Documnt of The World Bank FOR OMCUL USE ONKW Repwt No. 12189 PROJECT COMPLETION REPORT IDIA NHAVA SHEVA PORT PROJECT (LOAN 2387-IN) JULY 14, 1993 MICROGRAPHICS Report No: 12189 Type: PCR Infrastructure Operations Division Country Department II South Asia Regional Office This document has a resticted distribution and may be used by recipients only in the perfomanc of their offical duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = Rupees (Rs) US$1.00 = Rs 28.00 Rs 1,000,000 = US$ 35,714 (as of January 1993) ABBREVIATIONS BPT Bombay Port Trust CFS Container Freight Station (GOI Government of India JNP Jawaharlal Nehru Port MOST Ministry of Surface Transport PCR Project Completion Report Ply Project Implementation Unit FISCAL YEAR OF BORROWER April 1 - March 31 FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-enseral operations Evaluation July 22, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on India Nhava Shiva Port Project (Loan 2387-IND) Attached is the "Project Completion Report on India - Nhava Shiva Port Project (Loan 2387-IND)" prepared by the Technical Infrastructure Division in collaboration with the Infrastructure Operations Division, Country Department 2, of the Asia Regional Office, with the Borrower providing Part It. The project was implemented vith considerable delay; the port authority's operational efficiency has been unsatisfactory: productivity of cargo handling is low and the maintenance of equipment is below standard. Improvement in operation and maintenance works are urgently needed to ensure that the physical results are sustained. Extensive administrative changes, including possible privatization of some activities, are necessary to accomplish any major improvements in operations and maintenance. The estimated economic rate of return is 11.51 compared with an estimate of 202 at appraisal. The financial rate of return for 1992 is 1.7% compared with an estimate of 13.51 at appraisal. Overall the project's outcome is rated satisfactory--but barely so-- its sustainability uncertain and its institution building impact negligible. The PCR's quality is satisfactory. No audit is being planned. Robert Picciotto by H. Eberhard R8pp This docunent has a restricted distribution and may be uses. by rec C-ients onty in the performance of their official duties. Its contents may not otherwise be di iclosed ;thout World Barik authoization. FOR OMCIAL USE ONLY PROJECr COMPLETION REPORT INDIA NIAVA SHEVA PORT PROJECT (LOAN 2387-I) TABLE OF CONTENTS PagNQ. Preface ......................................... i Evaluation ....................................... ii PART I: PROJECT REVEW FROM THE BANK'S PERSPECTIVE 1. Project Identity .............................. 1 2. Background .............................. 1 3. Project Objectives and Description ........ ........... 1 4. Project Orgaization ........................... 2 5. Project Implementation ......................... . 3 Loan Effectiveness and Project Start-up ....... ....... 3 Implementation Schedule ............... ...... 3 Procurement. 3 Contract Disputes. 4 Coordination of the Project Components ...... . ..... 4 Project Costs ......... .............. 4 Disbursements ........................ 4 Loan Allocation ........................ 4 6. Major Results of the Project ....................... 4 Project Objectives ..................... .. 4 Physical Resuts ........................ 5 Financial Performance - Present ............ ...... 6 Financial Performance - Future .................. 6 7. ProjectSustainability ................. .......... 9 8. Bank Performance .......... ............ 10 9. Borrower Performance ....................... 10 10. Project Relationship ....................... 10 11. Consultant Services ............. ......... 10 12. Project Documentation and Data ................... 11 This document has a restricted distribution and may be used bY recipients onlY in the performane of their official duties. Its contents may not otherwe be disclosed without World Bank authodzation. PRTI H. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE Borrower's Perspective of the Design and Implementation and its Development hnpact on the Project .................... 12 PART m. STATISTICAL INFORMATION Related Bank Loans Md/or Credits ......... ............... 16 Project Timetable .................................. i6 Loan Disbursements ................................. 17 Project Implementation ............................... 18 Project Costs and Fiancing Project Costs ................................. 19 Project Financing ............................... 20 Allocation of Loan Proceeds ........................ 20 Project Results Direct Benefits ................................ 21 Economic Impact ............................... 21 Financial Impact ......... . 21 Studies ............ ......................... 22 Traffic ............ ......................... 23 Vessel Size .................................. 23 Status of Covenant ................................. 24 Use of Bank Resources Statf Input ................................... 25 Mission Data ................................. 26 Procurement ...................................... 27 ANN1EX Annex 1 . ........................................ 28 Table 1: Cargo Traffic ............................... 32 Table 2: Economic Rate of Retum ........................ 33 i PROJECT COMPLEnON REPORT INDIA NHAVA SIHEVA PORT PROJECT (LOAN 2387-IN) PREFACE 1. This is the Project Completion Report (PCR) for the Nhava Sheva Port Project, (India) for Loan 2387-IN in the aniount of US$250 million, approved on March 13, 1984. The loan closed June 30, 1992, three years behind schedule. It was not fully disbursed due to several disputes about contract claims which were still unsettled as of October 31, 1992, four months after the closing date. 2. This PCR was prepared jointly by the Infrastructure Division of the Asia Technical Department (Preface, Evaluation Summary, Parts I and o), and the Borrower (Part II), in consultation with the Infra- structure Operations Division of Country Department 11, South Asia Region. 3. Preparation of this PCR was started just after the p.'oject closing date of June 30, 1992. It is based, inter alia, on the Staff Appraisal Report, Loan Agreement, Guarantee Agreement, Project Agree- ment; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda. Ii PROJECT COMPLETION REPORT INDIA NIAVA SHEVA PORT PROJECT (LOAN 2387-IN) EVALUATION SUMMARY 1. Objeciv. The Nhava Sheva Port Project (Loan 2387-IN) was intended to accommodate the projected growth of maritime traffic in the Bombay area from through 1992/93 by: (a) providing specialized facilities to handle both containerized and bulk cargo; and (b) providing modem high capacity cargo handling systems at the new ports so benefits from handling larger vessels could be realized. 2. I ementa inon Exeren . The main items of civil works in the Project were: (a) construction at Nhava Sheva of a total of 1,180 m of offshore marginal wharves; (b) one service berth of 212 m length; (c) land reclamation; (d) dredging of an access channel; and (e) a container freight station (CFS) and township. The offshore marginal wharves were comprised of a 680 m wharf with four access bridges for container handling, and a 500 m wharf with one access bridge for handling bulk materials. The project also included procurement of advanced (automated) cargo handling equipment systems for both containerized and bulk cargo. 3. Progress on the civil works items was slow: all the civil works were behind schedule 1 to 2.5 years. This was mainly due to the slow preparation of documents and the lengthy evaluation process of bids (para 5.03, Part 1). However, the quality of the completed civil works was satisfactory. 4. Progress on the procurement of equipment was also slow. In addition, performance of equipment was below expectation. This was due to the inappropriate provisions in the technical designs and specifi- cations for highly sophisticated automated systems, the insufficient quality of the equipment supplied by the contractors and inappropriate maintenance/management by JNPT (paras 5.04, 6.02 and 6.03, Part D). 5. Jawaharlal Nehru Port Trust (JNPT)1 (originally named Nhava Sheva Port Trust) has since decided the highly automated systems should be converted to partially manual ones, in order to have more flexibility and reliability of operation (para 6.04, Part 1). Several contract disputes were experienced. These were caused by such things as: (a) time extensions; (b) customs clearance delays; (c) claims not paid by the employer; and (d) claims for liquidated damages due to unsatisfactory equipment performance (para 5.05, Part I). 