saigon port project (loan 1354-vie[sf])

7/31/2019 Saigon Port Project (Loan 1354-VIE[SF])

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ASIAN DEVELOPMENT BANK PPA: VIE 25094

PROJECT PERFORMANCE AUDIT REPORT

ON THE

SAIGON PORT PROJECT(Loan 1354-VIE[SF])

IN THE

SOCIALIST REPUBLIC OF VIET NAM

March 2003


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CONTENTS

Page

BASIC DATA iii

EXECUTIVE SUMMARY iv

MAPS vii

I. BACKGROUND 1

A. Rationale 1B. Formulation 1C. Purpose and Outputs 2D. Cost, Financing, and Executing Arrangements 2E. Completion and Self Evaluation 3F. Operations Evaluation 3

II. PLANNING AND IMPLEMENTATION PERFORMANCE 4

A. Formulation and Design 4B. Achievement of Outputs 5C. Cost and Scheduling 5D. Consultant Performance, Procurement, and Construction 5E. Organization and Management 6

III. ACHIEVEMENT OF PROJECT PURPOSE 7

A. Operational Performance 7B. Performance of the Operating Entity 8

C. Economic and Financial Reevaluation 10D. Sustainability 10

IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS 11

A. Socioeconomic Impact 11B. Environmental Impact 11C. Impact on Institutions and Policy 12

V. OVERALL ASSESSMENT 12

A. Relevance 12

B. Efficacy 13C. Efficiency 13D. Sustainability 13E. Institutional Development and Other Impacts 13F. Overall Project Rating 13G. Assessment of ADB and Borrower Performance 13


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VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 14

A. Key Issues for the Future 14B. Lessons Identified 15C. Follow-Up Actions 15

APPENDIXES

1. Project Costs 162. Project Outputs 173. Operations Data on Saigon Port 194. Financial Statements of Saigon Port 215. Financial and Economic Reevaluation 25


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BASIC DATALoan 1354-VIE(SF): Saigon Port Project

PROJECT PREPARATION/INSTITUTION BUILDINGTA No. TA Name Type Person-

Months

Amount

($000)Approval

DateTA 2305-VIE Computerized Management Information

System for Saigon Port1

ADTA 14.5 5002

2 Mar 1995

As per ADBKEY PROJECT DATA ($ million) Loan Documents ActualTotal Project Cost 40.00 34.19Foreign Exchange Cost 25.00 23.61Local Currency Cost 15.00 10.58ADB Loan Amount/Util ization 30.00 27.48

3

(SDR million) 20.59 20.05ADB Loan Amount/Cancellation 0.69

(SDR million) 0.54

KEY DATES Expected Actual

Fact-Finding 25 Sep2 Oct 1990Preappraisal/Appraisal 13 Nov1 Dec 1990Reappraisal 23 Aug9 Sep 1993

Loan Negotiations 12 Dec 1994Board Approval 2 Mar 1995Loan Agreement 24 Mar 1995Loan Effectiveness 24 Jun 1995 21 Jul 1995First Disbursement 23 Oct 1995Project Completion 30 Jun 1998 30 Apr 2000Loan Closing 31 Dec 1998 1 Nov 2000Months (effectiveness to completion) 36 57

ECONOMIC AND FINANCIALINTERNAL RATES OF RETURN (%)

Appraisal PCR PPAR

Economic Internal Rate of Return 18.1 33.3 12.6Financial Internal Rate of Return 10.7 12.4 3.7

BORROWER Socialist Republic of Viet Nam

EXECUTING AGENCY Saigon Port

MISSION DATAType of Mission Missions (no.) Person-Days (no.)Fact-Finding 1 8Reappraisal 1 90Project Administration 9 87

Inception 1 12Review 7 42Project Completion 1 33

Operations Evaluation

4

1 37

ADB = Asian Development Bank, ADTA = advisory technical assistance, PCR = project completion report, PPAR =project performance audit report, SDR = special drawing rights, TA = technical assistance.1

Attached to Loan 1354-VIE.2

Financed by ADB from the Japan Special Fund.3 Because the loan was denominated in SDR, depreciation reduced the loan amount available in dollar terms.4

The mission comprised A. Ibrahim, evaluation specialist and mission leader; R.G. Rinker, evaluation specialist andport engineer; and R. Lumain, senior evaluation analyst.


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EXECUTIVE SUMMARY

Damage associated with 3 decades of war, from 1945 to 1975, and a lack of investmentin the following decades, left all of Viet Nams major ports in a state of disrepair. Thishandicapped Viet Nams entire transport system, thus hindering economic growth. In 1989, theGovernment requested assistance from the Asian Development Bank (ADB) to undertake civil

works on Saigon Port (SP), the principal shipping gateway to Viet Nam, and to replace andpurchase new cargo-handling equipment to improve its operational performance.

The Projects goal was to facilitate the expansion of international trade by enhancing portcapacity and operational efficiency. The purpose of the Project and the attached technicalassistance (TA) was to (i) improve SPs cargo-handling capacity through the rehabilitation andmodernization of existing facilities at the Nha Rong and Khanh Hoi project terminals;(ii) enhance the efficiency of port operations through rationalization and streamlining ofprocedures and activities; and (iii) upgrade the overall performance of SP, the ExecutingAgency, by introducing a computerized management information system that would enable SPto process key operational and financial information and would assist in commercially orienteddecision making. The Project was in line with the Governments priorities, as reflected in the

National Transport Sector Review. The Project was also consistent with ADBs countryoperational strategy, which focused on reducing key development constraints through financialassistance for rehabilitation, upgrading, and development of the physical infrastructure tosupport economic growth. During processing, ADB conferred with other external fundingagencies, including the World Bank, to coordinate development efforts in the port sector.

The total project cost at appraisal was estimated at $40 million, with a foreign exchangecomponent of $25 million and $15 million in local currency. In March 1995, ADB approved aloan of $30 million, 75% of the total project cost, covering the entire foreign exchange and$5 million of the local currency cost. At completion in April 2000, actual project cost was$34.2 million, with a foreign exchange cost of $23.6 million and a local currency cost of$10.6 million. The 14.5% cost underrun was attributable to revisions in project scope and lower-

than-expected contract prices.

A project management unit was established within SP to manage and implement theProject. A team of international consultants was engaged according to ADB Guidelines on theUse of Consultants to help review the engineering designs and assist in supervision of the civilworks construction. The consultants overall performance was satisfactory. Lengthy bidevaluations caused considerable upfront delays. The cumbersome evaluation and approvalprocess is a systemic problem in project implementation in Viet Nam. Delays causedimplementation to take 22 months longer than envisaged at appraisal. Two covenants were notcomplied with at the time of the project completion report (PCR): the interest charged throughonlending according to the subsidiary loan agreement, and the collection of port traffic data.Both covenants were being complied with at the time of the Operations Evaluation Mission

(OEM).

The civil works carried out through the Project are satisfactory. The efficiency of break-bulk operations improved considerably from 1996 to 2002, and the corresponding turnaroundtimes for ships calling at SP have been shortened significantly. The major objective of theProjectto rehabilitate the existing break-bulk port facilitieshas been fully met. The attachedTA helped reduce billing time. SP can now efficiently process operational and financialinformation, and make commercially-oriented decisions based on users actual needs.


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SP remains the principal waterborne gateway to Viet Nam. It also handles domestic

trade. SP handled 10 million metric tons in 2001. Throughput has increased by an averageannual rate of 6% since 1995. The number of vessels calling at SP increased from 1,156 in1995 to 1,724 in 2001. Terminal improvements have generated employment not only at SP, butalso within Ho Chi Minh City and the surrounding areas.

SP remains profitable although marginal financial returns highlight the increasedpressures on operating profits. Those pressures result from high operating costs, constraints onrevenue generation in core port activities, and the relatively weak performance of noncorebusiness activities in recent years. SPs operating ratio deteriorated from 76% in 1995 to 92% in2001. Operating expenses increased about 10% annually during this period because of highersalary expenses, fuel costs, management and administration expenses, and cost of productsand services sold through SPs noncore business operations. At the same time, gross operatingrevenues, comprising port services (72% of revenues) and other businesses increased by about6% per annum. As a result, the operating income decreased from D78 billion in 1995 toD36 billion in 2001 and return on equity declined from 25% to 4%. On the other hand, despitean increased debt burden as a consequence of the Project, SP was able to maintain acceptable

liquidity and debt-to-equity ratios. SP benefited from additional government equity contributionsthat helped raise capitalization by about 15% per annum from 1995 to 2001.

The reestimated economic internal rate of return of 12.6% is below the appraisalestimate of 18.1% and the PCR estimate of 33.3%. Similarly, the reestimated financial internalrate of return of 3.7% is lower than the appraisal estimate of 10.7% and the PCR estimate of12.4%, and slightly below the 4% weighted average cost of capital. The decreases are mainlybecause of an overestimation of incremental benefits as well as an underestimation of operatingcosts in the previous calculations.

There is concern that traffic congestion around the port area, and competition from28 other ports with dedicated container facilities and larger storage yards, may threaten SPs

long-term sustainability. Also, future demand for berths that will accommodate larger vesselsmay require relocation of some port activities to a location with deeper water. SP remains thebusiest port in the area, however, and significant break-bulk shipping operations will continue,even with the trend toward containerization. Furthermore, several berths may be modified tobetter accommodate cruise ships. Although some operations may have to be relocated to alocation with deeper water, the sustainability of SP is likely.

The key issues that the OEM identified are the need to (i) investigate the construction ofa deepwater port terminal at an alternate site, (ii) streamline the bid evaluation and approvalprocess through delegation of authority to the relevant government agencies, (iii) give individualports greater autonomy in the setting of charges that generate their revenue, and (iv) ensurethat future budget allocations are adequate for maintenance.

The two key lessons learned are (i) the approach of separating business planning fromstrategic development functions in the port sector adopted by the Government may also beappropriate for ADBs other developing member countries; and (ii) developing member countriesstill in the nascent stages of administering ADB projects would benefit from more proactiveproject monitoring by ADB, particularly at the resident mission level.


