Ecuador - Port of Guayaquil Project

R E S T R I C T E D Report No. TO-179a This report was prepared for use within the Bank. In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT ON THE PORT OF GUAYAQUIL PROTECT ECUADOR September 25, 1958 Department of Technical Operations  CURRENCY EQUIVALENTS U.S. $1.00 a 15.15 Sucres I Sucre . U.S. $.066 100,000 Sucres . U.S. $6,600 1,000,000 Sucres a U.S. $66,000 UNITS All tonnages are given in metric tons of 2,204.5 lbs. One nautical mile is equal to 1.1516 statute miles.  ECTJADOR Report on the Port of Guayaquil Project Page SunaarJ i I. Introduction 1 II. The Existing Port of Guayaquil 1 - 4 III. The Project 5 - 7 IV. The Proposed New Port Authority 8 - 9 V. 'The Futvre frraffic tlhrough the Port 10 - 12 VI. The Economic Justification for the Project 13- 15 VII. The Financial Position of the New Port Autlioritr 15 - 18 V-III. Conclusions 19 Appendices A to h iaps 1 to 4  i EC UADOR REPORT ON TE PORT OF GUAYAQUIL PROJECT i. The Ecuadorian Government has asked the Bank to finance the foreign exchange cost of a project for the construction of a new port at Guayaquil, to be completed within about four and one-half years. The proposals were prepared for the Government by a firm of consulting engineers. ii. The total cost of the project is estimated at S/ 290 million (US,'c 19 million equivalent), of which US,, 13.0 million equivalent will be in foreign currency. iii. A Decree Law has been issued establishing an autonomous Port Authority, which Twill take over operation of the existing port and be responsible for the construction and operation of the new port. The loan would 'oe made to the Port Authority. iv. The Port Authority should be able to meet its debt service by an adequate margin with tariffs wh-ich would not place an undue burden on shipping or trade. The proposed loan agreement requires tariffs to be maintained at a level calculated to ensure that debt service is covered at least 1.5 times. V, The project is generally sound. Design and supervision will be entrusted to a reputadle firrm of consultants experienced in such work. Construction will mainly be carried out by contracts awarded after the invitation of international tenders. vi. The project is suitable for a loan of US$ 13.0 million equivalent. A term of 25 years including a four and one-half years' period of grace Wiould be appropriate.  ECUADOR REPORT ON THE PORT OF GUAYAQUIL PROJECT I. INTRODUCTION 1. The existing Port of Guayaquil is a river port with insufficient depth of water for ocean shipping and inadequate cargo handling facilities. It is proposed to build a new port on ar. adjoining tidal estuary, open to sea-going vessels at all states of the tide and equipped with adequate wharves, cargo sheds, etc. The cost of the newT port wfill be approximately S/ 290,000,000 (USSp 19 million equivalent). Preliminary designs have been prepared by Messrs. Parsons, Brinckerhoff, H4all and i4acdonald, con- sulting engineers. 2. The following report is an appraisal of the project. It is based on the findings of a Bank mission which visited Ecuador in Iarch, 1958 and on a report prepared by the consulting engineers in June, 1957. II. THE EXISTING PORT OF GUAYAQUIL General 3. As shomm on NIaps 1 and 2 at the end of this report, Guayaquil is situated towards the southern end of the Ecuadorian coast, on the right bank of the River Guayas about 55 nautical miles from the open sea. It has been used by shipping since the Spanish Conquest and is the only port of any magnitude in Ecuador. At the present time approximately 90% of all Ecuadorian imports and 60p of all exports are handled through Guayaquil. Existing Facilities 4. The principal existing installation on the Guayaquil side of the river is a 600 foot lighterage wharf with warehouses adjoining. These facilities are inadequate for the tonnage of cargo now being handled and the congestion is serious. On this bank there are also a petroleum depot, a modem grain handling wharf, silo and mills, and various jetties for small craft. On the opposite bank, at Duran, there is a somewhat larger petroleum depot together with the terminus of the railway frora Quito. Bettreen Duran and Guayaquil two small converted landing craft are in use as road vehicle ferries and a flat barge on to which freight cars can be run at the Duran side is used to ferry railborne goods. 5. At GJuayaquil the depth of the River Guayas is between 25 and 30 feet at low water, but only the grain handling wharf has sufficient depth for ships to come alongside. All ocean-going ships carrying other products must therefore be handled at anchor in mid-stream. For this there is ample  2. room, it being possible to accommodate t%relve ships at a time. During the rainy season, January to June, the current in the Guayas is of the order of five knots and the river carries a heavy burden of silt and debris. The latter is a hazard to small craft, and the strong current makes the anchor- age of all vessels somewhat insecure. Port Seaward Approaches 6. Between Guayaquil and the sea the minimum depth in the channel of the River Guayas is approximately 19 feet at low water, the rise of tide being about 10 feet. At the entrance to the river there is a bar carrying only 15 feet at low water. Accordingly, only ships having a draft of 231-6" or less can enter the river and proceed to Guayaquil and most of these must await the tide to cross the bar. It is estimated that an average of five hours per ship per voyage is lost for the latter reason. In the past these conditions made shipping companies unmilling to bring ships into the river, even wihen their draft permitted, so that in order to protect the position of the city the Government in 1952 issued a decree compelling all vessels drawing 231-6" or less to proceed to Guayaquil. 7. Ships of a greater draft than 23t-6" load or discharge at Puna, seaward of the bar, where a minimum of customs and other facilities have been provided. Cargo so handled, at present amounting to about 1E, of the total traffic of the port, must be lightered to and from Guayaquil, 35 nautical miles distant. The channels leading to the port are reason- ably well marked and lit and navigation is carried on by night as well as by day. Port Landward Approaches 8. As will be observed from Hap 1, Guayaquil is t1he focus of an extensive road, rail and river communications system. The principal exist- ing highways radiating from Guayaqucil are those leading to Salinas, to Portoviejo, to Quevedo, to Babahoyo and to Cochancay. The construction of the Salinas, Quevedo, Babahoyo and Portoviejo roads was among the projects in connection with which Loan 94-EC of February 1954 was made. Construction of the Quevedo road is complete and that of the others in progress. Under Baak Loan 176-EC of September 1957, the Quevedo road will be extended so as to provide an all seasons route to Quito via Aloag, and tne Cochancay road will also be reconstructed. Railway connection with the Sierra region is provided by the Duran-Simbambe-Quito railway, which has a southward exten- sion to the important center of Cuenca. The rivers flowing into the Guayas, principally the Daule and Babahoyo and their branches, pennit of barge trans- portation over a substantial area of the provinces of Guayas and Los Rios up to as far as 100 miles from Guayaquil. Port Tributary Area 9. The approximate areas from which exports through the port orig- inate and to which imports are conveyed are shown on iap 1. Included are the whole of the coastal provinces of Guayas and Los Rios and part of the coastal province of Manabi. At the present tirie much of the area of the Sierra provinces, Pichincha, Cotopaxi, Tungurahua, Bolivar, Chimborazo  and Canar is also served by CGuayaquil, as the railway from Duran to Quito is the principal transportation link between these provinces and the sea. The inhabitants of this tributary region constitute approximately 60Z of the population of Ecuador and its area amounts to about 35'/ of that of the whole country. Guayaquil itself has a population estimated to be some 400,000 and is the main commercial and industrial center of Ecuador. Existing Organization of Port Activities 10. lNo Port Authority dealing comprehensively with port operation has hitherto existed in Guayaquil. At the present time the reception and movement of shipping, navigational aids, medical inspection, pilotage and policing are the responsibility of tlhe Port Captaincy, a subdivision of the itinistry of iiarine. Revenue arising from these operations is paid directly into central governmental funds, expenditure being in turn met from the 11inistry's general budget. 