World Bank Documentdocuments.worldbank.org/curated/en/549331468025178099/pdf/multi-page.pdf · When the project was identified, most ports were badly congested; container berths,

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 14748

IMPLEMENTATION COMPLETION REPORT

CHINA

TIANJIN PORT PROJECT(LOAN 2689-CHA)

JUNE 29, 1995

Transport Operations DivisionChina and Mongolia DepartmentEast Asia and Pacific Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS(as of December 1 994,

Currency Naame = RnminbiCurrency tUnit - Ynan (Y)

Yuan rate per US$1.4)

1986 - 3.45 1990 4. 731987 - 3.72 1991 5. 331988 - 3.72 1992 5.531989 - 3.73 1993 5.80

1994 - 8.70

FISCAI, YEAR

January I - December 31

X1E kLSUREMENT EQUIVALENTS

Metric Sv s, eri BriisihUS .'x 'stem

I micter (ni) -- 'S teetI squaic maeter (m ) 10.764 squr, c feetI Cubic m der (m ) = 315.315 cubic feetI kilometer (km) O0 "121 mile1 ton-kim = 0.62 I ton-mileI ton 2-202 ')( pounds

PRINC'IPAL ABBREVIATIONS AND ACRONYMNJS USED

ERR - Econiomic Rate of ReturnGOC - Government ot ChinaICR - Implementation Completion ReportiCB - International Competitive BiddingMOC - Ministry ot CommunicationsMOF Miniistry of FinanceMOR - Ministry of RailwaysREIRR - Re-evaluated Economic Internal Rate of ReturnRFA - Revaluation on Average Net Fixed AssetsRRFA - Rate of Return on Average Net Fixed AssetsSAR - Staff Appraisal ReportSEZ - Special Economic ZoneSPC - State Planning CommissionITJICDC - Tianjin Harbour Constr-uctioin and Development Company'I'MG Tianjin Municipal GovernmentTPA - Tianjin Port AuthorityXTLC - Xing Tang Labor Company

FOR OFECIAL USE ONLY


CHINA


CONTENTS

Preface ................ iEvaluation Summary .................................... ii

PART I. PROJECT IMPLEMENTATION ASSESSMENT .... ....... 1

A. Statement/Evaluation of Objectives ..................... 1B. Achievement of Objectives ....... ................... 2C. Major Factors Affecting the Project ........ ............ 9D. Project Sustainability ............................ 10E. Bank Performance ............................ 10F. Borrower Performance ........................... 10G. Assessment of Outcome ........................... 11H. Future Operation ............................... 11I. Key Lessons Learned ............................ 11

PART II: STATISTICAL ANNEXES ......... ............... 13

Table 1: Summary of Assessments ..................... 13Table 2: Related Bank Loans/Credits (None) ............... 14Table 3: Project Timetable ........................... 14Table 4: Loan Disbursements: Cumulative Estimated and Actul . .. 15Table 5: Key Indicators for Project Implementation .... ....... 16Table 6: Key Indicators for Project Operation ...... ......... 18Table 7: Studies Included in Project ........ ............ 19Table 8A: Project Costs ............. ................ 20Table 8B: Project Financing .......................... 21Table 8C: Allocation of Loan Proceeds ....... .. ........... 21Table 9: Economic Costs and Benefits ...... .. ........... 22Table 10: Status of Legal Covenants .... 23Table 11: Bank Resources: Staff Inputs ........ ........... 23Table 12: Bank Resources: Missions ......... ............ 24

Annexes: 1. Financial Analysis ......... ................... 252. Economic Analysis ......... .................. 28

Appendices: A. Mission's Aide-Memoire ...................... 48B. Borrower Contribution to the ICR ................ 50C. Map ................................... 54

This document has a restricted distiibution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization. l

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CHINA

TIANJIN PORT PROJECT (LOAN 2689-CHA)

PREFACE

This is the Implementation Completion Report (ICR) f,or the Tianjin PortProject in China for which Loan 2689-CHA in the amount of $130 million was approvedon May 6, 1986. The loan was closed on October 31, 1994. The Loan was extendedtwice, for one year and ten months, respectively. Final disbursements were made onNovember 8, 1994. The Loan amount was fully disbursed.

The ICR was prepared by Messrs. Toshiro Tsutsumi (Task Manager) andHan-Kang Ten (Economic and Financial Analyst) in the Transport Operations Division,China and Mongolia Department of the East Asia and Pacific Region of the Bank andreviewed by Messrs. Richard Scurfield, Chief, EA2TP and Yo Kimura, Project Adviser,EA2DR. The borrower provided comments that are included as appendixes to the ICR.

Preparation of this ICR was started just before the project closing date andwas based on material in the project file. The borrower contributed to the ICR with itsown evaluation of the project preparation and execution.

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CHINA

EVALUATION SUMMARY

Objectives

1. The project's principal objective was to assist the Government of thePeople's Republic of China (GOC) to relieve congestion in the port of Tianjin and increasehandling capacity by providing additional facilities and improving the planning, managerialand operational capabilities of its staff. The Bank also encouraged the establishment of anautonomous port authority which would be a new organizational model for publicenterprises in China. The Bank helped finance: (a) 11 berths (2,150mr long) for generalcargo, timber and construction materials along with yard, railway, road and other relatedfacilities; (b) cargo handling equipment, navigational aids and harbor boats; and (c)technical assistance and equipment for: a study to minimize siltation in channels andbasins; provision of a management information system; and establishment of the PortDevelopment Center.

Implementation Experience

2. Project implementation was generally satisfactory, although the closing datewas extended twice, first for one year and then for 10 months due to:

(a) A one-year delay in the construction of the north-side wharves, owing tounforeseen soil conditions at the construction site. This required the pilestructure to be redesigned to a caisson-gravity type and bid documents to bemodified; and

(b) A delay in procurement of equipment for the training center, two boats andtwo quay-side container cranes. The former was delayed due to ,xtra timeneeded to finalize the scope and size of the training center; procdrement ofthe boats was delayed due to space shortages at the shipyard. Obtaining thecranes was delayed because of the long period devoted to bid evaluations aswell as to the limited availability of space in the shipyard where the partswere to be assembled.

3. Bid evaluations, which required a dual process (one by the end-user andanother by the central evaluation committee) took a long time (7-10 months) at the initialstage of the project. Although this improved after the borrower became familiar with Bankguidelines, evaluation for other contracts still required about six months, instead of the

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two-to-three months maximum typical of countries at China's stage of development. Thisshould be improved as soon as possible.

Results

4. Total project cost was $321.7 million, against $282.0 million estimated inthe Staff Appraisal Report (SAR). The increase was mainly due to a rise in local pricescompounded by the implementation delay (the local component was $188.1 million against$139.2 million) (para. 12 and Table 8A). The $130 million loan was fully disbursed.Remaining costs were borne by the Tianjin Port Authority (TPA).

5. The principal project objective was achieved, as the port is now moreefficient. For example, productivity per vessel increased over 50 percent, from 777tons/day in 1985 to 1,175 tons/day in 1993 (para. 14). Institutional goals were alsoachieved substantially through technical assistance: TPA's management information andoperations control systems were developed, the Tianjin Port Training Center wasestablished, and the siltation minimization study was completed. In addition, savings wereobtained in cargo-handling costs, ship waiting and berthing time, and cargo time. Theproject's economic rate of return (at completion) was estimated at 15.7 percent against19.2 percent in the SAR, which is considered satisfactory.

6. The objective of decentralizing the port authority so it could operate as afinancially autonomous corporation was only partly achieved, since the function of settingtariffs is still under Government control. The issue of tariffs becomes critical in the longterm because they do not fully incorporate price hikes and the Government must thereforeprovide the port with favorable tax arrangements.

Sustainability

7. The project should be sustainable. Because it extended the port facilities,traffic will grow in conjunction with Tianjin's economic development, the Beijing-Tianjincorridor and the country in general. Further, TPA is a financially stable entity withadequate financial resources to maintain and operate the port efficiently. Moreover, withthe modern equipment and extensive training provided under the project, TPA has thepotential to increase the port's productivity even further and provide services at competitivecosts.

Findings and Lessons Learned

8. The main findings from the project's implementation was that TPA andTianjin Harbour Construction and Development Company (THCDC) were quite capableof handling the construction and procurement of equipment.

9. A key lesson was that the project's flexible design for the wharf, whichallowed it to be converted to a container terminal, was a major factor in its success.Another lesson was that procurement of goods took longer than expected because of the

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dual evaluation process carried out. A third lesson was that financial targets with respectto decentralizing the setting of tariffs, should have been identified more precisely in theSAR. This can be accomplished in the near future. However, to ensure that tariffs areset correctly and do not reflect monopoly pricing (that would adversely affect users of theport), TPA and the municipal government will need to promote competition amongcompanies that operate at the port. This may entail the formation of new companies(which could be joint ventures) and TPA divesting itself of many of its subsidiaries, sothese could operate independently and compete.

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PART 1. lMPLEMENTATION ASSESSMENT

A. STATEMENT/EVALUATION OF OBJECTIVES

1. The project's main objectives were: (a) to increase Tianjin port's capacityto handle timber, construction materials and general cargo by building specialized berthsthat contain modern equipment; (b) to contribute to long-term efficiency and productivity;(c) to improve TPA's efficiency through training for various aspects of port planning anddevelopment and through TA (to help with installing computerized managementinformation systems, conducting a salutation study and establishing the Tianjin PortTraining Center), that could improve TPA's managerial skills.

2. When the project was identified, most ports were badly congested; containerberths, bulk cargo berths, port equipment, storage yards and transport infrastructure fordistribution were in short supply. In fact, congestion was so severe that it could haveconstrained China's foreign trade from expanding further. Thus, the project was designedto address congestion at Tianjin port, China's third largest port at the time and the oneserving Beijing.

3. The Bank also encouraged the Government to introduce organizationalchanges that could improve the port's management and promote its autonomy. Tianjin wasthe first port placed under the local municipality, which gave the TPA broader decision-making and financial authority than the Ministry of Communications (which had previouslybeen in control).

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B. ACHIEVEMENT OF OBJECTIVES

Project Description

4. To achieve these objectives, it was decided (see Map attached) that theproject would comprise 1 1 deep-water berths for ships of 30,000-50,000 dwt with workto be carried out from 1986 to 1992 in two phases: Phase 1 (1986-90) to construct 5 berthsand Phase 11 (1987-92) to construct an additional 6 berths. The 11 berths were designedto be converted into container berths when needed. In the future the project wouldcomprise both phases. It included the following components:

(a) construction of five new berths on the East Pier's south side for timber,general cargo and construction materials, requiring: (i) construction of a780 m quaywall for four berths with alongside depth of 10.5 m; (ii) con-struction of a 170 m quaywall with alongside depth of 10 m for theremaining berth;

(b) construction of six new berths 1,200 m in length on the East Pier's northside for general cargo with alongside depth of 10 m; and the constructionof some service boat quays;

(c) dredging of about 11.82 million cu m of spoil and reclamation of 840,000sq m of land and stabilization of the fill material;

(d) provision of the required cargo handling equipment and navigational aids,and harbor equipment and boats;

(e) provision of other related facilities such as railway, road, yard pavement,water supply, sewage, power supply;

(f) construction of the required buildings; and

(g) provision of supervision consultants.

5. The project also contained components to address the port's needs ininstitutional and technological development. These components comprise:

(a) technical assistance for a study of methods to minimize siltation in channelsand basins and training of port specialists;

(b) equipment for the development of Tianjin Port Authority's managementinformation and operations control systems;

(c) establishment of the Tianjin Port Development Center for training, researchand development studies.

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In particular, TPA agreed to incorporate long-term financial planning in its rolling financialfive-year plan (in which it would assume the position of an autonomous entity).

Project Implementation

6. The loan became effective on March 20, 1987, about five months after thelegal documents were signed on October 16, 1986. Although the closing date wasextended twice (due to unforeseen physical factors, not the Borrower's unsatisfactoryperformance), the major objectives were achieved.

7. Physical components. Prequalification of bidders, preparation of biddocuments, as well as bid evaluations for civil works contracts, were undertaken prior toloan effectiveness. Construction was supervised by experienced teams from the TianjinHabour Construction and Development Company (THCDC), whose backgrounds andprofessional experiences were reviewed and approved by the Bank; they were assisted byforeign consultants. TPA/THCDC applied the deep mixing method to strengthen the softsoil at the wharves, which was then able to accommodate the caisson-gravity type structure(this modification led to a one-year delay).

8. Procurement. Although no major procurement problems surfaced, therewas some delay in the various stages, such as with the preparation of bid documents,evaluation, and delivery of equipment. TPA and GOC took more time than expected toevaluate bids at the beginning of the project since they were not familiar with the Bank'sprocurement guidelines (Table 5C). While performance in this area improved gradually,the evaluation period generally required more than six months (180 days) which was muchlonger than the bid validity period (90-120 days) recommended by the Bank. This was dueto the GOC's multiple authorization procedures.

9. Additional container handling equipment (two quay-side container cranes andthree rubber-tired gantry cranes) were procured through cost savings. The additionalcranes were needed to meet the increase in containerized cargo. For the same reason, onetimber berth was converted to a container terminal. This was anticipated in the SAR andall 11 berths were designed for such conversions. Delivery of the two quay-side craneswas delayed until March 1995 due to constraints in the subcontracted shipyard. However,this delay did not affect the loan closing. The loan proceeds were fully used and theremaining contractual payments were met by local funds.

10. TA components. Implementation of training and studies, including thedevelopment of Management Information System (MIS), was satisfactory. TPA providedoverseas and domestic training in various aspects such as management, long-term planningand cargo handling. TPA's training for the east-pier operation was trimmed because thetype of cargo to be handled was changed from general cargo, which would have requireda large pool of stevedores, to container and dry bulk cargo. The MIS was satisfactorilyestablished and covered a wide area of TPA's activities such as planning, berth operations,financial payroll, personnel management, equipment management, fixed asset evaluations,documentation, and engineering matters. The siltation study was completed as planned.

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The size of the training center was reduced, since it was reconceived as a regional institutethat would be expanded in the future, instead of national center, as originally planned(following the Bank's recommendation).

11. During implementation, TPA prepared and submitted annual financial five-year rolling plans successfully; these plans indicated that TPA's financial condition wouldbe healthy.

12. The project's final cost was $321.72 million against $281.96 millionestimated at the time of appraisal. The increased costs were mainly due to price hikes inlocal costs, which were compounded by a delay in implementation (from $139.2 millionto $188.1 million). For example, steel was Y 1,000/ton at appraisal, but Y 3,300-3,500/ton in 1994.

13. No environmental or resettlement problems arose during implementation.

14. Throughout implementation, the primary objective to increase port efficiencywas achieved: the average cargo-handling period per vessel for general cargo was reducedfrom 2.1 days in 1985 to 1.8 days in 1993 (a 14 percent reduction). Further, when theincrease in vessel size is included in the calculation, vessel productivity increases morethan 50 percent, from 777 tons/day in 1985 to 1,175 tons/day in 1993 (see Table 6).Moreover, the institutional goal to establish a financially autonomous entity was achieved,except that tariffs are still under Government control. Because tariffs do not fully reflectprice increases, the Government must provide TPA with favorable tax arrangements, suchas exemptions. Under these arrangements, the TPA has an incentive to become moreefficient, because it will be able to retain more of its savings.

