PPA:PAK 15031
ASIAN DEVELOPMENT BANK CURRENCY EQUIVALENTS
Currency Unit - Pakistan Rupees (PRs)
At Appraisal At Project Completion At Postevaluation
PRs1 .00 = $0. 0822 $0. 0396 S0.0323 $1.00 = PRs12.16 PRs25.19 PRs31 .00
ABBREVIATIONS
ADBP Agricultural Development Bank of Pakistan DOFB Directorate of Fisheries, Government of Balochistan EA Executing Agency EIRR Economic Internal Rate of Return PCR Project Completion Report PEM Postevaluation Mission PFHA Pasni Fisheries Harbor Authority PPAR Project Performance Audit Report
NOTES
(i) The fiscal year (FY) of the Government ends on 30 June. (ii) In this Report, '$" refers to US dollars. (iii) In this Report, "ton' (t) refers to metric ton.
PE - 451 CONTENTS
Page
BASIC PROJECT DATA
MAPS: II III
HIGHLIGHTS 1
BACKGROUND 2
Rationale 2 A. B. Formulation 2 Objectives and Scope at Appraisal 2 C. D. Financing Arrangements 3
Project Completion 4 E. F. Ex-Postevaluation 4
Ill. IMPLEMENTATION PERFORMANCE 4
A. Design 4
B. Contracting, Construction, and Commissioning 5 Organization and Management 6 C. Actual Cost and Financing 7 D. E. Implementation Schedule 7
F. Technical Assistance 7
G. Compliance with Loan Covenants 8
IV. PROJECT RESULTS 8
8 A. Operational Performance B. Institutional Development 9
C. Financial Performance 10
D. Economic Reevaluation 11
12 E. Socioeconomic and Sociocultural Results F. Women in Development 12 G. Environmental Impacts and Control 12
H. Gestation and Sustainability 12
V. KEY ISSUES FOR THE FUTURE 13
A. PFHA Autonomy 13
B. Credit Design 13
VI. CONCLUSIONS 13
13 A. Overall Assessment Lessons Learned 14 B. C. Follow-up Actions 14
APPENDIXES 15
BASIC PROJECT DATA Balochistan Fisheries Development Project (Loan No. 619-PAK[SF])
PROJECT PREPARATION/INSTITUTION BUILDING: Person- TA No. TA Project Name Iy months Amount Approval Date
397-PAK Balochistan Fisheries DeveLopment PP 22 $350,000 23 Jan. 1981 500-PAK Balochistan Fisheries Development AO - $250,000 21 Dec. 1982
As per Bank KEY PROJECT DATA ($million): Loan Documents Actual
Total Project Cost 42.4 31 .2a Foreign Currency Cost 28.5 17.6 Bank Loan Amount/Utilization 35.4 32.7 Bank Loan Amount/Cancellation 2.7
KEY DATES: Expected Actual
Fact-finding 6-25 May 1982 Appraisal 9-29 Aug 1982 Board Approval 21 Dec 1982 Loan Agreement 14 Jan 1983 Loan Effectiveness 14 Apr 1983 11 May 1984 First Disbursement 28 Dec 1984 Project Completion 31 Dec 1989 Feb 1992 Loan Closing 30 Jun 1990 26 Aug 1991 Months (Effectiveness to Completion) 80 93
KEY PERFORMANCE INDICATORS (%): Appraisal PCR PPAR Economic Internal Rate of Return (ELRR) 28 Not Calculated 15 Financial Internal Rate of Return (FIRR) 26 to >50b Not Calculated Not Calculated
BORROWER: Islamic Republic of Pakistan
EXECUTING AGENCIES: (I) Pasni Fisheries Harbor Authority (PFHA) (ii) Agricultural Development Bank of Pakistan (ADBP) (iii) Directorate of Fisheries, Government of Balochistan (DOFB)
MISSION DATA:
Type of Mission No. of Missions Person-days
Fact-finding 1 80 Appraisal 118 Project Administration:
- Review 6C 69
- Special Project Administration gC 122
- Project Completion 1 38
Postevaluation 1 30
Excluding the reallocation of $11.0 million to the Special Assistance Program for Pakistan in 1991. b Component range for fishing operators, ice plants, harbor operations, fishmeal plant operations. Some of these missions also reviewed other Bank-financed projects in the country.
63°00E 65°00E
PA K IS TA N BALOCHISTAN FISHERIES DEVELOPMENT PROJECT 4 BALOCHISTAN COAST 0 20 40 60
Kilometers Panjgur I 27°00N 27°00N -1 () City 0 Town ____JL__ Road (Metalled) Road (Unmetalled) Trail River
Mand Turbat Hoshab JHALAWAN
Kalmat Pasnu Jabeli Sur Gwadar Rassmai Bander I àOrmara Jiwani I \N LOCATION OF PASNI I- 25°00N FISHERIES HARBOR )0N -1 KAHACHI
63°00E 65°00E -o
95-1646a HR / " DEPARTMENTOF j / . IRRIGATION COMPOUND / PA K IS TA N BALOCHISTAN FISHERIES DEVELOPMENT PROJECT PASNI FISHERIES HARBOR LAYOUT
OFFICE
DEPARTMENT OF FISHERIES OF / 4 '' GUEST HOUSE 4' MINISTRY OF ' ,' -----/ S(/p COMMUNICATIO 0 50 100
Meters
/ Area of Limited Access DECK LEVELS JIJ - - - Site Boundary (Boundaries not necessarily authoritative) SURFAC'
WATER TA K NORTH BREAKWATER PUMP ROOM /
STARBOARD BEACON 9HOTLL
/
PORT BEACON
_\ CREST LEVELS
SOUTH CAUSEWAY
SOUTH BREAKWATER
-c N.) 95-1648b HR I. HIGHLIGHTS
1. Objectives and Scope. The Project aimed to assist the development of marine fisheries in Balochistan and to improve the socioeconomic conditions and the nutritional intake of fishing communities through (i) construction of a fisheries harbor complex at Pasni; (ii) provision of credit lines to the private sector for the construction of marketing, processing, and transportation facilities and to fishermen for the purchase of marine engines and modern fishing gear; (iii) training programs for fishermen, extension officers, and staff of the Pasni Fisheries Harbor Authority (PFHA); and (iv) consulting services to assist in the design and implementation of the Project.
2. Cost, Financing, and Schedule. The actual cost of the Project was $31 .2 million, $1 1.2 million less than the appraisal estimate of $42.4 million. Compared with an approved loan amount of $35.4 million, disbursements amounted to $32.7 million, including $1 1 .0 million allocated to the Special Assistance Program for Pakistan in 1991. The Project was completed in February 1992, 26 months later than envisaged at appraisal.
3. Implementation. The Project succeeded in constructing the fisheries harbor complex at Pasni and in delivering the training programs. Funding of marine engines and fishing gear was less than envisaged at appraisal, as was the take-up of credit for the purchase and operation of marketing and transport facilities. However, the targeted number of marine engines and quantum of fishing gear were met from alternative funding sources. Minor changes in scope saw the addition of protection works at the harbor, an increase in the allocation of fellowships, and increased consulting services. Because local conservation practices bar the catch of sardines, the construction of the fishmeal plants was indefinitely deferred.
4. Institutional Aspects. The organizational arrangements involved three Executing Agencies (EAs): the Balochistan Government's Directorate of Fisheries (DOFB), the Agricultural Development Bank of Pakistan (ADBP), and PFHA. The project staff added to their experience in implementing fisheries development projects and gained operational experience. There remains a need to strengthen the financial viability of the Project through increased user charges and through the development of improved financial and management information systems.
