Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 6743-ME

STAFF APPRAISAL REPORT

MIEXICO

PORTS RETIABILITATION PROJECT

April 25, 1988

Countty Department IILatin America and Caribbean Region

ds document has a retcted disributin and may be used by teal. only In the PeifolaMne oftheir offidat dutdes. Its contents may aot ot&ise be disc! Wodd Bank autho&saion.

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

~9 *

CURRENCY EQUIVALENTS

Currency Unit Mexican Peso (Mex$)US$1 - Mex$2,270Mrbx$1 million = US$440

(March 15, 1988)

Fiscal YearJanuary I-December 31

WEIGHTS AND MEASURESMetric: British/US EquNvalent

1 meter (m) - 3.28 feet (ft)1 kilometer (km) = 0.62 miles (mi)1 kilogram (kg) & 2.20 pounds (lb)1 metric ton (m ton) - 2,205 poundsI liter (1) - 0.26 gallon (gal)

ABBREVIATIONS

BANOBRAS National Bank for Public Works and ServicesBANPESCA National Bank for Fishing and PortsCDP Port Development CommitteeCIFSA Industrial Development ConsultantCNCP National Commission for Port CoordinationDGPP Directorate General for PortsDGP Directorate General for PlanningDGT Directorate General for TariffsDGOM Directorate General for Maritime WorksDGVF Directorate-General for Rail LinesDRAGADO Directorate General for DredgingESP Port Services CompanyFIDEMAP Trust Fund for Port MachineryFONDEPORT National Fund for Ports DevelopmentGUA Stevedoring Union for TampicoNdeM National Railways of MexicoSAHOP Secretariat for Human Settlements and Public

WorksSCT Secretariat for Communications and TransportSEDRA Dredging ServiceSEPOG ESP of GuaymasSEPOM ESP of ManzanilloSERPOVER ESP of VeracruzSHCP Secretariat for Finance and Public CreditSPP Secretariat for Programming and BudgetingSPTA Decentralized Entity of Port System in Tampico-

AltamiraTEU Twenty-foot Equivalent Unit (Container)TUM Common User Berth

t

FOR OmFCI USE ONLY

MEXICO

STAFF APPRAISAL REPORT

PORTS REHABILITATION 7ROJECT

TABLE OF CONTENTSPage No.

I. SUMMARY .. I.oee,eeeeee......... e , 1

II. THE TRANSPORT SECTOR .................................. 3

A, The Transport System 3

(1) Transport and the Economy...............,............. 3(ii) Institutional Framework .............................. 4

B. Bank Involvement in the Sector and CurrentLending Strategy.................ra t e gy....... 5

C. The Ports Subsector .6....... ..... ..... , e 6

(i) Port Administration and Planning 00....."............ 6(ii) Maritime Traffic ... 8

(iii) Infrastructure, Equipment and Operationsa............. 9(iv) Port Finances and Investment ...... 11

-III THE PROJECT 13XII. T_ RJC .................... *.............................. 13

A. Project Origin and Objectives ............................. 13B. Rationale for Bank Involvement ............................ 14C. Project Description ... ***,.. ......................... 14D. Project Cost and Financing ............................ 169, Financial Prospects of Project 2orts ...................... 18P. Ecoromic Justification .... .....................0.......... 20G. Sensitivity Analysis and Project Risks .................... 20H. Project Execution .................... 21I. Performance Indicators, Targets art Monitoring ............ 21Jo Procurement *.................................eeeeeeeee 22K. Disbursement, Accounts and Audits ........................ 24L. Environmental Aspects .................................... 25

IV. AGREEMENTS REACHED AND RECOMMENDATIONS ....................... 25

This report is based upon the findings of an appraisal mission that visitedMexico in November 1986. The mission comprised Messrs. Zvi Raanan, (SeniorFinancial Analyst), D. Hill (Port Engineer) and Malise Dick (SeniorEconomist); R Laver (Financial Analyst, Consultant), RLE.G. Smith(Economist, Consultant), J.B. Newvman (Dredging Consultant) and K. Fratzke,(Operations Specialist, Consultant).

This document has a restricted distribution and may be used by recipients only In the peorfomneof their ofcial duties Its contents may not otherwise be dislosed without World Bank authoration.

- ii -

Page No.TABLE OF CONTENTS (Cont'd)

TABLES2.1 Prior Transport ........... .................................. 272.2 Dry Cargo Traffic at Principal and Project Ports.............. 283.1 Detailed Cost Tables: Guaymas, Manzanillo, Tampico-Altamira,

Veracruz; DredgesSupervision of Construction and Studies ...................... 29

3.2 Summary Accounts by Year - Base Costs......................... 353.3 Breakdown of Summary Accounts ................................ 363.4 Summary Accounts by Year - Including Contingencies............ 373.5' Project Components by Year - Base Costs ....................... 383.6 Project Components by Year - Including Contingencies.......... 393.7 Summary Account by Project Component ......................... 403.8 Project Cost Summary .. .....oo.oo.o.. .. ... .. ...... ........... 413.9 "roject Finwncing Plan ....o........o........eoo...eooeooee..o 42

4.1 Estimated Schedule of Disbursementt............................ 43

ANNEXSi Institutional Framework of Mexico's Portso..................... 462 Port and Waterway Dredging......................................0....000000 483 Port Efficiency ..............o......................0........ 534 Survey of Cargo-Handling Equipment ............................ 595 Description of Project Ports ................................. 626 Action Plans for Port Operators .............................. 647 Technical Assistance aid Studies Program ..................... 668 Methodology for Economic Evaluations for Project Ports ....... 709 Detailed Project Description ................................. 72

10 Action Program for Project Execution ......................... 76- Project Execution and Monitoring ............................. 80

12 Doc ments in Project File .................................... 84

CHARTS1 SCT Organization2 SEDRA Organization

MAPSIBRD 20359 - Port of GuaymasIBRD 20360 - Port of ManzanilloIBRD 20361 - Port of Tampico and AltamiraIBRD 23362 - Port of VeracruzIBED 20358R - Transportation Network and Principle Port Locations

MEXICO

PORTS REHABILITATION PROJECT

PROJECT SUMMARY

Borrower: Bnaco Nacional de Obras y Servicios Publicos, S.N.C.(BANOBRAS).

Guarantor: United Mexican States

Project ExecutingAgency: Secretaria de Comunicationes y Transportes (SCT)

Amount: US$50.0 million

Terms: Repayment in 15 years, including three years of grace atthe standard variable interest rate. On-lending termswould be the same, plus a small fee to BANOBRAS for itsintermediation role.

Project Objectives: The project would facilitate foreign trade as well asprogressively reduce Government subsidies to portoperations. Specific project objectives are to: (a)improve port efficiency through the rehabilitation andmodernization of port operations, ilfrastructure andequipment; (b) improve equipment management andmaintenance; (c) assist in the acquisition andmaintenance of dredging equipment and training in itsoperation; and (d) strengthen port livestment planningand financial management.