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The OEM recommends four follow-up actions: (i) ADB should continue to encourage theGovernment to extend autonomy to lower levels of government, including the port sector;(ii) ADB should assist in a review of national shipping tariffs to help ensure the sustainability ofports, including SP; (iii) SPs management information system should be updated periodically toincorporate technology improvements, and should be integrated with systems used by customs

and shippers; and (iv) SP should collect samples of the deck-drainage effluent for environmentalconfirmation testing and, if an unacceptable level of contamination is found, priority should begiven to improving the drainage system.

The OEM rates the Project and the TA as successful.


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I. BACKGROUND

A. Rationale

1. Viet Nam is geographically elongated, approximately 1,650 kilometers (km) from north tosouth; and narrow, at only 50 km across its narrowest section. Its 3,444 km coastline borders

the Gulf of Thailand in the south, and the Gulf of Tonkin and the South China Sea to the east(Map 1). A mountain range along much of western Viet Nams borders defines a coastal plain,the principal land-based transport corridor. The Mekong River in the south and the Red River inthe north, along with their tributaries and canals, form an extensive and intricate inland networkfor waterway transport, roughly 7,000 km in length. Coastal shipping and the inland waterwaynetwork are key components in Viet Nams overall transportation system.

2. Damage associated with 3 decades of war from 1945 to 1975, and a lack of investmentin the following decades, left all of Viet Nams major ports in a state of disrepair. Thishandicapped Viet Nams entire transport system, thus hindering economic growth. Viet Namsprimary port facilities include five major ports for general cargo, which account for 60% of allinternational and 20% of all domestic trade; and five ports dedicated to the handling of

petroleum and oil. Saigon Port (SP)1 is the principal shipping gateway to Viet Nam. At the timeof appraisal, the pier, quay, and other SP structures had deteriorated so severely that safe andefficient cargo handling was no longer possible. Concrete foundation piles had cracked, andsections were lost. Steel piling and marine hardware had corroded. The concrete deck haderoded, leaving occasional holes through the deck. Transit sheds and warehouses weredilapidated.

3. The Government requested assistance from the Asian Development Bank (ADB) toundertake civil works on SP and to replace and purchase new equipment to improve itsoperational performance. SP recognized the need to streamline and rationalize its operationaland financial systems. To this end, the Government also requested that ADB provide technicalassistance (TA) to strengthen SPs institutional capability.

B. Formulation

4. The Project was formulated during a fact-finding mission in September 1990 and anappraisal mission in November 1990; there was no project preparatory TA. The plan to improvethe operational capacity of SP was endorsed by the National Transport Sector Review (NTSR).2Project components were developed to address the rehabilitation and upgrades necessary toenhance SPs capacity and efficiency, as well as improve safety of its operations. Duringprocessing, ADB also conferred with representatives of the World Bank, the United NationsDevelopment Programme, and other external funding agencies to coordinate subsectordevelopment efforts.

5. ADB operations in Viet Nam were suspended thereafter until 1993, thus deferring furtherprocessing of the loan. The Project was reappraised in September 1993.3 Loan approval wasdelayed almost a year and a half because of a disagreement between ADB and theGovernment over the onlending interest rate to be charged under a subsidiary loan agreement

1Previously called Saigon Port Authority (para. 10).

2The review was undertaken with funding from the United Nations Development Programme during 19901992. Itproposed a restructuring plan that would make all ports autonomous by allowing them to set tariffs.

3During the 3-year delay between fact-finding and reappraisal, SP carried out repair work, considered essential forcontinued operation. The repair work was originally in the project scope, which was reduced accordingly.


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between the Government and SP. ADB proposed a rate similar to that applicable to loans fromthe ordinary capital resources (OCR), while the Government preferred a 1% concessional rate.4Ultimately, the Government accepted the ADB position; the loan was approved on 2 March1995 and became effective on 21 July 1995.

C. Purpose and Outputs

6. The goal of the Project was to facilitate expansion of international trade throughenhancing port capacity and operational efficiency. The purpose of the Project and attached TA5included (i) improving SPs cargo-handling capacity through the rehabilitation and modernizationof existing port facilities, (ii) enhancing the efficiency of port operations through rationalizationand streamlining of procedures and activities, and (iii) upgrading SPs overall performance byintroducing a computerized management information system (MIS).

7. Project outputs included (i) an improved port facility through rehabilitation of deterioratedwharf sections; installation of new fenders, marine hardware, and offshore mooring buoys; andconstruction of adequate maintenance workshops; (ii) improved cargo handling through theprocurement of new equipment, new tugboats, and better lighting; and (iii) improved operational

and financial management through the MIS and provision of communications equipment.

D. Cost, Financing, and Executing Arrangements

8. The project cost at appraisal was estimated at $40 million. In March 1995, ADBapproved a loan of $30 million equivalent (75% of total project cost) from its Special Fundsresources to cover the entire foreign exchange requirement of $25 million and local currencycost of $5 million equivalent. The Government was to finance the remaining local currency costof $10 million (Appendix 1).

9. The attached advisory TA was provided to install a computerized MIS that would enableSP to process key operational and financial information and make commercially oriented

decisions. The TA financed the entire foreign exchange cost and $10,000 in local currency costsfor translating and interpreting services. The TA provided 14.5 person months (81% of theappraisal estimate) of international consulting services in port operations, port finances, andcomputer MIS.

10. At the time of appraisal, the Saigon Port Authority, the Projects Executing Agency, wasunder the jurisdiction of the Ministry of Transport, and the operational responsibility of the VietNam Maritime Bureau (Vinamarine). In 1996, the Viet Nam National Shipping Lines (Vinalines)took over the operational responsibility of five major ports,6 and the Saigon Port Authority wasrenamed the Saigon Port.

11. A project management unit (PMU) was established within SP to manage and implement

the Project. The SP director of engineering served as project director in the PMU. The PMU wasstaffed with 12 professionals, including a deputy director and a chief accountant. To enhancetechnology transfer during implementation, seven PMU engineers were assigned to work

4The ADB loan to the Government was from Special Funds resources, with an amortization period of 40 years,including a grace period of 10 years and a service charge of 1% per annum.

5TA 2305-VIE: Computerized Management Information System for Saigon Port, for $500,000, approved on 2 March1995.

6The five ports are Can Tho, Da Nang, Hai Phong, Quang Ninh, and Saigon (Map 1).


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directly with the international consultants who were helping the PMU with project design andconstruction supervision.

E. Completion and Self Evaluation

12. The project completion report (PCR), circulated to the Board in October 2001, rated the

Project successful.7 The Project was generally implemented as appraised, with satisfactoryquality of construction. There were implementation delays, but no cost overruns.

13. The reevaluation conducted for the PCR determined a financial internal rate of return(FIRR) of 12.4%, compared with 10.7% estimated at appraisal. The economic internal rate ofreturn (EIRR) was also higher at 33.3%, compared with 18.1% estimated at appraisal.Substantial project benefits include savings in time required to load and unload vessels;improved user services; less damage to goods; and improved working conditions at the port,resulting in fewer accidents.

14. Two covenants were not complied with at the time of the PCR. First was the covenantdealing with the onlending rate under the subsidiary loan agreement between the Government

and SP. Second, port traffic data were not being collected or analyzed. With the exception ofsome significant errors in the economic and financial analysis, the PCR generally presented anaccurate and objective evaluation of the Project.

15. The technical assistance completion report (TCR)8 and the PCR rated the attached TAdifferently. The TCR assessed the TA as successful and the PCR, as highly successful. Thisdifference was because the TCR emphasized the need for periodic updating to keep pace withinnovations in computer software and hardware, and integration with systems that customs andshipping lines use. On the other hand, the PCR focused on the systems operationalperformance.

F. Operations Evaluation

16. This project performance audit report (PPAR) assesses the Project for relevance,efficacy, efficiency, sustainability, and institutional and other development impacts. The PPAR isbased on the findings of the Operations Evaluation Mission (OEM) that visited Viet Nam from2 to 17 December 2002; review of relevant project documents; discussions with ADB staff; andinformation gathered during meetings with officials from relevant ministries, port and marineagencies, and other development assistance organizations. The OEM conducted a conditionsurvey of the project site and ancillary facilities along with the surrounding infrastructure.Preliminary OEM findings were discussed at two wrap-up meetings: first in Ho Chi Minh City(HCMC) with SP on 14 December 2002, then in Hanoi on 16 December 2002. Copies of thedraft PPAR were circulated, for review and comments, to SP, various government ministries,and concerned ADB staff. The comments were considered when finalizing the PPAR.

7The PCR used the current four-category rating system: highly successful, successful, partly successful, andunsuccessful.

8The TCR was completed about 1 month before the PCR was circulated.


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II. PLANNING AND IMPLEMENTATION PERFORMANCE

A. Formulation and Design

17. ADBs country operational strategy for Viet Nam at the time of appraisal and reappraisal

focused, among other things, on reducing key development constraints through financialassistance for rehabilitation, upgrading, and development of the physical infrastructure tosupport economic growth. Viet Nams Third Five-Year Plan (19911995) reiterated giving highpriority to the rehabilitation of SP, Viet Nams main shipping gateway. Thus, within the maritimesector, the continued operation of SP was a priority for the Government and ADB. SP remainsViet Nams principal break-bulk handling facility and, to a lesser extent, an important container-handling facility. Its importance to the Government is undiminished although the current countrystrategy and program update (20032005) focuses more on broader-based projects for povertyintervention. But ADB remains engaged in policy reforms aimed at liberalizing the system ofeconomic management of key state-owned sectors.

18. The master plan that SP prepared for development of the port facilities originally

included rehabilitation and upgrade of the existing Nha Rong and Khanh Hoi project terminals;9installation of an MIS at SP; and the construction of a new deepwater terminal, dedicated to thehandling of cargo containers, near Thi Vai, at the mouth of the Saigon River. The project scopefocused on improving the break-bulk operations at the project site, which comprised most ofcargo operations at that time in HCMC, and did not include development of a new containerterminal.

