China - Ningbo and Shanghai Ports Project

 Ningbo and Shanghai ports project: Shanghai port Report No: ; Type: Report/Evaluation Memorandum ; Country: China; Region: East Asia And Pacific; Sector: Ports & Waterways; Major Sector: Transportation; ProjectID: P003542 The Implementation Completion Report (ICR) on the China Ningbo and Shanghai Ports Project: Ningbo Port (Loan 3006-0-CHA, approved in FY89), prepared by the East Asia and Pacific Regional Office with the Borrower's contribution, was reviewed by the Operations Evaluation Department (OED). The loan, for US$30 million, was approved in December 1988, was fully disbursed and closed in December 1995, two years behind schedule. This ICR concerns the Ningbo Port project, completed on schedule; a separate ICR was issued for the Shanghai Port. Separate ICRs were issued because the ports are separate and independent, and the loan components were implemented independently of each other. The ports' projects were combined into one loan to facilitate the Bank's project preparation. The project's objectives were: (i) to improve the efficiency of the Ningbo port's container and general cargo handling; (ii) to train both operational and managerial staff in port operations and maintenance; and (iii) to develop a plan for further expansion of the Ningbo port, an important port for six provinces with approximately 300 million people producing one quarter of China's exports. The project consisted of: (a) construction of a jetty and causeways for container and general purpose berths, and rehabilitation of the existing port facilities; (b) improvements in the dock area for roads, railroad connections, buildings, water supply and sewage systems; (c) procurement of cranes, forklifts, vessels, tugboats, vehicles and computers to operate the facilities; (d) training of operational and managerial staff; (e) updating the Ningbo Port's Master Plan to reflect the area's developing commercial activities, other land uses and transport infrastructure, and the deep water potential at Ningbo port; and (f) developing an action plan to improve port operations and maintenance, and the environmental monitoring system in the port area. The project's physical and institutional objectives were fully achieved. The physical components of the project were implemented ahead of schedule. Managerial and operational staff were trained as planned, both abroad and in China. The master plan was prepared and the port's environmental monitoring system was developed with concurrent improvement in the quality of the port's environment. The port's operations and maintenance targets for average berth time of vessels, berth throughput and operating costs specified in the action plan were met. For example, even though the average shipment for both general cargo and containers increased substantially, the average port days per ship decreased from 3.06 days to 2.05 days, and the total number of ships calling at the port annually increased from 1,185 to 3,866. The economic rate of return (ERR) of the project was 29 percent, slightly better than the ERR of 27 percent forecast at appraisal. During project implementations, the Ningbo Port Authority (NPA) also changed its financial reporting procedures to make them consistent with international accounting standards and it revalued its fixed assets. Extensive decision making power about the port was decentralized from the central government to the municipal level. The NPA's financial position is acceptable and its performance is healthy. It is expected that the greater autonomy and commercial orientation of the port, the investments made and the forward-looking master plan will lead to increased operational efficiency and induce a rationalization of port expenditures. OED rates the project's outcome as highly satisfactory, institutional development impact as substantial, and sustainability as likely. Bank performance is rated as satisfactory. These ratings are consistent with those in the ICR. The lessons learned from this project are: (i) decentralization of port operations to local authorities can be beneficial and improves operational and financial performance; (ii) central regulation of port tariffs is counterproductive and should be discontinued; instead, competition among terminal operators should be encouraged; and (iii) action plans with performance targets can be effective instruments for improving efficiency and productivity in port operations, maintenance, and environmental quality. The ICR is of satisfactory quality. It discusses the accomplishments of the project and provides a clear picture of the present financial and operating performance and their outlook for the future. The project may be audited together with other transport projects in China. CHINA: Ningbo and Shanghai Ports Project: Shanghai Port (Loan 3006-1-CHA) The Implementation Completion Report (ICR) on the China Ningbo and Shanghai Ports Project: Shanghai Port (Loan 3006-1-CHA, approved in FY89), prepared by the East Asia and Pacific Regional Office with the Borrower's contribution, was reviewed by the Operations Evaluation Department (OED). The loan, for US$46.4 million, was approved in December 1988. Approximately USS46 million of the loan was disbursed and the remaining amount of USS404,951 was canceled. The loan was closed in December 1995, two years behind schedule. This ICR concerns the Shanghai Port project; a separate ICR was issued for the Ningbo Port. Separate ICRs were prepared because the ports are separate and independent, and the loan components were implemented independently of each other. The ports' projects were combined into one loan to facilitate the Bank's project preparation. The project's objectives were: (i) to improve the efficiency of the Shanghai port's cargo handling capacity and efficiency in the short term; and, (ii) to develop a sound long-term strategy for the port to serve the large and growing transport needs of the region. The project consisted of: (a) construction of a multipurpose terminal at Baoshan, consisting of eight berths, three of them for containers; (b) construction of an eight-berth general cargo terminal at Guangang; (c) construction of two coal handling berths at Zhujiamen; (d) rehabilitation of the Minsheng grain terminal and construction of a grain silo there: (e) procurement of cargo, bulk coal and grain handling equipment and container cranes for the terminals; (f) a study for port costing and management information system (PCMIS) to enable China's ports to introduce a cost-based tariff structure; (g) review of the Shanghai Port Master Plan; and (h) an action plan and training to improve the port's efficiency. The project's objectives were achieved. The two year delay was caused by the complexities involved in procuring the many types of equipment. The PCMIS study was carried out by foreign and domestic consultants. Professionals from four ports (Shanghai, Ningbo, Dalian and Xiamen) and the appropriate Ministries were trained abroad to use the system. The system was also installed in four other ports and plans exist to expand it to the other ports in China. The review of the Shanghai Port Master Plan was completed and provided a sound basis for the Shanghai Port Restructuring and Development Project, now being implemented under Bank financing. The action plan and training, both in China and abroad, was successfully carried out and improved port efficiency. For example, the average ship berthing time dropped form 1.35 days in 1990 to 0.62 days in 1995; during the same period the container traffic increased from 1,027 ships to 3,248 ships. During implementation the Shanghai Port Authority's (SPA) Container Development Company formed a joint venture with a private foreign investor, the first in a major port in China. The economic rate of return (ERR) of the project was 22.6 percent, slightly better than the ERR of 18.2 percent estimated at appraisal. During project implementation, the SPA also changed its financial reporting procedures to make them consistent with international accounting standards and revalued its fixed assets. Extensive decision making power about the port was decentralized from the central government to the municipal level. The SPA'S financial position is acceptable and its performance is healthy. It is expected that the greater autonomy and commercial orientation of the port, the investments made and the forward-looking master plan will increase operational efficiency and induce a rationalization of port expenditures. OED rates the project's outcome as highly satisfactory, institutional development impact as substantial, and sustainability as likely. Bank performance is rated as satisfactory. These ratings are consistent with those in the ICR, except for project outcome which was rated as satisfactory because of the delays encountered in procurement. However, these delays concerned only one terminal and do not materially diminish the real accomplishments of the project. The lessons of experience from this project are: (i) decentralization of port operations can be beneficial and improves operational and financial performance; (ii) central regulation of port tariffs is counterproductive and should be discontinued, instead competition among terminal operators should be encouraged; (iii) a joint venture with an experienced terminal operator improved productivity and brought modern management techniques to container operations, and (iv) action plans with performance targets can be effective instruments for improving efficiency and productivity in port operations, maintenance, and environmental quality. The ICR is of satisfactory quality. It discusses the accomplishments of the project and provides a clear picture of the present financial and operating performance and their outlook for the future. The project may be audited together with other transport projects in China.