5. Environmental Impact. No environmental risk factors resulting from overexploitation and waste disposal were evident. However, erosion problems associated with the harbor require attention.
6. Cost/Benefit Assessment. The Project accelerated the introduction of large diesel-powered fishing vessels and demonstrated the importance of improved fishing gear. Based on participating fishermen's net operating returns and the capital costs of the Project, including expenditure on institutional support, the Project shows an economic internal rate of return (EIRR) of 15 percent. The socioeconomic status of the vessel owners and crew was enhanced considerably.
7. Overall Performance and Sustainability. Except for the poor utilization of the credit lines, implementation closely followed the appraisal design and plan for execution and the Project's objectives were largely met. The Project facilities are soundly constructed and the economic benefits are considered sustainable. Taking into account the success of the Project in achieving its aims and the ex-post EIRR of 15 percent, the Project is rated generally successful.
8, Feedback. The Project brought attention to (I) the need to ensure at appraisal that implementation of the components does not compete with alternative programs and organizations offering cheaper credit arrangements, (ii) the importance of engaging contractors with proven experience, and (iii) the need to ensure in the design for management of projects that the representation and requirements of Steering Committees are practical and that the established harbor authorities are vested with stronger management autonomy.
II. BACKGROUND
A. Rationale
9. The waters along Pakistan's 1,100-kilometer coastline have abundant fish resources. The Three-Year Public Sector Development Plan (1981/82-1983/84) recognized that development of this resource could improve the socioeconomic conditions of the population living in the arid coastal areas, increase the supply of inexpensive protein food, and increase foreign exchange earnings. The overall thrust in developing the fisheries sector was to (I) introduce larger vessels; (ii) expand the use of motorized vessels and modernize fishing equipment; and (iii) improve fisheries infrastructure, including harbors, onshore facilities, and training.
B. Formulation
10. A Project preparatory study was undertaken between July and November 1981 under a Bank technical assistance. 1 Details of the Project components and implementation arrangements were finalized after a Bank Fact-finding Mission in May 1982 and an Appraisal Mission in August 1982. Project formulation took cognizance of the experience and lessons derived from implementation of the then only postevaluated fisheries project in Pakistan. 2 This pointed to the need for design proposals to take into account fishermen's preferences for marine engines and to include workshops by the supplier for the repair and maintenance of engines. Three Executing Agencies (EAs) were given responsibility for implementing the Project: the Balochistan Government's Directorate of Fisheries (DOFB), the Pasni Fisheries Harbor Authority (PFHA) and the Agricultural Development Bank of Pakistan (ADBP).
C. Objectives and Scope at Appraisal
11. The principal objective of the Project was to assist the development of marine fisheries in Balochistan by (I) increasing fish production, (ii) improving the skills of fishermen and the operating efficiency of fishing vessels, and (iii) improving the socioeconomic well-being of fishermen and individuals who would work in marketing and onshore facilities. The scope of the
TA No. 397-PAK: Balochistan Fisheries Development, for $350000, approved on 23 January 1981; financed by the Government of Switzerland. Loan No. 54-PAK: Fisheries Development Project, for $6.73 million, approved on 22 December 1970. 3
Project included the following components: (i) the development of a fisheries harbor at Pasni, involving construction of a 600-meter breakwater, fuel and water replenishment facilities, four jetties, an auction hail, staff housing, and maintenance and administrative offices; (ii) a credit line for the purchase of 700 engines and 1,560 sets of fishing gear; (iii) a credit line for the construction of marketing and storage facilities, including five ice-making plants with adjoining chiller storage; the purchase of transportation facilities, including two insulated trucks and four fish-carrying vessels, and the construction of two fishmeal plants; (iv) provision of training, extension, and fellowships; and (v) a total of 202 person-months of consulting services to assist with Project design and implementation. 1 Technical assistance was also provided to strengthen institutional capabilities and assist with project benefit monitoring and evaluation.2
12. The Project, although centered around the development of a fisheries harbor at Pasni, was expected to also benefit fishermen living along a 250-kilometer coastal stretch between Jiwani and Ormara. Specific Project facilities to be provided outside the Pasni Harbor area included one ice-making plant at Turbat (inland center) and one fishmeal plant at Gwadar. Administrative facilities for implementing training and extension services and for processing subloans were to be available at Jiwani, Gwadar, Pasni, Turbat, Ormara, and Uthal (see map).
D. Financing Arrangements
13. The Project cost at Appraisal was estimated at $42.4 million with a foreign exchange component of $28.5 million, The Bank's Special Fund loan of $35.4 million, approved on 21 December 1982, covered the full foreign exchange cost and $6.9 million of the local currency cost. The balance of the Project cost ($7.0 million) was to be funded by the Government of Pakistan ($4.5 million) and ADBP ($2.0 million), and from the equity contributions of private sector borrowers ($0.5 million).
14. Approximately $23.2 million of the Bank loan was to be made available by the Borrower to the provincial government of Balochistan for use by PFHA to finance the foreign exchange cost and part of the local cost of constructing the fisheries harbor at Pasni. Another $1 .7 million was to be used by DOFB for financing the foreign exchange cost of training, extension services, fellowships, and consulting services. The balance of the Bank loan ($10.5 million) was to be onlent by the Borrower to ADBP to be extended as credit to fishermen for the purchase of marine engines and fishing gear ($7.5 million), and to the private sector for the purchase of marketing, processing, and transport facilities ($3.0 million). Onlending terms to ADBP included interest at 4 percent per annum and a 15-year repayment period including 4 years grace. Relending to fishermen and the private sector was at an annual interest rate of 11 percent.
Consulting services included 154 person-months for design, implementation, operation, and management of the harbor facilities; and 48 person-months for training and extension services covering the installation and maintenance of marine engines and the teaching of modern fishing operations. TA No. 500-PAK: Balochjstan Fisheries Development, for $250,000, approved on 21 December 1982. 4
E. Project Completion
15. The Project completion date envisaged at appraisal was 31 December 1989. A Project Completion Report (PCR) prepared by the Bank's then Agriculture Department in September 1993 discusses the design, scope, implementation, and operational aspects of the Project. The PCR covered the Project's implementation in adequate detail, and in its overall assessment, it considered that the physical as well as the socioeconomic objectives of the Project were met. Because Project-related data were not available, the EIRR for the Project was not reestimated.
F. Ex-Postevaluation
16. This Project Performance Audit Report (PPAR) focuses on pertinent aspects of the Project, in particular, the adequacy of Project preparation and the effectiveness of Project design, management, and institutional strengthening. The PPAR presents the findings of the Postevaluation Mission (PEM), which visited the Project area in May 1995, and is based on a review of the PCR, the Appraisal Report, material in Bank files, and discussions with Bank staff, senior officials of the EAs, and other agencies of the Borrower. Copies of the draft PPAR were provided to the Borrower, EAs and Bank staff concerned for review and comments. Comments received were taken into consideration in finalizing the Report.
Ill. IMPLEMENTATION PERFORMANCE
A. Design
17. The conceptual design and specifications envisaged at appraisal were for the most part followed. The design for the harbor would have been more complete if it had also included (i) a heavier crane for transferring cargoes, (ii) a winch or towing vehicle to haul vessels onto the slip, (iii) cradles for supporting slipped vessels, and (iv) fish boxes for transferring fish landings to the auction hail. The civil engineering design for the harbor anticipated that constructing a breakwater would result in a shift in the tidal mark. However, the tidal mark shift on the south side has fallen more rapidly than expected and on the north side the shoreline has been eroded as far back as the edge of the coastal road. 1 There has been an associated decrease in the harbor's depth, which has increased the need for dredging.2 The extent of erosion has raised concern for the possible contamination of Pasni's freshwater supply. It is recommended that an engineering review be conducted as soon as possible to address these concerns.
