ASIAN DEVELOPMENT BANK
PROJECT PERFORMANCE AUDIT REPORT
ON THE
SAIGON PORT PROJECT
(Loan 1354-VIE[SF])
IN THE
SOCIALIST REPUBLIC OF VIET NAM
March 2003
PPA: VIE 25094
CURRENCY EQUIVALENTS
Currency Unit
D1.00
$1.00
=
=
At Appraisal
(January 1995)
$0.0001
D11,003
–
dong (D)
At Project Completion
(June 2000)
$0.0001
D14,000
At Operations Evaluation
(December 2002)
$0.0001
D15,395
ABBREVIATIONS
ADB
DAF
EIRR
FIRR
HCMC
km
MIS
MOF
NTSR
OCR
OEM
PCR
PMU
PPAR
SDR
SP
SPA
t
TA
TCR
VRM
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
–
−
−
−
−
−
Asian Development Bank
Development Assistance Fund
economic internal rate of return
financial internal rate of return
Ho Chi Minh City
kilometer
management information system
Ministry of Finance
National Transport Sector Review
ordinary capital resources
Operations Evaluation Mission
project completion report
project management unit
project performance audit report
special drawing rights
Saigon Port
Saigon Port Authority
metric ton
technical assistance
technical assistance completion report
Viet Nam Resident Mission
NOTES
(i)
(ii)
The fiscal year (FY) of Saigon Port ends on 31 December.
In this report, “$” refers to US dollars.
Operations Evaluation Department, PE-620
CONTENTS
Page
BASIC DATA
iii
EXECUTIVE SUMMARY
iv
MAPS
vii
I.
II.
III.
BACKGROUND
1
A.
B.
C.
D.
E.
F.
1
1
2
2
3
3
PLANNING AND IMPLEMENTATION PERFORMANCE
4
A.
B.
C.
D.
E.
4
5
5
5
6
V.
Formulation and Design
Achievement of Outputs
Cost and Scheduling
Consultant Performance, Procurement, and Construction
Organization and Management
ACHIEVEMENT OF PROJECT PURPOSE
A.
B.
C.
D.
IV.
Rationale
Formulation
Purpose and Outputs
Cost, Financing, and Executing Arrangements
Completion and Self Evaluation
Operations Evaluation
Operational Performance
Performance of the Operating Entity
Economic and Financial Reevaluation
Sustainability
7
7
8
10
10
ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS
11
A.
B.
C.
11
11
12
Socioeconomic Impact
Environmental Impact
Impact on Institutions and Policy
OVERALL ASSESSMENT
12
A.
B.
C.
D.
E.
F.
G.
12
13
13
13
13
13
13
Relevance
Efficacy
Efficiency
Sustainability
Institutional Development and Other Impacts
Overall Project Rating
Assessment of ADB and Borrower Performance
ii
VI.
ISSUES, LESSONS, AND FOLLOW -UP ACTIONS
14
A.
B.
C.
14
15
15
Key Issues for the Future
Lessons Identified
Follow-Up Actions
APPENDIXES
1.
2.
3.
4.
5.
Project Costs
Project Outputs
Operations Data on Saigon Port
Financial Statements of Saigon Port
Financial and Economic Reevaluation
16
17
19
21
25
BASIC DATA
Loan 1354-VIE(SF): Saigon Port Project
PROJECT PREPARATION/INSTITUTION BUILDING
TA No.
TA Name
Type
TA 2305-VIE
ADTA
Computerized Management Information
1
System for Saigon Port
KEY PROJECT DATA ($ million)
Total Project Cost
Foreign Exchange Cost
Local Currency Cost
ADB Loan Amount/Utilization
(SDR million)
ADB Loan Amount/Cancellation
(SDR million)
KEY DATES
Fact-Finding
Preappraisal/Appraisal
Reappraisal
Loan Negotiations
Board Approval
Loan Agreement
Loan Effectiveness
First Disbursement
Project Completion
Loan Closing
Months (effectiveness to completion)
ECONOMIC AND FINANCIAL
INTERNAL RATES OF RETURN (%)
Economic Internal Rate of Return
Financial Internal Rate of Return
Amount
($’000)
2
500
As per ADB
Loan Documents
40.00
25.00
15.00
30.00
20.59
—
—
Approval
Date
2 Mar 1995
Actual
34.19
23.61
10.58
3
27.48
20.05
0.69
0.54
Expected
Actual
25 Sep–2 Oct 1990
13 Nov–1 Dec 1990
23 Aug–9 Sep 1993
1–2 Dec 1994
2 Mar 1995
24 Mar 1995
21 Jul 1995
23 Oct 1995
30 Apr 2000
1 Nov 2000
57
24 Jun 1995
30 Jun 1998
31 Dec 1998
36
Appraisal
PCR
PPAR
18.1
10.7
33.3
12.4
12.6
3.7
BORROWER
Socialist Republic of Viet Nam
EXECUTING AGENCY
Saigon Port
MISSION DATA
Type of Mission
Fact-Finding
Reappraisal
Project Administration
Inception
Review
Project Completion
4
Operations Evaluation
PersonMonths
14.5
Missions (no.)
1
1
9
1
7
1
1
Person-Days (no.)
8
90
87
12
42
33
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 and
port engineer; and R. Lumain, senior evaluation analyst.
EXECUTIVE SUMMARY
Damage associated with 3 decades of war, from 1945 to 1975, and a lack of investment
in the following decades, left all of Viet Nam’s major ports in a state of disrepair. This
handicapped Viet Nam’s entire transport system, thus hindering economic growth. In 1989, the
Government 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 and
purchase new cargo-handling equipment to improve its operational performance.
The Project’s goal was to facilitate the expansion of international trade by enhancing port
capacity and operational efficiency. The purpose of the Project and the attached technical
assistance (TA) was to (i) improve SP’s cargo-handling capacity through the rehabilitation and
modernization of existing facilities at the Nha Rong and Khanh Hoi project terminals;
(ii) enhance the efficiency of port operations through rationalization and streamlining of
procedures and activities; and (iii) upgrade the overall performance of SP, the Executing
Agency, by introducing a computerized management information system that would enable SP
to process key operational and financial information and would assist in commercially oriented
decision making. The Project was in line with the Government’s priorities, as reflected in the
National Transport Sector Review. The Project was also consistent with ADB’s country
operational strategy, which focused on reducing key development constraints through financial
assistance for rehabilitation, upgrading, and development of the physical infrastructure to
support economic growth. During processing, ADB conferred with other external funding
agencies, 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 exchange
component of $25 million and $15 million in local currency. In March 1995, ADB approved a
loan 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 lowerthan-expected contract prices.
A project management unit was established within SP to manage and implement the
Project. A team of international consultants was engaged according to ADB Guidelines on the
Use of Consultants to help review the engineering designs and assist in supervision of the civil
works construction. The consultants’ overall performance was satisfactory. Lengthy bid
evaluations caused considerable upfront delays. The cumbersome evaluation and approval
process is a systemic problem in project implementation in Viet Nam. Delays caused
implementation to take 22 months longer than envisaged at appraisal. Two covenants were not
complied with at the time of the project completion report (PCR): the interest charged through
onlending 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 breakbulk operations improved considerably from 1996 to 2002, and the corresponding turnaround
times for ships calling at SP have been shortened significantly. The major objective of the
Project—to rehabilitate the existing break-bulk port facilities—has been fully met. The attached
TA helped reduce billing time. SP can now efficiently process operational and financial
information, and make commercially-oriented decisions based on users’ actual needs.
v
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 average
annual rate of 6% since 1995. The number of vessels calling at SP increased from 1,156 in
1995 to 1,724 in 2001. Terminal improvements have generated employment not only at SP, but
also within Ho Chi Minh City and the surrounding areas.
SP remains profitable although marginal financial returns highlight the increased
pressures on operating profits. Those pressures result from high operating costs, constraints on
revenue generation in core port activities, and the relatively weak performance of noncore
business activities in recent years. SP’s operating ratio deteriorated from 76% in 1995 to 92% in
2001. Operating expenses increased about 10% annually during this period because of higher
salary expenses, fuel costs, management and administration expenses, and cost of products
and services sold through SP’s noncore business operations. At the same time, gross operating
revenues, comprising port services (72% of revenues) and other businesses increased by about
6% per annum. As a result, the operating income decreased from D78 billion in 1995 to
D36 billion in 2001 and return on equity declined from 25% to 4%. On the other hand, despite
an 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 contributions
that 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 appraisal
estimate of 18.1% and the PCR estimate of 33.3%. Similarly, the reestimated financial internal
rate of return of 3.7% is lower than the appraisal estimate of 10.7% and the PCR estimate of
12.4%, and slightly below the 4% weighted average cost of capital. The decreases are mainly
because of an overestimation of incremental benefits as well as an underestimation of operating
costs in the previous calculations.
There is concern that traffic congestion around the port area, and competition from
28 other ports with dedicated container facilities and larger storage yards, may threaten SP’s
long-term sustainability. Also, future demand for berths that will accommodate larger vessels
may require relocation of some port activities to a location with deeper water. SP remains the
busiest 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 to
better accommodate cruise ships. Although some operations may have to be relocated to a
location with deeper water, the sustainability of SP is likely.
The key issues that the OEM identified are the need to (i) investigate the construction of
a deepwater port terminal at an alternate site, (ii) streamline the bid evaluation and approval
process through delegation of authority to the relevant government agencies, (iii) give individual
ports greater autonomy in the setting of charges that generate their revenue, and (iv) ensure
that future budget allocations are adequate for maintenance.
The two key lessons learned are (i) the approach of separating business planning from
strategic development functions in the port sector adopted by the Government may also be
appropriate for ADB’s other developing member countries; and (ii) developing member countries
still in the nascent stages of administering ADB projects would benefit from more proactive
project monitoring by ADB, particularly at the resident mission level.
vi
The OEM recommends four follow-up actions: (i) ADB should continue to encourage the
Government 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 of
ports, including SP; (iii) SP’s management information system should be updated periodically to
incorporate 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 environmental
confirmation testing and, if an unacceptable level of contamination is found, priority should be
given to improving the drainage system.
The OEM rates the Project and the TA as successful.
I.
A.
BACKGROUND
Rationale
1.
Viet Nam is geographically elongated, approximately 1,650 kilometers (km) from north to
south; 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 Nam’s borders defines a coastal plain,
the principal land-based transport corridor. The Mekong River in the south and the Red River in
the north, along with their tributaries and canals, form an extensive and intricate inland network
for waterway transport, roughly 7,000 km in length. Coastal shipping and the inland waterway
network are key components in Viet Nam’s overall transportation system.
2.
Damage associated with 3 decades of war from 1945 to 1975, and a lack of investment
in the following decades, left all of Viet Nam’s major ports in a state of disrepair. This
handicapped Viet Nam’s entire transport system, thus hindering economic growth. Viet Nam’s
primary port facilities include five major ports for general cargo, which account for 60% of all
international 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 time
of appraisal, the pier, quay, and other SP structures had deteriorated so severely that safe and
efficient cargo handling was no longer possible. Concrete foundation piles had cracked, and
sections were lost. Steel piling and marine hardware had corroded. The concrete deck had
eroded, leaving occasional holes through the deck. Transit sheds and warehouses were
dilapidated.
3.
The Government requested assistance from the Asian Development Bank (ADB) to
undertake civil works on SP and to replace and purchase new equipment to improve its
operational performance. SP recognized the need to streamline and rationalize its operational
and financial systems. To this end, the Government also requested that ADB provide technical
assistance (TA) to strengthen SP’s institutional capability.
B.
Formulation
4.
The Project was formulated during a fact-finding mission in September 1990 and an
appraisal mission in November 1990; there was no project preparatory TA. The plan to improve
the operational capacity of SP was endorsed by the National Transport Sector Review (NTSR).2
Project components were developed to address the rehabilitation and upgrades necessary to
enhance SP’s capacity and efficiency, as well as improve safety of its operations. During
processing, ADB also conferred with representatives of the World Bank, the United Nations
Development Programme, and other external funding agencies to coordinate subsector
development efforts.