Project Description: The project would finance specific investments in1988-1994 in the four main ports of Guaymas,Tampico-Altamira, Manzanillo and Veracruz which handleabout 70% of non-petroleum sea-borne foreign trade, soas to improve their efficiency, modernize cargo handlingmethods and improve equipment maintenance. It wouldhelp finance new construction and wharf rehabilitation(30X of total costs), cargo equipment (49%), dredges(18%), and technical assistance (3%) for the recentlyformed Dredging Service - SEDRA, and provide assistanceto the Ministry of Transport and Communications (SCT) toimprove investment planning and organization in theport-subsector.

Benefits Port efficiency is an important element in Mexico'sand Risks: economic recovery and iD. the Government's efforts to

stimulate trade, restructure the industrial sector andbetter utilize limited public sector resources. Thelast two port projects, though limited in scope, havehelped to establish a basis for rationalizing the systemof port administration and the pricing of portservices. Further Bank involvement would help improveiDvestment planning, operational efficiency and costrecovery policies. The main risk is the availability ofsufficient counterpart funds to carry out investments in

a timely manner. Hmwever, this risk is small sirce theitems lcluded in the project constitute the essentialcore of the sector investment program and close reviewwill be malntained on the overall port investmentprogram and in partlcular that for the project ports andSEDRA. AMother risk will be the ability of SCT to carryout the needed institutional reforms given conflictingpolitical ilterests. Actions already taken, however,have confirmed the Government's commitment to suchreforms.

Estimated Project Cost: 1/-U5$ Million-

Port Civil Works Local Foreign TotalN nstruction T1.1 8.3 19.4Wharf Rehabilitation 2.0 1.3 3.3

Sub-Total Port Civil Works 13.1 9.6 22.7

Cargo EquipmentNow Equipment and Spare Parts 13.2 19.3 32.5Rehabilitation of Equipment 0.9 1.6 2.5

Sub-Total Cargo Equipment 1T4:T 20.9 35.0

DredgesParts, Auxiliary Craft

and Measuring Equipment 2.7 4.0 6.7Rehabilitation of Old Dredges 2.7 3.8 6.5

Sub-Total Dredges 5.4 7.8 13.2

Technical AssistanceSupervision and S..udies 0.5 1.7 2.2

Total Base Cost: 33.1 40.0 73.1Physical Contingencies 2.9 3.3 6.2Price Contingencies 4.2 6.7 10.9

Total Project Costs 40.2 2/ 50.0 90.2

Financing Plan: US$ MillionLocal Foreign Total

Government 30.2 - 30.2Ports 10.0 - 10.0IBRD - 50.0 50.0

Total 40.2 50.0 90.2

Estimated Disbursements:

Fiscal Year 1989 1990 1991 1992 1993 1994 1995--(UISillion) -

Annual 14.0 3/ 9.0 13.8 5.4 4.4 2.2 1.2Cumulative 14.0 23.0 36.8 42.2 46.6 48.8 50.0

Rate of Return: About 22X

1/ As of April 6, 1988.2/ Taxes and duties amounting to US$22.3 million are included. Foreign

finaneing costs during construction is not included.3/ Includes retroactive financing and Initial disbursement Into Spectal

Account.

-3-

IL. 1= TRAMSPOKT SECTOR

A. The Transport System

(i) Transport and the Economy

2.01 The dramatic swings in the Mexican economy over the past 10 yearshave had a significant impact on the transport s-etor. The surge in economicactivity in the late 1970's and early 1980's with GDP rising by an average 6%per year in real terms coupled with an unprecedented demand for importedgrains led to a period of high traffic growth for all modes of transport.The ports registered annual average increases of over 8X in cargo tonshandled from 1978 to 1981. Railway traffic increased by 5% per year from1977 to 1981 and would have been higher except for serious operational andphysical bottlenecks. Highway traffic grew by over 13X annually during thesame period. Despite an extensive transport network, including some 225,000km of roads (75,000 km paved), about 20,000 km of railways, 20,000 km ocpipelines, some 33 ports serving international traffic and 50 airportscapable of handling medium and larger size aircraft, transport bottleneckswere occurring which directly affected major economic sectors. Investment intransport, which had declined In relative terms from 20% of public sectorinvestment before the 1970's to 9%, was accelerated, particularly for portsand railways. The sectoral focus was on providing sufficient capacity tosupport the oil-led growth of the economy.

2.02 By 1982, however, the rate of expansion of the economy, led bypublic sector expenditures, became untenable. The fiscal deficit reachedover 17% of GDP. Subsidies had already reached over 8% of GDP by 1980.Capital flight accelerated and the peso had to be devalued by 268% in nominalterms in 1982. GDP fell in 1982 and in 1983. As the Government'sstabilization, demand-management program took hold, traffic declined and thefocus in the transport sector was on helping to reduce the fiscal deficit byimproving operational efficiency, curtailing investment and reducingunwarranted subsidies. With declining personal income and industrialactivity, and substantial real increases in transport-related prices, roadtraffic grew by only 4% per year from 1981 to 1985 and rail traffic by alittle over 1% annually. Port traffic declined by 3.5% over the period asdomestic grain production recovered, replacing import requirements.

2.03 During 1987 economic activity seems to have started a modestrecovery. However, the uncertainty in the long term macroeconomic prospectsmakes long range estimates of transport needs difficult. The restructuringof Mexican industry, particularly in the steel and fertilizer subsectors, hasimportant implications for the transport sector. Furthermore, the focus onpromoting non-traditional exports to fuel the economic recovery suggests thatnew types of commodity movements, which require higher levels of transportservices as compared with traditional traffic flows, will place new demandson the transport system. Over the next several years, however, as budgetsremain limited, the emphasis in transport will be to: treat the backlog ofmaintenance and rehabilitation works which have accumulated; minimize newconstruction; and continue to rationalize public sector expenditures. Arecent Sector Strategy Paper (Green Cover, Report No. 6552-ME) provides abroader assessment of the main sectoral issues. In addition, recent Staff

- 4 -

Appraisal Reports for the Second Highway Sector Project (Loan 2428-MF, FY84),the Railway Sector Project (Loan 2575-ME, FY85) and the Highway MaintenanceProject (Lo4u 2875-ME, FY88) provide a detailed discussion of land transport.