18. Utilization by fishermen of the credit line for the purchase of marine engines and fishing gear was affected by complementary programs sponsored by the United Nations Development Programme (UN DP), the Food and Agriculture Organization (FAO),the Government of Japan, and the subsidized programs of DOFB (see Appendix 1). Other factors affecting the
The tidal mark on the south side has fallen some 80 meters while erosion on the north side has been even more significant. PFHA is not equipped with a dredge. 5 use of credit were the high tax on imported engines and fishing gear, which was not applicable to purchases made through the fishermen's cooperative in Karachi, and a preference for buying reconditioned engines and cheaper fishing gear available in the market rather than buying new replacement engines and fishing gear.
19. Similarly, the private sector did not utilizethe credit line for marketing, processing, and transport facilities. This reflected in part the decision of the private sector to obtain these facilities with funding from nonproject sources and in part the uncompetitive price of imported components and preferences for secondhand equipment. For other subcomponents, the PEM found the private sector was not ready to invest and therefore avail itself of credit. 1 As a result, investment interest in new trucks with cold storage facilities and for engines to fit fish-carrier vessels was not forthcoming. The planned construction of two fishmeal plants did not occur because of a self-imposed ruling by fishermen not to catch sardines.
20. In the end, only $0.342 million out of the $10.5 million available for credit under the Bank loan was utilized. With the benefit of hindsight, the Project design failed to take into account the customs and preferences of the fishermen and the availability of funds from other sources.
B. Contracting, Construction, and Commissioning
1. Consultants' Performance
21. It was envisaged at appraisal that specialist expertise would be required to ensure efficient Project implementation and to strengthen the operational capacity of PFHA and DOFB. Funding approval was given for the appointment of (i) a firm of port engineering consultants with responsibility to PFHA for the detailed design, engineering investigations, and supervision of the construction of Pasni Harbor; (ii) one harbor management expert with responsibility for preparing and implementing operational procedures for the harbor and for assisting and training PFHA staff in management and administration; and (iii) one marine engineer and one master fisherman to assist DOFB in preparing specifications for the marine engines and fishing gear, and for training fishermen and extension officers. A total of 300 person-months of consulting services were utilized compared with the 202 person-months envisaged at appraisal.
22. The services of the engineering consultants, which covered site investigations, detailed design, tendering, and construction supervision, proved particularly effective. The services of the master fisherman and the marine engineer to enhance the skills of DOFB staff as well as for the training of fishermen and boat operators were hampered by deficiencies in the coordination and timing of Project activities and by delays in the procurement of instructional equipment and materials. Some planned formal training activities had to be shelved and training materials available under a separate program utilized on an ad hoc and as available basis. Working within these constraints, the effectiveness of these consultants was satisfactory. Although the terms of reference assigned to the harbor management advisor were appropriate, it appears the consultant appointed was lacking in relevant developing country experience,
Investors' readiness is linked to the availability of infrastructure, communication facilities, market outlets, and the desire to wait and see how Pasni further develops. 6
suggesting in hindsight that more careful selection of this appointment was warranted. Overall, the PEM concurs with the PCR and the Government's view that the consultants performed their services satisfactorily.
2. Civil Works
23. The fisheries harbor was developed and constructed as envisaged, except for minor modifications. Civil works for the construction of the harbor component were competently handled and reflected the sound management and systematic approach taken with Project design and implementation. The harbor breakwater, jetties, arid other Project facilities constructed at Pasni were of sound and lasting quality. All civil works were carried out by international contractors. Special credit was given by the engineering consultants and PFHA to the exceptional competency of the principal contractor.
3. Procurement
24. In general, the EAs did not experience any difficulties in following the Bank's Guidelines on Procurement. There were delays in the procurement of instructional equipment caused by delays in administrative attendance. The procurement of marine engines and fishing gear was to be carried out by ADBP on behalf of committed subborrowers and the purchases stored by DOFB for distribution against delivery notes issued by ADBP. Although utilization of this component was poor for reasons outlined in para. 19, the PEM also found evidence that ADBPwas not comfortable with the Bank's procurement arrangements, which imposed additional responsibilities not normally the domain of a commercial lender.
25. The quality of the materials and equipment procured for harbor construction, operations, training, and the provisions made by suppliers for repair and maintenance were satisfactory.
C. Organization and Management
26. Organization and coordination arrangements agreed upon at Appraisal were for the most part complied with. PFHA was responsible for the construction, and operation and maintenance of the fisheries harbor and fish handling facilities at Pasni. DOFB was responsible for training and extension, and ADBP was responsible for providing credit.
27. A Project Steering Committee made up of senior officials from the Federal Government and the provincial government of Balochistan was established. 1 The Committee was to meet monthly to evaluate and review the progress of the Project and remove any impediments to implementation. The Committee was also made responsible for formulating general policies for operating the fisheries harbor. While the PEM found the Steering Committee's role to be initially effective, meetings with a sufficient quorum became increasingly difficult to convene.
These included Federal Government representatives from ADBP, the Planning Commission and the Ministry of Food and Agriculture; and representatives from the provincial government including PFHA, the Planning and Development Department, the Finance Department, the Livestock and Fisheries Department, and the Directorate of Fisheries. 7
Implementation was completed through responsible direction from and coordination between DOFB and PFHA. The practical difficulties of convening regular meetings with representatives from high offices and from distant cities is a lesson worth keeping in mind for the management of future projects.
28. The Bank's involvement facilitated the implementation of the Project. Frequent Bank missions during the initial period of Project implementation helped ensure that problems related to procurement and selection of consultants were quickly overcome.
D. Actual Cost and Financing
29. The total Project cost of $31 .2 million compares with the appraisal estimate of $42.4 million (see Appendix 2). The lower cost was largely due to the underutilization of the credit lines and to savings made on the physical and price contingency provisions. The cost of the Project was financed by the Bank for $21 .7 million (70 percent) and the Borrower for $9.5 million (30 percent). Actual loan utilization amounted to $32.7 million, which includes $1 1.0 million reallocated to the special assistance program for Pakistan to mitigate the impact of the Gulf crisis.
E. Implementation Schedule
30. The Project was considered completed in February 1992 with the expiry of the services of the harbor management advisor. Although overall completion was 26 months later than envisaged at appraisal, testing and commissioning of the harbor complex was completed in June 1989 followed by start-up operations in July 1989. The main reasons for the later than expected completion were (I) an initial delay of 13 months in declaring the Bank loan effective, (ii) approximately five months extra time needed for completing the preparation and evaluation of tender documents, (iii) additional time needed for installing equipment, and (iv) delays in the appointment of consultants. The delay in declaring the loan effective was due to slow administrative approval for the promulgation of the PFHA ordinance.
F. Technical Assistance
31. The formulation and design of the Project were based on a feasibility study conducted between July and November 1981 by a team of international consultants. The selection of Pasni for the development of a fisheries harbor took into account the central location of Pasni and technical site issues. The Bank's Fact-finding Mission which visited the Project area in May 1982, concurred with the choice of Pasni. The choice of site appears justified.
