td.LAIMUT4 CUPY

Report No. 303a-PAK

IQ BE RETURNED TO REPORTS DESK

Appraisal of ETURN

Fourth Karachi Port Projec REPORTS D

Pakistan Project

WIT

April 24, 1974 FILE COPY

Asia Projects Department

Not for Public Use

Document of the Jnternaonal

Bank for Reconstruction and DIvetoPment

)nternatiOnal DeOeroplent

Associat,on

Th~s r'spo,t 's PreP fd for ffiia use ~te6n ru tmyntb

quotec or cited without Bank Group b u torat0 he Bank Grop os o

for the accuracy orcml reesofP utheeoritP

tmyntb repub 5ihd,

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

1 Pakistan Rupee (PR) = US$0.10US$1 = PRs 9.9

WEIGHTS AND MEASURES

Tons are metric tons of 2,205 pounds.All depths of water given in the report are

below Low Water Ordinary Spring Tides.

ABBREVIATIONS

AOC - Attock Oil Companydwt - Deadweight tons (a measure of

weight-carrying capacity)CDP - Gross Domestic ProductGNP - Gross National ProductKPT - Karachi Port TrustNRL - National Refinery Ltd.NSC - National Shipping CorporationO.P. 1, 2, 3, and 4 - Existing three, and proposed fourth,

oil berthsPRL - Pakistan Refinery Ltd.

GOVERNMENT OF PAKISTAN

FISCAL YEAR

July 1 to June 30

PAKISTAN

APPRAISAL OF FOURTH KARACUI PORT PROJECT

TABLE OF CONTENTS

Page No.

SUlMA4RY AND CONCLUSIONS .............................. . i-i

I* INTRODUCTION ... ***********e**,***e******........... 1

II. BACKGROUND ............... ,, 1

A. General 1B. The Petroleum Sector 2C. The Transport Sector ..................... ........ 3D. Transport Planning . .. 4

III. THE PORT OF KARACHI.......... 5

A. Organization and Administration 5B. Staff and Labor 6................. .... 6C. Port Facilities ...... .. ......... 6D. Dredging .7.........*.*.*. 7E. Operations ..... . .... ...... . 7

IV. INVESTMENT PROGRAM AND THE PROJECT ..................... 8

A. Investment Program 8B. Description of the Project ........... ........ 8C. Project Cost Estimates .................. 10D. Project Execution. ............ 12E. Consulting Services ...................... 12F. Procurement and Disbursement .............. 12G. Ecology . . .. .*.. ..* *,....... ., ,,,O...... 12

H. Existing Oil Tankage and Piping Arrangementsand Required Improvements ...... * ............ 13

V. ECONOMIC EVALUATION ........................ 13

A. General........... 13B. Traffic Forecast . ........ 13C. Project Scope. . ........... .. 14D. Economic Benefits .. . ....... 15E. Economic Return and Sensitivity Analysis .......... 16

This report was prepared by Messrs. J. Burns (Financial Analyst), F. Higgin-bottom (Engineer) and R. Roberts (Economist), with some assistance from Mr.Y. Akatsuka (Engineer).

-2-

VI. FINANCIAL EVALUATION ...... .. %**..... .q,

A. Tariffs ....... .-. '......... ttq. t t. t e q

B. Present Accounting SYStei0 a4A ft &t t .I .t.. 1C. Financial Forecats . .e...e.*eqqq.q.,q.q... 1.

D. Financial Plan and Objectives *. eeq it

E. Audit ........... **.... ..... .

F. Insurance . ... .. . . . .. . . . .. .... .. .* qte s a

VII. AGBSIMNS RUCWZ ANID �I* . (' .... 2

ANNKXUS

1. Description of Port Facilities. and Equipmt2. Description of Project and Non-Prqjqet 1.tW%3. Maintenance Dredging and Depenaing of Hat-mco ftwu61

Size of Dredger and Tiu Required4. Traffic Forecasting Methodology

TABOLES

1. KPT Investment Program 1974-1932. Estimated Project Co0ts3. Construction Schedules4. Annual Estimated Project Expeuditqr*5. Estimated Schedule of )1shorsqwnt6. Consumption of Petroleu trodi¢.ts 1-'1P77. Petrolewm Products, Demand and Spuy 19T3"%i$$8. Alternative Dredging Costs and Benfit9. Tanker Operating end Capital Costs10. Project Costs and Benefits11. Revenue and Expenditures 1969-197312. Balance Sheet June 30, 197313. Forecast Rqvenue and gixpenditures 1%74m1J8414. Forecast Balance Sheets 1974-194315. Statement of Cash Flows 1974-1983

MA?S

1. Pakistan Transport Network (10756)2. Karachi Transport Network (10170R)3. Karachi Port and Approach Chapnel (10171Rt)4. Proposed Oil Berth (8129)

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

SUMMARY AND CONCLUSIONS

i. All Pakistan's imports and exports by sea (10.3 million tons in1973) are handled through the port of Karachi, Pakistan's only major port.The port is managed by Karachi Port Trust (KPT), which has received twoprevious Bank Loans, 126-PAK for US$14.8 million in 1955 and 376-PAK forUS$17.0 million in 1964, and the proceeds of two Association Credits, S-9 PAXfor US$1.0 million in 1970 and Credit 422-PAK for US$18.0 million, in-cluding the re-financing of S-9 PAK, in 1973. Credit 422-PAK, whichbecame effective in December 1973, will assist in financing additionalgeneral cargo berths and reconstruction of the Napier Mole road bridge. KPThas been responsible for the execution of these loans and credits and,although execution of 376-PAK has been slow, KPT's performance has beensatisfactory. As the works are expected to be substantially completedby the revised Closing Date of June 30, 1974, no further extension isanticipated.

ii. The three oil berths, one of which, built in 1910, is in a verydilapidated condition, have very limited alongside depths of water, so thatimports of crude oil tend to be carried in small, old, tankers with lowdischarge rates. A berthing accident could at any time destroy the dilapidatedberth, thus depriving the port of one-third of its present capacity forberthing oil tankers with consequent serious disruption of Pakistan's importsof crude oil and petroleum products.

iii. A feasibility study undertaken by consultants, Frederic R. HarrisInc. (USA) to determine the best solution for handling Pakistan's oiltraffic, reviewed a number of possibilities, including offshore solutions.It recommended construction of a new oil berth on the East side of theharbor entrance at Keamari, adjacent to existing installations.

iv. Based on the consultant's recommendations as revised by Bankstaff following appraisal, the proposed project comprises, Part A, itemsto be financed by the proposed credit - (a) construction of a new oilberth No. 4 (O.P.4) capable of berthing 75,000 dwt tankers; (b) immediatecontract dredging of the approach channel to a depth of 37 ft; (c) purchaseof a dredger for maintaining and deepening the channel to 40 ft; (d) hosehandling equipment and common-user pipelines; and (e) consulting services forsupervision and technical assistance on dredger operation and maintenance;and Part B, items to be undertaken by KPT and financed by them - (f) increas-ing the alongside depth of one of the existing oil berths to 38 ft with thepresent dredging fleet, and (g) deepening the approach channel from 37 ft to40 ft depth with the dredger provided under Part A. The two parts of theproject are expected to be completed by September 1976 and June 1979,respectively.

v. The proposed credit of UJS$16.0 million would finance the foreignexchange costs of Part A of the project, the total estimated cost of whichis US$23.9 million. The local currency costs of the whole project, US$7.5

- ii -

million equivalent and the foreign exchange cost of Part B, US$0.4 million,will be financed by KPT, who will also be responsible for the execution ofthe project with the aid of consultants.

vi. Contracts for major civil works, dredging in Part A of theproject and the dredger procurement would be awarded on the basis ofinternational competitive bidding. Where appropriate, evaluation of bidsfor civil works.will include a 7-1/2% domestic preference.

vii. The proposed project would reduce the cost of imported crudeoil and is estimated to earn an economic return of 23%.

viii. Although KPT's present financial situation is sound, implementationof the proposed investment program will require considerable cash resourcae.KPT has therefore agreed to maintain the financial rate of return on itsfixed assets at not less than 4% from 1976 to 1981 and 7% thereafter. KPThas further undertaken not to incur additional long-term debt unless cashrevenue is at least 1.5 times the maximu- debt service requirement. To ensureeffective use of the oil berths, KPT will consider the introduction of time-related berthing charges.

ix. The proposed project is suitable for an IDA credit of US$16.0million to the Government on the usual terms. The Government would relendthe proceeds of the credit to KPT for a term of 25 years, including a five-year grace period, at the Bank interest rate current at the time of creditapproval.

I. INTRODUCTION

1.01 The Government of the Islamic Republic of Pakistan (the Government)has requested the Association's assistance in financing an oil berth anddeepening or the approach channel to handle larger tankers at Karachi. Theestimated total cost of the proposed project will be US$23.9 million ofwhich US$16.0 million would be financed by an Association credit; it isbased on studies made by consultants appointed for this purpose and financedunder Credit S-9 PAK. The proposed credit would be made to the Governmentand would be relent to Karachi Port Trust (KPT) at the Bank interest rateat the time the credit is approved, for a period of 25 years including afive-year grace period.

1.02 KPT has received two Bank loans - 126-PAK for US$14.8 million(1955) and 376-PAK for US$17.0 million (1964) and two credits - S-9 PAKfor US$1.0 million (1970), and 422-PAK for US$18.0 million (1973). Aftersome problems with KPT's supervision of the first loan completed in 1962,its performance has been satisfactory. The closing date for Loan 376-PAK,twice extended due to foundation problems and Indo-Pakistan hostilities,is now June 30, 1974; disbursement as at March 31, 1974 was US$14.9 million.Firnal disbursement of Credit S-9 PAK was US$637,000 and it has now been re-financed in Credit 422-PAK, under which four additional cargo berths andreplacement of the Napier Mole road bridge will also be financed.

1.03 Other loans/credits for the transport sector in Pakistan haveincluded three for highways, six for railways, including three made in the1950's which were joint loans for Pakistan Eastern and Western Railways,and four for pipelines. One highway loan was cancelled in July 1971 be-cause bids received were greatly in excess of original estimates. Allother loans have progressed satisfactorily.

1.04 This report is based on the findings of an appraisal missioncomposed of Y. Akatsuka (engineer), J. Burns (financial analyst),F. Higginbottom (engineer) and R. H. Roberts (economist) which visitedPakistan in August 1973 and on a report by consultants, Frederic R. Harris,Inc. (USA).

II. BACKGROUND

A. General

2.01 Pakistan covers an area of about 300,000 square miles; itis crossed by five great rivers - the Indus, Jhelum, Chenab, Ravi andSutlej which, after their confluence, flow as the Indus southwestwardto the sea. These rivers occasionally overflow their banks and the floodscause serious disruption of transport and the economy, as happened in 1973.

2.02 The population is about 64 million, about 70% of whom live inrural areas. Some 50% of the urban population lives in the five principalcities of Rawalpindi, Karachi, Hyderabad, Lahore and Lyallpur. The popu-lation is believed to be increasing at a rate of about 2.9% p.a.; the

- 2-

increase in urban areas is about 4.6% because of migration from the country-side.

2.03 The economy is primarily rural, with about one-third of theGross National Product (GNP) stemming from agriculture, fishing andforestry. Transport and communications account for about 7% of GNP.Principal agricultural exports include rice, cotton and oil seeds whichmove by rail from the producing areas to the country's sole deep sea port ofKarachi. Cement produced in Hyderabad is also exported through Karachi.Petroleum and petroleum products are the largest single imported commodity.Other imports, besides general cargo, include iron and steel, wheat, andfertilizers.

2.04 Average annual per capita income in 1972 is estimated at lessthan US$125. In the 1960's the economy maintained a growth of about 6%p.a. However, as a result of the loss of the East Wing in 1971, and thehostilities with India, Gross Domestic Product (GDP) at constant priceswas practically unchanged in 1971-72. Labor unrest combined with inflationand an uncertain business outlook resulted in a substantial drop in privatesector investment. In May 1972, Pakistan devalued the official Rupee rateof exchange from PRs 4.76 to the US dollar to PRs 11.00 and considerablyliberalized import regulations (subsequent 10% devaluation .of the USdollar changed the rate to PRe 9.90 to the dollar). These measures,combined with vigorous and successful efforts to find alternative exportmarkets for products previously shipped to the East Wing, and assistedby a good cotton crop, firm commodity prices, and a return to industrialpeace, have stabilized the economy and provided a base for a resumptionof economic growth. The 1S13 floods have again set back the economy butrecovery from the immediate difficulties appears to have been swift.

B. The Petroleum Sector

2.05 About 15% (500,000 tons p.a.) nf Pakistan's present crude oilrequirements is supplied by domestic oil fields in the vicinity of Rawalpindi.Development of these fields and new discoveries are adding only enough toreserves to maintain the current production rate. Consequently, in theabsence of any significant new discoveries, the proportion of Pakistan'scrude oil requirements supplied by imports will continue to increase withthe demand for petroleum products.

2.06 Imported crude oil is refined at the refineries of PakistanRefinery Ltd. (PRL), owned by major foreign oil companies, and NationalRefinery Ltd. (NRL), a Government-owned company, both located at Korangi,five miles east of Karachi (Map 10170R). PRL's crude oil intake capacityis 2.6 million tons p.a., and NRL's 0.6 million tons. Domesticallyproduced crude oil is refined at the Attock Oil Co., Ltd. (AOC) refinery,at Rawalpindi, which has a capacity of 0.5 million tons p.a. Between them,they provide a yield of refined products wnich meets most of Pakistan'spresent requirements of middle aistillates but which, because of limitationsimposed by existing equipment and technology, produces fuel oil and naphthain excess of domestic requirements. PRL plans to add facilities at its

- 3 -

refinery to reduce the yield of fuel oil and increase that of middledistillates, but strict limits on the degree of flexibility in yield patternswill remain, and a continuing imbalance can be expected between refinery yieldsand product demand. This implies a continuing need to import and exportsubstantial volumes of refined products, which amounted to 187,000 tons and708,000 tons respectively in 1972.