6. JNPT hired consultants to undertake technical audits of contracts for equipment capability, reli- ability and maintence requirements in accordance with tender designs. They were also to propose measures for improving operational efficiency for the bulk and container handling equipment. Further, I Henceforth, to avoid confusion, only the more recent title of the Port Trust, JNPT, and the Port, JNP, will be used in this report. 1ii they identified possible inadequacies in technical designs and specifications as well as in the quality of parts and equipment supplied, and proposed means for improvements (para 5.06, Part 1). 7. Result. With the exception of operational performance of the sophisticated automated cargo handling systems, the major objective of the project was achieved, viz. to provide modern, specialized additional port capacity in the Bombay area. Benefits from the project, in the form of savings, have been achieved: in (a) ship waiting time; (b) berthing time; (c) cargo handling cst; and (d) reduced loss of cargo. However, the actual productivity of the installations has been well below expectations and needs to be improved. The ERR on the project, as completed, is estimated at 11.5% (para 7.02, Part 1) compared to 20% estimated at appraisal. This was due mainly to bulk traffic not materializing as expected and operational efficiency well below target. 8. The financial performance of JNPT is unsatisfactory due to financial repercussion from large cost overruns, inflation in terms of foreign exchange rates and lower productivity in operations. In order to secure JNPT's financial soundness, GOI action to restructure the capital base of JNPT plus efforts by JNPI to improve operational efficiency, would be required (paras 6.16 - 6.22). 9. Sutna ilnab Short-term prospects are a major concern, because of lower than expected bulk traffic growth, slow containerization of general cargo, existence of competing container handling capacity in other Indian ports, and the heavy financial burden imposed on JNPT by cost overruns and inadequate financW structure. In the long-term, prospects for traffic growth are more encouraging. The capacity can be augmented with some limited investments and the project can be considered a sustainable invest- ment, provided measures are taken to correct current low productivity and maintenance problems. Regarding port operational efficiency, JNPT should give more attention to staff training and contracting out some port activities to the private sector, thereby improving productivity and maintenance, while generating additional investment funds (para 7.03, Part 1). 10. Findings and Lessons Learned. The following lessons can be learned from this project and may be of benefit in the future: (a) the project technology should be appropriate to country conditions and overly sophisti- cated components may need to be avoided (paras 5.04 and 6.04, Part 1); (b) the project executing entity should be staffed with experienced and capable persons to handle potential problems during the preparation and implementation periods and after- wards to ensure efficient operations (para 9.01, Part l); and (c) all the major project related components, in particular highway links, should be included in the project even though they may be financed by sources other than the Bank (para 3.02, Part 1). PROJECT COMPLhTION REPORT INDIA NHAVA SHEVA PORT PROJECT (LOAN 2387-IN) PART I. PROJECT REVIEW FROM THE BANK'S PER!tPECTIVE 1. Wig Id Name: Nhava Sheva Port Project Loan Number: 2387-IN RVP Unit: South Asia Region Country: India Sector: Transport 2. Back_round 2.1 The original wharves at Bombay Port were built between 1894 and 1914, and designed for handling break-bulk cargo, they the principal form of cargo. The port was able to cope successfully with traffic growth for four decades. During the 1950s, however, Bombay's capacity became strained with the growth of bulk cargo; mainly crude oil, grain and fertilizer. To ease the problem, a new marine oil terminal was built in 1956 and in 1962 seven berths, partially financed by IDA, were added. The Government of India (0O0) believed these facilities represented the maximum increase possible at that site, and any future need for increased capacity would require new facilities at a different site. This view was held due to Bombay's draft and beam restrictions, inadequate staging areas and road and rail access to the docks. Accordingly, in 1964, the Bombay Port Trust (BPT) commissioned a master plan to develop alternative port facilities in the Bombay area. The consultant (Bertlin & Partners, UK) recom- mended Nhava Sheva as the best site for the development of a satellite port. 2.2 The fast growth of bulk and container cargo traffic in the 1970s resulted in heavy congestion. Ship waiting time averaged 40 days, due not only to shortage of infrastructure, but also to poor port operations and management practices such as: (a) low labor productivity; (b) mandatory stuffing and stripping of containers within the port area; (c) unsystematic handling procedures and slow clearance of goods; plus (d) high down-tine for cargo handling equipment. GOI modernized and improved operational practices to increase productivity and agreed in principle to the development of a new port. In May .1982, G01 formed the Nhava Sheva Port Trust, later renamed the Jawaharlal Nehru Port Trust (JNPT). (JNPT and JNP will be used in the rest of this report to refer to the agency and the port respectively.) JNPIT was created as an independent agency with its powers and responsibilities defined by the Major Ports Trust Act of 1963, and operating under the jurisdiction of the, Ministry of Surface Transport (MOST). 3. Project Objectives and Description 3.1 Project Objectives. The project's objective was to accommodate the expected growth of maritime traffic in the Bombay area up to 1992/93 by: (a) providing specialized facilities to handle both 2 containerized and bulk cargo; and (b) changing from labor-intensive methods of cargo handling to modern high capacity systems, so benefits from handling larger vessels could be realized. The achievement of these objectives required the comprehensive training of otherwise inexperienced staff at all levels and extensive technical assistance in organization and management. 3.2 Prjec Descripi The Nhava Sheva Port Project (Loan 2387-IN) provided for: (a) a total of 1,180 m of offshore marginal wharving comprised of a 680 m wharf for handling containers (sufficient to berth one large and two medium-sized vessels simultaneously) with four access bridges, and a 500 m wharf for handling bulk materials (sufficient to berth two bulk carriers) with one access bridge, plus one service berth of 212 m, with its shoreward face designed for berthing port craft; (b) land reclamation, paved areas for container and railway yards, storage buildings for bulk and bagged cargo, offices, other buildings, road and railway sidings; (c) dredging of access channels; (d) container handling: 3 wharf and 9 yard gantry cranes, 38 tractors, 136 trailers and 1 heavy- duty forklift; (e) an integrated and complete conveyor belt system for bulk and bagged cargo, plus 2 continuous and 2 grab unloaders (650 m3/hour capacity each); (f) an electrical distribution system, utilities, services and environmental protection; (g) marine services: 3 tugs, 1 survey, 2 mooring and 3 pilot launches, plus navigational aids; (h) a container freight station (CFS) and staff residential township; and (i) technical assistance for staff training, port organization and management, in addition to engineering services for the supervision of contracts. It should be mentioned that the railway and highway links to the port were scheduled to be completed by the start of port operations, but their implementation was outside the scope of this project and the delays in the completion of the highway link has affected port traffic negatively. 4. Project Organization 4.1 JNPT was newly established in 1982 to prepare, implement and supervise the project, and operate the new port. It is important to note that the project had to be implemented by a totally new organiza.tion with newly recruited management and staff who were not necessarily experienced with such a project. In this sense, this is a rare port project among those financed by the Bank. To oversee the early stages of project implementation, JNPT established a Project Implementation Unit (PIU) staffed with top level managers. To minimize administrative delays in executing the project, GOI appointed a special committee including ministerial secretaries representing finance, shipping, railways, commerce and planning. 3 4.2 The consultants responsible for the project's feasibility study and final engineering were retained to prepare bid documents, assist in bid evaluation, supervise contractors and generally assist JNPT. 4.3 To control JNPT's payroll costs and avoid much of the labor unrest and consequent operating inefficiencies which have plagued India's other major ports, MOST decided that JNPT should operate only those facilities and equipment within the port's immediate confines, and contractors and conces- sionaires should be retained to operate many of the port's ancillary facilities. 