15. In the long term, ports should encourage competition among companies thatoperate the terminals to increase efficiency. In this regard, a new container handlingcompany (the Oriental Company) was created and is competing with the exiting containerterminal operated by Tianjin Container Company. The Bank highly recommends thisapproach be adopted at other ports, where appropriate. Also, an independent firm, XingTang Labor Company (XTLC) was established to provide personnel for the East Companyand No. 6 Company, which operate at the east pier (their construction was financed by theBank).

16. Decentralization. From June 1984, some of the management and financialfunctions of the port were decentralized from the central Government (MOC) to themunicipality. While the latter assumes most of the responsibility through the portauthority, which handles daily management, operations, construction and development,major projects and plans that affect the port's long-term development still need to beapproved by MOC. In order to avoid placing a financial burden on the municipality, portfinances were restructured in mid-1984; all its tax obligations were eliminated, whichimproved its financial position. To date, this arrangement has not been altered.

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17. The decentralization has significantly affected the port's financial andmanagement structure. The following table summarizes the key financial terms of therestructuring.

Date of Size of Project Needing MajorDecentralization State Approval Effects

June 1984 Rehabilitation projects Port is exempt from allover Y 30 million taxes, funds and

depreciation paymentsAll medium and until the end of 1995large-scale new projects

18. Financial performance. The port's financial performance from 1985-93 hasbeen satisfactory. A comparison of performance with that projected at appraisal indicatesthat the actual average annual growth rate of before-tax income was 8.4 percent during1985-92 compared with the 3.9 percent forecast in the SAR. However, the average annualincrease in operating revenue of 14.5 percent (7.7 percent forecast in the SAR) was offsetby the rise of operating costs of 21.6 percent (7.4 percent forecast). Before-tax incomein 1992 was Y 274.1 million, compared with the SAR's Y 129.7 million, and the figureincreased by 13.8 percent to Y 311.9 million in 1993. The total volume of traffic handledby the port in 1993 was not very different from the level forecast (33.9 million tons in theSAR vs. 34.6 million tons).

19. The SAR's financial forecasts were developed when the country controlledprices for almost every major commodity at the national level; as a result, cost increasesand inflation were rare. In addition, the Government allocated major resources during theprevious three decades and only charged users the "planned" prices. At appraisal, therewas no indication that either the cost of resources or the rate of inflation would change.Therefore, the financial forecasts assumed that: (a) real port charges would remainvirtually constant; and (b) the rate of inflation would be minor (from 6 percent-7 percentduring 1985-92). These assumptions, although reasonable at the time, now appear veryconservative due to the much higher than expected inflation.

20. During 1985-93, although the Government tightly controlled the port'stariffs, unit tariffs increased by an average of 20.9 percent a year. However, this increasestill did not match average unit price increases in operating costs of 31.7 percent (the resultof sharply rising fuel, materials and wage costs, and depreciation (most of which have tobe paid on the basis of market prices, which were much steeper than the rise in regulatedgovernment tariffs). Highlights of the port's income statements for selected years,compared with the SAR forecast, are summarized below with details shown in Table 1.1,Annex 1.

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1985 1990 1992 1993Actual SAR Actual SAR Actual SAR Actual----------------------------(Y million)------------------------------

Net revenue (afteroperating taxes) 250.3 181.9 365.0 278.7 644.3 305.1 1,139.9

Less:Total operating costs 91.8 78.2 200.8 114.5 360.9 129.3 832.2Operating revenue 158.5 103.7 164.2 164.2 283.4 175.8 307.7Average net fixed assets 658.0 663.0 1,395.0 1,454.0 1,838.0 2,004.0 2,050.0

Return on average netFixed assets (%) /a 24 16 12 it 15 9 15

Operating ratio /b 37 43 55 41 56 42 73

/a Return on average net fixed assets = operating revenue/average net fixed assets.fi Operating ratio = total operating costs/net revenue.

21. TPA's financial performance in 1993 was better than expected at appraisaldue to the preferential financial arrangements stemming from decentralization. Operatingratios, however, continued to deteriorate and were higher than the appraisal targets becausecosts rose rapidly, while tariffs remained lower. Thus, if the current tariff system is notchanged, TPA's operating costs are expected to exceed its operating revenue in 1997(based on the annual growth rates of costs and revenues between 1984-93).

22. The rate of return on average net fixed assets (RRFA), although still quitesatisfactory, also declined from 24 percent in 1985 to 15.4 percent in 1992. The decreasewas largely due to the rise in operating costs. TPA's fixed assets (RFA) were revaluedin March 1993 and it was expected that after this, the RRFA would decline even furtherin 1993. However, it dropped only slightly (to 15.0 percent). This was because: (a) theRFA was too conservative (carried out for the first time in more than 40 years it increasedfixed assets only by an average of about 30 percent in book value and 15.3 percent in netvalue); (b) the impact of the RFA was further diluted when the value of new fixed assetswas averaged with the low-valued fixed assets from the previous year; and (c) the 8.6percent increase in operating revenues in 1993 absorbed some of the negative impact fromthe RFA. Thus, it is very important for TPA to apply the proper market value on its fixedassets so it can adequately depreciate its aging facilities and then replace them withoutjeopardizing the port's future financial capacity.

23. Beginning in July 1993, TPA adopted new financial reporting procedures inorder to align Chinese accounting procedures more closely to the Western accountingsystem. Based on the new procedures, some accounts were abolished and replaced byothers. The purpose of the new system is to accelerate the commercialization andprivatization of the port by providing westernized accounting instruments.

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24. Present performance. At the end of 1993, despite the rapid rise inoperating costs, the port's financial position was still sound. The actual current ratio in1992 was 5.7, which was lower than the SAR's original forecast of 19.2 but stillacceptable. Also, debt service coverage during 1985-92 was much better than the SARforecast, and current assets exceeded liabilities. The percentage of net current assets inthe form of cash, however, declined from 80 percent in 1985 to 75 percent in 1992 andto 55 percent in 1993. For the same years, the share of accounts receivable increased from6 percent to 14 percent and then to 39 percent. Accounts receivables rose due to: (a) themerger of special funds with other accounts, and (b) the merger of accounts with the twoother TPA-owned firms (the Foreign Ship Agent Company and Fuel Supply Company)which had higher accounts receivables.

25. The most noteworthy points of the balance sheet during these years can befound in Table 1.2, Annex 1, and are summarized as follows:

1985 1990 1992Actual SAR Actual SAR Actual SAR

----------------------------(Mln. Yuan)--------------------------------

Net fixed assets 685.3 776.0 1,448.0 1,884.3 1,853.3 2,090.8Current assets 113.2 195.0 129.3 305.8 274.3 198.3Special fund assets 22.1 35.0 183.8 44.0 327.3 44.0

Total 802.6 1.006.0 1761.1 2,234.1 2,454.9 2.333.1

Equity 695.9 900.5 1,416.5 1,106.7 1,696.4 1,202.9Long-term debt 1.0 37.6 43.4 1,053.8 182.9 1,041.7Current liabilities 26.4 6.2 45.9 9.2 48.2 10.3Special funds 97.3 61.7 255.3 64.4 527.4 78.2

Total 802.6 1.006.0 1,761.1 2.234.1 2,454.9 2.333.1

Debt/equity ratio -- -- 3/97 49/51 10/90 46/54

26. Future performance. Under present financial arrangements, despite therecent high increase in operating costs, the port still enjoys healthy liquidity, leverage andprofitability ratios because it is exempt from all taxes, funds and depreciation payments (tothe Government). These conditions have not been altered over the last 10 years. Theport's new responsibility for financing all its capital investment programs has not yetimpacted on its cash flow (Table 1.3, Annex 1), but is expected to weigh more heavily inthe near future. In addition, its current preferential tax terms, which will expire in 1995,could change at any time in the coming year.

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27. Considering the higher growth rate of operating costs and TPA's futurefinancial obligations, the port's financial personnel should test many scenarios prior tonegotiations with government officials. The critical issues are:

(a) Tariffs. To offset the rapid increase in operating costs, tariffs should beadjusted every year in line with the general price index;

(b) Revaluation of fixed assets (RFA). To improve the port's financialcapacity to replace its aging equipment, RFA should be carried outperiodically;

(c) Investments. To enhance the port's cash flow, some non-cash generatedinfrastructure investments (such as for dredging and construction channelsand breakwaters) should be financed by the State;

(d) Foreign exchange risks. Due to fluctuations in foreign exchange rates, itis expected that TPA will have to pay an additional Y 61.0 million annuallyfor its foreign loans.

Econoniic Re-evaluation

28. The economic analysis presented in this report is based on actual data ontraffic, operational performance, economic costs and the benefits of project components.The methodology used in the revaluation was similar to that in the SAR and is brieflysummarized as follows:

(a) Capital investment and maintenance costs were revised to reflect 1994 pricesand included in the cost stream;

(b) The benefit stream, also reflected in 1994 prices, was also included, andconsists of savings in port handling, ship port time (berth and waiting), andcargo port time (berth and waiting);

(c) A project life of 20 years was assumed and the capital investment period forall berths was from 1985-95;

(d) Benefits started to accrue both for the construction-material berth and thecontainer berths in 1990. For general cargo berths, benefits started in 1993.

29. During project implementation, the use of the berths changed due to changesin the composition of the traffic. In particular, the growth of timber traffic was muchslower than the SAR estimate. Thus, TPA decided to use the existing general cargo berthsto handle the shrinking timber traffic and convert the four timber berths into threecontainer berths. This conversion was taken into account during the planning stage, in thedesign of the timber berths. It was also considered in the economic analysis for this ICR.

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30. Some expenditures (about 1 percent of total project costs) were allocated tothe newly established Port Training Center to improve the operational and managerialefficiency of port staff. The results of these 'improvements are not quantifiable in monetaryterms and, consequently, a conventional cost-benefit analysis of the investment cannot bemade in the usual manner. However, the payoff is expected to be large.

31. When reviewing the three project components together, it appears that twomajor factors had a positive impact on improving the revalued economic internal rate ofreturn (REIRR): (a) the lower average daily ship cost in the port; and (b) better thanexpected traffic performance for the cargoes. Conversely, these factors will be offset by:(a) the higher cargo handling costs; (b) the higher economic capital cost; and (c) the delayin project completion.

32. After the data was revised, the REIRR for the project was 15.7 percent,which is slightly lower than the SAR estimate of 19.2 percent, but still acceptable. Adetailed analysis is presented in Annex 2.

33. The REIRR and SAR estimates of the project in terms of economic rates ofreturn and net present value (NPV) are given below.

SAR ICR

Best estimate of rate of return (%) 19.2 15.7NPV (12%, million Yuan) 310.1 /1 487.2

/1 January 1986 prices.

C. MAJOR FACTORs AFFECTING THE PROJECT

34. Major factors affecting the project are summarized as follows:

Positive factors:

(a) The developing economy of the area and the country which increased porttraffic;

(b) The Borrower's expanded capacity to implement projects;

(c) Simplicity of project design; and

(d) Use of an advanced construction method to improve the soft soil (MDM),which saved costs.

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Negative factors:

(a) Underestimation of the limit of decentralization in the port's financialadministration;

(b) Price hikes during implementation, that increased both project and portoperation costs; and

(c) Underestimation of the difficulty in organizing a training center fornationwide use.

D. PROJECT SUSTAINABILITY

35. The project can be considered sustainable. It expanded port facilities andraised productivity, and port traffic will grow in conjunction with the economicdevelopment of the Tianjin area, as well as the Tianjin-Beijing corridor and the country.Further, TPA is a stable entity with enough financial resources to maintain and operate theport efficiently. Moreover, with the modem equipment and extensive training providedunder the project, TPA has the potential to increase the port's productivity even further andprovide services at competitive costs.

E. BANK PERFORMANCE

36. The Bank's performance in identifying issues and preparing the project wasthorough and timely: The project was identified in June 1984 and appraised in June 1985.Bank staff resources were used efficiently (130.4 staffweeks), both until appraisal andduring supervision with an annual average input of 9.1 staffweeks, including all specialtiesthroughout the duration (see Table 12, Bank Resources). Also, it gave adequateconsideration to the design of the wharves (all 11 berths were designed in a way that theycould be converted to handle containers).

37. However, its performance could have been better if it had more carefullyassessed the training needs during appraisal: while the SAR provided for a comprehensivePort Training Center for the entire country, the plan has not fully materialized.

38. Regarding procurement, the Bank took a consistent position and providedappropriate instructions and guidance, when necessary.

F. BORROWER PERFORMANCE

39. In general, the Borrower's performance was good and preparation andimplementation were adequate. Pilot reforms decentralized the administration of Tianjinport, provided it with financial autonomy and separated the major construction works fromdaily port administrative functions by the establishment of an independent entity (THCDC).Both TPA and THCDC succeeded in implementing the reforms. As shown in Table 10,

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Part II, covenants were mostly met. The Borrower's performance, therefore, wassatisfactory.

40. Although operations are satisfactory, the Borrower will need to closelymonitor the activities of the new east pier, with its advanced systems of managinginformation and equipment, to determine the level of increased efficiency.

G. ASSESSMENT OF OUTCOME

41. This project is assessed as satisfactory since it achieved all the majorobjectives without any shortcomings.

42. The net present value is positive, Y 487.2 million against Y 310.1 in theSAR (see para. 33), when flows are discounted at 12 percent for the major portion of theinvestment.

H. FuTURE OPERATIONS

43. The project has provided the port with the capacity to handle traffic up toaround the year 2000. It is important for authorities to prepare the next phase of thedevelopment since planning and construction will take several years; any delay that willlead to congestion will be a great loss to the national economy.

44. The efficiency of the port as well as its financial performance will need tobe monitored in the future; several indicators of port productivity, such as ship waitingtime, cargo handling volume per day per vessel (as indicated in para. 13), and moves(load/unload) of container boxes per hour per crane, can be used. These will be availablefrom the statistics provided by TPA.

45. TMG as well as TPA have asked the Bank to assist in financing a follow-upproject for port expansion. The Bank has proposed that it include various modes oftransportation that interface at the port so that maritime traffic will be considered alongwith road and railway linkages. Discussions between GOC and the Bank are underway.

I. KEY LESSONS LEARNED

46. The key lessons from the implementation are:

(a) Decentralization of control over China's port system can be carried outsatisfactorily. An autonomous corporation for port construction (THCDC)proved viable when staffed by competent professionals. TPA and THCDCperformances were quite satisfactory.

(b) Port decentralization now needs to include tariff setting; tariffs are stillunder Government control, and operating costs cannot be fully reflected.Also, TPA needs to pay more attention to improving productivity byintroducing more competition among corporations that operate at terminal;

- 12 -

(c) Flexibility in the project design, such as that of the wharf, which allowedit to be converted to a container terminal, proved well-advised; and

(d) Procurement of goods took longer than expected (more than six months) dueto the country's dual-evaluation process; in the future it could be shortenedif evaluation procedures were simplified or the meetings were bettercoordinated. Government effort is under way.