2.07 The Government has approved plans for the expansion of NRL'srefinery to a capacity of two million tons a year by about 1976, and isnegotiating with the Governments of Saudi Arabia and Romania for technicaland financial assistance. Failing such expansion, imports of middledistillates would exceed one million tons by 1976.

2.08 The Government plans construction of a new two million toncapacity refinery at Multan (Map 10756) for about 1977; it will useimported crude oil, and a pipeline from the coast is included in theplans. The project will be a joint venture between the Governments ofPakistan and Abu Dhabi, and will be operated by NRL. The refinery willbe designed to minimize the yield of low-value fuel oil, which could notbe economically exported, because of the refinery's distance from the port.

2.09 Consumption of fuel oil has been declining since 1966, becauseof Pakistan Western Railways' dieselization program, and a switch of largeindustrial energy consumers to natural gas. In view of the large surplusof fuel oil, exported at a very small net benefit to the Pakistan economy,the Government is now encouraging large industrial consumers located nearrefineries, such as Karachi Electric Supply Company, to switch back tousing fuel oil. The effectiveness of this policy will be strenlthened bya recent increase, effective August 1973, in Sui Northern Gas Pipelines'tariff for natural gas.

C. The Transport Sector

2.10 All forms of transport, ranging from camel train to jet aircraft,are represented in Pakistan. The main traffic flows are between thethickly populated area in the northeast, with Lahore as the center, andthe port and industrial area of Karachi some 700 miles away; west to theindustrial and agricultural areas around Lyallpur, Sargodha, and Khushab;and northwest to the administrative centers in Rawalpindi and Islamabad,and to Peshawar and the Afghan border bey ad. All these main routes areserved by rail, road and air transport and by a natural gas pipeline systembased on the Sui and Mari fields (Map 10756). Public expenditures inthe transport sector are being devoted increasingly to highways, which willtake about 53% of the total of PRs 446 million in FY 1973. This patternis expected to continue for at least the next five years.

2.11 Karachi is Pakistan's only major port and handles all its foreigntrade. The total of imports and exports has grown from 5.8 million tons in1964 to 10.3 million tons in 1973. The port is intensively used, with aberth occupancy factor of almost 100%, achieved through double banking ofships and at the expense of substantial ship waiting time. Each of the 19deep-water dry cargo berths in use handled about 270,000 tons of dry cargo

- 4-

in 1973, one of the highest throughput rates in the world. This was achievedwith the aid of lightering from double banked ships. Throughput at the threeoil berths averaged 1.4 million tons per berth in 1973.

2.12 Pakistan's merchant marine in 1972 consisted of some 57 vessels,about 600,000 dwt, which carried about 8% of the country's overseas trade(15% if petroleum is excluded); the National Shipping Corporation (NSC)accounted for about half the ships and 75% of the goods carried; except in1971-72, its operations have been profitable.

2.13 Pakistan Western Railways (PWR) is Government-owned and operatedand constitutes one of the largest organizations in the country. For manyyears the railways provided the main means of mechanized transport; how-ever, an increasing proportion of transport is being carried by road, andrailway traffic has shown little overall growth; freight traffic in ton-miles is now divided about equally between road and rail. PWR's operationswere studied in 1970/71 by consultants, SOFRERAIL (France), under Loan 621-PAX,who made recommendations for improvements. SOFRERAIL are being retainedby PWR to assist in the implementation of the recommendations.

2.14 Motorized road traffic is growing at about 10% a year and is theprincipal means of transport in urban areas. While truck transport hasbeen free of significant Government regulation for more than a decade,bus regulation was liberalized only in 1970. Since then there has been anincrease in the number of buses in operation and a substantial improvementin service. Animal-drawn traffic remains inportant in rural areas. Theoverall condition of the road system ranges from fair to poor; totallength is about 48,000 miles, of which about 33,000 miles are unimproved.

2.15 Air transport is provided by the Government-owned Pakistan Inter-national Airlines which operates international and domestic services. Thenumber of passengers carried on West Pakistan domestic routes showed anaverage annual growth rate of 11% from 1962-1971. However, the loss ofEast Pakistan caused serious disruption of services.

D. Transport Planning

2.16 Problems of transport coordination which require attention includethe operation of many rail, bus and air services at less than long-runmarginal cost, which results in misallocation of resources. A Governmentstudy carried out in 1971, with the help of individual consultants financedunder the Second Highway Loan 578-PAK, reviewed transport coordination inPakistan and recommended establishment of a permanent institution for planningand coordinating trar.sporc. The loan conditions require the Government-toconsult with the Association on implementation of its findings. TheGovernment has recently asked an expert to review the study's findings;following evaluation of this expert's recommendations, the Associationintends to ask the Government to disc.ss concrete steps for achievingeffective planning and management of the transport sector.

2.17 Referring to port planning ia particular, the latest traffic trendsindicate a need for additional general cargo berths by 1979. This will

- 5 -

require development of the Western Backwater area of the port (Map 10171R1);

alternative sites have been considered but cannot be developed in time. Afeasibility study has recently been completed by consultants, van HoutenAssociates (USA), with UNDP financing and the Bank as executing agency, whichindicated the Western Backwater could also be used for deep drafted bulk carriersof dry cargo, e.g., iron ore. However, the Government is considering thedesirability of developing alternative port facilities to Karachi for such

traffic, and the most promising location is at Phitti Creek (Port Qasim)some 10 miles east of Karachi. The Asian Development Bank has indicated aninterest in financial assistance for a port project at that site. A site

at Sonmiani 50 miles northwest of Karachi is also being considered. Thefeasibility of development at Phitti Creek depends upon the possibility ofmaintaining a dredged channel 40 ft deep or more through the bar at the creekentrance. Attempts are now being made to ascertain whether this is feasible.The Government has agreed to undertake a proper evaluation of the technicaland economic factors relevant to a determination of the best alternative forhandling deep-draft bulk carriers. If the findings of the investigationare favorable, bulk cargo and petroleum facilities could be completed atPhitti Creek by about 1980. Whatever may be the outcome, interim measuresto handle growing oil importation requirements must be provided, and this is

the purpose of the proposed project.

III. THE PORT OF KARACHI

A. Organization and Administration

3.01 While the port of Karachi has been efficiently managed andoperated, certain improvements in management, administration and operationsare being introduced and others proposed (paras 3.04, and 3.12).

3.02 The Karachi Port Trust Act of 1886, and its subsequent modifica-tions, created a Board called "The Trustees of the Port of Karachi",commonly known as the Karachi Port Trust (KPT). Section 79A of the Actsubjects all acts and proceedings of the Board to the control of theGovernment.

3.03 ne Board is a body corporate with perpetual succession and isvested with the property of the port. It consists of eleven trusteesrepresenting shipowners, shippers, labor and the Government. The Chairman,who is also a Trustee and Chief Executive of the port, is appointed by theGovernment. He is responsible for day-to-day administration and operations

and for carrying out the general policy of the Board; his term of officeis for such period as the Government may prescribe, but is normally forthree years. The Trustees have a two-year term.

3.04 KPT has five functional departments assisted by service groupsand a secretariat. Of the service departments, the most important areAccounting and Stores. The accounting problems related to these departmentshave been studied by management consultants retained under Credit S-9 PAKand KPT has agreed that a new management and cost accounting system will be

implemented by June 30, 1975. KPT has further agreed that changes in theorganizational structure to ensure continuity in management and effectivecoordination of administration and operations will also be effected byJune 30, 1975.

3.05 KPT has legal jurisdiction over the land, water and facilitieswithin the port boundaries, and powers which enable it to manage and operatethe port and waterways efficiently; to maintain, improve and regulate theiruse; to provide terminal facilities for ships, cargo and passengers; and toestablish its rates and dues. The port area, including the Western Back-water, is sufficiently extensive to meet all foreseeable future needs forexpansion if better solutions at other locations cannot be found.

3.06 The Board has far-reaching powers and, subject to the overridingauthority of the Government, may raise money, enter into contracts, altertariffs, buy equipment, undertake construction and sell assets. There hasbeen no Government interference in the Board's exercise of these powers,which have been used prudently and to the benefit of the port and itsusers.

B. Staff and Labor

3.07 Sound procedures set up over many years are in operation for therecruitment, promotion, welfare and discipline of KPT staff. KPT has haddifficulty in attracting and retaining high-caliber staff because it isunable to offer salaries competitive with the private sector, althoughsuch fringe benefits as housing, medical care, school and other welfarebenefits help. The Government has recently introduced new pay scalesfor Government employees based on the National Pay Commission's Reportof December 1972 which should improve the situation.

3.08 Labor relations have been good, but recently have shown somesigns of deterioration. However, procedures for settling disputes aresound and the port has been remarkably free from strikes. The totalstrength of the establishment, including officers and supervisory staff,is 10,100, and the average number of hourly employees has been about1,700.

3.09 While KPT has a larger labor force than many similar ports indeveloped countries, this reflects in part the use of labor-intensivelighterage for a substantial volume of cargo, through which it achieves ahigh cargo throughput per berth. Moreover, in view of high unemployment inPakistan, labor unrest in Karachi, and the strength of the labor unions, itwould be difficult to effect any reduction of the present labor force.Therefore, although labor productivity might be improved, measures designedto achieve this, such as increased mechanization, can only be introducedgradually and to the extent that they are economically justified.

C. Port Facilities

3.10 The three-mile approach channel to Karachi has a limiting depthof 29 ft. The mean tidal range is about 7 ft, so that ships drawing 33 ft

- 7 -

(25,000 dwt) can enter port on any day of the year. The port entrance isprotected by the Manora breakwater and the Keamari groyne from which achannel, about 1,100 ft wide, 34 ft deep and about two miles in length, leadsto the berths at East and West Wharves. There are 17 berths at East Wharf,all reconstructed under Bank loans and seven at West Wharf, including three newberths provided under Loan 376-PAK. The dry cargo berths are adequatelyprovided with transit sheds, open storage areas, electric portal cranes andother cargo-handling equipment. Four additional general cargo berths arebeing financed under Credit 422-PAK.

3.11 Oil traffic is presently handled in the lower harbor at threeberths connected by pipelines to tank farms at Keamari. One of theseberths, O.P.3, built in 1910, is in a dilapidated condition. Maintenanceof the structures of the other two berths is poor and KPT has undertaken toremedy the position. Further details of the port facilities, ancillaryservices, plant and floating craft are given in Annex 1.

D. Dredging

3.12 KPT carries out maintenance dredging of the navigation channeland alongside wharves with its own fleet of dredgers and barges. The overallhydraulic regime of the harbor is continuously studied with the aid of amodel set up with assistance from the Hydraulic Research Station, Wallingford(Ul). The quantities dredged in recent years have been increasing due tosome deepening and in 1973 amounted to over 1.5 million cu yd. However,dredging carried out under the Second Karachi Port Project has taken muchlonger than expected and this appears to stem in part from poor fleet manage-ment and in part from poor dredging techniques. Technical assistance toreview dredging operations of the existing fleet and improve performance,utilization of plant and managerial control is provided for in Credit 422-PAK.Following from this the fleet's working hours may be substantially increased.

E. Operations

3.13 The port normally works round the clock on a two-shift basis, andon weekends and holidays as required. Stevedoring on board ship is performedby private contractors but KPT personnel handle goods on shore and operatethe cargo-handling equipment.

3.14 All berths in the harbor are served by road and rail. About 60%of the port's traffic is transported by rail and the rest is moved by roadmainly to and from points in the Karachi area.

3.15 Congestion at the dry cargo berths continues despite the commis-sioning of four reconstructed berths in 1973. Average waiting time for eachof the six months to June 1973 was more than five days per ship, comparedwith less than three days for the corresponding period in 1972. Recentshipping reports indicate a waiting time of 12 to 15 days for a clear berthand three to four days for a double-banked berth, i.e., where ships aremoored alongside one another. This situation is likely to continue for sometime, since considerable quantities of grain, fertilizers and other goodswill be required to replace the losses incurred in the August 1973 floods.

The completion of four dry cargo berths in December 1976 (Third KarachiPort Project) should lead to some improvement, but if dry cargo trafficgrowth continues, additional berths will be required.

3.16 Operations at the oil berths are slow and berth occupancy ex-cessive, due to the 31 ft alongside depth limitation which only permits theuse of small, old tankers with poor pumping performance.

IV. INVESTMENT PROGRAM AND THE PROJECT

A. Investment Program

4.01 For the period 1974-79, KPT's investment program (Table 1) totalsabout PRs 983.1 million (US$99.3 million) for new major works, includingthe proposed project and development of the Western Backwater for sixadditional general cargo berths and including PRs 132.0 million (US$13.3million) for mechanical and floating equipment and minor works.

B. Description of the Project (Maps 10171R1 and 8129)

4.02 The proposed project comprises:

Part A Items financed by the proposed credit:

(a) Construction of an Oil Berth at Keamari and Installation ofNavigational Aids

{i) a loading platform, two breasting dolphins, fourmooring dolphins capable of accommodating 75,000 dwtoil tankers; causeway, walkways, and ancillary works.

(ii) provision of hose handling equipment and commonuser pipe-lines on the loading platform and causeway;

(iii) navigational aids, including buoys and radar beacons;

(iv) floating collars to contain spillage, and appropriatemeans of disposing thereof; and

(v) dredging alongs .-e the new berth to 44 ft depth for45,000 dwt tanKers at all states of the tide.

