Document o( The World Bank FOR OFFICIAL USE ONLY Report No. 6339 PROJECT PERFORMANCE AUDTT REPORT YUGOSLAVIA PORT OF BAR PROJECT (LOAN 1060-YU) AND YUGOSLAVIA MONTENEGRO EARTHQUAKE REHABILITATION PROJECT - PORT OF BAR (LOAN 1768-YU) July 9, 1986 ()perations Fviluation De(partment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization THE WORLD BANK FOR OICIAL USE ONLY Washington, D.C. 20433 U.S.A. O0Oice n C*ctWrGeweal. Operaonv% zvalualto July 9, 1986 MORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report: Yugoslavia Port of Bar Project (Loan 1060-YU) and Yugoslavia Montenegro Ear nquake Rehabilitation Project - Port of Bar (Loan 1768-YU) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Yugoslavia Port of Bar Project (Loan 1060-YU) and Yugoslavia Montenegro Earthquake Rehabilitation Project - Port of Bar (Loan 1763-Y)" prepared by the Operations Evaluation De2artment. 4?4 This document has a restncted distribution and may be used by recipients onv in tM performance of their olical duties. Its contents may not otherw.se be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT YUGOSLAVIA PORT OF BAR PROJECT (LOAN 1060-YU) AND YUGOSLAVIA MONTENEGRO EARTHQUAKE REHABILITATION PROJECT - PORT OF BAR (LOAN 1768-YU) TABLE OF CONTENTS Page No. Preface .. . . . . . . . . . . . . . .. . . . . . . . . . . . .i Basic Data Sheet ...... . . . .. . .. ii Ev alua t ion Summa ry ............... .............. .............. v PROJECT PERFORMANCE AUDIT MEMORANDUM I. PROJECT OBJECTIVES AND COMPONENTS ..................... 1 II. IMPLEMENTATION AND COST ............................... 3 III. TRAFFIC ............................................ 4 IV. PORT CAPACITY AND INVESTMENTS ......................... 5 V. ECONOMICS ....................................... 7 VI. SECTOR AND PORT MANAGEMENT ........................... 9 VII. SUSTAINABILITY ............ . ..... ................. 11 VIII. BANK ROLE AND LESSONS ............................... 12 ANNEX 1 - Comments from the Borrower ............................ 14 PROJECT COMPLETION REPORT I. Introduction .......................................... 17 II. Project Identification Preparation and Appraisal ...... 19 III. Project Implementation and Cost ....................... 21 IV. Traffic and Operations ................................ 29 V. Financial Evaluation ................................ 31 VI. Institutional Performance ............................. 36 VII. Economic Re-evaluation ........................... * * 37 VIII. The Role of the Bank .................................. 41 IX. Conclusions ............... ................. 42 TABLES 1. Actual and Expected Project Costs - Loan 1060-YU ...... 43 2. Construction Timetable - Loan 1060-YU ................. 46 3. Mechanical Handling Equipment, Proposed and Procured and Countries of Origin - Loan 1060-YU ..... 47 4. Acutal and Estimated Project Costs - Loan 1768-YU ..... 48 5. Construction Timetable - Loan 1768-YU ................. 51 6. Mechanical Handling Equipment, Proposed and Procured and Countries of Origin of Suppliers - Loan 1768-YU ................. ........................ 52 This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization. TABLE OF CONTENTS (cont'd) TABLES (cont'd) Page No. 7. Estimated and Ac .al Allocation of Loan Funds - Loans 1060-YU and 1768-YU......................**** 53 8. Schedule of disbursements - Loans 1060-YU and 1768-YU ......................................... 54 9, PBWO - Balance Sheet ................. 55 10. PBWO - Balance Sheet ................................. 56 11. Financing Plan ........................ ..... 57 12. Comparison of Actual Traffic and Appraisal Forecasts 1972-1984 . 0... ......................* . 58 13. Cargo Handled in Yugoslav Ports 1974-1984 ............ 59 14. Acutal and forecast Traffic 1974-1995 ................ 60 15, Estimates of Normal and Diverted Traffic Flows ....... 61 16. Costs and BenefitF ................................. 62 17. Organization Chart .................................. 63 MAPS: IBRD 14630 - Yugoslavia - Port of Bar and Earthquake Rehabilitation (Port) Projects IBRD 13136R - Yugoslavia - Transportation Infrastructure PROJECT PERFORMANCE AUDIT REPORT YUGOSLAVIA PORT OF BAR PROJECT (LOAN 1060-YU) AND YUGOSLAVIA MONTENEGRO EARTHQUAKE REHABILITATION PROJECT - PORT OF BAR (LOAN 1768-YU) PREFACE This Project Performance Audit Report (PPAR) represents a perfor- mance audit of the Yugoslavia Port of Bar Project and Montenegro Earthquake Rehabilitation Project - Port of Bar. The Port of Bar Project, approved on November 26, 1974, was sup- ported by Bank Loan 1060-YU for US$44 million, of which about US$42.4 mil- lion was disbursed and a0out US$1.6 million was cancelled. The Port of Bar Earthquake Rehabilitation Project, Loan 1768-YU, approved on November 30, 1979, was for US$50 million, of which US$30.1 million was disbursed and US$19.9 million was cancelled. The PPAR consists of: (i) an Evaluation Summary and a Project Performance Audit Memorandum (PPAM) for the two projects, written by the Operations Evaluation Department (OED); and (ii) a combined Project Comple- tion Report (PCR) for both projects, dated June 26, 1985, prepared by staff of the Europe, Middle East and North Africa Regional Office (EMENA). Both projects were combined into one PCR and PPAM because they were largely identical - after an earthquake, the second project funded rehabilitation of port facilities, which had been built under the first project. Last disbursement under the first loan (1060-YU) was made on May 6, 1982, and under the second loen (1768-YU), on February 11, 1985. The PCR was produced in a timely manner. The quality of the PCR is good. The first draft of the PCR was competently prepared by Yugoslav consultants to the port authorities. OED has reviewed the PCR against the President's Reports, the Staff Appraisal Report (SAR) for Loan 1060-YU (no separate SAR was produced for Loan 1768-YU), the legal documents, other project files and documents and the transcripts of the Executive Directors' meetings which considered the projects. Further, OED discussed the project with Bank operational staff and, during a mission to Yugoslavia in October 1985, with the Port of Bar Working Organization (borrower and executing agency), government offi- cials (of the Republic of Montenegro and at the federal level) and the consultants to the port. Following standard procedures, OED sent copies of the draft to the governments and the borrower for comments. Comments received are reproduced as Annex 1 to the report. PROJECT PERFORMANCE AUDIT BASIC DATA SHEET YUGOSLAVIA PORT OF BAR PROJECT (LOAN 1060-YU) AND YUGOSLAVIA MONTENEGRO EARTHQUAKE REHABILITATION PROJECT - PORT OF BAR (LOAN 1768-YU) KEY PROJECT DATA Loan 1060-YU Loan 1768-YU Appraisal Actual/ Appraisal Actual/ Estimate Forecast Estimate Forecast Total Project Cost (US$ million) 79.0 73.7 124.8 61.3 Project Cost Underrun (%) 5.5 51 Loan Amount (USS million) 44.0 44.0 50.0 50.0 Loan Disbursed (US$ million) 44.0 42.4 50.0 30.1 Date Physical Components Completed 12/31/77 12/31/81 6/30/82 12/31/84 Proporzion of Physical Components Com- pleted by Original Completion Date (Z) 100 30 100 15 Time Overrun (2) 150 67 Economic Rate of Return (%) 13 /a 10 /a NA /b NA /b Financial Rate of Return (2) /c 8 16 CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (US$ million) Loan 1060-YU Bank FYs: 74/75 75/76 76/77 77/78 78/79 79/80 80/81 81/82 (i) Appraisal 5.6 28.0 44.0 44.0 44.0 44.0 44.0 44.0 (ii) Actual - 0.5 12.3 27.5 33.7 38,7 39.6 42.4 (iii) Actual as % of Appraisal 0 2 28 63 77 88 90 96 Loan 1768-YU Bank FYa: 79/80 80/81 81/82 82/83 83/84 84/85 (i) Appraisal 12.0 32.0 48.0 50.0 50.0 50.0 (ii) Actual 0.3 1.1 7.1 18.1 28.2 30.1 (iii) Actual as % of Appraisal 3 3 15 36 56 60 /a Calculations had methodological errors. 7- Not estimated separately for Loan 1768-YU. 7 Return on net. fixed assets for 1983, the last year for which actual results are available. - iii - OTHER PROJECT DATA Loan 1060-YU Original Date Actual Date First Mention in Files 10/08/71 Government's Application 05/22/72 Negotiations (completed) 09/12/74 Board Approval 11/26/74 Loan Agreement 12/11/74 Loan Effectiveness 05/12/75 06/13/75 Loan Closing 06/30/78 12/31/81 Follow-up Project Montenegro Earthquake Rehabilitaticn Project - Port of Bar (Loan 1768-YU) Loan 1768-YU First Mention in Files 08/18/79 Government's Application 08/16/79 Negotiations (completed) 10/26/79 Board Approval 11/27/79 Loan Agreement 11/30/79 Loan Effectiveness 02/28/80 04/29/80 Loan Closing 12/03/82 06/30/84 Follow-up Project None Borrower and Executing Agency Port of Bar Working Organization Fiscal Year of Borrower January 1 - December 31 STAFF INPUT (Staff-Weeks) Loan 1060-YU FYs: 72/73 73/74 74/75 75/76 76/77 77/78 78/79 79/80 80/81 Identification/ Preparation ?.1 17.9 7.4 Appraisal 0.3 31.2 26.4 Supervision 0.1 0.2 15.4 27.6 27.9 26.7 13.7 7.6 2.1 18.3 38.8 41.8 27.6 27.9 26.7 13.7 7.6 FYs: 81/82 82/83 83/84 84/85 85/86 Total Identification/ Preparation 27.4 Appraisal 57.9 Supervision 13.3 17.1 6.7 0.6 9.4 166.4 13.3 17.1 6.7 0.6 9.4 251.7 - iv - STAFF INPUT (cont'd) (Staff-Weeks) Loan 1768-YU FYs: 80/81 81/82 82/83 83/84 84/85 85/86 Total Identification/ Preparation 0.8 0.8 Appraisal 18.1 18.1 Supervision 5.1 11.5 15.3 22.0 6.3 15 2 75.4 24.0 11.5 15.3 22.0 6.3 15.2 94.3 CURRENCY EXCHANGE RATE Name of Currency (Abbreviation) Yugoslav Dinar (YD) Calendar Year Average 1974 (last quarter) US$I= YD 17 1975 17- 18 1976 18 1977 18 1978 18- 19 1979 18- 19 1980 20- 29 .981 32- 42 1982 46- 63 1983 77-126 1984 126-191 1985 (first quarter) 250 - v - PROJECT PERFORMANCE AUDIT REPORT YUGOSLAVIA PORT OF BAR PROJECT (LOAN 1060-YU) AND YUGOSLAVIA MONTENEGRO EARTHQUAKE REHABILITATION PROJECT - PORT OF BAR (LOAN 1768-YU) EVALUATION SUMMARY Introduction Investments in the Port of Bar under Loth projects were part of the Government's program of building a 4irect railway link between Belgrade, the federal capital if Yugoslavia, and the country's southernmost part of the Adriatic coast. Investments in the 470km long railway, the principal compo- nent of the new link, had been started in the early fifties. Final comple- tion of the railway, supported by Bank Loan 531-Yu, approved in 1968, was achieved by end-1978 (PPAM, para. 1). Objectives Investments in the new transport link were aimed at improving one of Yugoslavia's least developed regions, comprising Mbntenegro and part of Serbia. In the absence of the transport improvements, the region's develop- ment prospects were considered as poor. The first investments in the new Port of Bar were made in the second half of the fifties, resulting in the completion of a small port. The Port of Bar Project, financed under Loan 1060-YU, was to increase that port's capacity to bring it in line with the capacity Gf the tilway and the expected transport demand. In 1979, a disas- trous earthquake hit southern Yugoslavia, destroying major parts of the port which had been or were being constructed with funding under Loan 1060-YU. This led to the Montenegro Rehabilitation Project - Port of Bar, financed under Loan 1768-YU (PPAM, paras. 1-4). Implementation Experience The Port of Bar Project was implemented, after some modifications, Trith a time overrun of about 150%, caused by start-up delays in implementa- tion and the aftereffects of the earthquake. Quality of construction and procurement was good. The earthquake rehabilitation project exceeded the original schedule by almost 70%. Both projects had substantial overruns of nominal costs measured in Yugoslav Dinar, and, due to successive devaluations of the Yugoslav currency, underruns of nominal costs measured in US$. A small portion of the first loan and a large portion of the second loan were cancelled (PPAM, paras. 6-9). Results The projects achieved their objectives of providing additional or rebuilding destroyed capacity in the port. The new port, however, was dimen- sioned far in excess of current requirements, as traffic developed much - vi - slower than projected. The rehabilitation project missed an opportunity to redimension the port in light of clear signs of a weak growth in demand. Under current scenarios, the port capacity would be fully utilized by about 1995 (PPAM, para. 10-15).1/ The appraisal projected the economic rate of rettrn (ERR) for the Poct of Bar Project at 13%, ard the Project Completion Report (PCR) recalcu- lated the return at 10%. Neither calculation was satisfactorily performed, suggesting that these ERRs are only indicative of the projects'actual econo- mic performance. The audit for the Bank project under which sections of the Belgrade-Bar railway had been financed (Report No. 3638, dated October 9, 1981), had already raised questions about that project's economic analysis. Financially, the port has done very well so far despite excess capacity and lower than projected traffic (PPAM, paras. 10-12, 16-21 and 25). The projects' primary focus was on generation or rehab.litation of physical assets. An attempt was also made to improve coordination of the ports sector at the federal level, but it produced little results. Attempted improvements in the financial management of the port also had only limited success (PPAM, paras. 22-25). Sustainability Sustainability and generation of project benefits will strongly depend on future traffic and operational efficiency of the new port. Past traffic performance, only partly explained by the earthquake, was disappoint- ing. A concerted effort by the port and the two railways (operating the new railway link) will be needed to redress the situation and protect the projects' viability. The current productivity of the new port is said to be satisfactory (PPAM, paras. 26-28). Findings and Lessons The two Bank loans were important instruments in the financing of works under which the Belgrade-Bar transport link would be completed. Both loans were made at a time of tight government budgets, affected in part by the enormous costs of the Belgrade-Bar railway. Financing of the port was a logical consequence of the Bank's earlier support to the railway. The projects' limited objectives, primarily generation and rehabil- itation of physical port assets, may have been appropriate given the magni- tude of the task. Even with these limitations in project design, and only due in part to the earthquake, the Port of Bar Project suffered a consider- able time overrun. With the physical infrastructure in place, attention can now be given to integrating transport more closely into the regional develop- ment framework under which the Belgrade-Bar tratport link was conceived and 1/ Bank staff feel that the oppo:tunities to redimension the port were limited. - vii - making progress on institutional development of the port. There are indica- tions (lack of traffic promotion, noncompetitive port tariff setting, high financial rates of return on port investments) that advancements in these areas are needed (PPAM, paras. 23-27). The Bank was effective in helping organize the physical implementa- tion of the project. It was less effective in defining the parameters under which the port was to be developed - future traffic demand, port capacity and the economics of the port. Simple adherence to basic standards of project work can improve the Bank's effectiveness in these areas under similar future operations (PPAM, paras.10-21). * 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM YUGOSLAVIA PORT OF BAR PROJECT (LOAN 1060-1.11) AND YUGOSLAVIA MONTENEGRO EARTHQUAKE REHABILITATION PROJECT - PORT OF BAR (LOAN 1768-YU) I. PROJECT OBJECTIVES AND COMPONENTS 1. Investments in the Port of Bar were part of the Government's program of improving one of Yugoslavia's least developed regions, comprising Hontenegro and the southwest of Serbia, through construction of a transport route linking Belgrade, the Federal capital, with Yugoslavia's southern end of the Adriatic coast. Pursued since the 19th century, the idea of such a link took on concrete form in the early fifties, when construction of a railway line was started at both ends of the line, Belgrade and Bar. Faced with extremely difficult physical conditions in the mountain ranges and skyrocketing costs, works on the final 270 km of che total length of some 670 km, with financing by the Bankl/ was started in 1966. While scheduled f.r end-1972, completion of the entire line took until end-1978, primarily because of the technical problems encountered.2/ The Port of Bar was the other component of the transport route which neeJed construction to bring its capacity in line with the expected growth in regional transport demand. 