i1mif ri ltJ J RESTRICTED LTM' | TILL I Report No. PTR-22a U \i U UWE11 ur ME K 5 ODMgi WEEK reportpi u was prepared for use w'thin the Bank c,nd its affiiated orgnizions. Public Disclosure Authorized Th-eydo not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing theii views. I INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized APPRAISAL OF PORI' PPnTrrT * YV1(U,_ Public Disclosure Authorized June 5. 1969 Public Disclosure Authorized nprtatinn PrTsiPcts Dpnartmnnt Currency Equivalents Currency Unit - Cyprus Pound (EC) U&$ 1 IC O.hl17 hO 1 a US$2.40 Fiscal Year January 1 to December 31 Wbights and Measures Weight 1 ton - 2,240 lbs Linear and Area-Metric 1 kilometer - 0.62 miles (mi) 1 4.ee (.. a P3.28(t feet 1 hectare (ha) . 2.47 acres (ac) All Depths of Water are related to ,&Z___- r__ T.r_v_ {/ST.T\ rwan wuw wvvaer kr±LwvJ A11..J _.S. __ TT__.J- .T - 5L_.A. flM-- AUUrevialoi,ul u;sxu L1 IAiU aepur RPT - Rendel, Palmer and Tritton NRT - Net Registered Tonnage GYPRIJ.I APPRATSAT. OF TTMAS-0T. PORT PRr.TPfJ.T TABLE OF CONTENTS 1- TmPRnThrjrT)MN - A. Cont.y nd People 2 B. The Economy 2 r. Transport m,c55"% tes3 STT OTDT Tr' ppDn1 rip t'VnlfTTo r, v . fflz A uL~ sJLA ' J %'LrU11.ULA rAAesentr 0'47-gand.i6atu. Ll dUlu AUWLJ.±i 14 laO5 B. Future Port Organization - 7 4. PRESENT AND FUTURE TRAFFIC 10 A. Shipping 10 B. aresent General Cargo Traffic 10 C. Future Total General Cargo Traffic 11 D. Limassoi Cargo Traffic 12 E. Passenger Traffic 14 5. THE PROJECT 15 6. ECONOMIC EVALUATION 19 A. Introduction 19 B. Analysis of Alternative Port Development Schemes 19 C. Evaluation of Deep-Water Port at Limassol 19 D. Benefits to Normal Traffic 20 E. Be:nefits to Diverted Traffic 20 F. Passenger Traffic 21 G. Economic Return 21 7. PORT DEVELOPIENT PROGRAM 22 8. FUTURE FINANCES AND TARIFFS 23 A. Lirnassol 23 B. Proposed Port Authority 24 9. CONCLUSIONS AND RECOMMENDATIONS 27 This report has been prepared by Messrs. A. H. Clark (financial analysti, A. A. Fateen (engineer), M. S. Parthasarathi (economist). and Miss A. L. Datar (economist). Cont'd. APPENDICES 1. Existing Port Facilities 2. Berthage and Depth of Water Required - Limassol 3. Evaluation of Alternative Port Development Schemes 4. Additional Information regarding Tariff Estimates - New Port at Limassol 5. Assumptions Used and Additional Information - Financial Situation of Proposed Port Authority TABLES 1. Forecast of Total General Cargo Traffic 2. Forecast of General Cargo Traffic and Ships - Limassol 3. Project Costs 4. Sensitivity Analysis Table - Limassol 5. Comparison of Present Tariffs, Economic Savings and Assumed New Tariffs 6. Present and Assumed Revised Tariffs 7. Estimated Revenue Forecasts - Limassol 8. Estimated Consolidated Forecasts 9. Estimated Revenue Forecasts - Famagusta 10. Estimated Revenue Forecasts - Larnaca 11. Estimated Consolidated Cash Flow Statement 12. Estimated Consolidated Balance Sheets YAPS AND DRAITIGS 1. Cy-prus 2. Port Service Areas 3. Limassol Proiect REPUBLIC OF CYPRUS APPRAISAL OF PORT PROJECT SUMMARY i. This reDort appraises a nroiect for the construction of a neut deep- water port. at Limassol, and provision of cargo-handling equipment at Famnusta. for which a Bank lonn of US$I1.A million is proposed. The econ- ony of Cyprus is heavily dependent on foreign trade. The proposed port will inrease Cyprsnmqt cargo_handlI4ng Gnacity And ennourage tourism. This would be the first loan to Cyprus in the transport sector. ii. The project consists of the construction of a harbor enclosed by +.srr hn:ker:l.ac2fml7iv oaTiay-l o%n-PcP e% tth -nnAi f%Tn nn.czAncn;rar .hi-n hprt.hs: two transit sheds, two produce inspection sheds and a passenger terminal; paed eaLs nnd ser_ices; cego-i<dj4.g equipment; a -tu -- Mther float- ing craft; engineering, operations and accounting consultants' services .d-&& A.4-4a.r4-;U& 'J"44oacot.L 0.'.. '...JWU.L A_-_f.-4WU J JCA0.L UULJ.IZU stQLO0..L a C-g=-aP,P4.~.. J J~ nt-q.fo 5 ~ the port cif Famagusta is included to help improve operations at that port. _"A accs roa 'to I LI ne part s A-1..Alu is als _LJ- t-Oal cO; IS estimated at US$18.6 million (WC 7.75 million) of which the proposed loan Ut T$J.L.L..; IIL,LLJ.LU± (Wu 4.8 riIL.L.LLfl) WUU.U& 1.L11W1A.n ULMhe atIIr,Vted f.LW.