5.
ADB operations in Viet Nam were suspended thereafter until 1993, thus deferring further
processing of the loan. The Project was reappraised in September 1993.3 Loan approval was
delayed almost a year and a half because of a disagreement between ADB and the
Government over the onlending interest rate to be charged under a subsidiary loan agreement
1
2
3
Previously called Saigon Port Authority (para. 10).
The review was undertaken with funding from the United Nations Development Programme during 1990–1992. It
proposed a restructuring plan that would make all ports autonomous by allowing them to set tariffs.
During the 3-year delay between fact-finding and reappraisal, SP carried out repair work, considered essential for
continued operation. The repair work was originally in the project scope, which was reduced accordingly.
2
between the Government and SP. ADB proposed a rate similar to that applicable to loans from
the ordinary capital resources (OCR), while the Government preferred a 1% concessional rate.4
Ultimately, the Government accepted the ADB position; the loan was approved on 2 March
1995 and became effective on 21 July 1995.
C.
Purpose and Outputs
6.
The goal of the Project was to facilitate expansion of international trade through
enhancing port capacity and operational efficiency. The purpose of the Project and attached TA5
included (i) improving SP’s cargo-handling capacity through the rehabilitation and modernization
of existing port facilities, (ii) enhancing the efficiency of port operations through rationalization
and streamlining of procedures and activities, and (iii) upgrading SP’s overall performance by
introducing a computerized management information system (MIS).
7.
Project outputs included (i) an improved port facility through rehabilitation of deteriorated
wharf sections; installation of new fenders, marine hardware, and offshore mooring buoys; and
construction of adequate maintenance workshops; (ii) improved cargo handling through the
procurement 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, ADB
approved a loan of $30 million equivalent (75% of total project cost) from its Special Funds
resources to cover the entire foreign exchange requirement of $25 million and local currency
cost of $5 million equivalent. The Government was to finance the remaining local currency cost
of $10 million (Appendix 1).
9.
The attached advisory TA was provided to install a computerized MIS that would enable
SP 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 costs
for translating and interpreting services. The TA provided 14.5 person months (81% of the
appraisal estimate) of international consulting services in port operations, port finances, and
computer MIS.
10.
At the time of appraisal, the Saigon Port Authority, the Project’s Executing Agency, was
under the jurisdiction of the Ministry of Transport, and the operational responsibility of the Viet
Nam 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 was
renamed 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 was
staffed with 12 professionals, including a deputy director and a chief accountant. To enhance
technology transfer during implementation, seven PMU engineers were assigned to work
4
5
6
The 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.
TA 2305-VIE: Computerized Management Information System for Saigon Port, for $500,000, approved on 2 March
1995.
The five ports are Can Tho, Da Nang, Hai Phong, Quang Ninh, and Saigon (Map 1).
3
directly with the international consultants who were helping the PMU with project design and
construction 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 satisfactory
quality 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 of
return (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 covenant
dealing 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 of
some significant errors in the economic and financial analysis, the PCR generally presented an
accurate and objective evaluation of the Project.
15.
The technical assistance completion report (TCR)8 and the PCR rated the attached TA
differently. The TCR assessed the TA as successful and the PCR, as highly successful. This
difference was because the TCR emphasized the need for periodic updating to keep pace with
innovations in computer software and hardware, and integration with systems that customs and
shipping lines use. On the other hand, the PCR focused on the system’s operational
performance.
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 is
based on the findings of the Operations Evaluation Mission (OEM) that visited Viet Nam from
2 to 17 December 2002; review of relevant project documents; discussions with ADB staff; and
information gathered during meetings with officials from relevant ministries, port and marine
agencies, and other development assistance organizations. The OEM conducted a condition
survey 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 the
draft PPAR were circulated, for review and comments, to SP, various government ministries,
and concerned ADB staff. The comments were considered when finalizing the PPAR.
7
8
The PCR used the current four-category rating system: highly successful, successful, partly successful, and
unsuccessful.
The TCR was completed about 1 month before the PCR was circulated.
4
II.
A.
PLANNING AND IMPLEMENTATION PERFORMANCE
Formulation and Design
17.
ADB’s country operational strategy for Viet Nam at the time of appraisal and reappraisal
focused, among other things, on reducing key development constraints’ through financial
assistance for rehabilitation, upgrading, and development of the physical infrastructure to
support economic growth. Viet Nam’s Third Five-Year Plan (1991–1995) reiterated giving high
priority to the rehabilitation of SP, Viet Nam’s main shipping gateway. Thus, within the maritime
sector, the continued operation of SP was a priority for the Government and ADB. SP remains
Viet Nam’s principal break-bulk handling facility and, to a lesser extent, an important containerhandling facility. Its importance to the Government is undiminished although the current country
strategy and program update (2003–2005) focuses more on broader-based projects for poverty
intervention. But ADB remains engaged in policy reforms aimed at liberalizing the system of
economic 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;9
installation of an MIS at SP; and the construction of a new deepwater terminal, dedicated to the
handling of cargo containers, near Thi Vai, at the mouth of the Saigon River. The project scope
focused on improving the break-bulk operations at the project site, which comprised most of
cargo operations at that time in HCMC, and did not include development of a new container
terminal.
19.
Demand for accommodating containerized marine traffic grew during project
implementation. Competition to SP also grew stiffer, as various ministries and the HCMC
municipality had constructed new port facilities near SP, some dedicated to handling container
traffic using modern container cranes.10 Traffic in District 4 of HCMC, the site of both project
terminals, 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 further
development of the Nha Rong and Khanh Hoi project terminals be stopped, and that ADB funds
be diverted to the development of a container facility. The Government did not agree with this
request.
20.
Instead, SP, using funds from the State Bank of Viet Nam, developed container-handling
capacity at the Tan Thuan terminal, adjacent to the project site. Located in District 7, Tan Thuan
has a much larger area available for processing containerized traffic than either the Nha Rong
or Khanh Hoi project terminals, and is readily accessible by a new highway. Tan Thuan does
not suffer from the same traffic congestion as the two project terminals. SP was unable to obtain
a used container crane for installation at Tan Thuan. Instead, the 80-ton mobile cranes supplied
by 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 nearby
Vietnamese 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
9
SP 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.
10
HCMC has 28 ports, including SP; 14 are on the Saigon River. Warehouse space in these ports totals
147 hectares, and their annual handling capacity is about 20 million metric tons.
5
to allow dredging to increase the berthing depths in front of the project terminals, so the
terminals could accommodate larger vessels. Larger cranes that can handle containerized
cargo were also bought. Loan savings identified near project completion were used to procure
additional equipment for handling cargo containers in the yard storage area. The OEM concurs
that these changes were appropriate, and improved the Project.
B.
Achievement of Outputs
22.
The Project improved the port facilities through extensive rehabilitation. Dredging works
were added to the project scope,11 and yard area was expanded beyond appraisal estimates to
provide additional handling and storage area. The transit shed, built to process cargo, was also
expanded to increase its capacity. Mooring buoys, planned at appraisal to provide additional inriver berths, increased the water depth at the terminals, allowing larger vessels to call at SP.
The modern cargo-handling equipment increased SP’s capacity. Installation of the MIS
streamlined and rationalized SP’s operational and financial procedures. A list of project outputs
is 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 loan
covered the foreign exchange cost and $3.9 million of the local currency cost. The decrease in
the total project cost from original estimates was partly because of a reduction in scope of repair
work (footnote 3). There was an overestimation at appraisal of the costs of tugboats and MIS
computerization. Loan savings, at the Government’s request, were used to procure two forklifts
and two two-way dozers.12 Overall, the Project had a cost underrun of $5.8 million, or 14.5% of
the appraisal estimate. Loan cancellations were $0.7 million.
24.
ADB disbursements were $27.5 million (92% of the appraisal estimates), while
Government 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 in
the SDR rate against the dollar during implementation.
25.
The Project further started sluggishly because consultants were recruited late, despite
approval for advanced action for their recruitment. Other implementation delays resulted from
(i) SP’s lack of familiarity with ADB procedures for local competitive bidding, (ii) lengthy bid
evaluations caused by cumbersome internal procedures, (iii) SP’s lack of experience in working
with international consultants, and (iv) difficulties in implementing civil works while the port was
in operation. The Project was completed in April 2000, 22 months behind schedule. The loan
closing 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 of
Consultants, was originally intended to review the engineering designs. The Government initially
resisted significant changes that the consultants proposed, which led to tension in working
arrangements. Also, supervision of the early civil works construction, without benefit of the
international consultants, was weak. These problems, which emerged early in the Project,
11
12
The present berthing depth was reported to the OEM as 8.2–10.0 meters (Map 3).
ADB initially rejected the Government’s request, as the cost of the equipment exceeded the loan savings. But the
request was later approved after the Government assured that it would bear any cost overrun.
6
contributed to delays in the initial implementation (para. 25). The contract for international
consultants was amended to improve construction supervision. In time, the Government
acknowledged that the design changes were beneficial to the Project. The OEM confirmed that
the consultants’ overall performance during design and supervision of construction was
satisfactory.
27.
The Project comprised seven contracts for civil, marine, and electrical works. Five
contracts were tendered using local competitive bidding procedures; the other two contracts
were directly negotiated with local contractors, with ADB approval. SP initially insisted that only
Vietnamese contractors be allowed to participate in local competitive bidding; that led to delays
in implementation. The Project also included six supply contracts for procurement of two
tugboats and miscellaneous marine equipment. Five contracts were tendered using international
competitive bidding procedures, and the sixth, through international shopping. Award of one
supply contract was delayed considerably because of a lengthy review due to inaccuracies in
the bid. 13 Ultimately, all supply and civil works contracts were procured in accordance with
ADB’s 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 forwarded
to the Ministry of Planning and Investment for review before submission to the Prime Minister for
final approval.
29.
All civil works, with one exception, were satisfactory and of acceptable quality. Problems
were originally identified in construction of the buildings, but all deficiencies were rectified. Some
problems during implementation were caused by ongoing port operations and delays in
payment. Despite the delays, the PCR considered the performance of the contractors
satisfactory. 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 after
implementation began (para. 10). At appraisal, Vinamarine had administrative authority over SP.
In January 1996, that authority was transferred to the newly established Vinalines, but
Vinamarine, as a member of the State Pricing Committee,14 retained responsibility for setting
tariffs and charges for all ports in Viet Nam. Vinamarine is now responsible for establishing
marine rules and regulations, as well as for planning the overall strategy for port development. It
also retains administrative control over all but five of Viet Nam’s major ports (footnote 6), which
are now under Vinalines. Vinalines also prepares the long-term business plan for these five
ports. Day-to-day operation of the five ports, however, is undertaken by their respective port
authorities.
31.
The State Pricing Committee uses a two-tier system to set port tariffs and charges. Port
tariffs, 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 Viet
Nam. The customs departments at each port collect and forward these tariffs to the Ministry of
Finance (MOF). The concerned port authorities collect the port charges, which include charges
13
14
The exchange rate was incorrect in one supplier’s bid.
The State Pricing Committee comprises representatives of Ministry of Finance, Ministry of Transport, and
Vinamarine.
7
for stevedoring services and anchorage. Each port authority has the opportunity to adjust these
charges 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 Government
approval to disband. Because this was one of the first ADB projects in Viet Nam after ADB
resumed operations, the Government was not familiar with various ADB guidelines and
procedures. Disagreements with the consultants regarding design issues also delayed project
implementation and administration. Rigid government procedures concerning procurement and
contract awards often impeded efficient implementation.
III.
A.
ACHIEVEMENT OF PROJECT PURPOSE
Operational Performance
33.
