Document of The World Bank FOR OFFICIAL USE ONLY ,A/ 30oC)6 -Q - Czp/t Public Disclosure Authorized Report No. 7257-CHA STAFF APPRAISAL REPORT Public Disclosure Authorized NINGBO AND SHANGHAIPORTS PROJECT SHANGHAIPORT CHINA November 16, 1988 Public Disclosure Authorized Transportand Energy OperationsDivision Country DepartmentIII Public Disclosure Authorized Asia Regional Office This document has a resticted distibution and may be used by rients only Inthe performance of CURRENCY EQUIVALENTS (as of July 1988) Curtency name = Renminbi (RMB) Currency unit Yuan (Y) US$1.00 = Y 3.70 US$0.27 = Y 1.00 US$270,270 Y 1,000,000 FISCAL YEAR January 1 to December 31 MEASUREMENT EQUIVALENTS Metric System British/US System 1 meter (m) = 3.281 feet 1 square meter (s2) = 10.764 square feet 1 cubic meter (m ) = 35.315 cubic feet 1 kilometer (km) = 0.621 mile = 0.5396 nautical mile 1 ton-km = 0.621 ton-mile 1 ton = 2,204 pounds 1 hectare (ha) = 2.469 acres PRINCIPAL ABBREVIATIONS AND ACRONYMS USED AAPRC - Audit Administration of the People's Republic of China ADT - Average Daily Traffic CHC - Cargo Handling Corporation CIECC - China International Engineering Consultancy Corporation cif - Cost, insurance and freight COSCO - China Ocean Shipping Corporation CNTIC - China National Technical Import Corporation dwt - Deadweight tons ERR - Ecrnomic Rate of Return FYP - Five Year Plan GOC - Government of China LRMC - Long Run Marginal Cost MLW - Mean Low Water MOC - Ministry of Conmunications MOF - Ministry of Finance MR - Ministry of Railways NPV - Net Present Value SHB - Shanghai Harbor Bureau SHS - Shanghai Harbar Superintendency nrt - Net registered ton PBC - People's Bank of China SEZ - Special Economic Zone SPC - State Planning Commission teu - Twenty-foot equivalent unit FOR OFFICLALUtSE ONLY CHINA NINGBO AND SHANGHAI PORTS PROJECT SHANGHAI PORT Loan and Project Summary Borrower: Peor'e's Republic of China. Beneficiaries: Ningbo Port Authority and ShanghaiHarbor Bureau Amount: $76.4 million equivalent:$30.0 million for Ningbo and $46.4 million for Shanghai. Terms: Twenty years, includingfive years of grace, at the standard variable interest rate. RelendingTerms: Out of the proceeds of the loan, $46.4 million equivalentwould be onlent by the Governmentto SHB under a subsidiaryloan agreementwith a 20-year term, including5 years of grace, at an inlterest rate of 6.2Z p.a. The foreignexchange -riskand the commitmentfees would be borne by SHB. ProjectObjectives: The principalobjective of the project is to assist the Governmentin its efforts to improve operations, relieve congestionand increase the handling capacity in the ports subsector. The project would provide for infrastructuredevelopment at two key ports in China, modern equipmentneeded to operate the new facilities,as well as technicalassistance and training to strengthenthe ports' management, improveoperating capabilities, and address long term aspects of port development. Project Description: The proposed project includes,developmentsat Shanghai port which consist of: (a) the construction of general and multipurposeterminals at Baoshan and Guangang comprisingeight berths each; (b) the constructionof two coal handling berths at Zhujiamen;(c) the reconstructionof four berths at the Minsheng terminal; (d) the constructionof an 80,000-toncapacity grain silo; (e) the acquisition of cargo handling equipment;(f) a study to develop a port costing and managementinformation system frameworkto help China's ports in establishing cost-basedtariffs; (g) a review of the Master Plan of Shanghai port by a panel of experts; and (h) the This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - carrying out of a number of measures to improve the efficiency and safety of the port. Risks: The only possible risk in the project is that it may be delayed in the course of construction. On the basis of preparations already made by SHB, this risk is not considered to be a serious one. Estimated Project Cost (Shanghai Port): Local Foreign Total …(US$ million) ---------- Civil works 81.5 125.7 207.2 Equipment 7.1 38.6 45.7 Technical assistance and training 0.6 2.7 3.3 Subtotal 89.2 167.0 256.2 Contingencies Physical 0.6 1.2' 1.8 Price 1.1 5.2 6.3 Total Project Cost 90.9 173.4 264.3 Financing Plan (Shanghai Port): Bank loan - 46.4 46.4 Port/Government 90.9 125.4 216.3 Japan and others /a - 1.6 1.6 Total 90.9 173.4 264.3 Estimated Disbursements (Shanghai Port): Bank FY 1989 1990 1991 1992 1993 ---------- (US$ million) ----------- Annual 11.6 10.7 13.0 7.8 3.3 Cumulative 11.6 22.3 35.3 43.1 46.4 Economic Rate of Return (Shanghai Port): 18X Maps: IBRD 20746 and 20747 /a Inclusive of US$0.7 million from Cr. 1664-CHA. - lii - CHINA NINGBO AND SHANGHAI PORTS PROJb:T SHANGHAI PORT Table of Contents Page No. I. THE TRANSPORT SECTOR .................. 