(b) Contract Dreding

(i) the existing app ,jach channel to the oil berthsabout 5,600 yd long, and 200 yd wide to 37 ftdepth (about 40,000 dwt tankers); and

(ii) dredging a test section of the approach channelto 45 ft depth.

- 9-

(c) Purchase of a Dredger

Purchase of an ocean-going trailing suction dredgerwith 2,000 m3 hopper capacity fitted with a swellcompensator.

(d) Consultants' Services

(i) supervision of civil works and installation ofnavigational aids, and dredging of the approachchannel;

(ii) naval architects' services for the specificationand inspection during building of the trailingsuction dredger; and

(iii) technical assistance to KPT for training of localstaff in operating the new dredger and forevaluating the results of the test dredging.

Part B Items not financed by the credit:

(a) Deepening the approach channel from 37 ft to 40 ftdepth (45,000 dwt tankers) with the dredger providedunder Part A.

(b) Deepening alongside the existing 0.P.1 to 38 ft depthby KPT's existing dredging fleet to enable 35,000 dwttankers to be berthed at all states of the tide.

Details of the project are given in Anne, 2.

4.03 The oil berth and approach channel depth have been the subjectof a feasibility and preliminary engineering study financed underCredit S-9 PAK and undertaken by consultants, Frederic R. Harris, Inc.(USA), which recommended the oil berth as described above and immediatedeepening of the approach channel to 40 ft. However, the Association'seconomic evaluation (Chapter V) indicates that immediate contract dredgingto 37 ft depth and purchase of a 2,000 m3 dredger for KPT adequate tomaintain the channel and deepen it to 40 ft over a period of about threeyears (1976-1979) is a better solution. KPT has agreed to operate this dredgerat maximum output to provide channel depth of 40 ft by June 1979. Detailedengineering of the berth is being financed under Credit S-9 PAK (refinancedin Credit 422-PAK), and has been practically completed.

4.04 In order to eventually accommodate 75,000 dwt tankers alongsidethe new berth, the approach channel will have to be further dredged to45 ft depth; the feasibility of maintaining such a channel will be testedby dredging a 2,000 ft long section of the proposed channel to that depth(about 360,000 cu yd).

- 10 -

4.05 Existing O.P.1 has been designed to accommodate 35,000 dwttankers, but has not yet been dredged alongside to the required depth(38 ft). It is proposed that this dredging should be undertaken at thesame time as the approach channel is being deepened, but because the bertlwill be in regular use, it would be uneconomic to include it as part of adredging contract; KPT can do this work with its existing fleet. KPT hasagreed to operate its existing dredging fleet to such extent and for suchperiods as would be necessary to ensure that O.P.I. is available at 38 ft depthnot later than September 1976.

C. Proect Cost Estimates

4.06 The total estimated cost of the project is PRs 236.5 million(US$23.9 million equivalent) with a foreign exchange component of PRs 162.0million (US$16.4 million equivalent) of which PRs 158.4 million (US$16.0million equivalent) would be financed by the proposed credit; the percent-age of foreign exchange cost is about 60% for civil works and about 80%for dredging and the procurement of the dredger. Foreign exchange forPart B works is estimated to be about 25%. The project's local currencycost, PRs 74.5 million, and the foreign exchange required for Part B ofthe project, PRs 3.6 million (US$0.36 million equivalent), will be financedby KPT. Details of the cost estimates are in Table 2, and are summarizedbelow:

- 11 -

Z ofPakistan Rupees US$ Total

Local Foreign Total Local Foreip Total Cost-------- -- - ------ (millions)

Part A

Civil works for oilberth 75,000 dwtcapacity and navi-gational equipment 15.6 23.0 38.6 1.58 2.32 3.90 18

Dredging 37 ftapproach channelwith test sectionto 45 ft depth 9.2 33.7 42.9 0.93 3.40 4.33 20

Hose handlingequipment, firefighting equipmentand 30" and 18".dia pipes withinport limits 2.7 5.4 8.1 0.27 0.55 0.82 3

Kaintenance dredger(2,000 m3 capacity) 18.5 59.4 77.9 1.87 6.00 7.87 35

Engineering servicesfor civil construc-tion work, dredgingsurvey, dredgerdesign and construc-tion and technicalassistance 1.5 6.0 7.5 0.15 0.61 0.76 3

Subtotal 47.5 127.5 175.0 4.80 12.88 17.68

Contingencies

Physical 2.7 6.2 8.9 0.27 0.63 0.90 4

Price 13.5 24.7 38.2 1.36 2.49 3.85 17

Subtotal 63.7 158.4 222.1 6.43 16.00 22.43 100

Part B

Dredging the ap-proach channelfrom 37 ft to40 ft depth by thedredger purchasedunder Part A anddeepening O.P.1 to38 ft depth along-side by KPT's ex-isting dredgers 10.8 3.6 14.4 1.09 0.36 1.45

TOTAL 74.5 162.G 23E.5 7.52 16.36 23.88

- 12 -

4.07 For Part A of the proposed project, the cost estimates for civilworks are based upon final design and updated unit prices for similarworks in Pakistan and those for dredging and procurement of the dredger arebased on current world prices; they are considered adequate. Physicalcontingencies are 10% for civil works and the hose handling equipment; pricecontingencies are based upon 18%, 15% and 12% p.a.- for 1974, 1975 and 1976respectively for foreign exchange cost and about 25% p.a. for local costs,to cover increases from end-1973. The cost of imported items includescustoms duties as a local cost; port dues are not levied and are thereforeexcluded. Part B costs are based on operating and maintenance costs of thedredger; the foreign exchange cost comprises mainly fuel and spares; con-tingency allowances as for Part A have been included.

D. Project Execution

4.08 The project will be carried out by KPT with the assistance ofconsultants.

E. Consulting Services

4.09 Detailed engineering of the oil berth has been undertaken byFrederic R. Harris, Inc. (USA), who will also supervise these works. Con-sultants will be appointed by KPT (i) to undertake the required surveys,to determine the quantities of dredging and to ensure satisfactory completionof the dredging and (ii) to prepare an outline specification of the dredger,to assess bid designs received and to inspect the dredger during building.Technical assistance to train KPT staff in operating the dredger, which isa type new to the KPT fleet, and to evaluate test dredging results, is alsoincluded.

F. Procurement and Disbursement

4.10 The contracts for civil works, equipment, dredging, except for thedredging to be carried out by KPT's own dredgers provided for under Part Bof the project, and procurement of the dredger will be on the basis ofinternational conpetitive bidding in accordance with the Association'sguidelines for procurement. Evaluation of bids for civil works will includea 7-1/2% preference for eligible domestic contractors. For Part A of theProject all works and procurement are expected to be completed by September1976, assuming effectiveness of the proposed credit by June 1974. Constructionschedules are in Table 3. The Part B works will be completed over theperiod 1976-1979.

4.11 Disbursements for civil works and contract dredging financed bythe credit will be on the basis of 100% of direct foreign exchange costsand 15% of local costs, representing :he estimated indirect foreign exchangecomponent. For the procurement of goods, equipment and consultant services,financing will be on t.he basis of the actual foreign exchange costs. Annualestimated project expenditure is shown in Table 4 and the estimated scheduleof disbursements for the proposed credit in Table 5.

G. Ecology

4 . 1 2 The dredging spoe_ res lting from deepening the entrance channelwill be dur;?ed in a appre - ' nas been -used for this purpose

- 13 -

by KPT over a'considerable period without detrimental effects on the ecology.The provision of floating collars for containing any spillage and means ofremoving it are included in the project; KPT has agreed to use the collarseach time a tanker is handled at the berths and the disposal equipment asnecessary. Tanks are to be provided for dirty ballast discharge (para 4.13).

H. Existing Oil Tankage and Piping Arrangements and Required Improvements

4.13 Both PRL and NRL have existing tank storage at Keamari withconnections0to their individual refineries, but these would be inadequateto handle the increased size of tanker foreseen on completion of the proposedproject and improvement to O.P.1. These companies have submitted proposalsto KPT for improvements to tankage capacity and pipelines, including continua-tion of the common user pipelines from the port boundary, which are satis-factory to the Associatibn. The Government has agreed that arrangementsto carry out the scheme of improvement would be submitted through KPT to theAssociation not later than June 1975 and that, in the event the refinerycompanies did not undertake the necessary work, the Government would takesuch action as would be necessary to ensure completion of the required worksby September 1976. The improvements include the provision of tanks fordischarge of dirty ballast by tankers and necessary piping.

V. ECONOMIC EVALUATION

A. General

5.01 The dilapidated condition of O.P.3 makes its replacement a matterof urgency. A berthing accident could, at any time, destroy the pier, thusdepriving the port of one-third of its present capacity for berthing oiltankers. Since the number of tankers calling at the port is, in any case,approaching the capacity of the three existing oil berths, the loss of oneof these would immediately result in serious ship delays and a rapidlyescalating cost to the Pakistan economy in the form of demurrage fees andhigher freight charges, as well as shortage of petiroleum products, withfar-reaching consequences for the energy sector and the economy. Tominimize this danger, only smaller tankers are presently being berthed atO.P. 3, with consequent delays to others. In these circumstances, to donothing is not a feasible alternative, and the economic evaluation is basedon a comparison of the proposed project against the minimum cost alternativeof replacing O.P.3 with a similar facility. While this would minimize theinitial investment, it would necessitate construction of additional piersby about 1978 and 1983, and would not yield the benefits to be derived fromuse of larger tankers.

B. Traffic Forecast

5.02 Crude oil imports in 1973 through the port of Karachi totalled3.4 million tons and imports and exports of refined petroleum products afurther 0.9 million tons.

* 14 -

5.03 Consumption of petroleum products in Pakistan increased over theperiod 1962-72 at an average annual rate of 5.6% (Table 6). The growthrate varies substantially from product to product and from year to year,making projection on the basis of these data difficult. However, consumptionof middle distillates, the principal product, increased fairly consistentlyover the period 1962-70 at 9.7% p.a., two percentage points faster thanthe growth of GDP over the same period. Following a period of relativestagnation in 1971 and 1972 GDP has resumed its growth and is expected toincrease at about 7% p.a. over the next few years. Taking account ofexpected petroleum product price increases, consumption of middle-distillatesis forecast to increase at 8% p.a., only one percentage point faster thanforecast GDP (Table 7).

5.04 The projected demand for middle distillates determines,the volumeof crude oil requirements,'and the pattern ef refinery yields determinesthe volume of other products which will be manufactured from the forecastcrude oil intake. The forecast of demand for products other than middledistillates is thereforesused only to determine the surplus or deficitof products which has to be exported or imported. The projected growth inconsumption of light distillates and heavy fuel oil (Table 7) correspondswith oil industry estimates. Since industry estimates were not availablefor asphalt, lubricants and greases, the projections for these commoditieswere based on past statistics and expected end-use demand. The forecastassumes that the escalating cost of crude oil will have only a marginalimpact on consumption and that balance of payments considerations will notresult in Government action to restrict imports. Full details of theforecasting methodology are contained in Annex 4.

C. Project Scope

5.05 Numerous alternatives to the proposed project were considered bythe consultants for the project, including provision of offshore berths andmoorings, but the choice was ultimately narrowed to alternative sizes ofpier at the proposed site, and alternative depths of channel.

5.06 Tankers of 75,000 dwt, which the proposed pier would be capableof handling, are about the maximum economic size for the short voyage fromthe Persian Gulf and for the forecast volumes of crude oil. The cost ofsuch a pier is only about 10% more than that of a pier for 25,000 dwttankers, and provides more than three times the potential capacity.

5.07 To permit the entry of 75,000 dwt tankers, the approach channelwould require dredging to 45 ft. Present hydraulic data is insufficientto determine with reasonable accuracy the annual cost of maintaining sucha channel; however, the best present estimates suggest that it would bea less economic investment, at the forecast volumes of crude oil, than a40 ft channel (Table 8). This uncertainty does not affect the validity ofthe decision to construct a 75,000 dwt pier, which is the least-cost method,at any positive discount rate, of providing capacity for the forecast through-put of crude oil.

- 15 -

5.08 Channel deepening can be undertaken either by contract or by KPTpurchasing a suitable dredger. Contract dredging would achieve the desiredchannel depth more quickly and would, therefore, reduce transportation costs,through use of larger tankers, more quickly. However, purchase of a dredgerwould, in any case, be necessary to maintain the resulting channel depthand such a dredger would be capable, given sufficient time, of dredging thepresent channel to a depth of 40 ft, thus avoiding the cost of contractdredging. These trade-offs were calculated for channel depths from 34 ft(35,000 dwt tanker) to 40 ft (45,000 dwt tanker) from which it was deter-mined that the proposed project, with contract dredging to 37 ft (40,000 dwttanker) depth and a dredger capable of further deepening the channel toat least 40 ft in about three years (Annex 3), provided the optimum solution.All three sizes of tankers can be unloaded in approximately the same time.The costs and benefits of the principal alternatives considered are shownin Table 8. The proposed project will provide sufficient berthing capacityto handle the forecast traffic until about 1981. It has the added advantageof leaving the option of further channel deepening open until the resultsof the proposed test dredging in the approach channel and the possibilitiesof development at Phitti Creek are known.

D. Economic Benefits

5.09 The economic benefits of the proposed oil pier and channel deepeningare derived from a comparison of tanker operating costs with 25,000 dwt tankersand those with 35,000 dwt and 45,000 dwt tankers (Table 9). The benefits arecalculated on the reasonable assumption that limited availability of45,000 dwt tankers would restrict their use to 50% of total crude oilimports. The full project cost3 and benefits are shown in Table 10.