32. Under TA No. 500-PAK, the Government appointed a Project Advisor to assist DOFB and PFHA to develop and strengthen their institutional capacities, and recruited a local institution to undertake benefit monitoring and evaluation of the Project. The Project Advisor was engaged for a total of 29 months, of which the final 8 months were financed under the Bank loan. Although delays in the appointment of the Project Advisor impacted adversely on his effectiveness, the expert's performance was nevertheless satisfactory.
33. The benchmark survey and monitoring required under the Bank loan agreement were competently completed by a local firm of engineering consultants. Baseline surveys were 8
carried out in 1986 and the baseline study report finalized and submitted to the Bank in January 1987. A final report, which included monitored changes, was completed and submitted to the Bank in March 1991. However, the intended purpose of monitoring and feedback to EAs was only partially accomplished because of inappropriate terms of reference and scheduling for feedback.
G. Compliance with Loan Covenants
34. In general, the EAs' compliance with the loan covenants was satisfactory. There were areas of noncompliance or incomplete compliance relating to the submission of progress reports and audited financial statements, the execution of a management agreement between PFHA and the provincial government of Balochistan, and the appointment of key staff in PFHA, which did not significantly affect implementation but reflected on institutional weaknesses and, in the case of the management agreement, raises concerns for the sustainability of benefits (see paras. 57 and 58).
35. The loan covenant for a management agreement between PFHA and the provincial government of Balochistan was intended to allow PFHA to operate with minimum recourse to government. Although the PFHA ordinance vests the responsibilities for operation and maintenance of the harbor facilities in PFHA, the ordinance does not extend to the PFHA Board and management, the independence and autonomy considered necessary to operate the harbor on commercial lines (see paras. 41, 49, and 58).
IV. PROJECT RESULTS
A. Operational Performance
36. Investment in the construction of the harbor complex with landing and replenishment facilities (water and fuel) was expected to raise annual fish landings from 72,000 t to 96,000 t. Actual total fish catches in 1994 were 116,000 t of which about 70,000 t were landed in Pasni and 46,000 t transferred at sea to Karachi merchants. The number of motorized vessels over the Project area increased from 2,000 to 3,000. The number of large fishing vessels berthing at Pasni increased from around 20 to 185.
37. The completed harbor provides fishermen with protected berthing and with facilities for the replenishment of water, fuel, and ice. The improved landing facilities significantly reduced the turnaround time for fishing vessels and enabled fishermen to operate regardless of tide and weather conditions. The cargo jetty, which provides for easier loading/unloading, stimulated an increase in the transfer of traded goods to and from nearby coastal communities. The harbor also provides a slipway and maintenance facilities for vessel repairs.
The Project area was defined to include all of the Balochistan coast, including the fishing communities at Jiwani, Gwadar, Pasni, Ormara, and Sonmiani. 9
38. The private ice plants, constructed within the bounds of Pasni harbor, supply over 16,000 t of ice annually to fishing vessels. Reflecting the increased supply of ice, iced fish sent to Karachi and the hinterland increased from some 30,200 t in 1991 to 39,900 t in 1994.
39. Under the Project, technical support in the form of marine engines, fishing gear, and training was intended to increase the individual catches of fishermen from the Balochistan coastline by over one third. Although the purchase of marine engines and fishing gear, using Bank funds, was small (18 engines compared with the 700 targeted at appraisal), PEM is nevertheless satisfied that the appraisal target was met with funding from nonproject sources.1 Appendix 3 provides a summary of the actual achievements under the Project and the expectations at appraisal.
B. Institutional Development
40. The responsibilities of PFHA remain as envisaged at appraisal and the organizational structure is appropriate with three departments (operations, finance, and administration), each headed by a manager, working under a General Manager. The operational procedures manual prepared by the harbor management expert, although now outdated, served as a bench reference for adaptation and modification. Project management in PFHA has largely been retained, with the exception of the General Manager for which there have been six appointments since 1985. Changes at the top executive level have in part been political and not always in the interests of PFHA. There is a need to protect PFHA and its operations from appointments that carry vested political interests and run counterto maintaining financial viability.
41. PFHA's staff strength has increased from a planned 54 at appraisal to 141, about 16 of whom are seconded to the Quetta offices of the provincial government, unrelated to PFHA. Overstaffing is recognized, but is presently not totally within the control of management. The administration is without an accountant and maintains a single entry accounting system. Every effort should be made to rectify this situation. Associated with the need for an acceptable accounting system is the need for an appropriate management information system and computerization. Computerization should include a network for data entry at the offices of the auction hall.
42. DOFB is headed by a Director who is under the administrative control of the Secretary of the Coastal Development and Fisheries Department of the provincial government.2 At appraisal, DOFB's total staff of 86, including those in offices at Tiwani, Gwadar, Pasni, Ormara, and Sonmiani, were considered inadequate. The provincial government posted additional staff, and the total number is currently around 164.
43. Since the inception of the Project, DOFB has been involved with the preparation and execution of some 20 other projects, including one with funding support from Japan for the supply of marine engines and fishing gear. Under these development projects, marine engines,
Inboard and outboard marine engines were installed during the period 1980-1985 under Japanese assistance and an FAQ project for all but 10 percent of the total number of fishing vessels. After 1985, there was an increase of some 600 inboard engines and 1,100 outboard engines for additional fishing vessels. At appraisal, DOFB operated under the Department of Livestock and Fisheries. 10
fishing gear, and training programs have been provided largely on a grant basis or heavily subsidized. While these programs have been successful in encouraging local communities to use more productive methods for catching fish, they have also raised the expectation that the provincial government will continue to provide equipment and facilities free of charge.
44. The future development plans of DOFB are tied in with the Government's Eighth Five-Year Plan. DOFB gives emphasis to modernizing fleets (wfth winches, navigational and electronic equipment), improving fish handling methods, and promoting investor interest in processing. Reinforcement of training and extension programs is also included as are improvements in the marketing and distribution of fish. The need for support facilities in workshops, spare parts, and urban infrastructure is also recognized.
45. Although the credit line extended to ADBP was only partly utilized (see para. 18), ADBP using its own funds nevertheless contributed to the attainment of the Project's objectives. ADBP opened an agency at Pasni and between 1985 and 1991 extended approximately $1.8 million to fisheries for working capital, fishing boats (including secondhand boats), fishing gear, and engines. The agency also provided loans to the growing commercial sector.
46. The Project provided 12 fellowships for training courses covering fisheries management, marine engineering, boat-building, and port management. The courses attended were chosen from programs available in the Republic of Korea and the United Kingdom. In addition, formal training courses for fishermen and vessel operators were conducted by the consultants at DOFB centers. The PEM was unable to obtain feedback from supervisors as to the extent to which the Bank's training program had impacted on DOFB. However, three persons who attended the overseas fellowship and training courses reported favorably on the course designs and knowledge gained. Training promoted through DOFB was reported to have contributed significantly to the transfer of know-how to fishermen. Confirmation reports were obtained by PEM from instructional material used at training workshops covering the benefits of motor power, improved fishing gear, and new methods of fishing. The visual change to motor power and take-up of fishing gear was clearly evident.
C. Financial Performance
47. It was intended that PFHA would be responsible for operating and maintaining the harbor facilities and be self-sufficient in meeting operational expenses and maintenance demands. To encourage fishermen to use the facilities, user charges were kept low. It was recognized that initially PFHA's revenues would not be sufficient to service the full financial cost of the Project or to meet all operational and maintenance expenses. Although no time period was stipulated before self-sufficiency could be achieved, it was recognized that it would take several years.