5. Project Implementation 5.1 Loan Effectiveness and Project Stat-un. Loan 2387-IN was approved on March 13, 1984, signed on May 25, 1984, and became effective on August 23, 1984. 5.2 Implementation Schedule. The project was originally scheduled to be completed by June 30, 1989, but it was not until December 1991 that most of the project components were actually substantially complete. The port, however, was officially opened in May 1989 and became partially operational even before the physical completion of all of its facilities. It should be noted that the delays experienced in this project's completion were minimal, compared to other Bank projects in India. The main reasons for the delays were: (a) slow procurement process, in particular, the lengthy evaluation of bids (discussed in paras 5.03 and 5.04 below); (b) inadequate performance of cargo handling equiprment due to the incorporation in their design of overly sophisticated and advanced automation now being modified to provide a greater degree of manual handling (described in paras 6.02 to 6.04 below); and (c) many contract disagreements delayed disbursements, with some contracts still under arbitration/review. 5.3 Procurement. The procurement process as a whole was slow, particularly the evaluation process. The evaluation period (from bid opening to award) for the 8 Bank financed contracts, where the contract amount exceeded US$5 million, varied between 6 and 13 months averaging 8.1 months as shown in Part m, para 9. The longest evaluation period (13 months), for Contract 1 for the main civil works, was due to procurement under the two envelope system: the first envelope was for technical and the second for financial aspects. However, the Bank insisted that for future contracts GOI change to the one envelope system and GOI followed the Bank's recommendation beginning with the second contract. The evaluation period was then shortened to an average of 7.4 months. 5.4 The performance of cargo handling equipment (for containers and bulk cargo) has been unsatis- factory. This possibly is due to the inappropriate provision in the bid documents (technical specifications) for highly advanced and sophisticated automation, the deficiency in the quality of equipment supplied by the contractors and the lack of proper maintenance/management by JNPT. Some aspects of the equipment system are a world-first application (i.e. the bagged fertilizer wagon side-loading system) requiring care- ful preparation of technical specifications to ensure optimum performance of the automated handling system. JNPT decided to start operating the system even before final completion of the installation. This made it difficult to identify the party responsible for the mechanical problems which arose. 4 5.5 Contract Q iIDhis . Many contract disputes have been experienced due to several reasons in addition to the low operational performance mentioned above: (a) extensions of time granted by the engineer were disputed by the employer; (b) Customs clearance was not obtained promptly by the employer; (c) claims signed by the engineer were not paid by the employer because of inadequate performance of the equipment; and (d) there were liquidated damage claims caused by unsatisfactory equipment performance plus interest claims for delayed payments. Within the bulk system, although each of the components of the system passed acceptance tests in accordance with the provision of the contract, the function level of the total system did not pass these tests. As of this date these disputes have not been settled. 5.6 To assess the capability, reliability and maintenance requirements of the equipment in accordance with tender specifications, and to propose corrective action to improve operational efficiency, JNPT requested Bank agreement for acquiring consulting services. Independent consulting companies performed tectnical audits of two contracts for procurement of bulk handling and container handling equipment. Their audit reports have been submitted and final decisions by JNPT on dispute resolutions are still pending. 5.7 Coordination of the Project Components. Coordination during the implementation of each component of the project, except for the construction of the highway to the port, was generally satis- factory. The unit train marshalling yard (railway transportation for containers) and CFS were completed in time for operation of the container terminal, and other components such as dredging, power distri- bution system, building and township construction have been completed satisfactorily. The National Highway (NH4), which would improve the port's links to the hinterland, is expected to be completed by 1994. 5.8 Proect Costs. The estimated cost of the Nhava Sheva Port Project at appraisal was Rs 7,040.5 million (equivalent to about US$722 million). The provisional final cost excluding the potential increment in the disputed contracts, is about Rs 8,886 million (equivalent to about to US$641 million), as shown in Chart 5(A) Part III. The increase in the total Rupee cost of about 26% is due to internal inflation and the decrease in US dollar cost is due to the change in the exchange rate. The project scope itself did not dhnge. 5.9 Disbursemetn. The estimated disbursements from the Loan are given in para 3, Part m. Disbursements were delayed due to protracted initial implementation of the project. The original closing date was June 30, 1989, but due to three extensions the actual closing date was June 30, 1992. The loan account has not been closed due to the pending refund of the outstanding special account balance (about US$1.73 million). The cumulative disbursements against commitments up to December 31, 1992, are US$230.738 million and the outstanding balance is US$19.262 million. 5.10 Loan Allocation. The original and revised allocations from Loan 2387-IN and its actual disburse- ments are shown Chart SC, Part m. Two reallocations were made on February 4, 1991 and December 10, 1991 to increase the amount in Categories l(a) and 2. 6. Major Results of the Pioject 6.1 Prject Objecives. Overall, the project achieved its main objective of providing modern, specialized additional port capacity in the Bombay area, to handle maritime container traffic as well as bulk foodgrain and fertilizer traffic up to the year 1992/93 with reduced port labor. The traffic and 5 vessel sizes at JNP and Bombay are shown in Chart 6, D and E, Part m. This shows that traffic growth was slower than expected and that although the move to larger bulk vessels did in fact occur, the same did not happen for container vessels as JNP so far is served by feeder vessels rather than mainline vessels and this is not expected to change unless the performance of the port improves significantly. As a corol- lary JNP also achieved the equally important objective of reducing congestion in Bombay port. The project also has been successful in introducing the new port high-apacity cargo handling systems for foodgrains and fertilizers, a much needed advance over the labor-intensive methods employed for such cargo in nearly all other Indian ports. Hopefully this will be the harbinger of similar projects in other Indian ports which suffer from high (that is, higher than need be) direct labor costs and, more importantly, high indirect costs of ship waiting time associated with much slower manual handling of cargo that could be handled more speedily in bulk. 6.2 PThysical Results. The physical targets of the project, in terms of provision of facilities, essentially were achieved as planned. However, some facilities and equipment items procured under Bank financing have given operational problems. The Bank reviewed the required size of facilities at appraisal. The size of the container yard and CFS, and amount of equipment were reduced based on the normal operational standard in many developing nations. It was expected that additional equipment would be provided only when justified by actual traffic growth. 6.3 The technical audits (referred to in para 5.6) disclosed issues and also recommended corrective measures. It is, however, difficult to identify, at this time, the responsible parties for the shortcomings and problems found in the system. Improvements in operation and maintenance works are urgently needed to ensure that the physical results are sustained. 