2. Paralleling early progress on the Belgrade-Bar railway line, the first step toward construction of the Port of Bar was made in 1954 when a company charged with port implementation was created. By 1967, the port started small scale operations, adequate for the limited traffic of the imme- diate hinterland, and by end 1970, Phase I of its development was completed. Under Phase II of the port program, originally scheduled for 1971-1975 but subsequently deferred to 1974-1980,3/ a further increase of port capacity was envisaged. In contrast to the investments in the railway line, which were lumpy, the port investments could be made in increments. 3. The Port of Bar Project (Loan 1060-YU), approved on December 11, 1974, financed the 1974-1977 slice of the Phase II port investments. The investments aimed at increasing the end-Phase I port capacity about fourfold from about 1.2 million tons per year to about 5.0 million tons, adequate for the projected 1980 traffic. The five millton tons were made up of 3.0 1/ Third Yugoslav Railway Project, Loan 531-YU, approved 03/21/68. 2/ Refer to Project Performance Audit Report, Yugoslavia - Third Railway Project (Loan 531-YU); Report No. 3638, dated October 9, 1981. 3/ Office Memorandum dated July 31, 1972, para. 5.01. - 2 - million tons of dry bulk cargo, 1.5 million tons of general cargo and 0.5 million tons of liquid cargo.4/ 4. The project's only formal objective was the shortening of overland transport for goods imported to or exported from Eastern Yugoslavia5/ con- veying the impression that the project rationale was more limite- than perceived by Yugoslav planners who thought in terms of regional development. The appraisal's restriction may have been imposed by the difficulties of quantifying "generated" traffic6/ and associated benefits, if not by the assumption that transport cost savings were indeed the overwhelming category of benefits to be expected. The components financed under the project, in decreasing magnitude of costs, were civil works, equipment, land, workers accomodation and technical assistance. About 58% of the costs, including local costs, were expected to be financed by the Bank loan, and the remain- der, about 42%, by various government, public sector and Yugoslav banking sources. 5. In April 1979, after substantial portions of the Port of Bar Project had been implemented, a disastrous earthquake struck Yugoslavia's southern Adriatic coast, causing major damage to port installations (and the Belgrade-Bar railway line) and rendering the port temporarily inoperable. This led to the Montenegro Earthquake Rehabilitation Project - Port of Bar (Loan 1768-YU), approved on November 27, 1979. The project's objective was to rehabilitate and restore the port's capacity7/ to the limited extent that "current and short-term projected traffic" could be accommodated.8/ Thus, the impression was created that there would be a reduction in port 4/ President's Report (PR), Loan 1060-YU, para. 41. 5/ SAR, Loan 1060-YU, para. 5.03. 6/ Generated traffic is defined as traffic (on any national transport route) which would exist only with the project. 7/ President's Report (PR), Loan 1768-Yu, para. 53. To reduce processing time, no separate appraisal report was written. 8/ PR, Loan 1768-Yu, para. 54. This meant, that with the projcct, only 14 ship berths (one of them greatly extended to accomodate 65,000 bulk carriers) were planned to be availRble, against 18 prior to the earthquake. - 3 - capacity.9/ Restoration of berths, breakwaters and buildings, repair of services, working areas and equipment, reconstruction of accommodations for workers and stabilization of a hill adjacent to the port were the major project items. The Bank loan was expected to finance 40% of total project cost (about 80% of total foreign costs), and a national fund for earthquake rehabilitation, the remaining costs. II. IMPLEMENTATION AND COSTS 6. Implementation of all components of the Port of Bar Project was at appraisal expected to be completed by end-1977, within less than three and one-half years, and the Bank loan, US$ 44 million towards estimated otal costs of US$ 78 million, was expected to be fully disbursed even earlier, by mid-1977.10/ Most project items slipped, some by months and others by years, and when the earthquake struck (April 1979), some works were not yet imple- mented. Final completion, stretched out by the earthquake, was achieved by end-1981. The project delays had little, if any, bearing on traffic flows as the port apparently had always sufficient capacity to accomodate traffic (primarily) carried by rail.11/ 7. There were several project modifications, mostly reductions in scope. Loan disbursement, very optimistically assessed at appraisal, was extended to mid-1982. A small unused portion of the loan, US$ 1.6 million out of US$ 44.0 million, was cancsl1ed.12/ According to port authorities and Bank staff, the standards of civil woks construction were good, and equip- ment procurement was satisfactory. The major delays in civil works were attributed to delays in design, specification of works and letting of contracts.13, 8. Aided by apparent net reductions in project scope, efficient pro- curement procedures and possibly good cost estimates at appraisal, increases in total project costs were kept in check. Actual total Yugoslav Dinar (YD) costs, 1,47 billion in current terms, were 25% above appraisal estimates of 1.18 billion. The actual US Dollar costs, 73.7 million, aided by the devalu- ation of the Yugoslav Dinar during implementation, were 5% below the estimate of 78.0 million. In real terms, the actual costs obviously performed even 9/ This impression was reinforced by revised traffic forecasts (PPAM, para. 11). 10/ SAR, Loan 1060-YU, para. 5.17, Annex 14 and Annex 15. 11/ Road transport is relatively insignificant for the port. A paved road, however, links Belgrade to Bar. 12/ PCR, Table 8. 13/ SAR, paras. 3.03-3.05. better, though the PCR provides no constant cost calculations. Actual project financing was by and large as expected at appraisal. 9. The earthquake rehabilitation project did not explicitly specify an implementation schedule. However, the loan disbursement schedule indicates that implementation was expected to be completed by end-1982.14/ For various reasons, most linked with the aftereffects of the earthquake, actual imple- mentation took until end-1984, as explained in the PCR.15/ Loan disburse- ment was extended until early 1985, when the account i closed. US$ 19.9 million, about 40% of the original loan amount of US$ 50.0 million, was cancelled. This was apparently done because of the strong appreciations of the U.S. Dollar, which lowered the foreign currency costs, though the PCR claims that the loan also financed local costs.16/ Port rehabilitation work was completed at about the same time as rehabilftation works on the railway line. Tne port project also underwent modifications in scope with effects on total project costs uneAplained in the PCR. Actual total Yugoslav Dinar (YD) coats, 4.15 billion, were about 78% above the appraisal costs of YD 2.33 bil- lion, all expressed in current terms; and the actual total US Dollar costs, 61.3 million, were about 50% below the estimated costs of US$124.8 million. The PCR provides little analysis about the factors bearing on the differences between appraisal and actual costs. 17/ The Bank loan ended up with the financing of almost 50% of total actual costs, against 40% projected. The balance was primarily carried by the earthquake rehabilitation fund, with the port authorities also making a small contribution. III. TRAFFIC 10. The appraisal of the Port of Bar Project made strong efforts to produce good estimates of future traffic, based on extensive surveys of port users undertaken by port authority consultants. The forecasts extended up to 1980, a short period for long-term investments. Apparently, the length of the period was based on the appraisal's assumption that port capacity 14/ PR, Loan 1768-YU, page ii. 15/ PCR, para. 3.10. 16/ PCR, para. 3.18 - 3.20. To what extent local costs actually were financed by the Bank remains unclear as the PCR, para. 3.18, Table (ii), shows total foreign project costs to be the same as actual disbursements under the loan. 17/ The lack of such analysis is attributable in part, according to Bank staff, to "the urgency with which the project was treated after the earthquake", which influenced the accuracy of damage and cost assessment. - 5 - generated under the project would be fully utilized by 1980.18/ Projected traffic was grouped into existing, diverted and generated tralTic, standard traffic categories in transport projects, which were subsequently used for the project's economic analysis. 11. Success in traffic forecasting was rather limited, both for volumes of total traffic and major commodity groups (general cargo, bulk cargo and liquid cargo), which all grew much slower than predicted. The earthquake had obviously a disruptive effect on traffic development, but does not fully explain the traffic shortfall. Other factors noted by Bank staff were the lack of port promotion and the country's economic slowdown, which combined with the efforts of the established Adriatic ports to keep their market shares. The non-competitive setting of tariffs of the Port of Bar may also have been of influence (PPAM, para. 24). No att"mpt was made under the earthquake rehabilitation project to systematically reestimate traffic, despite clear signs that it was weakening. The President's Report, however, acknowledged that traffic had not yet lived up to expectations and predicted that two of the three major traffic groups (general cargo and bulk cargo) would achieve volumes in 1985 far below the volumes projected under the 1974 loan; for the third group (liquid cargo), the rehabilitation project made no revised estimates.t9/ 12. Calculated against the projections made in 1974 (Loan 1060-YU), the shortfall in actual 1980 traffic was about 65%, and the shortfall in 1984 traffic was about 50%. Traffic projected in 1979 (Loan 1768-YU) for 1985 came very close to actual developments. Recent forecasts by the port authorities and their consultants expect total annual traffic, now about 2.5 million tons, to reach about 5.0 million tons in 1990, a figure previously (Loan 1060-YU) predicted for 1980, and about 5.5 million tons in 1995 when the assumed port capacity (without any further investments) would be reached.20/ These traffic figures, which do not appear to be fully realistic, imply very high growth rates in the next five years, followed by very low rates in the subsequent five years. IV. PORT CAPACITY AND INVESIMENTS 13. Both project appraisals were short on analytical information about the issue of port capacity to be achieved. No ports engineer participated in the 1974 appraisal, and this may partly explain the lack of such documenta- tion. While insufficient capacity of the old port was a principal rationale 18/ PCR, Table 12. 19/ PR, Loan 1768-YU, paras. 74-76. Bank staff note that the traffic slowdown attributable to the country economic slowdown may not have been fully predictable at the time of appraisal. 20/ PCR, paras. 7.02-7.03 and Tables 12, 14 and 15. - 6 - for undertaking the eort investments, the 1974 project did not demonstrate, how large that capacity was, how and to what exter.t it could be increased without major investments, and in particular, how the project inveszments related to the target capacity. Maximum capacity of the existing port was to be studied by the 1974 appraisal mission, but details of the review were not documented.21/ The cryptic appraisal information about the existing port was not even fully consistent.22/ 14. The rehabilitation project was particularly vague about the capa- city to be achieved. It made the point that only "current and short-term projected traffic" would be accomodated,23/ as noted earlier (PPAM, para.5), creating the impression there would be a smaller port, but also that the port would have "sufficient reserve capacity to absorb a larger [traffic] volume if needed".24/ Whatever port capacity was to result from the rehabilitation project, it was not fine tuned with the traffic forecasts made at appraisal, and it is now believed to be not smaller but greater than the capacity aimed at under the 1974 project. The PCR notes that "an opportunity was missed after the earthquake to reassess the needs of the port in light of the lower than expected traffic developments".25/ 15. Though not analyzed in detail, the capacity of the existing port, in the PCR's view, is in the order of 5.5 million tons per year for the expected traffic mix, all types of cargo counted. This implies that with a present traffic of about 2.5 million tons, leC3 than 50% of the port capacity is currently being utilized. If the recent traffic forecasts should hold true, full capacity utilization would be reached by 1995, almost 15 years after the capacity was built. 21/ Refer to Terms of Reference for Appraisal of the Port of Bar Project, dated November 20, 1973. 22/ The President's Report for the Port of Bar Project (Loan 10130-YU), for example, in para. 41, implies that the capacity of the old port was 1.2 million tons counting all traffic, including 0.5 million tons of liquid cargo. By contrast, the SAR of the same project, in paras. 7 and 11 of Annex 21, gives a capacity for traffic, calculated in the same fashion, of at least 1.7 million tons. 23/ PR, Loan 1768-YU, para. 54. 24/ PR, Loan 1768-YU, para. 76. 25/ PCR, para. 7,12. Bank staff point out that as a result of the revised traffic forecasts, various ongoing or upcoming port investments were scaled down. In the view of the staff, these reductions "represented the practical extent to which the port could be redimensioned after the earthquake". - 7 - V. ECONOMICS 16. Both the SAR and PCR performed quantitative economic analyses of the Port of Bar project, showing seemingly comfortable economic rates of return (ERR) on investments. The true economic picture, however, may have been or may be less rosy, as the calculations had methodological shortcomings which in the aggregate may have produced overestimates of quantified bene- fits. There were other issues bearing on the quality of project economics. A revision of the economic analyses was outside the scope of the audit. Questions about the adequacy of project economics had also surfaced under the audit for the Belgrade-Bar railway (Yugoslavia Third Railway Project, Loan 531-YU),26/ which had considerable difficulties endorsing (or modifying) that PCRrs reevaluation. 17. The SAR for the Port of Bar project addressed the question whether the overall port investments were economically feasible. Though asked routinely, the question was raised at a time when the decision about the Belgrade-Bar transport route had already been made and the rail investments, a multiple of those in the port, had either been completed or were in progress. In this situation, obviously, queries about the overall economic viability of the port were rather rethorical. 18. The Port of Bar Project did not entail economic analyses o' indivi- dual major investment items nor scope and phasing of the project. The lack of disaggregated and in fact any economics was particularly critical under the rehabilitation project, which was appraised against the background of drastically downscaled traffic forecasts. No economic analysis oi any type was performed under that project on the questionable grounds that it aimed at reconstruction of physical assets whose economic viability had been demo'- strated earlier and did not have to be analyzed again. 19. The SAR's economic analysis of the port project was disconnected from that of the railway, even though both transport components were essea- tial parts of one and the same integrated system. Ordinarily, such system components would be analyzed jointly to avoid analytical traps inherent In the allocation of joint investment benefits and costs.27/ Recognizing that port benefits were linked to the existence of the entire Belgrade-Bar trans- port route, comprising rail and port, the SAR for the port project made claims for joint rail and port benefits (savings in transport costs from rerouting traffic). However, these benefits had already been invoked earlier for the justification of the railway and thus led to a special form of double 26/ Report No. 3638, dated October 9, 1981. 