China - Huangpu Port Project

 Huangpu port project Report No: ; Type: Report/Evaluation Memorandum ; Country: China; Region: East Asia And Pacific; Sector: Ports & Waterways; Major Sector: Transportation; ProjectID: P003494 December 28, 1995 China: Huangpu Port Project (Loan 2877/Credit 1845-CHA) The Implementation Completion Report (ICR) on the China Huangpu Port project (Loan 2877/Credit 1845-CHA, approved in FY88) was prepared by the East Asia and Pacific Regional Office, with Appendix B contributed by the Borrower. The loan for US$63 million equivalent and credit for $25 million equivalent were approved on October 6, 1987 and closed on December 31, 1994, one year behind schedule. A balance of US$2.23 million of the loan amount was canceled. The project was the third to assist port development in China and the second to help finance expansion of the Huangpu port. It was prepared at a time when most of China's ports were severely congested. The project's main objective was to increase the capacity of the Huangpu port in the fast growing Guangdong Province, by building specialized berths outfitted with modern equipment, and by construction of related infrastructure. A complementary objective was to improve the port's efficiency over the long-term through training and studies. The project was successfully implemented and all objectives were achieved. The project's main design change involved adapting an iron ore berth to be used also for handling coal. The delay in completing the project was mostly due to problems with preparation and evaluation of bids and implementing contracts, and with the design and supply of the equipment handling coal and iron ore. Studies focused on engineering design, operational efficiency, preparation of a master development plan and improving the access channel to the port. Most of the studies' recommendations were implemented, and others are underway. Training was successfully carried out, both locally and abroad. A decentralization of port operations and finances from the central government, started soon after Board approval of the loan, helped improve Huangpu's efficiency; by 1994, it was carrying 43 percent more traffic than forecast at appraisal. This generated additional revenues and also helped produce a re-estimated economic rate of return of 33 percent for the project investments. As a result, port finances remained satisfactory, despite the fact that fuel and other operating costs increased substantially while port tariffs remained tightly controlled. The ICR rates the project outcome as satisfactory, institutional development as substantial, sustainability as likely and the Bank's performance as satisfactory. The Operations Evaluation Department agrees with these ratings, except for institutional development which is rated as moderate because the objectives were limited and the studies were confined to engineering and technical matters, the impact of which is likely to be modest. The key lessons of this project are: (i) port decentralization should include more flexibility for the port management to adjust tariffs and require more frequent revaluation of assets; (ii) post qualification criteria should be included in bidding documents to facilitate bid evaluation and avoid procurement delays; (iii) a simple project design and clear-cut organizational arrangements contributed to project success. The ICR is good; it contains detailed economic analysis and financial tables. The section on future operation of the project notes that the port's statistical system collects relevant indicators for assessing future operational and financial performance. No audit is planned.