19. Demand for accommodating containerized marine traffic grew during projectimplementation. Competition to SP also grew stiffer, as various ministries and the HCMCmunicipality had constructed new port facilities near SP, some dedicated to handling containertraffic using modern container cranes.10 Traffic in District 4 of HCMC, the site of both projectterminals, was also becoming congested; District 4 is a small island served by only two main

bridges (Map 2). SP requested, in the first year of project implementation, that furtherdevelopment of the Nha Rong and Khanh Hoi project terminals be stopped, and that ADB fundsbe diverted to the development of a container facility. The Government did not agree with thisrequest.

20. Instead, SP, using funds from the State Bank of Viet Nam, developed container-handlingcapacity at the Tan Thuan terminal, adjacent to the project site. Located in District 7, Tan Thuanhas a much larger area available for processing containerized traffic than either the Nha Rongor Khanh Hoi project terminals, and is readily accessible by a new highway. Tan Thuan doesnot suffer from the same traffic congestion as the two project terminals. SP was unable to obtaina used container crane for installation at Tan Thuan. Instead, the 80-ton mobile cranes suppliedby the Project have been fitted to handle, though in a less-efficient way, container traffic. Thus, it

is difficult for SP to compete against dedicated container-handling terminals such as the nearbyVietnamese International Container Terminal.

21. The project scope was modified during implementation to better address port capacity,particularly for container operations. The provision of mooring buoys and hardware was dropped

9SP comprises four terminals in HCMC (Map 2): Nha Rong (7 berths), Khanh Hoi (8 berths), Tan Thuan 1(4 berths), and Tan Thuan 2 (1 berth); 1 terminal in Can Tho City (1 berth); and 34 buoy berths in the Saigon River.

10HCMC has 28 ports, including SP; 14 are on the Saigon River. Warehouse space in these ports totals147 hectares, and their annual handling capacity is about 20 million metric tons.


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to allow dredging to increase the berthing depths in front of the project terminals, so theterminals could accommodate larger vessels. Larger cranes that can handle containerizedcargo were also bought. Loan savings identified near project completion were used to procureadditional equipment for handling cargo containers in the yard storage area. The OEM concursthat these changes were appropriate, and improved the Project.

B. Achievement of Outputs

22. The Project improved the port facilities through extensive rehabilitation. Dredging workswere added to the project scope,11 and yard area was expanded beyond appraisal estimates toprovide additional handling and storage area. The transit shed, built to process cargo, was alsoexpanded to increase its capacity. Mooring buoys, planned at appraisal to provide additional in-river berths, increased the water depth at the terminals, allowing larger vessels to call at SP.The modern cargo-handling equipment increased SPs capacity. Installation of the MISstreamlined and rationalized SPs operational and financial procedures. A list of project outputsis presented in Appendix 2.

C. Cost and Scheduling

23. The actual project cost was $34.2 million, with a foreign exchange cost of $23.6 million(69%), and a local currency cost of $10.6 million equivalent (31%) (Appendix 1). The ADB loancovered the foreign exchange cost and $3.9 million of the local currency cost. The decrease inthe total project cost from original estimates was partly because of a reduction in scope of repairwork (footnote 3). There was an overestimation at appraisal of the costs of tugboats and MIScomputerization. Loan savings, at the Governments request, were used to procure two forkliftsand two two-way dozers.12 Overall, the Project had a cost underrun of $5.8 million, or 14.5% ofthe appraisal estimate. Loan cancellations were $0.7 million.

24. ADB disbursements were $27.5 million (92% of the appraisal estimates), whileGovernment counterpart financing totaled $6.7 million (67% of the appraisal estimates). The

SDR-denominated ADB loan was reduced to $28.2 million as a result of a 12.3% depreciation inthe SDR rate against the dollar during implementation.

25. The Project further started sluggishly because consultants were recruited late, despiteapproval for advanced action for their recruitment. Other implementation delays resulted from(i) SPs lack of familiarity with ADB procedures for local competitive bidding, (ii) lengthy bidevaluations caused by cumbersome internal procedures, (iii) SPs lack of experience in workingwith international consultants, and (iv) difficulties in implementing civil works while the port wasin operation. The Project was completed in April 2000, 22 months behind schedule. The loanclosing date was extended once, to 1 November 2000.

D. Consultant Performance, Procurement, and Construction

26. A team of international consultants, engaged according to ADB Guidelines on the Use ofConsultants, was originally intended to review the engineering designs. The Government initiallyresisted significant changes that the consultants proposed, which led to tension in workingarrangements. Also, supervision of the early civil works construction, without benefit of theinternational consultants, was weak. These problems, which emerged early in the Project,

11The present berthing depth was reported to the OEM as 8.210.0 meters (Map 3).

12ADB initially rejected the Governments request, as the cost of the equipment exceeded the loan savings. But therequest was later approved after the Government assured that it would bear any cost overrun.


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contributed to delays in the initial implementation (para. 25). The contract for internationalconsultants was amended to improve construction supervision. In time, the Governmentacknowledged that the design changes were beneficial to the Project. The OEM confirmed thatthe consultants overall performance during design and supervision of construction wassatisfactory.

27. The Project comprised seven contracts for civil, marine, and electrical works. Fivecontracts were tendered using local competitive bidding procedures; the other two contractswere directly negotiated with local contractors, with ADB approval. SP initially insisted that onlyVietnamese contractors be allowed to participate in local competitive bidding; that led to delaysin implementation. The Project also included six supply contracts for procurement of twotugboats and miscellaneous marine equipment. Five contracts were tendered using internationalcompetitive bidding procedures, and the sixth, through international shopping. Award of onesupply contract was delayed considerably because of a lengthy review due to inaccuracies inthe bid.13 Ultimately, all supply and civil works contracts were procured in accordance withADBs Guidelines for Procurement.

28. The bid evaluation process in Viet Nam is lengthy and cumbersome (para. 67). Almost

1 year passed from the issue of bidding documents to the award of the first civil works contract.Contracts were submitted by SP to the Ministry of Transport for evaluation, and then forwardedto the Ministry of Planning and Investment for review before submission to the Prime Minister forfinal approval.

29. All civil works, with one exception, were satisfactory and of acceptable quality. Problemswere originally identified in construction of the buildings, but all deficiencies were rectified. Someproblems during implementation were caused by ongoing port operations and delays inpayment. Despite the delays, the PCR considered the performance of the contractorssatisfactory. The OEM agrees with this assessment.

E. Organization and Management

30. Project implementation arrangements were generally as envisaged at appraisal.However, there were modifications in the organizational structure above SP shortly afterimplementation began (para. 10). At appraisal, Vinamarine had administrative authority over SP.In January 1996, that authority was transferred to the newly established Vinalines, butVinamarine, as a member of the State Pricing Committee,14 retained responsibility for settingtariffs and charges for all ports in Viet Nam. Vinamarine is now responsible for establishingmarine rules and regulations, as well as for planning the overall strategy for port development. Italso retains administrative control over all but five of Viet Nams major ports (footnote 6), whichare now under Vinalines. Vinalines also prepares the long-term business plan for these fiveports. Day-to-day operation of the five ports, however, is undertaken by their respective portauthorities.

31. The State Pricing Committee uses a two-tier system to set port tariffs and charges. Porttariffs, which are usually adjusted every 2 to 3 years, include fees assessed for ship tonnage,channel use, freight processing, and formality fees. These fees are uniform for all ports in VietNam. The customs departments at each port collect and forward these tariffs to the Ministry ofFinance (MOF). The concerned port authorities collect the port charges, which include charges

13The exchange rate was incorrect in one suppliers bid.

14The State Pricing Committee comprises representatives of Ministry of Finance, Ministry of Transport, andVinamarine.


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for stevedoring services and anchorage. Each port authority has the opportunity to adjust thesecharges by as much as 15% of those established by the State Pricing Committee.

32. The PMU established during the Project is still in existence, but is awaiting Governmentapproval to disband. Because this was one of the first ADB projects in Viet Nam after ADBresumed operations, the Government was not familiar with various ADB guidelines and

procedures. Disagreements with the consultants regarding design issues also delayed projectimplementation and administration. Rigid government procedures concerning procurement andcontract awards often impeded efficient implementation.

III. ACHIEVEMENT OF PROJECT PURPOSE

A. Operational Performance

33. Various indicators of SPs operational performance are shown in Appendix 3, TableA3.1. Construction of the terminal improvements appears satisfactory. The new fendering unitsshow little wear or corrosion, and function properly. Asphalt paving and transit sheds in the yardarea are in good condition (Map 3). The two tugboats appear well maintained. Various sizes of

bollards for ship mooring lines were installed along the pier; larger bollards were brought from aneighboring port. Rainwater drainage systems installed through the Project are free fromobstructions and functional. River debris, however, tends to collect in the fender systems andshould be removed more regularly to ensure that the fenders continue to operate properly.

34. The yard area behind the face of the terminals is restricted. Operations are congestedbecause of a lack of available space at the port site, which is confined by the area road network.Further expansion of the yard would require the relocation of a major artery in the road network,at considerable cost and inconvenience. The Vietnamese International Container Terminal, acompeting port in HCMC, has a larger port site located further from the dense traffic arterial, andis already equipped with modern equipment dedicated to handling cargo containers. SP is wellsuited to handle break-bulk cargo operations, and competing in the cargo container shipping

market does not seem practical in the long run.

35. The Port Operations Action Plan was adopted, but not within the covenanted date of31 December 1995. The outputs of the first phase of the plan were reflective of SP being at anascent stage in its goal of market reform.15 Phase 2 of the plan consisted of designating one ormore berths exclusively for container operations, introducing a shorter three 8-hour shift system,and preparing a plan for handling pollutant discharges. The OEM found that one berth isreserved to give priority to container operations, but not exclusively for container throughput.Port operations now use the three 8-hour shift system as specified in the plan. Someimprovements may still be necessary in the handling of contaminated rainwater, pollutantdischarges, and hazardous material spillages.

36. SP handled 10.0 million metric tons (t) of cargo in 2001. Since 1995, total throughputhas increased by an average annual rate of 6%, slightly exceeding the appraisal targets. In2000, the throughput reached 9.7 million t, as against the appraisal target of 9.3 million t. Cargothroughput at the Nha Rong and Khanh Hoi project terminals increased from 4.9 million t in1995 to 5.8 million t in 2001. The total number of vessels calling at the project terminals

15Included as the plans output were (i) eliminating all unnecessary and prolonged waiting of trucks on the quaybefore or after completion of cargo pickup and delivery; (ii) introducing a rational cargo circulation system; and(iii) conducting daily meetings of management, stevedoring, and other entities to prepare and plan for the next24 hours.