- 13 -

PART II: STATISTICAL ANNEXES

Table 1: SUMMARY OF AssESsMENTs

A. Achievement of objectives Substantial Partial Negligible Not applicableMacro policies xSector policies xFinancial objectives xInstitutional development xPhysical objectives xPoverty reduction xGender issues xOther social objectives xEnvironmental objectives xPublic sector management xPrivate sector development xOther (specify) x

B. Project sustainability Likely Unlikely Uncertainx

HighlyC. Bank performance satisfactory Satisfactory Deficient

Identification xPreparation assistance xAppraisal xSupervision x

D. Borrower performancePreparation xImplementation xCovenant compliance xOperation (if applicable) x

E. Assessment of outcome x

- 14 -

Table 2: RELATED BANK LoANs/CREDrIS

Loan/credit title Purpose Year of approval Status

Preceding operation1. Three Ports Project expansion 1982 completed on 6/30/88

Following operations1. Huangpu Port Project expansion 1987 completed on 12/31/942. Dalian Port Project expansion 1988 completed on 12/31/933. Ningbo and Shanghai

Ports Project expansion 1988 to be completed on 12/31/954. Xiamen Port Project expansion 1988 completed on 3/31/95

Table 3: PRoJEcT TIMETABLE

Date DateItem planned actual

Identification 6/84Preparation - 11/84Appraisal 4-5/85 6/1-14/85Negotiations 02/86 03/3-6/86Board approval 03/86 05/06/86Signature - 10/16/86Effectiveness 03/20/87Project completion 12/31/92 10/31/94Loan closing 12/31/92 10/31/94

- 15 -

Table 4: LoAN DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL

Period Dates Planned ($) Actual ($)Disbursements Cum. Disbursements Cum.

Disbursements Disbursements

01/01/87-03/31/87 5,000,000 5,000,000 0 004/01/87-06/30/87 2,000,000 7,000,000 1,103,906 1,103,90607/01/87-09/30/87 7,000,000 14,000,000 1,787,353 2,891,25910/01/87-12/31/87 4,000,000 18,000,000 3,081,646 5,972,90401/01/88-03/31/88 4,000,000 22,000,000 2,858,471 8,831,37504/01/88-06/30/88 4,000,000 26,000,000 156,625 8,988,00007/01/88-09/30/88 4,000,000 30,000,000 1,362,238 10,350,23910/01/88-12/31/88 9,000,000 39,000,000 1,963,906 12,314,14501/01/89-03/31/89 4,000,000 43,000,000 3,319,761 15,633,90604/01/89-06/30/89 6,000,000 49,000,000 1,444,432 17,078,33807/01/89-09/30/89 12,000,000 61,000,000 8,261,335 25,339,67410/01/89-12/31/89 9,000,000 70,000,000 4,255,862 29,595,53501/01/90-03/31/90 10,000,000 80,000,000 1,802,362 31,397,89704/01/90-06/30/90 10,000,000 90,000,000 8,088,650 39,486,54707/01/90-09/30/90 5,000,000 95,000,000 4,702,752 44,189,29910/01/90-12/31/90 5,000,000 100,000,000 8,632,302 52,821,60101/01/91-03/31/91 5,000,000 105,000,000 6,263,147 59,084,74804/01/91-06/30/91 5,000,000 110,000,000 3,981,068 63,065,81607/01/91-09/30/91 5,000,000 115,000,000 2,477,108 65,542,92410/01/91-12/31/91 5,000,000 120,000,000 11,035,335 76,578,25901/01/92-03/31/92 5,000,000 125,000,000 297,873 76,876,13204/01/92-06/30/92 5,000,000 130,000,000 4,283,73$ 81,159,87007/01/92-09/30/92 2,496,204 83,656,07410/01/92-12/31/92 5,587,028 89,243,10201/01/93-03/31/93 5,446,689 94,689,79004/01/93-06/30/93 57,107 94,746,89707/01/93-09/30/93 10,000,940 104,747,83710/01/93-12/31/93 14,239,825 118,987,66301/01/94-03/31/94 2,284,397 121,272,06004/01/94-06/30/94 4,086,562 125,358,62207/01/94-09/30/94 1,741,648 127,100,27010/01/94-12/31/94 2,899,730 130,000,00001/01/95-03/31/95

- 16 -

Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION

A. Implementation

Project Planned Actual Completioncomponents start completion start completion delay (months)

Civil Works

1. South-side main work 08/86 03/90 03/87 12/90 92. Soft soil improvement 12/89 06/87 11/89 -13. North-side wharves

Foundation 08/89 10/88 09/89 1Superstructure 08/87 12/92 08/89 10/93 11

4. South-side storage yard 11/90 07/89 11/90 05. North-side storage yard 04/91 10/936. Dredging 12/92 09/93 97. Railway 12/938. Power supply station 12/90 06/88 03/91 3

Equipment

9. Handling equipmentSouth-side wharves 08/86 12/91 06/87 10/91 -2North-side wharves 08/87 12/92 06/88 12/93 12Quay-side cont. cranes 08/92 05/95

10. Boats 04/91 12/93 05/92 10/94 10

- 17 -

Table 5 (cont'd):

B. Training:(1) Training for East Pier Operation

Items Planned Actual

Direct Working StaffStevedore 2,935 34Driver 674 212

Auxiliary Workers 1,416 314

Management andAdministrative Staff 891 296

Total 5.943 856

(2) Training for Port Operation

Item\Year 1990 1991 1992 1993 Total

Management StaffFinancial 218 163 284 143 808Service 893 622 448 562 2,525General management 2,049 4,274 3,273 1,547 11,143Others 2,730 3,407 3,756 2,876 12,769Subtotal 5.890 8,466 7.761 5.128 27,245

WorkersOn-the-job training 948 560 3,060 509 5,077Operators 1,179 1,155 5,467 1,033 8,834Mechanical maintenance 128 498 278 178 1,082Safety training 1,898 4,632 6,111 2,471 15,112Others 4,583 6,139 4,082 2,123 16,927

Subtotal 8.736 12,984 18.998 6,314 47.032

Total 14,626 21,450 26.759 11.442 74.277

- 18 -

Table 5 (cont'd):

C. Procurement (ICB, over US$ 1 million)

Contract Bid Evaluation EvaluationAmount in Documents Report PeriodUS$ Equiv. to the Bid to the Signing Required

Items ('000) Bank Open Bank Contract (months)

South sideGantry cranes 9,400 07/88 09/88 04/89 05/89 7Timber loader 1,761 01/89 03/89 12/89 03/90 9Mobile cranes (25t) 1,059 02/89 05/89 12/89 04/90 7Quay-side gantry cranes 9,859 10/92 12/92 02/93 06/93 4Rubber-tired gantry cranes 3,519 10/92 12/92 02/93 04/93 3

North sideLevel ruffmg cranes 11,760 07/91 11/91 04/92 05/92 5Mobile cranes (40t) 2,430 01/92 03/92 10/92 12/92 6Mobile cranes (25t) 6,410 01/92 03/92 10/92 12/92 6Tractors 1,589 01/92 03/92 10/92 02/93 6

Oil supply boat 5,300 07/91 11/91 05/92 08/92 6Water supply boat 1,266 07/91 11/91 05/92 08/92 6Computer system 1,776 06/90 10/90 12/90 05/91 2VTMS 3,596 08/91 08/91 12/91 02/92 3Sewerage treatment system 1,013 06/88 07/88 08/88 06/89 10

Table 6: KEY INDICATORS FOR PROJECT OPERATION

---------------------------- Productivity Increase-------------------------General cargo Container Construction mater.1985 1993 1985 1993 1985 1993

Ship time (days/vessel) 7.9 5.4 4.7 1.5 2.0 1.5No. of vessels 1,520 1,824 557 2,025 318 287Total ship days 12,008 9,850 2,618 3,038 636 431Cargo volume ('000t) 9,330 11,576 900 4,820 980 1,211Productivity 777 1,175 344 1,587 1,541 2,813(t/day/vessel)

Produc. increase (%) 51.3 361.6 82.6

- 19 -

Table 7: STUDIES INCLUDED IN PROJECT

Siltation Minimization Study

(a) Purpose as defined at appraisal. Analyzing the source of sedimentation,evaluating sedimentation problems at the project area and providingmitigation measures. Determine if dredged material dumped at the site wouldreturn to the dredged channel and basin in the future.

(b) Status. Satisfactorily completed in December 1989.

(c) Impact of study. The proposed dumping area was evaluated appropriately.Dumped dredged material would not return to the basin and channel. Thiswas confirmed by periodic field observations during implementation.

2. Development of Operations Control and a Management Information System

(a) Purpose as defined at appraisal. Developing a computer managementsystem covering a wide area of TPA activities: planning, berth operations,cargo transportation, financial, payroll, personnel management, equipmentmanagement, fixed asset evaluations, documentation, and engineering.

(b) Status. Satisfactorily completed in August 1992.

(c) Impact of study. The system was established satisfactorily and is nowoperational (it can also link with the Dongfang container company's system).

- 20 -

Table 8a: PROJECT COSTS

Planned Planned Actual ActualLocal Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total------ (Y'000) -($'000) -(Y'000) ---------- ------ ($ 000) --------

South sideReclamation 7,363 - 7,363 2,301 - 2,301 62,650 0 62,650 13,404 0 13,404Site preparation 8,054 - 8,054 2,517 - 2,517 10,050 0 10,050 2,150 0 2,150Wharf construction 16,339 26,963 43,302 5,106 8,426 13,532 69,640 58,285 127,925 14,899 12,470 27,369Dredging basin 5,837 7,725 13,562 1,824 2,414 4,238 11,450 0 11,450 2,450 0 2,450Soft soil consoli-

dation 43,187 28,266 71,453 13,496 8,833 22,329 46,800 1,075 47,875 10,013 230 10,243Railway 16,918 - 16,918 5,287 - 5,287 35,300 421 35,721 7,552 90 7,642Water supply,

power, etc. 8,861 26,579 35,440 2,769 8,306 11,075 15,760 21,921 37,681 3,372 4,690 8,062Aux. building 68,582 - 68,582 21,432 - 21,432 139,480 327 139,807 29,842 70 29,912Highway & pavement 7,395 4,934 12,330 2,311 1,542 3,853 25,000 19,304 44,304 5,349 4,130 9,479Transformer station 2,432 9,728 12,160 760 3,040 3,800 39,260 25,941 65,201 8,400 5,550 13,950Revetment (dam) 7,827 - 7,827 2,446 - 2,446 2,220 0 2,220 475 0 475Equipment 8,691 98,758 107,450 2,716 30,862 33,578 2,680 175,696 178,376 573 37,590 38,163Others 3,312 5,517 8,829 1,035 1,724 2,759 168,520 21,599 190,119 36,055 4,621 40,676

Subtotal 204,8 208,470 41327 64000 65147 129,147 62881 324567 953,377 134,534 69,441 203,975

North sideDredging 53,635 - 53,635 16,761 - 16,761 86,130 0 86,130 16.793 0 16,793Wharf construction 19,718 32,672 52,390 6,162 10,210 16,372 110,340 124,635 234,975 21,513 24,300 45,813Soft soil consolidation

(with south side) 8,250 6,463 14,713 1,609 1,260 2,869Highway & pavement 7,690 10,979 18,669 2,403 3,431 5,834 29,900 13,489 43,389 5,830 2,630 8,460Railway 3,085 - 3,085 964 - 964 5,530 0 5,530 1.078 0 1,078Water supply,

power, etc. 4,003 5,994 9,997 1,251 1,873 3,124 5,940 9,950 15,890 1,158 1,940 3,098Equipment 11,168 60,506 71,674 3,490 18,908 22,398 1,480 162,230 163,710 289 31,630 31,919

Subtotal 99,29 110,15 209.45 31,031 34.422 65.453 247,570 316.767 564.337 48,269 61760 110,02

Port Development InstituteBuilding 3,309 - 3,309 1,034 - 1,034 12,870 0 12,870 2,181 0 2,181Facilities 32 4,413 4,445 10 1,379 1,389 40 3,246 3,286 7 550 557

Subtotal 3,341 4,413 7,754 1,044 1.379 2,423 12.910 3,246 16,15 2187 550 2.737

Technical assistanceand training 13,962 11,040 25,002 4,363 3,450 7,813 14,630 8,647 23,277 3,130 1,850 4,980

Custom duties 15,926 - 15,926 4,977 - 4,977Total base cost 337,328 334,075 671,403 105,415 104,398 209,812Physical

contingencies 33,734 33,408 67,139 10,542 10,440 20,981

Total 371.062 367.482 738,538 I5957 114.838 230.793

Price contingencies 74,358 89,370 163,728 23,237 27,928 51,165

GRANDTOTAL 445,419 456.853 902,271 139.194 142.766 281,958 903.920 653.227 1.557.147 188.120 133,601 321.721

- 21 -

Table 8b: PROJECT FINANCING

Sources Planned Final($'000) ($'000)

Bank loan 130,000 130,000

Domestic financing (TPA and Government) 152,000 191,721

Total 282.000 321.721

Table 8c: ALLOCATION OF LOAN PROCEEDS

Category Original Final Actualallocation allocation disbursements

Ln. Ln. Ln.($'000) ($'000) ($'000)

1. Civil Works 50,000 46,0002. Goods 51,000 81,6003. Consultants service

& training 3,500 2,4004. Unallocated 25,500 0

Special Account

Cancellation - -

Total 130. 130.000

- 22 -

Table 9: ECONOMIC COSTS, BENEFIT AND MAJOR FINANCIAL INDICATORS

SAR ICR

Total Traffic (1993): 33.9 34.6Of which: General Cargo (min. ton) /a 9.9 11.6

Construction Materials (mln. ton) 1.5 1.2Container ('000 teu) 465 482

Financial (1992, in %):Return on average net fixed assets 8.8 15.4Operating ratio 42.4 5.6Debt service coverage 1.8 4.7Debt/equity ratio 46/54 10/90Current ratio 19.2 5.7

Economic (1994 prices):Total cost (million Y) 1,002.55 1,904.38NPV (million Y) 639.43 487.20Economic rate of return (in %) 19.20 15.70

/a Including timber traffic.

- 23 -

Table 10: STATUS OF LEGAL COVENANTS

Agree- Section Status Original Revised Description of Covenant Comnmentsment Date Date

Loan 2.02(b) ok 10/16/86 Borrowers to openspecial account.

Project 4.01(a) ok 10/16/86 TPA shall maintainproper records andaccount.

4.01(b) ok TFA shall have accounts Audited financialaudited and furnished to reports have beenthe Bank not later than received on timesix months after end of and reviewed by thefiscal year. Bank.

Bank 4.03(a) ok By December 31 of each TFA has submittedyear, prepare and furnish the Five-Yearto the Bank a financial Rolling Financialplan for each of the next Plan to the Bankfive years. before December 31

each year.

Table 11: BANK RESOURCES: STAFF INPUTS

FY 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Total

Preappraisal 16.9 13.6 - - - - - - - - - 30.5

Appraisal - 63.5 35.4 - - - - - - - - 99.9

Negotiations - - - 6.5 - - - - - - - 6.5

Supervision - - - 11.0 4.3 11.3 11.8 13.8 6.4 9.8 4.5 72.9

- 24 -

Table 12: BANK RESOURCES: MISSIONS

Month/ No. of Days in Specializations Performance Rating Type ofYear persons in field represented status /a trend /b problems /c

Identification/Preparation 03/84 7 7 EGR,EC,FA, - - -

EC,OP,EC,FA

Appraisal 061855 5 14 EGR,EC,FA, - -

Post Appraisal 10/85 4 7 EGR,EC,FA,EC - - -

LendingArrangement 12/85 1 1 FA - -

Procurement 10/86 1 4 PR - -

Supervision I 10/86 2 7 EGR,FA I - -

Supervision 11 10/88 4 5 EGR,OP,EC,FA 1 2

Supervision III 09/89 2 4 EC,FA 1 2

Supervision IV 12/90 2 5 EGR,FA 2 3 M (con-struction

delay)

Supervision V 02/92 1 5 EGR 2 2 -

Supervision VI 09/92 2 5 EGR,EC 2 2

Supervision VII 03/93 2 1 EGR,OP 2 2

Supervision VIII 09/93 1 1 EGR 2 2

Supervision IX 11/93 2 4 EGR,EC 2 2

a I = problem free or minor problems; 2 = moderate problems; 3 = major problems./b 1 = improving; 2 = stationary; 3 = deteriorating./c M = Management; P = Procurement.