11. The loading, discharging, and storage of cargo at the Guayaquil lighterage wharf is undertaken by a subdivision of the Customs Department known as the "Timpresa de IHuelles"'. This organization also supplies the lighters used for all general cargo imports and for the majority of general cargo exports, the supply of labor for handling to or from the barge hold being included in the service provided. The tonnage of cargo dealt wit h by the Empresa in these various ways amounts to about 307 of the total traffic of the port, the proportion of the latter passing over the lighter- age wharf being about 20%. The charges made for such activities are based on an arbitrary scale, the individual rates of which are not directly re- lated to actual costs. Being what is described as a "non-autonomous public undertaking" the Empresa has its own budget. All surplus earned is, how- ever, ultimately surrendered to the central government and the Emresa has no funds under its ovm control for the purchase of equipment and like pur- poses. Furthermore, the procedures which the staff of the Empresa must follow, being tnose of a government department centralized in the capital, are quite unsuitable for the operation of an undertaking such as a port. 12. The remaining 70,O of the total cargo, comprising principally banana exports, wheat imports and petroleum traffic, is handled in craft hired or omed by the merchant or other undertaking concerned. However, except in the cases of bulk grain, bulk petroleum and bananas, the per- mission of the "Empresall has to be obtained before cargo can be handled in this way. Present and Past Traffic Through the Port 13. The volumes of exports and imports through Guayaquil during the years 1953-57 are tabulated in Appendix F. The exports consisted entirely of natural products such as rice, bananas, coffee, cacao, sugar, balsa, and fish. As will be seen, while the total rose fairly steadily from 321,200 tons in 1953 to 529,700 tons in 1957, the volume of individual items fluctuated considerably. Imports, falling under the principal head- ings of general cargo, petroleum products and wheat, also increased sub-  stantially, in this case from 160,000 tons in 1953 to 362,300 tons in 1957. With the exception of aviation gasoline the petroleum products listed are brought into the port by small tankers of the Anglo-Ecuadorian Oil Conpany and landed at the depots at Guayaquil and Duran already described. The aviation gasoline is imported under separate arrangements and landed at a depot adjoining Guayaquil Airport. Bulk wheat, amounting to about two- thirds of the wheat inport, is discharged at the grain handling berth; the remainder is imported in bags and dealt witlh as general cargo. A consider- able coastal traffic, consisting principally of local products imnard and transshipment outward also exists. This is handled mainly at sriall lamd- ing stages on the river front at Guayaquil. Accurate statistics of the latter traffic are not available, but it is estimated to amount to upwards of 30,000 tons per annum. Present and Past Financial Position in Respect of Port Operation 14. Records in connection wita the charges made for the port func- tions hitherto performed by the Port Captaincy have not been kept separate- ly for Guavaquil so that it is not possible to comment on the financial aspect of this side of present port operations. In the case of the opera- tions of the "Enpresa de i.uelles" records of revenue and expenditure for the years 1953-57 are available, these being summarized in Appendix A. It wllU be observed that during the years 1954-57 the Empresa uas able v3 transfer to the Government amounts averaging S/ 6,45o,ooo (us$ 426,00o equivalent) annually. These sums cannot, however, be regarded entirely as profit since during the years concerned the Empresa did not pay any contribu- tion towards the cost of the premises iw7hich it used and made no allowance for the depreciation of its equipment.  - 5 - III. TIM PROJ3CT General 15. The disadvantages arising from the present limitation on the draft of vessels entering the port are great. Not only has about one-sixtl of the cargo of the port to be lightered 35 nautical miles from Puna, but also an appreciable proportion of the shipping actually proceeding to Guayaquil does so not fully laden. Furthermore, modern port facilities are virtually non-existent. In order to permit ships of the draft now met with on the west- ern coast of South America to enter the River Guayas it would be necessary to carry out very extensive dredging and the feasibility of maintaining the re- quired depths could by no means be guaranteed. To the west of the river lies a tidal estuary known as the Estero Salado, the head of which reaches Guayaquil (see Ilap 2). This estuary is comparatively silt free, being entered by no rivers. With the exception of a section where a dredged channel mill be re- quired, it is of sufficient depth to permit vessels drawing 30 feet to pass at any state of tide. In view of the magnitude of the dredging problem in- volved in improving the River Guayas and the doubt existing as to whether such improvement could be maintained, it would be unwise to invest capital in the improvement of any of the facilities of the existing port. It is accordingly proposed to carry out the dredging required in the Estero Salado and to construct newi deep sea wharves near the head of the estuary, six miles from the center of Guayaquil. This proposal is generally referred to as the "Puerto Nuevo Project". 