Various indicators of SP’s operational performance are shown in Appendix 3, Table
A3.1. Construction of the terminal improvements appears satisfactory. The new fendering units
show little wear or corrosion, and function properly. Asphalt paving and transit sheds in the yard
area 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 a
neighboring port. Rainwater drainage systems installed through the Project are free from
obstructions and functional. River debris, however, tends to collect in the fender systems and
should 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 congested
because 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, a
competing port in HCMC, has a larger port site located further from the dense traffic arterial, and
is already equipped with modern equipment dedicated to handling cargo containers. SP is well
suited 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 of
31 December 1995. The outputs of the first phase of the plan were reflective of SP being at a
nascent stage in its goal of market reform.15 Phase 2 of the plan consisted of designating one or
more 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 is
reserved 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. Some
improvements may still be necessary in the handling of contaminated rainwater, pollutant
discharges, and hazardous material spillages.
36.
SP handled 10.0 million metric tons (t) of cargo in 2001. Since 1995, total throughput
has increased by an average annual rate of 6%, slightly exceeding the appraisal targets. In
2000, the throughput reached 9.7 million t, as against the appraisal target of 9.3 million t. Cargo
throughput at the Nha Rong and Khanh Hoi project terminals increased from 4.9 million t in
1995 to 5.8 million t in 2001. The total number of vessels calling at the project terminals
15
Included as the plan’s output were (i) eliminating all unnecessary and prolonged waiting of trucks on the quay
before 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 next
24 hours.
8
increased from 827 in 1995 to 1,048 in 2001. Average vessel turnaround times decreased from
more than 5 days in 1996 to less than 4 days in 2001. Cargo handling time per vessel also
decreased 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 year––but considering the
higher throughput, the accident rate has declined significantly, in terms of total cargo handled.
38.
Industry in HCMC accounts for about 40% of Viet Nam’s gross domestic product. SP
remains 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 million
people. That puts excessive strain on the existing road network. The increase in cargo transport
compounds the traffic problems around the Nha Rong and Khanh Hoi project terminals—which
were 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 land
at 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-handling
responsibilities to Thi Vai will allow use of some of the berths at SP for cruise liners visiting
HCMC for tourism. In 2001, tourist-related revenue accounted for almost 6% of SP’s gross
operating revenue.
40.
Rice is the major export at SP; throughput reached about 2.15 million t in 2002. Fertilizer
is the largest import commodity, reaching 1.2 million t in 2002, followed by steel and iron at
0.9 million t. Other imports include wheat, 0.3 million t; and chemicals, 0.1 million t. Domestic
cargo 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 in
1995 to about 3.4 million t in 2002. For the two project terminals, containerized traffic grew from
under 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 as
fertilizer, 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 about
20% higher than those at other international ports in the region. 17 The revenues are credited to
MOF, 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 the
region by the end of 2005. Port charges for stevedoring and anchorage, however, are
considerably lower than those at other regional ports. The main beneficiaries of the low rates
are 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
16
Opinions differ about when to start construction at Thi Vai. SP indicated to the OEM that 2015 may be the most
appropriate year to begin, because all outstanding loans will have been repaid by that time. Others within the
Government propose 2010.
17
A comparative study by the United Nations Economic and Social Commission for Asia and the Pacific found that
SP charges higher tariffs than those of other regional ports such as Manila; Hong Kong, China; Singapore;
Yangon; Jakarta; and Port Klang in Malaysia.
9
the Project “by collecting and analyzing port traffic data, particularly data related to ship waiting
time and ship service times and cargo-handling performance.” The OEM found that data are
now being collected and analyzed in these areas.
43.
An onlending rate to SP similar to that applicable to ADB’s OCR was covenanted in the
Project 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 to
the principal. The objective of the covenant was to facilitate the restructuring of SP and promote
its commercial orientation, thereby enhancing its capability to attain full cost recovery, as
envisaged in the NTSR (footnote 2). The OEM was informed that the authority to enforce SP’s
repayment of interest and principal to the Government no longer rests with MOF, but with the
autonomous Development Assistance Fund (DAF).18 The OEM was also informed that SP
suggested a reconsideration of the rate of interest for two reasons: (i) the devaluation of the
dong makes it difficult for SP to meet the original terms of the agreement, and (ii) 28 ports now
compete to serve HCMC. MOF denied this request, however, and the interest rate payable by
SP 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 in
core port activities, as well as the relatively weak performance of noncore business activities in
recent years.19 The operating ratio for the entire SP deteriorated from 76% in 1995 to 92% in
2001 (Appendix 4, Table A4.1). Operating expenses increased by about 10% annually, from
D243 billion in 1995 to D427 billion in 2001. The higher operating expenses were largely caused
by higher salary expenses; fuel costs; management and administration expenses, including
depreciation; and cost of products and services sold through SP’s noncore business operations
(Appendix 4, Table A4.2).
45.
Operating revenues (net of turnover taxes) have increased by about 6% annually, from
D321 billion in 1995 to D463 billion in 2001. Operating revenues from core businesses providing
port servicesstevedoring, warehousing, wharfage, and tugboat feesaccounted for an
average of about 73% of gross revenue. Noncore business activities, such as tourism and
associated 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 on
equity declined from 25% to 4% during that period. The operating profit margin from port
services declined from 25% in 1995 to 6% in 2001. Preliminary financial data for 2002 indicate a
recovery, 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 in
2001. Long-term debt burden increased by 54% annually in the same period, from D32 billion to
D435 billion in 2001. 20 SP’s 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 was
helped by a steady growth in capitalization of about 15% annually as a result of annual
increases in cumulative government equity contributions from D173 million in 1995 to
18
This occurred in 1998 when MOF was split into the Treasury, which was renamed MOF, and DAF. DAF is
authorized to ensure that agencies repay outstanding loans and interest to the Government.
19
The financial performance of SP’s Nha Rong and Khanh Hoi project terminals could not be assessed individually
because disaggregated financial data were lacking.
20
Includes an ADB loan for the Nha Rong and Khanh Hoi project terminals and a long-term loan from a Viet Nam
bank to help finance the construction of Tan Thuan 2, estimated at D100 billion.
10
D507 million in 2001 (Appendix 4, Table A4.4). Nevertheless, SP’s financial performance is still
at risk, and will likely deteriorate if the Government continues to make decisions relating to
stevedoring and anchorage charges, now among the lowest in the region (para. 41). Acquiring a
boom crane dedicated to handling containers would further improve SP’s performance and
competitiveness.
C.
Economic and Financial Reevaluation
48.
Appendix 5 gives the reestimated EIRR and FIRR. Based on a landside berth utilization
rate of 85.0%, the reestimated EIRR is 12.6%, well below the PCR estimate of 33.3%. The PCR
used the same methodology as at appraisal, with economic benefits including cargo handled at
Tan Thuan 1, which was not part of the Project. Thereby, incremental benefits were
overestimated; incremental operating costs were also underestimated by the PCR. At
evaluation, 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 targets
for cargo and container traffic, (ii) SP’s cost management would be effective and prudent, and
(iii) HCMC would be able to address traffic congestion in the port area to facilitate increased
cargo volume. The reestimated FIRR is 3.7%––close to the weighted average cost of capital of
4.0%21––but significantly lower than the PCR estimate of 12.4%. This difference is mainly
because operating costs were underestimated. The PCR assumed the incremental operating
cost to be 30.0% of incremental revenue, close to appraisal estimates. The OEM considered
that assumption optimistic, based on the decline in operating profit margin from core port
services (para. 46). Further confirming this observation was the deterioration of the operating
ratio for the entire SP.
49.
The sensitivity analysis shows that the FIRR will decline to 2.5% if operating and
maintenance expenses are 10% higher than assumed. Similarly, the FIRR drops to 1.6% with
operating revenues 10% lower than the base case. With an average berth utilization of 75% and
7 million t of cargo handled, the FIRR would be only 0.4%. The sensitivity analysis also shows
that 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 terminals
achieve 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 in
average 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 EIRR—to
13.9%—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 and
maintenance averaged D25 billion during the pre-project years 1992 to 1994. Spending declined
to D17 billion in 1995, and was estimated at D12 billion in 1999 (Appendix 4, Table A4.1). As of
October 2002, the budget of D15 billion for repair and maintenance was adequate. But, as the
equipment ages, appropriate and, likely, higher allocations for maintenance must be made to
ensure that the investment is protected.
21
The real cost of capital for ADB and government-financed components was estimated at 3.1% and 2.0%. However,
according to ADB’s Guidelines for Financial Governance and Management of Investment Projects, page 26, a
minimum rate of 4.0% should be applied if the derived weighted average cost of capital is below this threshold.
11
52.
As to the long-term financial sustainability of the Project, the operating ratio of 89% in
1994—before the Project began—decreased to 76% in 1995, then rose to 92% by 2001. This
was above the appraisal estimate of 87%, raising concerns over the move toward full cost
recovery. The high operating ratio resulted from low port charges and high operating costs
(paras. 44–46).
53.
There is concern that the Government’s continued control over port tariffs and fees
through the State Pricing Committee threatens SP’s long-term sustainability. That control
hampers SP’s ability to improve its financial performance. Traffic congestion in the port area
may also affect the long-term sustainability (para. 38). Competition from other ports with
dedicated container facilities and larger storage yards is another factor. Also, future demand for
larger-vessel berths may require a relocation of some port activities to a location with deeper
water. SP remains the busiest port in the area, however, and significant break-bulk shipping
operations will continue, even with the trend toward containerization. Furthermore, several of
the berths may be modified to better accommodate cruise ships. The sustainability of SP is
likely, even though some port operations may need to relocate to a location with deeper water.
IV.
A.
ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS
Socioeconomic Impact
54.
The Project, by improving commodity-handling capacity, reduced shipping costs for both
domestic and international trade. It was reported to the OEM that prices for imports and
domestic commodities shipped through SP have decreased, and increased exports have
generated 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 more
product choices. Family-operated businesses that produce handicrafts for export have also
benefited from improved handling at SP. Domestic cargo transport has increased from
0.6 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 throughput
has contributed to the creation of about 1,800 jobs since the Project began. Working conditions
at SP have improved considerably through the Port Operations Action Plan, which replaced two
12-hour work shifts for dock and stevedoring labor with three 8-hour shifts. Handling accidents
at SP have also decreased since the Project.
B.
Environmental Impact
56.
Environmental impacts of the Project have been minimal. Paving the storage yard has
reduced 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. Replacing
the old equipment has reduced harmful exhaust emissions. Dredging in front of the terminal,
although necessary to increase berthing depth, may have affected the existing marine
environment in a limited area. The Project was confined to rehabilitation and replenishment of
an 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 great
care is taken to minimize spills, and spills are later manually swept from the deck, some
12
contaminants that are hazardous to the environment, such as fertilizer or coal, remain on the
deck. Rain ultimately washes these contaminants, along with oil spills and leaks from vehicles
operating 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 to
help upgrade SP’s 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 delay
was the PMU proposal to enhance technical specifications to include accounts payable and
receivable, and a cargo and ship billing system. The consultants, supported by ADB, initially
opposed these enhancements on the grounds that the additional modules may be difficult to
implement.22 The views of the PMU prevailed, however, and the bidding documents for
providing the MIS were issued in May 1999. The bidding process was completed in September
1999. The delay was also attributable to exceptionally long review periods for the awarding of
contracts, and to a minor contract extension.23 The consultants provided extensive training, a
necessary adjunct to the TA. The PCR assessed the TA consultant’s performance as
satisfactory; 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 been
reduced by about 10 days, and SP is able to process operational and financial information and
make commercially oriented decisions based on the users’ actual needs. However, the OEM
found 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 are
considerably higher than at SP.25 Also, the MIS is not operating 24 hours a day, as the
consultants envisaged, but a maximum of 10 hours a day. But once SP completes a web page
concerning its operations, a component of the TA, the MIS will operate 24 hours, 7 days a week.
V.
A.
OVERALL ASSESSMENT
Relevance
60.