27/ A disaggregated analysis would be appropriate for a system part which would not be "essential" for the functioning of the entire system. - 8 - counting of benefits, inflating the benefits and the forecast ERR of the proposed port investments.28/ 20. The SAR estimated the ERR for the port investments (in the aggre- gate) at 13%, based on quantified savings in port operating costs and, already referred to, overland transport costs. The latter category of benefits, based on traffic ineligible for the calculation was overstated, and so was possibly the ERR.29/ The SAR also attempted to quantify benefits from reduction in ship turn around time in the new port, as compared to alternative Yugoslav ports, but had to abandon this idea because of unreli- able data and uncertainties about whether the Yugoslav economy could capture these benefits.30/ 21. To recalculate the ERR, the PCR defined a new category of project benefits--benefits from savings in ship service time, based on a comparison of the new with the old port.31/ The new benefits are similar to the ones which, ten years earlier, the SAR had failed to quantify (savings in ship turnaround time). Calculated on the questionable notion that any incremental time savings translate into tangible economic benefits and that the old port (in the absence of the project) would have permanently remained ineffi- cient32/, the new benefits account for the overwhelming part of the PCR's aggregrate benefits. However, once more, these benefits were overestimated, 28/ The PCR for the port project, apparently with some discomfort, calculated the ex-post ERR also on the basis of disaggregated port and rail investments. The PCR rationalized the approach by referring to "conceptional problems" to undertake an integrated analysis. The audit did not have the data at hand to determine whether the PCR's shortcut produced fully acceptable results. PCR, para. 7.01. 29/ The savings in overland transport costs were calculated from diverted and generated traffic. Conceptually, savings cannot be defined for generat-d traffic, which does not exist in the absence of the project. SAR, Loan 1060-YU, Annex 22, para. 4 (ii). Benefits from generated traffic have to be determined under a different approach. 30/ SAR, Loan 1060-YU, Annex 22, para. 5. 31/ Ship service time is measured as the time the ships are berthed. 32/ An equivalent assumption would have been that efficiency improvements in the old port would have cost as much as improvements in the new port. - 9 - having been derived, to a large extent, from inel gible traffic. 33/ Bank staff contend that a modified analysis based on a proper distinction of categories of traffic could lead to about the same result. On this basis the PCR forecasts an ERR of 102, as compared to the SAR's 13Z.34/ The PCR furthermore shows an increase in the ERR to about 14%, if r gional develop- ment benefits were included, seemingly leaving it undetermined to what extent they should. 35/ VI. SECTOR AND PORT MA!AGEMENT 22. Given the small size of the pre-1974 port and the destruction resulting from the 1979 earthquake, the projects obviously focussed on the provision or rehabilitation of physical assets. The 1974 appraisal, never- theless, referring to the lack of rational evaluation of Adriatic portsand the need to coordinate port development and financing programs, also attempted to provide improvements in the management of the national ports sector. Fur.her, it attempted to upgrade the financial management of the Port of Bar. To set the sector improvements in motion, the Bank proposed the usual vehicle, a study (on port development). Though seemingly a small step, the Yugoslav delegation was not ready to endorse it under this project in the absence of backing by the collective group of Yugoslav ports which enjoy a large measure of autonomy and which would le affected by the study. The Bank finally agreed to defer definite action on the study, though it advised the Government that it would be a prerequisite for financing of another port 33/ The calcultation was based on normal and induced traffic. Conceptually, savings can only be defined for normal traffic. About two-thirds of projected savings in ship service time relate to induced traffic. Benefits from induced cargo, as already noted in footnote 29 above, require a distinct analysis which does not necessarily produce the PCR's benefits for induced traffic. 34/ According to the PCR, para. 7.11, the recalcultated ERR would be negative if the SAR's benefits format was followed. 35/ The regional development benefits were calculated by consultants to the port authorities in charge of the draft PCR. The final version of the PCR makes note of the calculation though without venturing an evaluation. In particular, the final PCR takes no clear position on the question whether and to what extent benefits from induced traffic and developmental bene- fits can be added up. Ordinarily, the aggregation cannot be done. The PCR is aware of the issue of double counting of project benefits, as benefits for induced traffic had already been taken into account in the calculation of the 10% ERR, though it retains one-half of developmental benefits in the calculation which produces the 14% ERR forecast. - 10 - project.36/ A few years later, it was finally undertaken under the auspices of the Port of Bar but, for reasons not fully explained, without addressing the priorities of Yugoslav ports development and the "efficient" distribution of traffic among them--topics, for which the study had been proposed in the first place.37/ In the PCR's view, therefore, the "problem" of port coordi- nation must now be shifted from the ineffective republican to the federal level "to reduce unnecessary investments in the future".38! 23. Though seemingly a routine proposition, the audit feels a certain uneasiness about the recommended coordination and the underlying rationale. "Unnecessary investments", or overcapacity, on Yugoslavia's Adriatic coast may indeed be or become a problem, but it could well be linked to excess capacity created at Bar, miscalculations about prospects and inadequate promotion of Bar,39/ and the obvious reaction of existing ports, in dof4nse of market shares, to the creation or expansion of the new port. Whether a federal coordinating mechanism would have helped is debatable. There is also the issue of setting non-competitive tariffs for the Adriatic ports, referred to below (PPAM, para.24), with consequences for port revenues, profitability and budgets and possibly investment behaviors. Remedies for the various causes of overinvestments could conceivably lie in a port coordination system administered at the central level. But alternative remedies would also be available in a policy of incrf ising the competitiveness and selfreliance of the ports. This approach woul. not necessarily prevent errors in port plan- ning (as neither central "coo iination" would), but bring the consequences of investment decisions quick: 'ack to the place where they are made and so enforce investment discipline. 'here are good examples in other countries where ports develop in a comr .,itive rather than centrally coordinated setting. Further, port development, as part of regional development, has a special dimension in Yugoslavia because of the large autonomy of its consti- tuent parts. Regional port development cannot be easily fitted under the unbrella of a federally coordinated approach. 36/ SAR, Loan 1060-YU, paras. 3.14-3.16, and Agreed Minutes of Negotiations for the Port of Bar Project, dated September 1974. 37/ PCR, para. 3.07. 38/ PCR, para. 3.07. 39/ A recurrent theme in Bank documents is insufficient promotion of the Port of Bar, if not of the Belgrade-Bar railway as well, which are said to potentially serve about 50% of Yugoslavia. - At the Board discussion of Loan 1060-YU, one speaker queried whether the project might produce port "redundance" (excess capacity) on the Adriatic coast. Bank staff replied that this was not the case "at present" nor that there was any likelihood of it in the future. In fact, Bank staff noted that Yugoslavia's two largest ports were extremely congested. They conceded, however, that the Yugoslav republics might "push the development of their own respective ports in their own respective interests." Under these circumstances, obviously, ttie case for federal ports coordination was not very clear. Transcript of Proceedings, dated November 26, 1974. - 11 - 24. Improvements in the port's financial management were to be achieved through upgrading of cost accounting and tariff setting. While plans for improvements were made, implementation was marginal, though "the situation", in the PCR's language, "is not without hope".40/ Progress may have been constrained by the practice of the Yugoslav ports to set uniform tariffs after mutual consultation, though there can be exceptions.41/ The prac- tice, of course, can accomodate inefficient port operations and unproductive investments. As long as it is continued, there may be little use for refined costing data in a particular port. 25. The Port of Bar's method of setting tariffs, the lack of traffic promotion and the excess of port capacity did not stay in the way of very respectable financial rates of return (on net fixed assets), which after modest beginnings in 1977-1978 and a dive below zero percent in 1979, in the year of the earthquake, reached high positive double-digit numbers in the eighties (1983 is the last year for which financial reports were issued). The Loan Agreement for 1060-YU had set the 1980 target at 4%, and the 1981-1983 targets at 8%.42/ Operating ratios were also impressive. Against the back- ground of a lacTYof ports coordination, as noted in the PCR, with the implied effects on national ports' capacity, the financial results are rather unex- pected. Though welcome for the port, which carries the burden of two sets of financial obligations from largely identical projects,43/ they raise the question of consistency with the regional development objectives under which the port and the Belgrade-Bar railway were built. They also put a different light on the observation that Bar is and may, for many years, remain under- utilized, and on the issue of excess port capacity, if any, on the Adriatic coast. VII. SUSTAINABILITY 26. Future traffic development and efficiency of operations at Bar are major factors bearing on the generation and sustainability of future project benefits. Future traffic development will be the result of the interaction 40/ PCR, para. 5.06. 41/ PCR, para. 5.05. 42/ According to the Loan Agreeement, Section 5.07, the financial rates of return were to be calculated on revalued assets (assets "as valued from time to time in accordance with sound and consistently maintained methods acceptable to the Bank"). What valuation practice was actually followed by the Port of Bar authorities is unclear. But since the port invest- ments (under the rehabilitation project) were undertaken in the early eighties, the asset valuations should have been quite up-to-date. 43/ PCR, para. 5.12. - 12 - of several economic agents - the Port of Bar authorities, the two organiza- tions running the Belgrade-Bar railway, competing Adriatic ports and the Republics of Montenegro and Serbia which shape economic development in the hinterland of the port. This indicates that the Port of Bar influences its traffic only to a limited extent and that a concerted effort, primarily between the new port and the two Belgrade-Bar railways, is needed on traf- fic. The past traffic performance of the Belgrade-Bar transport route was disappointing, though it is not fully clear to what extent this was the result of a general economic slowdown, better service on competing routes or simply for lack of trying. But it is believed that at least the promotional efforts were halfhearted and ineffective in the past. In this context, the port's tariff policies also deserve a closer look to determine whether they are supportive of traffic generation and regional economic growth. Should the Belgrade-Bar traffic fall short of the now projected level, it would seriously jeopardize the economic viability of the entire Belgrade-Bar trans- port route. 27. A fresh look at traffic, tariffs and financial policies of the port could form part of a larger effort at institutional development of the port, if not the railways, and at integrating both more closely into the framework of regional development. Such a shift in focus, coming after successful completion of the physical transport infrastructure, could have far-reaching implications for the way the port and railways conduct business, their organizations, financial structures and recruitment and training of staff. But, to be successful, it also would need a strong c6mmitment on the part of regional (and possible federal) agencies and authorities. 28. Operational improvements in the port are largely up to the port authorities themselves though even then, close coordination with one of the railways is needed. The smooth interfacing of the port and that railway did not always work in the past. The PCR makes the point that the new port has a much better operating performance (productivity) than the old port, which may be undisputed, but the critical question is, how far the improvements can be carried under the specific parameters of the new port. One requirement to answer the question is the improvement in the collection and analysis of operating statistics, which to the PCR are not yet adequate,44/ and which should form part of overall efforts at institutional development of the port. VIII. BANK ROLE AND LESSONS 29. Participation of the Bank in the financing of the Port of Bar was the logical consequence of its earlier support to the Belgrade-Bar railway and tight Yugoslav investment budgets.45/ Apart from making a substantial contribution to port financing, in the order of 54% of combined actual project costs, the Bank's involvement contributed to the streamlining of 44/ PCR, para. 4.05 45/ PCR, paras. 8.01-8.02. - 13 - design and execution of the physical works and procurement. The Yugoslav authorities appreciated the quick Bank response to the earthquake damage. 30. The Bank's role was limited and somewhat ineffective in port insti- tution building, which was partly a matter of projecL design and partly the result of lack of Bank attention during implementation. As noted earlier, the projects understandably focused on the physical requirements of the port, though at the time of the earthquake, broader port management questions about the transport demand. port competition, the port's link-up with the railway and tariff policies came more into the foreground. Perhaps it was hoped that continuity in Bank business with Yugoslavia's railway and port sectors, particularly in the Belgrade-Bar cerridor, would provide further opportuni- ties to make progress in these areas. On the other hand, with new rail and port facilities having come into existence, the scope for significant finan- cial Bank support could for some time be expected to be limited. 31. The Port of Bar projects were substantially prepared with expertise available in the country. This was an excellent arrangement for ensuring that the national, regional and local concerns about the contemplated improvements were adequately expressed in project design and that the learn- ing experience was retained in the country. The modus of project preparation may explain the generous dimensioning of the facilities, based on optimistic perceptions of the future of the Belgrade-Bar transport. Nonetheless, the Bank might have introduced into the projects a more critical and probing attitude which might have led to economies in the investments. At least under the earthq1ake rehabilitation project, a mismatch of port capacity and demand became a distinct possibility which deserved explicit responses. Of course, careful scrutiny of spending plans is a virtue under any set of economic sector scenarios. The impression is strong that the project econo- mic work delivered by the Bank wps somewhat superficial. - 14 - ANNEX I ZCZC DIST8348 JWS0564 Comnh=1uti from the Borrower OEDD3 REF: TCP D.S. JWS0564 JGX894 IN 27/02:58 OUT 27/03:03 63139 LUKBAR YU TO: WORLD BANK, WASHINGTON, D.C. ATTN: OTTO MAISS, OED ACTING DIRECTOR FROM* WORKING ORGANIZATION PORT OF BAR, MONTENEGRO, YUGOSLAVIA 27, JUNE 1986 NO 904/BV RE: PROJECT PERFORMANCE AUDIT REPORT YUGOSLAVIA PORT OF BAR PROJECT, LOAN 1060-YU AND YUGOSLAVIA MONTENEGRO EARTHQUAKE REHABILITATION - PORT OF BAR, LOAN 1768-YU WE ARE INFORMING YOU THAT THE PORT OF BAR MANAGEMENT HAS EXAMINED THE REPORT ABOUT ABOVE-MENTIONED PROJECTS AND ESTIMATED THAT THE SAME IS IN ACCORDANCE WITH THE REORT DRAFTS WHICH PORT OF BAR HAS, ON ONE TIME, SENT TO YOU. IT IS OUR PLEASURE TO INFORM YOU THAT THE PORT OF BAR DOES NUT HAVE ANY ESSENTIAL COMMENTS ON FINAL REPORT DRAFT. WE TAKE THIS OPPORTUNITY TO INFORM YOU THAT IN PORT OF BAR PERSONNEL, EXCHANGE TOOK PLACE SINCE OUR FORMER GENERAL MANAGER MOVED TO A NEW DUTY, AND OUR NEW GENERAL MANAGER IS MR. BUDIMIR VUKCEVIC, ENGINEER, FORMER GENERAL MANAGER DEPUTY. WE ARE OBLIGED TO, ALSO TAKING THIS OPPORTUNITY, GIVE GREAT RECOGNITION AND GRATITUDE TO THE BANK STAFF WHICH FOLLOWED REALIZATION OF OUR PROJECTS AND WE THANK THEM AGAIN FOR THE HELP THEY HAVE GIVEN US. REGARDS, PORT OF BAR GENERAL MANAGER BUDIMIR VUKCEVIC 63139 LUKBAR YU =06270715 ALT RTO FROM: OE2M NNNN - 15 - PROJECT COMPLETION REPORT YUGOSLAVIA PORT OF BAR PROJECT (LOAN 1060-YU) AND MONTENEGRO EARTHQUAKE P.EHABILITATION PROJECT (LOAN 1768-YU) Europe, Middle East and North Africa Regional Office 一／乙 戶＇,&.