16. The development of the Port of Guayaquil has been the subject of studies by the Societe de Construction de Batignolles (a large French con- struction organization), the Ufnited States Corps of Engineers, a technical expert of the United Nations, the Knappen-Tippetts-Abbett Engineering Co., consulting engineers; and iiessrs. Parsons, Brinckerhoff, Hall and liacdonald, consulting engineers for the present project. These authorities were unani- mous in recommending that the proper course to be pursued is the construction of a new port on the 2stero Salado rather thlan any attempt at improvement of the existing port. 17. Studies in connection with the future development of the port have in the past been in the hands of the Aighways Committee of Guayas Province, an autonomous body which controls highway and inland waterway development in the area. The Government has now established an autonomous Guayaquil Port Authority, which will tatke over responsibility for development from the Highways Committee and the operation of the existing port from the Empresa de MHuelles and which will in due course become responsible for operating the new port. The organization and powers of the proposed Authority are described in Part IV of this report. NMew Wharves and Port Area 18. As showqn on Aaps 2, 3 and 4, the new wharves wTill be situated 40 miles from the sea on the branch of tChe estuary know'n as the Estero del ili-erto. A cut will be dredged in the neck of land which separates the  - 6 - Estero del iviuerto from the Estero Santa Ana at the northern end of the site and using the spoil from this and other dredging, a port area of approxi- raately 100 acres will be reclaimed from the surrounding swarps. Anple space exists for the extension of this area to meet future requirements. The berth- age provided initially will consist of a reinforced concrete marginal wharf 3,000 feet long capable of accommodating five ships, the wrharf being so sited . as to permit of extension at a later date to accommodate a further three ships. The depth at the berths wfill be 35 feet at low water. There will be four transit sheds and the customary ancillary buildings, circulating roads and services. The Landward Approaches to the New Port 19. A four-lane divided highway, tw,,o lanes of which are already being constructed, will link the port with the toum of Guayaquil (see Maps 2 and 3). To permit barges from the Guayas River to come alongside ships at the new wharves or at anchor in the Estero Salado and to allowJ the passage of coastal craft, a canal 148 feet wide and 12 feet deep at low water will be constructed connecting the Guayas with the Dstero Salado via the Estero Cobina. In order to prevent undue scour in the canal under certain tidal conditions a lock will be provided at the Guayas entry. Tilis canal is an important feature of the seleme and it is essential to the success of the new port that it should be constructed to the full capacity proposed. The Seaward Approaches to the Nqew Port 20. Approach to the Estero Salado from the sea will be thlrough the l-iorro Channel, parallel to the coastline opposite Data (1-iaps 1 and 2). This channel is navigable by ships of 30 feet draft at all states of the tide. While the location of the channel is subject to littoral drift, it is the opinion of the consulting engineers that any serious shoaling is unlikely. 3etween the Horro Channel and the new port some 1h0 nautical miles distant, ample depth exists ex- cept between Boca de Sabana Grande and Isla de la Seca. Here over a distance of some 10 miles the average depth at low water is about 25 feet wtith a minimum of about 20 feet. Through this reach it is proposed to dredge a channel 400 feet wide with a depth of 31 feet at low water. Such a channel will be naviga- ble by ships of 28 feet draft at all states of the tide. Ships drawTing more than this figure (amounting to only 3.7% of ships calling at the port in 1956), will need to wait for the tide. The Authority will make suitable arrangements, in advance of the completion of the project, to ensure the future maintenance dredging of the channel. Navigational Aids 21. The project provides for the marking and lighting of the I4orro and. dredged channels and other portions of the approach where such is required.  -7- Port Equipment 22. The cargo handling equipment held by the Empresa de PLuelles will become available to use at th<e new wharves. However, much of it is in bad condition and the remaining iterms are not wiell selected from. the point of view of the efficient operation of a modern port. The project, therefore, includes for the purchase of such additional cargo handling equipment as may be necessary. The floating equipment to be transferred to the Port Authority by the Empresa and the Tiighwwjs Committee appears ample for the initial re- quirements of the new port. Estimated Cost of Project 23. The cost of the project, including the cost of land acquisition, but excluding the cost of the access road is estimated to be S/289,275,000 (US;19.09 million equivalent), of which foreign currency costs, including interest during construction, will amount to S/196,950,000 (Mt13.00 mi]lion equivalent), A breakdown of these figures is given in Appendix G. These estimates are considered to be realistic. An adequate allowance has been made for contingencies and unless any appreciable inflation occurs during the construction period the estimated total cost should not be exceeded. The access roads, estimated to cost S/ 5 million, are already being con- structed by the Highways Committee of Guayas Province, using moneys trans- ferred from the original port development funds as detailed in Appendi,; G. 24. Although the Decree Lawr creating the Authority provides for the acouisition of any land it nay require, action in this respect has not yet been completed. Delay in acquisition mi-ght seriously delay the project rand it has therefore been agreed with the borrower that with the exception of amounts required for the payment of engineering costs, no withdrawals wrill be made from the loan account until the land required for the project has been acquired. Construction Program and Procedure 25. Only preliminary engineering having been done, no detailed con- struction program has yet been drairn up. However, it is anticipated that work during 1958 will be limited to engineering design, the invitation of tenders and preliminary work at the site. Completion is expected during 1962. All design work and the supervision of construction will be entrust- ed to consulting engineers well experienced in carrying out this type of project. With the exception of the dredging of the Estero Salado - GuWyas canal, which may be undertaken by the Highways Committee of Guayas Province using the river dredger Guayas, all wrork will be by contract awarded after international tender.  - 8 - IV. PROPOSED Nl1Ei PORT AUTHORITY General 26. In order that the new port may be operated at a maximum level of efficiency, the Government has established a Port of Guayaquil Authority, a Decree Law for this purpose having been issued on April 10, 1958. The proposed loan will be made to the Port Authority. Constitution of Authority 27. The decree establishing the Port Authority is satisfactory to the Bank. It provides for the direction of the general policy of the Authority by a Board of seven, all of whom serve on a part-time basis. The Chairman of the Board is appointed by the President of the Republic, three of the members represent goverrment departments and the remaining three, business and local interests. Executively the Authority's operations will be Ln the handsof a Geaeral Aanager, who may be a non-Ecluadorian. The Authority is autonomous, havinig its own funds, with powrers to fix and collect its charges and to control such matters as the movement of shipping, pilotage, navigation- al aids and conservation within the port limits. It also has powers to appoint and dis.miss members of its staff and to fix their salaries. -VRon its formation, the Authority became responsible for all measures to be taken in connection with the construction of the new port. It will take over the activities of the Empresa de iHuelles on January 1, 1959. Disposition of Surplus Receipts 28. Under the Decree Law the Autlhority's revenues are to be applied to operational costs, debt service and a fun,d for the depreciation of equipment and installation. If after the new port is