(ii) Institutional Framework

2.04 The transport sector in general is characterized by a relativelystable and qualified cadre of high level staff which do not changesignificantly with changes in Government administration. The principalissue, however, which was continuously identified by Bank sector reviews inthe 1970's, was the lack of coordination in the transport sector due to themultiplicity of ministries responsible for the various modes. In late 1982,the Secretariat of Communications and Transport (SCT) was reorgan'szed(Chart 1) to encompass all transport modes with three subsecretariats: onefor infrastructure, responsible for the design, execution and maintenance ofall civil works; one for operations, responsible for all transportoperations, tariffs and regulations and for overseeing parastatalenterprises; and one for communications. ln addition, a Directorate Generalfor Planning (DGP), answering to the Secretary, was established withresponsibility for investment and general budgetary planning and monitoring.While the reformulation with regard to the subsecretariats was carried outrelatively smoothly, it has taken more time to establish an effectiveplanning entity with the capability to handle all transport modes. Staff,organizational and technical constraints have had to be overcome.

2.05 Planning units within the various modal directorates areresponsible for identifying and proposing capital investments and operatingbudget estimates. They provide the technical details required for theanalyses of investments and, in some cases, carry out the economicevaluations, DGP, in turn, has the responsibility for carrying out orreviewing the economic evaluation and providing a multimodal, consistentanalytical framework for the preparation of the medium- and long-terminvestment programs. The Secretariat for Programming and Budgeting (SPP) hasplayed an important role in ensuring consistent modal planning. TheDirectorate General for Public Infrastructure and Social Development of SPPmust approve the proposed SCT investment and operating budgets and conducts aserious review of all major investments in the sector. This Directorate isalsen responsible for approving the budgets of the transport parastatalenterprises and calls on the relevant directorates of SCT for their opilion.

2.06 Bank efforts through the recent loans to the various subsectorshave sought to help the Government in the upgrading of DGP's capabilitieswith the belief that once DGP can demonstrate its ability to effectivelyassess the various modes, iu. zole within SCT, vis-a-vis the subsecretariats,will be enihanced. While the unit's analytical skills and tools cirewell-developed for highways, assistance has been provided to help DGP acquiresimilar skills and tools for the evaluation of rail and port operations andinvestments. Foreign and local consultant support has been contracted and ateam of young engineers has been organized as the analytical core of DGP.Currently, consultants are working to develop a sectoral data base, todevelop and upgrade a set of consistent evaluation methodologies and toprepare draft operational and investment strategies, for each *ode. Theobjective is to have established a well-organlzed and trained planning unit

-5 -

by the end of 1988 with a well-defined sector strategy for the newadministration.

B. Bank Involvement in the Sector and Current Lending Strategy

2.07 The Bank has made a total of 20 loans to transport to date coveringroads (11), railways (5), ports (3) and air (1) (Table 2.1). In ports thefirst IBRD loan of $20 million was made in 1972 and started the process ofrationalizing the organization of the subsector through the creation of portoperations companies (ESPs) and a central equipment fund (FIDEMAP). Furtherinstitutional improvements are taking place under the current Lazaro CardenasIndustrial Port Project (Loan 2450-ME). While there have been substantialadvances in terms of investment planning, design and construction andoperational improvements under these projects, prior to 1982 there was muchless success or dialogue about policy issues regarding pricing, user charges,regulation and subsidies. The problem was partially institutional, with theloans going to the Secretariat of Public Works (SAHOP) or the railways forexample, while the policies were determined by another secretariat. Therewas also, however, a basic difference in outlook. Project Completion Reportsfor Highways (Ln. 1671-ME), Railways (Ln. 1232-ME) and Ports (Ln. 1964-ME),have noted that although the quality of work executed is satisfactory, costchanges, construction delays and Insufficient budget allocations havegenerally resulted in delayed completion of Bank projects. On the otherhand, sector projects in highways, railways and the Port DevelopmentPreparation project have brought about a much more consistent approach toInvestment planning and the use of feasibility studies in the transportsector, as well as a dialogue with the SCT on p:icing policies andadministrative improvements.

2.08 Since the change of administration in 1982, the role of the BUnk inthe sector has changed significantly. The two basic reasons for the changewere the Institutional reorganization bringing SCT and SAHOP together (para2.04) and, more importantly, the economic crisis highlighted the need toconfront major policy issues. With the reorganization of SCT, the raising offuel prices to international levels, the increase and reclassification ofrailway freight tariffs reducing railway operating ratios from 145 in 1981 to95 in 1985, the enactment of a comprehensive contract between Government andthe National Railways (NdeM) to improve the railway operations and financialstatus, and the preparation of studies and concrete proposals to rationalizeand Improve cost recovery for roads and administration of the ports, theGovernment showed its commitment to take the necessary actions in thesector. The Bank responded with a comprehensive lending program resulting inthe Second Highway Sector Project (Loan 2428-ME, FY84), the Lazaro CardenasPort Project (Loan 2450-ME, FY84), the Chiapas Rural Roads Project (Loan2525-ME, FY85) and the Railway Sector Project (Loan 2575-ME, FY85) and theHighway Maintenance Project (Loan 2875-ME, FY88).

2.09 The extended economic recession, exacerbated by the fall ininternational oil prices coupled with the fact that the administration is inits last two years, have led to a more limited lending program for thesector. The present lending strategy is directed at meeting the lmmediateneeds of the present administration, as well as providing a financing bridgeinto the early years of the new administration. In the ports subsector, theproposed project is designed to rationalisse public sector investment as well

- 6 -

as improve and strengthen the institutional framework developed by thecurrent administration for the subsector - with a view to establishinggreater financial and managerial autonomy for the principal ports. To thisend, a condition of negotiation was the preparation of a ports policy paperby SCT, which could serve as a satisfactory basis for such negotiations.This was received before the invitation to negotiate was sent.

C. The Ports Subsector

(i) Port Administration and Planning

2.10 There is no comprehensive system of port administration in Mexico.Planning and control is split between a number of Government agencies andport operations are in the hands of commercially constituted, mainlyGovernment-owned, operating companies except in two important ports, Tampicoand Veracrus, where labor unions control the operations. At the nationallevel, responsibilities for the port subsector are divided between theInfrastructure and the Operations subsecretariats of SCT, the National PortCoordinating Commission (CNCP) and the National Port Development Fund(FONDEPORT). The Directorate General for Marine Works (DGOM), %hich comesunder the Subsecretariat for Infrastructure, is responsible for portconstruction while the Directorate General for Ports (DGPP), which comesuder the Subsecretariat for Operations, is responsible for overall portoperations (see Chart 1). Some of the functions of these two Directoratesoverlap with those of the CNCP which is responsible for coordinating portdevelopment plz.aning and policy, as well as for serviDg as a vehicle toconsult port users on port development. CNCP also has Directorates Generalresponsible for port administration, port systems analysis and industrialports and is the 'holding company', on the Government's behalf, of themajority of the shares in the Port Services Companies (ESPs) - the portoperating companies (para 2.13). Since 1985, CNCP has been the principalrecipient of port dues with responsibility for their allocation among thecountries' ports, subject to SPP approval. During the current administrationCNCP has played the key role in determinirg the direction of port policy.Another institution with a specialized role is FONDEPORT, a trust fund underSCT's jurisdiction, which has responsibility for the development, sale and/orlease of land adjacent to port areas. In the last two years, SCT has beenmaking an effort to coordinate the efforts of all these agencies through DGPas the central planning agency for all modes of trarsport. A more detaileddescription of the various agencies and an analysis of the institutionalframework at the time of appraisal is given in Annex 1.