＇戶、一州么／、’ - 17 - PROJECT COMPLETION REPORT YUGOSIAVIA PORT OF BAR PROJECT AND EARTHQUAKE REHABILITATION (PORT) PROJECT I. INTRODUCTION 1.01 The Port of Bar is located in the Republic of Montenegro in southern Yugoslavia and is one of the ten main commercial ports of the country. The most important of these ports include Koper, Rijeka, Bakar, Split and Ploce. Although there has been some small local port activity since 1906, Bar has only recently developed as a modern port since workc were completed under Phase I of its development program in 1967. 1.02 Phase II of the development program followed the decision to com- plete the Belgrade-Bar railway, which opened up the Port of Bar to the southern and eastern parts of Yugoslavia, including the Republics of Montenegro and Serbia and the Provinces of Kosovo, Vojvodina and the Belgrade area. 1.03 Yugoslav ports are operated by independent enterprises which pro- vide and maintain port facilities and carry out stevedoring and cargo han- dling operations. Exceptions are: (i) Split where a separate stevedoring enterprise handles cargo in ship and on shore; and (ii) Ploce, now owned by the Sarajevo Railway Organization. Port enterprises are fully independent and responsible for their own development plans; they are competitive and, except for tariffs, little coordination exists between different enter- prises. Although the main sea ports belong to the Association of Yugoslav Ports, within the Federal Chamber of Economy, the Association is only a con- sultative body with no real executive power. 1.04 The Port of Bar Enterprise (PBE) was created in 1954 as a fully autonomous entity. The PBE title was subbequently changed to the Port of Bar Working Organization (PBWO) and this report will refer to the organiza- tion under the latter title. It follows the general Yugoslav concept of decentralized economic control and worker's self management, having a policy-making Workers' Council elected by the personnel of the enterprise, which acts in similar fashion as a board of directors in a business corporation. 1.05 Loan 1060-YU assisted in financing the Phase II development pro- posals (para. 2.02) with the objective of providing the port with facilities to attract and handle imports and exports over the new and cheaper railway link to eastern Yugoslavia. Unfortunately, In April 1979, when practically all the works had been completed, the Port of Bar and surrounding area was struck by a severe earthquake, which badly damaged the new and the previ- ously existing port facilities. In these circumstances and since the major - 18 - objectives of Loan 1060-YU remained unchanged, the Bank approved a new Loan (1768-YU) to assist in financing the required reconstruction work and some new investment. These two Bank loans were the first to Yugoslavia to im- prove maritime transport. 1.06 This Project Completion Report covers both Loans; Loan 1060-YU for US$44.0 million was approved on November 26, 1974, signed on December 11, 1974, and became effective June 13, 1975; and Loan 1768-YU for US$50.0 million was approved on November 27, 1979, signed on November 30, 1979, and became effective April 29, 1980. - 19 - II. PROJECT IDENTIFICATION, PREPARATIQN AND APPRAISAL 2.01 Following completion of the Phase I development works at Bar in 1967, which included the construction of the main and secondary breakwaters, PBWO prepared during 1969 and 1970, with the assistance of Yugoslav consultants, a second phase development plan. This Phase II development program was designed to increase the capacity of the port level from 1.0 million tons to about 5.5 million tons. In 1971 the Association of Yugoslav Ports published a five-year development plan (1971-75) prepared by the vari- ous ports, but this plan did not address such main issues as the choice be- tween alternative development schemes, and the financing of investment programs. 2.02 PBWO's Proposed Phase II development plan for port expansion in- _uded construction of new bulk cargo facilities, extension of general cargo and passenger handling facilities, construction of a bulk petroleum berth, dredging to 14m depth and necessary expropriation of houses near the port area. However, because of difficulty in obtaining the required financing, the program was curtailed to provide only the new bulk petroleum berth; about 80% of the proposed new dry bulk facilities; and limited dredging, plus the necessary expropriations. The Government and PBWO then requested Bank assistance for financing the remaining portion, which constituted the main part of the proposed Phase II development plan. These proposals were discussed by pre-appraisal missions in January and June 1973 and with the help of a Yugoslav consultant, were subsequently amended by PBWO in the light of these discussions, to form the proposed project. 2.03 A %ank appraisal mission visited Bar in Nov/Dec 1973 at the invita- tion of the Government and recommended development of the port on lines generally in accordance with PBWO's amended Phase II development plan, i.e. provision of workers accommodation; port and railway infrastructure and ancillary services; mechanical equipment; and technical assistance, together with expropriation of all required land. The total cost of the project was estimated to be YD 1,181 million (US$78.0 million), including YD 561 million (US$36.9 million) foreign exchange. Loan 1060-YU was approved for US$44.0 million (YD 669 million) covering the US$32.3 million foreign exchange cost of the project (including the railway), US$4.6 million interest during con- struction, and US$7.1 million equivalent -f local costs of the project. A sum of US$5.6 million was on-lent to the Railway Transport Enterprise (RTE) Belgrade, which was subsequently assumed by the newly formed Railway Transport Organization (RTO), Titograd, for related railway construction outside the port (para. 3.01). 2.04 Apart from the provision of physical assets, the loan documents required the implementation of numerous measures to improve PBWO's adminis- trative, financial and operational performance. In particular, the require- ment for a Port Study to review the overall development needs of Yugoslav ports was made a condition for future port lending in Yugoslavia. The prin- cipal covenants and their compliance are commented upon in appropriate places throughout this report (particularly in para. 5.10 and para. 6.01). 2.05 Following the disastrous earthquake in April 1979, the Yugoslav Government requested and the Bank agreed to assist in financing the rehabil- itation works zequired in the port. The project for Loan 1768-YU" 1/ Separate loans were made for rehabilitation of railways and highways. - 20 - was based upon a report on the "Earthquake Effects and Possible Ways of Port of Bar Rehabilitation" prepared by PBWO in July 1979 and discussions with Bank missions in July and August 1979. The project covered: restoration of existing damaged infrastructure; repair of mechanical and floating equipment and workers' accommodation; provision of one new berth, additional storage and extension of an existing berth; and technical assistance. The total cost of the proposed project was estimated to be YD 2,334 million (US$124.8 million) including YD 1,140 million (US$60.9 million) in foreign exchange. Loan 1768-YU was approved for US$5 . million (YD 935 million) and covered some 82% of the estimated foreign exchange component of the project, or about 40% of total project cost. - 21 - TII. PROJECT IMPLEMENTATION AND COST A. Loan 1060-YU - Part of Bar Proiect (i) Project Description 3.01 The project to be financed by Loan 1060-YU, based upon the revised PBWO phase II development plan, as appraised by the Bank, comprised: (a) Expropriation: Compensation to be paid for clearing about 250 private and municipal houses from land required for port development. (b) Accommodation: Construction of a hostel providing 500 single accommodation for workers and 250 family apartments. (c) Infrastructure: Completion of the dry bulk wharf already under construction (total length 396m); construction of two new gen- eral cargo berths on Pier I (South); extension of passenfer ferry facilities; dredging to provide 14m depth (LWOST)-; construction of railway reception and dispatch yards outside the port area and connection to the main line; construction of transit and storage sheds totalling 38,000 M2; construction of a 30,000 ton grain silo; and provision of four vegetable oil/molasses storage tanks and pipework. (d) Services: Provision of ancillary water supply, drainage, elec- tric power, communication; roads, parking areas, and railway tracks within the port area. (e) Mechanical and Floating Equipment: Procurement and installa- tion of mechanical dry bulk cargo handling equipment, and mechanical general cargo handling equipment; and two tugs. (f) Technical Assistance: including consultants' services for design and supervision of the works, improving port management, operations, financial and accounting systems, and also for training. Details of the project are at Table 1. The works were expected to be completed by Dec. 31, 1977. (ii) Changes in the Project 3.02 The major changes occurred during project execution: (a) a reduc- tion in the number of cingle and family workers' accommodation to 235 and 129, respectively following re-assessment of requirements; (b) the new berths on Pier I were redesigned to enable them to handle containerized traffic together with prcvision of associated craneage and mechanical equip- ment requirements; (c) omission of procurement of five portal cranes for the dry bulk berth as the rew tower crane unloaders proved adequate; (d) provi- sion of one container gantry crane and container handling equipment, and 1/ Low water ordinary spring tides. - 22 - minor changes in the numbers of specific mechanical general cargo handling equipment units; and (e) deleting the procurement of two tug boats, follow- ing a decision by the port on hiring tugs owned by others. (iii) Implementation and Procurement 3.03 The civil engineering works and ancillary services were carried out under nine separate contracts. All the contracts were let to Yugoslav con- tractors following international competitive bidding procedures which were satisfactory to the Bank. The works were carried out to a good standard and were completed by mid-1978 except for the grain silo, the edible oil tanks, the railway works (see para. 3.06), and the workers' accommodation together with the ancillary services connected therewith. A bar chart showing pro- gress of the works is at Table 2. The major delays were in the design and specification of the works and in the letting of contracts with the schedul- ing of the latter proving too optimistic. 3.04 Procurement of mechanical handling equipment for dry bulk and gen- eral cargo was also subject to international competitive bidding and 19 con- tracts were let, all of which were satisfactory to the Bank. A list of the contracts with countries of origin is at Table 3. Procurement was completed during 1977 and 1978 (Table 2) except for two small contracts to supply weighing scales and some specialized grabs for handling dry bulk cargo. Equipment maintenance by PBWO is satisfactory. 3.05 PBWO has indicated that they were fully satisfied with the civil engineering works carried out in the port and the equipment procured, and although completion was after the original loan closing date, there is no reason to dispute this view. 3.06 After the earthquake struck in April 1979, the railway took longer to rehabilitate than the port. The grain silo co-struction of which had only just commenced, and the edible oil tanks, which were under construc- tion, suffered only light damage. These items were completed under the original 1060-YU Loan by end 1981 (Table 2). However, the railway construc- tion outside the port area suffered heavily. The marshalling yards and main line connection, which had been initially delayed by problems with land expropriation and about 80/85% completed were severely damaged; it was rebuilt under a separate rehabilitation loan. The railway completion was very much later than the completion dates of the main civil works in the port and adversely affected the port traffic (Table 2). The particular effects of this delay is discussed in Section IV Traffic and Operations. (iv) Technical Assistance 3.07 During project implementation, the port employed Yugoslav consultants to assist in Lbe general organization of construction, and in the design and specifications of the major works and equipment, and prepara- tion of contract documents. Yugoslav consultants also provided advice on (a) improvement of operations, (b) maintenance procedures, and (c) costing and port tariffs matters. Dutch consultants provided the designs and speci- fications for the equipment required for the dry bulk cargo handling berth. - 23 - The study of Yugoslav ports (para. 2.04) was undertaken by Yugoslav consultants, but it did not address the problems of priority of development among Yugoslav ports or the efficient distribution of traffic among them and thereby did not meet the objectives envisaged at appraisal and included in the original terms of reference. This omission was almost certainly due to the existing regime whereby individual ports are independent entities located in separate republics. It is no, 3vident that the problem of port coordination must be addressed at the Federal level in order to reduce unnecessary investments in the future. The Bank has indicated that future port loans depend upon achievement of such coordination. PBWO was satisfied with the services of all consultants providing technical services. B. Loan 1768-YU - Earthquake Rehabilitation (Port) Project (i) Project Description 3.08 The project for rehabilit4tion of the port following the April 1979 earthquake, financed by Loan 1768-YU, comprised: ,a) Civil Works: Repairs to 13 berths, the two breakwaters, tran- sit storage sheds and operative and cargo handling areas in- cluding the railways in the port, workers accommodation, and all ancillary services (water, sewerage and drainage and electricity); repair and stabilization of Volujica Hill behind the dry bulk cargo berth and petroleum product storage tanks; construction of new general cargo handling berths (330m) on North side of Pier I; extension of dry bulk cargo handling quay by a further 100m to permit berthini of two 65,000 ton bulk carriers; construction of 16,800 m new transit sheds; and dredging. (b) Mechanical and Floating Equipment: Repair of all damaged equipment in the port; procurement of additional equipment mainly reclaimers, conveyors and bulldozers to improve the horizontal movement of dry bulk cargo, additional portal and mobile cranes, a heavy lift mobile crane (50T) and fork lift trucks for general cargo and towmasters for roll-on roll-off operations, firefighting equipment, ai.d tug boats. (c) Technical Assistance: Consultants' services for design and supervision of the works. Details of the project are at Table 4. The estimated completion date was December 31, 1982. (ii) Changes in the Project 3.09 Due to the slow movement of cargo by rail, shed space was increased from 16,800 m' to 20,400 m2 and new traffic proposals prompted prepara- tion of open paved storage areas for wood and cattle. Of the proposed mechanical equipment, procurement of horizontal dry bulk cargo handling (stacker/reclaimers and conveyors) was deleted since estimates of crude phosphate rock imports for which it was largely intended failed to material- ize; also of the heavy lift mobile crane was deleted consequent upon the - 24 - slow development of container and other heavy lift traffic, as was that of two towmasters intended for Ro-Ro traffic. A higher number of forklift trucks was procured. Also, the actual damages to infrastructures proved to be less extensive than originally estimated at appraisal. (iii) Implementation and Procurement 3.10 Although the loan process was expedited and the loar became effec- tive April 29, 1980, the civil engineering works for rehabilitation of the port after the earthquake did not physically commence until mid-1981 with many contracts delayed until 1982 (Table 5). Delay in the letting of con- tracts was due to a number of factors stemming from the disaster which had caused damage over a wide area of the country. For example, there was pres- sure on engineers to provide satisfactory designs for rehabilitation that had to accord with a new law increasing the design requirements for earth- quake protection. This law took some time to pass. There was also an understandable concentration on restoration of reasonable living conditions as well as reasonable operating conditions in the port (April 1979 to mid-1980). It will be appreciated that the highway and railway systems were also severely disrupted.