completed a surplus of revenue should develop, this surplus will be divided equally between the Government and a capital reserve fund which the Authority is to establish. Exemptions from Port Charges 29. The Decree Law prohibits the granting by the Port Authority of exemptions from charges which it may impose in future and provides that current exemptions from existing charges granted for a definite period will not be renewed. Certain of the current exemptions were however made for an indefinite period and their cancellation would be a matter of difficulty and comolication. In order to protect the Authority from undue loss of reve- nue which might arise from the existence of these latter exemptions the Government has agreed to reimburse the Authority from any such loss in ex- cess of S/ 1,000,000 (uS'"66,o0O equivalent) yearly. Port Limits 30. In order that the Authority may be able to control the future operation of the present facilities to the best interest of the port as a whole, the River Guayas and the eaisting wharves at Guayaquil as well as the Estero Salado, will be included within the Authorityts jurisdiction.  .. 9- Port Authority Personnel 31. As no port operating organization of appreciable size at present exists in Ecuador, experienced persormel for the operation of the new port is lacking. To overcome this di.fficulty, the Authority has agreed to em- ploy a qualified and experienced General IManager satisfactory to the Bank, and to make adequate provision for the recruitment and training of other personnel required. Future Port Dues and Charges 32. Before the new port is commissioned, the Authority will draw up a new schedule of charges. It is important for the future wTell-being of the port that this tariff should be adequate and equitable. The Government and the Authnority have accordingly agreed that the charges established shall be calculated to yield sufficient revenue to cover debt service at least 1.5 times and that the Bank will be given an opportunity to comment on the schedule before it is published. 33. For use in estimating future revenues, the consultants prepared a tentative list of charges. While acceptable for such a purpose, and giving rates which are compatible with those ruling in other medium sized ports of a like natuxre, the list in its original form appears unsuitable for use as an actual tariff. As will be pointed out in Part VII, a somewhat higher level of charges than that envisaged by the consultants may be required to produce adequate revenue. The method of application suggested for certain individual charges might also tend to discourage ships from using the rew wharves.  - 10 - V. FUTURE TRAFFIC TIROUGH THE PORT General 34. Ecuadorian exports consist almost entirely of agricultural products and there is no prospect that this position will change within the foresee- able future. With the exception of wheat and some petroleum, imports consist of manufactured capital and consumer goods. While the nature of these will change as local light industries are set up and the proportion of semi-fin- ished and capital goods increases, the ratio of imports to exports may be expected to remain fairly constant,since the development of heavy manufacture is unlikely. In order to be able to estimate future exports the Bank Staff made a study of the agricultural potential of the port tributary area. The forecast of traffic given in Appendix H is based on that study. Exports Through the Port 35. These are expected to rise during the period 1957-1962 from about 530,000 tons to about 600,000 tons. Between 1962 and 1967 the increase should continue, but at a slightly lesser rate, reaching about 620,000 tons in the latter year. Since it was not found feasible to make a detailed fore- cast beyond 1967, it has been thought prudent to assume for revenue estimat- ing purposes that export traffic will thereafter remain at about thle samre figure. The greater part of the total increase is foreseen to occur in the principal item of export, viz. bananas; shiDment of other main items such as cacao and coffee increasing only slightly and that of rice fluctuating. Petroleum Traffic 36. In the past Ecuador has had a surplus of crude petroleum produc- tion, but has been obliged to import motor gasoline because of insufficient refining capacity. From 1959 onwards nowevrer total requirements will exceed production from the Ecuadorian fields and it will be necessary to supplement the latter by importing crude petroleum. These imports will be discharged at the Anglo-Ecuadorian Oil Company's terminal at La Libertad (see Map 1), whence products refined from the local and imported crude supplies will be shipped coastwise to Guayaquil for local consumption or transport to the Sierra. This coastal traffic is expected to increase by about 5% annually until 1963, thereafter remaining constant at approximately 375,000 tons yearly. Aviation gasoline, of which some 7,000 tons per annum are currently imported through Guayaquil, will continue to be obtained outside the country and imports rmay be expected to increase slightly. Wheat Imports 37. liheat imports in 1957 amounted to 56,ooo tons,of which 38,000 tons was in bulk and handled at the grain silo wsharf, and 18,000 tons bagged and discharged by lighter eitlher at P1una or at Guayaquil. Although local produc- tion of wheat may increase and improve in quality, it is expected that growth of population and some improvement in the standard of living will increase de- mand to an equal extent,so tlhat imports will remain at about the current figure.  General Cargo Imports 38. Appendix H shows these as increasing steadily from 180,000 tons in 1958 to about 210,000 tons in 1966 the computation being based on an approximately constant ratio of the volume of general cargo imports to that of total exports. Coastal Traffic 39. Writh the easier navigation for small craft afforded by the Estero Salado and for the reasons given in the next paragraph, coastal traffic may be expected to appreciably increase. Effect of Development of Other Ports 40. The other existing or potential ports of Ecuador are, taken from north to south, San Lorenzo, Esmeraldas, Bahia, 11anta and Puerto Bolivar. The first named of these is not in use as a port, the remainder possess only primitive facilities and are used as lighterage ports principally for exports. Proposals for the 4mprovement of the ports by the provision of shelter and deep-sea piers, etc. are before the Government, which, however, has stated that its policy in the matter is to undertake nothing other than minor improvements for some years to coine. Even were major improvements made to these ports it is improbable that traffic tlrough Guayaquil would be appreciably affected. The hinterland of Esmeraldas and Bahia are rela- tively self-contained and remote from Guayaquil. Improvement of these ports is therefore unlikely to affect traffic at the latter, except that banana production now being developed in the south of Pichincha Province, 'wich initially will be exported through Guayaquil, will probably be sent via Esmeraldas when the Quevedo-Santo Domingo road is completed. Similarly the construction of the Guayaquil-Jipijapa road may take a certain amount of produce to Aanta instead of to Guayaquil. The construction of a port at San Lorenzo would not appreciably affect exports from Guayaquil, but might affect imports through the latter as a certain proportion of the general cargo imports destined for the Sierra might tend to move via the San Lorenzo-Quito Railway. Such