&-BL-B exchange component. The harbor is designed to allow substantial further expansion ol berthage and supporting faclilties as uthy ayrbe needed. iii. rrocurement will be in accordance with the Bank:s guide'lnes. Disbursement of the loan would be against demonstrated foreign exchange costs except that, in the case of the access road, water main and elect:ric connection, disbursement would be on an agreed percentage of the cost. iv. Idmassol serves an important area in the western part of the island of Cyprus, rich in mineral resources, agriculture and tourist at- tractions. The present port operations consist of lighterage between ships anchored at sea and a small lighter harbor. Cruise and other pas- senger ships also anchor at sea and passengers are ferried ashore. As a result, cargo is either subject to high costs of lighterage, double han- dling and physical loss and damage, or is diverted at extra cost to the main port of Famagusta, while cruise passengers are deterred from going ashore by the cost, discomfort and time consumed. Even so, each year about 200,000 tons of cargo are .idadlet.at the port,while more than 20,1000 visitors land for a stay of less than one day and more than 40,000 passesn- gers enter or leave the country through Limassol. It is expected that by 1978, with construction of the new port, cargo traffic will increase to 500,000 tons by normal growth and re-routing of cargo presently handled at Famagusta; at the same time the number of less-than-one-day cruise visitors will, grow to 127,000. The number of passengers entering or leaving the country through Limassol will grow moderately. - ii - v. The public norts of OvDrus are administered by the DeDartment. of Ports, a department of the flUnistry of Communications and Works. Admirnis- tration bIy a eovernment denprtment has proved inadeouate to cope with the growth of traffic through the ports and with the expansion of facilities. An autonomous nort authority will be created to tnake over and manage all public gerneral cargo ports in the country. vi. The project is justified operationally and economically, with an econoMic rate of +re.trnof about lc5V- vni. The new port of 14.mssol, and the pr-oposed port aulthori +y as a whole, could be financially viable with tariffs reasonably based on costs. T.h. +ru"e - v..41 TP I be' <4 -A -A .- 44 0- -- 6-3 U'S on. costs. applied at all ports, to produce revenues sufficient to assure a financial Matve of re .on a-verage ne le seso tles <b 98a. n creasing thereafter. Commercial financial and cost accounting systems will Ibe -nsa'-.--i V-iii. There would be retroactivue finl±ing of engLneer-ing ser-vices from July 1, 15968 of about US$150,O00. ix. On the basis of agreements reached during loan negotiations, the project po-V1ideS a suitable basis for a Bank ioan to the Government of Cyprus of Us$115.million for a period of 25 years, including a grace period of about 5 years. REPUBLIC OF CYPRUS APPRAISAL OF PORT PROJECT 1. INTRODUCTION 1.01 In January 1968, the Government of the Republic of Cyprus re- quested the Bank to assist in financing the construction of a new deep- water port at Limassol to replace the existing lighterage operation. The public ports of the country are operated by the Department of Ports in the Ninistry of Communications and Wlorks. The project consists of con- struction of a deep-water harbor enclosed by a main breakwater and a se- condary breakwater, four general cargo berths and two passenger ship berths, two transit sheds, and two produce inspection sheds, a passenger terminal and other shore facilities. and provisicn of cargo-handling eonup- ment, a tug and other floating craft. Cargo-handling equipment is also to be provided for the port of Famnuta. The provision of engineering, oaoera- tions, and accounting consultants is included, as are an access road to the new port site at Limnssol and the necessary wTater mai-in and electricity -con- nection. 1.02 This would be the first Bank loan to Cyprus in the transport sec- tor. Earlier loans. for electric power development, were made in 19630Ad 1967 for US$21.0 million and for US$2.8 million, respectively. 1.03 The following appraisal report is based on the findings of a Bank appraisal rdis*04J to 0-u9sW 4Tuary/ In 1969tmZr% UULisv. l UJ.of r Clark, financial analyst; Fateen, port engineer; Parthasarathi, economist; and Miss I!atar, ecan0mi,st. 2. BACKGROUND A. Country and People 2.01 fsyprus is the most easterly of the 1editerranean islands and the third largest in area after Sicily and Sardinia. At the nearest coastal points, it is approximately 40 miles from Turkey, 60 miles from Syria, 220 miles from Ezypt and 300 miles from the Greek islands. It has an area of about 3,570 sq.