Philippines - Provincial Ports Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6566-PH STAFF APPRAISAL REPORT PHILIPPINES PROVINCIAL PORTS PROJECT May 1, 1987 Transportation Division Projects Department East Asia and Pacific Regional Office 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.  CURRENCY EQUIVALENT Currency Unit = Pesos (P) (As of December 1986) US$ = P 20 P $1.00 = US$0.05 FISCAL YEAR January 1-December 31 ABBREVIATIONS AND ACRONYMS AADT - Annual Average Daily Traffic ADB - Asian Development Bank CIF - Cost, Insurance, Freight GNP - Grcss National Product CRT - Gross Register Ton MARINA - Maritime Industry Authority MIS - Mai .gement Information System DOTC - Department of Transportation and Communications DOB - Department of Budget DLG - Department of Local Government DPWH - Department of Public Works and Highways NEDA - National Economic and Development Authority NTPP - National Transportation Planning Project PIP - Public Investment Program PMU - Port Management Unit PPA - Philippine Ports Authority PPAR - Project Performance Audit Report PPTC - Port Personnel Training Center PNR - Philippine National Railways RRIP - Rural Roads Improvement Project  FOR OmCIL USE ONLY PHI LIPPINES PROVINCIAL PORTS PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. LOAN AND PROJECT SUMMARY ........................... iii I. THE TRANSPORT SECTOR ......................... ............... 1 A. The Transport System ..................................... . 1 B. Transport Planning .*o o..................................e................ 1 C. Transport Issues in the Maritime Subsector................. 2 D. Bank Involvement in the Sector and the Subsector ........... 3 II. THE PHILIPPINE PORTS AUTHORITY .................oo............... 4 A. Organization ..Ge.600**eo 4400*00 0........... ............................ 4 S. Management and Staffing ....................... ... .. 5 C. Operation and Mcintenance *oo .... .........o.. .e.o........... 6 Do Trafficso.....e ..................... 7 F. Budget, Accounting and Auditing ............................ 9 IIT. THE PROJECT .................................................... 9 A. Background .......... ............ 9 B. Objectiv es ...n.............. ...................... 10 c. Project Description *~.* ~oo..*o... s*oe e)o.9o. ........................... 10 Do Cost Estimates ........... ........ 11 E. Financing Pln.................................12 F. Project Implementation and Procurement ....e.o.4.,64........ ........ 0.... . 12 G. Disbursement .................................... 14 H. Environmental Aspects ......... 14 IV. ECONOMTC EVALUATION ......... . .o.... ...o..o.. o.o........ . . . . . . . . .o. . 15 A. Traffic Aayi ......... ................ 15 B. Main Benefits and Beneficiaries. ........................... 15 C. Economic Evaluation ....0....................0.. ...... . . . . . . . 15 D. Sensitivity Analysis ....................................... 16 E . Proj e ct R i sks ........ ........... . 00*6. 0000. . 00000000&00. 000aa000.... 9 16 This report is based on the findings of an appraisal mission which visited the Philippines during September/October 1986. The mission comprised Messrs. Lars Nordin (Economist), Ismail Mobarek (Port Engineer), Lance Morrell (Financial Analyst), and Mennc Klautz (Consultant) and Ms. Lily iy (Economist). This document has a restricted distribution and may be used by recipients only in the performance of their official d ities. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Page No. V. FINANCIAL ANALYSIS ............................................. 17 A. Introduction ............................................... 17 Bo Past Financial Performancee...ooo.e...... ..ge.........o......... 17 C. Present Financial Position.................................. 19 D. Cost Recoverv and Profitability............................ 19 E. Future Financial Performance............................... 20 F. Sensitivity ... .....*..a .. . ...... .. *...**...... .. . e.g ............... 21 VI. AGREEMENTS REACHED AND RECOMMENDATIONS......................... 21 TABLES 1. Port Traffic in the Philippine ................................. 24 2. Total Project Cost Summary to...........o.... ,.. .g...... 25 3. Estimated Schedule of Disbursements ......................... 26 4. Traffic in the Project Ports . o .................. , . .... 27 5. Economic Evaluation of the Project ......................... .. 28 6. Actual and Forecast Income Statements ............ o....... .... O.... 29 7. Actual and Forecast Balance Sheets ......................****...... 30 8. Actual and Forecast Sources and Applications of Funds Statement . 31 9. Key Financial Indicators ......... . .............. ...... .. 32 ANNEXES 1. Description of the Project Ports ,. ........ .........*. .e 33 2. Technical Assistance ..,. ... ......... .. ......... . 37 3. Implementation Schedule ................ .. o.... .40 4. Annual and Cumulative Changes in the Average Tariffs . 41 5. Assumptions Made in Preparing Financial Forecasts .... ........... 42 6. Selected Documents and Data Available in the Project File ....... 44 CHART 1. Present General Organizational Structure of PPA ................. 45 MAPS 1. IBRD 20189 2. IBRD 20190 (Calapan and San Jose) 3. IBRD 20191 (Tagbilaran) 4. IBRD 20192 (Nasipit, Surigao, Pulupandan)  - iii - PHILIPPINES PROVINCIAL PORTS PROJECT Loan and Project Summary Borrower: Republic of the Philippines. Beneficia: Philippine Ports Authority (PPA) Amount: US$32.0 million equivalent. Terms: Twenty years, including a five-year grace period, at the standard variable interest rate. Relending Terms: Same as above. PPA would bear ;he foreign exchange risk. Purpose: The proposed project aims at strengthening the port insti- tutions in the Philippines and expanding prQvincial ports capacity. It will provide for: (a) expansion of six ports (Calapan, San Jose, Tagbilaran, Nasipit, Surigao and Pulupandan); (b) rehabilitation/maintenance of 16 porta (Bauan, Cagayan de Oro, Sta. Cruzt Legaspi, Tabaco, Pulauan and 10 yet-unnamed ports); (c) equipment; and (d) technical assistance for project implementation, financial manage- ment, training and studies needed for further development of the port system in the country. Risks: The project poses no unusual risks. Estimated Costs: /a Local Foreign Total