China - Xiamen Port Project

 Xiamen port project Report No: ; Type: Report/Evaluation Memorandum ; Country: China; Region: East Asia And Pacific; Sector: Ports & Waterways; Major Sector: Transportation; ProjectID: P003515 China: Xiamen Port Project (Loan 3007-CRA) The Implementation Completion Report (ICR) on the China: Xiamen Port project (Loan 3007-CHA, approved in FY89) was prepared by the East Asia and Pacific Regional Office, with Appendix B contributed by the Borrower. The loan for US$36 million equivalent was approved on December 13, 1988, and closed on March 31, 1995, one year behind schedule. The loan was fully disbursed. This was the Bank's sixth port project in China. This project assisted Xiamen port, which serves Xiamen island, situated across the straits from Taiwan. This island was one of the four initial Special Economic Zones established in 1984 to facilitate foreign investment in export-oriented industries. The project's main objectives were to: (i) improve the operational and maintenance capabilities of the port by preparing and executing an action plan; (ii) assist in preserving the environment by designing and incorporating in the port's Master Plan appropriate protection measures; and (iii) increase the port's capacity to handle cargo by carrying out physical investments and training. The project's objectives were achieved. The technical assistance component helped in updating the port's Master Plan and produced an action plan, implemented during the project, comprising a number of activities to improve operations, maintenance and environmental protection. Training, both domestic and abroad, was successfully completed, despite problems of tailoring training for managers, and the number of staff trained was more than three times the appraisal estimate. Increases in berth throughput in the old terminals and prevention of water pollution from oil and chemical fertilizers were important achievements of the project. Implementation was delayed by one year. Most of the delay was caused by procurement problems as well as changes to the original project design, i.e. the modification of two multipurpose berths to handle unanticipated growth in container traffic. Similar modifications made in other port projects in China reviewed by the Operations Evaluation Department (OED) were also due to an initial underestimation of the growth in container traffic. The port's financial performance remained satisfactory; larger than expected revenues, stemming mainly from the fast growth of container traffic, compensated for increases in operating costs, caused by liberalization of prices throughout the economy. Although port assets were revalued during project implementation for the first time in 40 years, the resulting depreciation provisions may still be insufficient to cover the replacement of the port's aging facilities. The economic rate of return is estimated at 43 percent, surpassing the appraisal estimate of 31 percent, mainly as a result of higher traffic and greater value of cargo, which more than offset an overrun in construction costs. OED concurs with the ICR in rating the project's outcome as satisfactory, its sustainability as likely, its institutional development as substantial, and Bank performance as satisfactory. The main lessons are: (i) training for managers needs to be customized to the specific needs of the executing agency to ensure its relevance and usefulness; and (ii) better communication between Xiamen port officials and those of other ports in the fast growing regions of China (which had benefited from earlier Bank loans) could have led to: (a) a better forecast of container traffic; and (b) a better understanding of Bank procurement procedures, thus preventing implementation delays. The ICR is satisfactory; it provides good data and analysis and covers all areas well. However, it could have been even more useful if it had taken a broader perspective by incorporating the findings of the five previous China port projects. No audit is planned.