1 A. Traffic .............................................. 1 Bo Investment..... o..O..O..0.0.00..O..0.0.000.0.......... ................2 C. Land Transport Systems...oo. .oo....................o.....o... 2 D. Transport Issues and Objectives in the 1980s...............0 3 II. THE PORTS SUBSECTOR.............. ........ ....... .. ..... ....... .. 4 Ao Port Traffic ............................. 4 B. Organization and Management................................ 5 C. Operations and Maintenance.* ......................... 6 D. Investment Priorities and Technology....................... 7 Eo Tariffs oo o .o oo .o o o o.es o .o o * *. o.o .o.............oo....................7 Fo The Role of the Bank........................................ 9 C. Experience in Past Lending ................................ 9 III. THE PORT OF SHANGHAI....................ooo...9o............. 10 A. Location and Facilities .................................... 10 Bo Hinterland................................................. 11 Do Operations o.o.o......oo..ooo.....o...oo..ooo..........oo...o...ooo....12 E. Environmento..o..o......oeoo.....o..ooo..o.o..o.e........oo.....ooo....o12 F. Management and Organization o..............................o 13 G. Planning, Budgeting, Accounting and Audit.................. 14 This report is based on the findings of pre-appraisal and appraisal missions which visited Shanghai in October 1987 and March-April 1988, respectively. The appraisal mission comprised Messrs. M. S. Parthasarathi (Economist), Kek Choo Chung (Port Operations Specialist), S.M.L. van der Meer (Port Engineer/Consultant), Billy Cheng (Financial Analyst/Consultant), Andrew Zador (Bulk Handling Specialist/Consultant), G. U. Fortunati (Environment Specialist/Consultant) and Cai Chengzhang. - iv - Page No. IV. THE PROJECT............................................... * 15 A. Project Objectives .......... ............................. 15 B. Description of Main Project Itemst.... em..o.o.............. 16 C. Ecology and Environment.2............. 17 Do Costuso eiati o................... * .................... 18 EH Financingr .oo........................................... 19 F. Status of Prepartion........................ ... **..*........o 20 A. Implementation................. ... 0. 0*0*............... e 20 H. Portacltieos... Epaion P.a..o.. .. 21 I. Disuurseer *.. r*..0..*....*.*..s ee...n.... ... 0.. 22 J. Reporting o.eraoio..........o.o......o....... ... * 22 V. ECONOMIC E V ALAndBNef........ .... o..... *..*o.. o..o.o..o..o 22 A.onrd uto 22 B. Port Facilities Expansion Pln22 Co Future Trafc r afof . 04*000000...00 ic.6 23 Do Impact on Operationso.oo .. ooooo .. aoooo.o 24 E. Costs and Beefis..e . f i ts0000 25 F. Overall Evaluation and Sensitivity Analysiso.o.o.......... 26 VI. FINANCIAL ANALYSIS.I ......... 27 A . Past Results ...... ...... .....0 ..............................27 B. Present Financial Position s i t i on......o.....0....27 C. Future Financial Performance.ooo...o........oo...*o..*oo* 28 VII. AGREEMENTS REACHED AND RECOMMENDATIONS.. o.................... 29 ANNEXES 1. Documents Available in Project File 2. Training Program 3. Terms of Reference for the Expert Panel to be Established by the World Bank and the Shanghai Harbor Bureau to Review the Master Plan of Shanghai Port 4. Proposed Action Plan 5. Development of a Port Costing and Management Information System: Terms of Reference 6. Implementation Schedule 7. Outline of Semi-Annual Progress Reports v TABLES 3.1 Port Traffic (1981-2000) 4.1 Project Cost Summary 4.2 Equipmentto be Financed by Bank Loan: Baoshan Terminal - Cost Estimates 4.3 Equipment to be Financed by Bank Loan: Guangang Terminal - Cost Estimates 4.4 Equipment to be Financed by Bank Loan: ZhujiamenTerminal - Cost Estimates 4.5 Equipment to be Financed by Bank Loan: Minsheng Terminal - Cost Estimates 4.6 Equipment to be Procured under _ocal CompetitiveBidding and Other Procedures 4.7 Cumulative Disbirsements 'Schedule 5.1 Traffic Handled by the Port 5.2 Operational Parameters Assumed for Economic Evaluation 5.3 Economic Project Cost 5.4 Cargo Handling Without and With Proposed Berths 5.5 Loading/Unloading Cost Savings 5.6 EconomicBenefits Summary 5.7 EconomicRate of Return and SensitivityAnalysis 6.1 Income Statement 6.2 Balance Sheet and Cash Flow CHARTS 41635:1 - Organizationof the ShanghaiHarbor Bureau 41635:2 - Typical Organizationof District MAPS IBRD 20746 - Shanghai Port Project IBRD 20747 - Project Terminals CHINA SHA_GHAIPORT PROJECT I. THE TRANSPORT SECTOR. 1.1 Chinese policy statementsrepeatedly identify transportationand