Tanzania - Second Port Modernization Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 21559 IMPLEMENTATION COMPLETION REPORT (IDA-20950) ONA CREDIT IN THE AMOUNT OF IN THE AMOUNT OF US$ 37.0 MILLION TO THE UNITED REPUBLIC OF TANZANIA FORA PORT MODERNIZATION PROJECT (PROJECT ID: P002784) December 28, 2000 TRANSPORT AFRICA REGION 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 EQUIVALENTS (Exchange Rate Effective 08/25/2000) Currency Unit = Tanzania Shilling Tsh 1.0 = US$ 0.0012507817 US$ 1.0 = Tsh 799.50 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ASYCUDA Automated System for Customs Data CAS Country Assistance Strategy DANIDA Danish International Development Agency DCA Development Credit Agreement DSM Dar Es Salaam EIB European Investment Bank FINIDA Finnish Intemational Development Agency Govt. Govemment HF High Frequency ICB Intemational Competitive Bidding ICR Implementation Completion Report IDA Intemational Development Agency IMO International Maritime Office KOJ Kurasini Oil Jetty MARPOL Marine Pollution (Intemat. Convention for Prevention of Pollution from Ships) MIS Management Information System MTR Mid-term Review N.B.F. Non Bank Financed NCB National Competitive Bidding PCU Project Coordination Unit PSRC Parastatal Sector Reformn Commission RTG Rubber Tyred Gantry QAG Quality Assurance Group SAR Staff Appraisal Report SBM Single Buoy Mooring SIDA Svvedish Intemational Development Agency SSG Ship- to-Shore Gantry TA Technical Assistance TDW Tonnage Dead Weight TEU Twenty Foot Equivalent Unit (container) THA Tanzania Harbours Authority TRA Tanzania Revenue Authority TRC Tanzania Railways Corporation TZR Tanzania Zambia Railways US$ United States Dollar VDS Vessel Delay Surcharge VHF Very High Frequency Vice President: Callisto Madavo, AFRVP Country Manager/Director: James W. Adams, AFC04 Sector Manager/Director: Yash Pal Kedia, AFITI Task Team Leader/Task Manager: Simon Thomas, AFTT1  FOR OFFICL USE ONLY FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLEIION REPORT UNITED REPUBLIC OF TANZANIA PORT MODERNIZATION PROJECT (CREDIT 2095-TA) CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 6 5. Major Factors Affecting Implementation and Outcome 6. Sustainability 7. Bank and Borrower Performance 8 'lessons Leamed 9. Partner Comments 10. Additional Information A mex 1. Key Performance Indicators/Log Frame Matrix Annex 2. Project Costs and Financing Annex 3. Economic Costs and Benefits Annex 4. Bank Inputs Annex 5. Ratings for Achievement of Objectives/Outputs of Components Annex 6. Ratings of Bank and Borrower Perforinance Annex 7. List of Supporting Documents Annex 8. Original & Revised Project Components Annex 9. Component - Objective Relationship Anmex 10. Project Component Revisions Annex 11. Financing Arrangements This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.   Project ID: P002784 Project Name: PORTS MODERNIZATION Team Leader: Simon Thomas TL Unit: AFTTR ICR Type: Core ICR Report Date: December 14, 2000 1. Project Data Name: PORTS MODERNIZATION L/CITF NVumber: IDA-20950 Country/Department: TANZANIA Region: Africa Regional Office ,Sector/subsector: TP - Ports & Waterways; XX - Unidentified KEY DATES Original Revised/4ctual PCD: 03/31/1989 Effective: 05/07/90 12/28/90 Appraisal: 07/07/1989 MTR: Approval: 02/27/1990 Closing: 06/30/97 06/30/2000 Borrower/Implementing Agency: GOVT/TANZANIA HARBOURS AUTHORITY Other Partners: NORAD, DANIDA, SIDA, EIB, NETHERLANDS, F1NNlDA. STAFF Current At Appraisal V;ice President: Callisto Madavo V. K. Jaycox Country MIanager: James W. Adams H. Messenger Sector Manager: Maryvonne Plessis-Fraissard Isaac K. Sam Team Leader at ICR: Simon Thomas M. Konishi ICR PrimaryAuthor: Marios A Meletiou 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory,HL=Highly Likely, L=Likely, UJN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory,H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: This project was, de facto, a continuation of the Port Rehabilitation Project (PRP) Cr. 1536-TA which became effective in mid-1985 and closed on December 31, 1992. The port of Dar es Salaam has 11 dry cargo deepwater berths; PRP converted berths 9 - 11 into a container terminal with a limited container stacking area, provided some handling equipment, constructed bulk grain storage facilities and started the rehabilitation of the general cargo port. The level of port traffic fell substantially in the early 1980's, from its peak in 1977, but this decline was then reversed and annual traffic growth averaged about 7 percent to 1988. More particularly, container traffic showed very rapid growth and this growth was expected to continue. Total dry cargo was forecast to increase 60 percent by 1997 to 3.35 million tonnes, while loaded container traffic was forecast to increase by over 200 percent to more than 150,000 TEU.The Mid-Term Review of PRP (1988) concluded that, despite the iinprovements in performance and the additional port capacity provided by the project, the port of Dar es Salaam (DSM) would experience