Study on Economic Partnership Projects

in Developing Countries in FY2008

Study on Namibe Port Development, in the Republic of Angola

SUMMARY

March 2009

Japan Port Consultants, Ltd. Toyota Tsusho Coporation Chapter 1 Overview of Host Country and Sector

(1) Socio-Economic condition of Angola

Angola has an area of 1.25 million km2 on the Atlantic coast of Africa with a western coastline of 1,600 km. The population is estimated as approximately 16 million, of which 34% is estimated to live in urban areas. The Republic of Angola is the third largest nation in sub-Saharan Africa, after the Democratic Republic of Congo and Sudan. The Angolan population is young and growing rapidly. The population growth rate is 2.9% per annum. Since the end of the civil war in 2002, Angola has made progress in stabilizing the macro-economy and reconstructing social infrastructure. However, economic growth remains largely dependent on the production of oil and diamonds, and relatively little progress has yet been made in the rebuilding of industrial activities including agriculture. As for industry, the country was known as an agricultural producer, not an oil exporter until 1975. Today, the economy is heavily dependent on oil production. Since 1973, the structure of the economy has changed substantially as the mining sectors increased their share of GDP. Within the Angolan economy, 92% of total exports and close to 80% of total government revenues depend on oil. The outlook for growth in Angola's overall GDP is optimistic. Based on the estimates of the IMF, real combined growth of all sectors is 27% in recent years. Macroeconomic stabilization is ongoing, with the Government continuing to follow the "hard Kwanza" policy, and inflation fell to as low as 12.2% in 2006. What remains, however, is to reconcile this stabilization with the structural and sectoral development of the non-oil micro-economy. Per capita GDP in 2007 was estimated at roughly US$3,767, well above the sub-Saharan average. But poverty is still strongly entrenched. Income distribution is extremely biased. It is estimated that more than two thirds of Angola's population live below the official poverty line of US$1.07 per day, and 28% are in extreme poverty (US$0.70 per day).

(2) Port Sector and Maritime Transportation in Angola

Container cargo in Africa has been growing rapidly in recent years. This trend is conspicuous in the trade between Europe as European cargo accounts for approximately 50% of the total. Import container cargo supersedes export containers by twice as many in the trade with Europe. Likewise, this trend is considered the same in the trade of Angola. Even with the effort to promote the manufacturing industry, export cargo will take time to develop after fulfilling the supply of commodities to substitute imports. Therefore this trend is assumed to continue for some time in the future.

Figure 1-1 Container Traffic of Africa in Recent Years （,000TEU）

There are four major commercial ports in Angola: Luanda, Lobito, Namibe, and Cabinda. Containers are handled in the first three ports. The throughput is dominated by the Luanda Port, where nearly 90 percent of containers are handled.

Table 1-1 Container throughput record in Angolan Ports (container box) 2002 2003 2004 2005 2006 2007 Luanda 191,750 207,096 222,442 237,788 253,134 268,480 Lobito 30,924 23,909 28,950 25,954 24,967 23,980 Namibe 3,784 4,273 6,158 8,096 10,966 13,192 Total 226,458 235,278 257,550 271,838 289,067 305,652

The problem with the ports in Angola is that Luanda port is so congested that cargo cannot move from quayside to the yard unless yard gets free from storage cargo. The average berth waiting time is about 25 days and the average berthing time is almost 8 days. The congestion in Luanda port is very serious compared to other ports in Asia and West Africa. Quayside container handling is less than 10 boxes per hour. This situation is derived from the lack of warehouses in the city. The expensive and unreliable land registration and ownership caused the lack of proper infrastructure which in turn caused stagnation of cargo. Port of Namibe does no yet handle a large volume of cargo. Therefore waiting time is not long as port of Luanda, but the handling time is very long because of the lack of proper cargo handling gear. The port is now undergoing a rehabilitation program with the assistance of JICA and capacity is expected to be increased in the near future.

(3) Conditions of Project Area

Total length of roads in Namibe Province is 2,182 km. Among them, there are 5 primary roads which total 529 km in length and are asphalt-paved. There are also secondary and tertiary roads. They are non-asphalt-paved roads, but low-cost pavement or earth roads. The hinterland of Port of Namibe is considered to be 4 provinces along the Mocamedes Railway. Those are Namibe, Huila, Cunene and Cuando Cubango. The total area is about 420,000 ㎢, 32.8% of the country’s total. The population of the hinterland is about 2.4 million people in 2005, 15.5% of the whole country. The increase ratio, 14.9%, is a little smaller than the country average. The biggest province is Huila which has a population of more than 1.2 million. Namibe province has the smallest population with 0.3 million people.