6.4 Meanwhile numerous corrective actions for the automated systems are being considered, and JNPT has decided to convert the systems to partially manual operated ones. Both systems, however, were designed to achieve a very high degree of automation requiring rigid adherence to prescribed operational methods. The container handling equipment, however, after partial conversion to manual operation is performing well. On the other hand, the bulk handling system, in particular, cannot be easily converted to partial manual operation even though many of its automated functions such as bagging and stacking are unsatisfactory. Better coordination is further required to ensure the timely availability of containers and chassis; otherwise poor productivity rates will persist. There is also need to reduce the loss in working time due to breaks and other factors. 6.5 In December 1991, a Bank supervision mission recommended that GOI consider the use of private sector involvement to overcome JNPT's low productivity and equipment maintenance inadequacies. Several shipping lines and private industrial groups had expressed a keen interest in being involved in the operation and management of selected port activities, alone or in joint venture. This recommendation is in line with MOST's announcement in the spring of 1991 that private sector involvement in ports was desirable and would be given consideration. 6.6 Subsequent to the formal commissioning of the project, and in light of projected traffic develop- ment, the Bank agreed with JNPT to the procurement of one container additional crane. This was to augment the three originally provided (in addition to one crane to be financed by port users). Although the new crane was to be covered by loan funds, there was lack of action by GOI on JNPT's request and the equipment was never procured. 6 6.7 Financial Peformance - Present. Estimates of JNPT's finances contained in the AppraW Report assumed start of port operations FY88 and total cargo throughput of 5.1 million tons by FY92. In reality, the port did not begin even partial operation until May 1989 due to project completion delays, and had reached a total throughput of only 2.65 million tons by FY92 due to delays in project completion and initial low productivity. Furthermore, because of cost overruns and the effects of inflation, the project's cost exceeded estimates by some Rs 2 billion. These ftors also incr ed JNPT's indebtedness, annual loan servicing and depreciation charges. 6.8 The effects of these various constraints are apparent in the table of financial highlights on pages 1 and 2 of Annex 1, summarized below: (Rs million) FY92 FY92 Year ended March 31 Appraisal Actual Cargo throughput(mil. tons) 5.1 2.65 Operating Revenue 1287 731 Operating Expenses 422 508 General Admistration 1472 Operating Surplus 851 151 Operating Ratio % 33.9% 79.3% Hist. Valued Fixed Assets 7075 9150 % ROR on Fixed Assets 13.5% 1.7% Annual Depreciation 173 282 Long-term Debt 7388 9789 6.9 The operating ratio of 79.3% compares very unfavorably with the appraisal estimate largely because of the much lower cargo throughput and lower cargo handling productivity rates achieved. JNPT's security, marine and general service indirect overhead costs, together with operational and administrative staff training charges resulted in a higher level of general administration costs than the Appraisal Report's rather optimistic figure of Rs 14 million. Furthermore, since this type of expenditure is prone to grow, JNPT needs to vigilantly avoid the development of an expensive bureaucracy. A major concern for JNPT is its long-term debt. The Appraisal Report considered GOI's intention that JNPT's financing plan depend solely on debt, rather than a mix of debt and equity, determining the high costs of the project have now made such a formula untenable. 6.10 Financial Performance - Future. Apart from JNPT's own modest retained earnings, the port has no equity capital. Its development has been financed entirely from loans, i.e., Rs 5.3 billion from GOI and Rs 4.4 billion from two other major ports. To assist JNPr meet loan service obligations in the early years, 001 granted a ten-year moratorium on its part of the loan capital. 7 6.11 JNPT's draft capital expenditure program, if approved by GOI and implemented between FY93 and FY99 would cost Rs 6.5 billion at 1992 prices or Rs 9.2 billion allowing for inflation at 8% p.a. JNPT has requested that GOI convert 50% of existing loans into equity capital to improve JNPT's fture cash flow. 6.,2 However, projections indicate that savings accruing to JNPT from such a restructuring of debt/ equity would fall well short of the program's cost. JNPT would need to seek loans to offset much of the shortfall. Only if the program costs are cut back to Rs 3.7 billion could further borrowing be avoided. 6.13 If, however, GOI gradually increases its equity holding by meeting the cost of planned capital expenditure, classifying such funds as an equity injection until a 50:50 debt:equity ratio has been reached, JNPT can complete the entire capital expenditure program without further loans. The following estimates of JNPT's future financial performance assumes this solution will be adopted by GOI and JNPI. 6.14 JNPT's draft capital expenditure program assumes another container gantry crane will be installed by 1993/94; during 1994/97 some short-life equipment will be replaced; and during 1997/99 work is expected to proceed on additional container wharves for which no detailed plans are yet available. Fore- cast balance sheets show that if this capital program is pursued and its cost is fully met by 00G untl JNPT's debt:equity ratio reaches 50:50, this ratio level will likely occur during FY98. 6.15 Pages 3 and 4 of Annex 1, show traffic, revenue and expenditure forecasts for the period FY93 to FY99. These flgures are based largely on JNPT's presentation to MOST on March 12, 1992, in a sub- mission seeking the Ministry's reaction to financial restructuring proposals. Although JNPT's traffic fore- casts are somewhat optimistic in light of the port's recent performance, they are attainable if cargo handling productivity improves. Tberefore, JNPT's figures have only been amended to take into account investment income and increases in estate rental income which JNPT's presentation did not include. Highlights of the revised forecasts are summarized below: 8 (Rs million) ACTL BUDJ EST EST EST PY92 EPY9 EX24 EX26 FY98 Container Cargo (mil.tons) 1.21 1.44 2.40 3.60 4.38 Bulk Cargo (mil.tons) 1.44 2.20 2.50 2.82 3.03 Operating Revenue 731 983 1339 1797 2134 Operating Expenditure# 580 575 658 804 907 Net Surplus 151 408 681 993 1227 Operating Ratio (%) 79 58 49 45 43 Investment Interest 118 130 150 150 150 Long-term Debt Interest 74 280 564 1031 983 Net Revenue 195 258 267 112 394 Net Cash Generated* 477 486 501 395 760 Long-term Loan Repayments - 160 262 503 621 # Including depreciation * Net Revenue plus Depreciation 6.16 Apart from capital expenditure, the forecasts do not take into account the effects of inflation. It has been assumed GOI will allow JNPT to amend tariffs promptly to keep abreast of inflation, in accord- ance with the project's Credit Agreement. Prompt action has not occurred in the past but, as GOI's recently expressed intentions are to make quasi-government entities more profit-oriented, this facet of sound financial management should be given higher priority in the future. 6.17 The projections show a favorable and attainable operating ratio and an ability to meet loan interest commitments until the year 2000, at which time loans bearing a ten-year grace period need servicing. Until then, it should be possible for JNPT to meet loan repayment obligations from internal cash generation. Forecast balance sheets are given on page 4, Annex 1. 6.18 In the year 2000, when total annual debt service costs increase from Rs 1689 million to Rs 2219 million, JNPIT's additional container berths should be fully operational and contributing to the port's profitability. 6.19 GOI has not yet decided to support JNPT with capital grants; a policy not previously applied to the port subsector. Very cogent reasons support such a policy. JNPT is a specialized port using sophisti- cated and expensive equipment. It should become India's showcase for container and bulk cargo handling. For a fledgling agency such as this to rely solely on loan capital with its associated heavy fixed interest and tight repayment schedule is not conducive to successful growth. 6.20 In the past, GOI has frequently granted to public corporations loan interest, repayment mora- toriums and fiuther loans to meet mounting debt service obligations. Rather than solving problems, this policy invariably leads to fiuther unmanageable indebtedness. 9 6.21 Corporations should be provided a sound financial base with a debt:equity ratio that can be serviced, given reasonable economic growth and sound management. Financial goals can be determined and monitored and management would not be tempted to relax on the assumption that unlimited loan funds and loan servicing moratoriums are easily accessible in case of need. 6.22 GOI can reduce the burden of financing future port development by privatization, a solution already strongly recommended by the Bank. Even if basic civil works infrastructure were to remain the responsibility of JNPT, a port operating contract should require that, at least, future cargo handling equip- ment needs be fmanced by the private operator. The prospects of achieving better cargo handling productivity by privatizing operations have already been discussed earlier in this report. 