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increased from 827 in 1995 to 1,048 in 2001. Average vessel turnaround times decreased frommore than 5 days in 1996 to less than 4 days in 2001. Cargo handling time per vessel alsodecreased from an average of 4.3 days in 1995 to 3.6 days in 2001.

37. Port accidents have remained constant, at around 10 per yearbut considering thehigher throughput, the accident rate has declined significantly, in terms of total cargo handled.

38. Industry in HCMC accounts for about 40% of Viet Nams gross domestic product. SPremains the principal waterborne gateway to the HCMC industrial area, and to the country.Population has grown rapidly in the HCMC area in recent years; it now exceeds 7 millionpeople. That puts excessive strain on the existing road network. The increase in cargo transportcompounds the traffic problems around the Nha Rong and Khanh Hoi project terminalswhichwere already congested. Although SP still has potential for increasing its handling capacity,landside traffic congestion will inhibit future growth. Containerized traffic is expected to increase,a reflection of the change in worldwide shipping trends.

39. To provide a better international gateway for cargo containers, SP has requisitioned landat Thi Vai, at the mouth of the Saigon River, to build a deepwater container terminal and is

waiting for approval from the Prime Minister16 (Map 1). The transfer of some cargo-handlingresponsibilities to Thi Vai will allow use of some of the berths at SP for cruise liners visitingHCMC for tourism. In 2001, tourist-related revenue accounted for almost 6% of SPs grossoperating revenue.

40. Rice is the major export at SP; throughput reached about 2.15 million t in 2002. Fertilizeris the largest import commodity, reaching 1.2 million t in 2002, followed by steel and iron at0.9 million t. Other imports include wheat, 0.3 million t; and chemicals, 0.1 million t. Domesticcargo includes cement, coal, and rice, with 2002 throughputs of 0.5, 0.4, and 0.1 million t,respectively (Appendix 3, Table A3.2). Containerized traffic at SP has risen from 0.6 million t in1995 to about 3.4 million t in 2002. For the two project terminals, containerized traffic grew fromunder 0.6 million t in 1995 to around 1.6 million t in 2002. Although containerization of cargo is

the global trend in shipping because of speed and efficiency in handling, some cargo, such asfertilizer, will probably continue to be shipped as break-bulk in the foreseeable future.

B. Performance of the Operating Entity

41. Port tariffs for tonnage, channel use, and freight processing in Viet Nam are about20% higher than those at other international ports in the region. 17 The revenues are credited toMOF, rather than to the port. As a new member of the Association of Southeast Asian Nations,Viet Nam has committed to rationalizing these tariffs to bring them in line with those of theregion by the end of 2005. Port charges for stevedoring and anchorage, however, areconsiderably lower than those at other regional ports. The main beneficiaries of the low ratesare the shipping lines, so there is also potential for rationalizing these charges.

42. Two covenants in the Loan Agreement were not complied with at the time of the PCR(para. 14). According to Schedule 6, para. 2, SP is required to monitor and evaluate benefits of

16Opinions differ about when to start construction at Thi Vai. SP indicated to the OEM that 2015 may be the mostappropriate year to begin, because all outstanding loans will have been repaid by that time. Others within theGovernment propose 2010.

17A comparative study by the United Nations Economic and Social Commission for Asia and the Pacific found thatSP charges higher tariffs than those of other regional ports such as Manila; Hong Kong, China; Singapore;Yangon; Jakarta; and Port Klang in Malaysia.


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9

the Project by collecting and analyzing port traffic data, particularly data related to ship waitingtime and ship service times and cargo-handling performance. The OEM found that data arenow being collected and analyzed in these areas.

43. An onlending rate to SP similar to that applicable to ADBs OCR was covenanted in theProject Agreement (Section 3.01). The PCR noted that in a letter dated 20 November 1995,

MOF allowed SP to defer payment of interest until 1 November 2001 by adding the interest tothe principal. The objective of the covenant was to facilitate the restructuring of SP and promoteits commercial orientation, thereby enhancing its capability to attain full cost recovery, asenvisaged in the NTSR (footnote 2). The OEM was informed that the authority to enforce SPsrepayment of interest and principal to the Government no longer rests with MOF, but with theautonomous Development Assistance Fund (DAF).18 The OEM was also informed that SPsuggested a reconsideration of the rate of interest for two reasons: (i) the devaluation of thedong makes it difficult for SP to meet the original terms of the agreement, and (ii) 28 ports nowcompete to serve HCMC. MOF denied this request, however, and the interest rate payable bySP in 2001 was 6.17%, the OCR rate, as envisaged in the subsidiary loan agreement.

44. SP is profitable, even though marginal financial returns highlight the increased pressure

on operating profits because of high operating costs and constraints on revenue generation incore port activities, as well as the relatively weak performance of noncore business activities inrecent years.19 The operating ratio for the entire SP deteriorated from 76% in 1995 to 92% in2001 (Appendix 4, Table A4.1). Operating expenses increased by about 10% annually, fromD243 billion in 1995 to D427 billion in 2001. The higher operating expenses were largely causedby higher salary expenses; fuel costs; management and administration expenses, includingdepreciation; and cost of products and services sold through SPs noncore business operations(Appendix 4, Table A4.2).

45. Operating revenues (net of turnover taxes) have increased by about 6% annually, fromD321 billion in 1995 to D463 billion in 2001. Operating revenues from core businesses providingport servicesstevedoring, warehousing, wharfage, and tugboat feesaccounted for an

average of about 73% of gross revenue. Noncore business activities, such as tourism andassociated businesses, accounted for the balance (Appendix 4, Table A4.3).

46. Operating income fell by 54%, from D78 billion in 1995 to D36 billion in 2001. Return onequity declined from 25% to 4% during that period. The operating profit margin from portservices declined from 25% in 1995 to 6% in 2001. Preliminary financial data for 2002 indicate arecovery, to 12%. The operating profit margin from noncore businesses also declined, from 33%in 1995 to 11% in 2001, and a further decline to 2% is expected in 2002.

47. Total asset growth averaged 23% annually, from D294 billion in 1995 to D1,003 billion in2001. Long-term debt burden increased by 54% annually in the same period, from D32 billion toD435 billion in 2001.20 SPs ability to manage an increased debt burden as a consequence of

the Project is evident from the acceptable levels of liquidity and debt-to-equity ratios. This washelped by a steady growth in capitalization of about 15% annually as a result of annualincreases in cumulative government equity contributions from D173 million in 1995 to

18This occurred in 1998 when MOF was split into the Treasury, which was renamed MOF, and DAF. DAF isauthorized to ensure that agencies repay outstanding loans and interest to the Government.

19The financial performance of SPs Nha Rong and Khanh Hoi project terminals could not be assessed individuallybecause disaggregated financial data were lacking.

20Includes an ADB loan for the Nha Rong and Khanh Hoi project terminals and a long-term loan from a Viet Nambank to help finance the construction of Tan Thuan 2, estimated at D100 billion.


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10

D507 million in 2001 (Appendix 4, Table A4.4). Nevertheless, SPs financial performance is stillat risk, and will likely deteriorate if the Government continues to make decisions relating tostevedoring and anchorage charges, now among the lowest in the region (para. 41). Acquiring aboom crane dedicated to handling containers would further improve SPs performance andcompetitiveness.

C. Economic and Financial Reevaluation

48. Appendix 5 gives the reestimated EIRR and FIRR. Based on a landside berth utilizationrate of 85.0%, the reestimated EIRR is 12.6%, well below the PCR estimate of 33.3%. The PCRused the same methodology as at appraisal, with economic benefits including cargo handled atTan Thuan 1, which was not part of the Project. Thereby, incremental benefits wereoverestimated; incremental operating costs were also underestimated by the PCR. Atevaluation, the EIRR was recalculated for the two project terminals, Nha Rong and Khanh Hoi.Three assumptions were made: (i) that the two project terminals had the ability to meet targetsfor cargo and container traffic, (ii) SPs cost management would be effective and prudent, and(iii) HCMC would be able to address traffic congestion in the port area to facilitate increasedcargo volume. The reestimated FIRR is 3.7%close to the weighted average cost of capital of

4.0%21but significantly lower than the PCR estimate of 12.4%. This difference is mainlybecause operating costs were underestimated. The PCR assumed the incremental operatingcost to be 30.0% of incremental revenue, close to appraisal estimates. The OEM consideredthat assumption optimistic, based on the decline in operating profit margin from core portservices (para. 46). Further confirming this observation was the deterioration of the operatingratio for the entire SP.

49. The sensitivity analysis shows that the FIRR will decline to 2.5% if operating andmaintenance expenses are 10% higher than assumed. Similarly, the FIRR drops to 1.6% withoperating revenues 10% lower than the base case. With an average berth utilization of 75% and7 million t of cargo handled, the FIRR would be only 0.4%. The sensitivity analysis also showsthat net financial revenues from existing cargo traffic cannot generate adequate returns on

investment costs.

50. The sensitivity analysis further shows that the EIRR falls to 9.3% if the project terminalsachieve an average ratio of only 30% for container cargo, instead of the assumed 34% and 52%in 2005 and 2010, respectively. The EIRR is estimated at 10.3% if there is a 10% decrease inaverage daily shipping costs, and 11.0% with a 10% reduction in incremental project benefits.Unlike the FIRR case, an average berth utilization rate of 75% raises the recalculated EIRRto13.9%because of shorter waiting times for ships.

D. Sustainability

51. Ensuring a prompt repair and replenishment of equipment when necessary was

covenanted in the Project Agreement (Section 2.12 c). The amount spent by SP on repair andmaintenance averaged D25 billion during the pre-project years 1992 to 1994. Spending declinedto D17 billion in 1995, and was estimated at D12 billion in 1999 (Appendix 4, Table A4.1). As ofOctober 2002, the budget of D15 billion for repair and maintenance was adequate. But, as theequipment ages, appropriate and, likely, higher allocations for maintenance must be made toensure that the investment is protected.

