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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized ReportNo. 3653-CHA STAFF APPRAISAL REPORT Public Disclosure Authorized CHINA THE THREE PORTS PROJECT Public Disclosure Authorized October 14, 1982 Public Disclosure Authorized Projects Department East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Name = Renminbi Currency Unit = Yuan (Y) US$1.00 = Y1.75 US$0.571 = Y1.00 US$571,429 = Y1,000,000 FISCAL YEAR January 1 to December 31 MEASUREMENT EQUIVALENTS Metric System British/US System 1 meter (m) = 3.281 feet 1 square meter (sq m) = 10.764 square feet 1 cubic meter (cu m) = 35.315 cubic feet 1 kilometer (km) 0.621 mile 1 ton-km = 0.621 ton-mile 1 passenger-km (pass-km) = 0.621 passenger-mile 1 ton = 2,208 pounds PRINCIPAL ABBREVIATIONS AND ACRONYMS USED CFS = Container Freight Station CHC = Cargo Handling Corporation cif = cost, insurance and freight COSA = China Ocean Shipping Agency COSCO = China Ocean Shipping Corporation CSA = Changjiang Shipping Authority dwt = dead weight tons fob = free on board HAB = Harbour Administration Bureau HSO = Harbour Superintendency Organization MLW = Mean Low Water level, or the local datum MOC = Ministry of Communications nrt = net registered ton POD = Port Operating District TEU = Twenty Foot Equivalent Unit FOR OFFICIAL USE ONLY TRANSLITERATION EQUIVALENTS Pinyin System Conventional System Beijing = Peking Beijiang = North River (of Pearl River system) Changjiang = Yangtze River Chengdu = Chengtu Dalian Dairen Dongjiang = East River (of Pearl River system) Guangzhou = Canton Guizhou = Kweichow Harbin Haerhpin Huanghe = Yellow River Huangpo = Whampoa River Huangpu = Whampoa Junggars = Junggas Nanjing = Nanking Nei Menggol = Inner Mongolia Ningbo Ningpo Qingdao = Tsingtao Qinghai = Tsinghai Shanghai = Shanghai Shaanxi = Shansi Shanxi Shensi Shenyang = Mukden Sichuan = Szechwan Tanggu Tangku Tarim Tarim Tianjin = Tientsin Wuhan Wuhan Xijiang = West River (of Pearl River system) Xingang = Hsingkang Xizang = Tibet Yunnan Yunnan Zhujiang = Pearl River This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. -t - t CHINA THE THREE PORTS PROJECT Table of Contents Page No. I. THE TRANSPORT SECTOR ..... ............... 1 A. Economic Setting . 1 B. Transport System . 2 C. Transport Policy, Planning and Coordination. 6 II. THE PORT SUBSECTOR . 8 A. Port Organization . 8 B. Port Organizational Reform . 9 C. Management, Staff and Training . 10 D. Existing Port Facilities . 10 E. Traffic .............. ...... # * 13 F. Operations . .. 14 G. Costs and Tariffs. 17 H. Budget, Accounting and Audit . 17 III. THE PROJECT . 19 A. Investment Plan. 19 B. The Project and the Loan . ........ .. 19 C. Description of the Main Project Items. 20 D. Cost Estimates . 22 E. Financing . 22 F. Implementation . 24 G. Disbursements. 26 H. Completion Report and Economic Impact Study . 26 IV. ECONOMIC EVALUATION . ...... ..................26 A. Main Benefits and Beneficiaries . ... 26 B. Traffic . 27 C. Ship Time Analysis . 31 D. Operational Parameters . .. ...... ....... ... 32 E. Benefits and Costs ......... 33 F. Project . ..... 34 C. Overall Economic Evaluation and Risks . 35 This report was prepared by Messrs. Kevin C. Rodley (financial analyst), Ismail E. Mobarek (engineer), and Niels Erik Krogh-Poulsen (economist). Page No. V. FINANCIAL EVALUATION. 36 A. General .36 B. Present and Future Financial Performance . 37 C. The CHCs .... 40 D. Sensitivity Analysis ... 41 VI. RECOMMENDATIONS ... 41 ANNEXES A. Related Documents and Data Available in Project File B. Reorganization of Port Cargo Handling Operations TABLES 1. Huangpu Port Berth Details of Existing Port 2. Huangpu Port Warehouses and Stocking Yards 3. Shanghai Port Berth Details of Existing Port 4. Shanghai Port Warehouses and Stocking Yards 5. Tianjin Port Berth Details of Existing Port 6. Tianjin Port Warehouses and Stocking Yards 7. Ship Time Analysis for Huangpu, Shanghai and Tianjin Ports 1980 8. Existing Principal Port Charges at Huangpu, Shanghai and Tianjin Ports 9. Detailed Cost Estimates 10. Estimated Disbursement Schedule 11. Operating Manpower requirement for Project Berths 12. Operating Manpower Training Plan for Project Container Terminals 13. Huangpu Port Traffic 1975-95 14. Shanghai Port Traffic 1975-95 15. Tianjin Port Traffic 1975-95 16. Intermodal Transfer of Cargo in Huangpu, Shanghai and Tianjin Ports 1980 17. Huangpu Coal Berth, Operational Parameters Assumed for Economic Evaluation 18. Huangpu, Shanghai and Tianjin General Cargo Berths, Operational Parameters Assumed for Economic Evaluation 19. Huangpu