Table 1-2 Land and Population of the Hinterland of Namibe Port Population (1,000 people) Province Area (㎢) Growth rate 1995 2000 2005 (2005/2000) Total of country 1278305 11,350.5 13,139.0 15,252.0 1.161 Total of 4 Provinces) 419530 1,780.4 2,062.1 2,368.7 1.149 Population share of 4 Provinces 32.8% 15.7% 15.7% 15.5%

The hinterland has yet to become an active business area. But fishery business is conducted vigorously in Namibe. Fish production of Namibe province was 16,000 tons in 2007. Agriculture business has been extended most in Huila. The vast area in Huila is cultivated for horticulture, fruits and vegetables, cereals, root crops and stockbreeding. In Namibe and Cunene, there are not so many cultivated lands, but a few smaller ones. There are a lot of manufacturing firms in Huila province. The number of manufacturing firms is the third biggest in the country, following Luanda and Benguela. The general cargo wharfs are always occupied by 2-3 vessels. Around 20 vessels enter the port a month. Container ships, conventional ones and oil/gas tankers each account for approximately one third of vessel calls, respectively. Two thirds of vessels call at Port of Namibe while one third use Sacomar Port. There are feeder services to and from Walvis Bay and also shuttle services to Lobito by container ships. Long-distance container ships are from Singapore and Lisbon. Most container ships and conventional ones leave for West African Ports, but some ships head to Portugal, Brazil and Singapore. As to oil and gas tankers, most tankers move in the country.

Chapter 2 Study Method

(1) Contents of Study

Contents of this study consist of the following two parts. 1. Study on New Container Terminal Development Based on the results of the demand forecast of container cargo, shipping trend survey, natural conditions study and environmental study, feasibility of the New Container Terminal Development Project is evaluated from technical, economical, potential and environmental aspects. 2. Study on Rehabilitation Plan of Sacomar Port After conducting visual site inspection on the deterioration condition of the existing iron ore handling facilities, appropriate Rehabilitation Plan of Sacomar port which compares both restoration and new construction/procurement options is proposed.

(2) Study Method and Organization

1. Study Method Study method is shown in the flow chart bellow.

Figure 2-1 Study Flow

2. Organization The study team was formed by Japan Port Consultants, Ltd. which is a firm specialized in planning, design and construction supervision of national and international port projects and Toyota Tsusho Corporation which has a business base in Angola and is familiar with the state of national infrastructure developments. The study was carried out by a team leader and 12 specialists in individual fields.

(3) Study Schedule

This study was carried out from 29 August 2008 to 30 January 2009 (5 months) including 3 site studies in Angola. 1st Site Study (18 September 2008 to 11 October 2008) : Luanda, Lobito, Namibe - Presentation of study scope, discussion - Collection of site data 2nd Site Study (21 November 2008 to 6 December 2008) : Luanda, Namibe - Presentation of progress and tentative results of study, discussion - Collection of additional site data 3rd Site Study (16 January 2009 to 26 January 2009) : Luanda, Namibe - Presentation of final results of study, discussion

Chapter 3 Contents and its Technological Feasibility

(1) Background of Project

There are 20 ports in Angola. Six of them are public ports. Among them, main ports for container cargo handling are the Ports of Luanda, Lobito and Namibe. Those outlines are shown below.

Table 3-1 Outlines of 3 major container ports in Angola

Handling Container Max. Berth Open Port (1,000TEU) Pier Length (m) Location Depth (m) Year (2007) 1950 A natural harbor situated in Luanda Bay, Luanda 400.0 (not including -10.5 1576 protected to seaward by Luanda island. offshore terminals) 1122 A natural harbor situated in Lobito Bay Lobito 36* (not including a -10.6 1903 formed by a sand spit 4.8km in length. tanker terminal) 680 Situated on the south coast in Namibe Namibe 20* (not including a jetty -10.5 1958 Bay of Sacomar Port) Note: * of handling container means the number estimated as 1.5 x number of handling boxes of containers.