21The real cost of capital for ADB and government-financed components was estimated at 3.1% and 2.0%. However,according to ADBs Guidelines for Financial Governance and Management of Investment Projects, page 26, aminimum rate of 4.0% should be applied if the derived weighted average cost of capital is below this threshold.


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11

52. As to the long-term financial sustainability of the Project, the operating ratio of 89% in1994before the Project begandecreased to 76% in 1995, then rose to 92% by 2001. Thiswas above the appraisal estimate of 87%, raising concerns over the move toward full costrecovery. The high operating ratio resulted from low port charges and high operating costs(paras. 4446).

53. There is concern that the Governments continued control over port tariffs and feesthrough the State Pricing Committee threatens SPs long-term sustainability. That controlhampers SPs ability to improve its financial performance. Traffic congestion in the port areamay also affect the long-term sustainability (para. 38). Competition from other ports withdedicated container facilities and larger storage yards is another factor. Also, future demand forlarger-vessel berths may require a relocation of some port activities to a location with deeperwater. SP remains the busiest port in the area, however, and significant break-bulk shippingoperations will continue, even with the trend toward containerization. Furthermore, several ofthe berths may be modified to better accommodate cruise ships. The sustainability of SP islikely, even though some port operations may need to relocate to a location with deeper water.

IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS

A. Socioeconomic Impact

54. The Project, by improving commodity-handling capacity, reduced shipping costs for bothdomestic and international trade. It was reported to the OEM that prices for imports anddomestic commodities shipped through SP have decreased, and increased exports havegenerated higher revenues from export taxes. Also, imports of raw materials for manufacturing,such as steel and iron, have generated more employment in the region, and provided moreproduct choices. Family-operated businesses that produce handicrafts for export have alsobenefited from improved handling at SP. Domestic cargo transport has increased from0.6 million t in 1995 to 2.7 million t in 2001, which has helped expand the domestic market.

Thus, the Project has helped promote economic growth in HCMC and surrounding areas.

55. Terminal improvements have also generated employment at SP itself. Higher throughputhas contributed to the creation of about 1,800 jobs since the Project began. Working conditionsat SP have improved considerably through the Port Operations Action Plan, which replaced two12-hour work shifts for dock and stevedoring labor with three 8-hour shifts. Handling accidentsat SP have also decreased since the Project.

B. Environmental Impact

56. Environmental impacts of the Project have been minimal. Paving the storage yard hasreduced dust. SP employs sanitary teams to clean the break-bulk terminals after each shift. The

drainage pits at the shed veranda and in the paved areas are cleaned periodically. Replacingthe old equipment has reduced harmful exhaust emissions. Dredging in front of the terminal,although necessary to increase berthing depth, may have affected the existing marineenvironment in a limited area. The Project was confined to rehabilitation and replenishment ofan existing facility, so no relocation was necessary.

57. The port apron and storage yard has a system for collection and drainage of rainwater,but the water is discharged back into the river without treatment or oil separation. Although greatcare is taken to minimize spills, and spills are later manually swept from the deck, some


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12

contaminants that are hazardous to the environment, such as fertilizer or coal, remain on thedeck. Rain ultimately washes these contaminants, along with oil spills and leaks from vehiclesoperating on the terminal, into the river.

C. Impact on Institutions and Policy

58. The main objective of the attached TA (footnote 5) was to provide a computerized MIS tohelp upgrade SPs overall performance. The TA was expected to be completed in 18 months,but actual completion took 51 months. The OEM confirmed that the main reason for the delaywas the PMU proposal to enhance technical specifications to include accounts payable andreceivable, and a cargo and ship billing system. The consultants, supported by ADB, initiallyopposed these enhancements on the grounds that the additional modules may be difficult toimplement.22 The views of the PMU prevailed, however, and the bidding documents forproviding the MIS were issued in May 1999. The bidding process was completed in September1999. The delay was also attributable to exceptionally long review periods for the awarding ofcontracts, and to a minor contract extension.23 The consultants provided extensive training, anecessary adjunct to the TA. The PCR assessed the TA consultants performance assatisfactory; the OEM agrees with the assessment. The OEM confirmed that the MIS is

operating satisfactorily.

59. The TCR assessed the TA as successful, and the OEM concurs.24 Billing time has beenreduced by about 10 days, and SP is able to process operational and financial information andmake commercially oriented decisions based on the users actual needs. However, the OEMfound that staffing levels are not appropriate, with 12 trained staff manning 200 terminals.Retention of competent staff is another issue, because salaries in the private sector areconsiderably higher than at SP.25 Also, the MIS is not operating 24 hours a day, as theconsultants envisaged, but a maximum of 10 hours a day. But once SP completes a web pageconcerning its operations, a component of the TA, the MIS will operate 24 hours, 7 days a week.

V. OVERALL ASSESSMENT

A. Relevance

60. At appraisal and the time of evaluation, SP served as the principal waterborne gatewayto Viet Nam. The Project was relevant at appraisal, as its primary purpose was to improve SPscargo-handling operations, and enhance its efficiency by rehabilitating and modernizing theexisting port facilities. Improvements focused on break-bulk operations and did not address thegrowing need to accommodate containerized cargo, which was becoming the worldwidestandard for cargo transport. Break-bulk operations continue at SP, however, as at other portsworldwide. Such operations are likely to continue for the foreseeable future for commodities likericeViet Nams major exportand fertilizer, its major import. Overall, the Project is assessedas relevant.

22The consultants proposed a simpler system to which future modules could be added.

23The extension allowed connection of the new MIS to each warehouse in the Khanh Hoi complex, and to the newwharves in Tan Thuan 2.

24The PCR rated the TA highly successful.

25Two trained information technology staff left SP for higher paid jobs in the private sector in 2001.


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13

B. Efficacy

61. The Project fully achieved its objective of rehabilitating the landside facilities of NhaRong and Khanh Hoi project terminals, thereby increasing SPs efficiency. It greatly improvedthe cargo-handling operations, minimizing cargo losses. Between 1995 and 2001, ships callsincreased by 27%, average turnaround times were reduced from more than 5 days to less than

4 days, and port congestion decreased. Cargo throughput tonnage for the project terminalsincreased from 4.9 million t in 1995 to 5.8 million t in 2001, and an estimated 7.3 million t in2002. Substituting dredging works for the planned mooring buoys and hardware enhanced theberthing capability at the port terminals, allowing larger vessels to call. Revisions of andadditions to the procured equipment also improved SPs ability to address cargo-handlingneeds. The TA strengthened SPs institutional capabilities. Overall, the Project is assessed ashighly efficacious.

C. Efficiency

62. The Project suffered from initial implementation delays caused by lengthy bidevaluations and contract award procedures. However, the total project cost was 14.5% lower

than estimated. The Project has an EIRR of 12.6%. The Project is assessed as efficient.

D. Sustainability

63. The civil works and equipment provided are of good quality and generally appear wellmaintained. SP is the busiest port in Viet Nam and remains profitable. Unfortunately, landsidetraffic congestion limits growth potential of the port area. The river location also limits the size ofvessels that can call. Despite the trend to containerize cargo whenever possible, the demand forbreak-bulk handling operations will remain strong. While larger ocean-going ships continue toenter the shipping market, the small- to medium-tonnage vessels now calling at SP will likelycontinue to ply the Saigon River. The setting of tariffs and other fees should be decentralized toensure SPs long-term sustainability. The FIRR is 3.7%, slightly below the weighted average

cost of capital of 4.0%. Overall, the Projects sustainability is assessed as likely.

E. Institutional Development and Other Impacts

64. Human resource management has improved, and employment opportunities haveincreased. But the Government retains control over the setting of port tariffs and fees throughthe State Pricing Committee; that has hampered SPs ability to expand. The operating ratioremains high due to low port charges and increasing operating expenses. The addition of theMIS has reduced billing times by about 10 days and has enabled SP to process and retrieveoperational and financial information more rapidly. Overall, the Projects institutionaldevelopment and other impacts are assessed as moderate.

F. Overall Project Rating

65. Based on the above criteria, the OEM rates the Project successful.

G. Assessment of ADB and Borrower Performance

66. The Project was formulated during one relatively short fact-finding mission; there was noproject preparatory TA. As such, inordinate reliance was placed on the Government to providethe rationale for the project components. This may explain SPs subsequent decision to seek


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14

approval for relocating the port at Thi Vai. ADB fielded eight project administration missions;because SP was inexperienced in using ADB procedures, more frequent and thoroughsupervision would have helped improve implementation. More assistance from the Viet NamResident Mission (VRM), established in 1996, would also have helped the Governmentunderstand ADB procedures.26 The implementation schedule envisaged at appraisal wasoptimistic because of ADBs inadequate assessment of the capacities of the Ministry of

Transport and SP. ADB missions did not fully monitor implementation of the action plan. Overall,ADB performance is assessed as satisfactory.

67. The Borrowers inexperience with ADB procedures caused delays in implementation(para. 28). The Borrowers lengthy bid evaluations delayed contract awardsa systemicproblem in Viet Nam. That also caused initial delays in project implementation. The subsidiaryloan agreement was not complied with until 2001, a year after the PCR was completed. ADB didnot initially support the recommendation for an additional two modules of the MIS that the PMUproposed through the TA. The OEM, however, found these useful additions. Apart from delaysattributable to the Borrowers inexperience with ADB procedures, overall Borrower performanceis assessed as satisfactory.

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

A. Key Issues for the Future

68. SP is reaching maximum capacity because of landside traffic congestion. If theinfrastructure in and around the port cannot be improved, SP may become unattractive toshipping lines. Improvement in the handling of containerized cargo, using contemporarymethods and equipment, is also necessary to remain competitive. The building of a deepwaterfacility at an alternate site should be investigated.

69. The cumbersome process of evaluating bids and awarding contracts caused seriousimplementation delays. Such problems remain an issue in Viet Nam. The process should be

streamlined by (i) delegating authority to the relevant government agencies to prevent excessiveimplementation delays in future projects; and (ii) enhancing VRMs role, a process that hasalready begun.