-25 - ANNEX 1

ANNEX 1: FINANCIAL ANALYSIS

Table 1.1: TIANJI PORT AuTHoRiTY: LNCOME STATEMENT(December 31, Y'OOO)

1985 1986 1987 1988 1989 1990 1991 1992 1993

Traffic:WhoLe port ('000 ton) 18,562 18,181 17,252 21,094 24,369 20,633 23,776 29,286 37,192Port authority ('000 ton) 18,049 17,709 16,740 20,316 23,344 19,417 22,458 27,678 34,591Of which: containers ('000 teu) 115.5 133.1 144.5 266.4 265.8 286.7 339.8 393.5 481.9

Revenue

Loading/unLoading 161,998 179,766 158,545 199,990 242,446 236,031 297,300 438,140 669,614Storage 28,848 36,417 19,370 25,595 43,395 32,479 23,062 39,318 37,511Sales 26,122 25,411 20,827 18,141 18,447 17,289 19,871 17,028 153,965Other 41,844 44,697 49,843 69,374 100,414 92,507 123,681 172,496 319,580

SubtotaL 258,812 286,291 248,585 313,100 404,702 378,306 463,914 666,982 1,180,670

Less: operating tax (8,492) (9,781) (8,474) (10,771) (14,219) (13,258) (15,815) (22,709) (40,721)

Total- Net Revenue 250,320 276,510 240,111 302,329 390,483 365,048 448,099 644,273 1,139,949------ ....... .. ... .. - - -- - - -- - - -- .... . - - - - - - -

Expenditure

Loading/unloading 46,036 54,171 57,063 78,869 108,223 113,425 138,795 202,826 395,735Storage 9,516 11,573 12,227 16,768 20,505 23,115 27,683 46,323 61,564Sales 22,470 21,744 18,351 16,978 18,432 16,592 19,694 16,595 144,101Other 13,800 15,412 21,371 30,786 44,576 47,689 69,452 95,111 230,809

TotatL operating costs 91,822 102,900 109,012 143,401 191,736 200,821 255,624 360,855 832,209

Operating Revenue 158,498 173,610 131,099 158,928 198,747 164,227 192,475 283,418 307,740-- - - - - - - - . ...... .. . . .. . . .... . -- - - - - - - - - - - - - - -

Add: Nonoperating revenue 142 221 78 694 1,242 6,023 15,546 10,708 17,680Less: Nonoperating expense (2,516) (2,994) (5,923) (8,489) (10,126) (12,054) (14,698) (20,010) (13,540)

Income Before Tax 156,124 170,837 125,254 151,133 189,863 158,196 193,323 274,116 311,880-- - --- -- -- - - . . ... .. --- -- -- - - ....... .... .... --- --

Return on average netfixed assets (X) 24.1 21.7 13.0 13.7 15.5 11.8 11.8 15.4 15.0

Operating ratio 36.7 37.2 45.4 47.4 49.1 55.0 57.0 56.0 73.0

Source: Tianjin Port Authority and Bank staff.

Dec-94

- 26 - ANNEX 1

Table 1.2: TIANJIN PORT AuTHoRITY: BALANCE SHEET(December 31, Y'000)

1985 1986 1987 1988 1989 1990 1991 1992 1993

ASSETS==..u==

Current Assets

Cash & bank deposits 90,827 88,738 60,009 64,784 80,516 91,007 132,002 205,629 423,820Accounts receivabLe 6,755 17,661 26,291 32,355 24,882 15,239 27,290 37,871 297,609Inventories 15,591 22,578 19,158 24,202 32,200 23,088 25,388 30,774 50,070

Subtotal 113,173 128,9T7 105,458 121,341 137,598 129,334 184,680 274,274 771,499

Fixed Assets

At cost 778,847 1,021,559 1,230,968 1,364,456 1,519,713 1,660,095 2,082,066 2,177,236 3,055,930Less: depreciation 93,566 106,045 126,030 146,322 176,638 212,069 258,341 323,884 809,750

SubtotaL 685,281 915,514 1,104,938 1,218,134 1,343,075 1,448,026 1,823,725 1,853,352 2,246,180

Special Fund Assets 22,153 71,003 105,823 157,475 172,572 183,767 225,294 327,314 --....-- ------- ------ ------ ------- --- -- -- - - ------ ... ...... .....

Long-Term Investments -- -- -- -- -- -- -- -- 212,520Other Assets /1 -- -- -- - -- -- -- -- 1,076,850

TotaL Assets 820,607 1,115,494 1,316,219 1,496,950 1,653,245 1,761,127 2,233,699 2,454,940 4,307,049=zz ==S====== ========= ======5 == …=

LIABILITIES & EQUITY

Current liabi(ities 26,377 24,690 22,589 47,216 25,978 45,877 2,293 48,203 637,829

Long-term debt 1,061 38,855 38,855 51,930 47,363 43,437 232,864 182,875 1,024,230

Equity 695,872 889,902 1,079,726 1,166,204 1,295,712 1,416,525 1,616,524 1,696,377 2,644,990

Special funds 97,297 162,047 175,049 231,600 284,192 255,288 382,018 527,485

Total LiabiLities & Equity 820,607 1,115,494 1,316,219 1,496,950 1,653,245 1,761,127 2,233,699 2,454,940 4,307,049*sn==… =====… == ========= =======Mm ========= ===Z=.== U==M=S=== ==Zzn.zzu ====au=

Debt/equity ratio 4/96 3/97 4/96 4/96 3/97 13/87 10/90 28/72Current Ratio 4.3 5.2 4.7 2.6 5.3 2.8 80.5 5.7 1.2

/_1: IncLuding construction in process and disposal of fixed assets.


Dec-94

- 27 - ANNEX 1

Table 1.3: TIANJ PORT AUTHORITY:SOURCES AND APPLICATIONS OF FUNDS

(December 31, Y'OOO)

1985 1986 1987 1988 1989 1990 1991 1992 1993

Sources

Internal cash generation 156,124 170,837 125,254 151,433 189,863 158,196 193,323 274,116 311,880Other enterprises 77,780 70,850 74,020 1,463 2,052 -- -- -- --

Other Port Develop. Fund -- -- - 110,635 98,788 108,994 87,802 83,292 80,465WorLd Bank Loans tI) 27,218 18,620 8,973 17,782 -- -- --

(II) - 22,291 -- -- -- 194,559 934 314Othe Bank Loan -- -- -- -- -- - - 5,300 199,600Depreciation -- - -- 31,663 37,803 41,346 50,934 75,815 100,590Sales of Fixed Assets -- -- -- 1,344 5,425 1,269 3,548 30,875 3,100Interest Incomes -- 2,523 4,892 4,400 5,000 5,471 -Others (net) - (889) (13,950) 5,241 714 (4,894) 48,350

Total Sources 261,122 260,307 230,538 315,654 324,873 319,446 535,880 470,909 744,329

AppLications

Investments and reneials 301,052 242,816 248,184 175,529 162,686 162,993 453,600 122,102 208,422

Funds provided to THMCC -- -- 144,162 119,985 178,644 (48,979) 247,084 567,693

Loan repayments -IRD -- -- -- 4,707 4,707 5,972 32,329 58,039 60,615- Others -- 3,772 -- -- --

subtotat -- -- 3,772 4,707 4,707 5,972 32,329 58,039 60,615.... ..... ------ ----- ---- ---- ------- ------. ........ .......

Change in working capital (15,657) 19,580 7,311 (13,519) 21,763 (38,654) 57,935 (29,943) (310,592)

Total Applications 285,395 262,396 259,267 310,879 309,141 308,955 494,885 397,282 526,138....... ...... ....... . . . ..

Net funds flow (24,273) (2,089) (28,729) 4,775 15,732 10,491 40,995 73,627 218,191Opening baLance 115,100 90,827 88,738 60,009 64,784 80,516 91,007 132,002 205,629CLosing baLance 90,827 88,738 60,009 64,784 80,516 91,007 132,002 205,629 423,820

Debt service coverage 33.2 32.1 40.3 26.5 6.0 4.7 5.1


Dec-94

- 28 - ANNEX 2

ANNEX 2: ECONOMIC ANALYSIS

A. TRAFFIC

1. As shown in Table 2.1, the overall traffic of the port is increasing steadily.The actual total traffic in 1993 was almost the same as the SAR forecast. However,general cargo and container traffic were higher than the estimates and are summarized asfollows.

Traffic Handled by the Port(million tons)

Forecast (SAR) Actual (ICR)Of which: Of which:

Year Total (1) (2) (3) Total (1) (2) (3)

1985 17.0 9.9 87 1.0 18.1 12.3 116 0.021990 28.7 9.4 350 1.3 19.4 6.8 287 1.01991 30.3 9.5 385 1.3 22.5 7.7 340 1.01992 32.1 9.7 423 1.4 27.7 9.6 394 1.41993 33.9 9.9 465 1.5 34.6 11.6 482 1.2

(1) General cargo traffic (including timber traffic).(2) Container traffic ('000 teu); 1 teu = 10 ton.(3) Construction materials.

2. Despite the severe economic recession in 1990 and 1991, the average annualtraffic growth of the port during 1985-1993 still shows an increase of 8.4 percent per year,compared to the estimated 9.0 percent in the SAR. The actual traffic in 1985, the firstforecast year, was 6.5 percent higher than the SAR estimate. The latest figure (1993) was2.1 percent higher growth than forecast. Based on the economic activities of the area (anewly developed special economic zone (SEZ) is located adjacent to the project site), theincrease in port traffic for the next decade (1995-2005) is estimated to be approximately5.6 percent per year which is slightly higher than the SAR estimate of 4.7 percent.

3. General cargo traffic. Traffic in 1993 was higher than the SAR estimateby 17.2 percent. For the last four years (1990-1993), the traffic growth rate was 19.5percent per year which was much higher than the SAR estimate of 1.7 percent. Thus, the

- 29 - ANNEX 2

port needs the additional general cargo berths to meet demand. TPA has proposed theconstruction of two of additional general cargo berths plus three multipurpose berths(which may be converted to container berths in the future) for Bank financing. The Bankis reviewing this proposal.

4. Construction material traffic. Most of the construction material (sand,stone, brick and tile) is shipped from domestic sources to meet local demand, particularlyfor the development of the port and SEZ. In 1993 traffic was lower than the SARprojection by 20 percent; based on the current development plan, it is estimated that trafficmay continue to be lower than the SAR estimate.

5. Container traffic. The container traffic in 1993 was 16.4 percent higherthan the SAR estimate. It appeared that container traffic in 1994 increased by about 26percent over 1993. The growth of the container penetration ratio, however, isconcentrated on foreign trade, particularly foreign incoming traffic, which increased from24 percent in 1985 to 71 percent in 1993. For domestic cargo, the containerization ratioalso increased from 0 percent in 1985 to 13 percent in 1993. Both foreign-bound anddomestic-bound container traffic increased substantially. The share of the latter, however,was still negligible (3 percent) in 1993. The container penetration ratio of the port can besummarized as follows:

Container Penetration Ratio in Tianjin Port(Percent)

1985 1993In Out Total In Out Total

Foreign-bound 24 14 19 71 50 55Domestic-bound 0 0 0 55 7 13Domestic sharing 0 3

6. The rapid growth of foreign incoming containerized cargo represents thecurrent cargo handling trend for international sea transport. Today, many internationalports only accept containerized cargo, and this requirement will force the port to expeditethe containerization of its foreign outgoing traffic. The development of domestic containertransport has fallen behind due to the lack of adequate investment in transport facilities forthe domestic users. Since improving domestic container handling will involve very largesums of capital, including the participation of many entities (port, road, highway, urban

-30 - ANNEX 2

construction, bridge, electric power, trucking, services, etc.), it is estimated that progressin this area will be rather slow in the foreseeable future.

B. SHIP TImE ANALYSIS

7. General Cargo Carriers. When comparing 1985 to 1993, general cargocarriers spent an average of 7.9 days and 5.4 days, respectively, in the port, of which shipwaiting time (nonproductive time plus weather stoppage) accounted for 5.8 days and 3.6days, respectively. During the same period, the average working time per ship (productivetime at berth) decreased from 2.1 days to 1.8 days due to improve handling. Despite thehigher traffic demand, the decrease in ship waiting time, from 4.6 days to only 0.5 days,reflected that if the project had not materialized-adding critical capacity-ship waitingtime would have been much larger (Table 2.2).

8. Construction Material Carriers. Between 1985 and 1993, the average portdays per ship decreased from 2.0 days to 1.5 days. Despite the fact that average shipmentsize increased from 3,700 tons to 5,800 tons, the average (productive) time needed tounload a ship did not change (0.7 days per ship). Installation of the new equipmentimproved not only the efficiency of the work but also maximized the availability of theequipment. The nonproductive time, for example, decreased from 1.2 days in 1985 to 0.8day in 1993 (Table 2.2).

9. Container Ships. Although the number of container ships visiting the portincreased more than three and a half times from 1985-1993, the average port days per shipdropped sharply from 4.7 in 1985 to 1.5 in 1993. With the project, nonproductive time(due to the port) also dropped sharply from 3.5 days to 0.8 days (Table 2.2).

C. BERTH OPERATIONS

10. The operating data for general cargo and container berths also differ fromthe SAR estimates. Detailed operating data used for the economic re-evaluation of eachproject berth are shown in Table 2.3, and highlighted as follows:

-31- ANNEX 2

SAR ICRestimate estimate

1985 1994 1994 Percent- ------prices---- --prices-- changed

1. Berth numbers-without projectGeneral cargo 21 21 0%Timber 3Construction materials 1 1 0%Container 3

2. Berth numbers-new projectGeneral cargo 6 6 0%Timber 4Construction materials I 1 0%Container 3

3. Maximum annual throughput per proposed berthGeneral cargo (mln ton) 0.44 0.47 +7%Timber (mln ton) 0.38Construction materials (mln ton) 2.24 1.53 -32%Container ('000 teu) - 102.4

4. Average ship size- new projectGeneral cargo ('000 dwt) 15.0 12.0 -20%Timber ('000 dwt) 20.0Construction mat. ('000 dwt) 4.0 6.0 +50%Container ('000 teu) - 0.7

5. Average shipment size-new projectGeneral cargo ('000 dwt) 8.0 8.0 0%Timber ('000 dwt) 12.0Construction mat. ('000 dwt) 3.7 5.8 +57%Container ('000 teu) - 0.25

6. Cargo valueGeneral cargo (Y'000/ton) 2.00 4.12 4.5 +9%Timber (Y'000/ton) 0.35 0.72 -

Const. mat. (Y'000/ton) 0.10 0.21 0.1 -210%Container (Y'000/teu) - - 50.0

7. Average daily ship cost in port for the proposed berths:General cargo ($'000/day) 7.0 10.35 6.31 -39%Timber ($'000/day) 7.7 11.39 -

Const. mat.($'000/day) 3.7 5.47 2.8 -49%Container ($'000/day) - - 7.6

8. Cargo handling costsGeneral cargo (Yuan/ton) 4.00 8.25 31.0 +275%Timber (Yuan/ton) 3.40 7.01 -

Const. mat. (Yuan/ton) 1.00 2.06 8.0 +288%Container (Yuan/teu) - - 247.0

- 32 - ANNEX 2

D. ECONOMIC COSTS AND BENEFIrS

Economic Costs

11. All costs related to the completion of the facilities planned under the projectwere included in the project economic re-evaluation. All inputs and outputs were evaluated inconstant 1994 economic costs (Table 2.4). Financial costs were converted to economic costs byshadow pricing each berth's input categories. Conversion factors for each input category arebased on estimates determined in completed Bank studies.