The main targets mentioned in the national transport strategy (ENTA) are the construction of the integrated transportation network, the integration into SADC regional transport corridor and the acceleration of privatization of transport management etc. The national port policy has been formulated on the basis of the national transport strategy. The basic strategies for port development by the Angolan government are summarized as follows. Port of Luanda: Continuance of privatization for terminal operations. Since Luanda Bay is cramped for newly development space, a new port may be constructed out of the bay. Commercial developers are expected to take part in the development. Port of Lobito: The port is expected to emerge as an intermodal gateway of African east-west corridor. Port infrastructure may be developed by Chinese financial assistance. Port of Namibe: The port is expected to be a base port of economic development in southern Angola, a gateway for landlocked countries and areas and an exporting port of natural resources. The government is looking forward to financial assistance from foreign countries. Port of Namibe is the third biggest port in Angola and the key port for the development of the southern part of Angola. On the other hand, the port facilities are not adequate for efficient cargo handling. The urgent rehabilitation project is a must to support the regional economy. The project will be done for the cargo demand in 2010. The growing ratio of cargo throughput has been increasing more rapidly than the Grant-Aid project expected. It is necessary to develop a new terminal to meet the rapidly increasing cargo demand of Port of Namibe. The new development project should be prepared for the future cargo demand after 2010 as soon as possible.

(2) Basic Policy of Host Country on Project Contents and Implementation

Ministry of Transport of Angola has a basic idea of the role and function of Port of Namibe as follows. ① Strategic Port for the Development of the Southern Part of Angola ② Gate way Port of the Landlocked Area of the Neighboring Countries ③ Transshipment Port of West Africa The size of the new terminal has been determined in consideration of the three roles above. Containerization of marine traffic in West Africa will become increasingly popular. More Panamax type container vessels will be introduced according to the increase of container traffic. Marine container traffic emphasizes scheduled services most. That means scheduled services must be secured with certain level of handling efficiency. To do this, the terminal should be managed for container cargoes exclusively for efficient and punctual operation. Most container vessels will be transferred to the new terminal and the existing terminal will be for general cargoes and Ro/Ro ships. Liquid oil cargoes continue to be handled at Sacomar area. Sacomar Port will reopen to handle iron ore loading in future. That means Sacomar Port will be a massive break-bulk terminal.

Figure 3-1 Function Share by Terminal in Future

Container Commercial RO/RO Commercial RO/RO Port Dry Bulk Port Dry Bulk General Cargo General Cargo

Container Container Terminal

Sacomar Liquid Oil Sacomar Liquid Oil Port Gas Port Gas Iron Ore

(Now) (Future)

(3) Overview of Port Development Plan

1. Construction Plan of Container Terminal a. Demand Forecast of Container Cargo at Port of Namibe Based on the cargo data at the port of Namibe and border crossing data from Namibia, and integrating the possibilities of economic growth and future development of industry in the region,

future container demand is estimated as shown in the following table. In addition, demand will grow in neighboring countries such as Congo DR, Zambia, Botswana, Namibia, and transshipment cargo will grow if the customs law is amended to the same condition with other major transshipment ports.

Table 3-2 Potential Demand Forecast at Namibe Port (TEU) 2015 2016 2018 2020 2025 2030 Laden-Import 20,421 97,893 157,275 243,981 592,477 585,157 Laden-Export 3,184 15,522 25,790 42,089 103,998 112,043 Empty 11,204 53,541 85,465 131,230 199,200 199,200 Transshipment 0 60,000 199,200 199,200 298,800 298,800 Total (TEU) 34,809 226,955 467,730 616,500 1,194,475 1,195,200

The following graph depicts the increase of container cargo by type.

Figure 3-2 Container cargo demand forecast

1,200,000

Transshipment Container 1,000,000

800,000 Empty Container

600,000

400,000 Laden Container

200,000

- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 b. Natural Conditions Study According to the information provided by the Namibe port office and the JICA Study reports which were carried out in the past, natural conditions in and around the project site can be summarized as follows.

The project site is located in a severely arid region which had a monthly rainfall of at most 20 mm in recent years. In Namibe Bay, water level varies about 1.2 m between LWL and HWL in spring tides. Wave height in the bay constantly reaches about 1.0 m with wind velocity of 10 m/s which

blows from dominant direction of SSW. Swell is a problem in the port causing excessive motion of ships at the berths. Maximum current speed in the bay reaches about 1.0 m/s and 2.0 m/s in south and north side of the bay, respectively. Few cyclones and earthquakes have been recorded in and around the project site.