Port, Coal Handling Without and With Proposed Coal Berths 20. Huangpu Port, General Cargo Handling Without and With Proposed Container Berth 21. Shanghai Port, General Cargo Handling Without and With Proposed Container Berth 22. Tianjin Port, General Cargo Handling Without and With Proposed Container Berths 23. Economic Costs and Benefits 24. Representative Ship Costs - iii - 25. Financial Forecast Methodology and Principal Assumptions 26. Huangpu Port, Income and Expenditure Account 1978-86 27. Shanghai Port, Income and Expenditure Account 1978-86 28. Tianjin Port, Income and Expenditure Account 1978-86 29. Huangpu Port, Harbor Masters Division, Income and Expenditure Account, 1978-86 30. Shanghai Port, Harbor Masters Division, Income and Expenditure Account, 1978-86 31. Tianjin Port, Harbor Masters Division, Income and Expenditure Account, 1978-86 32. Huangpu Port, Traffic and Cargo Handling Revenue 1980-85 33. Shanghai Port, Traffic and Cargo Handling Revenue 1980-85 34. Tianjin Port, Traffic and Cargo Handling Revenue 1980-85 35. Project Ports Balance Sheets as of December 31, 1977-80 36. Project Ports Cash Flow Statements 1977-80 37. Project Ports Balance Sheets as on December 31, 1980-86 38. Project Ports Cash Flow Projections, 1981-86 39. Ministry of Communications Cash Flow Related to Project Ports 1981-86 CHARTS IBRD A Ministry of Communications, Water Transport and Related Activities Organizatonal Structure IBRD B Huangpu Port, Organizational Struture IBRD C Shanghai Port, Organizational Structure IBRD D Tianjin Port, Organizational Structure IBRD E Huangpu Coal Terminal, Construction Schedule IBRD F Huangpu Coal Terminal, Schedule for Equipment Procurement IBRD G Huangpu Container Terminal, Construction Schedule IBRD H Huangpu Container Terminal, Schedule for Equipment Procurement IBRD I Shanghai Container Terminal, Construction Schedule IBRD J Shanghai Container Terminal, Schedule for Equipment Procurement IBRD K Tianjin Container Terminal, Construction Schedule IBRD L Tianjin Container Terminal, Schedule for Equipment Procurement MAPS IBRD 15512R1 China, Railways Ports and Airports IBRD 15816 Huangpu Port, Coal and Container Terminals, Location and Navigation Channel IBRD 15817 Huangpu Port, Coal Terminal IBRD 15845 Huangpu Port, Container Terminal IBRD 15814 Shanghai, Port Terminals and Navigation Channel IBRD 15815 Shanghai Container Terminal, District No. 9, Berths 1 and 2 IBRD 15813 Tianjin Container Terminal, Berths No. 27, 28, and 29 - iv - Acknowledgment This report is based on information provided by the Government, by the consulting firm E.G. Frankel (US); and on the findings of an appraisal mission in July/August 1981 consisting of Messrs. Kevin C. Rodley (mission leader and financial analyst), Ismail E. Mobarek (engineer), Niels Erik Krogh-Poulsen (economist) and Frank Higginbottom (consultant engineer). Mr. J. Richard Bumgarner (Senior Loan Officer) assisted in the appraisal. Additional reports and data related to the project and available in the Bank, are listed in Annex A. I. THE TRANSPORT SECTOR A. Economic Setting 1.01 China is the world's third largest country in area, covering about 9.6 million square kilometers and comprising the plateaus of Qinghai-Xizang in the West, Nei Menggu, and Shaanxi-Shanxi in the Northwest, and Yunnan-Guizhou in the Southwest; the Junggars, Tarim and Sichuan basins in Central China; and the lowlands in Eastern China. China's population is the largest in the world and numbers about 970 million with about 13% living in urban areas and the remainder scattered in a large number of towns located mainly along the coast and in the river basins of the three principal rivers of the country, the Huanghe, the Changjiang, and the Xijiang. The main centers of population and economic activity are Guangzhou, Shanghai, Beijing and Tianjin which are served by the three project ports. The main agricultural areas are located in the river basins. The topography of the country and the location of population and agriculture along the rivers and the coastline has resulted in river and coastal shipping being the most important traditional modes of transport. Over the past three decades, however, a long term expansion program has enhanced the importance of railway transport to the point where the railways now carry two thirds of freight by domestic motorized transport. 1.02 Domestic freight transported in 1980 was estimated at about 833 bil- lion ton-km of which about 571 billion ton-km moved by rail, about 80 billion ton-km by coastal shipping, 57 billion ton-km by road, about 76 billion ton km by river, and 49 billion