At appraisal and the time of evaluation, SP served as the principal waterborne gateway
to Viet Nam. The Project was relevant at appraisal, as its primary purpose was to improve SP’s
cargo-handling operations, and enhance its efficiency by rehabilitating and modernizing the
existing port facilities. Improvements focused on break-bulk operations and did not address the
growing need to accommodate containerized cargo, which was becoming the worldwide
standard for cargo transport. Break-bulk operations continue at SP, however, as at other ports
worldwide. Such operations are likely to continue for the foreseeable future for commodities like
rice—Viet Nam’s major export—and fertilizer, its major import. Overall, the Project is assessed
as relevant.
22
The consultants proposed a simpler system to which future modules could be added.
The extension allowed connection of the new MIS to each warehouse in the Khanh Hoi complex, and to the new
wharves in Tan Thuan 2.
24
The PCR rated the TA highly successful.
25
Two trained information technology staff left SP for higher paid jobs in the private sector in 2001.
23
13
B.
Efficacy
61.
The Project fully achieved its objective of rehabilitating the landside facilities of Nha
Rong and Khanh Hoi project terminals, thereby increasing SP’s efficiency. It greatly improved
the cargo-handling operations, minimizing cargo losses. Between 1995 and 2001, ships calls
increased 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 terminals
increased from 4.9 million t in 1995 to 5.8 million t in 2001, and an estimated 7.3 million t in
2002. Substituting dredging works for the planned mooring buoys and hardware enhanced the
berthing capability at the port terminals, allowing larger vessels to call. Revisions of and
additions to the procured equipment also improved SP’s ability to address cargo-handling
needs. The TA strengthened SP’s institutional capabilities. Overall, the Project is assessed as
highly efficacious.
C.
Efficiency
62.
The Project suffered from initial implementation delays caused by lengthy bid
evaluations 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 well
maintained. SP is the busiest port in Viet Nam and remains profitable. Unfortunately, landside
traffic congestion limits growth potential of the port area. The river location also limits the size of
vessels that can call. Despite the trend to containerize cargo whenever possible, the demand for
break-bulk handling operations will remain strong. While larger ocean-going ships continue to
enter the shipping market, the small- to medium-tonnage vessels now calling at SP will likely
continue to ply the Saigon River. The setting of tariffs and other fees should be decentralized to
ensure SP’s long-term sustainability. The FIRR is 3.7%, slightly below the weighted average
cost of capital of 4.0%. Overall, the Project’s sustainability is assessed as likely.
E.
Institutional Development and Other Impacts
64.
Human resource management has improved, and employment opportunities have
increased. But the Government retains control over the setting of port tariffs and fees through
the State Pricing Committee; that has hampered SP’s ability to expand. The operating ratio
remains high due to low port charges and increasing operating expenses. The addition of the
MIS has reduced billing times by about 10 days and has enabled SP to process and retrieve
operational and financial information more rapidly. Overall, the Project’s institutional
development 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 no
project preparatory TA. As such, inordinate reliance was placed on the Government to provide
the rationale for the project components. This may explain SP’s subsequent decision to seek
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 thorough
supervision would have helped improve implementation. More assistance from the Viet Nam
Resident Mission (VRM), established in 1996, would also have helped the Government
understand ADB procedures.26 The implementation schedule envisaged at appraisal was
optimistic because of ADB’s 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 Borrower’s inexperience with ADB procedures caused delays in implementation
(para. 28). The Borrower’s lengthy bid evaluations delayed contract awards—a systemic
problem in Viet Nam. That also caused initial delays in project implementation. The subsidiary
loan agreement was not complied with until 2001, a year after the PCR was completed. ADB did
not initially support the recommendation for an additional two modules of the MIS that the PMU
proposed through the TA. The OEM, however, found these useful additions. Apart from delays
attributable to the Borrower’s inexperience with ADB procedures, overall Borrower performance
is assessed as satisfactory.
VI.
A.
ISSUES, LESSONS, AND FOLLOW-UP ACTIONS
Key Issues for the Future
68.
SP is reaching maximum capacity because of landside traffic congestion. If the
infrastructure in and around the port cannot be improved, SP may become unattractive to
shipping lines. Improvement in the handling of containerized cargo, using contemporary
methods and equipment, is also necessary to remain competitive. The building of a deepwater
facility at an alternate site should be investigated.
69.
The cumbersome process of evaluating bids and awarding contracts caused serious
implementation 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 excessive
implementation delays in future projects; and (ii) enhancing VRM’s role, a process that has
already begun.
70.
Policy dialogue at the time of appraisal stressed the need to give greater autonomy to
the port sector. Although the individual ports are responsible for administering their day-to-day
operations, the State Pricing Committee establishes their port charges. While the ports are
given some leeway—up to 15%—to vary these charges, they need greater flexibility to sustain
financial 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 a
long period. Although present maintenance demands are minimal, future maintenance planning
must not be ignored. The MIS includes a preventive maintenance system that provides
recommended scheduling of maintenance operations; its proper use will assist in maintenance
planning.
26
VRM staffing has since been increased to strengthen project monitoring during implementation.
15
B.
Lessons Identified
72.
To better address future needs of the port sector, the Government separated the
business planning function from the strategic development function. Vinalines was assigned to
develop 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 improvements
necessary to accommodate the business plan. This strategy may also be appropriate for other
developing member countries.
73.
Viet Nam’s lack of familiarity with ADB’s guidelines and procedures, despite training
seminars through ADB’s Central Operations Services Office, slowed initial project
implementation. Portfolio performance reviews also indicated that this and other implementation
problems, such as sluggish disbursements, were systemic to Viet Nam. ADB responded by
strengthening 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 greater
authority 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, ADB
should encourage the Government to extend autonomy to other activities, including the port
sector, and review progress in the country strategy and program updates.
75.
Viet Nam is committed to rationalizing its national shipping tariffs by 2005. ADB should
help review the tariffs to ensure SP’s sustainability.
76.
SP’s present drainage system discharges directly into the Saigon River. Although
contamination of the discharged water may be minimal, SP should start collecting samples of
the 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 technology
change. Integration of the MIS with customs authorities and shipping lines will strengthen its
usefulness.
16
PROJECT COSTS
($ million)
Foreign
Appraisal
Local
Total
Foreign
Actual
Locala
Total
4.3
10.5
4.1
0.7
0.8
20.4
12.0
0.0
0.0
0.2
0.3
12.5
16.3
10.5
4.1
0.9
1.1
32.9
3.9
13.7
3.4
0.5
1.6
23.1
10.5
0.1
0.0
0.1
0.0
10.6
14.4
13.8
3.4
0.6
1.6
33.7
(9.3)
30.5
(17.1)
(28.6)
100.0
13.2
(12.5)
100.0
0.0
(50.0)
(100.0)
(15.2)
(11.7)
31.4
(17.1)
(33.3)
45.5
2.4
B. Contingencies
1. Physicalb
2. Price Escalationc
Subtotal (B)
2.0
2.0
4.0
1.3
1.2
2.5
3.3
3.2
6.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
(100.0)
(100.0)
(100.0)
(100.0)
(100.0)
(100.0)
(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)
25.0
15.0
40.0
23.6
10.6
34.2
(5.6)
(29.3)
(14.5)
A. Base Cost
1. Civil Works
2. Cargo-Handling Equipment
3. Tugboats
4. MIS Implementation
5. Consulting Services
Subtotal (A)
Total
d
% Overrun (Underrun)
Foreign
Locala
Total
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 all project-related goods and services from duties 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.
Appendix 1
Project Component
Appendix 2
17
PROJECT OUTPUTS
Table A2.1: Civil Works
Appraisal
Type of Work
Unit
Nha Rong
Khanh Hoi
Division
Division
Actual
Central
Nha Rong
Khanh Hoi
Workshop
Division
Division
and Others
1.
Central
Workshop
and Others
Wharf Strengthening
a. MM1–MM3
m
351
0
0
577
0
0
b. K1–K4
m
0
480
0
0
460
0
c. K5–K9
m
0
550
0
0
573
0
d. K10
m
0
140
0
0
139
0
2
2.
Yard Paving
m
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
0
2
7.
Shed Veranda
m
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
m
0
0
90
0
0
0
each
0
0
10
0
0
0
m3
0
0
0
12,491
20,417
0
13. Jetty
14. Mooring Buoy
15. Dredging Work
2
3
m = meter, m = square meter, m = cubic meter, CFS = container freight station.
Source: Asian Development Bank.
18
Appendix 2
Table A2.2: Equipment
(no.)
Appraisal
Type of Equipment
A. Cargo-Handling Equipment
1. Forklifts
a. 2.5 ton
b. 3.0 ton
c. 5.0 ton
d. 7.0 ton
e. 10.0 ton
f. 12.0 ton
g. 25.0 ton
2. Miscellaneous Gear
a. Mobile Mulitpurpose Crane (30 ton)
b. Mobile Mulitpurpose Crane (80 ton)
c. Rubber-Tired Gantry Crane
d. Container Yard Super Stacker
e. Light Truck/Work Vehicle
f. Light Tractor and Hustler
g. Manual Spreader 40 Frame
h. Semiautomatic Spreader
i. Container Yard Chassis
j. Paper Clamps for Forklift
k. Bulldozer/Trimmers 2 ton
l. Two-Way Dozers
m. Hoppers with Automatic Scale
n. Grab 3.5 m3: 4 string
o. Grab 2.4 m3: 2 string
B. Communications Equipment
1. Radio Handset
2. Base Station
3. Charger/Antenna/Duplex (set)
4. One Additional Station for Main Office
C. Tugboats
1. Tugboats (2 x 1,000 HP) with Firefighting and
Environmental Protection Equipment a
D. Computer Hardware and Software for MIS b
1. Net Server
2. Terminal
3. Printer
Nha Rong
Division
Actual
Khanh Hoi
Division
Nha Rong
Division
Khanh Hoi
Division
0
0
4
0
1
0
1
0
10
3
3
0
1
0
2
5
1
2
1
0
0
4
5
2
1
2
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
2
0
4
4
11
1
0
20
12
2
0
2
2
2
2
0
0
0
0
1
0
0
0
0
0
1
0
0
0
0
2
2
6
0
4
0
2
0
0
0
3
0
2
0
22
1
2
1
Appraisal
2
tbd
tbd
tbd
0
0
0
0
0
0
0
0
Actual
0
0
0
0
2
6
52
38
3
HP = horsepower, m = 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.
19
Appendix 3
OPERATIONS DATA ON SAIGON PORTa
Table A3.1: Summary of Port Operations, 1995–2002
Item
Unit
1995
A. Ship Calls
1. Total Cargo Ship Calls
vessels (no.)
1,156
a. Container
vessels (no.)
241
b. Cargo
vessels (no.)
915
2. Total Ship Calls at Nha Rong/Khanh Hoi
vessels (no.)
827
3. GRT
GRT (000)
8,018
4. GRT at Nha Rong/Khanh Hoi Terminals
GRT (000)
4,811
5. Average Cargo Ship Size
GRT (000)
6.9
6. Average Cargo Ship Size at Nha Rong/Khanh Hoi GRT (000)
5.8
7. Cruise Ship Arrivals (Nha Rong/Khanh Hoi)
vessels (no.)