12. The overall conversion factor is 0.94, of which the construction materials' berthis 0.92, container berths are 0.95 and general cargo berths are 0.94. The factors derived for thevarious cost items were applied to annual project expenditures to obtain the stream of projecteconomic costs (Table 2.5).

13. In the SAR, the overall effect of shadow pricing project costs was thateconomic costs were 18.3 percent higher than the financial costs, and total economic costs were90 percent higher than the SAR estimate (at constant 1994 prices).

Project Economic Cost Comparison(million Yuan)

Total

SAR: Economic - 1985 constant 721.55- 1994 constant 1,002.55

ICR: Financial - current 1,069.44Economic - 1994 constant 1,094.38

ICR/SAR (Economic, 1994 constant) 1.09

Economic Benefits

14. The economic analysis primarily focused on the benefits derived from relievingcongestion in the port. Details of the traffic forecast are shown in Table 2.1. The project willyield quantifiable benefits in the form of savings in cargo handling coats, ship time (both waitingand operating time), and cargo time (Table 2.6).

15. Savings in Cargo Handling Cost. Savings from cargo handling were relativelysmall when compared to total savings. These were derived from the direct costs of cargohandling on the new facilities. Without the project, the only way traffic in excess of berthcapacity could have been handled would have been by offshore unloading (called lightening)-atmuch higher costs. It is estimated that these costs would be three to four times greater than

- 33 - ANNEX 2

normal handling costs (see Table 2.7 for detailed estimates of savings). This alternate methodof unloading was assumed for cargo tonnage in excess of berth capacity at 95 percent occupancy.Savings in handling costs have been converted to economic benefits by shadow pricing the maincost components of normal handling and offshore unloading. Conversion factors of 1.05 forberth handling and 1. 1 for offshore unloading were used; these factors were estimated in aprevious Bank study.

16. Savings in Ship Time. These include reductions in ship time waiting for berthsand working at berths due to improved cargo handling. Estimates of the savings in waiting timedue to the project are shown in Table 2.8. Ship costs used for the economic evaluation are atthe low end of the model developed by the Bank. The annualized ship resale value, plusoperating costs, was used to calculate project benefits. It is assumed to reflect the present stateof the shipping industry and gives a slightly lower return than the annualized replacement value.

17. Savings in Cargo Time. These also apply to the interest saved on the valueof the cargo. For domestic cargo, the marginal source of working capital would be loans fromthe People's Construction Bank of China at 10-12 percent interest. For foreign cargo, the higherforeign exchange working capital needed would require more foreign borrowing, and it isassumed that this would be at China's marginal cost of capital of approximately 12 percent.Roughly 22 percent of all cargo passing through Tianjin port involves domestic trade. Interestsavings have therefore been calculated assuming an average rate of interest of 12.0 percent peryear.

18. Total project benefits for the items discussed above are presented by year inTable 1.8. The major project benefit would be in ship time savings. These savings wouldaccrue first to ship owners and could be passed on to cargo owners. All the ships andconstruction materials are Chinese owned. As for general cargo and container traffic, the vastmajority of ships are either Chinese-owned (COSCO) or Chinese-operated; it is expected that 90percent of the project benefits for such traffic will accrue to China directly.

E. OVERALL ECONOMIC RE-EVALUATION AND SENSITIVITY ANALYSIS

19. Table 2.9 sets out the re-evaluated economic rate of return (REIRR), netpresent value (NPV) and sensitivity calculations for the entire project. The overall REIRR is15.7 percent. Compared with the SAR, the sensitivity of REIRR and NPV to variations incosts and benefits are summarized as follows:

-34 - ANNEX 2

SAR ICR

Best estimate of rate of return (%) 19.2 15.7NPV (12%, million Yuan) 310.1 /a 487.2

15% increase in costs and best estimateof benefits (%) 16.9 14.3NPV (12%, million Yuan) 234.2 /1 324.8

15% decrease in benefits and best estimateof costs (%) 16.6 14.0NPV (12%, million Yuan) 187.7 /L 251.7

15% increase in costs and 15% decrease inbenefits (%) 14.5 12.7NPV (12%, million Yuan) 111.7 /L 89.3

/l January 1986 prices.

ra3

Table 2.1 a: Port Traffic (1985-1993) and Forecast (to 2010)('000 tons)

…~~~~~~~~~~~~~~~~~---Act.al … … … … … … … … … … … … V-or4ca.t…-----------------

10 Out Total 3m O~~~~~ut Total In Out feta1 to Out Total IS OuAt Total In out Total to Out Total In out Total to Out Tot.1

CoilFor.ige a 0 0 0 3.144 1.144 0 2,076 2.074 0 2.443 2.441 0 3.641 2.681 0 4.000 4.000 0 4,680 4.660 0 3.778 1.176 a 4.647 6.667

Dooetf.c a 0I 1.01 1.00? 02.4 2:1 ,01 .9 .0 .0 ,0 4001,0 37.333 1.111 20,2I I022 0 2.22 2ISTotal 0 0 0 0 2,643 2.643 9 4.321 4.314 0 4.7011 4.93 0 2,61 2.3 3 ,00 3"6,000 2,2, 01001 22.000 0. 24.000 24:.000 30:.000. 30,000

Pat relau prod..ctafor.tgn I 40 43 I8'24 3411 22 243 243 315 131 330 450 1333 194 800 200 1.000 3,200 800 4,000 1.400 1.400 1.000 4.000 2.000 10.000Doomestic 4 330 334 36 9 396 1,4 to I6 I 33I 34 37 11 31 4 30 200 0 I00 600 0 goo 1.400 0 1,400 2.000 0 2.000

Totaml 1 310 311 26? 254 343 It0 242 452 It0 213 010 17 164 114 3.000 200 1.200 4,000 800 4,600 7,000 1.400 0.400 10.000 2.000 12.000

Yorallo 3~~~~~~~0 7 37 69 64 151 225 43 264 430 61 495 162 170 012 500 10 330 1:447 147 1.34 2.084 209 2.263 2.201 211 2.752

D.stlc 0 0 0 ~~ ~ ~~ ~~~ ~ ~~ ~ ~~~0 3 I 0 0 0So0 0 1 300 410 3,13 33 .3I2 414 2,701 2,249 499 3.246

Total 30 7 37 86 41 114 221 44 269 410 81 491 162 170 012 3,010 2S0 1,200 1.100 100, 4.000 4.-3115 421 1.000 3.210 710 4.000

lor; inndt. 4.822 43 4.83 6448 404 1.272 404 964 5,442 5.039 86 3.4 3.733 404 4.153 1.800 J.000 2,600 .1,0351,033 2.001 2.132 1.1051 3127 2.349 1.33? 3,4641

DomestIc 4 0 4 0 101 103~~~~~~~~~~~S 34 418 13 91 3,302 3I6 2? 3.2313.134 0 3.000 1,000 6302 .02 0 3,383 3.163 0 1.314 1.314 ,

Total 4,028 43, 4.873 448 3,1301 3.73 332 3.442I 2.3114 1.114 2.162 ,3.363 4.030 3,6441 5.41313.00 _2.000 23,600 1.801 2,130 4.000 2.332 2.316 4,100 2,369 2.431 1.000 J

Fer-2ga J 33 34 7 113 100 4 1)6 122 14 196 232 32 394 208 0 300 300 0 200 200 0 210 250 0 290 2900

D-mottc 1.271 0 3,271 63 2 632 90? 0 90 13.207 I 1,231 000 33 1.003 700 0 P00 3,409 a 1.400 1.710 0 ,1170 2.230 0 2.230

Total 1.214 13 1.329 all 36,13,002 913 II6 3.020 1.221 204 1.427 1.002 200 1,231 700 300 000 3,400 200 1.400 3.110 210 2.000 2.210 790 2.100

Tn.Sgn ~~~~ ~~~369 0 349 0 342 342 0 210 270 0 39 39 a 0 0 0 30 30 0 100 500 a 320 120 0 310 330

oeaIc 0 0 0 0 a0 9 9 1 34 3 1 1 0 90 60 0'l 600 S00 0 3.060 I3..6 0 a.10 1,

TotaLc 36939 0 340 0 12 3402 0 219 2109 1 3413 150 0 s82 82 I' 300 0 1. 000 1,000 0 3.200 3,00 I0 3.100 3.00

TimberForeIgn 520 I 323 49 9 so 330 14 344 121 33 371 338 25 141 320 0 320 S00 0 S00 g00 0 600 3.000 0 3.000

Deontict 4 0 I 3 4 3 2 I I 3 2 i 4 Is 39 0 a 0 a 01 0 a

Total 212 3 127 10 is 43 332 63 311 330 79 209 324 18 382 320 0 320 500 100 600 0 go0 3.000 0 3,000

.Ona,mtallic oresForei,go 43 417 100 s0 024 964 'I 1.160 1,240 46 3.365 1,413 42 3.42? 1,469 0 3.400 1,400 0 1.704 1.700 0 3,600 1,600 0 2.000 2,000

D-Ottcie 3 0 J 0 4 4 a 2 2 4 2 A 0 4 4 0 0 0 0 0 0 0 0

Mota 44 437 502 50 940 990 13 1.191 1.242 12 3.387 1.419 '2 3.431 3,493 0 1.400 0,400 013700 1,100. 6 3.00: 3,600 0 2.000 2.000

Ir.gn 346 1 553 3,3217 2 31 ,343 1,541 70 1.431 1.414 64 3,740 947 314 1,101 3,200 300 1,300 1,844 114 2.000 2.031 340 2,200 2.306 112 2,100

D-:.atic II3 9 120 6 13 21 24 33 31 0 33 10 0 3s is 0 0 0 0 0 0 0 0 0 0 0 0

Total 419 14 473 1.335 49 1.364 1.149 83 3.410 li4I8S 9 13.713 047 349 I,13 1,200 300 1.300 1,644 354 2.0000 2.0201 3490 2,2000 2.304 1120 2.540

SoltforeIgn 0 460 480 0 329 329 0 34 36 0 4 4 0 14 34 0 0 0 0 0 0 0 0 0 0 0

Dom.st ic 411 801 1.414 396 734 1.132 144 6341 1.140 341 422 944 217 312 606 9 400 400 0 3,200 3,200 6 1.200 1.200 0 1.200 3,200 >7a

eTol 4513 1.463 2.133 394 Ids 1,242 344 452 1,19f 345 421 ti0 is? 40 641 a 400 400 0 1.200 2.200 0 2.200 2.200 0 1.200 3.200

Cootl.d

TI

Table 2.1 b: Port Trafric (1985-1993) and Forecast (to 2010)('000 tons)

-------- --------- … … … *9t2……-1-----… 191 … … … 2000 … … 2001--- .. 2010…----in O,.t Total On Cot Total I. ck. Total In Cot Total tn 0.t aotal 1n Out Totsl in out Total In OtL Total In Out Total

GrainFor.ignm 1,245 1.066 2.311 2,134 444 3,220 2.341 1,*11 2.480 1.953 989 2,942 1.089 488 1.757 1.400 900 2,300 2,533 1,100 3.833 2,621 1.686 4,313 2,917 1,876 4.793

Domestlr 4 2 0 2 9 3 4 4 0 1 97 8 21 11 0 00 00 0 47 11 0 1817 18I 0 201 207To t.a 1,243 1,108 2,333 2.314 49 3,1249 2,34 1,179 ,1441 1,953 1,08' 3,039 I...: 789 2.678 I.4.. 1.000O 2,400 2,333 1,447 4,000 2,421 ,1 4,00 , .8 ,0

Oth.r1or.1g~~~~~~~ 3,102 1,547 4,649 1,935 3,101 5,434 2,133 3.650 5.783 2,318 4.309 4,621 2,211 .1,12 7,370 2,780 7,140 10.120 3,322 6,744 12,051 3.739 9.870 13.409 4,090 10.797 14.887

DoetcIl 0 2 4 24 39 23 8 0 4 37 334 III 13 4311.0. 93110 .10. II.0 1,12 *275 1,3200 1.7 Ii171 ,9 ,3Total ',""9 1,m2 4,891 ,0so 3,731 3.8*l 2.348 3 ,944aI 4,2192 ,8',7s1 22,33 .44 600 3,307,30 20604,481 *.00 ,07903*,0548 1,82 430

Totallr. i, 10.481 3.919 14,400 6.777 8.461 15,238 6,953 4,848 16.801 7,918 10,8451 *8123 9.440 12.2729 21.719 8.600 13.300 23,900 14.713 19,307 34,040 16,011 22.469 41,480 23.181 21,140 48,775Doeaaric 2,173 2,273 3,448 2,140 2,430 4.278 1,103 3,812 3,432 2,940 6,883 M.833 3.714 *1,134 *2,872 2,400 13,700 34,100 3.343 70,773 251,90 4,728 74,301 3J.020 8,357 27.1*8 38,271

Tot.l *2,834 1,194 *,4 ,7 10*1.1 ,3 3802,1 ,* 7702.7 1142,9 41*1.0 32,00 42,00 *,9140,02 4000 !-23,3 4.7 7L2,10 1,421341 81,000

Eat. Dry I.Ike I 1 2.989 2,2491 4,8 41,4*4 4,924 9,340 4,339 4,444 *1.001 4,436 9,089 *3,723 3,2137 *4,147 17,484 3,10 20,~140 1:23,8*0. 7,417 21,300 33,279 S.03* 29,743 38,717 10.4753 3410 44.371at.t LiqoId Bulks 1 370 1 325 28 214 143 *0 242 412 290 2*1 30* l70 *4 714 1000 28a 0 4,000 800 4,800 2,000 1,400 8,400 *0,0 2,000 *200

Eat. General CargosFoareign 8,443 3.4*35 11,:10 2.439 3,2241 :7,77 2,143 4,1008 5,3 3.1*4 ,1*4 *D0,02 4.0 4,37" 32,71 4,700 ,4 2.40370 1,5 *7,358 4,7 13,24 *9,833 7,439 34.472 23,3

Damatlc 2,33 *0 1411 944 783*,77 2184 .04 2,47 ,47 2,44 .43 1,88 .0013,31 14102,20 28102,52 223*2.44 3,28 ,44s3,9* ,40 2,84 ,49

Domestic 22, 1410, 1.388 3213 2941 4293 .1241 17601 14*90 *4792Ct" 404 7273 *23 7241 83811 6950 2004 1,21 2 132. 2,7 2,2 ,28120 ,1 817 ,7

DomestIc 01 00 ~~~~1,4021 285 *867 2261 2703 *301 7200 4318 52*5 710 2 519 7.03 8*21 1170 *.300 4001 1: 11: 130 4010 201 211. 101 2Il10

