Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized ReportNo. 18766 IMPLEMENTATION COMPLETION REPORT Public Disclosure Authorized PAKISTAN KARACHI PORT MODERNIZATION PROJECT LOAN NO. 3335-PAK Public Disclosure Authorized December 30, 1998 Infrastructure Sector Management Unit South Asia Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwisebe disclosed without World Bank authorization. CURRENCY EQUIVALENTS US$1 = PKR 22.5(Rupees)- 1990/91 PKR1 = US$0.04 - 1990/91 US$1 = PKR 46(Rupees) - November 1998 PKR1 = US$0.022 - November 1998 WEIGHTSAND MEASURES 1 meter (m) =3.28 feet (ft) 1 kilometer(km) =0.62 miles (mil) 1 sq. kilometer(km) =0.386 sq. miles (mil) 1 metric ton (ton) =2,205 pounds(LB) ABBREVIATIONS AND ACRONYMS ADB Asian DevelopmentBank BOT Build, Operateand Transfer dwt Deadweighttons (vessel) ECC EconomicCoordination Committee of the Cabinet ECNEC ExecutiveCommittee of the NationalEconomic Council ERR EconomicRate of Return GOP Government of Pakistan ICB InternationalCompetitive Bidding KPT KarachiPort Trust MOC Ministryof Communications NHA NationalHighway Authority NLC NationalLogistics Cell OP-V Oil Pier-V PAKPRO Pakistan Simplificationsof InternationalTrade SAR Staff Appraisal Report FISCAL YEAR July 1 - June 30 Vice President: Mieko Nishimuzu Country Director Sadiq Ahmed Sector Manager Frannie Humplick Task Leader: Robert Panfil FOR OFFICIALUSE ONLY TABLE OF CONTENTS Page No. PREFACE ................................................................ 1I EVALUATION SUMMARY ................................................................. 2 PART I: PROJECT IMPLEMENTATIONASSESSMENT A. Project Objectives........................................................... 6 B. Achievement of Project Objectives........................................................... 7 C. Major Factors Affecting the Project.......................................................... 10 D. Project Sustainability.......................................................... 12 E. Bank Performance.......................................................... 12 F. Borrower Performance.......................................................... 13 G. Assessment of Outcome.......................................................... 15 H. Future Operation.......................................................... 15 I. Key Lessons Leamed .......................................................... 15 PART II: STATISTICAL ANNEX Table 1: Summary of Assessment.17 Table 2: Related Bank Loans/Credits.19 Table 3: Project Timetable.20 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual 20 Table 5: Key Indicators for Project Implementation. 21 Table 6: Key Port Operation Indicators.22 Table 7: Studies Included in Project.23 Table 8A: Project Costs.24 Table 8B: Project Financing.25 Table 9: Economic Costs and Benefits (KPT Traffic - Actual and Projected) 25 Table 10: Status of Legal Covenants.26 Table 11: Compliancewith Operational Manual Statements.29 Table 12: Bank Resources: Staff Inputs.29 Table 13: Bank Resources: Missions.30 APPENDIXES A. ICR Mission's Aide-Memoir ......................... ................................. 32 B. Economic Re-evaluation.......................................................... 37 C. Financial Evaluation.......................................................... 50 D. Borrower's Contributionto the ICR .......................................................... 56 E. Map IBRD No. World Bank 43152 IBRD 21184R IBRD 21185 IBRD 21217 This document has a restricted distribution and may be used by recipientsonly in the performanceof their official duties. Its contents may not otherwisebe disclosedwithout WorldBank authorization. 1 IMPLEMENTATION COMPLETION REPORT PAKISTAN KARACHI PORT MODERNIZATION PROJECT (LOAN 3335-PAK) PREFACE This is the Implementation Completion Report (ICR) for the Karachi Port Modernization Project in Pakistan, for which Loan 3335-PAK in the amount of US$91.4 million was approved on May 30, 1991, and made effective on February 6, 1992. The Project was closed on June 30, 1998, after a one-year extension granted beyond the original closing date of June 30, 1997. Because of foreign cost savings, US$16 million was cancelled on October 31, 1998. The final disbursement was made on December 18, 1998, and the remaining undisbursed balance (US$6,769,341.29 million) was cancelled. The ICR was prepared by Robert Panfil, Lead Infrastructure Specialist with the assistance of Raul Auzmendi, Transport Economist (consultant), particularly with the economic evaluations and Omar Hayat, Financial Analyst (consultant), with the financial assessment. The report was reviewed by Sadiq Ahmed, Country Director, Hiroaki Suzuki, Acting Infrastructure