36
8. GRT
GRT (000)
483
9. Passengers In/Out
thousand
12.1/12.1
B. Cargo Throughput
1. Total Cargo Handled
tons (000)
7,212
a. At Berth
tons (000)
6,089
b. At Buoy
tons (000)
1,123
2. Cargo Handled at Nha Rong and Khanh Hoi
tons (000)
4,936
3. Cargo Handled at Tan Thuan 1 and 2
tons (000)
2,275
4. Container TEUs Handled
TEU thousand
77
5. Container Tons Handled
tons (000)
636
6. Total Cargo Handling/Service Time
days
5,021
a. Container
days
765
b. Cargo
days
4,256
7. Total Cargo Handling/Service Time per Ship
days/ship
4.3
a. Container
days/ship
3.2
b. Cargo
days/ship
4.7
8. Cargo Handling Rate
tons (000/day)
1.3
9. Average Load (tons) per Vessel
tons/vessel per yr
—
10. Tonnage Handled per Meter per Annum
tons/m per yr
—
11. Container Unit TEUs per Meter per Annum
TEU/m per yr
—
12. Tons per Net Gang Hour (agricultural products) tons/gang per hr
—
13. Tons per Net Gang Hour (timber)
tons/gang per hr
—
14. Tons per Net Gang Hour (general cargo)
tons/gang per hr
—
15. TEUs per Net Gang Hour
TEU/gang per hr
—
C. Berth and Buoy Occupancy
1. Cargo Ship Time at Berth and Buoy
days
5,363
a. At Berth
days
4,186
b. At Buoy
days
1,177
2. Number of Berths
each
19
3. Number of Buoys
each
14
4. Cargo Ship Turnaround Time
days/ship
4.6
5. Time Available for Berth and Buoy
days
12,045
a. At Berth
days
6,935
b. At Buoy
days
5,110
6. Berth Utilization Rate
%
44.5
a. At Berth
%
60.4
b. At Buoy
%
23.0
7. Total Berth Time for Container
days
892
8. Total Berth Time for General Bulk Cargo
days
4,471
9. Total Berth Idle Time
days
342
a.
Container Vessels
days
127
b.
Cargo Vessels
days
215
10. Ratio of Berth Idle Time to Service Time
%
6.8
D. Cargo Handling Facilities: All Terminals/(Nha Rong and Khanh Hoi only)
1. Cranes (gantry/mobile/crawler/rail mounted)
unit
—
2. Reach Stacker
unit
—
3. Forklift/Toplift/Sidelift/CFS Forklift
unit
—
4. Reefer Point
unit
—
5. Tractor/Cargo Truck
unit
—
6. Dozer/Trimmer
unit
—
E. Port Safety
1. Cargo Damage
ton
—
2. Port Accidents
each
9
1996
1997
1998
1999
2000
2001
2002
1,072
333
739
766
8,062
4,837
7.5
6.3
29
427
8.4/7.6
1,207
398
809
725
7,023
4,214
5.8
5.8
24
377
11.7/11.7
1,421
399
1,022
855
8,100
4,860
5.7
5.7
9
126
2.1/2.1
1,447
496
951
869
8,898
5,339
6.1
6.1
28
357
6.1/6.1
1,811
745
1,066
1,099
12,445
7,467
6.9
6.8
16
280
4.7/4.6
1,724
1,048
676
1,048
14,870
8,922
8.6
8.5
29
460
8.0/8.0
1,882
—
—
1,126
15,950
9,570
8.5
8.5
29
—
—
b
7,340
5,639
1,701
5,790
1,550
108
963
5,198
720
4,478
4.8
2.2
6.1
1.3
—
—
—
—
—
—
—
6,821
4,960
1,860
5,056
1,765
123
1,154
4,647
624
4,023
3.9
1.6
5.0
1.4
—
—
—
—
—
—
—
7,601
7,042
559
5,780
1,822
140
1,470
5,576
756
4,820
3.9
1.9
4.7
1.3
—
—
—
—
—
—
—
8,337
5,538
2,799
5,204
3,133
172
1,965
5,486
1,200
4,286
3.8
2.4
4.5
1.4
5,762
2,077
505
17.0
23.8
12.9
15
9,701
7,069
2,632
5,747
3,954
237
2,642
6,066
1,376
4,690
3.3
1.8
4.4
1.5
5,330
2,651
698
16.6
27.0
13.3
18
10,022
7,568
2,454
5,826
4,196
269
3,159
6,183
1,167
5,016
3.6
1.1
7.4
1.5
5,813
2,677
791
—
—
—
21
11,800
—
—
7,324
4,476
280
c
5,474
3,375
2,099
19
14
5.1
12,045
6,935
5,110
45.4
48.7
41.1
831
4,643
276
111
165
5.3
4,878
3,042
1,836
19
14
4.0
12,045
6,935
5,110
40.5
43.9
35.9
747
4,131
231
123
108
5.0
5,893
3,746
2,147
19
14
4.1
12,045
6,935
5,110
48.9
54.0
42.0
835
5,058
317
79
238
5.7
5,890
3,076
2,814
19
14
4.1
12,045
6,935
5,110
48.9
44.4
55.1
1,378
4,512
404
178
226
7.4
6,439
4,487
1,952
20
31
3.6
18,615
7,300
11,315
34.6
61.5
17.3
1,490
4,949
373
114
259
6.1
6,649
4,770
1,879
21
34
3.9
20,075
7,665
12,410
33.1
62.2
15.1
1,298
5,351
466
131
335
7.5
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
40(25)
7(3)
111(80)
167(117)
57(48)
23(14)
b
b
c
c
—
—
—
—
—
—
—
—
4,235
—
—
—
—
—
—
—
—
—
—
—
30
9
10
10
9
7
10
10
— = 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.
b
b
20
Table A3.2: Cargo Tonnage Handled
('000 t)
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Throughput HCMC
Throughput Saigon Port
4,579
4,077
6,174
5,199
7,410
5,371
8,607
6,435
12,365
7,209
13,813
7,339
13,746
6,821
14,336
7,601
17,285
8,337
19,136
9,701
—
10,022
—
11,800
—
12,500
A. Imports
1. Fertilizer
2. Cement
3. Steel and Iron
4. Machinery and Equipment
5. Wheat
6. Chemicals
a
7. Others
1,882
1,081
88
82
75
0
24
532
1,914
758
111
154
17
235
48
591
2,528
461
142
300
94
176
77
1,278
3,349
704
328
360
107
223
127
1,500
4,258
724
464
548
65
304
165
1,988
3,798
665
789
537
50
218
121
1,418
3,274
528
396
359
42
266
124
1,559
3,594
1,200
9
439
33
196
102
1,615
3,716
1,365
4
343
17
187
117
1,683
4,527
1,414
11
552
23
305
82
2,140
4,377
1,108
1
733
28
330
104
2,073
4,692
1,224
0
916
33
345
121
2,053
4,970
—
—
—
—
—
—
—
B. Exports
1. Rice
2. Agriculture Products
3. Rubber
4. Timber Products
5. Fruits and Vegetables
6. Reefer Cargo
b
7. Others
1,543
984
—
11
262
13
31
242
2,690
1,874
163
3
144
3
10
493
2,420
1,575
88
2
17
0
16
722
2,560
1,680
98
26
10
18
28
700
2,308
1,440
82
0
2
0
0
784
2,692
2,173
108
0
0
0
0
411
2,766
2,119
0
0
0
0
0
647
2,866
2,392
0
0
0
0
0
474
3,271
2,299
0
0
0
0
0
972
3,088
1,858
51
0
0
0
0
1,179
2,974
1,558
137
0
0
0
0
1,279
3,008
2,146
130
0
0
0
0
732
3,188
—
—
—
—
—
—
—
C. Domestic
1. Coal
2. Rice
3. Cement
4. Clinker
c
5. Others
652
48
322
66
125
91
595
79
171
203
34
108
423
69
86
128
0
140
526
39
158
75
55
199
643
14
400
14
0
215
849
82
237
76
216
238
780
65
20
358
58
279
1,141
54
88
525
118
356
1,350
40
158
427
299
426
2,086
87
119
473
423
984
2,671
158
184
303
353
1,673
4,100
366
94
462
44
3,134
4,342
—
—
—
—
—
D. Container Traffic
1. Container (t'000)
a. Import
b. Export
2. Total TEU (1,000)
a. Import
b. Export
321
—
—
37
—
—
864
—
—
79
—
—
1,426
—
—
138
—
—
1,628
—
—
158
—
—
636
—
—
77
—
—
963
—
—
108
—
—
1,154
725
429
123
56
67
1,469
1,012
457
140
55
85
1,965
1,080
885
172
78
94
2,642
1,345
1,297
237
117
120
3,159
1,512
1,647
269
132
137
3,400
1,636
1,764
280
—
—
3,800
1,824
1,976
300
—
—
— = not available, HCMC = Ho Chi Minh City, t = metric ton, TEU = twenty-foot equivalent unit.
Includes paper, stationery, garments, concrete pipes, glass, animal foods, and other imports.
b
Includes handicrafts, ceramics, and other exports.
c
Includes stone powder, steel, container, bran, and other domestic cargo.
d
Includes transhipment.
Source: Saigon Port.
a
2002
2003
Estimate Forecast
d
Appendix 3
Item
FINANCIAL STATEMENTS OF SAIGON PORT
Table A4.1: Income Statement
(D million)
Item
1991
Operating Revenueb
98,856
162,653
223,066
269,291
Operating Expense
Personnel
Repair and Maintenance
1992
1993
1994
1995
321,105
1996
391,530
1997
357,665
1998
402,921
1999
376,292
2000
414,587
2001
463,077
2002a
542,645
84,518
144,136
197,044
240,137
242,991
314,147
303,072
357,300
338,823
382,807
427,219
495,394
35,195
50,225
67,579
71,883
117,234
136,613
124,359
126,368
127,776
137,806
152,596
163,328
9,395
21,399
24,574
28,737
17,207
15,313
10,275
13,807
12,335
17,458
19,117
17,773
31,316
64,796
95,269
112,453
83,653
123,234
110,772
155,955
140,648
162,667
202,489
249,643
8,612
7,716
9,622
27,064
24,897
38,987
57,666
61,170
58,064
64,876
53,017
64,649
14,338
18,517
26,022
29,154
78,114
77,383
54,593
45,621
37,469
31,780
35,858
47,251
5,286
2,211
1,802
915
595
3,297
6,197
15,132
2,367
2,604
2,079
2,966
939
671
3,278
2,476
201
386
6,895
15,666
10,669
10,372
11,834
19,387
19,789
27,153
26,791
76,233
80,479
60,404
53,858
24,170
23,715
27,565
38,383
5,815
6,256
8,200
7,059
20,020
20,281
15,180
13,648
5,931
6,111
5,247
5,527
13,572
13,533
18,953
19,732
56,213
60,198
45,224
40,210
18,239
17,604
22,318
32,856
85.5
88.6
88.3
89.2
75.7
80.2
84.7
88.7
90.0
92.3
92.3
91.3
—
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
1.2
1.6
1.4
1.3
1.6
1.3
1.1
0.8
0.5
0.5
0.5
0.6
Operating and Administration
Depreciation
Operating Income (loss)
Nonoperating Income
Interest Expense
Net Income Before Income Tax
Income Tax
Net Income After Income Tax
237
Memorandum Item
Operating Ratio (%)
Return on Total Assets
21
— = not available.
a
Annualized data from January to October.
b
Net of taxes.
Source: Saigon Port.
Appendix 4
Fixed Assets Turnover Ratio (x)
22
Table A4.2: Operating Expenses, 1995–2002
(D million)
1996
1997
1998
1999
2000
2001
2002a
117,234
113,430
136,613
132,407
124,359
119,500
126,368
121,378
127,776
122,709
137,806
131,650
152,596
145,495
163,328
155,472
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
Fuel
Material
Power and Water
Means Rental
Cost of Goods Soldb
Others
83,653
10,419
14,585
2,592
7,341
36,655
12,061
123,234
10,396
25,139
2,688
13,528
53,548
17,935
110,772
11,768
18,336
4,811
13,108
47,469
15,280
155,955
12,897
40,082
4,460
20,020
54,426
24,070
140,648
14,799
36,376
5,480
18,675
44,139
21,179
162,667
19,099
35,414
6,230
18,519
62,523
20,882
202,489
20,634
35,517
6,054
27,559
78,648
34,077
249,643
25,500
34,082
6,107
35,875
108,684
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
Direct
Service
Indirect
Core Business-Related Expenses d
% of Total Operating Expenses
Other Business-Related Expenses
% of Total Operating Expenses
4,702
3,110
1,174
418
192,965
79.4
50,027
20.6
4,762
3,124
1,194
444
238,104
75.8
76,044
24.2
4,750
3,078
1,212
460
234,855
77.5
68,217
22.5
4,986
3,293
1,225
468
270,819
75.8
86,481
24.2
5,528
3,768
1,256
504
265,420
78.3
73,404
21.7
5,579
3,786
1,269
524
291,324
76.1
91,483
23.9
6,486
4,691
1,355
440
303,974
71.2
123,246
28.8
—
—
—
—
331,137
66.8
164,257
33.2
Personnel
Salary
Labor Union, Health, and
Social Insurance Expenses
— = not available.