a development is however unlikely to occur for many years. Puerto Bolivar is relatively close to Guayaquil, but production in the part of the Guayaquil tributary area nearest to it is declining so that the effect of improvement of facilities at Puerto Bolivar on Guayaquil traffic should be slight. Apart from these particular possibilities of reduction, which have been allowed for in the estimate of traffic given in Appendix H, it was concluded that the effect of improve- ment at the minor ports would be to develop new traffic in their hinterlands rather than to attract traffic from Guayacuil. Extensive improvements at the three ports concerned may tend to make coastal transport between Guayaquil and Puerto Bolivar and Guayaquil and -anta more competitive with road haulage than at present for certain types of goods so that traffic of this nature may well increase. In considering the whole question it must also be borne in mind that the size and pre-eminence of the city of Guayaquil as an industrial, commercial and marketing centre will inevitably continue to attract traffic which might otherwise be expected to go to the minor ports, irrespective of whether or not facilities at the latter are improved.  - 12 - Distribution of Traffic in the Mew Port 41. ;When the new port is completed only bulk wiheat, petroleum and coastal traffic will be dealt with in the River Guayas. In the newtf port exports of bananas and rice customarily brought to Guayaquil by river will be loaded direct from barge to ship lying in the E3stero Salado. All the remaining e.xports and all general cargo inports will be handled at the new wharves. A study of the probable future distribution of these various categories of traffic, the results of which are summarized in Appendix I, indicates that of t'-he total forecast tonnage in 1963, some 37, would con- tinue to be handled in the River Guayas, 26% would be handled in stream in the 3stero Salado, and the remaining 37% at the new- wharves. 42. As time passes there will be a tendency for the proportion of traffic handled at the new wh1arves and in the 7stero to increase. Agri- cultural developrmient is likely to border new roads rathler than rivers, and road transport direct to the new wrharves will be competitive when com- pared with part road-part river transport. Any improvernents in transport facilities for crossing the River Guayas will have a like effect. As the city develops westward coastal traffic will tend to be transferred, also any new activity involving either export or import will inevitably be located near the new port.  - 13 - VI. BCOO1\T(-C JUSTIFICATION FOR TME PROJ73CT General Benefits from the INew Port 43. Traffic through Guayaquil could readily increase more rapidly in the near future than was conservatively assumed in Part V. Tile port's tributary area is only partially developed and the road program which the Bank is assisting wqill open large new areas. Increasing production and trade might readily emerge on a scale beyond the capacity of the present port's facilities. Congestion would ensue involving in turn heavy in- creases in the cost of cargo handling and the probable imposition of ocean freight surcharges. The prompt construction of the new port may, therefore, be regarded as insurance against such serious losses to the national economy. 44. Apart from any question of traffic growth', the new port will pro- duce substantial savings for the benefit of shipowners, e-porters, and im- porters. It will facilitate faster turnround and fuller loading of the ships which serve Guayaquil. It will enable larger vessels to call direct- ly and thus eliminate the need of costly lightering to and from Puna anchor- age. It will replace a large part of the present lighterage betueen the waterfront and ships in the strean by more economic loading and discharge directly at a wharf. 45. The economies accruiing to shipowners, importers, and exporters can be assessed approximately and are shown below. Counting the sums saved by foreign shipowners as wrell as by thie Ecuadorian economy, the total saving would amount to an annual minimum of the order of S/ 31 million (OJU: 2 million equivalent). This compares with an estimated construction cost of approxi- mately S/ 290 million (US$ 19 million equivalent). 46. There will be other benefits, perhaps more important than the direct savings, which cannot be measured or waich are now indeterminate. They include the protection of Ecuador's balance of paymients against the possibility of 1higher ocean freight rates; a stimulus to production and trade resulting from wider profit margins for merchants and producers; improved town-planning made possible by the location of the new port away from the congested river front areas; and the release for other community uses of the land and buildings now used by the Tmpresa de iauelles. There will also be more adequate capacity than at present to handle occasional peak traffic. Savings to Mlerchants in Reduced Cargo iMandling Costs 47. According to Bank staff estimates importers and exporters would save about S/ 8.0 million (US$ 0.5 million equivalent) a year in cargo handling charges on the present traffic volume. This economy represents the amount by which the handling charges now paid to the Empresa de ITuelles and private firms exceeds the charges wJhich would have to be paid on the same cargo under the Niew Port scale recommended by the consultants, with  - l, - full allowance for extra costs necessitated by lighterage through the Estero Cobina Canal and truck haulage between the town and the new wharves where these are involved. The entire reduction in handling costs would accrue directly to Ecuador in the form of a larger realization of export proceeds and lower costs of imports. Savings to Shipowners in Reduced ShipDing Costs 48. The ships which now serve Guayaquil would save about S/ 23 million (US&", 1,5 million equivalent) annually, based on present traffic, by the use of the Estero Salado. This economr represents the elimination of certain costs now paid or incurred by ships amounting to about S/ 27 million per annum offset to the amount of about S/ 4 ,million by shipping dues which would be payable to the new Port Authority under the tentative scale recom- mended by the consultants. The S/ 27 million of eliminated cost includes: a) An estimated annual saving of S/ 10 million because Puna anchorage would no longer need to be used, thus sub- stantially reducing stevedoring costs and eliminating the present surcharge on cargo lightered up the river; b) An estimated annual saving of about S/ 9 million because ocean sailing distances to the new port will be materially shorter than at present and also because ships would no longer have to wait for the tide on entering and leaving the ports; c) An estimated anmual saving of about S/ 8 million because the bar at the mouth of the Rio Guayas would no longer need to be crossed, thus enabling the larger ships to enter and leave Guayaquil more heavily laden than at pres- ent. 49. Miost of these savings will revert to the shipoeners, largely foreign enterprises, but part may be recaptured by Ecuador in the form of lower shipping rates, a larger revenue from the new port, or both. Moreover, faster turnround, heavier lading, and cheaper stevedoring from the use of the new port could well avert freight rate increases that might otherwise be imposed and will provide some bargaining scope for the new Port Authority to establish higher shipping dues, if necessary, or al- ternatively to bring about some reduction in freight rates, Miscellaneous Benefits 50. The availability of a facility for direct landing at the new port should encourage sone tourist traffic by passenger ships. The routing of export and import traffic to the Estero Salado will free the existing light- erage wharf for more efficient service to coastal freight and up-river traffic.  -15 - General Appraisal 51. The economic benefits from the project seem adequate to justify the construction cost of S/ 290 million (U.S.$ 19 million equivalent) in all. Furthermore as will be shown in Part VII, the new port should be able to pay for itself. VII. FINIAICIAL POSITION OF THE IXMJ PORT AUTHORIIY Initial Finance and Earnings 52. Substantial assets will accrue to the Authority during its forma- ti-e phase this year. First, the Author-ty will take over liquid funds of about S/ 30 million. They inciude S/ 27 million in cash accumulated in recent years and due to accumulate in 1958 out of customs duties assigned by law to a special fund, the Puerto Nuevo Fund, for the eventual construction of a new port and S/ 3 million from tne proceeds, in 1958, of a temporary sur- charge recently imposed on 'ighterage, cargo handling, and storage charges in order to raise additional construction funds for the new port. Second, the Authority will take over operating equipment which cost about S/ 28 million initially, but is now depreciated to half the acquisition cost. Tnis is mainly equipment used by the Empresa de IMuelles to operate the present port, but also includes some equipment, now under the control of the Highways Committee, which was bought from the proceeds of the Puerto Nuevo Fund. Finally, the Authority will become the creditor of the Highways Committee to the amount of about S/ 25 million. This represents Puerto Nuevo Fund moneys which could not be used for port construction pending an actual project and were applied, with the concurrence of the Government, to road construction and related works in Guayas Province. The Presidential Decree creating the Authority provides for the repayment of the debt in installments through 1967. 53. The Authority will ass-ume no liabilities in return for the acquired assets except some short term debts of the Empresa de Muelles due to be re- paid in 1959. The Government has arranged for the free use by the Authority, until it no longer requires them, of the land, jetties, and warehouses on the River Guayas waterfront now used by the Empresa. Title to these properties will continue to vest in the Government. Financing of Construction 54. The construction of the new port rill require an estimated 313 million in foreign exchange for imported equipment, materials, and services plus an estimated S/ 92 million in local currency expenditure. These costs include interest during construction. The Government has proposed that the Authority borrow the entire foreign exchange costs from the Bank and has  - 16 - assigned to the Authority, or will shortly assign, various revenues out of which to pay the local currency costs. These assigned moneys comprise: (a) the liquid funds wiich will be taken over by the Authority at the outset; (b) the customs duties payable into the Puerto N\uevo Fund from 1959 through 1962; (c) the operating surplus 1959-1962, of the present port as arising from the present scale of lighterage, cargo handling, and storage charges, plus the temporary surcharges recently imposed; and (d) the repaymnents 1959-1962, of Puerto Nuevo Fund moneys due from the Highways Conmittee. (For details, see Appendix E), 55. These revenues should bring in about S/ 122 million through 1962. This is about S/ 30 million more than the local currency costs of the pro- ject. Construction Funds, 1958-1962 3/ iiillion Liquid funds taken over in 1958 30 Customs duties payable to Puerto Nuevo Fund, 1959-1962 31 Repaymients due from Highlways Corenittee, 1959-1962 10 Operating surplus from present port, 1959-1962 _51 a/ Total 122 a/ Net after administrative overhead and repayment of short term debt. 56. Sufficient construction funds are thus in sight provided the Bank lends 1`3 million as requested. Howe-ver, there will be short inter- vals during the peak of construction expenditure when the liquid assets might fall below the minimum, say S/ 20 million, which the Authority ought to have in hand at all times as working capital for the present port and as a construction reserve for the new port. The Government has accordingly agreed to assure the provision of any additional funds which the Authority may need during construction to maintain its liquid assets at a proper level. 57. Based on the present tentative construction schedule, the heaviest pressure on liquid funds is apt to arise toward late 1961 (Appendix E). The timing of project expenditure compared with construction funds in sight might well be as followJs:  - 17 - Liquid funds Other construction Project Year at start funds in sight expenditure 1958 17.0 17.0 7.0 1959 27.0 60.7 66.0 1960 21.7 101.1 106.0 1961 16.8 89.9 98.0 1962 8.7 33.1 12.3 1963 29.5 __ _ _ Total 301.8 289.3 Future Earnings and Finances 58. When the Authority begins to operate the new port in 1963, it will have adequate working capital, no funded debt other than the proposed Bank loan, and a substantial equity (Appendix L)* The net properties would total S/ 327 million, against which S/ 192 million of funded debt would be out- standing. 59. The Bank staff has made estimates of future earning power (Appendix K), which are lower than the consultants' estimate. They assume that traffic volume through Guayaquil will develop in accordance with the conservative forecast of Part V., and that no higher shipping dues and cargo charges will be levied than the scale recommended by the consultants. Operat- ing expenses are estimated with allowance for ordinary working expense ashore, maintenance dredging of the new channel, and 40 year service life depreciation on the whole of the new port facilities valued at acquisition cost. Finally, it is taken into account that a growing share of the Guayaquil traffic wrill be truck hauled to and from new productive areas opened by roads now being built, whiile a diminishing share will be barge hauled to and from old areas along the rivers. 6O. Even if traffic levels off at 1.3 million tons a year from 1963 on, operating revenue should continue to increase for the next 10 years or longer. It should increase because, as mentioned above, a growing proportion of the traffic wlll be truck hauled, thereby enhancing receipts per ton. Goods carried to and from the port by truck will have to move across the face of the wharf, and thus pay higher charges than goods brought by barge to or from ships anchored in the streair. 61. The estimates show that net operating revenue will average about S/ 12 million annually for the first 10 years of the operation of the new port. This is income after maintenance and depreciation, but before interest charges. It excludes the customs duties whnich under the Decree Law could continue to be payable and all receipts on account of Highways Committee debts due to be repaid from 1963 onwards. 62. The return on the net fixed assets would average about .5% in the first 10 years. Interest charges would be earned about 1.2x. Adding depre- ciation allowances to net operating revenue, the cover of the full debt ser- vice would be 1.1 - 1.2x, which is too low.  - 18 - 63. The Authority will also have receipts from non-operating sources. Some 12.5 million sucres is due to be repaid by the Highways Committee from 1963 onwards. If, as the Decree Law permits, the assigned customs duties continue to be paid to the Authority after the new port is completed, this would bring in about 8.5 million sucres yearly. However, it is desirable that the Authority shoulld be in a position to meet its fixed charges by an adequate margin from operations only, without reliance on capital trans- actions or on Government subsidies. 64. A more adequate initial return on the investment, about 6%, and a safer initial cover of the debt service, about 1.5x, would result if the scale of shipping dues and cargo charges recommended by the consultants wzere adjusted in such a manner as to increase revenue by lO%. The large benefits accruing to slaipowners and merchants, as assessed in Part VI, show that there is substantial scope for tariffs moderately higher than the consultants have proposed. The Government and the Authority have according- ly agreed that shipping dues and cargo charges will at all times be held at a level ensuring 1*5x cover, or better, of the debt service. 65. According to Bank staff projections of cash flow (Appendix M), the Authority will need S/ 93 million in the 10 years starting 1963 to re- pay the Bank loan and renew plant and eq-ipment retired from service. Under the tariffs recommended by the consultants, an estimated S/ 99 million in retained depreciation charges, plus earnings after interest, would become available from operations. The margin of only S/ 6 million is too narrc)-, thus pointing again to the need of slightly higher tariffs than the con- sultants have recommended. 66. Pro forma balance sheets are shown in Appendix L. They reflect, in addition to retained earnings and depreciation, the recapture of Puerto Nuevo Fund moneys previously used for road building. They make no allow- ance for the continued assignment of customs duties after the port is com- missioned as permitted by the Decree Law. Should this assignment continue, surplus receipts might be created, 50 of which, in accordance with the Decree Law, would be returnable to the Government, 67. The assigned customs duties are an essential element in the planned financing of the local currency costs of the project. It is at present uncertain whether and for how long they may be needed after the new port is cormissioned. The Government has accordingly agreed that the Decree Law providing for the assignment of these duties will not be modi- fied without prior consultation with the Bank.  -19 - VIII, CONCLUSIONS 68, The project is sound and suitable for a loan of $13 million equivalent. It is well justified as a measure of modernization of transport facilities which will bring substantial econoric benefits to Ecuador. 69. The charter of the Port Authority is generally satisfactory, and of a nature which will facili.tate effective nanager;ment. Tariffs will be maintained at an adequate level and the financial position of the Authority should be sound. 70. An appropriate term considering the nature of the project Nould be 25 years, with a period of grace of approximately four and one-half years.  EKLSTING PORT OF GUAfYAQUIL Appendix A. _LiPR.3SA DE MUEJ&LES Revenue and Expenditure 1953-57 u.00Sucresj 1953 1954 1955 1956 1957 (1) Revenue (a) Brought Forward from Previous Year 3,629 489 3,519 2,332 - (b) Operating Revenue from Cargo Ihandling Charges 10,920 21,151 22,471 22,394 23,740 (c) Operating Revenue from Storage Charges 4,127 5,913 4,592 4,o96 3 Total 18,676 27,553 30,582 28,922 27,387 (2) Expenditure (a) Cperating and Capital Expenditure 18,187 16,353 20,250 23,630 22,565 (b) Transferred to Government - 7,681 _8,oo 5,292 4.822 Total 18,187 24,034 28,250 28,922 27D387 (3) Carried Fo;-ward to Following lear (a) SuDpus 489 _ 2,332 - - (b) Deficit - - ---  OPERITIOF<- OF ESISTING FOrisT OF G%UYAWQUIL ` ppendix B. Forecast of Reveiiue and Lpenditlare 1958-62 (1,000 Sucres) 1958 1959 1960 1961 1962 (1) Revenue (a) Ordinary OPerating Xe-renue 28,500 28,900 29,200 29,6co 30,000 (b) Proceeds of Proposed Additional Charges 3,000 5,500 5,S0o 5,600 5,700 Total 31,500 34,400 34,700 35,200 35,700 (2) Expenditure (a) tpera'ving Expenditure 20,000 20,200 20,500 20,700 21,000 (b) Pa-yment of Outstanding Debt4s of Emzpresa de Euelles 5,675 5,000 - - - (c) 50% of Port Authority Director's Fees, Salary of General iianager a.nd his Staff - 500 500 500 o00 etc. Total 25,675 25,700 21,000 21,200 2100 (3) Surplus to be Transferred to Govei-rment - - - (h) Surplus Availa'Lle for Con- tribution to Cost of Puerto Nuevo 3,000 8,700 13,700 1-4,000 14,200 (itillions U.S.$ Equivalent) (0.20) (o.58) (0.90) (0.92) (0.94)  NED PORT OF GUAYAQTJIL Appendix 0 UE,UR0 I1UMV0 FUND Revenue and Exienditure 1953-57 (1,000 Sucres) 1953 1954 19O55 1956 1957 (1) Revrenue Ta(jProceeds of Existing Decrees 7,974 7,130 8,372 6,429 7,686 (2) Expenditure ) Expenditure on Tech- nical studies, equipr1ent, etc. 2,619 1,8I)4 1,019 2,002 4,098 (3) Surpliis ofI Revenue Over Ependiture 5,355 5,286 7,353 4,427 3,588 (IEll-ion U.S.t- Eqlulivalent) (0.35) (0.35) (0.4L8) (0.29) (C. 24)  NEW PORT OF GUAYAQUIL Appendix D. PUERTO N7TEVO FUND--- Forecast of Revenue and Expenditure 1958-1962 (1,000 Sucres) 1958 1959 1960 1961 1962 (1) Revenue (a) Proceeds of Existing Decrees 8,000 8,100 8,200 8,300 8,400 (b) hepayment of S. 20,000,000 - - 2,500 2,500 2,500 Borrowed by Comite de Vialidad for Road Const:ruction (c) Mascellaneous Repaymernts 2,000 1,400 1,200 600 - Total 10,000 9,500 11,900 11,400 10,900 (2) Expenditure (a) Port Authority Directors' Fees, Salary of Gene2:al M;anager and his Staff, etc. (100% diuring 1958, 50W there- after). 500 500 500 500 500 (3) Surplus Available for Contribution to Cost of Puerto Nuevo 9,500 9,000 11,400 10,900 10,400 (I4illion U.S.$ Equivalent) (0.63) (0.59) (0.75) (0.72) (0.69)  NEW PORT OF GUAYAQUIL Appendix 3, PUERTO NUEVO PROJECT Capital Expenditure and Sources of Funds 1958-62 (1,000 Sucres) 1958 1959 1960 1961 1262 (1) Available Funds (a) Available at Beginning of year 17,000 27,000 21,700 16,800 8,700 (b) Surplus Available from Operation of Exist- ing Port a/ 3,000 8,700 13,700 14,000 14,200 (c) Surplus Wailable from Puerto Nuevo Fundjb 9,500 9,000 11,400 10,900 10,400 (d) Disbursement from ?roposed IBRD Loan 4,500 43,000 76,000 65,00o B05OO Total 34.000 387700 122.800 106,70 L1, 300 (2) Capital Expenditure (a) New Port Construction (Foreign Currency) 4,500 43,000 76,000 65,000 8,00 (b) New Port Construction (Sucres) 2,500 23,000 30,000 33,000 3,800 Total 7,000 66. 000 106Q000 98.000 1Z.30 (3) Funds Available at End of Year 27,000 21.700 16,800 8,700 29.500 (Million US$ Equivalent) (1.78) (1.43) (1.11) (0.57) (1.95) V/ -ee Appendix 1)  EXISTI,G 9ORIT OF GJAYAUQtIL ApDendi. F. Cargo Loaded and Discharged 1953-57 (1,000 1Aetric Tons) :9a 31954 -IM 1956 1957 Loaded Rice 42.5 10.2 20.8 13-.6 38.4 Bananas 224.4 274.9 354.8 336.5 408.5 Coffee 7.3 8.3 7.5 9.0 9.1 Cacao 21.1 29.4 23.5 28,7 26.2 Mlolasses - - - 27.0 18.3 Balsa 4.1 3.5 3.7 3.8 5.8 Sugar - - - - 9.6 iliscellaneous 21.8 21.0 21.4 5.4 13.8 Total 321.2 347.3 -431.7 422.0 529.7 Discharged Oats N N 6.0 5.2 Asphalt o o o 6.2 5.3 Fuel Oils t t t 23.6 5.4.1 Gasoline (Including Aviation Spirit) A A A 97.5 '5.7 Iron and Steel v v v 84.2 81,2 Automobiles & Trucks a a a 5.5 5.7 Machinery i i i 25.3 53.3 Food 1 1 1 2.1 2.1 Wheat a a a 50.5 56.5 Miscellaneous b b b 2.6 23.4 1 1 1 e _ ~ e _ - _ - Total 160.0 30f)~~~.joa. 2.0-1/ 303.5i 362.3 Total ______ ______ Coastal (Discharged and Loaded) ?etroleux. Products 17. A. N.A. N.A. N, A. 170 .0 General Cargo N.A. N.A. N.A. N.A. 30.0 / Total N.A. N.AA. N.hk b 200.Q GQ4L\D TOTAL N.A. l.A. N.A. K.A. 1,092.0 q/ Approximate only.  