Under the Bank's loan agreement and subsidiary Balochistan Project Agreement, all the Project facilities were to be constructed, managed, and operated by PFHA. The breakwater and four fisheries jetties were to be the assets of the Balochistan government, and the jetty for general cargo handling, the ship repair facilities, and marketing facilities were to be owned by PFHA. 11
48. Since commissioning, operational revenues have increased from PRsO.1 million for FY1990 to PRs6.1 million for FY1994, and impressive progress in privatizing marketing facilities has been achieved. The principal sources of revenue include auction fees, development charges, and the sale of water and electricity. Smaller, but significant revenues are obtained from cargo berthing fees, crane and launch hire, fuel, and shop rentals. While expenditures have exceeded revenues every year, there was a significant reduction in the deficit for the first ten months of 1995 (see Table 1 and Appendix 4) associated with changes in management and an emphasis on reducing expenditures on nonharbor operations.
Table 1: PFHA: Revenues and Expenditures Since Commissioning (PRs million)
Item 1990 1991 1992 1993 1994 1995
Revenues 0.10 0.61 2.73 4.16 6.05 6.54
Expenditures 1.70 2.81 6.48 8.89 10.99 7.88
Deficit 1 .60 2.20 3.75 4.73 4.94 1.34
Ten months
49. The operating deficit is caused partly by high expenditures on wages, reflecting staff numbers grossly in excess of the requirements. PFHA is aware of the problem (but does not have complete management autonomy) and is pursuing avenues to curb unnecessary expenditures. PFHA is also conscious of the need to increase revenues further to ensure the viability and sustainability of benefits.
50. Reflecting the benefits of the harbor, improved catching techniques, and vessel capacity, full-time fishermen were earning an average of PRs6O,000/year and an operating captain PRs1 20,000. At appraisal, the average annual income of full-time fishermen at Pasni was PRs6,960 and PRs1 3,920 for an operating captain.
D. Economic Reevaluation
51. The PEM's reestimate of the EIRR for the Project, based on actual investment costs and the induced benefits accruing to fishing vessel operators, is 15 percent. The Appraisal Report had estimates of 13 percent for investment in the harbor component and 28 percent for the entire Project. Because of data limitations relating to cargo transfers and port usage and the low take-up of credit for fish carriers, marine engines, and fishing gear, the PEM's reestimate of the ELRR is effectively reduced to measuring that for the harbor component. As such the PEM's ex-post result is similar to that projected at appraisal (for the harbor component) and attests to the economic viability of the Project. The reestimate is robust and insensitive to changes in assumptions (see Appendixes 5 and 6). 12
E. Socioeconomic and Sociocultural Results
52. The socioeconomic impact of the Project has been sizeable, particularly in the Pasni area. The population of Pasni town has grown from around 8,000 at appraisal, to about 35,000, and the number of retail shops increased from about 20 to over 200. Over the same period, the annual real incomes of Pasni fishermen have more than doubled and total employment, including part-time, on fishing vessels has increased from about 15,000 to over 25,000. The improved incomes of fishermen and the increase in employment opportunities partly explain the strong increase in Pasni's population. At the same time, while beneficial in a development sense, the urban growth has created a shortfall in basic infrastructure such as power, communications, water supply, education, transportatiort,and medical and social services.
F. Women in Development
53. The appraisal design did not specifically address women's issues. In Pakistan, the employment and involvement of women are dictated by custom and an individual's social status. The PEM observed that while very few women are gainfully employed either in the fishing sector or with the EAs, the employment for women in rural areas is a matter of priority concern in the country.
G. Environmental Impacts and Control
54. Overall, the Project's environmental impact appears negligible. Erosion of the north shoreline was foreseen as a natural consequence of the harbor's design and construction and no undesirable impact was anticipated. However, erosion has occurred faster and more than expected and could adversely impact on future harbor operations. While the PEM was not able to quantify the impact of waste disposal and oil leaks from fishing vessels, undesirable effects were not visually evident.
55. Associated with the attraction of the harbor, there has been a substantial increase in the population of Pasni, which has created a garbage disposal problem and is straining social services in the area. Coastal development programs that provide for education, health, and waste disposal and sewerage systems are strongly recommended.
56. The main fishing technique is gillnethng, which poses a limited danger only to protected species. While fishermen reported reduced catches in terms of shrimp size, all other species appeared to be in plentiful supply and, overall, catch yields were being sustained. The total annual fish catch remains substantially below the estimated maximum sustainable yield of the Balochistan coastal waters.
H. Gestation and Sustainability
57. While the Project provides significant financial benefits to fishermen, sustainability of these benefits depends on nature, the durability of engineering design, and attention to operational management and maintenance. The shifting sand has reduced the harbor's intended
The coast of Balochistan is a desert area with limited freshwater supplies, virtually no agriculture or livestock activity, and almost no industry except that related to fisheries. The expansion of fish production that resulted from the Project has been the primary stimulus for urban growth. 13 operating depth and further buildup could limit the size of vessels and operating hours for the harbor. Further erosion of the north shoreline threatens to contaminate Pasni's freshwater supply. There is a clear future need for dredging, engineering review, further protection works, and preventive maintenance. Getting this done is dependent on the quality of management, autonomy, and finances available to PFHA. Assuming that the matters identified are responsibly addressed, the benefits generated by the Project are considered sustainable.
V. KEY ISSUES FOR THE FUTURE
A. PFHA Autonomy
58. PFHA was intended to be a statutory body with responsibility for (i) maintaining the harbor facilities in accordance with an ordinance to undertake the efficient operation, repair, and maintenance of facilities; and (ii) bearing all administrative, operational, and maintenance costs. The noncompliance with a management agreement between the provincial government of Balochistan and PFHA, which provides PFHA with management autonomy to fully carry out its responsibilities, raises concerns over the sustainability of benefits. Given the history of interventions in PFHA's operations, there is a need to further protect management autonomy to ensure that operating efficiencies are not impaired and the deployment of expenditures is for harbor operations. The need for the preparation of accounts using the *doubleentry system is also evident, if only to provide the right signals to management on the financial status of the PFHA.
B. Credit Design
59. The arrangements for credit lines agreed upon at appraisal called for an extension of ADBP's responsibilities to cover procurement, storage, and distribution and for an increased risk exposure to unknown borrowers who, in most instances, have insufficient collateral. In effect, by extending the credit lines the Bank exposed ADBP to an increased risk of default by subloan recipients and substantially increased ADBP's overhead costs. The design of Bank-financed credit lines should take into account the banking practices of domestic financing institutions and the socioeconomic status of prospective borrowers. Credit design should be flexible and extend to covering requirements for secondhand equipment.
VI. CONCLUSIONS
A. Overall Assessment
60. The Project's goal of assisting marine fisheries production in Balochistan was achieved. Given the harsh climatic conditions and the isolated location of Pasni, construction and civil works for the Project proceeded remarkably well and as quickly as could be reasonably expected. The benefits of engaging an experienced contractor were particularly evident.
61. Significant gains in production and income were achieved for fishermen and there was a sizeable socioeconomic impact on the Pasni town area. Although relative cost considerations made fishermen and private investors unwilling to take up credit under the Project, the availability of alternative sources of credit ensured that the Project was completed essentially as envisaged. The value of technology transfer from training was significant. DOFB 14 increased its institutional capacity to run continuing programs in extension, and the administration of PFHA was strengthened through overseas fellowships to training courses. The harbor operations are soundly managed, and further privatization and development of operational facilities are planned. However, the revenue-generating side of the Project has also made it a victim of higher order interventions, which raises concerns over PFHA's ability to maintain operational efficiencies and to meet all future maintenance requirements. Appropriate responses to these concerns will ensure that the benefits to fisheries are sustainable. The overall Project EIRR is reestimated at 15 percent and the Project is rated generally successful.