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.
Source: Saigon Port.
a
Appendix 4
1995
Item
Table A4.3: Operating Revenues, 1995–2002
(D million)
1995
1996
1997
1998
1999
2000
2001
2002a
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
Item
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
167,902
Means 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
0
0
181
184
169
213
222
232
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
30,985
48,856
42,659
47,127
33,737
50,192
59,680
73,628
4,802
5,050
6,391
5,562
4,956
5,870
7,014
4,511
86
4,832
5,977
6,941
13,138
21,625
29,190
5% of Fuel Freight
Passenger Fees
Provision of Material Equipment
Provision of Foods
Duty Free Shop
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
2,134
1,905
0
0
0
359
381
0
410
258
992
321
0
0
0
7,236
332,949
414,499
369,459
415,565
376,292
414,587
463,077
542,645
(11,844)
(22,969)
(11,794)
(12,644)
0
0
0
0
321,105
391,530
357,665
402,921
376,292
414,587
463,077
542,645
Core Business Revenues (% of gross revenues)
77.5
74.6
74.0
69.4
72.4
71.1
70.2
69.1
Other Business Revenues (% of gross revenues)
22.5
25.4
26.0
30.6
27.6
28.9
29.8
30.9
5,755
6,079
12,432
12,872
13,404
20,278
30,064
34,880
Shipping Agent
Other Collection
Gross Operating Revenues
Less: Taxes
Net Operating Revenues
Memorandum Item
Tourist-Related Business Revenues b
% of Gross Revenues
1.5
3.4
3.1
3.6
4.9
6.5
6.4
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
a
b
Annualized from January to October 2002.
Includes provision of foods, duty free shop, tailoring, and hotel business.
23
Source: Saigon Port.
Appendix 4
1.7
Operating Income Margin-Core (% of gross revenues)
24
Table A4.4: Balance Sheet
(D million)
1992
1993
1994
1995
1996
1997
1998
1999
14,309
21,897
15,529
23,646
16,239
26,159
10,200
48,713
20,773
48,299
28,788
61,390
46,391
59,985
39,042
53,325
25,455
52,083
51,617
42,770
47,508
54,581
40,856
67,811
34,864
71,070
33,007
72,182
47,041
89,439
13,752
72,665
18,374
87,446
20,302
110,480
36,223
142,599
26,085
118,452
32,268
109,806
36,560
130,947
53,699
155,788
60,833
169,500
Fixed Assets
Revalued Cost
Less: Accumulated Depreciation
Net Revalued Cost
Capital Work in Progress
Total Fixed Assets
175,394
95,474
79,920
3,569
83,489
182,840
102,013
80,827
19,409
100,236
269,847
111,634
158,213
0
158,213
342,699
137,531
205,168
1,863
207,031
358,989
160,941
198,048
8,150
206,198
466,847
231,766
235,081
55,280
290,361
527,128
284,436
242,692
87,851
330,543
611,580
337,922
273,658
233,421
507,079
930,136
392,777
537,359
217,434
754,793
1,153,145
456,776
696,369
128,074
824,443
1,335,446
509,223
826,223
20,892
847,115
1,397,666
566,075
831,591
31,336
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
43,282
3,158
46,440
46,302
0
46,302
64,834
38,796
103,630
64,931
44,512
109,443
34,295
31,501
65,796
38,703
11,052
49,755
37,377
40,181
77,558
33,440
169,267
202,707
61,742
341,107
402,849
58,159
404,540
462,699
72,571
415,290
487,861
45,692
435,019
480,711
Equity
Government Contribution
Capital Reserve
Retained Earnings
Total Equity
53,536
34,374
20,209
108,119
62,738
45,181
17,927
125,846
62,738
45,181
36,102
144,021
156,566
0
13,686
170,252
172,632
529
54,687
227,848
328,573
1,811
20,702
351,086
361,325
3,951
30,308
395,584
389,928
2,308
30,588
422,824
444,439
5,460
11,852
461,751
481,339
7,563
3,789
492,691
507,405
6,284
1,353
515,042
532,719
6,277
12,720
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
1.6
0.3
0.0
43.0
2.9
2.0
1.6
0.3
1.7
36.8
0.0
0.0
1.4
0.3
1.3
72.0
26.9
15.7
1.1
0.2
1.7
64.3
26.1
15.9
2.5
0.6
1.8
28.9
13.8
10.7
2.9
0.7
1.7
14.2
3.1
2.8
3.8
1.2
2.0
19.6
10.2
8.5
3.5
1.2
1.7
47.9
40.0
27.1
1.8
0.4
1.7
87.2
73.9
39.5
2.3
0.9
1.4
93.9
82.1
42.3
2.1
0.7
1.3
94.7
80.6
41.4
3.7
0.9
1.4
87.1
78.8
42.1
Liabilities and Equity
Liabilities
Current Liabilities
Long-Term Debt
Total Liabilities
Memorandum Item
Current Ratio (x)
Quick Ratio (x)
Months in Receivables (mos.)
Debt to Equity Ratio (%)
LTD to Equity (%)
LTD to Total Capitalization (%)
LTD = long-term debt.
a
As of the end of September 2002.
Source: Saigon Port.
2000
2001
2002a
1991
Appendix 4
Item
Assets
Current Assets
Cash
Accounts Receivable
Inventory and Other
Current Assets
Total Current Assets
Appendix 5
25
FINANCIAL AND ECONOMIC REEVALUATION
A.
General
1.
The reestimated financial internal rate of return (FIRR) and economic internal rate of
return (EIRR) are based on with- and without-project scenarios. The general assumptions made
for the financial and economic analyses follow:
(i)
(ii)
(iii)
(iv)
(v)
B.
Financial revenues and costs are estimated for the berth and buoy operations of
Nha Rong and Khanh Hoi, the two project terminals of Saigon Port (SP). For the
economic analysis, net benefits and costs are for landside operations only.
Project benefits are assumed to begin in 2000. The rehabilitated facilities are
expected to have a life of 40 years. No replacement of project equipment was
assumed, with useful life seen to surpass the evaluation period. 1 A 20-year
benefit period starting in 2000 is assumed. The residual value of the rehabilitated
facilities in 2019 is included as a negative capital cost.
Project capital costs comprise actual financial costs for civil works, equipment
(e.g., cargo-handling equipment, tugboats), and consulting services.
All costs and benefits are expressed in constant prices in Vietnamese dong (D)
and converted into 2003 prices by applying the World Bank’s manufacturing unit
value index2 for the foreign components, and the consumer price index for all
local costs. Foreign costs are converted to constant dong prices at D15,900 to
$1. Nontraded components of the financial costs and benefits are converted to
economic costs and benefits using a standard conversion factor of 0.90.
Nha Rong and Khanh Hoi project terminals are used mainly for international and
domestic shipping of cargo. Passenger traffic in Nha Rong terminal is minimal,
and is not considered in the benefits analysis (Appendix 3, Table A3.1). Cargo
throughput is divided into two general categories for the analysis: general bulk
cargo and containerized cargo.3
SP or part of its operations will not be relocated to Thi Vai until after 2019, and
Ho Chi Minh City will make plans to regulate city traffic near the port to ease
congestion and allow increased cargo volume.
Comparison with the Project Completion Report Methodology
2.
The Operations Evaluation Mission (OEM) concurred with the project completion report
(PCR) and the report and recommendation of the President that the key project objective was to
sustain international trade and reduce its cost. Quantifiable economic benefits from the Project
are mainly from saved ship service time as a result of the rehabilitated facilities, and improved
cargo-handling equipment. 4
1
2
3
4
The Operations Evaluation Mission found the project equipment, handed over from 1997 to 1999, well maintained
and in satisfactory working condition.
World Bank. 2002. Global Commodity Prices Prospects, Projections as of November 2002. Washington, DC.
Cargo throughput comprises imports, exports, and domestic cargo, which comprises (i) rice, fertilizer, and cement;
(ii) coal and clinker; (iii) metal, machinery, rubber, and timber; and (iv) agricultural products , chemicals, and other
products.
Project benefits on port safety were not quantified. SP data show no change in the number of port accidents from
pre-project levels in 1995, despite an increase in total cargo handled and ship service time from 7 million metric
tons (t) and 5,021 days in 1995 to 10 million t and 6,183 days in 2001. Detailed data were not available on the level
of cargo damage at SP and the project terminals.
26
Appendix 5
3.
The OEM revised the financial and economic analyses of the PCR with respect to
(i) underestimation of incremental operating costs, (ii) underestimation of SP capacity in the
without-project scenario due to improvements in cargo-handling rate and berth capacity in 1994
and 1995, 5 and (iii) overestimation of benefits through inclusion of financial revenues from
noncore businesses6 but not their costs, and economic benefits from the existing Tan Thuan 1
terminal without associated capital costs.
C.
Saigon Port Capacity and Traffic
1.
Business Environment
4.
Viet Nam’s sustained economic growth has facilitated an increase in maritime trade for
both imports and exports. Growth in the gross domestic product has strengthened after a
slowdown caused by the Asian financial crisis. Viet Nam’s long-term growth potential is positive,
and will benefit from increased world trade, favorable commodity prices, and higher levels of
foreign investment. Increased imports reflect a rise in the demand for industrial and other inputs
and investment goods. Demand for imports will continue to outpace demand for exports.
5.
The Government recently rated eight farm products ready for competition in the world
market: rice, coffee, cashew, nuts, pepper, wooden furniture, wood products, and some fruits
and specialized farm produce, including sesame seeds and bamboo shoots. Vietnamese rice
has gained a competitive edge in the world market; 70% of the crop is high-quality rice meant
for export.
6.
The outlook for the industrial sector is favorable; double-digit growth is likely in 2002.
The industrial sector includes coal, mechanical products, textiles, garments, footwear, steel,
electricity, rubber, and paper. The coal sector has witnessed growth due to an increase in
demand attributed to both domestic and international markets. Thirty-three percent of the textile
and garment exports are to the United States; 70% of the footwear exports are to the European
Union. The mechanical sector produces manufacturing equipment for agroforestry processing,
vehicle engines, and industrial devices. Engines for farm equipment are exported to countries in
the region. New investments have been made in electricity, steel production, and tires.
2.
Cargo Traffic
7.
Based on SP cargo data and OEM estimates of achievable future levels of berth
occupancy, cargo traffic is expected to reach 14 million metric tons (t) in 2010, with
containerized cargo increasing from 2.6 million t in 2000 to about 8.9 million t in 20107 (Table
A5.1). Cargo throughput at the Nha Rong and Khanh Hoi project terminals is projected to
increase from 5.7 million t in 2000 to about 8.2 million t in 2010. An increase in containerized
cargo traffic is forecast from 0.9 million t in 2000 to 4.3 million t in 2010. Accordingly, the
proportion of containerized cargo is assumed to grow from 15.7% in 2000 to about 34.4% by
2005, and 52.4% by 2010. The share of general cargo traffic will decrease from 84.3% in 2000
to about 65.6% by 2005 and 47.6% by 2010. Overall, cargo throughput at the two project
5
6
7
Actual cargo throughput increased from 5.4 million t in 1993 to 7.2 million t in 1995, prior to project implementation.
The cargo-handling rate and time available at the landside berths increased from 1,023 t per day and 6,570 days in
1993 to 1,455 t per day and 6,935 days in 1995.
Noncore business revenues averaged 28.0% of gross revenues from 1995 to 2002.