2.11 At the local level, DGPP has Sttperintendencies in each of theprincipal ports which are, on behalf of SCT, the agencies supposedly owningthe port facilities, responsible for their maintenance and controlling allport operations. Until 1985, port dues were collected by theSuperintendencies. Since then, however, collection of dues and tariffs havebeen consolidated and been made the responsibility of the ESPs (para 2.13).Maintenance of port infrastructure, until 1986 a responsibility of theSuperintendencies, has also been transferred to ESPs with regard to thelandside installations, leaving the former with reduced functions, though notin all cases with reduced personnel. In the four project ports, maintenancepersonnel has been transferred to ESPs and to SPTA respectively.

- 7 -

2.12 Because of the proliferation of different Government agencies'representatives at the local level, an SCT regulation In February 1984provided the legal basis for the esitablishment of a Port DevelopmentCommittee (CDP) as overall coordinating body in each principal port or groupof ports. All local agencies dealing in port matters (including principalusers) are represented in the CDP. The CDPs prepare development plans, agreeon annual operating plans, supervise the purchase and maintenance ofequipment and generally are supposed to be the normative body for alloperations, development and navigation matters. The CDPs meet every twomonths and set up the working groups, when necessary, to perform theirassigned functions. By coordinating the work of all the Government agenciesat local level, rather than each agency referring decisions to Mexico City,ports thus respond more efficiently to user needs.

2.13 With a few exceptions, notably that of Tampico-Altamira (para2.14), the ports are operated by local port service companies (ESPs) set upunder the first port project (Loan 820-ME) in the 1970's as commerciallyconstituted operators which are jointly owned by the Governmes.t through CNCP,(which acts as a holding company of most of the shares), port unions and portusers. The nature of these companies and their efficiency vary. SCT hasdecided to widen the powers of the ESPs by giving them broaderresponsibility, including that for port equipment acquisition andmaintenance, cargo storage, and collection of all port tariffs and dues. Thelatter, however, are collected on behalf of CNCP and revenues therefrom donot pass through the ESPs' accounts. In some of the main ports on thePacific, e.g., Lazaro Cardenas, Guaymas and Manzanillo, the ESPs'administrations and operations are being strengthened through the addition ofmore highly qualified staif for administration, finance, statisticc,maintenance, and operations.

2.14 The case of Tampico-Altamira is a special one. With the completionin 1985 of the one-wharf public terminal in the new industrial port ofAltamira (z3me 30 km north of the old river-port of Tampico), the Governmentestablish.d the Tampico-Altamira Port System (SPTA) as a possible prototypedecentralized (regional) Port Authority to take responsibility, on theGovernment's behalf, for the integrated development, administration andoperation of the two ports. The Director General is responsible to a Boardof Directors representing nine agencies of Government, state andmunicipality. In June 1985 SPTA contracted with the union-owned cooperativew1tch had previously operated Tampico port to continue doing so withexclusive rights also to the operation of the new deep-water facility inAltamira.

2.15 Maintenance dredging of Mexico's ports and some irrigation canalshad, until recently, been the responsibility of the Directorate General forDredging (DRAGADO) within the SCT. DRAGADO also did some constructiondredging although the la-ter was and will continue to be done mainly byprivate dredging contractors under contract to the Directorate General forMaritime Works. A Presidential Decree was issued in November 1985,establishing the Dredging Service (SEDRA), a "deconcentrated' federalgovernment agency but still under the SCT (Annex 2). As a "deconcentrated"agency, instead of a regular government directorate, SEDRA is permitted ahigher degree of independence and flexibility in establishing its

- 8 -

organization (Chart 2) and procedures and also more discretionary use of itsannual budget.

2.16 The proliferation of agencies dealing with the ports has notcreated complementary functions in all cases, but rather some functions forwhich two or more agencies are nominally responsible and fighting fordomination. Investment in the port subsector has until recently beendictated largely by political considerations with insufficient economicjustification. As a first step towards the reorganization of the portsubsector, the project will focus on the consolidation of the planningfunction in the SCT and the strengthening of the CDPs as coordinating bodieswith decision-making power at local level. The details of the proposediAstitutional improvements in these areas are discussed below.

2.17 During negotiations it was confirmed that the duplication of effortwith regards to traffic forecasting and planning and the isolation of thestatistics function in DGPP (Annex 1) has been resolved by consolidatingthese functions in one organizational unit, the Ports and Systems Directorateof CNCP. As CNCP seems to have the relevant skills, is the officiallydesignated ports coordinating body responsible for port systems and portadministration, and also has the most direct access to port operations andtheir costs, it was the obvious choice for locating a federal ports planningbureau. Furthermore, CNCP is a staff unit and comes under neither of theSub-Secretaries, Operations or Infrastructure, but directly under the SCTSecretary. This puts it in a good position to be above theinter-departmental fray.

2.18 The evelving network of the regional Port Development Committees(CDPs), will play a critical role in the investment planning process and thedecentralization of decision making and better coordination at the locallevel. It is through these that the primary information on port capacity anddemand for port services will be fed to the central body. The CDPs should,to this end, appoint specialized subcommittees of two or three members todeal with finances, accounting, auditing, technical matters, and operations.The exception is the relatively new decentralized organization atTampico-Altamira, which, theoretically at least, embodies all thesefunctions, but is having some difficulty getting started. Some of thesedifficulties will be addressed through the proposed project (paras 3.10,3.14).

(ii) Maritime Traffic

2.19 There are about 33 ports with commercial traffic in Mexico, butmost are of minor importance. Excluding petroleum, largely centered on threeGulf ports, and the salt and gypsum ports of Baja California, some five portshandle the bulk of Mexican seaborne traffic: Veracruz and Tampico-Altamiraon the Gulf Coast, and on the Pacific Coast, Guaymas, Lazaro Cardenas andManzanillo. This concentration, and the preponderance of traffic through theGulf ports (Pacific ports account for under 30% of general cargo, and 35X ofgrain traffic) is explicable in terms of a high concentration of populationand economic activity in the central Mexican region with good transport tothe Gulf Coast and the strong economic links with the United States.

- 9 -

Veracruz, which handles the largest volume of general cargo and agriculturaldomestic traffic, only totalled 3.0 million tons of dry cargo in 1985 ofwhich 500,000 tons was bulk mineral, mainly cement clinker.

2.20 Part of the reason for the fairly small total volume, and theconsequent medium scale of port activity, is the importance of land movementsto and from the United States. Nearly 30% of imports went overland in 1985,and the proportion of high value general cargo was probably nearer to 40%. Asimilar pattern applies to non-petroleum exports.