B. Lessons Learned
62. Lessons derived from this Project's experience point to the need for more careful attention to ensuring (I) that the planned implementation of components is feasible and does not compete with alternative programs and organizations offering cheaper participation and cheaper credit arrangements; (ii) that proposals are planned with more effective management autonomy; and (iii) that the requirements for steering/coordinating committees to meet regularly are practical in terms of distance and time contraints. The successful implementation of the Project is attributable in large measure to engaging an engineering contractor with proven experience. Engineering and construction of the harbor proved a model of what can be accomplished against imposing natural elements.
C. Follow-up Actions
63. The government of Balochistan is encouraged to review the provisions of Ordinance No. 8, 1983 under which PFHA was established and to allow compliance, by PFHA, with the preparation of 'proper accounts" and the appointment of auditors. Consideration should also be given to strengthening the provisions for the autonomy of PFHA to control revenues and expenditures.
64. The government of Balochistan is encouraged to undertake studies to determine the feasibility of a Balochistan coastal area development project including investment in (i) fishing port facilities at Damb and/or other coastal Balochistan locations; (ii) regular passenger and cargo transport service along the Balochistan coast; and (iii) town planning and town infrastructure including roads, telecommunications, water supplies, sewage, solid waste management, public health programs, and schools. Such complementary investments are likely to promote the framework for further private sector expansion of fishing and fish processing along the coast.
65. PFHA, in consultation with the government of Balochistan, is encouraged to make an engineering review as soon as possible to address (i) the need for dredging; and (ii) the concerns over the contamination of Pasni's freshwater supply with further tidal erosion. 15
APPENDIXES
Number Title Page Cited On (page,para.)
1 Development Assistance for the Fisheries Sector in Balochistan 16 4,18
2 Project Costs 17 7,29
3 Project Achievements 19 9,39
4 Financial Statements 21 11,48
5 Economic Analysis Estimates 22 11,51
6 Sector Trends and Statistics 26 11,51 DEVELOPMENT ASSISTANCE FOR THE FISHERIES SECTOR IN BALOCHISTAN
Country/ Amount Agençy ______- Project Period__ (million)
A. Overseas Loans
Japan Procurements 1979/80 PRs2.896 For supply at cost of fishing gear
Agricultural Development - 1980/81 PRs1 .00 For supply of 200 small engines Bank of Pakistan
FAOIUNDP Balochistan Coast Fisheries 1978-1983 PRs15.35 For improvement of fishing gear and training Develoent
The Bank Balochistan Fisheries 1984-1990 PRs562.70 Principally for a fisheries harbor and training - 0) Development
B. Overseas Grants
Japan Procurements 1980-1982 Y200.00 To purchase engines and fishing gear
FAO/Japan Procurements 1980-1983 na. To establish marine engine repair /lacilities at Gwadar Pasni, Jiwani, Gaddani, Damb and Ormara
Japan Procurements 1994 Y414.00 To purchase marine engines, support facilities, and fishing gear
The Bank Advisory and Operational 1982 $0.25 Balochistan Fisheries Development
C. Government Funding
Over 20 Projects Provided under 1984— 1994 PRs96,000 ' For breakwaters, patrol boats, offices, mending Annual Development Plans sheds, workshops, fishing nets, and marine ______engine spaprts. ____ x na. = not available. a Excludes Government funding support associated with overseas development projects.
17 Appendix 2, page 1
PROJECT COSTS
Table 1: Comparison of Actual and Appraisal Costs ($ million)
Appraisal Actual Item FX LC Total FX LC Total
A. Project Cost
16.191. Pasni Fisheries Harbor 11.26 5.47 16.74 13.07 29.25 2. Marketing/Transport Facilities 1 .93 0.68 2.60 0.11 0.00 0.11 3. Marine Engines/Fishing Gear 4.94 - 4.94 0.23 0.00 0.23 4. Training and Extension 1.32 0.38 1.70 1.03 0.60 1.63 5. Working Capita! - 0.90 0.90 Project Base Cost 19.45 7,43 26.88 17.56 13.66 31.22
Physical Contingency 2.92 0.98 3.90 Price Contingency 6.13 5.49 11.62 Total Project Cost 28.50 13.90 42.40 17.56 13.66 31.22
B. Project Financing
1. The Bank- Loan 28.50 6.90 35.40 17.56 4.13 21.69 2. Federal Government - 4.50 4.50 - 9.53 9.53 3. Agricultural Dev. Bank of Pakistan - Loans - 2.00 2.00 4. Eqtiity Contributions of Subborrowers - 0.50 0.50
Total Prolect Cost 28.50 13.90 42.40 17.56 13.66 31.22
FX = Foreign currency LC = Local currency - = magnitude zero. Excluding $1 1 .0 million, which was reallocated to finance the foreign exchange cost of fuel. Approved 18 June 1991 as Special Assistance Loan, Board Paper No. R76 -91. Including provision for consulting services of $1 .802 milhon. Including provision for consulting services of $0604 mifon. Table 2: Project Costs: Disbursements By Year
______1984 1985 1986 1987 1988 1989 1990 1991 1995 TOTALS
MUV Index (1990 = 100) ' 6806 68.61 80.91 88.72 95.32 95.01 100.00 102.23 108.95
GDP Deflator (1981 = 100) b 126.30 132.00 136.30 142.50 156.20 169.60 180.50 204.10 306.10
Exchange Rate (PRs = $1.00) 14.046 15.928 16.648 17.399 18.003 20.541 21.707 23.801 31.000
Project Costs at Nominal Prices ($ million)
ForeignCurrencyCosts 0.072 0.261 0.454 4.544 6.518 4.894 0.517 0.302' 17.56 1
Local Currency Costs d 0.056 0.203 0.353 3.535 5.070 3.807 0.402 0.235 13.661 -S 0,
Total Nominal Capital Costs 0.128 0.464 0.607 8.079 11.588 8.700 0.919 0.537 31.222
Project Costs at 1995 Prices (PRs million)
Foreign Currency Costs 3.584 12.856 18.936 172.982 230.942 173.959 17.449 9.979 640.688
Local Currency Costs 1.913 7.504 13.194 132.112 178.879 141.130 14.794 8.387 497.912
Total Real Capital Costs 5.497 20.359 32.130 305.094 409.821 315.089 32.243 18.367 1138.600 0 -U World Bank Manufacturers Unit Value (MUV) Index. CD Pakistan Gross Domestic Product deflator (GDP) Index. 0. Excludes disbursement for special loan assistance of $11.0 million. x Allocated in proportion to Bank loan disbursements. 1')
(a CD 1\)
19 Appendix 3, page 1
PROJECT ACHIEVEMENTS
Table 1: Comparison of Operational Targets at Appraisal and As Achieved
Indicator Actual Projected at As Achieved 1982 Appraisal 1994
Fish Landings (000 tons) 72.1 96.0 116.5
Iced Fish Sent In land (000 tons) 1.3 5.0 11.1
Iced Fish Sent to Karachi (000 tons) 12.6 45.6 26.8
Exports of Dry Salted Fish ('000 tons) 13.3 6.6 8.1
Fishing Vessels Above 25 tons (no.) 21 n.e. 59
Full—time Fishermen (no.) 13,120 16,100 19.862
Average Income. Full —time Fishermen (PR5 per annum) 7,052 15,170 64,106
Economic Internal Rate of Return (%)
- Harbor n.e. 13 15 a
n.e. = not estimated.