severe capacity constraints, by the mid- 1 990s, unless further improvements were made. The majority of the port traffic was in transit to/from the landlocked countries of East and Central Africa. In 1988, Tanzanian traffic accounted for 41 percent of total port traffic and Zambia 40 percent; the remainder of the traffic was split between Zaire, Burundi, Rwanda, Uganda and Malawi. Despite the level of transit traffic, it had become recognized that DSM had failed to exploit fully its potential as a transit port for the region and that additional traffic could be attracted by improved facilities and levels of service. The main objectives of the Port Modemization Project (PMIP), as stated in the SAR, were, therefore:"to expand the physical, managerial and operational capabilities of THA (Tanzania Harbours Authority) to meet the traffic volume expected in the 1990's and to provide a more reliable and cost effective link with the neighboring landlocked countries". The Project objectives were clear and appeared rea'istic. The objectives reflected the Tanzanian Government's "Programme for Transport Sector Recovery", which called for institutional changes and rehabilitation of the transport sector in order to re-establish transport infrastructure and operations to serve the economy. The Program for Recovery was fully endorsed by the Transport Sector Donors' Conference which was held in December 1987. The Donors agreed to provide major support in the road sector (the Integrated Roads Project), the railway sector (Railway Restructuring Project) and the port sector (Port Modemization Project). The port project would substantially benefit the economy through lower port and shipping costs, more efficient port services and increased foreign exchange earnings. One of the six major objectives of the World Bank's 1990 Country Assistance Strategy (CAS) was to" reduce sectoral and physical constraints". The CAS has been updated several times, since 1990, but has continued to maintain the emphasis on the development and rehabilitation of the transport sector, often citing specifically the port sub-sector. The Project objectives were fully consistent with the Bank's assistance strategy. Overall, the project was highly responsive to borrower circumstances and development priorities. 3.2 Revised Objective: In 1994, The Government of Tanzania (GOT) established the Tanzania Revenue Authority (TRA ), and the Development Credit Agreement (DCA) was amended, in 1995, to include the sentence: "In addition, the customs and transit control activities of the Tanzania Revenue Authority will be strengthened and streamlined." This also reflected the "Programme for Transport Sector Recovery", which stated: "To promote regional integration, customs procedures and transit arrangements should be simplified to improve the ease with which transit cargo can pass through Tanzania". As a result of the amendment, support for - 2 -  the customs and transit control was substantially increased. In 1996, the GOT made a fundamental change in its strategy toward the major parastatals and commenced its policy of privatization. The DCA was further amended (1997) to include the concessioning of the container terminal. The Presidential Parastatal Sector Reform Commission (PSRC) was made the implementing agency for this Project component. The concessioning of the container terminal was also made a condition of the Structural Adjustment Credit. 3.3 Original Components: The table below presents the original project categories (inclusive of physical & price contingencies), as presented in the SAR. ORIGINAL PROJECT COMPONENT CATEGORIES (Costs in US$ million) MAIN COMPONENT CATEGORY COST ESTIMATE IDA FINANCED A. CIVIL WORKS 65.50 17.50 B. EQUIPMENT 27.51 8.60 C. DESIGN / SUPERVISION 5.36 2.30 D. INSTITUTIONAL DEVELOPMENT 23.97 8.60 TOTAL 122.34 37.00 3.4 Revised Conmponents: Following the 1995 amendment to the DCA, the four original component categories of the project were restructured to reflect the new activities and to delineate the "Port" and "Customs" components: 1. Civil Works (Port) 2. Equipment (Port) 3. Consulting services/TA (Port) 4. Consulting services/TA (Customs and PSRC) 5. Equipment (Customs) 6. Civil Works (Customs) The first and fourth tables in Annex 2 detail costs and financing, on the basis of the revised main component categories. During the project, 17 revisions were made to the original list of project activities. Some major activities, such as the paving of the lighter wharf and rehabilitation of the Belgian wharf, were deleted from the project, while the rehabilitation of customs and t-ansit buildings and the dredging and straightening of the harbor entrance channel were added. Despite the changes, the final total project cost was very close to the original cost estimate. 