2.21 Partly because of topography and mainly because of thedevelopment of the railway and highway systems, most of the main ports havemoderately well defined hinterlands. Veracruz is the principal port forMexico City, with good rail connections. Tampico-Altamira has goodconnections to Monterrey, and a circuitous connection to Mexico City.Manzanillo is the principal port for the Guadalajara region. Guaymas servesthe North-Western region including the new industrial developments atHermosillo.

2.22 Port traffic statistics, excluding petroleum for all Mexicanports and for the four project ports, Guaymas, Manzanillo, Veracruz andTampico-Altamira are given in Table 2.2. Total dry cargo at these ports wasabout 10 million metric tons. The table shows that in 1985 the four projectports accounted for 80% and 62% of general cargo imports and exportsrespectively; together with Lazaro Cardenas the shares are 83% and 74%respectively. For agricultural imports, the project ports account for 65% oftraffic, and for the small export traffic, 100%. Only for mineral traffic,which is normally handled either over specialized berths or at least withspecialized equipment, are the project ports comparatively unimportant. Thisalso applies to coastal shipping. Detailed traffic statistics of the projectports are given in Tables 1 through 4 of the Economic Evaluation (availablefrom the project file).

(iii) Infrastructure, Equipment and Operations

2.23 While no shortage of infrastructure capacity is anticipated in theforeseeable future, the budget constraints of recent years have meant that,as a short-term cost saving measure, very little maintenance has been done,leaving the busiest ports with problems of deteriorating and dangerousstructures. In the port of Altamira, which was the object of very largeinvestments in recent years within the framework of the Industrial Port-sProgram, an excellent and capacious landside facility has ontLy one betth,leaving the port poorly equipped to fulfill its future assigned function as adeep-water container terminal and extension to the constrained old river portof Tampico. The general level of productivity in the four project ports hasimproved in recent years (Annex 3), bus a major problem impeding furtherimprovements, has been the lack of proper maintenance of operationalequipment. Much of it is old and inappropriate to modern handlingtechniques. CNCP undertook a country-wide inventory of the state of portequipment with a view to establishing a centrally controlled program for itsrehabilitation, where appropriate, scrapping of obsolete equipment and theacquisition, where justified, of suitable specialized equipment. Duringnegotiations agreement was reached on the proposed program (Annex 4) eOveringthe period to December 31, 1992 to which the project will give suppoft,

- 10 -

through partial financing of the program applicable to the four subject portsand technical assistance for improving maintenance procedures, and theapplication of economic and operational analyses to future equipmentacquisition and rehabilitation programs. Furthermore, an important step toimproved productivity is the country-wide training program of port operatingstaff undertaken by CNCP with UNDP assistance, partially financed through theongoing Lazaro Cardenas Industrial Port Project (Loan 2450-ME).

2.24 The following is a brief description of each of the ports (detailsin Annex 5) and SEDRA (Annex 2) and how the proposed project intendsaddressing the principal problems:

(a) Guaymas. (See Map IBRD 20359). The port has 5 berths (some 878 mwith water depths ranging between 8 and 11 m), a grain silo with astorage capacity of 64,000 tons and two storage sheds with a totalarea of about 11,000 m2. The port is inadequately equipped forcontainer handling and some of its water and electrical supplysystems are in a bad state. Ship waiting time should be reduced bythe completion of infrastructure works. Given the forecast rapidgrowth of container traffic for the new auto plant in Hermosillo,the project will help redesign the port and equip it to handle suchtraffic efficiently. It will also equip the port for moreefficient handling of imported grain and break-bulk general cargo.Productivity targets for this traffic are included in the proposedAction Plan (Annex 6).

(b) Manzanillo. (See Map IBRD 20360). The older part of this port is afinger pier opening onto the city's central square. With eventualimprovements to the new port facilities on the San Pedrito lagoon,the Government intends turning this old pier into a terminal fortourist vessels. The San Pedrito facility now has three wharveswith a depth alongside of about 11 m. As in Guaymas, theconventional equipment is in a state of disrepair, and there isinsufficient specialized equipment for container and grainhandling. These deficiencies have led to costly and inefficientoperations. The project will address these shortcomings as well asrehabilitate some essential utilities (water and electricity) whichare badly deteriorated. Productivity targets to be attained aspart of the ESPs Action Plan appear in Annex 6.

(c) Tampico-Altamira. (See Map IBRD 20361). The common user terminal(TUM) in the new facility at Altamira has one berth of 250 m with apresent depth alongside of 12 m but designed for 18 m, an amplestorage area and a freight-shed of 4,500 m2 for the handling offuture container traffic. SPTA has purchased a container cranefrom PEMEX and some back-up equipment which have been refurbishedand put into operation. An additional berth and container craneand auxiliary equipment to be financed under this project wouldhelp transfer container traffic from the congested berths of theold river port of Tampico nearby, with marked effects on portproductivity. Tampico itself is some 12 km up the Panuco River andis a classical old port with the railway line and downtownconfining it within a narrow strip along the river bank. There are9 berths for general cargo and 4 for bulk mineral handling. The

- 11 -

water-depth of 10-11 m alongside however, can only be maintained byannual dredging of some 3-4 million m3, a serious cost item. Theproject intends improving efficiency in the old port by creatingbetter roadway access to the port, better equipment availability,rehabilitating some of the infrastructure and introducing a propermaintenance program, as well as by relieving present congestion bydiverting container vessels to the Altamira terminal. Productivitytargets to be attained are set out in Annex 6. A study of thecosts and benefits of relocating some of the waterfront industrieswith their own wharves to the new industrial port sites at Altamirawould also be financed by the project. Terms of Reference for thestudy are in the Project File.

(d) Veracruz. (See Map IBRD 20362). The country's oldest port, isalso the port with the best access to the central metropolitanregion. It has some 3.3 km of wharves with water depths rangingfrom 9 to 11 m, additional shallow water wharves, and ample coveredand open storage area. Its productivity is low, its equipmentbadly neglected, including container-handling equipment, and muchof its infrastructure is in need of repair. Because, however, ofadministrative deficiencies in the port's management, the projectproposes to limit investments under this project to those necessaryto improve container and grain handling (see relevant Action Plan,Annex 6). Such assistance will be made conditional onadministrative reform (para 3.15). In addition to container (andgrain related investments), the project would help rehabilitatecargo handling equipment and introduce, through technicalassistance, proper maintenance programs for such equipment (Annex7).