Loo74'43 120 82M 2,7246 247 131 194 38 21,114* ,2 38 21,149 6399 3,0841719440 4,2750 2,121 2.484 13,74 16,0218 2,98 7,1.4008I *0,09 ,477 8,440 *,GIs

T Tacontie rfi p0tal o) 294.3 503.4 799.7 3779.3427*2.3 1491.9 438a.4 831£4. 13.4 024*9,

foueg 841 3 * 3 14199 o 7 487 *70 *90 340 *91 199 394 232 210 482 233. 102. 73. 29. 492. 9 01. 338. 833. 2211. 401, 1013. *4 0.

balkMde tafcotnr rfiTotb 97* 318l2,3 243 ,23 ,472,*2307 ,433,7* 413 430 ,903,34*,34 ,04I,4 Ill93,3 1:031 13,7 3:4,71 78,11* 23,223: 7,9 8,88 4,05

Lou " 9,22 3,11 1*2305 2,43 4,293 4,847 2,420 1,0937,3183 3,431 42391 3,570 13,82 5,4154 22574 381 4.45 0,24 ,04 7,84 2292 I,87 s824 * 3,3 4,42 8,01 I 1,1*

Deaa . 43ge nlddO dybl raCa (al) Mtallic 3are2 4a1) Csat foln-o) Nomoali ore ll),Ceia .tlar frioi) at(oatc.1) ri IrIni3 2. Conteinarisahle cargo Incladea----Cement (oen----- ..... e.i... ---- C ..mica .....ise .... ig.o--- --- desi-s-l-, -a-- oag-l2.Gan(oeg-o oetcal) tes(l

b.ttk tr'affdi akc taf

Dec-9423181.3021241564?260 .3763341619#.7 .2 ,3 1364,0 .6 0803754,0 37367885715257504891,8

- 37 - ANNEX 2

Table 2.1 c: Trafric Calculation

------------Actual- .----------- ----Forecast----------------1990 1991 1992 1993 1994 l195 2000 2005 2010

Construction materiaels traffic ('000 ton)River berths 420 625 339 366 400 500 500 500 500Sea berths 582 404 1,088 845 606 300 1,100 1,710 2,000

Total 1,002 1,029 1,427 1,211 1,006 800 1,600 2,210 2.500

General cargo traffic ('000 ton)River berths 1,093 1,226 1,344 1,712 1,800 2,000 2,000 2,000 2,000Sea berths 5,754 6,457 8,226 9,864 9,151 8,326 10,922 12,138 13,117

Total 6,847 7,683 9,570 11,576 10,951 10,326 12,922 14,138 15,117

Total Loaded container traffic (Q000 teu)Sea berths 286.7 339.8 393.5 482.0 608.3 734.5 991.0 1,211.9 1,432.4

/1: There are two separated opersting districts in TPA; (a) river berths for the smaller vessels and(b) sea berths for the ocean going vessels (the project area).

Dec-94

- 38 - ANNEX 2

Table 2.2: Tianjin Port Authority: Ship Time Analysis(Actual ship days per ship)

General Cargo ConstructionShip Container Ship Material Ship Whole Port

-- - - - -- - - -- - - - -- - - - ................ .. ...............................

1985 1990 1993 1985 1993 1993 1985 1990 1993 1985 1990 1993

1. Productive time at berth 2.10 0.60 1.80 0.50 0.40 0.50 0.70 0.60 0.70 1.60 0.80 1.302. Nonproductive time:

a. Due to port 4.60 0.10 0.50 3.50 0.60 0.80 0.50 0.20 0.50 4.00 0.30 0.80b. Due to ship 0.10 0.10 0.20 0.00 0.00 0.00 0.40 0.10 0.00 0.00 0.10 0.10c. Due to cargo owner 0.50 0.50 1.90 0.40 0.50 0.10 0.00 0.00 0.00 0.30 0.60 1.00d. Others 0.40 0.20 0.70 0.20 0.20 0.10 0.30 0.60 0.30 0.30 0.30 0.40

SubtotaL 5.60 0.90 3.30 4.10 1.30 1.00 1.20 0.90 0.80 4.60 1.30 2.30

3. Weather stoppage 0.20 0.10 0.30 0.10 0.00 0.00 0.10 0.00 0.00 0.30 0.10 0.10

TotaL Average Port DaysPer Ship 7.90 1.60 5.40 4.70 1.70 1.50 2.00 1.50 1.50 6.50 2.20 3.70

w3... an.. =3 a . =33 ==3 3xU ===3 n... .... 3.3.3 33= ..mas

Total Number of Ships 1,520 2,825 1,824 557 1,485 2,025 318 285 287 4,169 6,389 6,127

Sources: TPA

13

Table 2.3: Operational Data Used for Economic Evaluation

General Cargo Container Construction Materials

Existing Proposed Existing Proposed Existing Proposedberths berths berths berths berths berths

Berths (number) 21 6 4 3 1 1Cranes per berth (number) 3 2 2.3 2.0 2 2Average crane productivity per hour (tons, teus)/_1 40 50 18 20 155 166Average working hours per day (hours) 12.8 15.0 16.0 16.0 16.0 16.0Throughput capacity per berth (tons, teus/day) 1,536 1,500 648 640 4,960 5,312Berth operating days per year (days) 320 330 320 320 320 320Haximum annual capacity per berth ('000 tons, teus) 467 470 103.7 102.4 1,270 1,530Ship arrivals (scheduled/unscheduled) Unscheduled Unscheduled Unscheduled Unscheduled Unscheduled UnscheduledAverage ship size (DUT, teus) 11,000 12,000 950 /_2 700 /_3 4,000 6,000Average shipment size (tons, teus) 6,400 8,000 250 220 3,700 5,800Cargo value (Yuan/ton, teu) 4,500 4,500 50,000 50,000 100 100Average daily ship cost in port (Yuan/day) 52,200 54,897 80,040 66,120 15,660 24,360Unloading/loading cost (Yuan/ton, teu) 31.00 31.00 247.00 247.00 8.00 8.00

Notes:(i) theoretical daily berth capacity = cranes per berth x average crane productivity per hour x average working hours per days.(li) theoretical annual berth capacity = theoretical daily berth capacity x berth operating days per year.(ill) maximun annual capacity per berth = theoretical annual berth capacity x maximun berth utilization.

/1. One TEU = 10.00/_2. Equivalent to 14,tons./_3. Equivalent to 10,000 dwt per ship/ 4. Figures in the table are the costs for normaL berth handling. If cargo traffic exceeds 95X berth occupancy rate, additional

cargo will be handled by lightering at roughly three times the costs for normal berth handling.for lightering operations, throughput capacity is taken as 50X of normal berth throughput capacity.

Sources: TPA and Bank staff.

Dec-94

- 40 - ANNEX2

Table 2.4: Tianjin Port Project: Economic Project Cost(Y million, 1994 prices)

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Total

A. Financial (Current prices)=z=u==Z==2

South Side

1. Container Berths 19.40 37.50 80.00 55.80 98.00 260.00 109.40 86.50 112.00 96.48 17.36 972.442. Construction MateriaL

Berths 0.00 0.00 0.30 1.40 2.60 21.20 4.60 0.70 4.90 4.50 0.00 40.20

SLbtotal - South 19.40 37.50 80.30 57.20 100.60 281.20 114.00 87.20 116.90 100.98 17.36 1012.64---------------------.. .. --. ......

North Side

1. Hulti-purpose (GeneralCargo) Berths 0.00 0.00 3.00 7.90 62.70 40.00 100.00 127.50 216.00 22.00 0.00 579.10

Total 19.40 37.50 83.30 65.10 163.30 321.20 214.00 214.70 332.90 122.98 17.36 1591.74=33333 3== == ===-K ==Z== ===2== ==2== 333333 =Common 3=33z3 =S--33 333333 w-333==

Training Center 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.00 6.50 6.20 0.00 17.70…-------------. … .. - - .. - - .... ------ ... ---- . ......

Grand Total 19.40 37.50 83.30 65.10 163.30 321.20 214.00 219.70 339.40 129.18 17.36 1609.44333333 3=2333 = 3 = =22 =3333= =3333 Commo =S-333 =3=3 3 3333us wa33s

B. Economic (1994 prices)== 3= =

South Side

1. Container Berths 37.54 69.29 118.73 78.67 132.52 322.74 125.35 95.84 114.51 91.75 16.18 1203.122. Construction Haterial

Berths 0.00 0.00 0.49 2.05 3.56 28.18 5.36 0.75 4.78 4.14 0.00 49.31

Subtotal - South 37.54 69.29 119.22 80.72 136.08 350.92 130.71 96.59 119.29 95.89 16.18 1252.43-- - ----- ----- -- -- -- -- ------ ------ .----- -- -- -- - - - - - ...... .

North Side

1. Multi-purpose (GeneralCargo) Berths 0.00 0.00 4.91 10.79 76.28 49.77 112.47 139.42 220.06 20.59 0.00 634.29

---- -. -- -- -- -- ------ -- -- -- - - - - - . - - - - - - ...... ...... . . .....

Total 37.54 69.29 124.13 91.51 212.36 400.69 243.18 236.01 339.35 116.48 16.18 1886.72Sam33n 33333 3--333 ==3 =33 = 33=33 333... .. =... 33333n 33333= 333333 mo33oo3

Training Center 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.43 6.43 5.80 0.00 17.66-- -- -- -- - ------ .. -- -- -- -- -- - - - - - . - - - - - - - - - - - - - - - - - - ......

Grand Total 37.54 69.29 124.13 91.51 212.36 400.69 243.18 241.44 345.78 122.28 16.18 1904.38

Dec-94

T2

Table 2.5: Tianjin Port Project: Shadow Price Conversion Factor(Y million, 1994 prices)

General Cargo Container Construction Naterials

Conver - - - ----------------------------sion -----Financial---- Economic -----FinanciaL---- Economic ---- Financial---- Economic Total

factor Local Foreign Total Total Local Foreign Total Total Local Foreign Total Total project

Land 0.80 79.37 0.00 79.37 63.50 133.19 0.00 133.19 106.55 8.87 0.00 8.87 7.10

Labor:Unskilled 0.54 13.27 0.00 13.27 7.17 15.18 0.00 15.18 8.20 1.01 0.00 1.01 0.55

Semi skilled/Technician 0.80 8.44 0.00 8.44 6.75 9.15 0.00 9.15 7.32 0.61 0.00 0.61 0.49

Supervisor 2.00 1.71 6.48 8.19 9.90 1.27 3.24 4.51 5.78 0.08 0.00 0.08 0.16

Materials:Steel 1.00 12.94 49.41 62.35 62.35 12.32 31.18 43.50 43.50 0.82 0.00 0.82 0.82

Timber 1.00 4.11 15.62 19.73 19.73 3.23 8.08 11.31 11.31 0.21 0.00 0.21 0.21

Cement 1.00 8.23 31.24 39.47 39.47 6.40 16.17 22.57 22.57 0.43 0.00 0.43 0.43 4

Sard 0.80 13.36 0.00 13.36 10.69 20.42 0.00 20.42 16.34 1.36 0.00 1.36 1.09

Stone 0.80 43.62 0.00 43.62 34.90 56.44 0.00 56.44 45.15 3.76 0.00 3.76 3.01

Bitumen 1.00 16.27 0.00 16.27 16.27 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Others 0.80 27.74 105.74 133.48 127.93 3.54 11.64 15.18 14.47 0.24 0.00 0.24 0.19

Fuel:Diesel 1.00 1.71 0.00 1.71 1.71 62.36 0.00 62.36 62.36 4.15 0.00 4.15 4.15

GasolIne 1.00 0.06 0.00 0.06 0.06 0.37 0.00 0.37 0.37 0.02 0.00 0.02 0.02

Neavy oil 1.00 0.06 0.00 0.06 0.06 0.37 0.00 0.37 0.37 0.02 0.00 0.02 0.02

Others 1.00 0.99 0.00 0.99 0.99 0.74 0.00 0.74 0.74 0.05 0.00 0.05 0.05

Water 0.80 1.71 0.00 1.71 1.37 3.39 0.00 3.39 2.71 0.23 0.00 0.23 0.18

Electricity 2.00 4.11 0.00 4.11 8.22 8.78 0.00 8.78 17.56 0.58 0.00 0.58 1.16

Construction 0.80 3.87 14.86 18.73 17.96 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Mechanical equipment 1.00 1.14 89.41 90.55 90.55 239.46 230.01 469.47 469.47 15.95 0.00 15.95 15.95

Others 0.80 4.89 18.74 23.63 22.65 27.09 68.42 95.51 90.09 1.81 0.00 1.81 1.45

Total 247.60 331.50 579.10 542.23 603.70 368.74 972.44 924.86 40.20 0.00 40.20 37.03

Overall conversion factor 0.94 0.95 0.92 0.94*=== ==== ~~~~~~~~~~~~==R= ==-Z

zr~i

/-1: Foreign cost has been converted to Yuan by using 1 USS * 8.70 shadow exchange rate.

Source: TPA and mission's estimate.

Dec-94

- 42 - ANNEX 2

Table 2.6 a: Cargo Handling Without and With The Proposed Berths(General Cargo Berths)

1990 1991 1992 1993 1994 1995 2000 2005 2010

A. TSIJC DDUID ('000 TONS) 5. 754 6.457 3.226 9.564 9.151 8.326 10.922 12.138 13,117

B* WITMhOT PUiX=CT

raisting Barth. // I /I

1. Berth. (umber) ~~~ ~~21 21 21 2T 21 21 27 27 272. Traffic ('000 tons) 5.754 4,457 2 ' 226 9.864 9.151 J.325 10,922 12,135 13,1173. SinaI. *hip berth day. required 3,746 4 204 5.355 6.422 5.958 5.421 7.111 7,902 *.5404. hAal ship berth days available 6,720 6.720 6.720 6,720 6.720 6.720 6.720 64720 6.7205. Berth occupancy rate (Z) 56 63 80 (95) 89 *1 (95) (95) (95)6. Waiting te qu uing factora 0.00 0.00 0.04 0.55 0.17 0.05 0.55 0.55 0.557. 1Aa total *bie port day*s

a. Actual Ship berth days 3.746 4204 5.355 6 384 5 955 5.421 6,384 6,3J4 6.354b Ship waiting days 0 0 214 3,532 1,013 271 3,911 4.346 4,697. Ship lightering days 0 0 0 76 0 0 1.454 3,036 4,312

Total hlip port days 3.746 4.204 5.569 9.992 64971 5,692 11,749 13.766 15.393

C. WITH P=CT

Zaiating Bartha

1. Bertha (umber) 21 21 21 21 21 21 21 21 2T2. Traffic (t000 tons) 5.754 6,457 8,226 7.660 7.106 6,466 8,482 9.426 10. 163. Aaal ship berth days required 3.746 4,204 5,355 4,987 4.626 4,210 5.522 6.137 *6.324. Aaual Ship berth days avsilabla 64720 6,720 6.720 64720 6.720 6,720 6.720 *.720 6.7205. Berth occupancy rate (2) 56 63 s0 74 69 63 62 91 (95)6. waiting tim queuing factore 0.00 0.00 0.04 0.01 0.00 0.00 0.04 0.19 0.407. Au-al total ship port dayse

a. Actual ship berth day. 3,744 4.204 53355 4.987 4,426 4,210 5.522 6.137 6,3J4e. Ship vaiting days 0 0 214 50 0 0 221 1,166 2.653C. Ship lightering days 0 0 0 0 0 0 0 0 496

Total ship port days 3.746 4,204 3.569 5,037 4.626 4,210 5.743 7.305 9.533

Proposed Berths

17 erths (umber) 6 6 6 6 4 T2. Traffic ('000 tons) 2,204 2,045 1,540 2.440 2,712 2.9313. ; Al hbip berth days required 1,449 1,363 1.240 1.627 1.J0 1.9544. Ainai ship berth days available 1.980 1,950 1.980 1,950 1,990 1,980S. Borth occupancy rate (2) 74 69 63 *2 91 (95)4. Waiting tie queuing factors 0.01 0.00 0.00 0.04 0.19 0.407. Awual total ship port days.

a. Actual .hip berth days 1.469 1.363 1,240 1,627 1,80I 1,561b. Ship waiting day. 15 0 0 65 344 782C. Ship ligbtering days 0 0 0 0 0 144

Total Ship port days 1,484 1,363 1,240 1.692 2.152 2.809

notess Ci) *aal ship berth days required * trafficitheoretical daily capacity per berth.(ii) a*ual ship berth days available * umber of bertbh a berth operating days per year.(iii) berth occupancy rate - anusal ship berth days required / ar*usl *bip berth days available.(iv) waiting tim queuing factors are fra Port DOvelopmant. UNCTA0 1978. and berth throughput, UNSCTAD 1945.(v) *MuAal Ship vaiting days - anual Ship bertb days required a waiting time queueing factors.