NFW PORT OF GUAYAQUIL Appendix G ESTIYTED COST OF PUERTO 1UEVO PROJECT Total Cost Local Currency Foreign Currency (1,000 Cost Cost (1,000 U.S.3 Item (1,000 Sucres) (1,000 U.S Tn Equiv.) Sucres) Equiv.) (a) Estero Salado Channel, including Navigational Aids 11,h99 2,85 54,737 3,613 (b) Wharves, Cargo, Sheds, etc. 67,842 4,944 142,744 9,h22 (c) Estero Salado-Guayas Canal Including Lock 11,347 1,585 35,360 2,334 (d) Services betreen Guayaquil and New W-Vhar-vcs inclucdng Po.werline, Telephones, etc. but excluding AccessRoadsa 636 370 6,242 412 (e) Land Acquisition 1,000 - 1,000 66 (f) Port Equipment - 1,000 15,150 1,000 (g) Interest During Construc- tion _ 2,247 3h,OL2 2,214 Total 92,32h 13,000 2B9,275 19,094 a/ The cost of the access roads is estimated to be S/5,000,00Q approximately. Construction is already in hand, a transsfer having been made for the purpose from the Puerto Nuevo fund.  NLW PORT OF GUAYAQUIL Forecast of Future Traffic (1,000 Metric Tons) item 1295 1929 1960 12961 962 J963 1964 l 1966 1967 Imports (a) General cargo imports 180 180 185 195 200 205 205 205 210 210 (b) Petroleum products 7 7 7 7 7 8 8 8 8 8 (c) Wheat 55 5_ 55 . S 5S 55 55 55 5S US Total 242 242 247_- 2 5?7 262 268 268 268 273 273 Exports (a) Rice 27 28 29 30 31 32 33 34 35 36 (b) Bananas 410 420 430 440 450 460 460 46o 460 460 (c) Coffee 9 10 10 11 11 12 12 12 12 12 (d) Cacao 29 30 31 32 33 34 34 35 35 36 (e) Molasses 25 25 26 27 30 30 30 30 30 30 (f) Sugar 12 12 14 16 20 20 20 20 20 20 (g) Miscellaneous 20 21 22 21 24 26 27 28 29 n3 Total 532 546 562 579 599 614 616 619 621 624 Coatise (Loaded and Discharged) (a) Petroleum products 300 315 330 345 360 375 375 375 375 375 (b) General cargo 30 -nL 31 3 _L_ L33- .3k4 - 35. 35 __-35 -- Tot_al 2330 346 362 378 394 410 410 410 410 410 Grand Total 4,104 1,134 1,171 1,214 1,255 1,292 1.294 1,292 1,304 1,307  lw PORT OF GU ^AA Aiendix I Freat of Probable Distribution of Traffic (1000 Metric Ton.) (1) Based on Actual Trafflc R.ecorded in 19S7 (2) Based on Traffic Forecast for 1961 Tonnge which Tonnage Which would hae Tannage which Tonnage which Tonnage which would have been handled would have Total will be will be handled Tonnage which been handled in Stro in been handled tonnage handled in in stream in will be handled Total lIte in River ag &Ltuero Sala", at ney wharves le River Guwas iEstero Salado at new wharves tonnae Isorte (a) General cargo imports - 178 178 _ 205 205 (t) Petroleum products 130 - _ 130 8 - 8 (a) heat 38 18 56 27 18 55 Total 168 - 196 44 - 221 268 1xmorts (a) Rice - 9 29 38 - 8 24 32 (b) Bana_as 286 123 409 322 138 460 (a) Coffee - - 9 9 - 12 12 (d) Cacao - 26 26 - - 34 34 (e) Molasses 18 _ - 18 30 - - 30 ) ugar - - 10 10 - _ 20 20 (g) Miscllaous - 3 16 19 - - 26 26 18 298 213 529 ,0 30 2S4. 614 C-oas tw" (Loaded and Discharged) (a) Fetroleum products 170 - - 170 375 - - 375 (b) general cargo 30 _ _ - _ 3 total --9010 21- 2 0 0 410 ROMgl Tota -m -. 298 -. _ _ 48 477 1.29  APPENDIX J Pro forma Financial Position, Ne-. Port of Guayaquil Authority as of Jan. 1, 1959 (S/ COO) Current Assets Cash on hand and in bankls 20.C00 Time deposits 5.-C0C Ilarketable securities 1*100 I. Total 27.000 Current Liabilities Assumed short-term debt of Eapresa de 1luelles 5.000 Accrued interest on proposed Bank loan 100 II. Total 5.100 Fixed Aissets Operating equipment taken over from Empresa de Aluelles 13.000a) Operating equipment taken over from Highways Committee 806b) Progress payments on New Port project during 1958 7.000c) III. Net fixed 20.800 assets Rapayable Claims cn1iJdhways Cornmittee Loan for hightTay construction 20.000 Other loans 3.2O0 IV. Total 23.200 FTet working- capital (I minus II) 21.900 NTet fixed assets (III) 20.800 Repayable claims (TV) 23.200 Net properties 65.900 Drawings on proposed Bank loan 4.500 Equity equivalent 61.o00 (a) Depreciated value, as estimated by Bank staff, of equipment which originally cost SI 25.1 million. (b) Depreciated value, as estimated by -Highwrays Committee, of equipment wihich originally cost S/ 1.6 million. (c) Includes engineering fees, cost of land, and interest during construction on proposed Bank loan.  Appendix K NEW PORT OF GUAYAQUIL AUTHORITY Forecast of Income and Earnings (Selected Years) (S/ 000) 1963 1967 1973 Revenues Dues on shipping 5,070 5,350 5,650 Cargo handling charges 27.,190 29,520 32,000 Cargo storage charges 7,140 7,540 8,190 Total operating revenues 39,400 42,410 45,840 d/ Expenses Ordinary operating expenditure 19,845 22,515 23,795 Allowance for maintenance dredging 1,500 1,500 1,500 Allowance for depreciation 7,395 7,395 7,395 Total operating expenses 28,740 31,410 32,690 Net operating revenue a/ 10,660 11,000 13,150 Interest on Bank loan h/ 10,610 9,270 6,630 Net earnings 50 1,730 6,520 (Times interest earned) l.Ox l.lx 2.Ox Net operating revenue, plus depreciation 18,055 18,395 20,545 Interest and amortization of Bank loan 16,140 16,1140 16,1140 (Cover of debt service) l.lx 1.Lx 1.3x Net fixed assets c/ 295,900 262,800 241,200 Net operating revenue 10,660 11,000 13,150 (Return on investment) 3.6% 4.2% 5.5% a/ Operating revenues as shown above less operatLng expenses shown above. b/ Interest due, in each selected year, assumes 'l-;13 million loan at 54/2% repayable in 41 equal semi-annual instalments commencing 1963. Average annual mnterest on such loan would appro2dnmate S/5.4 million equivalent. c/ As calculable from pro forma balance sheets, q.v. average net fixed assets over entire 20-year period would approximate S/250 million equivalent. d/ The increase in revenue as compared with 1967 reflects the greater proportion of traffic being handled at the new wiharves. Note The revenues shoTn are calculated on the basis of tlhe consultantsI tentative list of rates and the forecasts of traffic tonnage and distribution given in Appendices H and I.  Appendix L Pro Forma Financial Position, New Port of Guayaquil Authority selected dates during repa ment period of proposed loan (S/ 000, as of Jan. 1) (e) (e) 1963 1968 1973 Current Assets Cash and equivalent 29.500 30.700 23.200 Repayment from Highwaya Committee due in next 12 months 2.500 _ - I. Total 32.000 30.700 23.200 Current Liabilities Accrued int7erest, Bank loan, past 6 months 5.400 4.500 3.500 Current and next payment due Bank loan 5.400 7.100 9.300 II. Total 10.800 11.6o0 12.800 Fixed Assets E-res-a de Nluelles and Highway Com]ittee equipment _ at acquisition value 13.800 6.800 - New Port including construction equipment, and interest during construction 289.000 289.000 274.000 Renewals of plant and equipment - 35.00 918.500 Fixed assets at cost 302.860 )29) 300d) 25500 Depreciation reserve 6.900a 36.500- 1.300 III. Net Fixed Assets 295.900 262.800 241.200 Repavable Claim on Highway Committee Outstanding,, pecified date 12.500 - - Due within 12 months 2.500 IV. Repayable Claim 10.000 - - Net working capital (I-II) 21.200 19.100 10.400 Net fixed assets (III) 295.900 262.800 241.200 Repayable claim (IV) 10.000 - - Renewals Fund b) - 16.500 27.300 Net Properties 37J15 295.400 27b.900 Outstanding Bank loan c) 19.600 M.660 113,200 Equity equivalent 135.500 138.600 160.700 Original investment 135.500 135.500 1 Earned surplus - 3.100 25.200 (a) Represents 50% of acquisitiosv wlue of equipment taken over from &Vpresa de Nuelles and Highway Comrattee *& 1958*.59, (b) Assumed equal to 50% of e'rcess et wumulative depreciation charges over cumulative renewals ewxpnd