(e) Dredging (SEDRA). The national dredging fleet is in a state ofdisrepair - with a capacity of 13.5 million m3 in 1981 reduced toan effective 8 million m3 in 1985. In an attempt to avoid furtherdeterioration of effective dredging capacity, the Government, inNovember 1985, formed the Dredging Service (SEDRA), a"deconcentrated" federal government agency, to be fully responsiblefor all dredging operations in Mexico, through its own orcontracted operations. The Government has expressed the desire tosee the dredging fleet rehabilitated to an extent which will allowit to do all maintenance dredging in the ports at aninternationally competitive price. The project is intended to helpachieve this. A detailed analysis of the situation and theproposed remedies are included in Annex 2 and in the Action Plan inthe Project File.

(iv) Port Finances and Investment

2.25 Although most of Mexico's principal ports are operated by PortServices Companies (ESPs), all port installations remain national property.Except in the case of Tampico-Altamira (para 2.31), -ESPs do not pay anyconcession fee for the use of such installations. Instead, port dues andberthage fees are collected directly from vessel operators, and wharfage andstorage charges are collected from cargo owners or their agents, to cover the

- 12 -

capital for port infrastructure, as well as for the costs of theirmaintenance and admiunistration. These dues are equal throughout Mexicanports. Though such dues have been collected by most of the ESPs since 1985,the monies thus collected are channeled directly to CNCP (as oi 1986) whichredistributes it to the ports throughout Mexico as required. Theseredistributed funds (with SPP's approval) are meant to pay for the landsidemaintenance of port installations Pad their administration for which the ESPshave recently been made responsible. In effect, some of these funds wereused in 1986 to buy new equipment and help some ESPs with some much neededrehabilitation works. Through such livestments, the Government's equity inthe relevant ESPe was increased. harine conservation of the ports (i.e.,dredging and maritime civil works maintenance) is the responsibility of DGOM,funded by the federal budget.

2.26 After the basic adjustment of port dues made at the end of 1985,following a Bank-flianced study (under Loan 2450-ME), the Governmentintroduced an automatic monthly linkage of ship's dues (port and berthage) tochanges in the dollar exchange rate, thus keeping this part of revenues fromdecreasing with the creeping devaluation of the peso. As DGPPSuperintendencies accounts are cash-based and do not include depreciationallowances, only specific studies from time to time allow dues adjustments torelate to full costs. During negotiations, agreement was zeached on annualupdating of the basic cost information and appropriate adjustment of dues, ifnecessary.

2.27 In addition to port dues, charged basically for the use of theinfrastructure, clients also pay tariffs for the services rendered by theESPs, such as towage, stevedoring, cargo handling, etc. These tariffs varyby port and are generally cost-related in that total revenue from tariffsbave to cover the total costs of the ESPs. Tariffs have to be approved bySCT's General Directorate of Tariffs and with the high inflation pushingcosts up steadily, ESPs are constantly demanding approval for further tariffincreases. Excessive delay in approving such increases has resulted in theESPs' revenues declining in real terms, and operational losses in recentyears. Furthermore, tariff adjustments to date have been across-the-boardones, irrespective of specific costs for handling different types of cargo.The object of tariff-increases, as mentioned above, is to assure that theESPs' overall revenues do not fall below their overall costs. However,overall costs have not in the past included properly inflation-adjusteddepreciation but have usually been based on historic values. The projectwill therefore also introduce mechanisms, as part of the Action Plans for theESPs, whereby operational assets will be properly valued and a reasonabledepreciation allowance will be included in the ESPs costs as of 1988.

2.28 The existing, highly complex system of port tariffs is currentlybeing replaced by a simplified uniform tariff structure, being implemeated ona port by port basis by a Joint Commission of the Directorate of Tariffs andCNCP. No systematic analysis has been made to determine whether the level ofexisting tariffs is adequate. Part of the project therefore will be toensure a detailed analysis of operational costs in each of the relevantports, and appropriate adjustments where required and authorized by theGovernment.

- 13 -

2.29 The project requires cost analyses to be made in each of theproject ports and consequent progressive adjustment on tariffs or cutting ofcosts so as to attain target financial ratios of the Action Plans (Annex 6).

2.30 It was agreed at negotiations that consolidated port financialreports will be kept by CNCP aided by the relevant CDPs and port operatingcompanies which will indicate the port position overall - including all portcharges, both dues and tariffs on the revenue side, and on the expenditureside, the matching costs of all the relevant agencies, e.g., DGPPsSuperintendencies, ESPs, etc. A phased plan for such consolidation offinancial data for each project port as of 1989 was agreed upon atnegotiations.

2.31 In the case of SPTA, which is already legally constituted as atwo-port Authority, the present situation is that the operating contractor(GUA) bills port users throu4h the SPTA and pays agreed percentages to SPTAas a concession fee.

2.32 After the substantial investments in the industrial ports programand the Investments during the early years of this administration, thereappears to be no substantial shortage of potential capacity in the principalports, with the exception of some specialized installations for container andgrain handling. This is the main reason that investment levels in 1986 havefallen by about 73X in real terms from 1981 levels, (from the equivalent ofUS$296 m to US$80 million per year) covering equipment, infrastructureconstruction and maintenance, dredging and ferry boats.

2,33 The initial results of preparatory study confirm that only minimallevels of investment in infrastructure are required in the principal portsduring the next 4 years to meet the forecasted traffic demand. The proposedinvestments for Guaymas, Manzanillo, Veracruz and Tampico-Altamira and SEDRAtotal about US$90 million equivalent over the project period, includingtaxes.

2.34 During negotiations, Government assurances were received, wherebyby November 30 of each year, it would review the annual port investmentprogram with the Bank, and specifically before budget finalization, it wouldseek agreement with the 3ank on any new investment in the project ports. Theinvestment criteria to be used in the preparation of the investment plan werealso agreed upon during negotiations.

III. THU PROJBCT

A. Project Origin and Objectives

3.01 The project was originally identified in August 1984 as one of anumber of potential projects in the port subsector. The Government at thattime signalled interest in Bank involvement in a project focusing on theTampico-Altamira port complex, and project preparation was carried outaccordingly. In July 1985, the Bank was informed that the Tampico-Altamiraproject should be indefinitely postponed, and discussions again opened on the

- 14 -

prospects for a broader project, oriented toward rehabilitation andmodernization of the commercial port system, which would also address pricingand institutional reform issues.

3.02 In 1986, the Government requested that the proposed project be asector loan operation modeled on the ongoing highway and railway sectoroperations in Mexico. While the level of policy reform to be associated withthe project would lend itself to a sector operation, it was recognized thatthis would be the first Bank project to deal with the port sector on a broadbasis, and it appeared that further strengthening of the planning functionsof the agencies involved would be required. It was therefore proposed that atwo-phase approach be taken. The proposed project, scheduled for FY88, wouldcover a limited time period (1988-94) and four main ports, i.e., Guaymas,Manzanillo, Tampico-Altamira and Veracruz, and the National Dredging Service(SEDRA) yet would start to address sector policy issues. The preparatorywork on the proposed project, to be done together with DGP (the centralplanning body of SCT, which has not previously dealt wit'.h the portssubsector) will lay a solid foundation for a follow-up project of a broadsectoral nature. Such a proposed sector project, in FY91 or later, wouldthen be based on the strengthened planning mechanisms and the experience withthe institutional and pricing issues of this proposed project.