At north and south ends of the bay where the ports exist, weathered rock terrace appears rising steeply from shoreline up to about MSL +30 m. On the seabed, there is a deep trough (depth varies from CDL -15 m to CDL -500 m) in center of the bay and a shallow area (shallowest point is CDL -1 m) at the south entrance of the bay. c. Port Planning Conditions Taking account of present conditions and future trends of regional and international maritime transport, maximum ship dimensions were set for planning purposes as follows. - Length: 250 m to 280 m - Breadth: 32.3 m

In order to accommodate the above ship and ensure efficient port operation, required terminal dimensions of the new container terminal were set as follows. - Length: 350 m - Width: 350 m - Depth: CDL-14 m (-15 m in future) - Area: 12.3 ha

As a result of comparative evaluation among five (5) alternative locations in due consideration of natural, construction (technical), operational and environmental conditions in and around the locations, alternative ④ shown in the right figure was recommended as the most suitable location for the new container terminal construction site.

Figure 3-3 Location of Initial Alternatives

①

Namibe Port Saco Mar Port

②

③ ⑤ ④ Recommended Location

d. Design Conditions of Container Terminal In accordance with the Technical Standards and Commentaries for Port and Harbor Facilities in Japan, 2007 (Japanese Standards) and PIANC Guidelines, preliminary design of facilities in the new container terminal was carried out selecting the ship below for design purposes. - Type of Vessel: Container Ship - Loading Capacity: 4,000 TEU - Deadweight Tonnage: 50,000 DWT - Length Overall: 274 m - Molded Breadth: 32.3 m - Full Loaded Draft: 12.7 m

Design wave conditions were calculated by the Study Team, while sub-soil conditions were derived from the JICA Study carried out in the past. e. Port Facilities Layout Plan Based on the above conditions, port facilities layout plan was developed in three (3) phases as shown in the right figure. A breakwater is planned to ensure the wave height in front of the container terminals is less 0.50 m more than 97.5 % days in a year. The terminal and land areas are connected with trestles. Figure 3-4 Port Facility Layout Plan

Phase III Phase II Phase I

f. Terminal Layout Plan The layout plan of a new terminal for each phase was made taking into consideration productivity and convenience of operation. The terminal is equipped with required cargo handling equipment and buildings as shown in the right figure. In general, two (2) Quay-side container cranes (QCC) and six (6) Rubber Tire Gantry Cranes (RTG) are installed at every berth (phases).

Figure 3-5 Image of Terminal Layout

g. Conceptual Design of Port Facilities The port facilities planned in Phase-I are shown in the table and figures below. The most important and critical point in this conceptual design is the necessity of swift construction of breakwater and container wharf under high wave condition.

Table 3-3 Designed Port Facilities Facility Structural Type ① Container Wharf (-14 m) Pre-fabricated flat sheet pile cellular ② Seawall (1) Rubble mound + Wave dissipating block ③ Seawall (2) Rubble mound ④ Breakwater Rubble mound + Wave dissipating block ⑤ Trestle Simple beam + Steel pipe pile ⑥ Access Road Dual carriage earth road + Asphalt pavement

Figure 3-6 Container Wharf (-14m)

① Container Wharf (-14 m)

Figure 3-7 Seawall (1)

② Seawall (1)

Figure 3-8 Breakwater

④ Breakwater

h. Construction Schedule The container terminal is fully developed in (3) phases as shown in the figure below. Phase I, II and III are planned to be completed in 4, 3 and 3 years, respectively.

Figure 3-9 Construction Time Schedule Project Phase Item Phase I Phase II Phase III Consecutive Year 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 1 Detailed Design 2 Tender 3 Construction (Phase-I) 1) Breakwater 2) Terminal 3) Trestle 4) Access Road 5) Dredging 6) Container Handling Equipment 4 Construction (Phase-II) 1) Breakwater 2) Terminal 3) Dredging 4) Container Handling Equipment 5 Construction (Phase-III) 1) Breakwater 2) Terminal 3) Trestle 4) Access Road 5) Dredging 6) Container Handling Equipment

i. Construction and Procurement Cost Based on the results of conceptual design and construction schedule above, construction and procurement costs of Phase I, II and III were estimated as shown in the table bellow. The costs include 10 % contingency but no tax and price escalation is included.

