automate any of them computerised cost accounting wide study being system integrated with and carried out by COA. compatible with the MIS; and A satisfactory (c) Develop a strategy of hardware compromise could not and communication requirements be worked out, so the for introducing computerised study was abandoned. systems to PPA in the near- and long-term Feasibility Identification, preparation, Completed The additional ports studies for evaluation and detailed successfully for both rehabilitated under the future port engineering of port development the current project present project were projects projects when 9 additional successfully completed and ports were identified the rehabilitation work for the for rehabilitation and two major ports will form for a future port part of the upcoming project when extensive Maritime Sector Project rehabilitation works at Iloilo and Cebu were identified as priority works Special Studies Studies for the requirements, The studies for the recommendations of the preparation and evaluation of communications, water fire fighting study were procurement proposals for supply, MIS largely not implemented, as communication, water supply, fire equipment and port they were seen by PPA as fighting and MIS equipment as operations were being too expensive - some well as minor studies related to cancelled as being improvements were made; improvements in PPA's operations unnecessary or the recommendations of the untimely; the fire tariff rationalisation study fighting study and a were not at first readily tariff rationalistion acceptable to PPA, but some study were completed were implemented after discussion with the Bank Source: Bank Staff  PCR - Part m 16 Provincial Ports Project - Ln. 2823-PH 7. Status of Covenants Section Covenant Status Loan Agreement: 3.04 The Borrower shall, by 30 Jun 88,, complete a Review indicates no further review of the role of the Bureau of Customs in actions needed by Bureau since domestic shipping and cargo clearances and prepare termination of the barter trade a plan of action to facilitate cargo clearance has stopped inspections of domestic cargo 3.05 The Borrower shall, by 30 Jun 88, complete and Actions being taken by implement a plan of action to improve safety in MARINA as part of a plan of domestic shipping action coordinated with DOTC 4.01 The Borrower shall submit audited financial Complied with, but usually late; statements, audit report and a separate report on report for year ended 31 Dec 93 SOEs by 30 June of each year has not yet been received Project Agreement: 4.01 Authority shall submit audited financial statements, See above response audit report and a separate report on SOEs by 30 June of each year 4.02 Authority shall revalue fixed assets by 31 Dec 91 Complied with and every 5 years thereafter 4.03 Authority shall maintain an operating ratio not Complied with higher than 65 % for fiscal years after 31 Dec 87 4.04 Authority shall finance not less than 30% of its Complied with capital expenditures from internal sources for fiscal years after 31 Dec 87  PCR - Part IH 17 Provincial Ports Project - Ln. 2823-PH Section Covenant Status Schedule 2 Implementation Program 1. The Authority shall: 1994 plan not submitted. (a) by 1 Feb of each year furnish to the Bank However, PPA's investments for comment a draft of its annual have been supervised by Bank expenditure plan; and missions and found to be (b) by 1 Aug of each year furnish to the Bank acceptable. the agreed annual expenditure plan. 2. The Authority shall maintain a Project Executive Complied with Committee satisfactory to the Bank. 3. The Authority shall: Complied with; nine additional (a) continue to select ports to be rehabilitated ports recommended in Nov 88 under Part B of the Project; and (b) include ports to be rehabilitated under Part B of the Project only after approval of the Bank. 4. The Authority shall, in order to improve port safety Complied with and efficiency, by 30 Jun 88, introduce procedures established to segregate passenger and cargo traffic. 5. The Authority shall, by 31 Dec 87, commence to Plan produced, but additional implement a plan established after consultation with work is needed; pending the Bank to improve port operations and revenue decision by the Board collection. 6. The Authority shall furnish to the Bank: (a) by 31 Dec 87, an inventory of port Complied with Dec 88 maintenance and rehabilitation requirements; (b) by 30 Jun 88, an action plan for the Complied with Dec 88 maintenance and rehabilitation of the ports; and (c) by 31 Mar 89, and each 31 Mar thereafter a Complied with May 93 report on the implementation of the said action plan. 7. The Authority shall, by 30 Sep 87, complete and program completed Nov 87, but thereafter implement a training program developed it has not been fully after consultation with the Bank. implemented Source: Bank Staff  PCR - Part III 18 Provincial Ports Project - Ln. 2823-PH 8. Use of IDA Resources A. Staff Inputs Stage of Project Cycle Number of Remarks Through Appraisal 70.7 Estimate - MIS divides up lending operation in different way Appraisal through Board Approval 24.4 Estimate - MIS divides up lending operation in different way Board Approval through Effectiveness 4.1 Estimate - MIS divides up lending operation in different way Supervision 52.7 Includes preparation of PCR Total 151.9 Source: Bank Staff  PCR - Part III 19 Provincial Ports Project - Ln. 2823-PH B. Missions Stage of Project Cycle Month/ No. of Days in Specialisation Performance Types of Year Persons Field Represented[1] Rating Status[21 Problems[3] Through Appraisal - Identification 02/85 2 5 EGR/ECN Preparation 1 07/85 1 2 TSP Preparation II 10/85 3 4 ECN/FNA/LNO Preappraisal 04/86 2 14 ECN/FNA Appraisal I 08/86 1 10 EGR Appraisal II 09/86 4 14 ECNx2/FNAx2 Appraisal through Board Approval - Post-appraisal 02/87 1 2 ECN Board Approval through Effectiveness - Supervision I 09/87 1 5 FNA -- Supervision II 11/87 3 9 EGR/ECN/FNA 1 Supervision - Supervision III 02/88 1 5 ECN -- -- Supervision IV 07/88 1 7 FNA -- -- Supervision V 10/88 3 7 EGR/ECN/FNA 1 -- Supervision VI 05/89 1 7 FNA I -- Supervision VII 09/89 1 5 FNA -- -- Supervision VIII 11/89 1 5 EGR -- -- Supervision IX t1/90 3 14 EGR/FNA/CSP 2 MC Supervision X 07/90 1 10 EGR 2 MC Supervision XI 01/91 2 7 EGR/FNA 2 MCD Supervision XII 01/92 2 4 FNA/TSP 2 MCD Supervision XIII 09/92 1 7 FNA 2 MCD Supervision XIV 05/93 1 7 EGR 2 MCDF Supervision XV 11/93 1 5 FNA 2 MCDF Supervision (PCR) 04/94 1 10 EGR -- -- Notes: [1] EGR Engineer, ECN = Economist, FNA Financial Analyst, LNO = Loan Officer, TSP = Transport Specialist, CSP = Computer Specialist [2] 1 Problem-free or Minor Problems, 2 = Moderate Problems [3] M = Project Management, C = Compliance with Covenants, D = Development Objectives, F = Availability of Funds Source: Bank Staff      :' t''t ,(DX ,', \ 11, : . J '' ' ' 'l ,'; 7 t E i E, ::: 1 | f :i : D | iS}:E