3.03 The objectives of the proposed project are to:

(a) improve port efficiency through the rehabilitation and moderni-zation of port operations, infrastructure and equipment;

(b) improve port equipment management, including equipment procurement,finance and maintenance;

(c) assist in the acquisition of dredging equipment, maintenance andoperational training and help with the administrativereorganization of the dredging functions; and

(d) strengthen port investment planning and financial management.

B. Rationale for Bank Involveuvnt

3.04 Port efficiency is an important element in Mexico's economicrecovery and in the Government and Bank efforts to stimulate trade,restructure the industrial sector and better utilize limited public sectorresources. The last two port projects, though limited in scope, have helpedto establish a basis for rationalizing the system of port administration andthe pricing of port services. Continued Bank involvement would help improveinvestment planning, operational efficiency and cost recovery policies.

C. Project Description

3.05 The project will comprise primarily rehabilitation of portinfrastructure and equipment, procurement of replacement equipment,replenishment of spare parts stocks, appropriate technical assistance and

- 15 -

training. In addition there will be procurement of new container and bulkgrain handling equipment for Guaymas, Manzanillo and Veracrus, and containerequipment for Altamira and Veracruz as well as new measuring and surveyequipment and auxiliary craft and barges for SEDRA. A summary of the projectby ports, SEDRA and other components follows. A detailed description of theproject is included as Annex 9.

(a) Guaymas. The construction will consist of a new control buildinganidlihtiug for the container terminal, levelling, paving andstriping for the container storage area, repairs to the railwaytracks within the port, rehabilitation of the potable water,fire-fighting and electrical systems, and relocatiow of the transitshed now adjacent to Berth 2. Equipment would be procured orrehabilitated for the handling of container and break-bulk generalcargo and grain.

(b) Mauzanillo. The infrastructure work consists merely in therehabilitation of the drinking water, fire-fighting and electricalsystems and striping of the container yard and port area. Equipmentwould be procured or rehabilitated for the handling and storage ofcontainer and break-bulk general cargo and grain.

(c) Tampico-Altamira. The construction at the port of Tampico willconsist of marine protection works at the mouth of the Rio Panucoand south of the harbor, mooring and fendering systems, sheds,paving and storm drainage on the wharves, improvements to the roadaccess to the Port of Tampico, rehabilitation and replacement ofcargo handling equipment and procurement of one tugboat. Theinfrastructure work at the Port of Altamira will include improvementto the access road, completion of the railway access, constructionof a 250 m extension to the container wharf including necessarydredging and construction of adjacent container yard and newequipment maintenance shop, control building and a new apron on theexisting consolidation shed. Equipment would be procured orrehabilitated for the handling of container and break-bulk generalcargo, and navigation aids would be procured.

(d) Veracruz. The infrastructure improvement will consist of thelowering of the pipelines from the PEKEX terminal adjacent to theentrance of the existing container terminal ard construction of abridge at this point to provide easier access to the large containeryard at the west side of the port. Equipment would be procured orrehabilitated for the handling of container and break-bulk generalcargo and grain.

- 16 -

(e) This sub-project will include rehabilitation and modernization ofthe basic fleet of trailing suction hopper dredges and cuttersuction pipeline dredges, acquisition of auxiliary vessela,measuring equipment and spare parts. Also included will be theexecution of studies on national dredging needs and on means ofstrengthening SEDRA's management and planning capability.

(f) The technical assistance to be financed under the proposed projectwould comprise (details in Annex 7): (i) supplementary studies toassist SEDRA to carry out the action plan; (ii) a cost-benefit studyof relocating bulk traffic facilities from Rio Panuco to Altamira;(iii) a study of the environmental impact of the project; (iv)assistance in the preparation and implementation of equipmentmaintenance programs; (v) cost/tariff studies; (vi) assistance indeveloping port management accounting systems, and (vii)construction supervision for the major civil works. The trainingprogram developed and begun with UNDP participation under the lasttwo projects will be implemented with funds from Loan 2450-ME.Environmental issues for the project ports will be covered withUNDP's assistance to the the Mexican Ministry of EnvironmentalAffairs (SEDUE), and funded from Loan 2450-ME.

D. Project Cost and Financing

3.06 The total cost of the project is estimated at US$90.2 million,(*including taxes of about US$22 million), of which US$50 million is foreignexchange. The proposed Bank loan of US$50 million would finance the foreignexchange part which represents about 55X of total project costs. Therelatively high proportion of foreign exchange is due to the equipmentacquisition and rehabilitation (spare parts) components which make up thelarger part of this project, These estimates include pbysical contingenciesvarying from 5X to 1OX and price escalation in both foreign and local costscomponents (denominated in US$).

- 17 -

Details of project costs are presented in Tables 3.1-3.8. A summary costtable is presented below:

Project Cost Summary

(US$ '000)

% TotalLocal1/ Foreign 2 / Total Base Costs

A. Port Rehabilitation & Equipment

1. Guaymas 3.1 3.8 6.9 92. Manzanillo 1.8 2.8 4.6 63. Tampico-Altamira 17.5 16.4 33.9 474. Veracruz 4.8 7.5 12.3 17

Sub-total 27.2 30.5 57.7 79

B. Dredge Rehabilitation 5.4 7.8 13.2 18

C. Techbical Assistance 0.5 1.7 2.2 3

Total Baseline Costs 33.1 40.0 73.1 100

Physical Contingencies 2.9 3.3 6.2 8Price Contingencies 4.2 6.7 10.9 15

Total Project Costs 40.2 50.0 90.2 123

1/ Includes US$22.3 million equivalent in duties and local taxes.T/ Does not include foreign cost of interest during construction.

April 1988

3.07 Cost estimates made during appraisal in 1986 were revised in April1988 and are based upon: (a) final design cost estimates for extension ofthe container wharf, associated dredging and container yard and rail accessat Altamira; (b) final design of the connection of the Metals and Mineralswharves at Tampico; (c) current unit prices in Mexico for similarconstruction and rehabilitation of structures, paving and utilities systems;(d) current prices for rehabilitation of light and heavy motorized equipmentby privately owned repair shops; (e) recent market prices for the new cargohandling equipment; (f) estimates by Astilleros Unidos de Veracruz forrehabilitation of the dredges; (g) recent market prices for the measuring andsurvey equipment, and spare parts for the dredges; and (h) manpower estimatesand prevailing consultant's fees for studies and supervision of construction.