- There was also difficulty in securing local funds. 3.11 The hiring of outside consulting engineering firms to supplement the limited availability of local engineers for these tasks might have expedited the works although this would have required additional management supervision which was also in scarce supply. Nevertheless, the Bank did hire a special consultant to advise PBWO on the selection of alternative repair schemes submitted by contractors. In the event, a total of 13 contracts were let to Yugoslav contractors and, with the exception of the special wood storage and cattle holding area improvements and the maintenance workshop extension (which were completed later), the works were satisfactorily executed by mid-1983 (Table 5). 3.12 Mechanical equipment for dry bulk cargo and general cargo handling was procured under 8 contracts following international competitive bidding procedures satisfactory to the Bank. A list of the equipment provided with the countries of origin of the suppliers is at Table 6. Although procure- ment was only completed by mid-1984, the portal cranes and forklifts were provided in 1981 and assisted in an early restoration of cargo handling efficiency. 3.13 The decision taken by PBWO under Loan 1060-YU to hire rather than procure tugs had not proved satisfactory. Accordingly, procurement of two new tugs was agreed and these have been delivered under a contract with a shipyard in the Federal Republic of Germany and are operating well. 3.14 PPWO has expressed satisfaction with all the civil works and equip- ment procured under the project. Work was completed by December 31, 1984. Repairs tc the railway works outside the port were the responsibility of RTO Titograd under a separate loan, and were also completed by end 1984, but behind schedule. 1/ Separate loans were approved by the Bank to assist it, financing these works. - 25 - 3.15 Yugoslav consultants assisted in the soil and geological investiga- tions; the design and specifications; the preparation of contract documents for the various works and equipment procured, and ir, the restoration of ancillary services. Dutch consultants continued to advise on dry bulk cargo handling requirements. PBWO was satisfied with the services of all the consultants. C. Costs and Disbursement 3.16 Project cost estimatei at appraisal and the final actual project costs are summarized below for both loans. Details are available at Tables 1-' and 4, with further details of mechanical equipment procurement at Tables 3 and 6. The allocation of loan funds between the list of goods at appraisal and as actually disbursed is given at Table 7. (i) Loan 1060-YU: Actual and Appraisal Cost Estimates (US$'000) Item Appraisal Estimate Actual Cost Local Foreign Total Local Foreign Total Expropriation 3.7 1.2 4.9 2.9 - 2.9 Workers Accommodations 4.5 1.4 5.9 8.4 - 8.4 Civil Works-' (i) Infrastructure 3.5 2.4 5.9 3.6 5.5 9.1 (ii) Services 5.3 3.4 8.7 3.7 10.2 13.9 (iii) Storage 4.8 4.7 9.5 2.9 9.4 12.3 Mechanical Equipment 2.9 9.6 12.5 1.8 8.6 10.4 Technical Assistance 1.3 0.5 1.8 3.2 0.3 3.5 Physical Contingencies 2.3 1.7 4.0 - - - Price Contingencies 5.2 3.6 8.8 - - - Interest during Construction 1.4 4.4 5.8 0.1 4.4 4.5 Subtotal Port Works 34.9 32.9 67.8 26.6 38.4 65.0 Railway Works 6.2 3.8 10.0 4.7 3.9 8.6 Interest during Construction - 0.2 0.2 - 0.1 0.1 Subtotal Railway Works 6.2 4.0 10.2 4.7 4.0 8.7 TOTAL 41.1 36.9 78.0 31.3 42.4 73.7 1/ The foreign exchange content of the civil works, as shown here, was determined by the Port of Bar counting them as complete units, including equipment procured therefore, the value of equipment included amounts to US$3.3 million (0.2 million for port railway, 2.5 million for the grain silo, and 0.6 million for the edible oil (tanks). - 26 - 3.17 The financing plan for this project as originally proposed and as actually achieved was: Appraisal Estimate Actual Government Grants 13.6 11.3 PBWO 2.6 0.1 Federal Directorate (MATREZ) 3.4 2.0 Investment Bank Titograd 16.9 19.7 Other Banks - 2.5 Commune of Bar - 0.4 Railway 5.8 6.4 IBRD 57.7 57.6 100.0 100.0 The Bank loan was for US$44.0 million of which US$42.4 was disbursed (Table 7). 3.18 The value of the dinar relative to the US dollar changed over the project period from YD 17.0 in March 1975 to YD 46.6 in June 1982, which resulted in the US dollar costs being less than estimated. The cost in Dinars increased from 1,182 million to 1,470 million (Table 1). - 27 - (ii) Loan 1768-YU: Actual and Appraisal Cost Estimates (US$1'000) Item Appraisal Estimate Actual Cost Local Foreign Total Local Foreign Total Restoration of Berth, Breakwaters & Volujica Hill 14.4 10.0 24.4 6.6 8.5 15.1 Restoration of Transit Sheds and other Buildings 6.2 6.0 12.2 1.3 1.7 3.0 Dredging 1.0 0.6 1.6 0.8 0.9 1.7 Restoration of Services and Open Storage 10.2 6.5 16.7 1.3 2.8 4.1 Equipment Repair - 5.5 5.5 0.3 0.5 0.8 Accommodation Repair 9.4 3.1 12.5 10.3 - 10.3 Dry Bulk Berth Extension 3.3 2.3 5.6 1.3 1.3 2.6 Two Berths Pier No. 1 4.5 3.1 7.6 2.3 2.2 4.5 New Transit Sheds 2.7 2.7 5.4 1.1 2.2 3.3 Bulk & General Cargo Mechanical Equipment - 11.5 11.5 1.9 5.2 7.11 Two Tug Boats - 3.4 3.4 - 4.8 4.8 Technical Assistance 0.5 - 0.5 1.2 - 1.2 Price Contingencies.' 11.7 6.2 17.9 - - - Expropriation - - - 1.2 - 1.2 Interest During Construction - 1.6 - 1.6 TOTAL 63.9 60.9 124.8 31.2 30.1 61.3 1/ Including spares. 2/ 10-25% Physical Contingencies included in cost of items. 3.19 The financing of the above project as originally proposed and as actually achieved was: Proposed % Actual % Republic Fund for Earthquake Rehabilitation 60.0 47.6 PBWO - 3.3 IBRD 40.0 49.1 100.0 100.0 The variation in actual financing again reflects the difficulties in pro- viding local finance. The Bank Loan amounted to US$50.0 million of which US$30.1 million was disbursed. - 28 - 3.20 Variations in the Dinar/US dollar exchange rate (YD 19 at November 1979 to YD 191 at December 1984) together with change in the content of the project, already referred to (para. 3.09), reduced the US dollar project costs compared to the appraisal estimate. The Bank included Loan 1768-YU under its Special Action Program and increased the Bank's share of the proj- ect cost by increasing the disbursement percentages of civil works contract costs thus financing part of the local costs. The cost in Dinars increased relative to the appraisal estimate from 2,3:4 million to 4,027 million. 3.21 Restoration of the damaged railway works outside the port area was undertaken under a separate Loan (1769-YU). - 29 - IV. TRAFFIC AND OPERATIONS A. Traffic 4.01 Despite a setback in the development of traffic following the earthquake, traffic through the Port of Bar has increased steadily from about 800,000 tons in 1972 to 2.2 million tons in 1984, an average annual increase of 8.5% (para. 7.02 and Table 12) About 40% of the traffic is dry bulk cargo, mainly iron ore and phosphates, Lnd a further 40% is general cargo. These traffic levels are about half the appraisal estimates which forecast a major diversion of traffic from other competing routes. Container traffic has also not developed as expected, reaching only 3,500 TEU's in 1984. While it is true that traffic has not developed as forecast, it is important to emphasize that almost immediately after the facilities designed to handle (and therefore to attract) the traffic were completed, they were destroyed. Thereafter, for almost a year, facilities were not available to handle any sizeable amount of traffic, so that any momentum that may have been gained on transfer of traffic from existing ports to the new route (Bar and Belgrade-Bar Railway) was lost. Indeed it was not until 1983/84 that the Port of Bar was in a position to attract any sizable additional traffic (para. 7.02). B. Operations 4.02 The Port of Bar is essentially a railway port (90% traffic by rail) and its ability to operate efficien Ly is dependent upon the availability of wagons to move cargo expeditiously, especially dry bulk cargo. At the pres- ent time there are rolling stock problems which inhibit the achievement of full efficiency. While there exists good cooperation between the port and the railway staff there is a shortage of shunting engines to move wagons in and out of the port and there appears to be an overall shortage of wagons in the railway system. In the railway's opinion the problem is essentially one of shortage of shunting capacity at the port. Be that as it may, the over- all capacity of the railway to move traffic out of the port is probably be- tween 2.0 and 2.25 million tons p.a. at present, (70% bulk) which iF only equivalent to the current level of traffic. Unless this level can be increased to about 5.5 million tons p.a., traffic growth in the port is bound to be affected and the port capacity will be underutilized. Procurement of shunting engines under Loan 1768-YU was agreed by the Bank but, due to internal difficulties in producing the required tender documents in time, the borrower was unable to complete the procurement before the revised closing date. 4.03 In general, the port operations at Bar are satisfactory. Training of port workers is undertaken "in-house" at a rate of about 10% p.a. of the total labor force of some 1,250 men (650 stevedores and cargo handling workers, 270 drivers, the rest being shop and general labour). Gangs vary between 4 and 12 men; two shifts are worked for 5 days/week with a third shift available as overtime, and a sixth day is worked as normal time in the first week of the month. Gangs normally achieve results in excess of the following tons/gross gang hour: dry bulk 150 tons, palletiz.d cargo 40 tons, bagged about 20 tons, and containers 20 TEU's, which, except for bag- ged cargo, are satisfactory. The daily handling rate will therefore not be - 30 - less than 400 tons/day and would likely exceed this tonnage depending upon the cargo mix. 4.04 Ship service time is estimated to be 7-10 days which, though some- what high, is an improvement over earlier times. Given the current annual tonnage and available berths in the port no waiting time caused by lack of available berths exists. Cargo storage time in the port is excessive, pos- sibly linked to the railway capacity problem. 4.05 Collection of operating statistics in the port need to be improved and the proposed new mechanised accounting and management information sys- tems provide for this (see para. 5.08). - 31 - V. FINANCIAL EVALUATION General 5.01 Since the main borrower is PBWO, this financial evaluation concerns itself with the affairs of PBWO only. The railway component part of Loan 1060-YU for US$5.6 million out of which US1.6 million was cancelled was relent to RTE-Belgrade. Upon the reorganization of the railways, separating the Montenegio section under the new RTO-Titograd, the responsibility for the railway portion of the loan now devolves on the latter. There was a separate loan under the earthquake reha6ilitation efforts to RTO-Titograd (Loan 1769-YU) for US$14.0 million, which will be the subject of a separate PCR. 5.02 Compliance with the several financial covenatits included in Loan Agreement 1060-YU for the first project is summirized in para. 5.10 below. However, Loan Agreement 1768-YU, for the earthquake project did not provide any major financial covenants except for three standard covenants, comments on which are also included in para. 5.10. 5.03 In general, in the financial area, the following major items need to be commented upon: (M) accounting (including cost accounting) and man- agement information systems and tariffs; and (ii) compliance with financial covenants and financial performance. Accounting (including Cost Accounting) and Management Information Systems and Tariffs 5.04 To date PBWO's accounting system has not adopted any meaningful cost accounting and proper financial and management information systems as originally envisaged in the appraisal report for the first project. Briefly the background is as follows. 5.05 The 1060-YU Loan Agreement provides under Section 5.08 for: (i) with the assistance of consultants carrying out a review of the tariff setting policies of PBWO; (ii) preparing a tariff structure based on the costs of providing the relevant port servicesl and (iii) consultations with the Bank regarding such tariff structure upon its preparation and prior to its implementation. There was no requirement however, to set up an appro- priate cost accounting system and, no date was set for the implementation of the tariff structure. In compliance with the Loan Agreement, PBWO engaged lccal consultants under contract dated May 14, 1976 to carry out the above review. They were on the scene through 1979, but due partly to insufficient Bank supervision in the financial area in the early years, the intent o. the loan covenant was not translated into the consultants' work plan. The con- sultants' efforts resulted in the installation of a simple departmental accounting system. Subsequently, PBWO tried intermittently on its own intermittently to improve the costing activities, but nothing substantial was achieved in terms of developing a cost-based tariff structure. Firstly, it appears that the intent of the loan covenants and the principles and practice of cost accounting were not adequately taken into consideration by - 32 - PBWO (in the context of Yugoslav national accounting practice where, for example, salaries and wages are shown as distribution of net income rather than as an operating cost). Secondly, it is the usual practice that uni- lateral tariff setting by individual ports is discouraged, and uniform port tariffs in Yugoslavia are normally set after consultations within the Asso- ciation of Yugoslav Ports. Room for revisions or exceptions to take account of special situations at individual ports exist, when it can be demonstrated that the uniform tariffs should be adjusted in a particular case. 5.06 The situation, though unsatisfactory to date, is not without hope. Under the new General Manager, who took over in 1982, renewed efforts were made to follow the real intent of the sections of the loan agreement concerning financial matters upon which the Bank, in the later years, continued to insist. Accordingly, a new contract for the costing and tariff studies was signed in 1983 with local consultants from Belgrade. They have already completed the costing studies, and recommendations for implementing a new cost accounting system using cost centres and mechanised accounting operations are reportedly 95% complete. Delays in implementing the s,stem was attributed to shortage of accounting machines, so the project components were changed in 1984 to include two computing machines to complete the full complement of three machines needed for operating the new system. PBWO is expecting to start implementation in mid-1985. 5.07 After the costing system is put into operation, the next step will be to determine and analyse costs for the various services, and then to review applicable tariff policies. On completion of the above steps, tariff rates for each service will be determined after which the Association of Yugoslav Ports will be approached with a view to effecting relevant changes in tariffs. These steps are expected to be taken in the period mid-1985 to mid-1986. 5.08 The proposed new systems are also expected to provide for the prep- aration and circulation of relevant operational statistics and financial results to management at designated intervals and thus permit the making of informed decisions. Compliance with Financial Covenants and Financial Performance 5.09 Comparative income statement and balance sheet summaries of PBWO for the years 1974 through 1983 are given in Tables 9 and 10 (balance sheet summary for year 1984 is not yet available, while the income statement actuals for 1984 and projections for 1985 are available). 5.10 At the time of appraisal of the first project, PBWO's traffic was 921,000 tons, operating revenues YD 48.6 million, operating income YD 7.0 million, operating ratio 86%, and the annual rate of return on net fixed assets was 3.8% for year 1974 (actual). On the opening of the Belgrade-Bar railway line to traffic (partly financed by the Bank) in mid-1976, the Port of Bar traffic was expected to increase from 3.2 million tons in 1977 and to reach 4.3 million tons in 1980, with corresponding improvements in financial position and performance. In the event, the Belgrade-Bar railway line was actually opened in mid-1978, and the earthquake in 1979 caused considerable damage to the railway and port facilities. As a result the PBWO had to bor- - 33 - row for the second time from the Bank under Loan 1768-YU US$30.9 million in addition to the original loan of US$38.4 million (under Loan 1060-YU) to rehabilitate its original facilities plus some additions. The financial covenants under the above loan agreements are summarized below: Loan Agreement Compliance 1060-YU Section 5.04 Starting 1976 include breakwaters Included as fixed assets on the and berths on the books as fixed books from 1977, however, started assets and charge depreciation. charging depreciation from 1980. Section 5.05 Observing the debt limitation This test was being observed through test of 1.5. 