TA COMPLETION REPORT Division: IWTC TANOJNAME: TA AMOUNT APPROVED: 1 938-PAK: National Ports Master Plan and REVISED AMOUNT: EXECUTING AGENCY: TA AMOUNT UNDISBURSED: TA AMOUNT UTILIZED: Ministry of Communications/Directorate, Ports and Shipping $90,563 DATE: Approval Signing: Field: CLOSING: 24/8/93 20/1/95 12/3/95 to 15/11/95 ORIGINAL: 15 Dec 1 ACTUAL: 15 April 1996

TA DESCRIPTION

1. While the need to modernize Port and and the proposals to address future capacity constraints are widely accepted, there are differing perceptions of the comparative advantage of each port and consequently differing views as to the specific strategy the two ports should pursue. The developments over the past years and plans under consideration largely run counter to the perceived complementary roles of the two ports. Also, the government announced its intention to study the prospects of constructing a third international port to service transit cargo destined to or originating from the Central Asian republics.

2. Coordinated port planning was required for three reasons: (i) potential duplication of port investments due to Port Qasim's transition from a complementary to a competitive relationship with Karachi Port; (ii) planned modernization in Karachi Port and private sector construction in Port Qasim; and (iii) adverse effects of outdated organizational structures, duplication of administrative and management functions, inadequate trade logistics on cargo throughput and port performance. Because of these issues and the need to establish a basis for rational decision making in the ports sector, the Government accorded a high priority to the National Ports Master Plan and Management Study and requested the Bank for technical assistance to fund it.

TA OBJECTIVES AND SCOPE

3. The primary objectives of the proposed TA were to assist the Government to: (i) undertake a critical review of the port sector with a view to rationalizing investment allocations to and within the sector; (ii) prepare an strategic investment plan, including the recommendations of measures to attract private sector participation in their financing; and (iii) identify the organizational, procedural, and policy options needed to ensure effective and efficient operations in Karachi Port and Port Qasim.

4. The scope of the TA was to formulate (i) an investment strategy for the country's port sector as a whole; (ii) corporate plans for each of the existing ports; and (iii) a rationale and recommendation whether or not should be constructed as a third international port.

TA INPUTS EVALUATION

5. The TA was conducted by Posford Duvivier Consulting Engineers, UK, associated with the specialized consulting firms (i) Portia Management Services; (ii) Hydraulics Research Wallingford; (iii) Steer Davies Gleave; and (iv) TechnoConsult, . Additionally, a Transport Institution Capacity Building Expert was assigned to the TA by TechEcon on a short-term basis. Performance of the four long-term international experts was generally good, with very good practical knowledge and experience in the field.

6. The Study was expected to commence during the fourth quarter of 1993, but effectively started 1 .5 years late only in March 1995. Main reason was the late signing of the Technical Assistance Agreement on 12 September 1994. Also, the TA was completed only in mid-April 1996 after a duration of 13 months, as against an expected TA duration of nine months, due to the late delivery of the Final Report. The consultants demobilized in October 1995.

7. The Directorate, Ports and Shipping, under the Ministry of Communications (MOC), was the Executing Agency (EA). The principal implementation responsibility laid with the Director, Ports and Administration, under the overall supervision of the Director General, Ports and Shipping, of MOC. In addition, a Steering Committee comprising representatives from PQA, KPT, and MOC was established to coordinate the requirements and review the propress of the TA. The Bank conducted an Inception Review Mission in end-May 1995 and a Tripartite Review Mission in mid-January 1996. -

8. The total cost of the TA was $809,437. The TA amount provided for international and local consultants' remuneration, per diem, two vehicles, international and local travel, and administrative support. Equipment needed for TA implementation was procured according to the Bank's Guidelines for Procurement. The consultants had to arrange for own transportation, since delivery of the veIcles was held up after arrival in Karachi Port in June 1995 due to customs problems, and the Goveri1ment did not provide adequate local transportation during the interim period as agreed. The two Nissan vans were finally delivered, as agreed, to the EA in January 1996 after demobilization of the consultants. Capability and performance of both counterpart and supporting staff was overall sufficient, office accommodation and facilities, communication arrangements, and supply of equipment were generally satisfactory. The consultant's working relationship with the EA and senior port officials was very professional and the EA's response to consultants' requests was satisfactory.

TA OUTPUTS EVALUATION

9. The TA delivered as an output: (i) Inception Report (April 1995); (ii) Interim Report (August 1995); (iii) Draft Final Report (November 1995); and (iv) Final Report (April 1996). Delivery of the first three reports was timely in accordance with the contract, despite the difficulties in obtaining information due to the competitive situation between Karachi Port and Port Qasim authorities, which impeded free delivery of statistics. Only the Final Report was delivered three months late since the consultant did not receive comments from the Government in time and demobilized in November 1995.

10. The consultants prepared a report, which was succinct and at the same time identified the major problems existing in the sector, viz, (i) an imbalanced import/export trade; (ii) low productivity rates in both ports, and (iii) high labor and low capital intensity in both ports. Major recommendations of the Study comprised (i) establishment of dedicated terminals, (ii) improvement of storage facilities, land access to Karachi Port, and dredging at Port Qasim; (iii) provision of port services by the private sector on commercial basis, (iv) introduction of legislation to reform the Labor Act, (v) adoption of a common policy to run all Pakistan ports by port authorities as landlord ports, and (vi) construction of a third port as the least cost effective option when considering the overall economic cost implications.

11. The quality of work and putput was generally good. However, the hoped for benefits from (i) technology transfer and training, (ii) analysis of background data, (iii) initiative, flexibility, innovation, and (iv) cost estimates were less than expected, and (v) the financial analysis showed some weaknesses.

TA OVERALL ASSESSMENT/RATING

12. The TA was successfully implemented within the budget despite the problems encountered with the collection of statistical data. Having covered all aspects of the TOR, this TA is rated as generally successful, since it was accepted by the Government and serves as a master reference document for future port planning purposes.

MAJOR LESSONS LEARNED

13. The Government's agreement for a TA should be requested well in time and sufficient time be allowed for the Government to perform its reviewing procedures. The provision of Government counterpart facilities (for instance adequate local transportation) needs to be verified before the consultants are fielded.

RECOMMENDATIONS AND FOLLOW-UP ACTIONS

14. The consultant's report on the findings and recommendations of the activities, associated with the development of the ports sector and its impact on the country's future seaborne trade, has been comprehensively analyzed and serves as a master reference document for future port planning purposes. Major conclusions were that (i) the proposed investment in Gwadar is financially and economically not viable, and (ii) financing of dredging and industrial development at Port Qasim should be considered by the Bank. This investment was not included in the project pipeline because it was considered by Dutch financing.

Prepared by: Udo Witulski Designation: Project Economist, IWTC