SP provided historic data on general bulk and containerized cargo loaded and unloaded in SP and its Nha Rong
and Khanh Hoi project terminals from 1995 to 2001, and projections of cargo tonnage for 2003, 2005, and 2010.
Appendix 5
27
terminals will average 59.0% of total cargo handled in SP from 2003 to 2010, compared with
68.4% in 1995.
Table A5.1: Cargo Traffic
(million metric tons and %)
Item
Saigon Port (SP)
General Bulk Cargo
Containerized Cargo
Cargo Handled at Berth
Berth Utilization Rate (%)
Cargo Handled at Buoy
Buoy Utilization Rate (%)
1995
Actual
7.2
6.6
0.6
6.2
60.4
1.0
23.0
2000
Actual
9.7
7.1
2.6
7.1
61.5
2.6
17.3
2003
Projected
12.5
8.7
3.8
8.7
70.5
3.8

2005
Projected
13.0
7.4
5.6
9.3
75.2
3.7

2010
Projected
14.0
5.1
8.9
10.5
85.1
3.5

NR and KH Terminals
(% of cargo handled at SP)
General Bulk Cargo
5.0
68.4
4.4
5.7
59.2
4.8
7.5
59.5
5.5
7.6
58.9
5.0
8.2
58.6
3.9
(% of cargo handled at NR and
KH)
Containerized Cargo
(% of cargo handled at NR and
KH)
Cargo Handled at Berth
Cargo Handled at Buoy
88.6
84.3
73.6
65.6
47.6
0.6
11.1
0.9
15.7
2.0
26.4
2.6
34.4
4.3
52.4




5.3
2.2
5.4
2.2
5.9
2.3
 = not available, KH = Khanh Hoi, NR = Nha Rong.
Sources: Saigon Port and Operations Evaluation Mission estimates.
3.
Without-Project Case
8.
The OEM updated the without-project scenario to account for improvements in landside
cargo-handling rate and berth capacity starting in 1994 8 (para. 3). In the without-project case,
OEM assumed that SP is able to gradually achieve a maximum berth and buoy utilization rate of
about 75% by using internally generated funds to carry out some essential repairs and
rehabilitation of landside berth facilities.9 Correspondingly, the base case projection estimates
SP cargo capacity at 7.6 million t10 by 2002. Average landside cargo capacity for 1995 to 2002
is estimated at 6.3 million t; berth occupancy rate for 1995 to 2002 is estimated at 62%. This
compares with a cargo capacity of 6 million t at appraisal and completion. For the Nha Rong
and Khanh Hoi project terminals, the OEM estimates berth and buoy capacity at 4.7 million t, of
which 1.0 million t is containerized cargo (Table A5.2). 11
8
Total cargo handled at berth increased from 4.8 million t in 1993 (reappraisal) to 6.1 million t in 1995 (Board
approval).
9
Based on an estimated berth cargo-handling capacity of 10.1 million t in 1995 for the without-project case, and
12.3 million t in 2002 for the with-project case.
10
The PCR dated 14 July 2000 and prepared by the SP project management unit concluded that SP facilities could
not have met expected future traffic growth (expected at 8 million t for 2000) without the Project.
11
Sensitivity analys is shows that if the base case assumes a without-project cargo capacity of 5.7 million t for the two
project terminals, the EIRR will be 15.8% due to higher economic benefits from saved ship time from the estimated
“normal” traffic. At the same time, the FIRR is lower, at 0.5%.
28
Appendix 5
Table A5.2: Saigon Port Capacity
(million metric tons)
Item
Appraisal
(1993)
w/o Project
w/Project
Saigon Port
Total Cargo Handled
At Berth
At Buoy
General Cargo
Containerized Cargo
NR and KH Terminals
Total Cargo Handled
At Berth
At Buoy
General Cargo
Containerized Cargo
6.0
4.8
1.2


8.0
6.5
1.5


3.4 a


2.9
0.5
Project Completion
(2000)
w/o Project
w/Project
6.0
4.8
1.2


9.2
6.7
2.5


5.7 a


4.8
0.9
Operations Evaluation
(2002)
w/o Project
w/Project
7.6


6.1
1.5
14.0
10.5
3.5
5.1
8.9
4.7


3.7
1.0
8.2
5.9
2.3
3.9
4.3
 = not available, KH = Khanh Hoi, NR = Nha Rong, w/o Project = without Project, w/Project = with project.
a
Actual cargo traffic data.
Source: Operations Evaluation Mission.
4.
With-Project Case
9.
The total cargo handled in 2002 was 11.8 million t; the berth utilization rate was 69.5%.
During the same time period, the landside cargo traffic rate was 8.2 million and the berth
occupancy rate, 66.4%. The OEM assumed a maximum landside berth utilization rate of 85%,
based on the size and nature of SP. Based on SP projections of cargo traffic and level of
containerization, the with-project case projects a gradual increase in total cargo handled to
14 million t by 2010 12 (Table A5.2). Landside cargo traffic is estimated at 9.3 million t in 2005
and 10.5 million t in 2010 (para. 7 and footnote 9). The berth occupancy rate is projected at
75% for 2005 and 85% for 2010. For the two project terminals, total cargo handled is estimated
at 8.2 million t with an increased level of containerized cargo throughput of 4.3 million t. This
compares with total cargo handled of 5.7 million t at project completion. Landside cargo traffic at
the project terminals is assumed at 5.9 million t.
5.
Generated Cargo Traffic
10.
Generated traffic in SP (berth and buoy) is assumed to gradually build up from
2.2 million t in 2000 to 5.4 million t in 2005 and 6.4 million t in 2010. The incremental capacity of
the Nha Rong and Khanh Hoi project terminals is projected to slowly build up from 1.3 million t
in 2000 to 2.9 million t in 2005, and to 3.5 million t in 2010 and beyond. The incremental
capacity for containerized cargo is projected to increase from 0.2 million t in 2000 to 1.6 million t
in 2005, and to 3.2 million t in 2010 and beyond. World shipping trends are toward
containerization; thus, generated traffic from general bulk cargo is assumed to gradually
decrease from a peak of 2.0 million t in 2002 to 0.2 million t in 2010 and beyond.
12
In the with-project scenario, long-term berth utilization is seen to benefit from increased ship calls and cargo traffic
because of Viet Nam’s continued economic development and improvements in port productivity, performance, and
facilities.
Appendix 5
D.
29
Financial Analysis
11.
Financial revenues for SP consist of operating revenues from port services such as
stevedoring, warehousing, delivery, wharfage, tugboat services, buoy use, mooring, and
unmooring. In the absence of disaggregated revenue and cost data at the terminal level,
operating revenues for the Nha Rong and Khanh Hoi terminals were estimated by applying the
ratio of cargo throughput at the project terminals to total cargo handled through SP, to total
operating revenues. Incremental operating revenue, net of taxes,13 was then calculated based
on an average revenue per ton and incremental traffic growth (berth and buoy) at the Nha Rong
and Khanh Hoi project terminals (para. 10). The average revenue per ton (in 2003 prices) was
estimated at D34,800 in 2000, D35,500 in 2001, and D34,000 in 2002 and beyond. The
corporate income tax rate was estimated based on an average return on income before tax of
13% and corporate income tax rate of 25%.
12.
Project capital costs are based on actual disbursements from 1995 to 2000 for the Asian
Development Bank (ADB) loan and counterpart government financing. Operating costs include
variable costs for personnel, fuel, material, power and utilities, and other expenses.14 Repair
and maintenance costs were assumed to increase with equipment usage in order to extend its
life. As in the case of operating revenues, operation and maintenance costs were estimated by
applying the percentage share of cargo throughput at the project terminals to total cargo
handled through SP. Incremental operation and maintenance costs were then calculated based
on the average cost per ton and incremental traffic growth (berth and buoy) at the Nha Rong
and Khanh Hoi project terminals (para. 10). Average operating cost per ton (in 2003 prices) was
D18,300 in 2000, D19,300 in 2001, and D16,900 in 2002 and beyond. Average maintenance
cost per ton (in 2003 prices) was D2,000 in 2000, D2,100 in 2001, D1,600 in 2002, and D2,100
from 2003.
13.
The recalculated FIRR of 3.7% is marginal. Table A5.3 gives details of the FIRR
calculation. The FIRR is slightly below the recalculated weighted average cost of capital of 4%
for the Project. 15 The substantially lower result relative to the PCR is largely due to a
reestimation of the level of incremental operating costs. The PCR assumed that the incremental
operating cost was 30% of incremental revenue, similar to estimates at appraisal. The operating
profit margin for core port services declined from 25.2% in 1995 to 6.4% in 2001. Preliminary
financial data for 2002 indicated a recovery to 11.6%. Overall, this observation is confirmed by
the deterioration of the ratio of operating expenses to operating revenues for the whole of SP—
from 75.7% in 1995 to 92.3% in 2000, and 91.3% in 2002. While SP remains profitable,
marginal financial returns show increased pressure on operating income margins because of
increased operating costs, constrained revenue generation, and the relatively weak
performance of its noncore businesses in recent years.16
13
This comprises turnover tax and corporate income tax.
The OEM assumed that 70% of personnel, particularly directly hired staff, and 50% of other core business-related
expenses are variable.
15
The real cost of capital for ADB and government-financed components was estimated at 3.1% and 2%. However,
according to ADB’s Guidelines for Financial Governance and Management of Investment Projects, page 26, a
minimum rate of 4% is to be applied if the derived weighted average cost of capital is below this threshold.
16
The operating profit margin from the noncore business activities has declined from 33.1% in 1995 to 23.7% in 2000
and 10.8% in 2001.
14
30
Appendix 5
Table A5.3: Recalculation of Financial Internal Rate of Return for
Berth and Buoy Operations at the Nha Rong and Khanh Hoi Project Terminals
(D million, 2003 prices)
Year
Project
Capital
Cost
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
12,487
14,494
100,878
129,311
210,772
109,939
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(30,121)
Incremental
Maintenance
Cost
0
0
0
0
0
2,576
2,812
4,123
5,709
5,939
6,169
6,399
6,630
6,860
7,090
7,320
7,320
7,320
7,320
7,320
7,320
7,320
7,320
7,320
7,320
Incremental
Operating
Cost
Incremental
Operating
Revenue a
0
0
0
0
0
23,963
26,116
44,043
45,893
47,743
49,593
51,443
53,293
55,143
56,993
58,843
58,843
58,843
58,843
58,843
58,843
58,843
58,843
58,843
58,843
Financial Internal Rate of Return =
a
0
0
0
0
0
44,121
46,533
85,724
89,325
92,926
96,526
100,127
103,728
107,329
110,930
114,530
114,530
114,530
114,530
114,530
114,530
114,530
114,530
114,530
114,530
Net
Benefits
(12,487)
(14,494)
(100,878)
(129,311)
(210,772)
(92,357)
17,605
37,559
37,723
39,244
40,764
42,285
43,806
45,327
46,847
48,368
48,368
48,368
48,368
48,368
48,368
48,368
48,368
48,368
78,488
3.7%
Revenues, net of turnover, and income tax from port services such as stevedoring, warehousing,
delivering, wharfage, tugboat services, buoy, and mooring and unmooring.
Source: Operations Evaluation Mission.
Appendix 5
E.
31
Economic Analysis
14.
The Project aimed to reduce international and local shipping costs by rehabilitating the
wharf and cargo-handling areas at Nha Rong and Khanh Hoi project terminals, and by providing
tugboats and modern equipment for multipurpose cargo-handling operations.
1.
Estimation of Economic Benefits
15.
The basic quantifiable economic benefit of the Project is saved time for ship service and
handling at berth. Field interviews confirmed that ship waiting time was negligible before the
Project. Saved costs for ship service comprised incremental benefits from generated traffic from
the Project, and non-incremental benefits from without-project port traffic. The net benefit and
cost streams are limited to landside berth operations of the Nha Rong and Khanh Hoi project
terminals.