Table 3-4 Summary of Construction and Procurement Cost Total Construction and Procurement Costs Percentage of Currency Portions Phase (Million JPY) Foreign Portion Local Portion I 40,650 77% 23% II 23,164 79% 21% III 23,927 82% 18% Total 87,741 -- --

Procurement costs of steel (sheet pile, pipe pile), rubber fender, FRP steel pipe pile cover, container handling equipment (QCC, RTG, truck & chassis) and boats (Tug and pilot), which may be imported from Japan, account for 32%, 47% and 51% of the total construction and procurement costs above in Phase, I, II and III, respectively.

2. Study on Sacomar Port Rehabilitation Plan

Objective of this study is to propose a preliminary rehabilitation plan of the major iron ore handling facilities to resume their operations. As a result of this study, it is recommended that all equipment, including two (2) stack/reclaimers, one (1) ship loader and belt conveyor should be replaced by new equipment, and new jetties should be constructed in front of the existing jetty as shown in the figure bellow. Figure 3-10 Rehabilitation Method for 200,000 DWT Carriers

Existing Jetty General Layout

15,000 DWT Oil Carrier 200,000 DWT Ore Carrier New Jetty General Section

Ship Loader Rails

200,000 DWT Ore Carrier

Existing Jetty

New Jetty

Rehabilitation works will be completed in two (2) years as shown in the figure below.

Table 3-5 Rehabilitation Time Schedule 1st Year 2nd Year Item 2 4 6 8 10 12 14 16 18 20 22 24 1. Clearing Existing Equipment 2. Rehabilitation of Existing Facilities 3. Construction of New Structure 4. Relocation of Oil Receiving Facilities 5. Equipment Manufacturing 6. Equipment Installation & Test Operation

Based on the rehabilitation plan above, required costs were estimated as shown in the table below. The costs include 10 % contingency but no tax and price escalation is included.

Table 3-6 Rehabilitation Costs Rehabilitation Costs Item (Million JPY) 1. Clearing Existing Facilities 237 2. Rehabilitation of Existing Facilities 90 3. Construction of Reinforcement Structure 2,659 4. Relocation of Oil Receiving Facilities 369 5. Equipment Delivery & Installation 331 6. Equipment Manufacturing 6,000 Sub-total 9,685 Contingency (10% of sub-total) 969 Total 10,653

Chapter 4 Environmental and Social Impacts Review

(1) Current State of Environmental and Social Conditions a. Natural Environment: Coastal line along Namibe is part of the Benguela current region1, one of the major coastal upwelling ecosystems in the world. The area supports an important global reservoir of biodiversity such as biomass fish, seabirds, sea turtles and marine mammals etc. In particular, Namibe is located at Angola (warm) current and Benguela (cold) current frontal zone of south Angola, making it a rich and diversified marine environment. There are two conservation areas in Namibe, namely Namibe Partial Reserve (4,450 Km2) and Iona National Park (15,150 Km2) which are located in the southern part of Namibe city. b. Social Environment: Fisheries activities are the dominant economic activities in the area. Namibe province has the largest fish catch among all 6 coastal provinces in relation to artisanal fisheries2. Since Namibe has no major industries but small to medium scale fisheries, income generation and poverty alleviation is one of the significant social problems to be tackled in the area. Lack of social infrastructure such as water supply and sanitation are critical for local residents as well.

(2) Anticipated Positive Environmental and Social Impacts of the Project a. Economic activities: Port development activities will generate new diversified job opportunities for the local community. Such development offers an opportunity to improve the welfare of the population. b. Vulnerable groups: Restoration program of livelihood activities for project affected vulnerable households will contribute to the better wellbeing of the vulnerable households. c. Environmental benefits: An installation of proper treatment facilities for sewerage and oil waste water, oil spill prevention measures under proper environmental management plan will safeguard the bay and the surrounding area from environmental degradation. d. Safety: Improved enforcement of maritime security and safety measures shall prevent maritime accidents.

1 Benguela Current region is situated along the coast of southwestern Africa, stretching from east of Cape of Goods Hope in the south, northwards to Cabinda in Angola. 2 In Angola, artisanal fisheries accounts for 84% of the total fish catch.

(3) Anticipated Environmental and Social Impacts of the Project

The environmental and social impacts and possible mitigation measure are summarized in the below table.