1978, however since the earthquake in 1979, the debt service require- ments have been higher than the net incomes. Section 5.06 Achieving an operating ratio Actual operating ratio was 94%. of 70% in 1976. Section 5.07 Achieving the following annual Actual annual rates of return were rates of return on net fixed as follows: assets: Appraisal Loan Report Agreement Actual 1977 7.7% 4.0% 1977 - 1.2% 1978 6.4% 4.0% 1978 - 3.4% 1979 8.4% 4.0% 1979 - (9.5)% 1980 9.8% 4.0% 1980 - 12.2% 1981 8.0% 1981 - 18.1% 1982 8.0% 1982 - 10.7% 1983 8.0% 1983 - 16.3% 1984 8.0% 1984 - - 34 - Section 5.08 With the assistance of consultants: Not complied with. (i) carry out a review of the tariff-setting policies; (ii) by January 1, 1976, prepare a tariff structure based on costs; and (iii) consult with the Bank regarding the said tariff structure upon its preparation and rior to its implementation. Loan Agreement Compliance 1060-YU and 1768-YU Section 4.02 (1060-YU and 1768-YU) Insurance coverage. Complied with. Section 4.07 (1060-YU) Investment limitation of Earthquake rehabilitation project YD 6 million. costing over YD 6 million was undertaken with Bank's concurrence. Section 4.06 (1768-YU) Investment limitation of Complied with. YD 10 million. Section 5.02 (1060-YU and 1768-YU) Submission of audited financial Complied with, but with delays of statements. up to a year. Section 5.03 (1060-YU and 1768-YU) Protection of loan from liens. No known liens appear to exist. 5.11 The reasons for the poor performance in the years 1976, 1977, 1978 and 1979 are the less than estimated traffic actually handled by the port, probably because of the delayed opening of the Belgrade-Bar railway, i.e. 49% of expected traffic in 1976, 30% in 1977, 37% in 1978 and 42% in 1979. Immediately after the 1979 earthquake, actual traffic in 1980 fell to 35% of the estimate. However, since 1980 PBWO has been covering fully its operating expenses, including depreciation, and making reasonable profits. Operating ratios were 83% on 1982, 74% in 1983 and 68% in 1984. - 35 - 5.12 One of the main problems facing PBWO is the servicing of its for- eign debt under the Bank's loans amounting to US$38.4 million under 1060-YU and US$30.1 million under 1768-YU, for a total of US$68.5 million. PBWO could have handled the first loan without much trouble, but the borrowing and the servicing of the earthquake rehabilitation loan also fell on PBWO, although it was originally assumed in the President's report that it would be serviced to the extent necessary by the Federal Government (paras. 43 and 77). The debt problem can be sub-divided into three areas: (i) PBWO is having to pay twice for more or less the same facility; (ii) the National Bank of Yugoslavia has benefitted from the foreign exchange resources pro- vided by both loans for financing civil works con:racted locally; and (iii) the exchenge rate of the Yugoslav Dinar against tAe US dollar has increased dramatically over the years. The PBWO management and Bank staff have been assessing the financially debilitating effect oi this situation and have made strong representations to the Republican and Federal Governments. As a result, the Governments have agreed to provide financial support to PBWO to service the foreign debt. For example, under loans 1060-YU and 1768-YU, 75% and 67% respectively of the loans were disbursed locally and PBWO has obtained agreement that 75% and 67% respectively of the foreign exchange differential of the debt service, compared to the rates prevailing as of January 1, 1983, would be reimbursed to the extent of 50% for 1060-YU and 100% for 1768-YU by the Federal Government. This is expected to total some YD 1,400 million for years 1983, 1984 and 1985. During this period, PBWO's own internal generation of funds is expected to total YD 2,300 million, while the annual debt since requirements covering the Bank loans for the three years will be some YD 3,700 million. However, PBWO continues to can- vass additional financial support for servicing the Bank loans, more partic- ularly the earthquake loan, and both the Republican and Federal Governments are continuing to consider this matter favourably. - 36 - VI. INSTITUTIONAL PERFORMANCE 6.01 The principal institutional matters identified during appraisal of the first project and included under Sections 4.01 through 4.05 of the Agreement under Loan 1060-YU relate basically to (i) strengthening of the project management group and the construction division of PBWO through ade- quate staffing and training; (ii) employment of engineering consultants; and (iii) employment of consultants to improve PBWO's operations, and to strengthen its management and financial capabilities. In general, the loan covenants were complied with except in the training of staff and in the financial areas. 6.02 In 1982, a substantial improvement took place in the management of PBWO with the appointment o. the present General Manager. He has played an active part in dealing with the various problems of PBWO, in particular in closely co-ordinating PBWO's role with those of the railway and other orga- nizations for developing port traffic, as well as in energetically tackling PBWO's debt service problem. Efforts made earlier to strengthen the main departments were partly successful in the sense that good managers were found to head most units. However, improvement in the number and quality of staffing under these managers did not reach the levels envisaged at appraisal. Consultants from Belgrade were more or less in charge of pro- ducing the technical and operational studies, analyses and follow-up, and although they succeeded in producing the required information, insufficient attention was paid to the training of PBWO staff. Bank supervision missions do not appear to have adequately stressed the need for increased efforts in this area. Several technical specialists were also employed to assist local consultants in different aspects of the engineering studies and analyses, the result of which were, in general, satisfactory. Also, in 1983 local consultants were appointed as accounting consultants to perform the costing and tariff studies which still remain to be completed (Lee Financial Section para 5.06). 6.03 In regard to the general organization of PBWO and the management practices, the power emanates from the Worker's Council to the General Manager through the Business Management Board and then down through the departmental managers to the worker's units at the operating levels. Thus the organizational structure has remained as originally envisaged; however, further actions need to be taken to improve training activities generaily and to strengthen PBWO's financial capabilities, the latter through the implementation of an adequate cost accounting system, the determination of an appropriate tariff policy and the introduction of cost-based tariffs. Assurances have been given to the Bank mission in April 1985 that implemen- tation of the latter items will soon be undertaken. They also plan improve- ment of their training arrangements so as to achieve satisfactory standards and levels. Recognition is also being given to the need for strengthening and improving the PBWO's marketing activities and its coordination with the railway, and the major industrial enterprises to attract traffic and thereby encourage continued traffic growth. - 37 - VII. ECONOMIC EVALUATION Introduction 7.01 The economic viability of the Port of Bar is closely related to that of the Belgrade-Bar railway. Together, the port and railway serve a broad hinterland covering much of southern and eastern Yugoslavia, providing a low cost route for foreign trade as well as a stimulus for regional devel- opment and national integration. The primary hinterland of the port, cover- ing Montenegro and most of Serbia, has a population of about 8 million in- habitants, 35% of the total population of Yugoslavia, and accounts for about 25% of the country's total economic activity. Ideally, a joint evaluation of both the port and the railway investments would be the most appropriate approach to follow. However, such an approach presents a number of concep- tual problems, the most important of which is the inability to clearly define the with and without project scenarios due to the large time differ- ence between railway and port construction. A simpler methodology has therefore been used which deals separately with the economic effects of the port and an allocation of joint benefits based roughly on pro-rata costs. For the purposes of the completion report, the approach taken is a global one which does not attempt to disaggregate the effects of the various com- ponents of the port investment program and hence to determine to what extent investments have been optimized. The economic re-evaluation has been established on the basis of actual costs and benefits, the latter being derived from actual traffic and revised forecasts. Traffic Forecasts 7.02 Traffic through the port of Bar has not developed in line with the appraisal fo.ecasts (para. 4.01), which assumed that traffic would grow at over 20% per year during the period 1972-80, primarily dile to estimated traffic diversion from other competing ports. In reality, the port has been able to attract only about one-third of the potential Lraffic from the cost- lier but more well established alternative routes because of poor marketing methods and inadequate coordination with RTO-Titograd. At the same time, traffic growth has been affected by the 1979 earthquake and the general slowdown in economic growth since 1981. In 1976, throughputs were only 49% of the forecast traffic and by 1980 this share had fallen to about 35% (Table 12). However, traffic has picked up during 1983 and 1984 following completion of the rehabilitation program and Bar has steadily raised its share of total national port traffic from only 6% in 1974 to 11.5% in 1984 (Table 13). Although actual traffic in 1984 was only about 50% of the ori- ginal forecast, traffic has increased steadily at just over 8.5% p. a. since 1972. 7.03 PBWO has established revised forecasts based on information avail- able to the port's commercial department and on market surveys amongst the main users of the port. In view of the relatively small number of users, PBWO considered this to be a bett-r method than the use of general growth trends. Development plans of particular enterprises have been examined carefully by PBWO and its consultants and forecasts have been scaled down where necessary. Forecasts have been established up to 1995, the year in which port capacity would be reached (5.5 million tons) and additional investments would be required (Table 14). The annual traffic growth rates - 38 - from 1984 to 1995 estimated for the main categories of traffic are 4.8% for general cargo, 11.8% for dry bulk cargo, and 2.4% for liquid cargo, the overall increase being just under 9% p.a. These growth rates are in line with recent trends and appear realistic. The main increases in traffic are expected in dry bulk traffic, particularly impcris of iron ore for the Smederevo steel plant, as well as exports of cement. General cargo traffic, mainly exports, would continue to show a modest growth rate of 4 to 5% p.a. 7.04 For incremental traffic identified through the market surveys, it is often difficult to determine whether such traffic is induced by the port or whether it represents potential traffic diverted from other routes. Where this distinction is difficu'.t, an allocation has been made on a 50/50 basis between normal traffic and diverted traffic. Table 15 shows an esti- mate of normal and diverted traffic for the period 1974-95. In 1984 it is estimated that about one-third of total traffic represents traffic diverted from other routes, mainly from Rijeka and Koper, with this share increasing to about 45% of total traffic in 1995. Project Costs 7.05 Project costs used in the re-evaluation include: (i) the total construction costs of the port of Bar during the 1974-81 period; and (ii) the incremental cost of additional works and equipment procured under the Earthquake Rehabilitation Project (Loan 1768-YU) over and above the rehabil- itation costs. The exclusion of the earthquake rehabilitation costs from the economic evaluation is justified on the grounds that if it were economic to construct the facilities in the first instance, their rehabilitation woild be equally justified. In retrospect, of course, it is probable that a number of facilities should not have been rehabilitated after the earthquake in the light of the lower than expected traffic growth. However, the origi- nal cost of these facilities must be included in the re-evaluation. Costs have been adjusted for taxes and duties and salvage values have been allowed for all infrastructure costs. Project Benefits 7.06 The main benefits of the project include: (i) savings in ship service time; (ii) handling cost savings on normal traffic which stem from reduct- ions in ship service time and port labor costs; and (iii) overland transport cost savings on traffic diverted from other routes, particularly from the ports of Rijeka, Sibenik and Ploce. 7.07 At appraisal only handling cost and transport cost savings were quantified. Although obviously a major benefit, ship service time savings were not estimated on the grounds that there were inadequate data on ship- ping patterns and that Yugoslavia could not capture these savings through the tariff mechanism. In addition to estimating ship service time savings, the economic re-evaluation has also attempted to estimate the order of mag- nittide of the indirect regional development impact of the project and the effects of this on the economic viability of the project. - 39 - 7.08 Savings in ship service time and in port handling costs are based on increased productivity in the port and reflect changes in handling rates from about 200 tons to 400 tons per ship day for general cargo and from 500 tons to 1,200 tons for dry bulk traffic. On this basis, ship service time savings have been estimated only for normal traffic, as operating conditions in competing ports are not available. A daily opportunity cost per ship of US$5,000 has been used. Ninety percent of ship service time benefits are allocated to the project on the grounds that 80% of the traffic is in Yugoslav vessels and that only half the remaining benefits accruing to for- eign ships would be recovered by Yugoslavia through slower increase in freight rates. Current handling costs are estimated at US$1.3 per ton com- pared with US$2.0 per ton before the project, providing a savings of US$0.7 per ton. Handling cost savings on diverted traffic are also assumed to be US$0.7 per ton and are therefore lower than the appraisal estimates of US$2,0 per ton. Furthermore, since savings would be primarily in labor cost.-, only 70% of the handling cost savings have been counted as benefits considering that labor savings may not be achieved in totality. 7.09 Savings in land transport costs for diverted traffic are based on marginal costs of rail transport for the Rijeka/Koper and Ploce/Sibenik routes, road transport for the Dubrovnik route, and rail transport over the Belgrade-Bar line. Since investment in the port accounts in constant prices for about 13% of total investments in the railway and port, only 13% of the transport cost savings on diverted traffic have been allocated to the port project. 7.10 Besides quantification of the above direct benefits, an attempt has also been made by PBWO to estimate the regional development impact of the project based on the incremental value added in the industrial and agricul- tural sectors in the hinterland of the port. The estimate has been limited to the impact of the port project in the immediate hinterland of the Republic of Montenegro and excludes Serbia, Kosovo and other areas. These estimates have been derived by pre-1973 growth rates, with actual growth thereafter. The PBWO report-' suggests that 5% of actual growth could be attributed to port development based on the pro-rata share of port costs. However, as forecast port traffic clearly includes induced traffic, it is felt that only half of the estimated development effects should be attri- buted to the port in order to avoid any double counting of benefits. The order of magnitude of these development benefits is estimated, in 1980 prices, at YD 76 million (US$3 million) in 1984 increasing to YD 244 million (US$10 million) in 1995. Specific examples of industries which have devel- oped as a result of the port and railway infrastructure include cement production and wood products, particularly foL export, as well as lignite mining for dib,cibution by coastal shipping. Results 7.11 fhe appraisal estimated an ER of 13% based on handling cost and transport cost savings applied to optimistic traffic forecasts, particularly traffic diverted from other ports. Using this approach the economic re-evaluation would show a negative ER. Instead, the re-evaluation has con- sidered ship service time savings which are an important benefit to the project (para. 7.08). 