3.5 Quality at Entry: The quality at entry is rated "satisfactory": The design of the project was supported by substantial preparatory work and incorporated the experience of the previous port projects, particularly the PRP which was then under implementation. The design of the project incorporated or, at least, attempted to incorporate: (a) The careful assessment of investment needs (grain silos, constructed under a previous port project, - 3 -  have rarely been used). The project components were subjected to rigorous analysis and many were then to be further reviewed on the basis of the results of the comprehensive "Port Development Study" which formed part of the project. (b) The more effective use of technical assistance. It was thought that preparatorv work had identified and addressed the factors underlying the relatively limited achievement of institutional objectives in previous projects. The project tried to address the failings of previous TA through monitoring and guidance by THA and by the appointment of counterpart staff. (c) The focus on the problem of staff motivation. An incentive scheme for port workers had just been introduced by TIA and TA was included specifically to develop further the scheme. (d) The establishment of satisfactory implementation arrangements. The project was large and complex: * Seven co-financiers involved (later increased to eight) * 25 project components under four main categories * Two implementing agencies (THA and the Customs Department), and a third (Presidential Parastatal Sector Reform Commission) was added THA, the primary implementing agency, had gained considerable implementation experience from the previous projects and the Project Coordination Unit (PCU) was to be provided with TA and training. The project design successfully integrated the efforts of the project co-financiersnd satisfactorily addressed implementation including project management and coordination, monitoring and reporting, procurement and accounting and auditing. (e) The establishment of monitorable performance indicators. With the exception of the level of service to inland transport, adequate performance indicators wvere establiskod. (f) Adherence to the Bank's safeguard policies. The only safeguard policy relevant to this Project was "OP 4.01, Environmental Assessment". The project was assessed as "B category" because the originally identified civil works did not pose any serious environmental concems. PRP environmental procedures were to be applied in this project. The TOR for the Port Development Study included a detailed environmental impact study, consistent with the World Bank Technical Paper "Environment Considerations for Port and Harbor Development" (1989 edition), with special emphasis on any proposed dredging or reclamation works. The Port Development Study also included an assessment of the facilities and operating practices necessary to join the Intemational Convention for Prevention of Pollution from Ships (MARPOL). Provision was made in the Project for fire fighting equipment and pollution control facilities. (g) The realistic assessment of the Project risks. The Project risks were identified as: traffic growth; costs and delays in implementation; and the actual achievement of operational improvements. When privatization was included in the Project, management resistance was recognized as a potential risk. 4. Achievement of Objective and Outputs 4.1 Outcome,'achievement of objective: The Project was extended for a total of 3 years and was thus implemented over a 10 year period. The long implementation period reflects the adjustments made to the scope and focus of the Project in order to support the major changes in the Government's strategy toward economic liberalization and the parastatal sector that took place during the 1990's. The Project achieved most of its original and revised objectives: (a) The capacity of the port was expanded to meet the traffic demands of the 1990's and beyond.The total dry cargo traffic handled at the port remains at around 2 million tonnes, but the present level of container - 4 -  traffic (slightly more than 100,000 TEU) could not be handled without the investments made under the Project. The dredging and straightening of the entrance channel now allows 24 hour port access, considerably improving the operational effectiveness and competitive position of the port. (b) The upgrading the Kurasini Oil Jetty (KOJ) to accommodate larger refined product tankers and increase unloading productivity allowed the full liberalization of the Tanzanian petroleum sector in 2000 and the withdrawal of subsidies from the Tiper refinery . The Project complemented the activities undertaken under the Petroleum Rehabilitation Project Cr.2202-TA, and the macro-economic policy dialogue. (c) The privatization of the container terminal of Dar es Salaanr introduced as an objective in 1997, was achieved with the signing of a lease agreement in May, 2000. The private operator took over running the container terminal in September 2000. This is the initial stage of fundamental change to the port sector in Tanzania (d) The improvement in port service performancexxas not fully achieved but considerable operational improvements were made to the level of service to