Table 4-1 Anticipated Environmental and Social Impacts and Possible Mitigation Measures Anticipated Impacts Mitigation Measures 1. Pollution Measures Water quality Water quality degradation during Adopting good dredging practices; construction through dredging and Installation of waste treatment facility should reclamation activities; Oil spills and waste be considered. discharge from ships Air Deterioration of air quality due to increased Using vehicles that have passed emission traffic during construction/ operation. testing; spraying water on construction site; creation of greenbelt. Bottom Sediment Adverse impacts during dredging and by Application of good dredging practices; discharge of dredging materials; Sediment quality of seabed should be Reclamation may change sea bed conditions examined; Careful selection of dumping site. Noise and Vibration Increased traffic will increase noise level Using well managed machines, mufflers; during construction/operation. implementation of proper traffic management. 2. Natural Environment Biological Dredging/reclamation activities will affect Adequate engineering design, monitoring, Environment the existing ecological cycle. feedback system to limit disruption to ecological process; Proper waste management plan; ecological baseline study to be carried out Protected Area Coastal area of Namibe Partial Reserve, Iona Improved marine safety measures should be National Park could be affected due to applied to avoid accidents such as oil spills. increase in ship traffic.

Hydrology Reclamation/dredging may induce changes Hydrodynamic modeling study should be in current flow, sediment concentration and carried out to numerically model wave, tide sea bed conditions. Impacts may take place induced currents and sediment concentration in on underground water and Bero river. the basin. Survey on underground water and river needs to be carried out. Topography/Land use Reclamation will lead to elimination of Site selection of reclaimed area will be Pattern natural beaches. analyzed, considering the impacts on topography. 3. Social Environment Resettlement No resettlement is anticipated at site C. Socio-economic baseline survey on local / However, non-resettlement to the fisheries fisheries community should be carried out. engaged people should be considered. When PAPs are specified, social survey should be carried out to prepare a resettlement action plan (RAP). Living and Livelihood/ New employment opportunity for the local To give job priorities to the local community; Economic activities community. Negative impacts to fisheries provision of job training and other necessary activities leading to reduced income3. assistances; Social survey on the fisheries activities to be carried out and if negative impacts are specified, proper compensation should be provided to their losses. Continues consultation with those fisheries community is a must.

3 Although fishing inside the bay is prohibited by law, subsistence fisheries are allowed in the bay, which is practiced at the mouth of Bero river (near the project candidate site).

Anticipated Impacts Mitigation Measures Cultural Assets No cultural assets are identified at site C. No cultural assets are identified at site C. However, in case any cultural assets are identified, the port location and the access road routes will be re-considered. Landscape The site is a bare land. There is salt field next Consultation is required with the owner of the to the site. salt field. Women & Vulnerable Vulnerable groups including female-headed Livelihood support programs for the vulnerable groups /poor /disabled families may be affected due groups should be considered. Provision of to project. Increased risk of infectious infectious disease (HIV/AIDs) prevention diseases such as HIV/AIDs due to influx of programs to the local community/ construction construction workers. workers. Conflict of Interests Conflict on port / fisheries activities Good coordination with project authorities and local community / fisheries community and their leaders etc. is required. Safety Increase in ship accidents due to increase in Improved enforcement on maritime security ship traffic and safety measures.

(4) Policy and Legal Framework for Environmental and Social Consideration in the Host Country

The following are the major project related laws and regulations on environment and social consideration; a. The Environmental Framework Law (Law No. 5/98, June 19th ), b. Decree on Environmental Impact Assessment (Decree No.51/04, July 23rd ), c. Decree on Environmental Licensing (Decree 59/07, July 13th ), d. Land Law (Law No. 5/98, November 9th) e. Biological Water Resource Law (No. 6-A/4, October 8th ).

(5) Necessary Action to be taken by the Host Country for Project Realization

At a next project preparation stage, the executing entity of the project is responsible for conducting a full-scale Environmental Impact Assessment (EIA). The following are the proposed studies to be carried out in the EIA; a. Pollution measures: Adequate pollution measures (water/air quality/noise/vibration/waste) during construction/operation. b. Natural Environment: Detailed baseline study to be carried out to identify and analyze the impacts on the marine/ terrestrial fauna and flora: hydrodynamic study such as numerical model wave, currents and sediment distribution in the basin to identify the critical areas of the proposed design: impacts on alternation of topographic features such as partial elimination of natural beaches. c. Social Environment: Baseline information on economic activities and livelihood of the local community: detailed baseline information with a focus on fisheries conditions including impacts on project affected fisheries community and its compensation plan if necessary. d. Preparation of Environmental management and monitoring plane. e. Possible impacts leading to global environmental problems/ possible secondary and cumulative impact

Chapter 5 Financial and Economic Feasibility

(1) Project Cost

The project cost of the new container terminal is estimated as follows.