1/ Draft Proiect Comoletion Reoort oreDared by PBWO. - 40 - 7.12 All costs and benefits have been adjusted to constant 1980 prices, the approximate mid-year of the investment cost stream (Table 16). Project benefits have been estimated over a 20-year period, the level of benefits hav- ing been held constant from 1995, the year in which port capacity is expected to be reached. Based on direct traffic benefits alone, namely ship service time, handling cost and transport cost savings, the estimated ER is about 10%. However, when regional development benefits are included, the ER increases to about 14%. In the latter case, traffic benefits represent about 70% of the total discounted benefits. As the development benefits estimated in this report may only represent part of the developmental impact, the proj- ect can be considered as economically viable and an important contribution to economic development in southern and eastern Yugoslavia. On the other hand, the project clearly does not represent an optimum pattern of development for the port, mainly due to the over-optimistic traffic forecasts at appraisal. In hindsight, an opportunity was missed after the earthquake to reassess the needs of the port in the light of the lower than expected traffic developments at that time, possibly by reducing the general cargo provision by one berth. - 41 - VIII. ROLE OF THE BANK 8.01 The Bank's involvement in the two projects was positive and effec- tive for the design, civil works, equipment procurement but could have been improved in the areas of training, cost account;ng and tariffs, and Yugoslav Port Study. For most of the ports in Yugoslavia funds for investment needs are made available more or less on a grant basis through the development funds of the republic in which the port or ports are situated. These devel- opment funds are made possible through contributions from each of the indus- trial or commercial entities in each republic. Montenegro Republic, where Port of Bar is situated, is a relatively less developed area, where the industrial and commercial entities are comparatively less affluent and fewer in numbers. The development fund available in Montenegro is not adequate for most of the various infrastructure needs of the republic, thus capital sources are scarce as far as Port of Bar is concerned. The Bank, therefore, was one of the few sources available from which Port of Bar could obtain capital for its investment needs. 8.02 The Bank's association with the earthquake project was both prompt and effective, particularly since the Federal and Republican support alone was not sufficient to meet the rehabilitation requirements of the port and other transport modes destroyed by the earthquake; it demonstrated the Bank's ability to respond quickly to catastrophic events in member countries. In a1dition, Bank's support in reducing the equipment for bulk handling was effective, and its agreement to the inclusion of two shunting locomotives for efficient handling of the railway wagons in the port, though not implemented, was timely, although it is unfortunate it was not possible to extend the loan to permit their procurement. In particular, while answers were being sought to effectively design and build earthquake- resistent structures, the Bank's support and assistance was very much appreciated. Also, possibly in part due to the frequent concerns expressed by the Bank, the government authorities are dealing with the debt service problem of PBWO in a positive manner. In addition, more attention is now being paid to the close coordination of traffic development and movement efforts by RTO-Belgrade, RTO-Titograd, and the Port of Bar. 8.03 Supervision by the Bank staff could have been improved. More emphasis might also have been given by various supervision missions to the need for (i) improvement in the training of staff and (ii) regular exchange of views with representatives of the Federal Government in Belgrade, to ensure adequate coordination among the various public enterprises involved in generating and handling traffic, especially the railways and the ports. 8.04 In 1982, Bank's Operations Evaluation Department (0ED) carried out an operational policy review on the subject "Experience with Loan Covenants" which included a review of the Port of Bar Project under Loan 1060-YU. OED commented on the non-compliance of financial covenants under Loan 1060-YU by the borrcwer and the Bank not taking any remedial action. The Region responded to this in a memorandum dated May 19, 1982 to OED noting that the conclusion of OED might be premature and that a more considered judgement could only be formed together with the results of the earthquake rehabilita- tion project, the latter being essentially a continuation of the first proj- ect rendered inactive in the special circumstances of the earthquake disaster. - 42 - IX. CONCLUSIONS 9.01 In relation to the original expectation that the project financed by Loan 1060-YU would be completed by December 1977, there was a delay of about one year, however, in the final stages the project works were severely damaged by an earthquake. The subsequent rehabilitation project was expected to be completed by end 1982, but was largely completed by end September 1983 and finally completed by December 1984. The delays mostly occurred in the design, specifications and contracting stages. 9.02 Cost in Dinar terms for Loan 1060-YU project increased by YD 288 mil- lion to YD 1,470 million due largely to inflation. The equivalent USdollar cost decreased from US$78.0 million to US$73.7 million. For Loan 1768-YU the Dinar overrun was very large, amounting to YD 1,693 million on the YD 2,334 million estimate. The USdollar cost was 30.1 million compared to US$60.9 mil- lion estimated, due in part to deletion of some bulk handling mechanical equipment and to the less than anticipated damages to infrastructure. 9.03 It is difficult to assess, at this time, whether the project (Loan 1060-YU) will achieve its objective, i.e. to attract some 5.5 million tons of traffic annually to the shorter and cheaper Belgrade-Bar route. However, it must be recognized that the chaos caused by the earthquake and the resulting loss of momentum has had an inevitable delay on traffic devel- opment. It is not unreasonable therefore to expect the port to achieve its objective albeit a number of years late. But to achieve this result, the capacity of the railway as well as the coordination between the port and rail- way will have to be considerably improved. 9.04 The overall Yugoslav Ports Study prepared by Yugoslav consultants under the project did not address the competing positions of the different ports and consequently the priority of investments in each port. This was largely due to the independent nature of each republic and its port organization. Agreemeot on investment priorities and ensuring that these are adhered to will have to be enforced at the Federal level. Nevertheless, the Ports Study submitted to time Bank in 1984 needs to be officially commented upon by the Bank. 9.05 PBWO has expressed its appreciation of the Bank's technical and financial contributions in achieving the completion of the project; it was especially grateful of the assistance given in reviewing the alternative solu- tions for reconstruction of the damaged areas following the earthquake. PBWO has also -expressed its confidence in the suitability of the overall project design for achieving its objectives. (5049D) PaECT COMLIETID REPORT YUGOSLAVIA: PORT OF SAR AD EARTHOMAKE RENMAILITATION (PORTI PROJECTS Actual and Estimt.ed Prolect Costs - Loan 1060-YU Estianted Actual (in mill. Din.) (in mill. US) (in mill. Din.) (n miill. US$) Local forian lotal Local foaia ranl Lgl Earino Total Local Earie Ital EQRT Expropriation IL Zi 2LA !LA fiJ AIL* Li .2-. L Accommodation amJ ZA2 11.J 13 LA Zi 11A Jild L. ... A INFRASTRUCTURE Excavation & earth filling 20.2 13.4 33.6 1.3 0.9 2.2 - - - - Dredging 4.7 1.2 5.9 0.3 - 0.3 11.4 3.7 15.1 0.6 0.2 0.8 Extension of bulk cargo quay 9.1 7.4 16.5 0.6 0.5 1.1 9.5 15.4 24.9 0.6 0.8 1.4 Pier 1 (2 new quays) 27.4 22.4 49.8 1.8 1.5 3.3 39.4 75.8 115.2 2.2 4.1 6.3 Pier V Passenger quay 7.7 1.9 9.6 0.5 0.1 0.6 2.7 5.4 8.1 0.1 0.3 0.4 Repair of main and Secondary breakwaters - - - - - 1.3 2.4 3.7 0.1 0.1 0.2 62- 16A fli.A 102 167. IA 2-1 2-1 il i Li Watersupply 4.7 0.5 S.2 0.3 - 0.3 2.2 6.4 8.6 0.1 0.3 0.4 Sewerage 16.4 1.8 18.2 1.0 0.1 1.1 5.1 16.4 21.5 0.3 0.1 1.2 Electric power 14.1 9.3 23.4 0.9 0.6 1.5 13.1 43.4 56.5 0.7 2.3 3.0 Telecommunication 6.5 6.4 12.9 0.4 0.4 0.8 2.4 8.0 10.4 0.1 0.4 0.5 Port railway System 26.1 27.6 53.7 1.8 1.8 3.6 15.4 54.8 70.2 0.8 2.4 3.2 Port road system, parking, port fence 25.7 10.7 36.4 1.7 0.6 2.3 24.8 64.3 89.1 1.4 3.4 4.9 Workshop 5.8 2.3 8.1 0.4 0.3 0.7 4.8 7.5 12.3 0.3 0.4 0.7 Anti-pollution 5.6 8.0 13.6 0.4 U.s 0.9 - - - - - - Fire-fighting station with garage - - - 0.2 4.7 4.7 - 0.1 0.1 1.04. Aft IllJ LJ L 1fld 29565 2Z3 12 11 POJECT COMPLETION REPORT YUGOSLAVIA: PORT OF BAR AND EARTHOUAKE REMARILITATION (PORT) PAJECTS Actual and Estimated Project Casts - Loan 1660-YU Estimted Actual (in mill. Din.) (in mill. US$) (in ill. Din.) (in will. US) Local fariso Total Local foralo Total Local Entian Total Local Fali laa STQRAGES Grain silos 35.9 39.8 75.7 2.3 2.6 4.9 39.6 152.1 191.9 1.4 5.5 6.9 Edible oil tanks 5.0 18.0 23.0 0.3 1.3 1.6 2.6 33.9 36.5 0.1 1.4 1.5 Transit and other sheds 48.9 31.5 80.4 3.3 2.2 5.5 25.7 46.3 72.0 1.4 2.5 3.9 Open storage areas2" 5.2 1.3 6.5 0.4 - 0.4 - - - - - - MA 2LA 125A Li L1 IA ALI 232. ILS ZJ 2A 11J EQUIPENT Portal cranes 18.9 70.0 8.9 1.2 4.6 5.8 - 25.5 25.5 - 1.4 1.4 Transporter bridges 8.4 30.6 39.0 0.6 2.0 2.6 - .2 58.2 - 3.1 3.1 Container crane, mobile cranes. forklifts, tractors. trailers and other 7.5 29.5 37.0 0.5 2.0 2.5 0.3 51.7 59.0 - 3.1 3.1 ' Palettes and tarpaulins 5.9 1.2 7.1 0.4 - 0.4 - 7.0 7.8 - 0.4 0.4 Two tugboats 7.2 27.7 34.9 0.5 1.9 2.4 - - - - - Spare parts 4.8 8.7 13.5 0.4 0.7 1.1 - 8.9 8.9 - 0.5 0.5 IL2 IZ. 22AA 2A 11z 1.LA i11.1 1I59A - L.A Expenditures of equipment Procurement 33.9 1.2 35.1 1.8 0.1 1.9 162 160J 1ISA 1A LA 1L TECHNICAL ASSISTANCE 24.0 9.2 33.2 1.5 0.6 2.1 59.9 8.4 3.3 3.2 0.3 3.5 50LZ 411. 90 11. iA 6A Ill 729.2 12111J ZLA 1IA A INTEREST DURING CONSTRUCTION 21.8 66.6 88.4 1.4 4.4 5.5 2.0 82.9 84.9 0.1 4.4 4.5 TOTAL PORT" $IR.& 12" 1IL8 Ii2 Il 5ZA AAA9 22.1 IMA6 2ZJ IA LA PADJEC~T CMPLET0M REPORT YUGOSLAVIA: PODT OF BAR AND EARTNMAKE REMAAILITATIDM (POTL PAJECTS Actual and EstZmted Prolect Costs - Loan 1060-YU (in mill. Din.) Estimated (in mill. US$) (in mill. Din.) Actual (in i11l. US$) Local Frai Total Lcal Eartan Total Loca Farlan Intal Local .Ia RAILWAX marshalling Yard 44.1 27.4 71.5 3.0 1.8 4.8) Acceptance-dispatch station 35.0 22.0 57.0 2.3 1.4 3.7) 93.3 77.4 170.7 4.7 3.9 8.6 Port-railway ConeCt. 13.1 8.4 21.5 0.9 0.6 1.5) thZ IZA IILJ ftJ 1J IL INTEREST DURING CONSTRUCTION - 3.2 3.' - 0.2 0.2 - 2.0 2.0 - 0.1 0.1 TO- AL RAILWAY SLZ fal 11.1 2 i 1Ll 91J 3SA 17L LZ 1. L1 TOTAL PORT AND RAILWAY 621.2 I0.2 11L1 11) )id ZI IIZ 7. I4LI 11J ILA ZLZ U' I/ Excavation and filling works were anticipated under the appraisal ane the Project as a separate item of works. Actually, during progress of the implementation, particular excavating and earth fills were awarded separately for particular strucutres. as integral part of particular contracts. Z/ The Project and the Appraisal anticipated, based on specific estimates of possible needs, a separate item of works for *open storage areas". During progress of the implementation, the open storages (asphaltic pavements or concrete surfaces destinated for storaging of cargo) were awarded under the contracts for construction of quays and under the contracts for port roads and parkings respectively. I/ The Project Cost Estimate as contained in the Appraisal has been adjusted to enable a comparison. Price and physical contingencies are proportionally alliAted - the price contingencies to all items, and the physical to civil works only. Source: PO0 and IBRO June 1965 -- an - ca . . 7 -ALl I~'III Z 310¥1_- _ __ __ IABL.I - 47 - PROJECT COMPLETION REPORT YUGOSLAVIA: PORT OF BAR AND EARTHOUAKE REHABILITATION (PORT) PROJECTS Mechanical Handling Equipment Propo.ed and Procured and Countries of Origin - Loan 1060-YU 1B EA.1Ag.ftm Procured Country of Origin Bulk Cargo Crane Unloader - 12 Ton 3 3 Italy Portal Cranes for bulk Cargo 5 - Portal Cranes for General Cargo - 8 Ton 4 3 Italy Mobile Cranes - 12 Ton 5 3 United Kingdom Container Crane - 40 Ton - 1 Italy Container Forklifts - 35 Ton - 2 United Kingdom General Cargo Forklifts - 2-7 Ton is 26 Italy and United Kingdom Tractors 10 10 Yugoslavia Trailers - 35 Ton and 10 Ton 40 33 Yugoslavia Bulldozer I Yugoslavia Front End Loader 1 Yugoslavia Shunters 2 Ho'land Grabs for Dry Bulk Cargo 12 22 Fed. Republic of Germany Grabs for Dry Bulk Cargo 13 Italy Pumps. Valves, for Edible oil Tanks As required Italy Pallets. Tarpaulins and Scales As required Yugoslavia Tug Boats 2 Source: IBRO June 1985 PR3ECT COMLETION REPORT YUGO5LAVIA: PORT OF BAR AND EARTHOUME REHABILITATION (PORT) PROECTS Actual and Estimated Prolect Costs - Loan 176A-YU Estimaed Actual (in mill. Din.) (in mill. USf) (in mill. Din.) (in mill. USS) Lal farem Total LoAl Fargio ltal Local Forain Intal Local Eal latal I RESTORATION OF QUAYS 102 i 1AZ2 1-5 1A A 2h2.M 4.5. 127. 1.1 6L ILI 1.1 Restor. of Pier I 15.2 29.5 45.0 0.2 0.4 0.6 1.2 Restor. of Pier II 116.9 212.1 329.0 2.0 3.1 S.1 1.3 Restor. of Pier V and Passenger Quay 13.5 26.5 40.0 0.2 0.4 0.6 1.4 Restoration of other quays 61.7 121.4 183.1 0.9 1.7 2.6 1.5 Restoration preliminary works I) 55.0 55.4 110.4 1.2 1.0 2.2 2. RESTORATION OF BREAKWATERS 122, 22Ll 200d LA L1 113 lid ZZ.J 91J LJ AJ L. 3 RESTORATION OF VOLUJICA HILL 101. 6i. 110.9 2i L- L 2L. 10-2. 1.9 1- 1A 1A 4 4. DREDGING 11J 1L2 ILA L2 LJ 12 fL fik 11S. LA LJ 12 5 REPAIR OF STORAGES 22I 2LJ 190. LA i la §2J 11.0 J184. lLi Lf LZ 5.1 Transit sheds 52.2 108.8 161.0 0.8 1.5 2.3 5.2 Repair of oil tanks 17.1 6.2 23.3 0.3 0.1 0.4 6. REPAIR OF OTHER BUILDINGS 1L.A 1J .1 13 1J 1A 12Z 1A- iAL 1L2 011 7. REPAIR OF SERVICE AND CARGO HANOL ING AREAS 232, 1I5.1 3L7 115 Z.2 121 11-.2 ILl Ill L2 LA LA 7.1 Watersupply and sewerage 7.2 Parking. rcads. open storage areas 13.2 76.1 89.3 0.2 0.7 0.9 7.3 Railway system 23.1 94.9 118.0 0.4 0 9 1.3 7.4 Electric power and telecomunication 21.8 82.0 103.8 0.4 0.8 1.2 7.: Restoration of other infrastructure 2.2 - 2.2 0.1 - 6.1 PAOJECT COMLETION REPORT YUGQSLAVIA: PORT OF BAR AND EARTHOMAKE REHABILITATICM IPORT) PADJECT Actual and Estimated Protect Costs - Loan 1768-Yu (in mill. Din.) Estimated (in mill. US$) (in *i1l. Din.) (in awill. USM$ Local arein latal Local Enrain Total ocal Eareia Total Lacal Eatn Iata S. REPAIR OF EQUIPMENT - 1.I6 11A.Ul1 2L 101.3 LI L L 9. APARTMENTS FOR WORKERS (Restoration) 211L ILl ZAL 11-5 LA 101a -2 06A 2. -. JI 10. TECHNICAL ASSISTANCE 11L 1AI 2A _RA iZ - A 1J ..L2 1Z 11. EXTENSION OF VOLUJICA QUAY J 1Z.2 1212 1 ZAft iZ A1J Z1 14A .. 11 L 12. TWO NEW BERTHS ON PIER I 1013 is.2 1l2A LA L.Jl 11Id 1il 1.1L ZA LZ Ll 13. NEW TRANSIT SHEDS 6W1 5bl 111.4 L LJ LI 7LA 220.2 lA LI Z.2 Ll 13.1 Sheds 19, 20. 25 65.0 135.6 200.6 1.0 1.7 2.7 4 13.2 Shed fo. maintenance workshop 7.r 15.5 23.0 0.1 0.1 0.2 13.3 Terminals for timber and cattle 2.9 69.1 72.0 - 0.4 0.4 14. NEW EQUIPMENT FOR BULK CARGO 11.1 100.1 _- LI L - . - - - - - 15. NEW MECHANICAL EQUIPMENT2- 11A5 1IlA z Li 2i 12 512.4 1L 1.a L.1 Z.l 15.1 Portal cranes 238.5 238.5 - 1.7 1.7 15.2 Mobile cranes 12.3 12.3 - 0.3 0.3 15.3 Forklifts 31.5 31.5 - 0.8 0.8 15.4 Towmasters 15.5 Grabs. - 38.3 38.3 - 0.3 0.3 15.6 Workshop equipment 0.3 26.0 26.3 - 0.2 0.2 15.7 Other equipment 5.8 8.3 14.1 - 0.1 0.1 15.8 Fire-fighting equipment3 15.9 Spares - 182.5 182.5 - 1.8 1.1 15.10 Equipment procurement expenditures 186.5 - 186.5 1.9 - 1.9 PROJECT COMPLETION REPORT YUGOSLAVIA: PORT OF BAR AND EARTHOUAKE REHABILITATION (PORTI PROJECTS Actual and Estiamted Project Costs - Loan 176a-YU Estimated Actual (in mill. Din.) (in mill. USj) (in ill. Din.) (in mill. US$) Local fortir Intal Lgsal Forain Inotal Local Eartlan otal Local Earal latal 16. TUGBOATS -_ iL I1 j1 1 - S47.0 S7.o - 4.8 4.8 16.1 Tugboats 16.2 Fire-fighting equipment 17. EXPROPRIATION - - 89.3 - 89.3 1.2 - 1.2 - TOTAL 9.4 11L0, Z3U4. Oka i24. 146S i6l6A 40S . 1 18. INTEREST DURING CONSTRUCTION - - -- - - 2A _ A i L TOTAL 114. lIL0. 