5.10 The economic benefits of channel deepening are calculated on theassumption that the rate of siltation in a 37 ft to 40 ft channel will bebetween 0.7 and one million cu yd per annum. Three separate consultantswho gave this as the most probable estimate, state that, given the uncertain-ty of this type of assessment, the figure might be higher or lower; if itis 30% higher, a 40 ft depth would take about 4-1/2 years to achieve insteadof three years; this would reduce the economic benefits by about US$200,000.

5.11 As noted in para 5.06, the proposed oil pier would only cost about10% more than a pier designed to accommodate 25,000 dwt tankers. However, itsconstruction will mean that the cost of two piers for 25,000 dwt tankers,which would otherwise have to be built in 1975 and 1977, is avoided. Thisavoided cost is included as a benefit of the project. In addition, if deep-ening of the entrance channel to 45 ft proves to be feasible, the proposedpier would avoid the cost of a third 25,000 dwt pier in 1983. This has notbeen taken as a benefit in view of the uncertain feasibility.

E. Economic Return and Sensitivity Analysis

5.12 The economic analysis comparing the benefits discussed above withthe capital costs, including engineering services and physical contingencies,produces an internal economic return of 23%.

5.13 The economic return as calculated is sensitive only to variationin project benefits, a 25% decrease in benefits reducing the return on theproject to 14%. With a rate of siltation 30% higher than estimated, therate of return would not be significantly affected.

5.14 A 25% increase in capital costs would only reduce the return onthe project to 20%. A 15% increase in project costs plus a 25% decrease inproject benefits would reduce the return to 12%.

5.15 NSC has plans to acquire a 45,000 dwt tanker for service to Karachi.Ahis, and other possible acquisitions and charterings of larger tankers byPakistan shipping companies, would ensure that a significant part of thebenefits of a deeper channel would accrue to the Pakistan economy. Further-more, in order that Pakistan may recoup, unequivocally and as soon as theproject becomes operational an adequate proportion of those project benefitsaccruing to foreign shipowners, the pricing of port services will be suchas to recover the project costs together with a reasonable return on theinvested capital, as required under Credit 422-PAK (paras 6.03 and 6.19).

VI. FINANCIAL EVALUATION

A. Tariffs

6.01 The level of charges levied in the past has been adequate forall requirements. In June 19733 She r--nment approved KPT's applicationfor increases in rates a--- charg_, des!6ned to meet the impact of the May1972 devaluation of the Rupee.

6.02 Wharfage and storage char-es are levied on the owner of the cargo,and berthage, mooring, cr_nage, water supply and pilotage charges on theshipowner. Wharfage and storage charges represent the main income of theport, about two-thirds of its tot. operating revenue.

6.03 A review of the entire ->arif± structure will be undertaken, beforeJune 30, 1975, by KPT with ,le a,sistance of' consultants provided underCredit S-9. The introduction o^ ca:ras related to berth occupancy time, toŽnsiire the most efficiec; sjerths existing and proposed, andrebates for unitized cargo, wL- je ncie in this review. KPT has agreedthat any necessary acjustuents _n ariffs to ensure that specified financialobjectives are achieves will be ancroduced.

- 17 -

B. Present Accounting System and Past Earnings

6.04 KPT's accounting system, which has many disadvantages, has not beenchanged very much over the past thirty years. However, as result of recommen-dations made under a study financed by Credit S-9 PAK, a new managementaccounting and costing system is being introduced which is scheduled to be inoperation by June 30, 1975. Past earnings have been sufficient to providea satisfactory return on net fixed assets. The present financial positionis sound.

6.05 Income and expenditure for the years 1969 through 1973 are shownin Table 11, from which it will be seen that debt service coverage has beenadequate and operating ratios satisfactory, falling from 77 in 1971 to 68in 1973. Apart from 1971 when it was 4.9%, the return on net fixed assetshas exceeded 6%.

6.06 The balance sheet as at June 30, 1973 is attached as Table 12. Asprovided by the Karachi Port Trust Act of 1886, reserves amounting to PRs 253.0million are invested in Government and municipal securities. Of these invest-ments, PRs 228.0 million would be available for financing the project butthose for the provident and other welfare funds, totalling PRs 35.0 million,would not. Cash amounting to about PRs 75.0 million is held in fixed depcsitaccounts in various banks. Investments and cash on fixed bank deposits forthe sinking fund amount to PRs 139.0 million against the outstanding long-term debt of PRs 259.0 million. The debt/equity ratio is 24/76 and the cur-rent ratio stands at 5.5 to 1.

6.07 By Government directive, a revenue reserve fund is kept attwo-thirds of the average revenue of the past three years; this reserve,at June 30, 1973, stood at PRs 66.0 million with invested funds totallingPRs 53.0 million.

C. Financial Forecasts

6.08 The underlying financial position up to 1981, though showing somesigns of deterioration, is sound. Thereafter, much will depend on theextent to which the Western Backwater is developed. Should the constructionof six berths be undertaken, then an overall tariff increase of 15% wouldbe necessary in 1982 to maintain the required rate of return on net fixedassets of 7% from 1982 onwards (para 6.22).

6.09 Earnings expected to be attained during the period 1974-1983 aregiven in Table 13. Operating revenues are calculated on the basis of KPT'scurrent tariffs up to 1981 but include the 15% increase thereafter. Drycargo traffic volumes are assumed to increase at 4.5% p.a. and oil trafficat an average over the period of 6.7% (Table 7). Operating expenses areestimated to increase by some 7% p.a. to reflect normal anticipated increasesin wages and salaries and other direct costs. Depreciation has been providedas calculated by KPT and is adequate.

- 18 -

6.10 Allowance has been made for the service of long-term debt, in-cluding (i) Bank Loans 126-PAK and 376-PAK, and Credit 422-PAK, (ii) loansfrom consortium countries, (iii) the proposed credit for the present project(relending terms assumed to be 7-1/4% interest for 25 years including afive-year grace period) and assumed loans for other major works, on termssimilar to those recommended for the proposed project.

6.11 On the basis of these forecasts, the operating ratios will risefrom 61 in 1974 to 65 in 1983. The debt/service ratio will drop from 2.6 in1974 to 1.7 in 1983 and the interest-earned ratio will decline from 5.2 in1974 to 2.7 in 1983. The return on net fixed assets will decrease f:rom 9.3%in 1974 to 7.4% in 1983. These trends are likely to be reversed after 1983,as capital expenditures decline and revenues increase.

6.12 The balance sheet data (Table 14) reflect a sound financial posi-tion during the entire 1974 to 1983 period. Current ratios range from 4 to1 in 1974 to 12 to 1 in 1983 and the debt/equity ratio increases from 22/78in 1974 to an acceptable 36/64 in 1981, thereafter declining to 34/66 in 1983.

D. Financial Plan and Objectives

6.13 The capital investment program up to 1983 totals some US$155.3 mil-lion (Table 1) and includes:

PRs US$(million) (million)

Second Port Project (ongoing) 42.27 4.27Third Port Project (ongoing) 335.92 33.93Fourth Port Project 236.46 23.88Western Backwater 693.00 70.00Other minor works, mainlyreplacement and renewals:

hiopper barges and tugs 57.45 5.80Cargo-handling equipment 36.20 3.66Civil and mechanical works 116.51 11.77Drydock 20.00 2.02

230.16 23.25

1,537.81 155.33

To be financed by:

Foreign currency loans 865.57 87.43 56%Grant 28.69 2.90 2%KPT's own resources 643.55 65.00 42Z

1,537.81 155.33 100%

- 19 -

6.14 The capital investment program up to 1983 includes US$70.0 million,being the estimated cost of six berths in the Western Backwater, includingnecessary dredging, reclamation and equipment, for which financing has yetto be arranged. All other items in the investment program are fullyfinanced.

6.15 Other minor non-project items in the investment program includeUS$5.8 million for hopper barges and tugs, US$3.7 million for cargo-handlingequipment and US$13.8 million for various civil and mechanical engineeringworks.

6.16 The foreign exchange costs of the Second Karachi Port Projectare financed by Loan 376-PAK which is expected to be fully disbursed byJune 30, 1974. The foreign exchange costs of the Third Karachi Port Projectare being financed by Credit 422-PAK and those of the renewals and replace-ment program are being financed by the supplier countries (UK, Japan,Netherlands). The foreign exchange costs of the proposed project wouldbe financed by the proposed IDA credit (except as noted in para 4.06) and inthe financial plan it has been assumed that the foreign exchange costs ofthe Western Backwater would be similarly financed.

6.17 The local currency costs of all the expenditures in the investmentprogram will be met by KPT from accumulated reserves and future earningsand from a grant by the Government of 40% of the total cost of the NapierMole road bridge included in the Third Port Project, estimated to amount toUS$2.9 million equivalent.

6.18 The capital resources available to and utilized by KPT during theten-year period 1974 to 1983, which are detailed in Table 15, are summarizedbelow:

PRS '000

Investments and cash deposits realized 15,106Internally generated funds 959,176Loans 865,575Grant 28,692

1,868,549

Capital expenditure 1,537,808Repayment of loans 328,012Increase in working capital 2,729

1,868,549

About 42% of the funds required for capital expenditure will be providedfrom KPT's own resources, 2% from a grant and the remaining 56% from loans.In assessing available resources, it has been assumed that the investmentsand cash deposits in the various special reserve accounts (Table 12) otherthan provident and welfare funds would be realized to the extent requiredfor the program.

- 20 -

6.19 A rate of return on net fixed assets of not less than 4% from1976 to 1981 and 7% from 1982 onwards will ensure that sufficient cash willbe generated to provide, after meeting operating and maintenance expenditure,full debt service coverage and make a reasonable contribution towards thecapital investment program; it will also recoup an adequate part of thebenefits arising from improved port facilities and operations for Pakistan(para 5.15). The increase from 4% to 7% in 1982 is required to meet debtservice on the Western Backwater development, and KPT has agreed to achievethese rates of return.

6.20 KPT has managed its finances well in the past. However, to ensurethat a sound financial position is maintained, KPT has agreed not to under-take further long-term borrowing without Association approval unless netcash revenue is at least 1-1/2 times future maximum debt service require-ments.

6.21 KPT has also agreed not to undertake, prior to the Closing Date,capital expenditures exceeding US$2 million equivalent in any fiscal year,other than those incurred in carrying out the approved investment program,without Association agreement.

6.22 The agreements relating to the present project described inparagraphs 6.19-6.21 substantially accord with those reached in respectof Credit 422-PAK.

E. Audit

6.23 The present Government audit of KPT's accounts is satisfactoryexcept that it should be carried out more expeditiously and its scopebroadened.

6.24 Section 68 of the KPT Act of 1886 provides for the receipts andexpenditure accounts to be audited and examined on a half-yearly basis byauditors appointed by the Government. The audit is carried out by theAuditor General's Department as is usual for Government agencies inPakistan. KPT has agreed that the audit will be carried out within sixmonths of the end of the fiscal year; the scope of the audit will be broad-ened to embrace the commercial aspects of the new accounting system; and, ifnecessary to achieve this, independent auditors, acceptable to the Asaocia-tion, will be appointed in addition to the Auditor General.

F. Insurance

6.25 KPT, with Government approval, carries its own insurance risks.Past experience has shown that the cost of insuring assets against losseswould have greatly exceeded any losses sustained. In the event of any suchloss or damage involving foreign exchange, the Government has agreed thatthe required foreign exchange would be made available.

- 21 -

VII. AGREEMENTS REACHED AND RECOMMENDATION

7.01 Agreement has been reached on the following matters:

(a) evaluation by the Government of alternatives for handlingdry bulk cargo in deep-draft ships (para 2.17);

(b) implementation by KPT of new management accounting systemand organizational changes by June 30, 1975 (para 3.04);

(c) operation of KPT's dredging fleet and new dredger to theextent necessary to ensure completion of required dredgingby September 30, 1976 and June 30, 1979 respectively(paras 4.03 and 4.05);

(d) submission through KPT, not later than June 1975, of ascheme for improvements to tankage capacity and pipelinesand Government action to ensture completion of approvedworks by September 30, 1976 if not undertaken by therefinery companies (para 4.13);

(e) revision of the KPT tariff structure by June 30, 1975 andintroduiction of any adjustments required to ensure achieve-ment of specified financial objectives (para 6.03); and

(f) financial objectives, debt limitation and limitation ofcapital expenditure (para 6.22).

7.02 The proposed project is suitable for an Association credit to theGovernment of US$16.0 million on the usual terms. The Government wouldre-lend the amount of the credit to KPT for a term of 25 years including afive-year grace period, at the Bank interest rate current at the time ofcredit approval.

April 24, 1974

ANNEX 1Page 1

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Description of Port Facilities and Equipment

1. Description of the Port

The present port is located in the southern end of the city ofKarachi. The harbor is approached from the southwest through the approachchannel about three miles long. Inside the harbor the main navigationalchannel is about two miles long, and main berthing facilities are locatedalong both sides. Mooring buoys are located in midstream of the innerharbor and the oil terminals at the entrance to the harbor on the Keamariside. The present entrance channel provides 29 ft depth.