70. Policy dialogue at the time of appraisal stressed the need to give greater autonomy tothe port sector. Although the individual ports are responsible for administering their day-to-dayoperations, the State Pricing Committee establishes their port charges. While the ports aregiven some leewayup to 15%to vary these charges, they need greater flexibility to sustainfinancial viability. Thus, there is a need to give greater autonomy to the port sector.

71. Port rehabilitation became necessary because of the lack of proper maintenance for along period. Although present maintenance demands are minimal, future maintenance planning

must not be ignored. The MIS includes a preventive maintenance system that providesrecommended scheduling of maintenance operations; its proper use will assist in maintenanceplanning.

26VRM staffing has since been increased to strengthen project monitoring during implementation.


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B. Lessons Identified

72. To better address future needs of the port sector, the Government separated thebusiness planning function from the strategic development function. Vinalines was assigned todevelop the long-term business plan, based on needs of shippers, the port users. Vinamarine

was assigned to develop the long-term strategic plan for providing the port improvementsnecessary to accommodate the business plan. This strategy may also be appropriate for otherdeveloping member countries.

73. Viet Nams lack of familiarity with ADBs guidelines and procedures, despite trainingseminars through ADBs Central Operations Services Office, slowed initial projectimplementation. Portfolio performance reviews also indicated that this and other implementationproblems, such as sluggish disbursements, were systemic to Viet Nam. ADB responded bystrengthening the capacity of VRM to monitor project implementation.

C. Follow-Up Actions

74. The National Assembly of Viet Nam amended the State Budget Law, which gives greaterauthority at the district and provincial level and makes village-level budgeting more autonomous,on 10 December 2002. The revised law will go into full effect in 2004. Within this context, ADBshould encourage the Government to extend autonomy to other activities, including the portsector, and review progress in the country strategy and program updates.

75. Viet Nam is committed to rationalizing its national shipping tariffs by 2005. ADB shouldhelp review the tariffs to ensure SPs sustainability.

76. SPs present drainage system discharges directly into the Saigon River. Althoughcontamination of the discharged water may be minimal, SP should start collecting samples ofthe effluent for confirmation testing by 30 June 2003. If contamination is at an unacceptable

level, priority should go to improving the drainage system.

77. The MIS requires periodic updating as computer software and hardware technologychange. Integration of the MIS with customs authorities and shipping lines will strengthen itsusefulness.


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Project Component

A. Base Cost

1. Civil Works 4.3 12.0 16.3 3.9 10.5 14.4 (9.3) (12.5) (11.7)

2. Cargo-Handling Equipment 10.5 0.0 10.5 13.7 0.1 13.8 30.5 100.0 31.4

3. Tugboats 4.1 0.0 4.1 3.4 0.0 3.4 (17.1) 0.0 (17.1)

4. MIS Implementation 0.7 0.2 0.9 0.5 0.1 0.6 (28.6) (50.0) (33.3)

5. Consulting Services 0.8 0.3 1.1 1.6 0.0 1.6 100.0 (100.0) 45.5

Subtotal (A) 20.4 12.5 32.9 23.1 10.6 33.7 13.2 (15.2) 2.4

B. Contingencies

1. Physicalb 2.0 1.3 3.3 0.0 0.0 0.0 (100.0) (100.0) (100.0)

2. Price Escalationc 2.0 1.2 3.2 0.0 0.0 0.0 (100.0) (100.0) (100.0)

Subtotal (B) 4.0 2.5 6.5 0.0 0.0 0.0 (100.0) (100.0) (100.0)

C. Service Charge During Construction 0.6 0.0 0.6 0.5 0.0 0.5 (16.7) 0.0 (16.7)

Total 25.0 15.0 40.0 23.6 10.6d

34.2 (5.6) (29.3) (14.5)

MIS = management information system.a

Based on the average exchange rates (dong per US dollar) for the years 1995 to 2000 as provided in the country economic review report of the Asian Development

Bank.b At 10% of base cost.c

At 3.1% per annum.d Although the report and recommendation of the President stated that the Government had exempted al l project- related goods and services from dut ies and taxes,

the Saigon Port paid taxes in the amount of $158,000 equivalent, and these were included in the actual amount of local currency.

Source: Asian Development Bank. 2001. Project Completion Report on the Saigon Port Project in Viet Nam. Manila.

16

Appendix1

Total Foreign Locala Total

PROJECT COSTS

Foreign Locala% Overrun (Underrun)

Total

Actual

Foreign Local

Appraisal

($ million)


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Type of Work Unit

1. Wharf Strengthening

a. MM1MM3 m 351 0 0 577 0 0

b. K1K4 m 0 480 0 0 460 0

c. K5K9 m 0 550 0 0 573 0

d. K10 m 0 140 0 0 139 0

2. Yard Paving m2 7,240 61,850 0 17,691 69,536 0

3. Transit Shed (Rehabilitation) m2 4,900 22,348 0 0 33,020 0

4. Demolishing Shed m2 0 6,366 0 3,935 6,216 0

5. New Shed for CFS m2 0 4,133 0 0 0 0

6. New Shed m2

0 0 0 6,480 0 07. Shed Veranda m2 0 0 0 0 10,206 0

8. Central Workshop m2 0 0 3,024 0 0 2,592

9. Lighting set 204 1,224 0 130 677 0

10. Electrical Substation each 0 0 0 1 3 0

11. Fender each 0 (854 m) 0 60 104 0

12. Mooring Bollard each 0 0 0 20 44 0

13. Jetty m 0 0 90 0 0 0

14. Mooring Buoy each 0 0 10 0 0 0

15. Dredging Work m3 0 0 0 12,491 20,417 0

m = meter, m2 = square meter, m3 = cubic meter, CFS = container freight station.

Source: Asian Development Bank.

Appendix 2 17

PROJECT OUTPUTS

Table A2.1: Civil Works

Division

Appraisal

Central

Workshopand Others

Nha Rong

Division

Khanh Hoi

Division

Actual

Central

Workshopand Others

Nha Rong

Division

Khanh Hoi


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18 Appendix 2

Type of Equipment

A. Cargo-Handling Equipment1. Forklifts

a. 2.5 ton 0 0 2 4

b. 3.0 ton 0 10 5 5

c. 5.0 ton 4 3 1 2

d. 7.0 ton 0 3 2 1

e. 10.0 ton 1 0 1 2

f. 12.0 ton 0 1 0 0

g. 25.0 ton 1 0 0 0

2. Miscellaneous Gear

a. Mobile Mulitpurpose Crane (30 ton) 0 0 2 0

b. Mobile Mulitpurpose Crane (80 ton) 0 2 0 2

c. Rubber-Tired Gantry Crane 0 0 0 2

d. Container Yard Super Stacker 0 4 0 6e. Light Truck/Work Vehicle 1 4 0 0

f. Light Tractor and Hustler 0 11 1 4

g. Manual Spreader 40 Frame 0 1 0 0

h. Semiautomatic Spreader 0 0 0 2

i. Container Yard Chassis 0 20 0 0

j. Paper Clamps for Forklift 0 12 0 0

k. Bulldozer/Trimmers 2 ton 0 2 0 0

l. Two-Way Dozers 0 0 1 3

m. Hoppers with Automatic Scale 0 2 0 0

n. Grab 3.5 m3: 4 string 0 2 0 2

o. Grab 2.4 m3: 2 string 0 2 0 0

B. Communications Equipment

1. Radio Handset 22 0 0 0

2. Base Station 1 0 0 0

3. Charger/Antenna/Duplex (set) 2 0 0 0

4. One Additional Station for Main Office 1 0 0 0

C. Tugboats

1. Tugboats (2 x 1,000 HP) with Firefighting and

Environmental Protection Equipmenta 2 2

D. Computer Hardware and Software for MISb

1. Net Server 6

2. Terminal 523. Printer 38

HP = horsepower, m3 = cubic meter, MIS = management information system, TA = technical assistance, tbd = to be

determined.a Upgraded to 1,500 HP.b No number was identified at appraisal because that would be decided during implementation of attached TA 2305-VIE:

Computerized Management Information System for Saigon Port , for $500,000, approved on 2 March 1995.

Source: Asian Development Bank.

Table A2.2: Equipment

Appraisal

Nha Rong

Division

Khanh Hoi

Division

Nha Rong

Division

Actual

Khanh Hoi

(no.)

tbd

tbdtbd

Appraisal Actual

Division


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Item Unit

A. Ship Calls

1. Total Cargo Ship Calls vessels (no.) 1,156 1,072 1,207 1,421 1,447 1,811 1,724 1,88a. Container vessels (no.) 241 333 398 399 496 745 1,048 b. Cargo vessels (no.) 915 739 809 1,022 951 1,066 676

2. Total Ship Calls at Nha Rong/Khanh Hoi vessels (no.) 827 766 725 855 869 1,099 1,048 1,12

3. GRT GRT (000) 8,018 8,062 7,023 8,100 8,898 12,445 14,870 15,954. GRT at Nha Rong/Khanh Hoi Terminals GRT (000) 4,811 4,837 4,214 4,860 5,339 7,467 8,922 9,575. Average Cargo Ship Size GRT (000) 6.9 7.5 5.8 5.7 6.1 6.9 8.6 8.6. Average Cargo Ship Size at Nha Rong/Khanh Ho GRT (000) 5.8 6.3 5.8 5.7 6.1 6.8 8.5 8.7. Cruise Ship Arrivals (Nha Rong/Khanh Hoi) vessels (no.) 36 29 24 9 28 16 29 28. GRT GRT (000) 483 427 377 126 357 280 460 9. Passengers In/Out thousand 12.1/12.1 8.4/7.6 11.7/11.7 2.1/2.1 6.1/6.1 4.7/4.6 8.0/8.0

B. Cargo Throughput

1. Total Cargo Handled tons (000) 7,212 7,340 6,821 7,601 8,337 9,701 10,022 11,80a. At Berth tons (000) 6,089 5,639 4,960 7,042 5,538 7,069 7,568 b. At Buoy tons (000) 1,123 1,701 1,860 559 2,799 2,632 2,454