/1- Traffic vwld *eaeed the practical capacity of these bertha. For the purpose of the econoic evaluation it hba beenassued that vwys will be found, e.g., through lightering. to mov* the traffic through the port vith waiting timesnot exceeding those corresponding to 932 berth occupancy rate.

Sources, TPA and Back staff.

Dec-94

- 43 - ANNEX 2

Table 2.6 b: Cargo Handling Without and With The Proposed Berths(Container Berths)

1990 1991 1992 1993 1994 1995 2000 2005 2010

A. TRSIWIC DEJD ('000 TUe) /-I 286.7 339.5 393.5 4S2.0 608.3 734.5 991.0 1,211.9 1,432.4

. W VSITOUT PROJECS

lusting Container Berths_.____________________-__ ~~ ~ ~ ~~~~~/ 2 1 2 / 2

1. O.rtbe(umk.r) 4 4 * 4 * 4 T T 2. Traffie (t000 TrDs) 286.7 339.9 393.5 482.0 608.3 734. 5 91.0 1.211. 1,432.43. Aaal ship berth days required 442 524 607 744 939 1 133 1.529 12i70 2,2104. mual ship berth days gvailable 1.2S0 1.260 1.280 1.2S0 1.260 1.260 1.2S0 1.2S0 1,2S05. erth occupancy rate CZ) 35 41 47 58 73 *9 (95) (95) (95)5. Waiting time queuing factors 0.01 0.01 0.02 0.05 0.1 0.55 2.08 2.05 2.0S7. Am-I total sbip port daysi

A. ctual ship b-rth daYs 442 524 607 744 930 1.133 1.216 1.21d 1.21db. Ship waiting days 4 5 12 37 169 9653 3.1S0 53090 4.597c. Ship lightering days 0 0 0 0 0 0 626 1,308 1.98U

Total ship port days 446 529 619 751 1.109 2,096 5.022 5,414 7,801

C. V1IT P1JZC0

xtisting Container Sertha

1. *arthe ( mber) 4 * 4 *4 * 4 4 4 42. Traffic ('000 TEDs) 164.7 195.2 226.1 276.9 349.4 421.9 551.3 696.2 922.93. AmlI ship berth days required 254 301 349 427 539 *51 S79 1.074 1.2704. Anual ship berth days avallable 1.280 1.280 1.280 1.280 1.280 1,280 1,2S0 1,280 1.2805. SNrth occupancy rats (21) 20 24 27 33 42 51 *9 84 (95)5. Waiting tim quouing factors 0.00 0.00 0.00 0.00 0.00 0.01 0.05 0.24 1.047. -nnal total ship port daysa

. Actual ship berth days 254 301 349 427 539 651 $79 1.074 1,216;. Ship waiting days 0 0 0 0 0 7 44 25S 1,331c. *hip lighterin days 0 0 0 0 0 0 0 0 102

Total sbip port days 234 301 349 427 539 655 922 1.332 2,655

Proposed Containr S-rth

'. *srthsCmmer) 3 3 3 3 1 3 3 3 12. Traffic ('000 TEUs) 122.0 144.5 167.4 203.1 258.9 312.5 421.7 515.7 509.53. Aal ship berth days required 191 226 262 320 405 498 659 90S 5524. A-al ship berth days available 960 960 9 0 96 950 950 950 950 203. *rth occupancy rate (C) 20 24 27 33 42 51 59 54 (95)5. waiting tim queuin factors 0.00 0.00 0.00 0.00 0.00 0.01 0.05 0.24 1.047. Aual total shiP port days'

a. Actual sbip berth days 191 226 262 320 405 48S 659 90d 912b. Ship waiting dsys 0 00 5 33 193 990

b. Sip lightering days 0 0 0 0 0 0 0 0 '°

Total ship port days 191 226 262 320 405 493 *92 999 1,9U2

lNotes i) *aeual sbip bertb days required * traffic/theoretical daily capacity per berth.(ii) annual ship berth days available * number of berths x berth operating days per year.(iii) berth occupancy rat * anmual ship berth days required / annual ship berth daye available.Civ) waiting time queuing factors are from Port Dev:lopamnt. UNCTAD 1976 and ; Srth througbput. UNCTAD. 1965.lv) annal ship waiting days * annual ship bertb required waiting tiA qususg factors.

/ 1. Include foreign (in/out). loaded and septy containers.-2. Traffic would ezceed the practical capacity of these berths. For the purpose of the economic evaluation it has 'bee

aseum1'd that ways illr be found, e.g.. through ligbtering. to move the traffic through tbh port witb waiting timsnot sceeding ttoes corrsponding to 951 berth occupancy rate.

Sources. TPA and lank staff.

Drec94

- 44 - ANNEX 2

Table 2.6 c: Cargo Handling Without and With The Proposed Berth(Constmction Materials Berth)

1l99 1991 1992 1993 19in 19i5 2000 2003 2010

*. TBFFIC DDIAND ('000 TOIS) 552 604 1.056 645 606 300 1,100 1.710 2.000

S. VXTTIODXT PBO=Ct

dexiting Berths

I Sertbh (miner) I 1 I I I I I T T2. Traffic ('000 tones) 362 404 1.056 $43 606 300 1.100 1.710 2,0003. Annal shp brth days required 117 *1 210 170 122 60 222 341 *034* Al ship barth days availzble 320 320 320 320 320 320 320 320 3205. Berth occupancy rate (Z) 37 23 66 53 3d 19 69 (93) (91)6 Vditing t qu fctors 0.20 0.09 0.94 0.43 0.21 0.05 0.99 9.20 9.207. A total shit part daysg

a. Actual ship berth dsy 117 A1 219 170 122 s0 222 304 304b. Ship waiting days 23 7 206 77 26 3 220 3.174 3,70bc. Ship lightering day 0 0 0 0 0 0 0 52 19S

Total ship port days 140 *S 425 247 146 63 442 3.560 4,210

C. WIlS P10JET

rxistiW Bertha /_2

1. Serthb (tu ber)2. traffic ('000 tos)3. Amal ship bertb days required4. d1al ship berth days available5. berth occupancy rate (Z)6 Vaiting time queuing factors7. Anual total ship port days.

a. Actual bhip berth daysb. Sbip waiting days4. thip lightering days

Total skip port days

Preposed Bertha

Z. I I I I I I I T T2. Traffic ('000 tons) j82 404 1.0I6 $45 606 300 1.100 1,710 2.0002. AmaL ship bertk days required 110 76 205 159 114 56 207 322 3774. £aal ship berth days available 320 320 320 320 320 320 320 320 320S. Nerth occupancy rate (<) 34 24 64 50 36 1J 63 (95) (93)6. Waiting time queuing factors 0.16 0.05 0.77 0.39 0.16 0.03 0.50 9.20 9.207. na.al total ship port days

s. Actual ship berth days 110 76 205 159 114 56 207 304 304;. Ship watting days 1 6 156 62 21 3 166 2.962 3,466e. Ship lightering days 0 0 0 0 0 0 0 36 146

Total ship port days 125 *2 363 221 133 59 373 3,302 3.915

*test M a) a*nal ship bertb days required - traffic/thsoretIcal daily capacity per berth.(it) a*al sbip berth days avilable - umber of berths x berth operating days per year.(itt) berth occupancy rate - annual ship berth days required / annual ship berth days available.(iv) waiting tim queuing factors are from Port Development. VHCTAD 1975. and berth throughput. UNCTAD 1985.(v) a*al ship waiting days - anral ship berth days required a waiting tie queueing factors.

I t Traffic would exceed the practical capacity of tbese bertb. For the purpose of the econoic evalustion it has beenseawsed that vays wil be fourd. e.g., through ligtering. to move the traffic through the port With WaiLing tinesnot exceeding those corresponding to 951 berth occupancy rate.

/2. The existing berth ts return to general cargo handlzig in 1990.

Soureas TPA aod Bank staff.

Doec-4

- 45 - ANNEX 2

Table 2.7: Cargo Loading/unloading Cost Savings(Y millfion, 1994 prices)

General Cargo Container Berthe

1993 1994 19S 200 2005 20 1990 1991 1992 1993 1994 1995 200 2005 210

A. Taff ic demand

('000 ton)-- 9.584 9.151 8.326 10.922 12.139 13.117 258.7 339.5 393.5 482.0 605.3 734.5 991.0 1211.9 1432.4

1. ierth capacity at 951 occupancy rate (1000_tone)

Without.project 9.0 9.0 9.0 9.0 9.0 9.7 75. 79. 75. 78. 78. 78. 751 781781with Pro sOct 112.277 1'2,827 1'2.02'7 12.8227 1l:2.87 1'2.6207 '765.1 75.1, 785.1, 758.1l 105:0.0 1371.51 1371.51 1371.56 1,371.6

C. Traffic handling ('000 tona)

Wtout projectsoerth 9.507 9.151 8.326 9.507 9.507 9.507 218.7 339.5 393.5 452.0 608.3 734.5 755.1 755.1 755.1Lightering 57 0 0 1.115 2,331 3.310 0.0 0.0 0.0 0.0 0.0 0.0 202.9 423.5 844.3

Total 5,584 9.151 8.326 10.922 12.138 13.117 258.7 339.5 393.5 452.0 605.3 734.5 991.0 1211.9 1432.4

With project 17.Berth 9.584 9.151 8.326 10.922 12.135 12.627 258.7 339.5 393.5 452.0 605.3 734.5 991.0 1211.9 17.Lightering 0 0 0 0 0 490 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 80.8

Total 9,584 9.151 5.1326 10,922 12.135 13.117 258.7 339.8 393.5 462.0 808.3 734.53 991.0 1211.9 1432.4

0. LoadinmglunloadinLg costs (miullo T

Wihout projectBerth 315.22 297.87 271.01 319.22 319.22 319.22 74 .36 88.13 102.05 125.01 157.78 190.49 204.39 204.39 204.39Lightering 3.83 0.00 0.00 114.08 238.46 335.61 0.D0 0.00 0.00 0.00 0.00 0.00 165.38 345.44 525.17

Total 325.05 297.57 271.01 433.25 557.88 657.83 74.36 88.13 102.05 125.01 157.78 190.49 369.77 549.83 729.58

With projectBerth 321.07 297.57 271.01 355.51 395.09 411.01 74.38 56.13 102.05 125.01 157.78 190.49 257.02 314.31 355.75Lightering 0.00 0.00 0.00 0.00 0.00 50.13 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 49.40

Total 321.07 297.57 271.01 355.51 395.09 481.14 74.38 58.13 102.05 125.01 157.78 190.49 257.02 314.31 405.15

E. Pat loading/unloading

Savings (9(11. TI 3.95 0.00 0.00 77.77 182.59 198.89 0.00 0.00 0.00 0.00 0.00 0.00 112.75 235.52 324.35

Construction Materials

1990 1991 1992 1993 1994 1995 2000 2005 2010

A. Taffic demand ('000 tons) 552 404 1I0m 545 608 300 1,100 1.710 2.000

B. Norh caaIta 95 occupancy rate ('000_tone)

Without project 1.270 1.270 1.270 1.270 1.270 1, 270 1.270 1.270 1.270With project 1.530 1.530 1,530 1.530 1.530 1.530 1,530 1,530 1.530

C. Traffic handling ('000 tone)

Without projeactBerth 552 404 1,055 545 808 300 1,100 1.270 1,270Lightering 0 0 0 0 0 0 0 440 730

Total 552 404 1.055 945 608 300 1,100 1.710 2.000

With projectBarth 552 404 1,055 545 608 0 1,100 153 150Lights ring 0 0 0 0 0 0 0 150 470

Total 552 404 1,055 545 608 300 1,100 1,710 2,000

D. Loadinglunloading costs (million TI

Without projectBerth 4.59 3.39 9.14 7.10 5.09 2.52 9.24 10.87 10.87Lightering 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11.82 19.27

Total 4.59 3.39 9.14 7.10 5.09 2.52 9.24 22.29 29.94

With projectBorth 4.59 3.39 9.14 7.10 3.09 2.52 9.24 12.85 12.855Lights rinxg 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.75 12.41

Total 4.59 3.39 9.14 7.10 5.09 2.52 9.24 17.80 25.26

E. Nst loading/unloading savings (nil. TI 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.89 4.65

Notess 1. The convesrion factors for handling cost ars, (a) At berths 1.051 and (b) Lightering 1.10.2. Lighteriukg costs ars tksn to be three tiass handling costs at berth.

Sourcessi TPA and Bank staff.

Dec.94

- 46 - ANNEX 2

Table 2.8: Tianjin Port Project: Economic Benefits Summary(Y million, 1994 prices)

1990 1991 1992 1993 1994 1995 2000 2005 2010

General Cargo Berths.. ..................

Ports: Loading/unloading savings 0.00 0.00 0.00 1.99 0.00 0.00 77.77 162.59 196.69Ships port days savings 0.00 0.00 0.00 88.59 35.69 9.29 220.63 219.23 151.69Cargo port days savings 0.00 0.00 0.00 31.75 12.17 2.45 85.46 91.53 68.27Less:Senefits accruing to foreigners (1OX) 0.00 0.00 0.00 12.23 4.79 1.17 38.39 47.34 41.67

Total 0.00 0.00 0.00 110.10 43.07 10.57 345.47 426.01 374.98

Container Berth...............

Ports: Loading/unloading savings 0.00 0.00 0.00 0.00 0.00 0.00 112.75 235.52 324.38Ships port days savings 7.69 13.69 21.61 28.33 32.91 82.50 282.33 340.71 280.84Cargo port days savings 0.02 0.03 0.10 0.31 1.51 8.05 29.71 36.91 31.36Less:Benefits accruing to foreigners (10%) 0.77 1.37 2.17 2.86 3.44 9.06 42.48 61.31 63.66

Total 6.93 12.35 19.54 25.78 30.98 81.49 382.31 551.83 572.92...-- ----- ---- ------ ............ ........ ...... ......... ...... ......... ------

Construction Materials.. . . . ................... ._ _

Ports: Loading/unloading savings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.69 4.68Ships port days savings 0.14 0.07 2.26 0.76 0.31 0.05 2.60 4.56 4.68Cargo port days savings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Less:Benefits accruing to foreigners (10X) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total 0.14 0.07 2.26 0.76 0.31 0.05 2.60 9.25 9.36.... ... ------ ...... .... ...... ------ .... ------- ------- .. .------- -------............................ ....... ...