2. Berthing Facilities

Berthing facilities consist of 24 deep-water berths, lighteragewharves and three oil piers in addition to O.P.4 being provided under theproposed project, but one of these (O.P.3) is in dilapidated condition andwill be phased out on completion of O.P.4. In addition, there are 15 mooringbuoys, two ship repair berths and boat wharves. Juna Bunder is the oldestsection of the port where goods are landed from and shipped on lightersand barges. It is proposed to build four new dry cargo berths here underthe Third Karachi Port Project (Credit 422-PAK). The present main berthingfacilities include:

ANNEX 1Page 2

Sanctioned YearLocation Berths No. Length (ft) Depth (ft) Con_8tructed(i) Shipping

Berths

East Wharf No. 1-4 2,050 34 /1No. 5-7 1,520 28 1960No. 8 550 31 1960No. 9-17 4,560 34 1960

Sub-total 17 8,680

West Wharf No. 18 550 32 1930No. 19-21 1,800 34 1930No. 22 700 36 1972No. 23 630 38 1972No. 24 500 34 1972

Sub-total 7 4,180Juna Bunder 4 2,155 30 /2

(ii) LighterageWharves

East Wharf No. 17 A 120 10 1960West Wharf No. 24 A & B 260 10 1972West Lighter-age Wharf 1 240 24 1968Sub-total 1,6Z0

(iii) Oil Piers

Keamari No. 1 700 31 1966No. 2 644 31 1956No. 3 403 31 1910

(iv) MooringsNo. 1-5 Sx325 20 1971No. 6 900 34 1972No. 7 750 34 1972No. 8-12 5W700 34 1972No. 13-15 3X600 27 1971

(v) Ship RepairBerths

East Wharf 2x500 24 1968

(vi) Boat Wharves

East Wharf Return Wharf 370 24 1970Comm.ssariat 540 10 1970Boat Basin 1,250 8-10 1910NMB Wnarf I. 12 1914

Sub-total 3,980

To be commissioned in 1973.

/2 To be constructed under Credit 422-PAK.

ANNEX 1Page 3

3. Transit Sheds and Storage Areas

The East and West Wharves each have seven transit sheds (includingone at West Wharf under construction), open transit and storage areas. Apassenger terminal is now being built on East Wharf expected to be completedby 1975. Warehouses are mainly located in Thole Produce (T.P.) RailwayYard. Details are as follows:

Transit Sheds Open Transit Areas Open Storage Areas WarehousesLocation 1,000 sq ft 1,000 sq ft 1,000 sq ft 1,000 sq ft

East Wharf 0 /b - - _

East Wharf 555 705 1,240 330West Wharf/a 700/C 350 525 -Juna Bunder 134-Thole Pro-duce Yard - _ - 1,880 1,260

Total 1,489 1,055 3,645 1,590

/a Includes those currently under construction.

lb Passenger terminal.

jc To be constructed under Credit 422-PAK.

4. Cranes, Cargo-Handling Equipment and Plant

KPT owns and operates all the quayside cargo-handling appliances,including:

Description Number Capacity(tons)

Electric Portal Cranes 96 (16) 2 - 3Heavy Lift Portal Crane 1 30Road Mobile Cranes 27 ( 8) 2 -10Motor Trucks 26 (4) 3 - 7Towing Units 114 (24) I - 5Fork Lifts 63 (8) 3 - 5Trailers and Shunting Tractors 850 3 - 5

9 (2) 35 H. P.

Additional equipment being provided under Credit 422-PAK is shown in brackets.

5. Floating Craft

KPT c',as and operates the following floating craft:

ANNEX 1Page 4

Description Number Capacity Age (years)

Floating Crane 1 30 tons 50Floating Cranes 2 60 tons 9 & 28Floating Crane 1 125 tons 6Bucket Dredgers 3 50 ft - 1250 tons/hr 7, 8 & 45Grab Hopper Dredgers 2 50 ft - 100 tons/hr 3 & 43Cutter Suction Dredger 1 50 ft - 450 cu yd/hr 7Suction Dredger /a 1 50 ft - 450 cu yd/hr 4Reclamation Plant 1 4,750 m3/hr 4Steam Hopper Barges 2 800 tons 48Diesel Hopper Barges 3 800 tons 7, 2 & 12Diesel Hopper Barges 2 1,000 tons 0Dumb Cargo Barges 27 250 tons -Dumb Water Barges 27 300 tonsDangerous Goods Barges 6 25-200 tons -Harbor Tugs 6 10-20 tons 10-41Barge Tugs 4 4 tons -Water Boats 3 200 tons 4, 9 & 13

/a Capable of use only within the harbor.

The craft more than 30 years old are in very poor condition and duefor scrapping.

6. Railway Facilities

KPT has provided a network of approximately 100 miles of broadgauge railway tracks; by agreement the PWR operates the wagon and trainmovements on this network.

The Keamari Yard, laid behind the East Wharf, facilitates receivingup-country export cargo at the storage areas and direct delivery at theberths is also possible. Similarly, import cargo is railed either to thestorage areas or directly to the local and up-country destinations.

The Thole Produce (T.P.) Yard about one mile from the port providesstorage and railway facilities to receive cotton and other export cargo, whichcan also be railed to the ship-side whenever required.

The Mansfield Import Yard, laid during 1909 to 1912, provides ware-houses and open storage facilities for import and export cargo. It isobsolete and barely able to meet the present level of traffic demand at the13 berths of the West Wharf and has been scheduled for remodeling underThird Karachi Port Project (Credit 422-PAK).

The tank farms of the Pakistan Refinery Limited, Pakistan BurmahShell Limited and National Refinery Limited are located in the oil in-stallation plot, immediately behind the Keamari oil terminal. KPT and PWRprovide them with sidings and railway connection with Keamari Yard.

ANNEX 1Page 5

7. Land Connections

The East Wharf (Keamari) area contains 17 shipping berths, threeoil berths, two ship repair berths, one lighterage wharf, bulk oil installationsand boat basin. The Keamari area is connected to the mainland by:

(a) The Pakistan Western Railway (PWR) bridge whichcarries the railway tracks across the Chinna Creek.

(b) A PWR single track leading to the mainland HumpYard through the oil installation area, exclusivelyused for oil traffic.

Cc) The existing Napier Mole road bridge.

(d) A possible land route of poor quality through Clifton thatis not capable of heavy traffic without substantial improve-ment.

The existing road bridge was completed in 1864 and widened in 1914.It carries four traffic lanes, footpaths and services. The overall widthof the bridge is approximately 70 ft. The bridge is being replaced underthe Third Karachi Port Project (Credit 422-PAK).

8. Ancillary Services

The water supply for the port is obtained from the KarachiDevelopment Authority and is made available through mains and water bargesprovided by KPT.

9. Maintenance

Maintenance of existing structures needs to be improved, particularlyin the case of O.P.1 and O.P.2 where the existing concrete structures areshowing evidence of deterioration.

December 3, 1973

ANNEX 2Page 1

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Description of Project Items and Other Items to be UndertakenNot Financed by the Project

A. Items to be Financed by the Proposed Credit

1. Oil Berth

The berth will comprise a loading platform 120 ft x 50 ft, twobreasting dolphins, one on each side thereof, each 55 ft x 30 ft withnecessary fendering, and four mooring dolphins 25 ft x 25 ft, all connectedby 5 ft wide walkways. The loading platform will be connected to land by acauseway of part solid, and part piled construction.

The face of the breasting dolphins will be about 190 ft from theeastern edge of the lower harbor channel, and the loading platform about5 ft behind the face of these dolphins. The water area between the newberth and the existing channel will be dredged to a 44 ft depth to accommodateloaded 45,000-dwt tankers at all states of the tide. A floating collarwill be provided to contain any possible spillage.

Construction will be with reinforced and/or pre-stressed concrete onsteel tubular piles. Cathodic protection will be provided for the piling;ancillary works will include electric lighting and a customs office.

To handle the flexible hose connection for discharging/loadingmoored tankers, a hose tower equipped with a 5 ton crane will be providedon the loading platform; the flexible hoses will in turn be connected to acommon user 30"-diameter crude oil import pipe, and an 18"-diameter heavyfuel export pipe, both of which will be laid to the port boundary. Provisionof all necessary fire fighting equipment has been included.

2. Entrance Channel

The existing approach channel to Karachi harbor has a limitingdepth of 29 ft (25,000-dwt ships) and will need to be extended and dredgedto give a 40 ft depth of water for 45,000 dwt tankers to enable full use tobe made of the new oil pier. This will be achieved in two stages. First,a contract will be let to dredge about 3.5 million cu yd which will provide37 ft (about 40,000 dwt) under the proposed project; this will be completedby mid-1976, and the cost has been estimated on the basis of US$1.10 percu yd; thereafter it will be deepened to 40 ft, involving a further 1.5million cu yd of dredging, over the following three years by the dredger

ANNEX 2Page 2

to be provided. Details of this dredger are in section 3 below. Additionalmarket buoys and radar reflectors for existing buoys will improve thenavigability of the channel. The contract dredging includes deepeninga 2,003 ft test length of the approach channel to 45 ft in order toassess the maintenance dredging which will be required when a channel for75,000 dwt tankers is provided.

3. Procurement of Dredger for Maintenance and Deeper.ing of the EntranceChannel

Maintenance dredging of the fully deepened 40 ft channel isexpected to be about one million cu yd per annum. This has been independentlyestimated by three consultants, van Houten & Co. (USA) in association withthe Danish Hydraulics Institute, Frederick R. Harris (USA) and WallingfordHydraulic Research Laboratory (UK). It has been indicated that given theuncertainties of projections of this type the quantity might be exceeded ormay be less. The Association considers one million cu yd an acceptable figurefor planning purposes. At the initial dredged depth of 37 ft, maintenancedredging is estimated to amount to about 700,000 cu yd per annum. To enablethe required quantity to be dredged annually plus the extra 1.5 million cuyd to deepen the channel to a 40 ft depth over a period of three Nears, itis proposed to obtain a trailer suction hopper dredger of 2,000 m hoppercapacity; this will be fitted with apparatus to compensate for the effectsof swell in the open sea section of the channel. It can be demonstrated(Annex 3) that a dredger of this capacity can dredge at least 1.5 millioncu yd annually given the known distance from the channel to the dumping area.This will be adequate to achieve the proposed program. If the maintenancerequired proved to be 30% in excess of the present estimate, a 40 ft channelcould be achieved in about 4-1/2 years.

4. Consulting Services

Final engineering of the oil berth design is being financed underCredit S-9 PAK and is expected to be completed by December 1973; the proposedcredit will finance only supervision of construction of the berth, hose tower,and piping; it will also finance the required preparation of dredging con-tract documents and necessary surveys before and on completion of dredgingto determine precise quantities. For the procurement of the dredger, itincludes financing of naval architects to provide an outline biddingspecification, review the bids and designs submitted, and undertake a numberof inspections during construction. Also, because the operation of a dredgerof this type in open sea conditions is new to IPT's dredging staff, technicalassistance in the form of a dredging master and mechanical engineer will beprovided to give practical training to local staff "n the operation andmaintenance of the dredger over a period of three years from its delivery inKarachi. Assistance in assessing the results obtained from the deepenedtest section of the entrance channel is included.

B. Other Items Included in, but.Not Financed by, the Project

KPT will dredge the existing O.P.1 to a 38 ft depth to enable it toberth loaded 35,000-dwt tankers at all states of the tide by mid-1976;

ANNEX 2Page 3

and, with the dredger described in section 3, KPT will, in addition tomaintaining the 37 ft channel, deepen it to 40 ft depth by about 1979.

C. Further Ancillary Works

The common user pipelines for crude oil import and heavy fuel oilexport will be extended from the berth limits by the two refinery companiesto a common manifold adjacent to the tank farms, whence each individualcompany will provide piping to its own area. The companies will alsoincrease storage from the present 30,000 tons in the case of NRL and 65,000tons for PRL to the amount necessary to handle the increased tanker sizes.Additionally, improved piping arrangements to the existing oil berths,as required to expeditiously handle imports of-petroleum products and exportsof molasses and edible oils, will be provided by the companies concerned.Preparation of the required proposals is being coordinated by the OilCompanies' Advisory Committee for approval by KPT and the Association.

December 3, 1973

ANNEX 3Page 1

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Maintenance Dredging and Deepening of Entrance ChannelSize of Dredger and Time Required

1. Data

Dredging required to deepen channel to 40 ft 5,000,000 cu yd

Dredging required to deepen channel to 37 ft 3,500,000 cu yd

Dredging required to increase depth from 37 to 40 ft 1,500,000 cu yd

Say 37 ft - 38 ft 400,00038 ft - 39 ft 500,00039 ft - 40 ft 600,000

Annual maintenance dredging of 40 ft channel 1,000,000 cu ydto "1 " "37 ft " 700,000 cu yd

" Is it " 38 ft " 800,000 cu yd

"1 is " "39 ft " 900,000 cu yd

Use a 2,000 m hopper capacity dredger, speed 10 knots.

Spoil dumping site 5 miles from dredging area, therefore returntrip by dredger takes about 1 hour to which is added 15 minutes for dumpingthe spoil. Allow for three shifts working, with one hour lost between each shift.

2. Capacity of Dredger

(a) Available Working Time

Non-working days due to monsoon condition and other badweather = 100 days.

Maintenance and repair carried out in this season, there-fore available working days per year - 365-100 - 265 days.

ANNEX 3Page 2

(b) Hopper Loading

Hopper capacity X m3 Pump capacity 2 X m3/hr

Effective hopper capacity (solid) X m3

Solid content of suctioned water 1OZ /1

. . Time to fill hopper X x 0.5 = 2.5 hr2X x 0.10

Number of cycles per day -24 - 3 5.63.75

* .Daily Capacity (solid) = 2,000 x 5.6 - 5,600 m 3

Annual Capacity = 1,480,000 m'

Deduct 10% for unaccountable delays, etc., say 1,350,000 m3

- 1,500,000 cu yd

/1 To the extent the solid content can be increased, the annualcapacity will also increase.

Maintenance and deepening program will therefore be as followa:

AvailabilityMaintenance Capacity Cumulate

Year Capacity Dredging Quantity for Deepening Deepening Capacity…('--------------- ('000 cu yd) …------- … - _ -_ - -

1976/77 1,500 700 800 800

1977/78 1,500 900 600 1,400

1978/79 1,500 1,000 500 1,900

A 40 ft channel would therefore be achieved at the latest byabout May 1979.