214, Ua2 124. )48. 266, 14L ILI I/ The item of preliminary works is shown separately in this table constdering that the same was separately agreed upon with the Contractor. C Z/ See Also Table 6. I/ Supplied together with tugboats. I/ For purposes of comparison between the Appraisal and the actual state, the columns under the costs estimates contain a proportional increase on account of estimated price contingencies. Mote: The items amounting less than US$ or Dinars 0.1 mill. have been marked with... Source: POWD and IBRM June 1985 YUGOSLAVIA REHABILITATION PROJECT (1768 YU) Actual Construction Schedule 1979 1980 1981 1982 1983 1984 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Pestoroion of Pier 1 P'estoiition of Pier If & Berth 2 3 1it0or(jlon of Passenger Berths & Pier m malof Breakwaters S Voluil:l Hit Stobilizationim estorotion of Hondling Areas & Uth t m PIer Construction of North Berth L.n Voluicc Berth F xtension Coostruction of Storage Sheds S uccessive Construction of Storage Shed for Wood & Cattle 4 Sxtc-nsion of the Workshop )redging Popoin of Storage Sheds his Storage Cornpleted in March 1983 Other Port Buildings ,onlry Crones Portol Cranes forkhfts Tug Boots Maintenance Equipment for Workshop U > Repor of Equipment a ggg - i HMI M-I IM- -gm M m A * In the Appraisal Report Construction SchedAe was not prepared wo Bank- 27486 - 52 - TABLE PROJECT COMPLETION REPORT YUGOSLAVIA: PORT OF BAR AND EARTHOUAKE REHABILITATION (PORT) PROJECTS Mechanical Handling touioment Proposed and Procured and Country of Origin of Sunpliers (Loan 1768-YUI Itm Proposed Procured Countrx of Woriji Bulk Dry Cargo Reclaimers 1/ - - Conveyor, Bulldozprs and Loaders Portal Cranes ST 3 - Portal Cranes 20T 2 1 Hungary Mobile Cranes 12T 3 3 United Kingdom Mobile Cranes 40/45 Ton I - Forklifts 2-13 Ton 30 40 Italy Towmaster Tractor 2 Fire Fighting Alarm System 1 1 Switzerland Tug Boat: 2 2 Fed. Republic of G2rmany Loading Equpt. Cdible Oil Tanks - As Required U N " Specialized Grabs - 22 U U U 1/ As determined by specialist consultants to handle proposed traffic. Source: IBRO June 1985 - 53 - TABLE 7 PROJECT COMPLETION REPORT YUGOSLAVIA: PORT OF BAR AND EARTHQUAKE REHABILITATION (PORT) PROJECTS (LOANS 1060-YU AND 1768-YU) Estimated and Actual Allocation of Loan Funds (US'000) Loan 1060-YU Notes Amount at Actual Category Appraisal Amount Civil Works 11,000 21,8001 Equipment Installation 1,700 200)' Equipment Procurement 13,400 11,700)-L" Port Consultants Services 600 300 Interest during Construction 4,400 4,400 Unallocated 7,300 - Railway Works 4,400 3,900 Interest during Construction 200 100 Unallocated 1,000 - Railway Cancelled - 1,600 TOTAL 44,000 44,000 Loan 1768-YU Amount at Actual Category Appraisal Amount Civil Works 20,500 19,900 Equipment Procurement 13,500 9,200 Equipment Repair 4,700 1,000 Unallocated 11,300 - Cancelled - 19,900 50,000 50,000 Note: 1/ The differences between the above allocations to the categories by the Disbursements Division and the actual costs shown on para. 3.15(i) obtained from PBWO are due to the inclusion of equipment valued US$3.3 million in the cost (foreign exchanges) of the structures constructed and charged to civil works costs shown in para. 3.15(i) and Table 1. Source: IBRD June 1985 - 54 - TABLE 8 PROJECT COMLETION REPORT YUGOSLAVIAL PORT OF BAR AND EARTHQUAKE REHABILITATION (PORT) PROJECTS Schedule of Disbursements (US$ million) Loan 1060-YU Loan 1768-YU Actual/ Appraisal Actual/ Appraisal Fiscal year Actual Estimate Estimate Actual Estimate Estimate ending June 30 % % 1975 5.6 1976 0.5 2 28.6 1977 12.3 28 44.0 1976 27.5 63 - 1979 34.7 77 1980 36.7 88 - 0.3 2.5 12.0 1981 39.6 90 - 1.1 3 32.0 19& 42.41/ 96 - 7.1 15 48.0 1983 18.1 36 50.0 1984 28.2 56 - 1985 30.l/ 60 - I/ US$1.6 million was cancelled. 2/ US 19.9 million was cancelled. Source: IBRO June 198S PRO.CI CT LETIe ~EP1 USO5LAVIA PRT 86A A8 EAOTI8RKE EIa[MILJTATION (PORTS) PIOCTS (LiS 1060-TU AN 1768-U) PORT O 8AR Ib o~LIATIO ~ Statament IL,ressed n 81IllIonS of vi.a D1nars) 1974 1975 1976 1977 1978 1979 19M t1i1 1982 113 1im im f or ye- em Ing Appr. Appe. APr. Apr. Ar. Apr. Ar. Uece~be 31 Actual Forecast Actl F!r*cast Actual forecast Actual Forecast Actual Forecast Actual Forecast Act.al Forecast Actu~l Actal Actual Act~a P Operatt%g Revenue^ fte.edering and 1.oadiln9 34.2 33.2 46./ 40.6 52.1 88.4 71.9 144.4 107.3 160.8 115.6 179.8 199.2 203.2 238.7 351.9 555.9 I00.8 - Storage 7.2 4.5 9.3 5.5 11.1 12.1 27.4 20.0 29.5 22.8 37.2 25.2 30.5 27.8 69.3 75.9 56.3 126.3 Nåtp 4MI:s ~hbrfage u.9 2.4 1.0 3.0 3. 7.0 5.8 10.6 1.3 11.6 -0.7 12.8 16.4 14.4 14.9 24.7 54.8 146.5 o.o9 anm ~.9nO 0.3 0.7 0.5 0.) 0.6 1.3 1.1 1.9 1.1 2.0 1.5 2.4 2.1 2.6 2.9 3.6 7.2 16.2 ~ - - . - 3.2 0.8 4.6 - 5.1 - 6.0 - 6.9 - - - 26.8 C liotge 0.3 0.5 0.5 0.5 0.4 1.2 0.7 0.9 0.9 1.0 1.0 1.1 1.9 1.2 3.3 2.7 4.3 8.7 uther des an ser-c.s 52 _5.0 _ 59 i2.8 6.1 23.1 6.4 45.6 6.8 57.1 7.1 64.7 7.5 156.9 151.5 287.6 465.5 lotal 41.6 46.3 61.5 56.2 81.3 119.3 129.8 188.8 186.2 210.1 223.1 236.4 314.8 263.6 4%.0 610.3 96.1 1170.8 2290.0 uperating t~penses ages 21.4 21.2 33.6 24.4 51.5 45.0 61.8 63.7 104.3 67.4 131.9 11.4 168.8 75.2 228.0 314.7 418.6 97.6 1m0.0 F,el au 4eectric per 1.5 1.7 1.7 2.2 1.5 3.8 2.9 5.9 2., 6.5 1.4 6.9 9.5 7.3 11 16.9 33.4 68.5 86.0 Kteri,ls 3.6 2.1 4.1 2.6 6.9 2.8 15.1 3.2 11.9 3.6 21.5 3.7 25.4 3.7 44.6 48.5 67.8 133.7 1M0.0 mal.tece 0.3 1.1 0.3 1.3 2.3 3.8 1.4 8.1 0.7 10.2 1.2 10.2 1.4 11.7 2.4 2.0 5.7 17.6 20.0 In.s5rnce 0.9 1.9 1.5 1.9 2.4 ?.8 2. 4.6 5.8 5.4 1.2 5.9 9.3 6.0 9.3 22.0 15.2 27.1 35.0 Ocher- 2.3 2. 8.1 2.4 5.1 4.0 7.8 4.4 6.1 4.8 11.3 5.1 23.1 5.5 22.4 25.3 36.9 72.1 M.0 Smb-tot.l 36.0 30.1 49.3 35.2 69.7 62.2 111.1 89.3 131.3 97.9 174.5 103.2 237.5 109.4 318.3 429.4 577.6 1016.6 130.0 utprechet~o 5.6 5.8 5-4 1.3 6.6 13.9 9.7 30.4 20.9 37.1 20.4 37.1 24.3 41.6 31.1 79.0 '39.0 290.0 00.0 To.W 41.6 35.9 54.) 42.5 16.5 76-1 121.4 12.3 152.2 135.0 194.9 140.3 261.8 151.0 349.4 508.4 711.6 1266.6 16 .0 bro Operating Incm 7.0 10.4 B2b 3 4-8 43_.2 8.4 68.5 34.0 751 28.2 1 530 1126 136.6 101.9 254.5 00.2 520.0 *oasing revenu 6.1 6.1 6.1 6.1 "ican~aeoms IMce (epenses) 2. 0.2 0.4 0.2 9.7 0.3 6.4 0.3 4.2 0.4 (137.3) 0.5 70.6 0.5 95.8 91.3 293.7 Aartilétion - deterred expense, 4.5 (0.1) 9.0 (0.1) 9.0 (0.2) (9.0) (6.5) (10.2) (.0.2) (10.0) (10.0) Total 2.0 0./ 0.4 0.2 9.7 0.3 6.4 1.9 4.1 (2.5) 137.4) (2.4) 70.4 (2.4) 89.3 81.1 283.5 (10.0) (10.0) bet ~perat,.s nco 9.0 10i l32 13.9 14.5 43.5 14.8 70-4 38.1 72.6 &109.2j 91_ 123.4 110.2 225.9 183.0 538.0 59.2 510.0 Contribution: noos1n ad other 1di, 3.3 1.3 4.8 1.5 6.1 2.k 1.0 4.0 9.5 4.2 10.1 4.5 27.6 4.7 60.7 20.0 74.0 *Ta *T9 wiore,s. com åsset, - 0.8 - 0.5 - 1.8 - 2.2 - 2.2 - 4.3 - 6.2 - - •TR -Tal Total 3.3 2.1 4.8 2.0 6.) 4.6 1.0 6.2 9.5 6.4 10.1 8.8 27.8 10.9 60.7 20.0 74.0 icm hefore Interest anm laes 5.) 6.5 6.4 11.9 ?.8 38.9 7.b 64.2 28.6 66.2 (119.3) 82.9 95.6 99.3 165.2 163.0 464.0 59.2 Inteest txpense 0.) 07.6 0.6 0.5 0.6 0.5 0.6 0.4 22.0 28.4 112.5 54.9 113.7 52.8 144.6 196.2 35.5 367.-7 829.5 lae 2.3 0.2 3.4 0.2 3.3 0.5 5.0 0.8 6.6 0.7 4.2 0.6 10.8 0.8 20.5 23.6 44.3 86.0 -rep ,ot. J.0 0. 4.0 0.7 3.9 1.0 5.6 1.2 28.6 29.1 116.7 55.5 124.5 53.6 165.J 217.8 409.8 793.7 bet 1oc 2.) i - 4 11.2 3.9 37 63.0 - 37.1 (236.0) 2 28.9 45 0 (54.8) 542 (199.5) (319.5) K ati. uperat-g katiox 86 76 81 76 94 64 94 64 82 64 87 60 83 5 72 83 74 68 76 1 aes interest Covereo ( UOss 1p. ncm interest) 10.0. Il-J. 21.3. 27.4. 8.0. d6.4x 14.0. 171.3. 1.5. 2.6m 0.25. 1.7. 0.46. 2.1. 0.94x 0.52, 0.70s ,,.ta Of Keturn o 1et fi..C Allets 1 3.8 4.4 3.9 5.0 3.0 8.2 2.! 1.7 3.4 6.4 (9.5> 8.4 12.2 9.8 18.1 10.7 16.3 -To De ceter~i~e. Pmy 1965 (60050> PROJECT COPLETION REPORT VU60SLAVIA; PONT Of MR AND EAR E1. REHABILITATION (PORTS) PROJECTS (LOWS 1060-VU AND 1768-lU) POkT OF R _M NOWMIZATION Selance Sheet Smry (Expresse" in millions of yugoslav Dinars) 1974 19)5 19?6 1977 1978 1979 1980 1981 1982 1963 Apr. Appr. Appr. Appr. Appr. Appr. Appr. As at Decemer ,. Actual Forecast Actual Forecast Actual Forecast Actual forecast Actual Forecast Actual Forecast Actual Forecast Actual Actual Actes] ASSLIS rix*d Assets; broSS 216.6 290.1 531.3 379.6 629.3 750.4 1011.2 151.3 15684.8 1251.3 1037.1 1251.3 1270.8 1392.3 1663.7 2493.1 534.7 Accumulated deprecation bo.0 53.3 98.0 60.6 110.4 14.5 151.1 104.9 217.0 142.0 106.1 179.1 176.6 220.7 280.0 416.1 175.4 net fixed assets In use 236.6 231.4 433.3 319.0 618.9 675.9 866.1 1146.4 1367.8 1109.3 928.4 1012.2 1094.2 1171.6 1403.7 2007.0 4579.3 wor-in-progress 186.7 206.9 271,4 460.5 300.0 389.6 595.3 - 353.6 47.8 66.6 86.0 190.4 - 469.1 1770.7 Se4.6 Sub-total 423.2 443.3 704.7 179.5 818.9 1065.4 1461.4 1146.4 1721.3 1157.1 995.0 1158.2 1294.6 1171.6 182.6 3777.7 S128.9 oeferred txpenses 17.9 6.5 16.3 63.0 39.8 169.0 24.4 246.0 25.7 263.0 452.1' 323.4 265.9' 317.8 326.6 428.3 1018.7 Uther lson-Lurrent Assets 9.6 6.1 11.9 7.9 21.2 9.9 11).3 12.0 142.4 14.5 met urrent Assets; ."&rng ca etal 17.b 3.5 50.11 3.9 56.2 11.0 65.8 12.6 109.0 14.0 164.0 15.9 991.4 17.5 1432.3 200.S S09t.9 Investment cas. 2. 12.4 1.2 26.8 113.3 68.0 11.2 130.0 20.1 141.8 219.1 125.2 104.1 134.4 224.1 65.8 414.8 Sub-tutl 2.4 15.9 6.0 30.7 169.5 19.0 77.0 142.6 129.1 155.8 383.1 141.1 1095.5 151.9 1656.4 ZM5.3 5509.7 a local Assets 411.1 471.6 790.9 Otl. 1049.4 1323.3 1674.1 1546.0 2018.5 1590.4 1830.8 1622.7 2646.0 1641.3 34.8 6312.3 11667.3 LMAgILITith AWd EIjUill Long-Ierm Oebt 122.4 21.8 221.) 2b).3 363.0 691.6 836.3 851.3 1063.4 838.6 1642.8 813.5 2209.8 786.4 3000.2 4594.8 7165.3 EQuity: 6overm t contributions 112.L - 244.6 - 244.6 - 244.6 - 264.6 - 294.6 - Z94.6 - - - busines funV2' r oo.7 33d.( 569.2 349.2 686.4 361.1 837.8 460.1 965.1 487.2 18.0 514.6 436.2 660.3 854.6 1717.S 3912.0 Sub-total 348.7 450.0 569.Z 593.6 686.4 631.7 837.8 694.7 955.1 751.8 186.0 809.2 436.2 864.9 854.6 1717.5 3282.0 Total LiaDIlities and Lquity 41.1 411.8 190.9 861.1 1049.4 1323.3 1614.1 1546.0 2018.6 1590.4 130.8 1622.1 2646.0 1641.3 3854.0 6312.3 1167.3 katio0s uebt/Equity 20/14 5196 2617? 33/61 35/65 52/4d 50/So 55/45 S3/47 53/47 90/10 50/50 84/16 46/52 ?8/22 73127 66/34 Average net fixSed assets in use 239.6 24u.3 334.9 278.2 416.1 497.5 692.5 911.2 1117.0 1127.9 1148.1 1090.8 1011.3 1121.9 1249.0 1705.4 3293.2 1/ Includes eartaquaae losses not covered. i includes overment contribution, housing and other reserves. no, I9lb (5001 - 57 - TABLE 11 PROJCT CONPLETION MEPORT YUGOSLAVIAs PORT OF BAR AND BATMQUAKS REABILITATION (PORT) PROJBCTS Financing Plan Loan 1060-YU - (Port) Million US$ Squivalent Local Foreign Total P-tual/ Appr. Appr. Appr. A3pr. Actual Eat. Actual Esat. Actual Esat. Est. t Montenegrin Republic 2.0 2.5 2.0 2.5 3.3 SetDian Repuolic 6.3 7.9 6.3 7.9 10.4 Port of Bar 0.1 2.0 0.1 2.0 2.6 Feceral Directorate (Matres) 1. 2.6 1.5 2.6 3.4 Investment Bank of Titograd 14.5 12.9 14.5 12.9 16.9 Other banks 1.8 - 1.8 - Commune of Bar 0.3 - 0.3 - IBRD 38.4 38.4 38.4 38.4 50.3 26.5 27.9 38.4 38.4 64.9 66.3 Loan 1060-YU (Railway) kTE 4.7 4.4 4.7 4.4 5.8 J3RD 4.0 5.6 4.0 5.6 7.3 4.7 4.4 4.0 5.6 8.7 10.0 Total 31.2 32.3 42.4 44.0 73.6 76.3 100.0 Loan 1768-YU Republic Puna for keconstruction 29.2 74.8 29.2 74t8 60.0 Port ot Bar 0.4 - 2.0 - - 16R 30.1 50.0 30.1 50.0 40.0 Total 29.6 74.8 30.1 50.0 61.3 124.8 100.0 Source: PBWO June 1985 - 58 - TABLE 12 PROJECT CMLTION REPORT YUCOSLAVIA: PART OF BAR AND EARTHOUAKE REHABILITATION (PORT) PROJECTS Cmarison of Actual Traffic and Anaraisal Forecasts: 1972-1984 ('000 tons) Comodity OroUg 1Z2_ 1974 1976 1980 1984 Annual Growth Rate % 1972-1984 actual Actual Planned Actual Planned Actual Planned Actual Planned 1/ Actual Forecast General Cargo 34S 346 350 332 545 609 1.387 875 1,387 8.1 12.3 Bulk Cargo 350 276 405 460 1,270 580 2.385 913 2.385 8.3 17.3 Liquid Cargo 115 299 175 275 367 32S 555 378 555 10.4 14.0 Total 809 921 930 1,067 2.182 1.514 4,327 2.166 4.327 8.6 15.0 1/ Appraisal estimates assumed traffic would not increase after 1980 because of uncertainties over development at other Yugoslav ports. Source: PBWO June 1985 - 59 - TABLE 13 PROJECT COMPLETION REPORT YUGOSLAVIA: PORT OF BAR AND EARTHQUAKE REHABILITATION (PORT) PROJECT Cargo Handled in Yugoslav Ports 1974-1984 ('000 tons) Port 1974 1976 1980 1983 1984 Koper 1,951 2,102 2,356 2,690 2,798 Pula 225 206 292 110 120 Rijeka 6,681 6,766 7,554 6,718 6,993 Zadar 135 374 734 522 356 Sibenik 970 757 976 1,114 1,184 Split 1,421 978 403 997 1,000 Kardeljevo (Ploce) 2,554 2,748 3,514 3,445 3,695 Metkovic 273 218 162 322 315 Dubrovnik 296 224 329 194 217 Bar 921 1,067 1,514 1,731 2,166 Total 15,467 15,646 17,834 17,843 18,844 % Bar 6.0 6.8 8.5 9.7 11.5 Source: PBWO June 1985 - 60 - TABLE 14 PROJECT COMPLETION REPORT YUGOSLAVIA: PORT OF BAR AND EARTHQUAKE RERABILITATION (PORT) PROJECTS Actual and Forecast Traffic 1974-95 ('000 tons) Actua 1 Forecast Annual Growth Rate Commodity 1974 1980 1984 1986 1990 1995 1974-84 1984-95 Coal 1/ -- -- 41 - 120 130 -- 11.0 Oil products 2/ 299 325 378 485 900 990 2.4 9.2 Ores 3/ 116 376 666 800 1,860 2,000 19.1 10.5 Non-metals 4/ 10 39 19 30 90 100 6.6 16.3 Metallurgical products 4/ 34 160 267 200 370 400 22.9 3.7 Wood products 4/ 13 59 19 80 100 130 3.9 19.1 Wood -- 15 1 -- -- -- -- -- Cement 4/ 157 82 68 200 370 400 -8.0 17.5 Building materials 3 19 7 10 40 50 8.8 19.6 Grains 1/ -- 103 93 200 360 400 -- 14.2 Fertilizers 1/ -- 36 27 70 100 100 -- 12.6 Other 4/ 289 300 580 610 690 800 7.2 3.0 Total 921 1,514 2,166 2,685 5,000 5,500 8.9 8.8 1/ Imports for consumption in Montenegro/Serbia. 2/ Coastal traffic for distribution to Montenegro/Serbia. 3/ Includes: iron ore imports for Smederevo steel plant increasing from current 0.6 mt. to 1.2 mt., phosphate imports increasing from 0.1 mt to 0.8 mt. No bauxite traffic included in forecasts. 4/ Mainly exports from Montenegro/Serbia. Source: PBWO June 1985 - 61 - Table 15 PROJECT COMPLETION REPORT YUGOSLAVIA: PORT OF BAR AND EARTHQUAKE REHABILITATION (PORT) PROJECTS Estimates of Normal and Diverted Traffic Flows ('000 tons) Diverted Traffic Actual Normal Traffic 1/ Rijeka/ Ploce/ Dubrovnik Sub-total Total Koper Sibenik 1974 904 -- 17 17 921 1976 1,043 1 23 24 1,067 1980 1,064 377 29 44 450 1,514 1984 1,409 569 65 123 757 2,166 Forecast 1986 L,569 678 285 153 1,116 2,685 1990 2,789 1,296 752 163 2,211 5,000 1995 3,044 1,462 829 165 _,456 5,500 1/ Capacity of the old port would have limited throughputs to just over 1. million tons per year. As a result, part of the normal traffic estimates should be considered as induced or possibly diverted traffic. As the distinction between induced and diverted traffic is difficult to establish in many instances for future incremental traffic, the latter has been allocated arbitrarily on a 50/50 basis between normal traffic and diverted traffic. Source: PBWn June 19185 - 62 - Table 16 PROJECT COMPLETION REPORT YUGOSLAVIA LOAN 1060-YU PORT OF BAR PROJECT LOAN 1768-YU PORT OF BAR EARTHQUAKE REHABILITATION PROJECT Costs and Benefits (Yugoslav Dinar million - 1980 prices) Bene fits Ships' Handling Transport Year Costs Time Costs Costs Total 1975 195.4 -- --- -- 1976 471.2 -- -- 0.9 0.9 1977 b74.6 -- 1.4 1.6 3.0 1978 360.6 81.0 2.1 3.1 86.2 1979 192.1 96.4 3.2 5.7 105.3 1980 131.1 114.8 4.9 5,4 125.1 1981 139.1 137.8 7.6 5.6 151.0 1982 250.3 165.4 11.5 5.6 182.5 1983 243.2 198.6 17.5 9.7 225.8 1984 104.5 239.5 26.6 11.0 276.1 195-- 247.3 30.5 15.6 293.4 1986 -- 256.5 35.1 18.2 309.8 197 -- 289.1 40.5 20.6 350.2 19d8 -- 325.8 46.5 23.3 395.6 1989 -- 367.2 53.3 28.0 448.5 1990 -- 414.0 61.3 34.3 509.6 1991 -- 422.3 62.4 34.3 519.0 1992 940.7 430.7 63.7 34.3 528.7 1993 -- 439.2 64.8 34.3 538.3 1994 -- 447.9 66.1 34.3 548.3 1L995-1999 -- 456.8 67.3 34.3 558.4 U00U 940.7 456.8 67.3 34.3 558.4 4u01-2005 -- 456.8 67.3 34.3 558.4 14uub (560 / -- -- -- -- ER= 10% 1/ Salvage value. Source: 1BRD June 1985 YUGOSLAVA PORT OF BAR AND EARTHQUAKE REHABILITATION (PORT) PROJECTS (Loon 1060-YU ond 1768-YU) Project Completion Repor Port o( Bor Working Organztion Organization Chart - April 1985 Basc C ganczat ion al ic gnizaton c# Baic Ora on of atm As~cyted Uits af Lat> Asoiated UrKts If La Asoaed Unfits of Labor PORT $ERVlcES Ui.TS MAINENANCE INTS SOCI SERICES I£~S ADMNSTRATION UMTS U u NITS Fe C&Atoms Zone Elec~ncl oker Hsei Fnnc" Inw~lints BuIk -Handing Bet+ M ctaurant & C~arena Commrcil Design pmr Carpntry Food SupiV Legal Conshuction & Pi li R~,wy vard Personne Pracumr.i Coracts Posæ~ Quav Connre Waenouse Secuty & FWgtig proctI Iip~ementac PlØage & Towage Moonng & Un,morig Sately & Saivage Workers Councl usnes Manmoent Board (Ch^Oen by the Worts oui) Exper Adluor Mebe Post servicœr Mebe - antenanc Pot eacsManenn Sc SlicsAdryvn.stration ConsRte war LUis walkers UnSits UTs of LDo Units at Labor Utof Labor Jo De c¥apoied Dy the Montenegnn f?epu0i.c Ealcutive Council W~ta oa - 27484 난― 6RD 13136R AUSTRýÅ NGA R I HUNGARY m Y 1111 G IIIIA Y U G 0 5 1 A V l A TRANSPORTATION INFRASTRUCTURE K A (.BAN l A