Totelas....

Ports: Loading/unloading savings 0.00 0.00 0.00 1.99 0.00 0.00 190.52 402.80 525.75Ships port days savings 7.82 13.76 23.87 117.68 68.91 91.84 505.56 564.50 437.21Cargo port days savings 0.02 0.03 0.10 32.06 13.68 10.50 115.17 128.44 99.63Less:Benefits accruing to foreigners (10X) 0.77 1.37 2.17 15.09 8.23 10.23 80.87 108.65 105.33

Total 7.07 12.42 21.80 136.64 74.36 92.11 730.38 987.09 957.26...... Su .= =n... . M a= US.. . ..... 5 * ....... massSS ....... 53 5 . .

Notes: 1. Opportunity cost of capital for cargo is assumed to be 12.00X.2. 50% In the first year, 75% the second year and 100% In the third year.

Sources: TPA and Bank staff.

Dec-94

T3

Table 2.9: Economic Rate of Return and Sensitivity Analysis(Y million, 1994 prices)

-a se Case ------------- ------- Case 1- ------- ------- Case 2- ------- --------Case 3-----------------costs------- Total Net Net Net NetCapital Paint- Bene- Cash Costs Benefits Cash Costs Benefits Cash Costs Benefits Cash

Year invest. enance Total fits Flow (*15%) Flow (-15X) Flow (+151) (-15X) Flow

1985 37.54 37.54 (37.54) 43.17 (43.17) 37.54 (37.54) 43.17 (43.2)1986 69.29 69.29 (69.29) 79.68 (79.68) 69.29 (69.29) 79.68 (79.7)1987 124.13 124.13 (124.13) 142.75 (142.75) 124.13 (124.13) 142.75 (142.8)1988 91.51 91.51 (91.51) 105.24 (105.24) 91.51 (91.51) 105.24 (105.2)1989 212.36 212.36 (212.36) 244.21 (244.21) 212.36 (212.36) 244.21 (244.2)1990 400.69 18.60 419.29 7.07 (412.22) 482.18 7.07 (475.11) 419.29 6.01 (413.28) 482.18 6.01 (476.2)1991 243.18 18.60 261.78 12.42 (249.37) 301.05 12.42 (288.64) 261.78 10.55 (251.23) 301.05 10.55 (290.5)

1992 236.01 18.60 254.61 21.80 (232.81) 292.80 21.80 (271.00) 254.61 18.53 (236.08) 292.80 18.53 (274.3)1993 339.35 40.02 379.37 136.64 (242.73) 436.28 136.64 (299.64) 379.37 116.14 (263.23) 436.28 116.14 (320.1)1994 116.48 40.02 156.50 74.36 (82.14) 179.98 74.36 (105.62) 156.50 63.20 (93.30) 179.98 63.20 (116.8)1995 16.18 40.02 56.20 92.11 35.91 64.63 92.11 27.48 56.20 78.29 22.09 64.63 78.29 13.71996 40.02 40.02 219.76 179.74 46.02 219.76 173.74 40.02 186.80 146.78 46.02 186.80 140.81997 40.02 40.02 347.42 307.40 46.02 347.42 301.40 40.02 295.31 255.29 46.02 295.31 249.31998 40.02 40.02 475.07 435.05 46.02 475.07 429.05 40.02 403.81 363.79 46.02 403.81 357.81999 40.02 40.02 602.73 562.71 46.02 602.73 556.71 40.02 512.32 472.30 46.02 512.32 466.32000 /_ 49.32 49.32 730.38 681.06 56.72 730.38 673.66 49.32 620.82 571.50 56.72 620.82 564.12001 / 1 49.32 49.32 781.72 732.40 56.72 781.72 725.00 49.32 664.46 615.14 56.72 664.46 607.72002 /-1 40.02 40.02 833.06 793.04 46.02 833.06 787.04 40.02 708.10 668.08 46.02 708.10 662.12003 /I 50.73 50.73 884.41 833.68 58.34 884.41 826.07 50.73 751.75 701.02 58.34 751.75 693.42004 /Il 50.73 50.73 935.75 885.02 58.34 935.75 877.41 50.73 795.39 744.66 58.34 795.39 737.12005 40.02 40.02 987.09 947.07 46.02 987.09 941.07 40.02 839.03 799.01 46.02 839.03 793.02006 40.02 40.02 981.12 941.10 46.02 981.12 935.10 40.02 833.96 793.94 46.02 833.96 787.92007 40.02 40.02 975.16 935.14 46.02 975.16 929.14 40.02 828.88 788.86 46.02 828.88 782.92008 40.02 40.02 969.19 929.17 46.02 969.19 923.17 40.02 823.81 783.79 46.02 823.81 777.8

2009 40.02 40.02 963.23 923.21 46.02 963.23 917.21 40.02 818.74 778.72 46.02 818.74 772.72010 40.02 40.02 957.26 917.24 46.02 957.26 911.24 40.02 813.67 77.65 46.02 813.67 767.72011 40.02 40.02 957.26 917.24 46.02 957.26 911.24 40.02 813.67 773.65 46.02 813.67 767.72012 40.02 40.02 957.26 917.24 46.02 957.26 911.24 40.02 813.67 773.65 46.02 813.67 767.72013 40.02 40.02 957.26 917.24 46.02 957.26 911.24 40.02 813.67 M7.65 46.02 813.67 767.7 >

2014 40.02 40.02 957.26 917.24 46.02 957.26 911.24 40.02 813.67 M.65 46.02 813.67 767.7 Zt

Total 1886.72 976.3 2863.0 15817 12953.8 3292.39 15817 12524.4 2862.98 13444.3 10581.3 3292.4 13444.3 10152

ERR = 15.7 X 14.3 X 14.0 X 12.7 XNPV (12%) * 487.2 324.8 251.7 89.3

/1: Major maintenance.

Dec-94

- 48 - Appendix A

APPENDIX A: PREPARATION MISSION'S AIDE MEMOIRE

(November 6-17, 1994)

1. A World Bank mission comprising Messrs. T. Tsutsumi and H. K. Yenvisited Tianjin Port from November 6 to 17, 1994, to prepare the ImplementationCompletion Report (ICR). The mission wishes to thank the officials of the Governmentof China (GOC), Ministry of Communication (MOC), as well as the management and staffof Tianjin Port Authority (TPA) and Tianjin Harbor Construction and DevelopmentCompany (THCDC) for the courtesies and cooperation extended to it during this visit.

2. This Aide-Memoire summarizes the agreements reached with TPA/THCDCofficials on the preparation of the ICR. The agreements of the mission, as incorporatedin this Aide-Memoire, are subject to review and confirnation by Bank management.

The View of the Bank and TPA/THCDC

3. The Bank mission and TPA/THCDC have the same view on the projectimplementation as prepared below.

4. The project was satisfactorily completed on October 31, 1994, except forfinal delivery of two quay-side container cranes which is expected in March 1995.However, the Bank loan in the amount of US$130 million has been fully used up inNovember 1994. The contract price for two quay-side cranes was about US$4 millionhigher than TPA expected. About eighty percent of the contract works has beencompleted, thus all the loan amount (US$130 million) could be fully disbursed.

ICR Preparation

5. The Bank mission started preparation of the ICR from early September1994, with the request to TPA/THCDC to provide the necessary information and data.The mission received draft information and data and prepared an outline of the ICR beforedeparture from headquarters on November 1, 1994.

6. The mission visited the project site and discussed with TPA/THCDC thepreparation of the ICR. The mission has obtained necessary information and reachedagreements on the actions to be taken as follows:

(a) TPA/THCDC will view the draft ICR left by the Bank ICR mission;TPA/THCDC will send their comments, if any;

- 49 - Appendix A

(b) Bank management will review and comment on the agreement betweenTPA/THCDC and the Bank ICR mission. A revised draft ICR will be sentto the Borrower, MOC and TPA/THCDC (to be confirmed by MOC), byFebruary 10, 1995;

(c) TPA/THCDC's comments, as well as their own evaluation, will be sent tothe Bank by February 28, 1995; and

(d) the Bank will finalize the ICR and send to the Board by April 30, 1995.

November 16, 1994Tianjin, China

- 50 - Appendix1 B

APPENDIX B: PROJECT REVIEW FORBORROWER'S PERSPECTIVE

Section A

1. The East Pier Project (First Phase) of Tianjin Port is a major project in theport and the first port project in China. World Bank Loans were used for large civilconstruction and procurement of equipment through ICB. It also introduced the projectsupervision system. The project officially commenced construction in May 1987. Thesouth side berth and its accessories were completed in November 1990; the north side berthstarted construction in May 1990 and was completed on 15 October 1993. It was reviewedand formally accepted by the State Acceptance Committee on 12 December 1993 to beginofficial operation.

2. The project design is reasonable in general layout and function. Thehandling equipment and structure are advanced and reliable. In general, project objectiveswere achieved on its completion and will greatly expand Tianjin Port's capacity in cargotraffic.

3. Construction on the silt beach area adopted large amounts of moderntechniques to achieve effectiveness. In store yard construction, new technology of vacuumpre-loading and plastic drain for consolidation were used. The geologic condition of theproject site was greatly improved by reinforcing the soil of a large area (800,000 m2 )-thefirst time such a technique was used in China. Construction of the south side wharvessuccessfully applied the method of deep mixing (MDM) (also for the first time) for thefoundation structure. In order to improve the wharves' structure, the advanced techniquesof MDM were also applied to the north wharves under the approval of the World Bank;thus, the original design of pile structure was modified to caisson gravity type whichresolved a long-standing problem in wharf construction in Tianjin Port and willsignificantly influence future port construction. Although the modification has resulted ina one-year delay, this should be considered worthwhile and successful because that difficulttechnical problem has been settled. Tianjin Port is grateful to the World Bank forextension of the closing date.

4. Construction of the following components such as 110 kilovolt substation,communication center (C Station), VTMS, sewerage treatment plant, computer managingsystem and training center under this project have greatly enhanced the comprehensivecapacity and function of Tianjin Port.

5. Procurement of over 100 units of handling' machines, port boats and othersystems were carried out strictly in accordance with the Guidelines set by the World Bank

- 51 - Appendix B

through ICB. It provides a solid foundation for the development and traffic increase ofTianjin Port so that it will enable the port to be an international modern one.

6. The method of sino-foreign cooperation and the Chinese supervisingconstruction was adopted. Project supervision for civil works on the south side wharvesand center of the East Pier was jointly managed by Tianjin Harbour Construction andDevelopment Company (THCDC), Overseas Coastal Area Development Institute (OCDI)from Japan and SPECS of Singapore; the north side wharves were managed by THCDCalone. Consultant service by foreign experts, construction supervision and local andoverseas training enabled technical and management staff to widen their view, learn andobtain some international practice, advanced technology and management experienceswhich have enhanced the staff's ability. Therefore, project quality was ensured.

7. Particular attention was given to environmental protection. In theconstruction period, environmental protection facilities such as the sewerage treatmentplant, smoke extinguisher, dust and firefighting system were designed and constructedwithin the structure of the whole project and with the approval of the Tianjin EnvironmentProtection Bureau. There was no significant negative impact to the local environment.

8. Equipment procurement under this project was executed by an experiencedautonomous department-Tianjin Port International Tendering Office which comprises veryhigh level experts. A project manager was responsible for implementing the project'sphysical aspects. The project manager chosen was the best senior engineer with richexperience, which ensured smooth project implementation and satisfactory results.

9. The project design was basically undertaken by the Chinese design institute(the First Design Institute of Navigation Engineering of MOC). In general, the design wasa success. The design institute made a great effort to ensure the satisfactory execution ofthe project.

10. Technical documents for equipment procurement were prepared by TianjinPort Authority, THCDC and the Design Institute with consultant service from SPECS ofSingapore, Kruger of Denmark and Compass from Germany. Some reliable and proventechniques were incorporated in the well-drafted technical specifications which fullycomplied with local conditions. The tendering work was successful.

11. In accordance with the port master plan and development needs in theproject period, two quayside container cranes and three rubber-tired gantry cranes wereprocured with funds saved from the Bank Loan (plus some amount from local sources).The new south side berth was used successfully to develop container transportation. Now,Tianjin Port has become the first seaport in China to accommodate fourth-generationcontainer ships.

12. The south side wharves were completed and accepted by the state inNovember 1993. Since December 1990, handling equipment has operated normally andprovided benefits. The north side wharves were completed in October 1993, and accepted

- 52 - Appendix B

in December 1993. The north side handled 10,330,000 tons in 1994 (since it beganoperating in January 1994). The smooth completion of the project fully showed that theproduction capacity of Tianjin Port has been strengthened. This is a successful project.

13. Generally, the project was implemented strictly following the SAR. Thewharves, storeyard, power supply, lighting system and handling machine were completedor delivered in the contracted period. Based on the four years' operation, the procurementof project facilities and machines is considered satisfactory. But the delivery of boats suchas oil boats, water boats and tug boats was delayed due to the availability of the shipyardspace; and procurement of two quay-side container cranes, with cost savings, was delayedin delivery due to the lack of shipyard space of the subcontractor (which was assigned forother large contracts).

14. Project objectives for TA and training were achieved with satisfactoryimplementation in training and study, and construction of a training center. Delays inconstruction and procurement in the training center occurred because TPA had difficultiesin finalizing the role of training centers.

15. Due to reasons beyond TPA's control, bid evaluations required a long period(average over six months) which prolonged the procurement.

Section B

16. The first part of the ICR drafted by the World Bank is comprehensive. Itdescribes completely all the major items of the project executed and the analysis providedis mainly correct and complies with the actual conditions.

17. With respect to the data of each item in the list of ICR, Part III, weacknowledge that they are correct and fully show the overall situation.

18. With regard to the delay in procurement, we agree, in principle, with thestatement by the World Bank; the reason for delay in the delivery of container cranes wasthat the subcontractor was assigned to other large contracts.

Section C

19. From project appraisal to reimbursement deadline, the World Bank was verypositive and effective. The Tianjin Port Authority and Tianjin Harbour Construction andDevelopment Company appreciates the efforts of all officials and experts from the WorldBank who participated in this project. We were deeply impressed by their strong sense ofresponsibility, scientific management and concern for the project.

20. During the whole implementation period, we have kept a close cooperationand mutual respect with the Technical Division, Communication Division, andDisbursement Division of the Bank. Especially with the guidance on all aspects grantedby the Bank's experts, TPA and THCDC overcame various difficulties in project executionand completed the project satisfactorily.

- 53 - Appendix B

21. Each site supervision mission from the World Bank had a significant impacton project execution. They inspected the site situation twice a year and collected first handinformation, resolved problems in the construction to accelerate the effort by strengtheninga mutual understanding and trust so that an easy understanding could be reached. TheBank mission gave us great support on using savings to procure container cranes, etc. andespecially on extending the closing date and reallocating the loan. The Bank staff'sinstruction, understanding and quick response to our request facilitated implementation.

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