Thereafter there is ample capacity for maintenance and somedeepening, but lack of knowledge of the maintenance requirement of achannel in excess of 40 ft precludes the possibility of determining thedepth which could be achieved. Even if the miaintenance dredging quantitiesallowed in the calculation were 30% in excess of estimate, the 40 ftchannel could be achieved in about 4-1/2 years, say, December 1981.

December 3, 1973

ANNEX 4Page 1

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Traffic Forecasting Methodology

Introduction

1. Past consumption of petroleum products in Pakistan increased overthe period 1962-72 at an average annual rate of 5.6% (Table 6). The growthrate varies substantially from product to product and from year to year,making projection on the basis of these data difficult. However, thereappears to be a reasonably good correlation between the growth of GDPand the growth in consumption of middle distillates, the principal productgroup. This relationship was used as the basis of the forecast for middledistillates which, in turn, provided the basis of the forecast for crudeoil. requirements.

Middle Distillates

2. Growth in consumption of middle distillates averaged 9.7% p.a.over the period 1962-70, two percentage points faster than GDP over thesame period. Following a period of relative stagnation in 1971 and 1972GDP has resumed its growth and is expected to increase at about 7% p.a.over the next few years. Taking account of expected petroleum product priceincreases resulting from devaluation of the Rupee and recent and expectedfuture, crude oil price increases, consumption of middle distillates areforecast to increase at 8% p.a., only one percentage point faster thanforecast GDP (Table 7).

Light Distillates

3. Consumption of light distillates (excluding naphtha) has grownat an average of 4% p.a. and, since there is no reason to expect any change,this growth rate is used for the forecast period. It corresponds with oilindustry estimates.

Naphtha

4. The supply of naphtha (a light distillate) in Pakistan is influencedby the present imbalance between demand for light distillates, mainly gasoline,increasing at 4% p.a. and supply, which is increasing in line with middledistillate growth, at 8% p.a. Given the inflexibility of refinery yieldpatterns this imbalance is likely to continue and will result in anincreasing supply of naphtha. At present, surplus naphtha is exported, butthe forecast assumes that the use of naphtha in the manufacture of petro-chemicals and fertilizer will become economically attractive, and that an

ANNEX 4Page 2

increasing proportion of the supply will therefore be used in Pakistan(Table A to this Annex).

Heavy Fuel

5. Since 1966 domestic consumption of heavy fuel has shown adeclining trend (Table 6), resulting from Pakistan Western Railways'dieselization program and a switch of large industrial energy consumersfrom fuel oil to natural gas. In view of the large and growing surplusof fuel oil which has to be exported at a very small net benefit to theeconomy, the Government is encouraging large industrial consumers, such asKarachi Electrical Supply Company, to switch back to the use of fuel oil.The forecast, which conforms with oil industry estimates, assumes that thispolicy will be successful.

Asphalt

6. No data are available for domestic consumption of asphalt separatefrom exports. However, the total volume in 1972 of 72,000 tons (Table 6)is substantially less than in earlier years, and is not unreasonable, inrelation to the mileage of paved highway, as an estimate of domestic con-sumption. On this basis, therefore, consumption is forecast to increaseat 10% p.a., the estimated growth of paved highways and highway traffic.

Lubricants and Greases

7. Gaps and anomalies in the data for lubricants and greases limittheir usefulness, and no oil industry forecast is available. In the absenceof a firmer foundation, the forecast was based on data for the four years1967-1970, which show a clear growth trend of 5.5% p.a.

Refinery Capacities and Yields

8. The capacities and yield patterns of existing refineries andplanned expansions are shown in Table B of this Annex, which also showsthe crude oil intake required to manufacture these volumes of product.These yield patterns were used to obtain the product supply figures usedin Table A.

Demand and Supply of Petroleum Products

9. The product supply figures shown in Table A are derived from amatching, as far as practically possible, of refining capacity to thedemand for middle distillates, the principal product group. This matchingprocess is based on the following reasonable assumptions:

(a) when imports of middle distillates would otherwisereach one million tons p. a., additional refiningcapacity will be added;

ANNEX 4Page 3

(b) all feasible means will be used of minimizing thevolumes of surplus products. Thus, a vis-breakerwill be added to PRL's refinery in 1976 to increasethe yield of middle distillates and reduce that ofheavy fuel; and Multan refinery will have a yieldpattern similar to NRL's present refinery so as toavoid manufacturing heavy fuel, which could not beeconomically exported from this inland location;

(c) the start-up of Multan refinery, scheduled for1977, will be deferred at least until 1979.

10. The resulting differences between supply of, and demand for,individual products is shown in Table A as imported or exported.

Crude Oil Demand

11. Table 7 recapitulates the volumes of refined products consusmed,as shown in Table A, deducts product imports and adds product exports, toobtain total manufactured product. The volume of product used in therefining process is added to the total manufactured product to obtain thetotal crude oil intake. The amount of crude oil supplied from domesticsources is deducted from the total crude oil intake to give the requirementsof imported crude oil.

12. Imports of crude oil thus obtained are shown in Table 7 asincreasing at 7.1% p.a. This compares with a growth rate of 6.7% forproduct consumption.

Principal Uncertainties

13. The principal uncertainties in the traffic forecast concern:

(a) The rate of increase in the price of crude oil, andthe effect of this on demand, either directly orthrough Government action, to curb demand for balanceof payments reasons. It is not possible to forecastwith accuracy either future crude oil prices, or theirimpact on demand. A product-by-product review indi-cates that the demand for most petroleum products isnot very price-elastic. The forecast recognizes,however, that there will be some reduction in thegrowth of demand as a result of inevitable priceincreases.

(b) If implementation of the new policy referred toin para 5 is less successful than anticipated,a higher proportion than forecast of the fueloil manufactured in Pakistan will have to be

ANNEX 4Page 4

exported. If the present consumption trend ismaintained, it will result in exports in 1983being about 300,000 tons higher than forecast.

(c) If future refining capacity is not designed tominimize surplus product (para 9(b)above), thevolume of fuel oil exports would be increased andthat of lubricants would be decreased.

(d) If the assumption in para 4, regarding the useof naphtha for manufacture in Pakistan ofpetrochemicals and fertilizer, is not borne out,substantially higher volumes of naphtha willhave to be exported.

14. To the extent that the expectations in (b), (c) and (d) are notfulfilled, exports of petroleum products will be increased. While thiswould bring forward the timing of the next oil berth project, it couldhave no bearing on the benefits of the present project which are relatedto the volume of crude oil imports.

December 3, 1973

pA.fSTA8

APPFRASAL OF FOFT1 K8AC81 F- POJECT

PFtroleu Proucets - nd S by raft 97

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Middle Di.t151.te.

De,sad (8. p...) 1,970 2,130 2,300 2,480 2,680d 2,890 3,120 3,370 3,640 3,930 4,250

S,:pply:1. Present Refineries 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450

2. N8L Espansion - - - 720 720 720 720 720 720 720 720

3. Vlstresker -I) _ _ _ 230 230 230 230 230 230 230 2304. 19,n Refinery(

1) - - - -- - 720 800 800 800 800

5. Product Imports 520 680 850 80 280 490 - 170 440 730 1,050

Heavw Fuel

Desand (2.87 p.a.) 790 810 830 860 880 910 930 960 980 1,010 1,040

Supply:1. Present Refineries 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250

2. NRL 8Epansion - - - 500 500 500 500 500 500 500 500

3. Vi.breaker - (320) (320) (320) (320) (320) (320) (320) (320)

Total Supply 1,250 1,250 1,250 1,430 1,430 1,430 1,430 1,430 1,430 1,430 1,430

Exports 460 440 420 570 550 520 500 470 450 420 390

Light Digtillsteo (.ecl. nsphtbe)

Deo nd (47. p.a.) 330 340 350 370 380 400 410 430 450 470 490

Supply:1. Present Refineries 460 460 460 460 460 460 460 460 460 460 460

2. NItL Expansion - - - 80 80 80 80 80 80 80 80

3. Visbreaker - - - 0 30 38 30 30 30 30 30

Tr nsfers to NAphth. (130) (120) (110) (200) (190) (170) (160) (140) (120) (100) (80)

Nkpitba

De,apd - _ - 50 60 79 120 140 164 180 200

Supply:1. Transfers fro. Casoline 130 120 110 200 190 170 160 140 120 100 80

2. Present N8L Refinery 50 50 50 50 50 50 50 50 50 50 50

3. NR8L 13xp8sion (1) - - - 170 170 170 170 170 170 170 170

4 Hut.. Refinery _ 180 200 200 200 200

Total Supply 180 170 160 420 410 390 560 560 540 520 seo

Erport 180 170 160 370 350 320 440 420 380 340 300

Lubes sod Greases

Demad (5.5% p.a.) 80 80 90 90 100 100 110 120 120 130 140

supply:1. Iports - - 10 10 20 20 - - - - -

2. Prevent Refineri,! 80 80 80 80 s0 80 80 80 80 80 80

3. Mo1tan Refineryt) - - - - - - 230 260 260 260 260

Report. - - - - - - 200 220 220 210 200

Asphalt

D_ed (107 p.a.) 80 90 100 110 120 120 140 160 170 190 210

Supply:1. Present Refin.ries 120 120 120 120 120 120 120 120 120 120 120

2. Rultan Refinery I1) - - - - - - 430 680 680 680 480

ERports 40 30 20 10 - - 410 440 430 410 390

Note : 1. Start-up of Moltan Refiery, scheduled for 1977, *sused, on bads. of forecast prodtcdas,d4 t. be deforre to 1979.

Sources: Rank StaffMinistry of Puel, Power and Natural Resources

September 28, 1973

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Refinery Yields at Maximum Capacity

(1) (2) (3)A O R _ P R L N(N (5) Multan Refinery

______________________ Present Future~ ~ Present Expansion _(% of total) ('000 tons) (%) ('000 tons) (%) ('000 tons) (%) ('000 tons) ('A) ('000 tons) (%) ('000 tons)

Crude Oil Intake 100 500 100 2,620 100 2,620 100 520 100 1,530 100 2,000

Offtake:

Light Distillates 24 120 13 340 14 370 - - 5 80 - -

Middle Distillates 38 190 40 1,050 49 1,280 40 210 47 720 40 800

Heavy Fuel 25 125 43 1,130 31 810 - - 33 5D0 - -

Lubricants and Greases 2 10 - - - - 13 70 - - 13 260

Naphtha - _ 10 50 11 170 10 200

Asphalt - - - - 24 120 - - 24 480

Refinery Use 11 55 4 100 6 160 13 70 4 60 13 260

Notes: 1. AOR = Attock Oil Refinery2. PRL = Pakistan Refinery Ltd.3. NRL = National Refinery Ltd.4. Assumes operation of vis-breaker in 19765. Assumes start-up of new 1.5 million ton middle distillate refinery in 1976, in addition to existing 520,000 ton lubricant refinery

Sources: Ministry of Fuel, Power and Natural ResourcesFrederic R. Harris, Inc.

September 21, 1973 w -

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Investment Program for Years Ending June 30

(PRs Million)Total

Sub- US$ Million1974 1975 1976 1977 1978 1979 Total 1980 1981 1982 1983 Total Equivalent

Second Port Project 36.67 5.60 - - - - 42.27 - - - - 42.27 4.27

Third Port Project 12.29 116.03 117.62 62.17 27.81 - 335.92 - - - - 335.92 33.93

Fourth Port Project - 36.54 93.67 79.65 11.39 15.21 236.46 - - - - 236.46 23.88

Western Backwater - - - 34.30 66.52 135.50 236.32 143.00 156.09 127.59 30.00 693.00 70.00

Other Works

Replacement of Craft 10.93 12.52 4.00 - - 10.00 37.45 15.00 5.00 - - 57.45Cargo-Handling Equipment 10.70 5.50 - - - - 16.20 - 5.00 10.00 5.00 36.20

Civil Works 6.12 6.13 6.00 6.00 7.00 9.00 40.25 7.00 8.00 10.00 10.00 75.25Mechanical 3.26 2.50 2.50 2.50 2.50 5.00 18.26 5.00 6.00 6.00 6.00 41.26Replacement of Drydock 1.50 8.00 10.50 - - - 20.00 - - - - 20.00

23.25

81.47 192.82 234.29 184.62 115.22 174.71 983.13 170.00 180.09 153.59 51.00 1,537.81 155.33

Source: Karachi Port Trust and Bank Staff

April 1974

TABLE 2PARITSTVN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Estimated Project Costs

PRs'000 US$'OOO % ofLocal Foreign Total Local Foreign Total Total

PART A

1. Civil Works and Navigational Aids

Berth Area Dredging 554 5,016 5,570 56 507 563Causeway 1,953 776 2,729 198 78 276Trestle 1,802 1,188 2,990 182 120 302Loading Platforms 2,473 2,502 4,975 249 253 502Breasting Dolphins 3,928 4,954 8,882 397 500 897Mooring Dolphins 2,660 3,790 6,450 268 383 651Walkways 503 713 1,216 51 72 123Buoys, Radar Reflectors 790 2,180 2,970 80 220 300Miscellaneous (Electrical and

Cathodic Protection) 977 1,851 2,828 99 187 286

Sub-total 15,640 22,970 38,610 1,580 2,320 3,900 18

2. Dredging Entrance Channel

5,200 yd long by 200 yd wide with 37 ftdepth (about 3.5 million cu yd) 7,425 30,690 38,115 750 3,100 3,850

Test dredging 2,000 ft long by 45 ft deep(36,000 cu yd) 1,780 2,970 4,750 180 300 480