Includes entire harbor and general cargo facilities.
Appendix 3, page 2
Table 2: Comparison of Physical Targets at Appraisal and As Achieved
Indicator Appraisal As Achieved Comment
A. Pasni Fisheries Harbor and Complex
1. Breakwater (meters) 600 600 2. Jetties 4 4 3. Repair Shop Facilities 1 4. Fish Handling Center 5. Storage Depot 6. Fuel Installation Facilities 1 7. Administration Building 8. Staff Housing Colony (units) 6
B. Marketing and Transport Facilities
1. Ice-making Plants
a. Pasni 4 4 } b. Turbat 0 2. Ice Stores @ 25 tons in Pasni 5 0 } 43. Chilled Storage Rooms @ 50 tons 0 4. Equipment for Two Fishmeal Plants } 0a. Pasni } b. Gwadar 0 } 45. Engines for Four Fish Carriers 0 } 6. Insulated Trucks 2 0 7. Jeeps 5 0 } 58. Repair Shops and Equipment 0 } C. Marine Engines and Fishing Gear
1. Inboard Engines (5-45HP) 700 18 Another 14 remain in stock 2. Fishing Gear (Sets) 1560 730 Coil ropes, 2,000 floats
0. Institutional Support (Training and Extension)
1. Fellowships (person-months) a. Directorate of Fisheries Field Staff 102 71.5 b. Pasni Fisheries Harbor Authority Staff 12 45
E. Consulting Services
1. Pasni Fisheries Harbor (person-months) . Civil & Port Engineering 130 228 b. Harbor Master 24 24 2. Training and Extension 24a. Master Fisherman 24 b. Marine Engineer 24 24
a Financing for these items was to be made through Agricultural Development Bard' of Pakistan. Except for the ice-making plants, investor interest was not forthcoming. For the marine engines and fishing gear, funding from nonproject sources was preferred. 21 Appendix 4 FINANCIAL STATEMENTS PFHA Revenue and Expenditure, 1 July 1994 to 30 April 1 995 a
Item PRs '000
A. Revenues
1. Auction Fees (@ 2.5%) 1,360.3 2. Berthing Fees 325.6 3. Cargo Handling Charges 23.3 4, Sale of Land/Development Charges 1,241.2 5. ToU Tax 47.5 6. Hire of Crane/Launch 69.9 7. Enlistment/Registration fees 83.6 8. Rent on Fuel Installations 300.0 9. House Rental 156.6 10. Shops Rental 170.5 11. Sale of Freshwater 649.9 12. Electricity Connections 1,974.5 13. Others 140.9 6,543.6
B. Expenditures
1. Pay and Allowances 4,451.2 2. Travel Allowance/Daily Allowance 302.2 3. Purchase of Durable Goods 5.1 4. Repair and Maintenance 755.5 5. Advertising 15.9 6. Fuel 221.9 7. Communications (Postal/Telephone) 73.8 8. Printing/Stationery 61.0 9. Electricity 1,792.9 10 Gas 6.5 11 Others 193.0 7,879.0
Overall Deficit (10 months) (1,335.4)
a Accounts include revenue and expenditure items of a capital nature. Source: Pasni Fisheries Harbor Authority (unaudited records). 22
Appendix 5, Page 1
ECONOMIC ANALYSIS
A. Methodology of the Appraisal Report
1. The Appraisal Report adopted the methodology used by the consultants in the Technical Assistance study completed during 1981. Each Project component was evaluated for the incremental costs and revenues expected to be derived from investment.
2. Improvements in fishing efficiency were based on the incremental fishing catch expected with improved nets, better fishing techniques, and motorization. The benefits of introducing ice plants and trucks for the transportation of fresh fish to Turbat were evaluated on handling capacity and the expected additional revenues derived. The fishmeal plants were evaluated on capacity considerations and the amount of additional raw materials resulting from the increased fish catches. The added value of operating four fish carriers for the transfer of fish to Karachi was also estimated. The economic analysis for the Pasni Fisheries Harbor measured the additional benefits expected to accrue to 538 fishing boats as a result of reducing the average turnaround time from seven hours to five hours and extending the number of fishing hours in a year. In addition, it was assumed that the availability of chiller rooms would improve fish quality and raise the real price of fish by 10 percent. Savings in fuel transport costs were estimated as a benefit arising from the availability of fuel storage facilities. Other benefits evaluated as a consequence of harbor development included savings in cargo freight and expected savings in cargo losses/damages.
B. Approach and Methodology of the Project Performance Audit Report
3. Limitations on the myriad assumptions underlying the appraisal approach and the limited take-up of credit (under the Project) made it impractical for the PEM to follow exactly the same approach. The PEM confirmed that, in the absence of utiUzation of the Bank's credit line, improvements in fishing efficiency nevertheless occurred as a result of (I) the existence of the harbor, which accelerated the transfer to motor power and fishermen's need for larger vessels; and (ii) training programs that promoted the introduction of new fishing techniques with improved fishing gear and the use of marine engines.
4. Two types of Project benefits are evaluated:
(i) benefits in the form of increased fishing revenues, as represented by the difference between columns C and F in Table 2 resulting from the expansion of the Pasni harbor-based diesel-powered vessel fleet; and
(ii) benefits that accrue to Balochistan's non-Pasni harbor-based diesel- powered vessels resulting from the Project's training and extension components, (Column E, Table 2).
5. Benefits resulting from more efficient cargo handling were not evaluated because data relating to annual cargo throughput, carriage, and freight charges were insufficient. Benefits that accrue to the small outboard-powered Pasni harbor-based fishing vessels in the form of improved revenue mainly from shrimp catches were not estimated because of the very small 23
Appendix 5, Page 2
number of engines (18) actually introduced under the Project. Also no benefits were attributed to the ice plants constructed within the harbor.1
C. Major Assumptions
6. The major assumptions underlying the reestimation of the economic internal rate of return (EIRR) are as follows:
(i) All Project capital costs are converted into constant 1995 prices, using the World Bank's MUV index to convert foreign currency expenditures and the Pakistan GDP deflator to convert local currency expenditures.
(ii) All Project benefits are calculated in 1995 rupees.
(iii) The economic life of the Project is assumed to be 25 years, with the Project generating incremental benefits from 1989.
(iv) Fishing vessel crew labor is shadow priced at PRs3,000/month, this being the alternative wage rate in the Pasni area.
(v) Local currency operating costs are adjusted using an adjustment factor of 0.9.
(vi) Landed prices of shrimp (see Appendix 6, Table 2) are assumed to have increased by PRs2O/kg.
(vii) Fifty percent, representing 8,000 tons, of incremental production from non- Pasni locations is attributed to the Project's training and extension component, and the additional catch is estimated to have benefited from an average improved price of PRs1 2/kg.
7. The general operating assumptions for the two common vessel types using the Pasni harbor on which projections for the annual fishing revenues and fish operating costs are based are shown in Table 1.
D. EIRR and Sensitivity to Changes in Assumptions
8. The benefit/cost streams derived on the basis of these assumptions are shown in Table 2. The estimated EIRR of 15 percent for investment in the Project is insensitive to changes in the assumptions for the projected number of fishing vessels, harbor operating costs, added value from non-Pasni fish operations, and fish operating costs. The most sensitive assumption relates to the projected number of fishing boats expected to use the harbor. A 10 percent reduction would reduce the number of fishing operators to less than for 1993 and reduce the EIRR reestimate from 15.0 percent to 14.3 percent.