7. Project Sustainability 7.1 The project has had the following significant benefits: (a) Ship waiting time for berth, in Bombay port for container ships, has declined dramatically since the facilities at Jawaharlal Nehru Port (JNP) went into operation: from more than 10 days on average in 1982/83 to less than one-fourth day in 1991/92. Waiting time for a berth in JNP was nil in the latter year. The number of container ships which visited the two ports in 1991/92 was 555 for Bombay and 237 for JNP. The resulting savings are estimated at almost 8,000 ship-days valued at US$58.1 million. Similar savings have been realized for bulk ships also (89 in Bombay and 55 in Nhava Sheva) totalling 1,440 ship-days valued at over US$8.9 million. (b) Time-at-berth for ships using JNP are considerably less than for ships using Bombay port, since facilities at the former are more modern and designed to handle cargo at much faster rates, especially for bulk. Average time-at-berth for container ships in JNP is 1.75 days/ ship, compared with 4.48 days/ship in Bombay. Also, ships visiting JNP are much larger with each ship's cargo capacity equal to three ships visiting Bombay. This savings is estimated at 1,940 ship-days/year, valued at US$11.1 million. In the case of dry bulk cargo ships, the savings are estimated at 1,520 ship-days valued at over US$5.6 million. (c) Benefit has also been realized from the use of larger vessels in the trade served by JNP compared with those served by Bombay port. This has generally been in the form of a freight advantage of US$4 per ton of bulk cargo handled at JNP. In 1991/92, the new port handled 1.4 million tons of dry bulk cargo, with a saving of US$5.6 million in freight paid by the Indian trade. (d) There have also been savings in the form of reduced cargo loss for cargo handled at JNP valued at 0.4% of the value of the cargo handled at JNP, amounting to about US$3 million in 1991/92. 7.2 Tle above savings totalled approximately US$92.3 million in 1991/92 and will grow with continued growth in the volume of traffic handled at JNPT. By the year 2000, the savings should be some 50% larger, even though this may require some small investments in additional equipment, especily for handling containers. The ERR on the project as completed can be estimated at 11.5%, which is marginally acceptable, and compares with 20% at appraisal. (rable 2) 10 7.3 The project can be considered a sustainable investment provided JNPT's operational efficiency and financial condition improves shortly. The prospects for traffic growth at JNP are very probable, and the capacity and efficiency of the present facilities can be augmented with some marginal investments and appropriate staff training. It is important, however, for JNPT to provide proper maintenance and measures to improve operational efficiency. JNPT is undertaking maintenance based on the manual provided by the contractors; however, due to the possible low quality level of the equipment and the lack of JNPT's experience, significant deterioration has already occurred. JNPT's improvement is urgently required. 8. Bankl Peformance 8.1 The Bank's own supervision efforts were not systematic enough throughout the implementation period in terms of mission composition. Although adequate in the early stage of implementation engineering input was insufficient after 1989. However, the number of missions, two per year on average, appear to have been appropriate. 9. Borrower Performance 9.1 Chart 7, Part HI, contains a review of the performance of the borrower in terms of the legal covenants. JNPT's performance in terms of operational efficiency, however, has been unsatisfactory. Productivity of cargo handling is still low and the maintenance of equipment is below standard. How- ever, INPT's performance could have been much better if it had been staffed with personnel experienced in a similar type of project or in handling potential problematic issues from the early stage of a project; and/or had JNPT employed a more experienced foreign consultant to assist in preparation and imple- mentation of the project. Extensive administrative changes, including possible privatization of some activities, is necessary to accomplish any major improvements in operations and maintenance. 9.2 JNPT has paid a great deal of attention to environmental aspects, in particular maintenance and creation of green areas, even though this was not a part of the scope of the project. 10. Project Relationshin 10.1 The Bank's relationship with both GOI and JNPT during the project has been satisfactory. 11. Consultant Services 11.1 The main consultancy services for the project, provided: (a) engineering: preparation of bid documents and supervision; (b) training: a comprehensive staff training program (financed by the Netherlands Government); and (c) studies: (i) an Organization, Management and Finance (OMF) study (financed by the Netherlands Government); (ii) an Intermodal Transport Study; and (iii) a Container Operations Manual. 11.2 Even before the appraisal of the project, the consulting firm that had been in charge of the project preparation, had been selected by Q01 for project implementation. Altho'igh the firm apparently had sufficient experience in this type of assignment, the performance of its staff assigned to this project was inadequate, in that they did not seek sufficient input from experts experienced in specialized areas. 11.3 Generally all the training and studies were completed satisfactorily. Although the scope of the staff training was expanded by utilizing the Netherlands Government grant funds, further training in certain specialized areas, such as equipment operation and maintenance, is required. It should also be mentioned that many trained operators of equipment left JNPT for other jobs thus causing a shortage of trained operators. This is one reason for low operational efficiency. The financial part of the OMF study is being utilized and other parts are under testing. The Container Operations Manual is also being utilized for terminal operations. Certain modifications to cover all operational aspects are underway. An origin/destination study as well as traffic forecasts were included in the Intermodal Transport Study and these should be evaluated in the future. 12. Proiect Documentation and Data 12.1 The Loan Agreement, in the case of Loan 2387-IN, was adequate and appropriate for achieving project objectives in the key organizational and financial areas. The appraisal report of the project provided a useful framework for both the Bank and GOI to follow project implementation. INPT provided a draft Project Completion Report for this project, with subsequent clarifications. 12 PART II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 1. The concept of Nhava Sheva Port conceived in 1961, was sanctioned only in 1982 and proposed to the World Bank for funding. Thanks to the participation of the World Bank, which was the real turning point, the Project was pursued and progressed thereafter to a tight time schedule. Even by World Bank standards, this project is considered to be a model project, which has been constructed and conmmis- sioned within an active construction time of 3-1/2 years. 2. Objectives of the Project and Achievement Qbjiectives (a) Decongest Bombay Port; (b) provide modern facilities for handling container and dry bulk cargo; and (c) provide modern port management systems in port operation. (a) Severe congestion in Bombay Port has already been reliaved and the waiting time of ships at Bombay has been eliminated or reduced considerably; (b) with the commissioning of the modern container handling system and bulk handling system, major transfer of cargo from Bombay Port to JNP, even within three years of operation, has taken place. JNP has become the No. 2 port in container handling amongst the 11 major ports in India, next only to Bombay (Table 1). JNP is the leading port in the major ports of India handling flnished fertilizers. JNP is also the second leading port in India in handling raw materials for fertilizers. It is expected that this will improve further in the coming years, provided there is no major change in the policy for fertilizers and finished fertilizers through this port; (c) unlike the practice in other major ports in India, where (i) dock labor; (ii) shore labor; (iii) private labor; (iv) transport contractors, and (v) equipment contractors, are involved in port operations, the entire operation in JNP is managed by a single agency, viz., JNPT. JNP is managed by a professional team of