Sub-total 9,205 33,660 42,865 930 3,400 4,330 20

3. Hose Tower and Common User Pipelinesto Limit of Port

Hose Tower, Hoses and Associated Equipment 1,092 2,867 3,959 110 290 40036" and 18" Pipes to End of Causeway 1,583 2,578 4,161 160 260 480

Sub-total 2,675 5,445 8,120 270 550 820 3

4. Purchase of Maintenance Dredger

Trailing Suction Dredger with 2,000 m3Hopper 18,515 59,400 77,915 1,870 6,000 7,870 35

5. Engineering Services

(a) Supervision ofi) Civil Works, Navigational Aids

and Hose Tower 347 1,485 1,832 35 150 185ii) Dredging Entrance Channel 149 841 990 15 85 100

(b) Naval Architect's Services 297 1,584 1,881 30 160 190(c) Technical Assistance for Maintenance

Dredging and to Test Results 692 2,129 2,821 70 215 285

Sub-total 1,485 6,039 7,524 150 610 760 3

6. Physical Contingencies

10% Civil Works and Hose Tower 2,675 6,236 8,911 270 630 900 4

7. Cost Contingencies

18%, 15% and 12% Foreign Exchange for1974, 1975 and 1976 respectivelyand 25% Local Currency 13,465 24,650 38,115 1,360 3,850 17

SUB-TOTAL 63,660 158,400 222,060 6,430 16,000 22,430 100

PART B

Dredging the approach channel from 37 to 40 ftdepth by the dredger purchased under Part A anddeepening 0.P.1 to 38 ft depth alongside byKPT's existing dredgers 10),S00 3,600 14,400 1,090 360 1,450

TOTAL 74,460 162,000 236,460 7,520 16,360 23,880

Sources: Bank Staff and Frederic R. Harris, Inc. (Consultant)

April 1974

'.4 ~~~~~~~~~~~~~~~~~~~~~~~TABLE3

i .

oI -4; j B 1

i4 .0 1 04 4.

i~~~~~~~~~~~. 44i 4 0 4

0~~ ~~ 4i.-

0.~~~~~~~ - ? 4 C XXA G

04 ~ ~~~~~~~~~~ c ' 0- 3 )°< ° ° O @ v O4 = IWU i4X? i 9p C°

<P4~ ~ ~ ~ ~ ~ C)OCH4c

TABLE 4

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Estimated Project Expenditure

Fiscal Expenditure of Project Funds (US$'000)Year Quarter Local Foreign Total

1975 1 10 65 752 130 270 4003 310 900 1, 21014 580 1,425 2,005

1976 1 495 2,395 2,6602 425 775 1,2003 570 2,720 3,2304 645 1,1435 2,080

1977 1 615 2,760 3,3752 1.,630 1,760 3,3903 200 440 6404 .210 430 640

1978 1 ) 475 375 8502)3 ) 205 95 3004)

1979 1)2 ) 625 240 8653)4 ) 395 275 670

Total 7,520 16,360 23,880

April 1974

TABLE 5

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Estimated Disbursement Schedule

Disbursement (US$' 000)Fiscal Year Quarter Quarter Cumulative

1975 1 25 252 130 1553 48o 6351! 1,075 1,710

1976 1 1.,750 3,4602 1,855 5,3153 1,420 6,7354 2,290 9,025

1977 1 1,880 10,9052 2,430 13,3353 1,315 14, 6 504 435 15,085

1978 1 ) 345 15,430

3 ) 255 15,685

1979 1 )2 ) 210 15,895

4 ) 105 16,000

April 1974

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Consumption of Petroleum Products 1962 - 1972('000 tons)

CompoundGrowth Rate

Product 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1962-72

Light Distillates 212.5 207.9 236.3 285.1 246.8 247.3 251.1 234.6 298.7 311.4 315.3Growth Rate (%) (2.2) 13.7 20.7 (13.4) 0.2 1.5 (6.6) 27.3 4.3 1.3 4.0

Middle Distillates 838.3 987.6 1,101.4 1,186.2 1,215.9 1,366.5 1,484.4 1,614.0 1,753.9 1,664.3 1,822.3Growth Rate (b) 17.8 11.5 7.7 2.5 12.4 8.6 8.7 8.7 (5.1) 9.5 8.0

Heavy Fuels 791.4 905.3 924.5 1,085.0 1,245.3 1,056.5 935.9 927.8 943.9 744.2 767.6Growth Rate (.) 14.4 2.1 17.4 14.8 (15.2) (11.4) (0.9) 1.7 (21.2) 3.1 (0.3)

Asphalt (includes exports) n.a. n.a. n.a. n.a. 33.3 48.5 68.2 106.4 93.4 85.1 72.4 -

Lubricants, Greases & Other n.a. n.a. 51.6 53.6 5.3 65.7 92.2 114.5 85.4 82.4 191.6 -

Total Consumption 1,842.2 2,100.8 2,313.8 2,609.9 2,746.6 2,784.5 2,831.8 2,997.3 3,175.3 2,887.4 3,169.2 5.6

Growth Rate (x0) - 14.0 10.1 12.8 542 1.4 1.2 5.8 5.9 (9.1), 9.8

Notes: 1. n.a. - not available2. Figures for lubes and greases not available

Source: Ministry of Fuel, Power and Natural Resources

September 5, 1973

PARTSTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Petroleum Products - Demand and Supply - 1973-1983

('000 tons)

Compound Growth

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 Rate 1973-83

DEMAND

Light Distillates (excluding naphtha) 330 340 350 370 380 400 410 430 450 470 490 4.0%

Middle Distillates 1,970 2,130 2,300 2,480 2,680 2,890 3,120 3,370 3,640 3,930 4,250 8.0%

Heavy Fuel 790 810 830 860 880 910 930 960 980 1,010 1,040 2.8%

Naphtha (1) - - - 50 60 70 120 140 160 180 200 -

Asphalt 80 90 100 110 120 120 140 160 170 190 210 10.0%

Lubricants and Greases 80 80 90 90 100 100 110 120 120 130 140 5.5%

Other 120 120 120 120 120 120 120 120 120 120 120

TOTAL PRODUCT DEMAND 3,370 3,570 3,790 4,080 4,340 4,610 4,950 5,300 5,640 6,030 6,450 6.7%

Growth Rate (%) 6,3 5.9 6.2 7.7 6.4 6.2 7.4 7.1 6.4 6.9 7.0

Less Product Imported: Middle Distillates 520 680 850 80 280 490 - 170 440 730 1.050

Sub-total 2,850 2,890 2,940 4,000 4,060 4,120 4,950 5,130 5,200 5,300 5,400

Add Products Emported: Heavy Fuel Oil 460 440 420 570 550 520 500 470 450 420 390

Naphtha 180 170 160 370 350 320 440 420 380 340 300

Lubes and Greases (2) _- - - - - 200 220 220 210 200

Total Manufactured Products 3,490 3,500 3,520 4,940 4,960 4,960 6,090 6,240 6,250 6,270 6,290

Refinery Use 230 230 230 350 350 350 580 610 610 610 610

TOTAL CRUDE OIL INTAKE 3,720 3,730 3,750 5,290 5,310 5,310 6,670 6,850 6,860 6,880 6,900 6.4%

DOMESTIC CRUDE INTAKE 500 500 500 500 500 500 500 500 500 500 500

IMPORTED CRUDE OIL 3,220 3,230 3,250 4,790 4,810 4,810 6,170 6,350 6,360 6,380 6,400 7.1%

Product Imports/Exports (as above) 1.160 1,290 1.430 1.020 1.180 1.330 1,140 1.280 1.490 1_700 1.940

TOTAL PETROLEUM IMPORTS/EXPORTS 4,380 4,520 4,680 5,810 5,990 6,140 7,310 7,630 7,850 8,080 8,340 6.7%

Notes: (1) Assumes operation of naphtha-based petrochemical plants.

(2) Reflects operation of lubricants refinery from 1979.

Sources: Bank StaffOil Companies Advisory Committee (Rarachi)

Ministry of Fuel, Power and Natural Resources

September 26, 1973

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Alternative Dredging Costs and Benefits(US$'000)

YearA L T E R N A T I V E I A L T E R N A T I V E 2 A L T E R N A T I V E 3((4) ()(4) (5) (4) (5)

Capital Costs Recurring Costs Benefits(5) Net Benefits Capital Cost Recurring Costs Benefits Net Benefits Capital Cost Recurring Costs Benefits Net Benefits

1974 3,200(2) (3,200) 2,600(2) (2,600) 5,200(2) (5,200)

1975 3 80(31 (7,000) 5,000(3) (7,600) 8,000(3) (13,200)3,20(2 2,600(2) 5,200(2)

1976 750 2,780 2,030 600 2,960 2,360 1,200 3,530 2,330

1977 750 2,900 2,150 600 2,970 2,370 1,200 3,540 2,340

1978 750 2,970 2,220 600 2,970 2,370 1,200 3,540 2,340

1979 750 3,810 3,060 2,600(2) 600 3,810 610 1,200 4,550 3,350

1980 2,600(6) 750 3,920 570 3,000(3) 600 3,920 (2,280) 1,200 4,680 3,4802,600(2)

1981 2,600(6) 750 3,920 570 1,200 4,680 3,480 1,200 4,680 3,480

1982 1,350 4,500 3,150 1,200 4,700 3,500 1,200 4,700 3,500

1983 1,350 4,750(7) 3,400 1,200 4,710 3,510 1,200 4,710 3,510

1984 1,350 4,900(7) 3,550 1,200 4,710(8) 3,510 1,200 4,710(8) 3,510

Present (1974) Value @ 12% Discount 1,033 263 (2,929)

Notes (1) Alternative 1 - Capital dredging to 37 ft; one dredger of 2,000 yd3

capacity.Alternative 2 - Capital dredging to 40 ft; one dredger of 1,500 yd

3capacity.

Alternative 3 - Capital dredging to 45 ft; two dredgers of 1,500 yd3

capacity.(2) Capital cost of dredger(s). (Excludes engineering costs and contingencies of $1.4 million included in dredging capital costs shown in Table 10.)(3) Capital dredging undertaken by contract.excluding test dredging for 45 ft channel.(4) Maintenance and running costs of dredgers(5) 50% of crude oil imports il, maximum sized ships and 507. in 35,000 dwt ships(6) Capital cost of second dredger, not included in present project. Later purchase than under Alternative 2 reflects capability of original dredger to deepen channel to about 42 ft.(7) Higher benefits than under Alternatives 2 and 3 reflect greater dredging capacity and a resulting channel about 2 ft deeper.(8) Benefits stabilize as facilities reach capacity.

Source: Bank Staff

November 1973

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Vessel Operating and Capital Costs

(US$'000)

25,000 dwt 35,000 dwt 45,000 dwt 75,000 dwt

Capital Cost 9,000 11,000 12,500 18,000

per dwt 360 314 278 240

Annual Fixed Costs

Depreciation & Interest @ 15% of Capital Costs 1,350 1,650 1,875 2,700

Annual Variable Costs (excluding crew and management) 750 850 1,025 1,450

TOTAL OPERATING COSTS (excluding crew and management) 2,100 2,500 2,900 4,150

Delivery Cost per million tons of Persian Gulf Crude Oil

Annual Delivery Capability( ) ('000 tons) 800 1,200 1,500 2,450

Cost per Annual Ton of Capacity (us$) 2.625 2.083 1.933 1.694

Cost per Million Tons (US$'000) 2,625 2,083 1,933 1,694

Saving compared with 25,000 dwt ship (US$'000) _ 542 692 931

Note: 1. Assumes 35 round trips per annum

Sources: Bank StaffNational Shipping Corporation, Karachi

November 1973

TABLE 10

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Project Costs and Benefits

(US $'000)

1/ BenefitsCapital Costs Recurring Reduced Oil Z/ Avoided 2/ Net

Year Oil Pier Dredging Costs Delivery Costs Investment Benefits

( 3,9004/1974 ( - 4 5005/ - - - (3,900)1975 3,700 3,900_ - - 3,400 (8,700)

1976 1,000 400 5/ 750 2,780 800 1,4301977 - - 750 2,900 3,400 5,550

1978 - - 750 2,970 800 3,020

1979 - - 750 3,810 - 3,060

1980 - - 750 3,920 - 3,1701981 - - 750 3,920 - 3,170

1982 - - 750 3,920 - 3,1701983 - - 750 3,920 - 3,170

1984 - - 750 3,920 - 3,1701985 - - 750 3,920 - 3,170

1986 - - 750 3,920 - 3,170

1987 - - 750 3,920 - 3,170

1988 - - 750 3,920 - 3,170

1989 - - 750 3,920 - 3,1701990 - - 750 3,920 - 3,1701991 - - 750 3,920 - 3,1701992 - - 750 3,920 - 3,170

1993 - - 750 3,920 - 3,1701994 - - 750 3,920 - 3,1701995 - - 750 3,920 - 3,170

E.R.R.: 23%

1/ Maintenance and running costs of dredgers.2/ For details see Table 8.3/ Capital cost of two piers for 25,000 dwt tankers.4/ Dredger.5/ Contract dredging.