2. Cargo Handled at Nha Rong and Khanh Hoi tons (000) 4,936 5,790 5,056 5,780 5,204 5,747 5,826 7,32

3. Cargo Handled at Tan Thuan 1 and 2 tons (000) 2,275 1,550 1,765 1,822 3,133 3,954 4,196 4,474. Container TEUs Handled TEU thousand 77 108 123 140 172 237 269 285. Container Tons Handled tons (000) 636 963 1,154 1,470 1,965 2,642 3,1596. Total Cargo Handling/Service Time days 5,021 5,198 4,647 5,576 5,486 6,066 6,183

a. Container days 765 720 624 756 1,200 1,376 1,167 b. Cargo days 4,256 4,478 4,023 4,820 4,286 4,690 5,016 7. Total Cargo Handling/Service Time per Ship days/ship 4.3 4.8 3.9 3.9 3.8 3.3 3.6

a. Container days/ship 3.2 2.2 1.6 1.9 2.4 1.8 1.1 b. Cargo days/ship 4.7 6.1 5.0 4.7 4.5 4.4 7.4

8. Cargo Handling Rate tons (000/day) 1.3 1.3 1.4 1.3 1.4 1.5 1.5 9. Average Load (tons) per Vessel tons/vessel per yr 5,762 5,330 5,813 10. Tonnage Handled per Meter per Annum tons/m per yr 2,077 2,651 2,677 4,2311. Container Unit TEUs per Meter per Annum TEU/m per yr 505 698 791 12. Tons per Net Gang Hour (agricultural products) tons/gang per hr 17.0 16.6 13. Tons per Net Gang Hour (timber) tons/gang per hr 23.8 27.0 14. Tons per Net Gang Hour (general cargo) tons/gang per hr 12.9 13.3 15. TEUs per Net Gang Hour TEU/gang per hr 15 18 21

C. Berth and Buoy Occupancy

1. Cargo Ship Time at Berth and Buoy days 5,363 5,474 4,878 5,893 5,890 6,439 6,649

a. At Berth days 4,186 3,375 3,042 3,746 3,076 4,487 4,770

b. At Buoy days 1,177 2,099 1,836 2,147 2,814 1,952 1,879

2. Number of Berths each 19 19 19 19 19 20 21

3. Number of Buoys each 14 14 14 14 14 31 34

4. Cargo Ship Turnaround Time days/ship 4.6 5.1 4.0 4.1 4.1 3.6 3.9

5. Time Available for Berth and Buoy days 12,045 12,045 12,045 12,045 12,045 18,615 20,075

a. At Berth days 6,935 6,935 6,935 6,935 6,935 7,300 7,665

b. At Buoy days 5,110 5,110 5,110 5,110 5,110 11,315 12,410

6. Berth Utilization Rate % 44.5 45.4 40.5 48.9 48.9 34.6 33.1

a. At Berth % 60.4 48.7 43.9 54.0 44.4 61.5 62.2

b. At Buoy % 23.0 41.1 35.9 42.0 55.1 17.3 15.1

7. Total Berth Time for Container days 892 831 747 835 1,378 1,490 1,298

8. Total Berth Time for General Bulk Cargo days 4,471 4,643 4,131 5,058 4,512 4,949 5,351

9. Total Berth Idle Time days 342 276 231 317 404 373 466

a. Container Vessels days 127 111 123 79 178 114 131

b. Cargo Vessels days 215 165 108 238 226 259 335

10. Ratio of Berth Idle Time to Service Time % 6.8 5.3 5.0 5.7 7.4 6.1 7.5

D. Cargo Handling Facilities: All Terminals/(Nha Rong and Khanh Hoi only)

1. Cranes (gantry/mobile/crawler/rail mounted) unit 40(25

2. Reach Stacker unit 7(3

3. Forklift/Toplift/Sidelift/CFS Forklift unit 111(80

4. Reefer Point unit 167(117

5. Tractor/Cargo Truck unit 57(48

6. Dozer/Trimmer unit 23(14

E. Port Safety

1. Cargo Damage ton 3

2. Port Accidents each 9 9 10 10 9 7 10 1

= not available, CFS = container freight station, GRT = gross revenue tonnage, TEU = twenty-foot equivalent unit.a

Includes the Saigon Port terminals of Nha Rong, Khanh Hoi, Tan Thuan, Tan Thuan 2, and Can Tho.b

Annualized using data from January to October 2002.C

Estimates.

Source: Saigon Port and Operations Evaluation Mission estimates.

Appendix 3

OPERATIONS DATA ON SAIGON PORTa

1995 1996 1997 1998 1999 2000 2001 2002

Table A3.1: Summary of Port Operations, 19952002


31/46

Item

Throughput HCMC 4,579 6,174 7,410 8,607 12,365 13,813 13,746 14,336 17,285 19,136

Throughput Saigon Port 4,077 5,199 5,371 6,435 7,209 7,339 6,821 7,601 8,337 9,701 10,022 11,800 12,500

A. Imports 1,882 1,914 2,528 3,349 4,258 3,798 3,274 3,594 3,716 4,527 4,377 4,692 4,970

1. Fertilizer 1,081 758 461 704 724 665 528 1,200 1,365 1,414 1,108 1,224

2. Cement 88 111 142 328 464 789 396 9 4 11 1 0

3. Steel and Iron 82 154 300 360 548 537 359 439 343 552 733 916

4. Machinery and Equipment 75 17 94 107 65 50 42 33 17 23 28 33 5. Wheat 0 235 176 223 304 218 266 196 187 305 330 345

6. Chemicals 24 48 77 127 165 121 124 102 117 82 104 121

7. Othersa

532 591 1,278 1,500 1,988 1,418 1,559 1,615 1,683 2,140 2,073 2,053

B. Exports 1,543 2,690 2,420 2,560 2,308 2,692 2,766 2,866 3,271 3,088 2,974 3,008 3,188

1. Rice 984 1,874 1,575 1,680 1,440 2,173 2,119 2,392 2,299 1,858 1,558 2,146

2. Agriculture Products 163 88 98 82 108 0 0 0 51 137 130

3. Rubber 11 3 2 26 0 0 0 0 0 0 0 0

4. Timber Products 262 144 17 10 2 0 0 0 0 0 0 0

5. Fruits and Vegetables 13 3 0 18 0 0 0 0 0 0 0 0

6. Reefer Cargo 31 10 16 28 0 0 0 0 0 0 0 0

7. Othersb

242 493 722 700 784 411 647 474 972 1,179 1,279 732

C. Domestic 652 595 423 526 643 849 780 1,141 1,350 2,086 2,671 4,100 4,342

1. Coal 48 79 69 39 14 82 65 54 40 87 158 366

2. Rice 322 171 86 158 400 237 20 88 158 119 184 94

3. Cement 66 203 128 75 14 76 358 525 427 473 303 462

4. Clinker 125 34 0 55 0 216 58 118 299 423 353 44 5. Othersc

91 108 140 199 215 238 279 356 426 984 1,673 3,134

D. Container Traffic

1. Container (t'000) 321 864 1,426 1,628 636 963 1,154 1,469 1,965 2,642 3,159 3,400 3,800

a. Import 725 1,012 1,080 1,345 1,512 1,636 1,824

b. Export 429 457 885 1,297 1,647 1,764 1,976

2. Total TEU (1,000) 37 79 138 158 77 108 123 140 172 237 269 280 300

a. Import 56 55 78 117 132

b. Export 67 85 94 120 137d

= not available, HCMC = Ho Chi Minh City, t = metric ton, TEU = twenty-foot equ ivalent unit.a

Includes paper, stationery, garments, concrete pipes, glass, animal foods, and other imports.Includes handicrafts, ceramics, and other exports.

cIncludes stone powder, steel, container, bran, and other domestic cargo.

Includes transhipment.

Source: Saigon Port.

20

Appendix3

1996 1997 19981992 1993 1994 1995

Estimate

2003

Forecast

Table A3.2: Cargo Tonnage Handled

1999 2000 2001 2002

('000 t)

1991


32/46

Item 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002a

Operating Revenue

b

98,856 162,653 223,066 269,291 321,105 391,530 357,665 402,921 376,292 414,587 463,077 542,645

Operating Expense 84,518 144,136 197,044 240,137 242,991 314,147 303,072 357,300 338,823 382,807 427,219 495,394

Personnel 35,195 50,225 67,579 71,883 117,234 136,613 124,359 126,368 127,776 137,806 152,596 163,328

Repair and Maintenance 9,395 21,399 24,574 28,737 17,207 15,313 10,275 13,807 12,335 17,458 19,117 17,773

Operating and Administration 31,316 64,796 95,269 112,453 83,653 123,234 110,772 155,955 140,648 162,667 202,489 249,643

Depreciation 8,612 7,716 9,622 27,064 24,897 38,987 57,666 61,170 58,064 64,876 53,017 64,649

Operating Income (loss) 14,338 18,517 26,022 29,154 78,114 77,383 54,593 45,621 37,469 31,780 35,858 47,251

Nonoperating Income 5,286 2,211 1,802 915 595 3,297 6,197 15,132 2,367 2,604 2,079 2,966

Interest Expense 237 939 671 3,278 2,476 201 386 6,895 15,666 10,669 10,372 11,834

Net Income Before Income Tax 19,387 19,789 27,153 26,791 76,233 80,479 60,404 53,858 24,170 23,715 27,565 38,383

Income Tax 5,815 6,256 8,200 7,059 20,020 20,281 15,180 13,648 5,931 6,111 5,247 5,527

Net Income After Income Tax 13,572 13,533 18,953 19,732 56,213 60,198 45,224 40,210 18,239 17,604 22,318 32,856

Memorandum Item

Operating Ratio (%) 85.5 88.6 88.3 89.2 75.7 80.2 84.7 88.7 90.0 92.3 92.3 91.3Return on Total Assets 8.9 9.3 8.7 20.5 17.4 10.4 8.6 4.6 3.1 3.3 4.4

Return on Equity (%) 12.6 10.8 13.2 11.6 24.7 17.1 11.4 9.5 3.9 3.6 4.3 6.0

Net Profit to Revenues (%) 13.7 8.3 8.5 7.3 17.5 15.4 12.6 10.0 4.8 4.2 4.8 6.1

Revenues to Total Assets (%) 64.0 94.3 90.1 96.3 109.4 97.7 75.6 64.4 43.5 43.4 46.2 52.6

Fixed Assets Turnover Ratio (x) 1.2 1.6 1.4 1.3 1.6 1.3 1.1 0.8 0.5 0.5 0.5 0.6

= not available.a Annualized data from January to October.b Net of taxes.