a few officers and staff for rendering integrated service; (d) unlike in other ports, where piece-rates, incentives and speed money are involved, JNP has no such practice. JNP works round-the-clock on a composite tariff basis without the users requiring to pay any additional costs as overtime for working either on Sundays/Holidays, etc.; (e) the Customs Collectorate in lNP and its management are distinctly different from that in some other ports in its team work and response to the users; and (t) environmental care and continuous monitoring have been introduced in the port project at JNP. 13 3. Aspects Reviewed by the World Bank in the Detailed Pro3ect Report and Their Implications (a) At appraisal, the World Bank pruned down the traffic forecast assessed by the consultants in the Detailed Project Report (DPR). However, the present traffic scenario indicates that the forecast contained in the DPR, were more realistic than the pruned traffic forecast assessed by the World Bank; (b) World Bank cut down the facilities for export of bulk cargo. There were demands for export facilities after the scope was modified. Hence, it was desirable to have some ficilities for export. Alternatively reversible conveyor belt system for use of import and export should have been selected; (c) in respect of container berth, the World Bank assumed that only three cranes were needed for handling the traffic to the tune of 3 million tons, in spite the port and the ministry pointed out at that point of time that the throughput assumed for the cranes is on the high side. The present experience bears out our 3pprehension. Providing three cranes for three berths is a mismatch since internationally ships require a minimum of two cranes for a ship. Of course, this was conceded by the World Bank in August 1989 itself, within a few months after commissioning of the port, on the basis of which a case for augmentation of the equipment was made by the port; and (d) when the World Bank reviewed the area requirement of CFS, they had pruned the covered area from 70,000 m2 recommended by the consultants to only 25,000 m2. This pruning down resulted in the covered area created for CFS becoming inadequate within less than one year from the date of commissioning of the port, resulting in a separate complex being set up elsewhere as CFS for export. 4. Other Observations 4.1 Though the World Bank Appraisal assumed that about five years will be a normal period for any port to reach its planned throughput, they had not correctly assessed the phasing of the increase in the initial two years to reach the designed throughput. 5. Usefulness of the Bank Missions 5.1 The Bank was always found to be very quickc and responsive to the needs of the JNPT. Discussions were always very open and frank. However, in certain cases, it was noticed that the Bank was critical of the role of JNPT regarding non-settlement of claims and non-payment of certain disputed bills. We had subsequently clarified to the Bank that actions followed by the port are in terms of the contract and as dictated by legal and audit requirements. 5.2 We found the World Bank missions had been visiting the port at least twice a year and had come out with critical reviews pointing out the action points and bottlenecks requiring immediate action at various levels, like the port, MOST and other agencies. They were also supportive of JNPT in taking up certain matters with contractors, when we expressed our dissatisfaion on the co-operation extended by certain contractors at some critical stages of the project. 14 5.3 The World Bank was also kind enough to send a special port consultant to this project, with a view to identifying operational problems which were hampering the performance of the port. 5.4 The World 1Bank were also appreciative of the fact that ours is a green site port and also one of the ports executed with 1r;ast time overrun. 5.5 On resettlement matters the mission showed keen interest and one mission even went and saw for themselves the two villages, which had been bodily shifted and resettled from Sheva to a place just out- side the boundary of the port. 5.6 The World Bank has been suggesting a lot of improvements in the Custom formalities. While certain formalities are linked with the policy of the Government, certain other problems have been sorted out with the help and co-operation of the Customs collector. A very important feature, which we note in the Bank missions is that they also have interaction with the users of the port like railways, customs, CWC, shipping agents, stevedores, clearing agents, etc., so that they are able to suggest useful remedial actions to the port. The Bank authorities were very much appreciative and accommodative of the need for certain reallocation of the loan proceeding required during the execution of the project. 6. Lessons Learnt from the Execution of the Project 6.1 The main infrastructural facilities which could not be developed, matching with the construction of the port which are lacking even today are as under: - the construction of the road, national highway - NH-4B link; and - development of Dronagiri Node. 6.2 The port, however, tried its best to make contingent arrangements to overcome the delays in above areas. The lesson learnt from above is that preferably the port itself should have been made responsible for completion of very important infrastructure facilities which may have a direct bearing on its success. All infrastructure facilities like, port users building, transportation facilities have not been thought of at project stage. Delay in their implementation caused dissatisfaction with the port users. Such operational requirements should have been part and parcel of the project. 6.3 In a project of this magnitude, where it is to be concluded through a number of contracts, with interdependency between contracts, litigation could be a big hurdle throwing the complete project out of gear. Litigation in one contract could have crippling effect on the progress of a number of other contracts. In this project, in Contract C-1, there was litigation, when one of the bidders was disqualified at the stage of opening of technical bid. This led to a delay of six months. In spite of the best efforts by the port, by bringing to the notice of the judiciary that even a day's delay of such a mammoth project could mean a loss of lakhs of rupees per day, six month's time was lost. Ultimately, the judgement was in favor of JNPT. However, the resultant delay in completion and commissioning and rise in escalation costs were inevitable. There was also litigation with regard to the acquisition of land, some of which has not been sorted out till today, but fortunately clearance was obtained at least for the possession of the land subject to the compensation to be sorted out subsequently, so that the construction work could be started as planned. 15 6.4 All the bids prepared by the consultants were sent to the World Bank for review of the conditions, specifications, commercial and technical details, etc. Present technical audit on conta'ner and bulk terminal points out certain major planning and design deficiencies in the tender itself and as such the review of the tenders at the port, the Government and the World Bank levels do not appear to be fool- proof. Unfortunately at that point of time the port also did not have senior staff with the requisite back- ground and experience in the facilities planned to scrutinise and monitor the proposals. As such the World Bank may like to think of suitable controls in future projects to avoid such planning and design lapses in major investments. 6.5 It is for consideration whether the design and planning of such large projects should also be required to be reviewed by another senior consultant before and during implementation. 6.6 For haniling a project of this magnitude and with the latest state of-the-art technology, the port could not get consultants with requisite experience for execution of the same. Though the consultants had back-up arrangements, with other international consultants, on certain specialized areas, the overall performance of the consultants had not been up to the mark, as could be borne out by the outcome of the technical audits. It is, therefore, necessary to ensure that for projects of this magnitude, selection of the right consultant is important. Though this apprehension was spelt out by the port in 1983, the port was asked to continue with the same consultant by the Ministry, as otherwise, it would have led to further delays. 6.7 In bigger projects there are always needs for going in for certain left out items which are required to be tied up through similar contracts with a tight time schedule. The World Bank should permit LCB for such low value works, but yet time bound requirements and accordingly fix the total monitoring limits under the loan agreement. Our experience is that low value works do not attract global participation and lead to loss of more time at pre tender acceptance stage. 