Table 5-1 Project Cost (unit: mil. JPY) Foreign Local Item Total Currency Currency Construction of Port Facilities 47,290 16,944 64,234 Procurement of Equipment 15,530 0 15,530 Consulting Service 6,282 1,695 7,977 Administration Cost, Tax and Duty, Contingency 6,910 4,591 11,501 Total 76,012 23,230 99,242

Table 5-2 Breakdown of Project Cost by Phase (unit: mil. JPY) Phase I Phase II Phase III Item Foreign Local Total F L Total F L Total Construction of Port Facilities 22,588 8,596 31,184 12,101 4,367 16,468 12,601 3,981 16,582 Procurement of Equipment 5,770 0 5,770 4,590 0 4,590 5,170 0 5,170 Consulting Service 2,836 860 3,696 1,669 437 2,106 1,777 398 2,175 Contingency 3,119 946 4,065 1,836 480 2,316 1,955 438 2,393 Administration Cost 312 312 159 159 145 145 Tax and Duty 1,071 1,071 544 544 496 496 Total 34,313 11,785 46,098 20,196 5,987 26,183 21,503 5,458 26,961

(2) Financial Feasibility Analysis

The revenue and expense is supposed to maintain the present condition of the Namibe Port. Operational system is assumed to be on the basis of the current management. With this assumption, the Internal Rate of Return, IRR, of this project is calculated as 8.0 %. This is higher than the procurement cost of ordinary governmental fund, and this project is regarded as financially feasible. The sensitivity analysis indicates that this project will fail if the revenue is reduced or expenses increase by 10%. This means that this project is very vulnerable and will work by a slight margin. IRR (in standard condition) 8.0 % Feasible Revenue 10% down - Not Feasible Expense 10% up 2.3% Not Feasible

(3) Economic Benefit Analysis

The southern part of Angola is centered by Lubango, and two thirds of containers are carried from Walvis bay to Lubango. The benefit of the project development is assumed to be the reduced transportation cost by substituting land transportation. As for this benefit, difference in the trucking

cost between Walvis Bay-Lubango and Namibe- Lubango is US$ 2,900 per TEU. The GDP growth is estimated in order to assume the contribution of port by "with project" case. Considering the effect of the new terminal to GDP, this benefit alone has a return of 22%. This result indicates the significance of port development. As infrastructure to support industry and public utilities, port has a significant impact in wide sectors of the economy. Benefit by the development of this project is calculated by two aspects; namely trucking cost reduction and GDP contribution. Each item has a large ratio of return. When considering them together, the integrated effect will be 56% on investment. Therefore the port development is considered economically very important. Trucking cost reduction only 47% GDP supporting effect only 22% Integrated Economic Benefit 56%

Chapter 6 Project Schedule

The total period of the project is 13 years including 10 years of construction work and 1 year warranty. During the preparation stage, it is necessary to conduct EIA procedure based on site surveys on natural and social conditions. In addition, stakeholder meetings and public hearings have to be conducted to obtain mutual agreement among project implementation body in parallel with EIA procedures. It is considered better to conduct these preparation works both for project authorization and for construction simultaneously in order to fast track project implementation. If the breakwater is constructed continuously disregarding phased construction, the construction period may be reduced more by 2 years.

Figure 6-1 Project Implementation Schedule

Preparation Implementation Stage Warrant Stage Phase I Phase II Phase III Breakdown of Preparations and Works y Period 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 13th year (Authorization of Project) Approval of Original Plan Site Surveys (Natural Conditions and Social Conditions) EIA Procedure Consulting with Govermental organization related to the Project Public Meeting Financial Arrangement (Construction Works) Deatil Design Selection of Contructors Construction of Breakwater Dredging Works Construction of Terminals Construction of Roads and Bridge Procurement of Equipment Warranty Period

▲ ▲ ▲ Open of Terminal Open of Open of Open of No.1 Berth No.2 Berth No.3 Berth

Chapter 7 Organization Implementing the Project

Port development and management are under the Ministry of Transportation. The project may influence fishery and mining if it includes the rehabilitation of Sacomar. The responsible authority will oversee each step of the project as follows.