FINANCIAL STATEMENTS OF SAIGON PORT

Table A4.1: Income Statement

(D million)

Appendix4

21


33/46

Item

Personnel 117,234 136,613 124,359 126,368 127,776 137,806 152,596 163,328

Salary 113,430 132,407 119,500 121,378 122,709 131,650 145,495 155,472Labor Union, Health, and

Social Insurance Expenses 3,804 4,206 4,859 4,990 5,067 6,156 7,101 7,856

Repair and Maintenance 17,207 15,313 10,275 13,807 12,335 17,458 19,117 17,773

Operating and Administration 83,653 123,234 110,772 155,955 140,648 162,667 202,489 249,643

Fuel 10,419 10,396 11,768 12,897 14,799 19,099 20,634 25,500Material 14,585 25,139 18,336 40,082 36,376 35,414 35,517 34,082Power and Water 2,592 2,688 4,811 4,460 5,480 6,230 6,054 6,107Means Rental 7,341 13,528 13,108 20,020 18,675 18,519 27,559 35,875

Cost of Goods Soldb 36,655 53,548 47,469 54,426 44,139 62,523 78,648 108,684Others 12,061 17,935 15,280 24,070 21,179 20,882 34,077 39,395

Depreciation 24,897 38,987 57,666 61,170 58,064 64,876 53,017 64,649

Total 242,991 314,147 303,072 357,300 338,823 382,807 427,219 495,394

Memorandum Item

Personnel (no. of staff)c 4,702 4,762 4,750 4,986 5,528 5,579 6,486 Direct 3,110 3,124 3,078 3,293 3,768 3,786 4,691 Service 1,174 1,194 1,212 1,225 1,256 1,269 1,355 Indirect 418 444 460 468 504 524 440

Core Business-Related Expensesd 192,965 238,104 234,855 270,819 265,420 291,324 303,974 331,137% of Total Operating Expenses 79.4 75.8 77.5 75.8 78.3 76.1 71.2 66.8

Other Business-Related Expenses 50,027 76,044 68,217 86,481 73,404 91,483 123,246 164,257% of Total Operating Expenses 20.6 24.2 22.5 24.2 21.7 23.9 28.8 33.2

= not available.a Annualized from January to October 2002.b

Cost of goods sold includes provision of material and equipment, provision of foods, duty free shops, and hotel business.c Annual average.d Includes personnel costs, fuel, material, power and water, depreciation, and repair and maintenance.


22

Appendix4

2002a

Table A4.2: Operating Expenses, 19952002

(D million)

1995 1996 1997 1998 1999 2000 2001


34/46

Item

Revenues from Core Business 257,962 309,173 273,459 288,353 272,555 294,739 324,893 374,743

Stevedoring 154,128 184,825 168,701 178,368 169,995 193,863 223,938 265,370

Warehousing 33,217 37,556 23,689 26,080 21,305 22,484 22,998 23,557

Delivering 0 0 6,561 7,228 5,904 6,387 5,583 6,865

Wharfage 27,869 35,072 27,723 27,834 28,741 31,093 33,957 36,630

Tugboat Services 34,627 41,280 36,728 37,799 32,964 29,834 27,378 30,634

Buoy 6,674 8,844 8,471 8,998 12,013 9,339 9,501 10,097

Mooring/Unmooring 1,447 1,596 1,586 2,046 1,633 1,739 1,538 1,590

Revenues from Other Business 74,987 105,326 96,000 127,212 103,737 119,848 138,184 167,902Means and Land Rental 3,601 4,605 4,612 5,532 4,669 3,956 2,868 3,781

Parking Fees 1,112 1,644 1,336 1,270 1,031 1,090 1,183 2,723

5% of Fuel Freight 0 0 181 184 169 213 222 232

Passenger Fees 778 643 1,023 562 337 426 830 661

Remaining Goods 0 0 0 0 627 584 222 6

Power and Water 0 0 0 0 520 924 1,083 644

Provision of Material Equipment 30,985 48,856 42,659 47,127 33,737 50,192 59,680 73,628

Provision of Foods 4,802 5,050 6,391 5,562 4,956 5,870 7,014 4,511

Duty Free Shop 86 4,832 5,977 6,941 13,138 21,625 29,190

Tailoring 490 461 729 704 971 816 658 584

Repair and Construct Civil Works 9,070 20,398 7,229 31,011 23,402 13,233 15,823 20,227

Mechanical Repair 7,975 8,676 11,643 13,042 11,737 13,287 13,114 8,822

Transportation 2,477 3,583 4,246 4,976 7,425 2,199 2,452 3,736

Tallying 613 230 513 0 0 102 217 410

Hotel Business 463 482 480 629 536 454 767 595

Rental for Equipment and Offices 1,215 831 0 5,597 2,959 4,485 2,105 4,201

Maritime Services 8,862 7,618 9,134 4,718 3,720 4,385 2,105 6,713

Buoy Dredging 0 0 0 0 0 4,071 4,668 0

Training 0 0 0 0 0 64 1,167 0

Shipping Agent 2,134 1,905 0 0 0 359 381 0

Other Collection 410 258 992 321 0 0 0 7,236

Gross Operating Revenues 332,949 414,499 369,459 415,565 376,292 414,587 463,077 542,645

Less: Taxes (11,844) (22,969) (11,794) (12,644) 0 0 0 0

Net Operating Revenues 321,105 391,530 357,665 402,921 376,292 414,587 463,077 542,645

Memorandum Item

Core Business Revenues (% of gross revenues) 77.5 74.6 74.0 69.4 72.4 71.1 70.2 69.1

Oth er Bu si nes s R eve nu es ( % of gr oss r eve nu es) 2 2. 5 25.4 26.0 30.6 27.6 28.9 29.8 30.9

Tourist-Related Business Revenuesb 5,755 6,079 12,432 12,872 13,404 20,278 30,064 34,880

% of Gross Revenues 1.7 1.5 3.4 3.1 3.6 4.9 6.5 6.4

Operating Income Margin-Core (% of gross revenues) 25.2 23.0 14.1 6.1 2.6 1.2 6.4 11.6

Operating Income Margin-Other (% of gross revenues) 33.3 27.8 28.9 32.0 29.2 23.7 10.8 2.2

aAnnualized from January to October 2002.

Includes provision of foods, duty free shop, tailoring, and hotel business.


Appendix4

23

1995 1996 1997

Table A4.3: Operating Revenues, 19952002

(D million)

2002a1998 1999 2000 2001


35/46

Item 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002a

Assets

Current Assets

Cash 14,309 15,529 16,239 10,200 20,773 28,788 46,391 39,042 25,455 51,617 47,508 40,856

Accounts Receivable 21,897 23,646 26,159 48,713 48,299 61,390 59,985 53,325 52,083 42,770 54,581 67,811

Inventory and Other

Current Assets 34,864 33,007 47,041 13,752 18,374 20,302 36,223 26,085 32,268 36,560 53,699 60,833

Total Current Assets 71,070 72,182 89,439 72,665 87,446 110,480 142,599 118,452 109,806 130,947 155,788 169,500

Fixed Assets

Revalued Cost 175,394 182,840 269,847 342,699 358,989 466,847 527,128 611,580 930,136 1,153,145 1,335,446 1,397,666

Less: Accumulated Depreciation 95,474 102,013 111,634 137,531 160,941 231,766 284,436 337,922 392,777 456,776 509,223 566,075

Net Revalued Cost 79,920 80,827 158,213 205,168 198,048 235,081 242,692 273,658 537,359 696,369 826,223 831,591

Capital Work in Progress 3,569 19,409 0 1,863 8,150 55,280 87,851 233,421 217,434 128,074 20,892 31,336

Total Fixed Assets 83,489 100,236 158,213 207,031 206,198 290,361 330,543 507,079 754,793 824,443 847,115 862,927

Total Assets 154,559 172,418 247,652 279,696 293,644 400,841 473,142 625,531 864,599 955,390 1,002,903 1,032,427

Liabilities and Equity

Liabilities

Current Liabilities 43,282 46,302 64,834 64,931 34,295 38,703 37,377 33,440 61,742 58,159 72,571 45,692

Long-Term Debt 3,158 0 38,796 44,512 31,501 11,052 40,181 169,267 341,107 404,540 415,290 435,019

Total Liabilities 46,440 46,302 103,630 109,443 65,796 49,755 77,558 202,707 402,849 462,699 487,861 480,711

Equity

Government Contribution 53,536 62,738 62,738 156,566 172,632 328,573 361,325 389,928 444,439 481,339 507,405 532,719

Capital Reserve 34,374 45,181 45,181 0 529 1,811 3,951 2,308 5,460 7,563 6,284 6,277Retained Earnings 20,209 17,927 36,102 13,686 54,687 20,702 30,308 30,588 11,852 3,789 1,353 12,720

Total Equity 108,119 125,846 144,021 170,252 227,848 351,086 395,584 422,824 461,751 492,691 515,042 551,716

Total Liabilities and Equity 154,559 172,148 247,651 279,695 293,644 400,841 473,142 625,531 864,600 955,390 1,002,903 1,032,427

Memorandum Item

Current Ratio (x) 1.6 1.6 1.4 1.1 2.5 2.9 3.8 3.5 1.8 2.3 2.1 3.7

Quick Ratio (x) 0.3 0.3 0.3 0.2 0.6 0.7 1.2 1.2 0.4 0.9 0.7 0.9

Months in Receivables (mos.) 0.0 1.7 1.3 1.7 1.8 1.7 2.0 1.7 1.7 1.4 1.3 1.4

Debt to Equity Ratio (%) 43.0 36.8 72.0 64.3 28.9 14.2 19.6 47.9 87.2 93.9 94.7 87.1

LTD to Equity (%) 2.9 0.0 26.9 26.1 13.8 3.1 10.2 40.0 73.9 82.1 80.6 78.8

LTD to Total Capitalization (%) 2.0 0.0 15.7 15.9 10.7 2.8 8.5 27.1 39.5 4