Source: Bank Staff

April 1974

TABLE 1.1

PAKISTAN

APPRAISAL OF FOIURTH KARACHI PORT PROJECT

Karachi Port Trust - Revenue and Expenditure

Years Ended June 30

(PRs'OOO)

1969 1970 1971 1972 1973

Operating Revenues 85,128 91,267 103,519 125,473 138,616

Operating Expenditures 53,135 57,996 70,869 70,011 80,558

Depreciation 7,400 8,300 9,300 10,200 14,371

Total Operating Expenditures 60,535 66,296 80,169 80,211 94,929

Net Operating Revenue 24,593 24,971 23,350 45,262 43,687

Non-Operating Revenue 14,897 15,987 15,368 15,110 18,234

Net Revenue 39,490 40,958 38,718 60,372 62,921

Interest Paid 3,635 3,211 3,028 9,059 17,476

Net Income 35,855 37,747 35,690 51,313 j5,445

Operating Ratio 71 72 77 64 68

Interest Earned Ratio 8.1 9.6 5.9 5.9 3.6

Debt Service Coverage 2.8 3.0 3.0 3.0 2.0

Return on Net Fixed Assets 6.9 6.5 4.9 6.7 6.4

Source: Karachi Port Trust

April 1974

TABLE 12

PAKISTAN

APPRAISAL OF FOURTH KARACHI PCRT PROJECT

Karachi Port Trust - Balance Sheet as at June 30, 1973

ASSETS Carrent Assets

Debtors 31SiStores 19,492

- 131,295Investments

Provident & Other Funds 35,437Reserve Fund 53,462Operating Reserves

Sinking Fund 63,089Depreciation Fund 41,403Revenue Account 27,672Capital Account 32,183

253,246

Fixed Assets 800,407

Less Depreciation 57,482742,925

TOTAL ASSETS 1,127,466

LIABILITIES Current Liabilities 23,931

Long-Term Debt 23,931

World Bank 210,563Consortia Loans 48,610

259,173Equity & Reserves

Capital Account 569,0081evenue Reserve 66,037Provident & Welfare Funds 40,470Sinking Fund 138,756Revenue Account 30,091

844,362

TOTAL LIABILITIES 1,127,466

Debt/Equity Ratio 24/76Current Ratio 5.5:1

Source: Karachi Port Trust

April 1974

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Forecast Revenue and Expenditure - Years Ended June 30

(PRs'OOO)

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Operating Revenues 174,804 185,292 196,409 208,193 220,8i4 233,925 247,959 262,836 320,396 339,938

Operating Expenditure 90,590 94,449 100,808 107,612 114,893 123,084 131,420 140,839 150,383 161,095Depreciation 15,700 17,000 19,000 21,000 23,000 26,000 29,000 30,000 31.000 32.000

Total Operating Expenditure 106,290 111,449 119,808 128,612 137,893 149,084 160,420 170,839 181,383 193,095

Net Operating Revenue 68,514 73,843 76,601 79,581 82,791 84,841 87,539 91,997 139,013 146,843

Interest on Investments 18,938 19,100 17,961 15,361 15,361 15,361 15,361 14,661 14,361 13,961

Net Revenue 87,452 92,943 94,562 94,942 99,152 101,202 103,900 106,658 153,374 160,804

Interest on Loans 16,626 20,067 25,172 32,094 36,531 39,378 44,130 49,473 55,829 60,213

Net Income 70,826 72,876 69,390 62,848 62,621 61,824 59,770 54,185 97,545 100,591

Operating Ratio 61 60 61 62 62 64 65 65 65 65Interest Earned Ratio 5.2 4.6 3.7 2.9 2.7 2.6 2.3 2.1 2.7 2.7Debt Service Coverage 2.6 2.5 2.3 2.0 2.0 1.7 1.5 1.7 1.8 1.7Return on Net Fixed Assets 9.3 8.6 7,3 6.4 6.0 5.7 5.3 5.2 7.2 7.4

Source: Karachi Port Trust and Bank Staff

April 1914

PAKISTAN

APPRAISAL OF FOURTH KARACHI PORT PROJECT

Forecast Balance Sheets as at June 30

(PRs'000)

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Fixed Assets 881,877 1,074,697 1,308,987 1,493,607 1,608,827 1,782,347 1,952,347 2,132,437 2,286,02' 2,337,027

Less Depreciation 112,531 129,531 148,531 169,531 192,531 218,531 247,531 277,531 308,531 340,531

Net Fixed Assets 769,346 945,166 1,160,456 1,324,076 1,416,296 1,563,816 1,704,816 1,854,906 1,977,496 1,996,496

Investments 298,039 258,039 228,039 228,039 238,039 238,039 228,039 218,039 238,039 288,039

Current Assets

Debtors 30,316 28,316 26,316 26,316 26,316 24,316 22,316 20,316 18,316 16,316Stores 20,235 21,235 22,235 23,235 24,235 24,235 24,235 24,235 24,235 24,235

Cash 32,805 27,410 25,128 31,362 36,106 18,821 14,231 17,932 24,968 26,238

82,356 76,961 73,679 80,913 86,657 67,372 60,782 62,483 67,519 66,789

Total Assets 1,150,741 1,280,166 1,462,174 1,633,028 1,740,992 1,869,227 1,993,637 2,135,428 2,283,054 2,351,324

Deduct Current Liabilities 21,407 19,407 17,407 15,407 13,407 11,407 9,407 7,407 5,407 5,407

Capital Employed 1,129,334 1,260,759 1,444,767 1,617,621 1,727,585 1,857,820 1,984,230 2,128,021 2,277,647 2,345,917

Represented by:

Long-Term Debt 253,495 304,642 411,232 512,439 556,169 623,730 690,730 776,976 829,057 796,736

Equity and Reserves

Capital Reserves 629,801 702,677 772,067 834,915 897,536 959,360 1,023,769 1,046,293 1,129,477 1,216,107Other Reserves 246.038 253.440 261,46

8270,267 273,880 274.730 29D,091 304.752 319,113 333,074

875,839 956,117 1,033,535 1,105,182 1,171,416 1,234,090 1,293,860 1,351,045 1,448,590 1,549,181

1,129,334 1,260,759 1,444,767 1,617,621 1,727,585 1,857,820 1,984,230 2,128,021 2,277,647 2,345,917

Debt/Equity Ratio 22/78 24/76 28/72 32/68 32/68 33/67 35/65 36/64 36/64 34/66

Current Ratio 3.8:1 3.9:1 4.2:1 5.2:1 6.5:1 5.9:1 6.5:1 8.4:1 12.5:1 12.3:1

Source: Karachi Port Trust and Bank Staff

April 1974

PAKISTAN

APPRAISAL OF FOURTH KARACHI FORT PROJECT

Statement of Cash Flows for Years Ended June 30

(PRs '000)

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 Total

Sources

Net Income 70,826 72,876 69,390 62,848 62,621 61,824 59,770 57,185 97,545 100,591 715,476

Depreciation 15,700 17,000 19,000 21,000 23,000 26,000 29,000 30,000 31,000 32,000 243,700

Loans

Second Port Project 11,450 - - - - - - - - - 11,450

Third Port Project 5,840 58,010 58,810 41,080 11,985 - - 175,725

Fourth Port Project - 16,930 72,420 60,000 5,940 3,110 - - - - 158,400

Western Backwater - - _ 25.680 50.840 101.520 108,670 117,130 95.160 21.000 520.000

17,290 74,940 131,230 126,760 68,765 104,630 108,670 117,130 95,160 21,000 865,575

Grant

Napier Mole Bridge - 7,402 8,028 8,799 3,613 850 - - - - 28,692

Investsents Realized - 40,000 30,000 - - - 10,000 10,000 - - 90,000

Total Sources 103,816 212,218 257,648 219,407 157,999 193,304 207,440 214,315 223,705 153,591 1,943,443

Disposals

Capital Expenditure

Second Port Project 36,670 5,600 - - - - - - - - 42,270

Third Port Project 12,290 116,030 117,620 62,170 27,810 - _ 335,920

Fourth Port Project - 36,540 93,670 79,650 11,390 15,210 - - - - 236,460

Western Backwater - - - 34,300 66,520 135,500 143,000 156,090 127,590 30,000 693,000

Other Works 32.510 34.650 23.000 8,500 9.500 24,000 27.000 24.000 26.000 21,000 230,160

81,470 192,820 234,290 184,620 115,220 174,710 170,000 180,090 153,390 51,000 1,5'7,810

Repayment of Loans

First Port Project 9,042 9,482 9,944 10,417 10,912 11,440 12,001 - - - 73,238

Second Port Project 6,490 6,875 7,260 7,700 8,140 8,580 9,020 9,515 10,065 10,615 84,260

Third Port Project - - - - - 8,786 8,786 8,786 8,786 8,786 43,930

Fourth Port Project - - - - - 3,960 7,920 7,920 7,920 7,920 35,640

Western Backwater - - - - - - - - 13,000 26,000 39,000

Consortia 7.436 7. 4 36 7,46 5.983 4.303 4.303 4.303 3.308 _51944

22,968 23,)93 24,640 25,553 25,035 37,069 42,030 30,524 43,079 53,321 328,012

Investments 44,793 - - - 10,000 - - - 20,000 50,000 124,793

Changes In Working Capital -Increase (Decrease) (3,271) 1,000 1,000 3,000 3,000 - - (2,000) 2;729

Total Disposals 145, OM 217,613 259,930 213,173 153,255 211,779 212,030 210,614 216,669 152,321 1,999,344

Increase (Decrease) in Cash (42,144) (5,395) (2,282) 6,234 4,744 (18,475) (4,590) 3,701 1,036 1,270 (49,9nl)

Source: Karachi Port Trust and Bank Staff

April 1974

IBRD 10756

62- 6- 710 7'4NOVEMBER 1973

PA KI STAN r u RN

32'- CHINAPRIMARY ROADS 32(-

SECONDARY ROADS

, ---- i--- RAILWAYS J

* AIRPORTS

EXISTINGGAS PIPELINES JAMMU

…_____ PROPOSED GAS PIPELINES ANDDHlLIIAN Ofl& .0, A ~ .

---- DISTRICT BOUNDARIES AS -FI XCE*.**E CINE

-*- INTERNATIONAL BOUNDARIES --- LA

- * / W a1 .K ASH M IR0 100 200 300 400 R dw MIndR

K ILOMETERS t- V /SPTE - -

4\ ~ 1 )Kuhab

K..D280

Quetta ut 8

\ BALUCHISTANKala S/GAS FIE)Dc/ ahowalpur!/ INDIA

> ~~B A L U C H I S(TA N , 4 > >l

IRAN ) Jacobabad GAS FI EI RAN J 9<

kur U. X,-RS,,BX X,-N. R- STAPKROX.

24°- > - *- v t--/ * & "dt~~~~, ) (>. CHINA

~~c3~~ F ( TIBET)

. . . * . . .: . : -HUTAN

Sonmiani ~~~~~~~~~~~~~~~~~~SIKKIM4.

IANI erabod~~~~~~~~~~~~~

$A \r*§ z~ 4 World &mk~~~~~~~~~~~~~~~~~~~~~IN

IBRD 10170R670 Iff6705NOVEMBER 1973

\ 67o ; Q !t67 67°5' 245'

24 '5 4 2455

KARACHI/ ~~~~~~~~~~~~~~~AIRPORT

7o Hyderabad

724"50' ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~24050'

E A KI ST El N SMajor Roods + AirportOyster Rocks

MAN0RAf,.,

0.

KARACHITRANSPORTATION NETWORK U .S . I

24045 Major Roads 4 Airport 45

Secondary Road City Areas IRAN+--4Railway F Swaimp Areas ClS INE PA

0 1 2 3 4

K I IOM E TUR S Thi oomdorie's sowon an th.is map do not

670 timply roodorwooomt or i ARABIA Arby,~&e 67S'Worid tnknd its fflir6oes

IBRD 10171R1NOVEMBER 1973

MAXNSFIELD IMPORT/ RAI~~~~LWAY YAR

WESTERN DEWT ROAD BRIE

BACKWATER : W SACKWATER

-, I -,>' ,)g \ \\ \--y , l / / T-<-_

. \ ~~~~I /O3

0000,~ ~ ~ ~ ~~~~

OIL INSTALAT ONS

PAKISTAN

KARACHI PORT- : sAn 0 \ PROPOSED /

\ \ >\ \ RNEW OILiE ER I Paved Rods

X ,\ts sO/ R oE dX \ \ .,8t9 1t s | | RdlwR y Tracks

\\N\ t X - ->0 t\ Training Wols

\ N < \>< t;> \ \,, \ _ Tronsit Sheds

\\ \ - Mongrove Swomps\\ZZZ\j\4 TidaI Nud Flots

<- \ \\ X >>$,\ < Z,;New Channel

-~~~~~ \ ~~~~~~~~' I ~~~~~~~0 1000 2000 3000

FEET

. 42 ~~~\ NX \

F \> U S S R r.< .~~~~4 \ \ \

tk~~~~~~~~~N ''5vt ,_ NrALsX ,\XiL4 > '\> ] N DI A zH \, "'.

,CHINA

RAN ~ ~ ~ ~ ~ '

ARANB

N 0~~~~~~~~~~~I N V11

ARABIA rb,a.zraln Sea I,i rS./R¢,lauJl{X..... /'w.i. ./-'. ,

PAKISTANFOURTH KARACHI PORT PROJECT

OIL BERTH NO. 4GENERAL PLAN

PROPOSED OIL PIER NO 4 1500'

EDGE O.' EXISDING LOWER HARBOR CHANNEL

190' _755.00 DWT

10 f5l00 OWT OEIL PIER NO I

BERTHING LINE\

130 t / / \ / <g DDLRAINO DOLAHINO I CONNECTING WALKWAYS ITYP)130' OO~~~~~~~~~~.PHIN NO 2 I DOLPHIN NO 1~~~~~~~~~~~~~~~~~~~~~111

L HANDLING STRUCTURE OMOORING OOLPRIN5D APPROACH RE MOORING DOLPHINS

NO.3 & NO.4 ~ ~ ~ ~ ~ ~ ~ iNO.1 N&NO 2

-200'+ _ 175 +_ > 7 130" 130t 105 ____ 200'IPIPEWAY ROADWAY

CAUSEWAY

E E ~~~~~~~~~~~~ALE IN FreT

FENCING

ta X , $.1l.1 L,> W Iv l i ,