Sector Manager, Lynn Bennett, Social Sector Manager, Marc Juhel, Lead Ports Specialist and Peer Reviewer, Ismail Mobarek, Principal Port Engineer and Task Manager, John Tillman, Senior Economist and Navaid Qureshi, Senior Urban and Transport Specialist. In addition, Irene Christy, SASIN, provided active support in the preparation of the report. Preparation of this ICR was begun during the Bank's final supervision/completion mission in June 1998 and a Mission to Karachi took place in October 1998. The ICR is based on the mission's findings, which are included in Appendix A, material in the Project File, and discussions with officials of the Bank and Borrower. In addition, the borrower contributed to preparation of the ICR by providing an evaluation and data, which are included as Appendix D. 2 IMPLEMENTATION COMPLETION REPORT PAKISTAN KARACHI PORT MODERNIZATION PROJECT (Loan3335-PAK) EVALUATIONSUMMARY Introduction (i) KarachiPort Trust (KPT), located on the south side of KarachiCity, is Pakistan's largest port. The port has a 4km long entrancechannel and provides access for tankers up to 75,000 DWT and general cargo/containervessels up to 22,000 DWT. Presently, KPT handles about 10 million tons of dry cargoes (60% containers, 10% break-bulkand 30% bulk) and 13 million tons of liquid cargoes. Until Port Qasim was developedin the early 1980's, KPT was Pakistan's only port. Port Qasim, located near Karachi and accessed by a 35 km channel, was originallybuilt to serve the Pakistan Steel complex. With the recent constructionof a container terminal, PQA now is in direct competition with KPT. Project Objectives (ii) The major Project objectives were to: (a) assist with the development of an appropriate strategy for the medium/long-termdevelopment of the port subsector; (b) reduce port costs at Karachi through improved cargo handling productivity,accelerated cargo and documentclearance and improvedland-side access to the port; (c) strengthen the Karachi Port organizationthrough changes in institutional,managerial and financial structures;and expand liquid cargo handlingfacilities. (iii) To accomplishthe objectives,the Project consistedof five components:(a) Civil Works (70% of total appraisalcosts) - Constructionof: a liquid productsmarine terminal; the Jinnah Bridge Phase II, Quay-sidepavements; and the Keamari Groyne Access Road; (b) equipment (21%) - Procurement of: dredging plant, environmental protection equipment, port operations computers and software, radar and related equipment and spare parts; (c) trade facilitation improvements; (d) Institutional strengthening in administration, economics, marketing security and environment; and (e) project preparationand supervision,studies, technical assistance and training. ImplementationExperience and Results. (iv) At the beginning,the appraisal of the Project was delayed by about 18 months (June 1988 to December 1990). The main causes of the delay were due to the Planning Commission's concern about the use of mobile cranes and the Bank's concern that procurement for the major works be well advanced. The delayed appraisal allowed importantissues to be resolvedand advancedproject and procurementpreparation. In the 3 end, the overall project implementation period (from appraisal to completion) did not suffer. (v) After the project approval, the implementation of most components was effectively carried out, although there were some delays and the Project was completed one year behind schedule. The most important delays took place with the construction of the Jinnah Bridge Phase II (32 months)and the procurement of the hopper barges for the new dredger (64 months). These were mainly caused by contractor performance problems. Towards the end of the Project, political instability was also a major factor causing delays and this led to the cancellation of several new components that had been added late in the project. (vi) Overall the Borrower's performance was considered to be satisfactory. In general, KPT performed better on the 'physical' components than on the 'institutional' components. KPT did a good job to ensure that the works and goods were of high standards. Also, most of the studies were well done and produced adequate recommendations. However, follow-up on several key studies involving computerization, navigational systems, trade facilitation and cargo handling operations still remains to be undertaken. (vii) KPT is financially sound and has been able to generate sufficient cash to meet its investment obligations. However, several important financial issues still remain to be addressed such as the re-evaluation of fixed assets, separation of accounts based on activity-wise cost and