16.
Savings in ship service time were calculated on the basis of growth forecast for general
bulk cargo and containerized cargo (paras. 7–9). The analysis assumed a progressive growth in
the level of containerization, particularly at the Khanh Hoi terminal. The ratio of container cargo,
with an average unit weight of 12 t per 20-foot equivalent unit, to total cargo handled, is
expected to increase from 15.7% and 22.3% in 2000 and 2002 to about 34.4% and 52.4% by
2005 and 2010, respectively.
17.
The annual ship service times for normal and generated cargo traffic (berth and buoy) in
Nha Rong and Khanh Hoi project terminals were quantified using the difference between the
ratios of cargo tonnage handled and cargo-handling rate in the without- and with-project
scenarios. Assumptions of cargo-handling rates are based on estimated average cargohandling rates for SP in the without- and with-project cases (Table A5.4). Total ship turnover
time includes incremental ship waiting time due to increasing landside berth occupancy in the
with-project case.17 Conventional port planning techniques, based on queuing theory, suggest
that, for a port of the size and nature of SP, ship waiting will start to rise sharply at levels of
berth occupancy above 70%. Based on the 15-berth capacity of Nha Rong and Khanh Hoi
project terminals, ship waiting time is assumed at 3%, 5%, 8%, and 16% of calculated ship
service time based on increasing berth occupancy rates of 70%, 75%, 80%, and 85%,
respectively.
Table A5.4: Cargo-Handling Rates at the Nha Rong and Khanh Hoi Project Terminals
(‘000 metric ton per berth day)
Item
General Cargoa
Without-Project Case
With-Project Case
Containerized Cargo a
Without-Project Case
With-Project Case
1995
1998
2000
2002
2005
2010
1.47
1.47
1.21
1.21
1.09
1.43
0.99
1.49
0.99
1.12
0.99
1.12
0.71
0.71
1.76
1.76
1.15
1.77
1.15
2.35
1.15
2.92
1.15
3.88
a
In the absence of disaggregated data, cargo-handling rate is based on port average.
Source: Operations Evaluation Mission.
17
A reason to increase landside berth occupancy is the ships’ preference for landside berth facilities over in-river
buoy berths; container cargo should be handled at landside berths. Subsequently, ship waiting time is seen to
increase with higher landside berth utilization, because both project terminals continue to operate as break-bulk
terminals. Some Khanh Hoi berths can accommodate containers, even though they are not dedicated container
terminals.
32
Appendix 5
18.
At OEM, the reestimated daily operating cost of vessels unloading and loading along
Nha Rong and Khanh Hoi project terminals was $7,000. This compares with $5,000 at appraisal
and $6,700 at project completion. Annual saved cost for ship service (berth and buoy) for
generated traffic was calculated in accordance with conventional practice, as half of daily
operating costs.
19.
Economic benefits for the landside berth operations were then derived by multiplying the
quantified saved ship service cost (berth and buoy) by the ratio of cargo handled at berth to total
cargo handled, i.e., 72.9% in 2000, 75.5% in 2001, 69.5% in 2002, and about 72% in 2003 and
beyond. A standard conversion factor of 0.90 was used to convert the nontraded component of
project benefits (i.e., domestic shipping) into economic benefits. The ratio of domestic cargo to
total cargo handled was 22% in 2000, 35% in 2002, and 30% in 2004 and beyond.
2.
Estimation of Economic Costs
20.
The economic costs comprised project investment costs, and operation and
maintenance costs. The capital costs were derived from actual construction and nontraded
components of the financial costs (i.e., 31% of capital costs, 81% of operating costs, and repair
and maintenance costs) converted to economic costs and benefits using a standard conversion
factor of 0.90. Economic costs from the landside or berth operations of the two project terminals
were calculated by multiplying incremental operating cost by the ratio of cargo handled at berth
to total cargo handled.
3.
Economic Internal Rate of Return
21.
The recalculated EIRR for the landside berth operations of the Nha Rong and Khanh Hoi
project terminals is 12.6%. Annual savings in ship service time for containerized cargo is
projected to increase from D46 billion in 2002 to D119 billion in 2010 and beyond. On the other
hand, annual ship service time saved for general cargo will progressively decline from D122.3
billion in 2002 to zero in 2010 with the shift toward more containerized cargo. In 2010 and
beyond, berth occupancy and, hence, ship waiting time for general cargo vessels will have
reached the same level as in the without-project scenario.
22.
The detailed calculation is presented in Table A5.5. The reestimated EIRR is not
comparable with the PCR estimates because economic benefits at the PCR included cargo
handled by Tan Thuan 1, and underestimated incremental operating costs. In summary, the
EIRR depends on Nha Rong and Khanh Hoi project terminals meeting targets for cargo traffic
and level of containerization, and undertaking prudent measures for cost management, and the
ability of Ho Chi Minh City to address traffic congestion in the port area, which will help increase
cargo volume.
Table A5.5: Recalculation of Economic Internal Rate of Return for
Berth Operations at the Nha Rong and Khanh Hoi Project Terminals
(D million, 2003 prices)
Year
12,100
14,044
97,751
125,302
204,238
106,531
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(29,187)
Incremental
Maintenance
Costs
0
0
0
0
0
2,318
2,531
3,710
5,138
5,345
5,552
5,759
5,967
6,174
6,381
6,588
6,588
6,588
6,588
6,588
6,588
6,588
6,588
6,588
6,588
Incremental
Operating
Costs
0
0
0
0
0
16,054
18,120
28,130
30,366
31,590
32,814
34,039
35,263
36,487
37,711
38,935
38,935
38,935
38,935
38,935
38,935
38,935
38,935
38,935
38,935
Savings in Ship Service Time
General Cargoa
Containerized Cargo
Normal
Generated
Generated
Normal
0
0
0
0
0
66,280
55,524
95,836
71,215
47,652
21,552
19,008
16,464
13,920
3,745
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9,788
8,426
26,481
17,502
10,255
3,980
2,929
2,034
1,295
234
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
17,334
35,612
36,045
37,988
40,093
41,843
43,378
44,736
45,946
46,366
46,745
46,745
46,745
46,745
46,745
46,745
46,745
46,745
46,745
46,745
0
0
0
0
0
2,560
5,404
9,960
16,523
23,799
31,476
39,512
47,846
56,429
64,301
72,242
72,242
72,242
72,242
72,242
72,242
72,242
72,242
72,242
72,242
Economic Internal Rate of Return =
a
Total
Net
Benefits
0
0
0
0
0
95,962
104,967
168,321
143,227
121,799
98,850
104,827
111,081
117,591
114,646
118,987
118,987
118,987
118,987
118,987
118,987
118,987
118,987
118,987
118,987
(12,100)
(14,044)
(97,751)
(125,302)
(204,238)
(28,941)
84,316
136,481
107,723
84,863
60,483
65,029
69,852
74,930
70,554
73,464
73,464
73,464
73,464
73,464
73,464
73,464
73,464
73,464
102,650
12.6%
Appendix 5
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Project
Capital
Cost
From 2010 and beyond, berth occupancy and thus, shipping time for general cargo vessels reach the same level as they would in the without-Project capacity.
33
Source: Operations Evaluation Mission.
34
Appendix 5
F.
Sensitivity Analysis
23.
Sensitivity analysis was carried out on the FIRR and EIRR with respect to changes in the
assumptions on berth utilization rate and cargo tonnage, average daily shipping costs, and level
of containerization (Table A5.6).
Table A5.6: Results of Sensitivity Analysis
Item
FIRR
(%)
Base Case
O&M Costs, 10% Increase
Operating Revenues, 10% Decrease
Cargo Traffic: Average Berth Utilization
Rate of 75%
Base Case
Incremental O&M Costs, 10% Increase
Incremental Benefits, 10% Decrease
Average Daily Shipping Cost, 10%
Decrease
Level of Containerization: Average 30%
of Cargo Handled from 2003–2019
Cargo Traffic: Average Berth Utilization
Rate of 75%
EIRR
(%)
NPVb
(D/mo.)
NPV1
(D/mo.)
Vb
(D/mo.)
V1
(D/mo.)
SV
(%)
(191,557)
(191,557)
(191,557)
(191,557)
(208,876)
(221,537)
(229,489)
219,178
377,831
377,831
236,497
347,851
288,011
87.4
(50.7)
(120.1)
12.6
12.1
11.0
10.3
13,532
13,532
13,532
13,532
1,615
(20,416)
(36,824)
150,675
503,560
503,560
162,591
469,612
453,204
(8.9)
2.7
2.7
9.3
13,532
(48,393)
503,560
441,804
2.7
13.9
13,532
45,907
503,560
500,234
(0.3)
3.7
2.5
1.6
0.4
EIRR = economic internal rate of return, FIRR = financial internal rate of return, NPV1 = net present value in the
sensitivity test, NPVb = net present value in the base case, O&M = operation and maintenance, SV = switching value,
V1 = value of the variable in the sensitivity test, Vb = value of the variable in the base case.
Source: Operations Evaluation Mission.
24.
The analysis shows that FIRR will decrease to 2.5% if operation and maintenance
expenses are 10% higher than base case estimates. Similarly, the recalculated FIRR drops to
1.6% with operating revenues10% lower than the base case. FIRR breaks even at 0.4% with an
average berth utilization rate of 75% and 7 million t of cargo handled. The sensitivity analysis
shows that net financial revenues from existing cargo traffic cannot generate adequate returns
on investment costs.
25.
A 10% reduction in incremental project benefits will reduce the base case EIRR from
12.6% to 11%. Similarly, if average daily shipping costs were 10% lower than the base case
estimate of $7,000 per day, recalculated EIRR is about 2% lower, at 10.3%. On the other hand,
a 10% increase in operation and maintenance expense has minimal impact, with EIRR close to
the base case estimate of about 12.6%. The analyses also point out additional economic
benefits from increased containerization in the Nha Rong and Khanh Hoi project terminals. The
EIRR is only 9.3% if the project terminals achieve only an average ratio of 30% for container
cargo to total cargo handled. The sensitivity analyses also point out the impact of rising ship
waiting time associated with increasing berth occupancy rates. At an average berth occupancy
rate of 75%, the recalculated EIRR is higher, at 13.9%.
G.
Distribution of Economic Benefits
26.
Direct benefits to the domestic economy consist of increased port productivity through
the elimination of capacity bottlenecks. Primary beneficiaries are the Government and SP,
Appendix 5
35
through additional port fees collected; and shipping companies, through saved time for ship
service and cargo-handling, in both existing and generated traffic. Indirect project beneficiaries
are residents and industries in Ho Chi Minh City, which is expected to meet its goal of
10% growth in gross domestic product in 2002. Of the city’s 26 industrial subsectors,
25 reported production increases. Growth was strongest for the foreign-invested industrial
production sector, followed by the private and state sectors.
27.
The economic analysis, as is conventional in port studies, reflects benefits from
assumed savings in ship service time for normal and generated traffic. Based on a 1-month
sample of cargo ship traffic, half of the cargo loaded and unloaded is from Viet Nam flag or
locally-owned ships. Because about half of the ships and shipping are foreign owned, there is a
chance that many of the benefits will accrue to them, rather than to Vietnamese shippers. On
the other hand, benefits accruing to foreign ship owners may be partly passed on to the
Vietnamese economy if the freight rates at SP fall in response to increased port efficiency.
Because of data constraints, the OEM did not attempt to quantify the extent to which benefits
accrue to the Vietnamese economy. Similarly, ADB did not attempt to determine the extent to
which benefits accrue to Viet Nam by quantifying ownership of vessels using SP at the appraisal
or PCR stages.
28.
The financial and economic analysis shows that the Project is economically viable, but
marginal. The adequate economic returns relative to the fragile FIRR indicate some leeway for
upward adjustments in port fees to capture more benefits, especially foreign benefits, if
competition allows it. Also, sensitivity analysis shows that the FIRR is not very robust; the EIRR
would range from 9% to 14%.