7. Suggestions for Consideration by the World Bank for this Project at the Present Stage 7.1 A project with state-of-the are technology in a developing country requires proper training of personnel and also technical assistance for its effective management. No doubt, the Bank had stressed the need for training of personnel in its appraisal report and also in its subsequent missions. To this end, even training was included as a part of certain contracts in the supply of equipments. In reality, it was found that such stipulations in the contract in terms of adequacy, duration and quality of training was not found to be satisfactory. Training through supply contracts had to be done at a time when staff had not been recruited. Language problems were also a barrier for importing training to tile different levels of the staff. With regard to technical assistance, it is felt that this should have been visualized as a part and parcel of the original project. Likewise a properly equipped training institute with facilities for simulator type of training should also have been planned as a integral part of the project. 7.2 The World Bank may like to consider whether these areas can be funded, if needed, through new operation. This can also include the cost of the rectification measures required as a follow up of Technical Audit and the augmentation of equipments for the container terminal which are needed urgently. 16 PART III. STATISTICAL INFORMATION 1. Related Bank Loans and/or Credits NONE 2. Project Timetable Date Date Date Item Planned Revised Actual - Identification - Preparation 06/16/81 - Preappraisal 10/29/82 - Appraisal Mission 7/83 05/10/83 - Post-Appraisal Mission 07/27/83 - Loan Negotiations 1/84 01/16/84 - Board Approval 3/84 03/13/84 - Loan Signature 5/84 05/25/84 - Loan Effectiveness 8/84 08/23/84 - Loan Closing 6/89 06/92 06/30/92 - Loan Completion 03/89 12/92 12/31/92 17 3. Loan Disbursements Disbursements (in $ MiMion) Bank Fiscal Year Estimated Actual Actual % of and Quarter Cumulative Cumulative Estimated 1983184 1 2 3 4 1984/85 1 .60 .62 0.2 2 2.00 1.02 0.4 3 12.00 2.08 0.8 4 30.00 3.70 1.S 1985186 1 50.00 4.12 1.6 2 70.00 14.05 5.6 3 95.00 14.59 5.8 4 120.00 15.28 6.1 1986/87 1 145.00 15.48 6.2 2 170.00 24.57 9.8 3 190.00 49.91 20.0 4 205.00 96.04 38.4 1987/88 1 215.00 96.04 38.4 2 223.00 105.17 42.1 3 230.00 120.38 48.2 4 235.00 122.70 49.1 1988/89 1 240.00 156.29 62.5 2 245.00 157.75 63.1 3 250.00 171.38 68.6 4 250.00 175.08 70.0 1989/90 1 250.00 194.59 77.8 2 250.00 194.59 77.8 3 250.00 222.10 88.8 4 250.00 223.37 89.3 1990/91 1 250.00 223.37 89.3 2 250.00 226.66 90.7 3 250.00 228.44 91.4 4 250.00 229.19 91.7 1991/92 1 250.00 229.19 91.7 2 250.00 229.19 91.7 3 250.00 229.19 91.7 4 250.00 230.74 92.3 1992193 1 250.0 2 250.0 18 4. Project Implementation Project Planned Actual Months of Components Completion Completion Delays Civil Works - Main Civil Works 3/89 4/90 13 - Container Freight Station 12/89 5/89 5 - Residential Colony 3/89 12/90 21 - Electrical Distribution System 9/88 6/90 21 - Dredging 3/89 6/88 -9 EquiDm9g - Bulk Handling Equipment 3/89 12/92 1/ 45 - Container Equipment 3/89 12/92 45 - Workshop Equipment 3/89 6/90 15 - Floating Craft 9/88 7/90 22 Technical Assistance - Taining 12/88 91922/ 33 - OMF Study 6/87 10/89 28 - Intermodal Study 6/87 7/89 25 - Container Manual 9187 9/89 24 1/ Expectd 2/ Training financed by the Netherlands included. 19 5. Prolect Costs and Financinf A. Prg!Mc l;g$t * Appraisal Estimate ----.--.-.-----.-.------...... Actuat -------------- Local Forefgn Total Local Foreign Total Local Forefgn Total Costs Exchange Costs Exchange Costs Exchange Costs Costs Costs - -- -- - (USS M) .-.-- ------ ------ (Rupee M) - .- ---------- (USS R) ------ A. Land Acquisition 20.5 0.0 20.5 175.0 0.0 175.0 12.1 0.0 12.1 B. Civil Works 154.7 62.6 217.3 1325.1 231.2 1556.3 91.6 16.0 107.6 C. Dredgfng 6.0 24.3 30.3 85.0 147.8 232.8 5.9 10.2 16.1 0. Plant and Equipment 44.0 70.7 114.7 793.3 581.7 1375.0 54.8 40.2 95.0 E. Container Freight Station 4.3 1.3 5.6 139.8 0.0 139.8 9.7 0.0 9.7 F. Sulk Storage Facilities 13.8 13.4 27.2 264.7 115.4 380.1 18.3 8.0 26.3 G. Electric PAwer Distribution 11.1 5.0 16.1 128.2 0.0 128.2 8.9 0.0 8.9 R. Utilities and Services 25.5 1.0 26.5 455.1 23.2 478.3 31.5 1.6 33.1 1. Residential Colony 24.6 0.0 24.6 705.8 0.0 705.8 48.8 0.0 48.8 J. TA and Training 3.0 2.5 5.5 72.7 7.9 20.6 0.9 0.5 1.4 K. Engineering Services 7.9 2.6 10.5 174.0 5.6 179.6 12.0 0.4 12.4 Base Estimate 315.4 183.4 498.8 4258.7 1112.6 5371.3 294.3 76.9 371.2 L. Contingencies 13.8 10.6 24.4 55.9 20.8 76.7 3.9 1.4 5.3 Physlcial 52.4 30.4 82.8 1547.8 664.5 2212.3 107.0 45.9 152.9 Price Total Project Cost 381.6 224.4 606.0 5862.4 1798.0 7660.4 405.1 124.3 529.4 M. Interest during Construction 115.4 0.0 115.4 1224.8 0.0 1224.8 84.6 0.0 84.6 M. Front-end Fee on ISRO Loan 0.0 0.6 0.6 0.6 0.0 0.6 0.0 0.0 0.0 Total Financing Required 497.0 225.0 722.0 7087.8 1798.0 8885.8 489.8 124.3 614.1 Overall average exchange (USS1nRs. 14.47) was calculated by using the actual Bank disbursements prof iLe and the yearly exchange 20 B. Proect Einancn Sources Planned Final (US$'000) (US$'000) Bank Group 250.0 230.7 Bombay Port Trust 205.0 234.9 Kandla Port Trust 0.0 34.6 GOI and Co-Financier 267.0 160.4 Total 722.0 660.6 C. Allocation of Loan Proceeds Original Final Actual Category Allocation Allocation Disbursements (1) Civil Works (a) 70,000,000 70,021,558 70,021,296 (b) 54,000,000 32,740,000 25,920,470 (2) Equipment 100,000,000 131,475,000 118,808,612 (3) Technical Assistance, Engineering Services and Training 16,000,000 15,140,000 13,635,360 (4) Fee 623,442 623,442 (5) Unallocated 9,376,558 0 Total 250,000,000 250,000,000 228,385,738 21 6. Project Results A. Direct Benefits Indicator Appraisal Esimate at Estimated at Estimate Closing Date FlI Development Reduced ship $20 million $67.0 million $100.5 miUion waiting time (1988) (1992) (2000) Faster cargo n.a. $16.7 million $25.1 million handling (1992) (2000) Larger vessels - Bulk cargo $30 million $5.6 million $8.4 million - Containers $14 million (1992) (2000) Reduced cargo loss $3.0 million $4.5 million (% of the cargo value) 0.4% B. Economic Imnac Appraisal Estimated Estimate Actual Economic Rate of Retutn 20% 11.5% C. Pinancial Imnact Appraisal Actual Estimate Financial Rate of Retum FY 92 13.5% FY 92 1.7% FY93 15.2% Est. FY93 5.6% FY 94 18.5% Est. FY 94 7.7 % 22 D. Studie Studies Purpose as Defined at Status Impact of Study Appraisal 1. OOrganition, Development of optimal Completed as Finance Accounting Study is Management and struture and systems planned being utilized. Others are Fincial Study enabling JNPT to function under testing. smoothly and efficiently 2. Contaier Operations Development of efficient Completed as Container Operation Manual Manual and Training operation in handling planned is being utilized. Training containerized cargo improved productivity. 3. Intermoda Transport Development of efficient Completed as Too early to evaluate. and Traffic Allocation inlnd transportation of planned Study and Traffic containers Forecast 23 E. Traffic ('000 Tons) JNP .mbayo Pat at Appr Actual Actu 90 2,452ln Bumk cAT*lcontjn BUlM jC tainer ..BuRlkjI Coitaher ld ICQI__= 1988189 1,000 780 29,342 3,600 90 2,452 X1,400 291 407 27,746 3,870 91 2,604 1,700 1,370 657 2s,500 4,286 92 2,756 1,900 1,443 1,314 24,070 3,433 93 2,908 2,200 94 3,060 2,500 95 3,279 3,000 96 3,496 3,300 97 3,715 4,000 F. Vessel Size Average Tons (DWI) JNP Boay (- JNP aI Appraisa Acta at Ap .ail Adual BWlk j Coutini _ R nl lr BIWk coatu _ -, 1987/88 22,000 20,000 89 23,000 21,000 90 24,000 22,000 30,404 18,794 91 25,000 23,000 40,470 17,564 16,800 15,000 13,233 5,580 92 26,000 24,000 34,140 14,688 93 27,000 25,000 94 28,000 26,000 95 29,000 27,000 96 30,000 28,000 24 7. Status of Brief Descrtion Selstion of Covenant Apptioable Conplian¢e Remarks Lending rate for 8ank iunds to be not less LA 3.01 Yes than 11.5%, vith 25 years repayment including 5 years grace period. BPT to lend an amount of Rs 2 biDion at LA 3.02 Yes 10% with 15 years repayment inoluding S years Prace perW. Other loans required to be made available PA 2.09 No The tenns and conditions are under at 10.25% with repayment period of 25 consideration by the GovL years including 10 years grace period. Ports acounts are to be audited by PA 4.02 Yes auditors and to be furnished with 9 months. Port is not to incur debts exceeding US$10 PA 4.03 Yes million per annum for purpos other than port constucdon if debts service ratio is below 1.2. In 1989-90 and 1990-91 port to achieve an PA 4.04 No The operating ratio for 1991-92 is operating ratio of .6. 0.7. As the traffic did not materalize the ratio of 0.6 could not be achieved during 1989-90 and 1990-91. The ratio of 0.6 to be achieved in 1992-93. From financial year 1989-90 onward Yes rvenues to cover operating expenses and debt service. 