The ice plants are operating at unusually low prices and with excess capacity. The economic profit is considered to be negligible and to have been largely transferred to the fishing fleet. 24
Appendix 5, Page 3
Table 1: Operating Assumptions for Fishing Vessels at Pasni
10-ton 25-ton Item Vessel Vessel
Days Per Trip 10 20 Trips Per Year 20 10 Market for Fish Pasni Karachi Catch Per Trip 4 tons 12 tons Average Landed Price PRs1 6,000/ton PRs20,000/ton Annual Revenue PRs1 .28 million PRs2.4 million Capital Cost of Vessel (Fitted-out) PRsO.8 million PRs1 .6 million Operating Life of Vessel 8 years 8 years Annual Operating Costs PRsO.868 million PRs1 .63 million Crew/Share (PRs '000) 529.0 908.7 Economic Operating Costs PRsO.627 million PRs1 .082 million Crew/Share at the Shadow Price of Labor (PRs '000) 288.0 360.0 Table 2: Benefit/Cost Streams For Project EIRR (PRs '000)
WITH PROJECT WITHOUT PROJECT Capital Harbor Fishing Revenue Fishing Added Fishing Revenue Fishing Year Investment Operating Operators From Operating Value Operators From Operating NET Cost' Costs At Pasni b Fishing C Costs d Non-Pasni e At Pasni ' Fishing C Costs d Benefits' A B No. C D E No. F G
1984 5,496.5 (5,496.5) 1985 20,359.3 (20,359.3) 1986 32,130.0 (32,130.0) 1987 305,094.1 (305,094.1) 1988 409,821 .4 (409,821.4) 1989 315088.8 3,068.2 81.0 139,968.0 65,542.0 38,400.0 54.0 93,312.0 43,694.6 (255,029.4) 1990 32,243.3 4,758.5 158.0 273,024.0 127,847.3 76,800.0 56.0 96,768.0 45,313.0 133,361.9 1991 18,366.6 9,712.4 158.0 281,872.0 131,444.9 86,400.0 58.0 100,224.0 46,931.3 155,297.4 1992 9,535.8 165.0 294,360.0 137,268.5 91,200,0 61.0 105,408.0 49,358.8 182,541.5 1993 9,339.9 175.0 322,000.0 149,572.5 95,040.0 64.0 110,592.0 51,786.2 199,146.8 r'.) 1994 7,405.8 185.0 340,400.0 158,119.5 96,000.0 67.0 115776.0 54,213,7 209,127.4 (n 1995 6,500.0 g 185.0 340,400.0 158,119.5 96,000.0 70.0 120,960.0 56,641.2 207,276.7 1996 6,500.0 185.0 340,400.0 158,119.5 96,000.0 70.0 120,960.0 56,641.2 207,276.7 1997 6,500.0 185.0 340,400.0 158,119.5 96,000.0 70.0 120,960.0 56,641.2 207,276.7 1998 6,500.0 185.0 340,400.0 158,119.5 96000.0 70,0 120,960.0 56,641.2 207,276.7 1999 6,500.0 185.0 340,400.0 158,119.5 96,000.0 70.0 120,960,0 56,641,2 207,276.7 2000 6,500.0 185.0 340,400.0 158,119.5 96,000.0 70.0 120,960.0 56,641.2 207,276.7 2001 6,500.0 185.0 340,400.0 158,119.5 96,000.0 70.0 120,960.0 56,641,2 207,276.7 2002 6,500.0 185.0 340,400.0 158,119.5 96,000.0 70.0 120,960.0 56,641.2 207,276.7 2003 6,500.0 185.0 340,400.0 158,119.5 96,000.0 70.0 120,960.0 56,641.2 207,276.7
2015 6,500.0 185,0 340,400.0 158,119.5 96,000.0 70.0 120,960.0 56,641.2 207,276.7
EIRR = 15.0%
CD a. a See derivation Appendix 2, Table 2. x b Total number of fish operators using 10 ton and 25 ton vessels. (11 Annual revenue from 10 ton and 25 ton vessels (see Table 1), with initial vessel mix 60:40. 0 d See Table 1, for the economic fish operating costs of a 10 ton and 25 ton fishing vessel. 0' C Co Incremental production from non -Pasni locations, representing approximately 8,000 tons In 1994. CD Equals (C+E+G) - (A+8+D+F). g Reltects reduction in staff numbers and expenditures on non-harbor operations.
SECTOR TRENDS AND STATISTICS
Table 1: Marine Fisheries on Balochistan Coast
Item 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Annualized ______Growth (%)
Fish Production (000 tons) - Total 75.4 89.6 82.3 83.5 95.3 91.1 101.7 102.0 106.9 114.0 116.5 4.4 - Iced Fish Sent to Karachi 14.1 18.7 16.9 23.6 25.8 - 23.4 22.5 23,3 27.9 26.8 7.4 - Iced Fish Sent Inland 6,7 7.3 4.8 6.7 9.8 - 7.1 7.7 8.0 9.7 11.1 5.2 C)
Number of Full-time Fishermen 13,989 15,057 15,293 14,562 16,513 16,100 - - 17,322 18,859 19,882 3,6
Number of Fishing Vessels
- With Inboard Engines 136 189 208 302 325 438 593 633 689 758 834 63.4
- With Outboard Engines 2,163 2,206 2,294 2,477 2,579 2,803 3,122 3,090 3,239 3,526 3,552 5.1
- Total (Including Sail) 2,642 2,728 2,81 I 3,055 3,222 3,449 3,872 3,878 4,090 4,568 4,501 5.5
Source: Department of Fisheries. - CD
a x C)
-D 9) CD CD -s
27 Appendix 6, page 2
Table 2: Landed Fish Prices in Balochistan a
At Appraisal Year 1995 Real 1995 Implied Fish Species % of Price % of Price Price Real Increase catch b (PR5/kg) Catchb__(PRs/kg)_C (PRs/kg) d in Prices
21.9Shrimps 240 93.7 Lobster 13.1 225 87.8 Average Weighting 2.4 20.5 1.2 235 91.8 4.5 times
White Pomf ret 1.9 120 46.8 King Mackerel 3.5 50 19.5 Silverbar (Silago) 1.2 40 15.6 Snapper 2.7 25 9.8 Tuna 1.8 30 11.7 Barracuda 2.4 10 3.9 Butterfish 1.8 5 2.0 Leatherjackets 2.4 50 19.5 Mackerel 2.6 30 11.7 Average Weighting 30.2 2.4 19.3 40 15.7 6.6 times
Flatfish -Sole 0.5 30 11.7 Croakers 2.3 10 3.9 Grunters 2.3 30 11.7 Sea Bream 2.0 30 11.7 Catfish 0.8 10 3.9 Shark 1.4 17 6.6 Skates, Rays, and Swordfish 1.1 10 3.9 Grouper 1.0 50 19.5 ______Average Weighting 37.3 1.6 37.9 18 6.9 4.4 times
Other 2nd Grade Fish 1.8 ______Average Weighting 9.7 1.8 24.0 18 b 7.0 4.0 times
3rd Grade Fish 0 . 5 _____ 3 1.2 ______Average Weighting 20.3 0.5 17.6 3 1.2 2.2 times
Overall Weighted Average 100.0 2.1 100.0 22 8.4 4.1 times
a Price equivalents. Fish are more commonly sold by the piece. b Based on the recorded statistics of DOF for fish landings. Current prices obtained from fishermen at the Pasni Fish Harbor. d Current 1995 fish prices deflated by the GDP deflator for Pakistan.