①Research and Planning by Port Authority of Namibe ↓ ②Authorization of the project by IMPA Stakeholder meeting, EIA procedure and public hearing. ↓ ③Consultation with relevant Ministries by MINITRANS ↓ ④Financing by MINTRANS and MINFIN ↓ ⑤Construction of facilities by IMPA and Port Authority of Namibe ↓ ⑥Terminal Operation by Port of Namibe (Supervising terminal operator)

The new terminal construction project will be a big project. It involves several steps such as planning, authorization including EIA procedure, financing, selection of contractor, construction and operation. Every step needs a certain number of officers and experts. Works of planning, facilities construction and operation can better be assisted by the consultant and the government will supervise their works. The government should assign full time staff members for the project implementation in each relevant agency and section.

Chapter 8 Technological Advantages of Japanese Company

(1) Japanese Technical Advantage

Japanese companies have distinguished technological advantages in the following aspects: a. Container Terminal Construction by Prefabricated Sheet Pile Cell Method: This is a technology developed in Japan which has the advantage of safety, durability and quick construction. Simple version of “Steel Sheet Pile” is popular in Europe but has a weakness in terms of safety while setting sheet-piles during construction work. On the other hand, “Prefabricated Sheet Pile Cell” method does not have this shortcoming and it will shorten the construction period specifically in a large scale construction project. In addition, this method has advantages over the “Concrete Caisson” method as well in that it is environmentally friendly the construction period is shorter. b. Container Cranes: Low occurrence of breakdown which contributes to less maintenance cost For Container Cranes (Quayside Gantry Cranes and RTG), Japanese cranes are at the frontier in this field and have long experience including Seismic Isolation, low occurrence of breakdown, and less maintenance cost. For example, RTG cranes of other countries are estimated to have 14 times more breakdowns than those of Japan. Another case survey of 15 RTG units revealed that Japanese machines can save US$ 400,000 crane every year in comparison with machines of other countries.

Considering the 25 year service life of machines, this translates into a large difference.

(2) Possible Japanese Contribution to the Project

1) Japanese Technologies and Experiences Following points need to be well understood by the Angolan government. a. Capability of Project Implementation by Japanese companies (Construction Method Technology and Idea on shortening the construction period) b. Technology and Experience of Japanese Products (Equipment) c. Experience of Japanese government in financing projects in the past

2) Support of Operation after construction works are completed : This project proposal covers not only construction and equipment supply but also technical assistance in the operation stage. a. JICA technical assistance expert (short term & long term) scheme b. JICA Training scheme in Japan and/or in Angola

3) Japanese Governmental Financing and Technical Assistance Scheme : Japanese governmental aid agency such as JICA and JBIC are willing to assist is willing to assist

the project in all aspects i.e. i) Financing, ii) Construction & Equipment and iii) Technical assistance with Human Resource Development. There is an option that Angolan government leases the new container port in Namibe to an international port operator on a concession basis.

(3) Possibilities of Japanese Governmental Financial Assistance: The project is expected to be funded by the Japanese Export Credit or Japanese Yen Loan :

Table 8-1 Comparison of Financing Conditions - Subject to change by assessment survey Finance Scheme Export Credit (Buyer’s Credit) Japanese Yen Loan (Soft Loan for development Project) 1. Financier JBIC - Japanese Government (Japan JICA - Japanese Government Bank for International Cooperation) (Japan International Cooperation And Agency) Private Bank(s) (Co-Financier) 2. Currency Japanese Yen Japanese Yen (US Dollar is also acceptable) 3. Loan Amount Max 85% of the contract amount 70% to 85% of the contract amount 4. Loan Term Max 14 years (including max 4 Maximum 40 years including max 10 years' Construction/grace period) years grace period. (According to OECD and JICA guideline to each country’s category to be reviewed regularly) 5. Interest rate Currently approx 3.4% p.a. Basic Condition : 0.7 to 1.7 % p.a. and other (Libor 1%p.a. plus 2.4%p.a.) (According to OECD and JICA charges including necessary charges such as guideline to each country’s category to (Japanese Yen Risk Premium, Insurance, Up-front be reviewed regularly) Basis) Fee, Commitment Fee etc but without legal cost to be occurred separately 6. Advantage Arrangement is relatively quick Soft Loan (Low Interest, Long Repayment Period) 7. Difficulties 1. Need to comply with loan 1. Arrangement takes time objective 2. No precedent case to Angola 2. Currency risk 3. Currency risk (Source : JICA Home Page, Japanese Private Bank and JETRO Study Team)