8. Use of Bank Resounxs A. StaffJnmus 1979 1988 2 I X 983 1294 198S 1986 1987 1988 1289 19 .1221 1922 giull Preappraisa 13.00 10.4 19.0 30.3 118.3 191.00 Appraisd 0.2 51.3 32.2 83.70 NcgotiairOs 11.9 11.90 Supervision 2.5 17.7 22.3 30.8 17.0 14.3 12.9 8.1 6.5 132410 U, C'4 B. Mission Data Month/ No. of Days in Specializations Perfonnance Rating Type of Year Person Field Resented Status at Trendb/ Pblems c IdantiPrep 4/79 3 30 EC, EGR, PA - Appraisal 10/82 6 60 EC,EGR - - Supervision 1 9/84 2 15 EC,EFR 2 2 Supervision l 12/84 1 6 EGR 2 2 P Supervision III 4/85 1 4 EGR 2 2 p Supervision IV 10/85 1 5 EGR 2 2 Supervision V 2/86 2 6 EC, EGR 2 2 Supervision VI 10/86 2 16 EGR, PA 2 2 Supervision Vi 5/87 1 7 EGR 2 2 Supervision VIll 11187 2 6 EGR 2 2 Supervision IX 6/88 3 15 EC, EGR, I I Supervision X 10-11/88 3 IS EC, EGR, EC 1 2 Supervision Xl 5/89 1 5 EGR 1 2 Supervision XII 10/89 1 5 PA 2 3 SupetvisionXIII 1-2/90 3 30 FA, EGR,EC I 1 SupervisionXIV 4/90 2 6 PA, EC 1 2 SupevisionXV 11/90 3 15 FA,EC 2 3 Supervision XVI 7-8/91 2 10 FA, EC I 1 SupervisionXVII 10-11/91 3 12 FA, EC, EGR 2 2 Supervision XVIII 2/92 2 4 FA, EC Completion 10192 3 20 EC, FA, EGR Total 292 Comments If 1 = problem frie or minor problems; 2 = moderate problms; 3 = major problems. bl I = iinmving; 2 = staionary; 3 = deteriorating. £ P = Proceent. 27 @X0 2 -J p S A tE = { :[f C- 44 S t - Y0 X t ffi g | t g~~~ SfJo S~~~ 0 0 -J - e > " -J '0 4 - - -1 It 28 Page 1 of4 AWAI{ARIALNMERU PORT TRUST NUAVA SHVA PORT PROJECT - LOAN 2387-IN PROIRCS C)MPLE1ON RPR PbunitlHiilb FY90 PY90 PY91 FY91 FY92 FY92 Apprsal Apprsl Apprais Year nded Much 31 Edimes Actal Eia Actul Etima Acta C-tale CPo (Mu to-) 1.7 OAI 1.9 0.66 2.2 1.21 Bu cgo (multons) 2.6 0.29 22.7 137 2.9 1.44 Contaior RVue S71 126 66S IS1 770 347 Bulk Revem 422 114 446 324 471 325 BataeReatal 46 15 46 26 46 38 O&srOpmtinglRsvue 0 0 0 0 0 21 TOaW Operatg Expenses 1039 255 1157 531 1287 731 Dtmo Operat Expeneas: Ctanr Cago 4 26 36 Bulk Cago 3 SO 61 Ca!e Drdging 25 37 35 sub.ot 0 32 0 113 0 132 Indie Operatng EBens 21 62 94 sub-total 215 53 231 175 249 226 Oener Admigsation 10 57 12 65 14 72 DepecIadon 173 183 173 255 173 282 Toetl Operatig EpB 398 293 416 495 436 580 opentig &S lu 641 -38 741 36 851 151 Add: hwveablaerest 16 37 29 47 49 1IS Las: Ie_t an LIW-tem Debt 791 6 791 28 790 74 Net Rcve -134 -7 -21 55 110 195 Opatg Ratio 38.3 114.9 36.0 93.2 33.9 79.3 ROR a isLt. VsIed Pxud Asse % 9.6 _ 11.5 OA 13.5 1.7 Soue PT and Bank Staff 29 Pago2 of4 JAWAHARLAL NU PORT TRUT NHAVA SHEVA PORT PROJECT - OAN 23S71N PROJECI COMPLEION RBPORT pinRcl Mi1haiRb p.b=) BALANCE 8T FY90 FY90 FY91 PY91 FY92 FY92 Appraisal Appraisa Appai Yeaw Cded Mrch 31 Edtim Actal Esimat AcU Estinmts Actul Ors sFid Asaa 7075 $287 7075 8781 7075 9150 Len Accmmated Deprqcatio 520 IS5 693 441 867 753 Net Fix Aets in us 6555 S102 6382 8340 620S 8397 Woc im pwgreg 0 350 0 220 0 14 ToaWl Fixed Amets 65S5 84S2 6382 8560 6308 8411 ! 1vesmiat 75 449 207 638 468 999 Cob St Bob 36 IS 39 28 42 SS nwentaries 35 1 37 3 39 16 Aconta Recivabl 87 SD 96 36 107 56 OlberCat ASSU 0 748 0 692 0 787 Totl Cufeat Ass 158 814 172 759 188 914 Les Curet Liabilities 18 304 19 199 21 176 NdtCureutAaels 140 510 153 560 167 738 Tot Ase 6770 9411 6742 9758 6843 10148 PaidUpCapit 26 0 26 0 26 0 Rtaind Enlgs 659 102 -631 IS3 -571 349 Toa EqlW -633 102 .60 153 -54S 349 S1 ffoPovideI Funds 0 1 0 4 0 10 IAX Tam Deb: Govu 01 India sm 4782 5452 5094 5649 S332 BombaylKadla Pot Tre 2131 4525 1944 4507 1739 44S7 Toal LAog Tam Dekt 7403 9307 7396 9601 73S8 9789 Toal Liabities & Equity 6770 9411 6791 9758 6843 10148 Sorce 3p'r and Back Staf_ 30 Psge 3 of 4 IAWAHARAL NEHRU PORT T U NHAVA S$EVA PORT PROJBC - LOAN 23S7-lN PROJP£T COMPLMON AM3OR Fogrcast Ttaffk. Raiue v s xu RBVBANINIJR Year ended March31 FY93 FY94 FY95 FY96 FY97 FY9S FY99 7Year Container cawgo Onil tons) 1.44 2.40 3.42 3.60 3.96 4.38 4.80 24.00 Bulk Cargo tam) 2.20 2.50 2.81 2.82 2.82 3.03 3.20 19.38 Canainr Reve 412 686 978 1030 1133 1253 1373 6865 Bulk Revenu 497 565 635 637 637 685 723 4379 Pate Relb 53 65 SO 100 125 155 190 768 Oth Opatig Revevuw 21 23 26 30 35 41 48 224 Toa Op0at Reveue 983 1339 1719 1797 1930 2134 2334 12236 Tald Cub qO a*g Eqmn 347 409 490 521 530 541 560 3398 Cah Opeting Supbus 636 930 1229 1276 1400 1594 1774 8838 Add, lavin aatlowed 130 150 160 150 140 150 170 1050 Tta Cash aurphus 766 I108 1389 1426 1540 1743 1944 9888 Log4tm Debt _ters 280 564 853 1031 1041 983 987 5739 Decox 228 249 271 283 302 366 411 2110 Net Rvenu 258 267 265 112 197 394 546 2039 9oeue aad AvoUnlioai of FunQ Siou of :anis. TOWal Cu plus 766 1080 1389 1426 1540 1743 1944 9888 001 COpfIal Grant 975 980 1135 640 1100 2580 1795 9205 Total 1741 2060 2524 2066 2640 4323 3739 19093 Dirpositlo of Foods.: Long-m Debt _nrt 280 564 853 1031 1041 983 987 5739 Ln-tm Debt Ropoyten 160 262 38S 503 563 621 702 3199 Toal Debt S&vice 440 826 1241 1534 1604 1604 1689 8938 c _ptalipediue 975 980 1135 640 1100 2580 1795 9205 Inrae in in_ea t 304 230 I20 -142 -103 95 204 708 I_ea is Woddn Ca l 22 24 28 34 39 44 51 242 TOal 1741 2060 2524 2066 2640 4323 3739 19093 Seoues RIFT and Bank Stff 31 P4e 4 of 4 JAWAHARLNENRUPR NH&VA SHEVA PORT PROjET - LOAN 23S7-lN ERO=0 CMIQp .~ ~ ~ ~~(o _ .a Yewa on Marc31 F3 FY94 PY9 FY9S FY97 F9 FY99 Grosw Ped Aseb 10139 11119 12254 12894 13994 16574 IS369 Len Accumuled Dqeciatic 981 1230 1501 1784 2086 2452 2863 Net Fixd AWa in uae 9158 9889 107S3 11110 11908 14122 15506 Walk imprcge 0 0 0 0 0 0 0 Toa Fixed Asset 9158 9889 10753 11110 11908 14122 15506 Inweatmu 1303 1533 1653 1511 1408 1503 1707 Net CurrtA s - 760 784 812 846 SSS 929 9S0 Ttal Aae 11221 12206 13218 13467 14201 16554 18193 GO! capitalGrAl 97S 1955 3090 3730 4830 7410 9205 Retiwd Eanings 602 864 1124 1231 1422 1810 2348 TOa Equity 157 2819 4214 4961 6252 9220 11553 Staff Pnsa ldontPFu nds is 20 25 30 36 42 50 Total Log Tem Det 9629 9367 8979 S476 7913 7292 6590 Tol Liabitl & EquIB 11221 12206 13218 13487 14201 16554 18193 DcbEquib Ratio 86114 77/23 86/32 63/37 56/44 44/56 36/64 Finci Rat of Rear a Hirially Valud FIed 5.6% 7.7% 9.5% 9.1% 9.2% 9.0% 8.5% Sourcc INFr and Bank Staff 32 JAWAHARLAL NEIRU PORT TRUS NHAVA SHEVA PORT PROJECT - LOAN 2387 PROJECT COMPILETON REPORT Caruo Trafric in Terms of Prinoipal Commodities ('000 tonnes) r_ - --- _ _ - - E_---: POW Po Om bv r X .T 1 1 olW 2892 19M 73 w7 2am 92 1720 (6 22U 1X 191 UV57 21 St 2n8 1251 N0 (7V 1299 O2 P-6 N12 2 124 87 ff 3369 IS 3 too630 7297 199t 1748 tOo 195 19" 610 1227 a4 V1.aldispim, 1892 6384 6161 1so 949 3014 2194 79 (0 1780 21522 1991 197 549S 4#0 1044 2182 270? 02 () 1855 19121 1992 10124 134 53t 279 4971 81 2003 (100 261 25041 199t 91J6 1S49 509 343 4t IS9 1132 (100 28 24518 Tiada m1992 496 302 304 2S0 202 (28) 1659 SW6 1991 472 268 226 237 119 (2M 1599 5075 Cdidn 2192 1834 148 466 286 (5 721 7455 1891 5004 181 434 27m (49) 581 m Newmw p2m 1992 62 692 m41 i5 s ( 1004 8274 1991 8t2 6121 6 10 (1) 12203 0S3 Mamu 1992 1no6 12517 122 590 15i 199t 1369 12266 166 190 14911 ombhy 21902 27077 22 484 3433 cm74 275 1991 19985 36 674 4286 (2n 495 29786 314?? 192 a2s 820 1314 (10 3s 2701 1991 121 845 657 (5) 4 207 i lb 1992 law4 366 21 54 "3 (2) 346 21003 1991 Ila 10 316 32 102 (43) 3466 19481 ?OTAL 1899 49618 32088 I 1125 S3W6 16101 d1m 7188 n19n75 15781 1991 4#i83 315J4 | 181 4182 13669 5849 8043 (49 20241 112855 33 TABLE 2 NHAVA SHEVA PORT PROJECT (LN. 2387-IN) Project CoDmpletion Renort Economic Rate of Return (ERR) and Sensitivity Analwis (1992 prices, million US$) Base Case Capital Total Net Cash Year Investment Maintenance Total Benefits Plow 1985 9.2 9.2 (9.2) 1986 28.2 28.2 (28.2) 1987 198.4 198.4 (198.4) 1988 65.7 65.7 (65.7) 1989 128.3 128.3 (128.3) 1990 118.5 118.5 (118.5) 1991 14.7 14.7 (14.7) 1992 3.7 12.3 16.0 92.3 76.3 1993 47.4 12.3 59.7 97.1 37.4 1994 12.3 12.3 102.2 89.9 1995 12.3 122.3 107.5 95.2 1996 12.3 12.3 113.1 100.8 1997 12.3 12.3 119.0 106.7 1998 12.3 12.3 125.2 112.9 1999 12.3 12.3 131.7 119.4 2000 12.3 12.3 138.5 126.2 2001 12.3 12.3 138.5 120.0 2002 12.3 12.3 138.5 120.0 2003 12.3 12.3 138.5 126.2 2004 12.3 12.3 138.5 126.2 2005 12.3 12.3 138.5 126.2 2006 12.3 12.3 138.5 126.2 2007 12.3 12.3 138.5 126.2 2008 12.3 12.3 138.5 126.2 2009 12.3 12.3 138.5 126.2 2010 12.3 12.3 138.5 126.2 2011 12.3 12.3 138.5 126.2 Total 672.5 2S00.1 1.677. ERR = 11.5 % NPV (10%)= 4.6 Notes: (i Benefits projected for only 20 yean. (ii) Maienance costs assumed to be 2% of capital costa. (iii) TraffLo and benefits assumed to grow 5% p.a. to the year 2000, when additional facilities, pattiaclay for cotainers, may be needed; so fAther grwth assumed. (iv) Ship time valued at US$5,700 (Bombay) and USS11,200 (Nhava Sheva) per day for onainer ships and US$3,710 (Bombay) and US$10,190 (Nhava Shwva) for bulk ships (from the Bank's ship Cost User Manual).