- 18 -

3.08 The project and related capital and other costs will be finncedthrough three principal sources as follows (details in Table 3.9):

Sum_ary of Project Financing Plan

Funds Required Local Foreign Total I

Project Investments 40.2 50.0 90.2 80Debt Service During Project a/ - 22.5 22.5 20Total Required: 02O 72R.5 112.7 100

Funds AvailableInternally Generatedby the Ports: 20.6 20.6 18IBIRD Loan: ' 50.0 50.0 44Government: 19.6 22.5 42.1 38Total Available 40.2 72.5 112.7 _00

ai Includes estimated interest and commitment fees, during projectImplementation period.

Government assurance was received at negotiations that the funds required forproject implementation,would be made available and had already been budgetedto the end of 1988.

E. Financial Prospects of Project Ports

3.09 All the project ESPs are in a precarious financial position and thereason lies not only in inflationary developments, but also in the fact thatnone of the port operating companies began with a solid capital base. Thusthe need to acquire large items such as specialized machinery or a tug hasput severe strains on essentially revenue-based operations. Currently CNCPis helping in the acquisition of new machinery, partially with revenues whichit receives from port dues and which it is putting into select ESPs asadditional Government equity; also it is proposed to have CNCP take over theownershlp of very costly pieces of equipment from the ESPs and then charge alease for use of such equipment. Further Government participation in equityfinancing as counterpart funding of this project and assumption of part ofthe debt, will help strengthen the relevant ESPe.

3.10 SPTA is temporarily in a soomewhat different position from theESPs. It acts malily as an administrative agency, collecting concession feesfrom the operator, GUA and port dues from users. It also receivesadditional capital support from the Government. However, the accumulationof, and appropriate adjustment, of port dues, should reduce Governmentparticipation considerably by the end of this project. Agreement was reachedat negotiatioss that the Government would provide, by June 30, 1989, aprogram of measures to strengthen and improve the effectiveness andefficiency of SPTA'S control of operations, at the two ports of Tampico andAltamira.

- 19 -

3.11 The financial objectives proposed for the ports will be expressedin target working and operating ratios, which express the need to generatesufficient funds to cover all working costs and interest payments andeventually make some contribution to future investment. These results wouldbe based on a consolidated accounting of all port revenues both from dues andtariffs on the one hand and of all costs, operating and infrastructure, onthe other. The introduction of a system of consolidated financial reportsfor each of the project ports, as of Juue 30, 1989, was agreed duringnegotiations. For this purpose a review of a proposal with the Bank shouldbe done before November 30, 1988. Agreement was reached on the followingmaximum working (WR) and operating ratios (OR)1/, which will be incorporatedinto the Action Plans for the relevant ports:-

1987 1988 1989 1990 1991WR OR WR OR WR OR WR OR WR OR

Guaymas 0.67 1.04 0.55 0.91 0.54 0.89 0.56 0.93 0.57 0.94Manzanillo 0.67 1.18 0.61 1.05 0.60 1.06 0.58 1.01 0.57 0.97Tamptco-Altamira 0.61 0.93 0.77 1.06 0.81 1.14 0.82 1.17 0.85 1.18a/Veracruz 0.72 1.13 0.66 1.22 0.56 1.00 0.57 1.02 0.59 1.04

a/ The worsening operating ratio in Tampico-Altamira expresses partialabsorption of dredging costs.

3.12 The financial forecasts (available from the project file) for thefour ports, based on the lower traffic scenario, indicate that in order toattain even the very modest financial targets incorporated into the ports'action plans (Annex 6), some relatively drastic increases in the real levelof dues and tariffs will be necessary. Even if increased efficiencyresulting from project investments is taken into account, some such specificadjustments will be necessary. On the basis of existing information, itappears that revenues from port dues will have to be raised in real terms byover 50X by December 31, 1989.

3.13 It was also agreed at negotiations that satisfactory costingsystems be established and maintained at each of the project ports, thatannual review of the systems and the targets and indicators included in theAction Plans would be undertaken with the Bank by November 30 of each year,and that on the basis of such reviews, modification of the Action Plans andthe measures needed to achieve targets would be agreed with the Bank.

3.14 In the case of SPTA, it was agreed at negotiations that theGovernment would present a specific action plan to improve SPTA's operations,including exercising greater control over the operating contractor, by June30, 1989, in keeping with the existing operating contract.

1/ The working ratio is defined as the ratio of working costs withoutdepreciation to operating revenues. The operating ratio is defined asthat between working costs plus depreciation to operating revenues.

- 20 -

3.15 In Veracruz, DGODP's Superintendency is having problems controllingport operations because of the complex union situation i.e., two portworkers' unions inside the ESP with 75X of the total shares, the limitedshare of the Government in SERPOVER's capital, and an independent stevedoringunion. Agreement was reached at negotiations that disbursement of loan fundsfor Veracruz port would be made dependent on the signing of aprogram-contract between SERPOVER and SCT satisfactory to the Bank. Such acontract needs to include financial, administrative and operational targetsand responsibilities and a mechanism for their monitoring and subsequentadjustment.

F. Economic Justification

3.16 The traffic forecasts for the four ports are based upon the generalpremise that the Mexican GDP will grow at about 2 to 4% p.a. on average overthe next decade and that with increasing trade liberalization, internationaltrade through the ports system will grow by 3 to 51 p.a. on average. Withinthat general framework local conditions in the four port regions have beenreviewed to determine the port and conmmdity group specific (general cargo,agricultural and mineral) traffic forecasts. The existing operatingconditions have been reviewed, the effects of work underway assessed, and theprobable future operating conditions with and without the projectdetermined. Avoidance of the deteriorations which would occur in operatingconditions without the project forms the basis for the benefit assessment;quantification of these benefits has been based, inter-alia, upon queuingtheory and the Bank's "Shipcost' model. Full details of the economicanalysis are available from the Project File; and the economic rates ofreturn for the civil works and specialized equipment in each of the projectports, SEDRA and the equipment rehabil'tation component are given below:

Economic Rates of Return

I of Total Economic RateProject Items Project Cost of Return (1Civil Works andSpecialized EquipmentGuaymas 8 25Manzanillo 5 15Veracruz 18 42Tampico/Altamira 46 17SEDRA (Dredging) 17 20Equipment Rehabilitation 3 14Technical Assistance 3 -

Total Project 100 22

G. Sensitivity Analysis and Project Risks

3.17 The sensitivity of the ERR to variations in costs and benefits hasbeen investigated. The minimum ERR on the total project is about 161 withincreases of 201 in cost and reductions in benefits of up to 20%. The majorrisks are slower-than-anticipated institutional progress and less rapidtraffic growth. With regard to the former, the project design is such thatproductivity and effective capacity improvement will take place in the

- 21 -

project ports and SEDRA even in the absence of major Institutional change.The economic analysis has been based on very conservative productivityimprovements. The second risk has been minimized by assuming a rate ofgrowth of only 3% p.a. in dry-cargo traffic which is substantially lower thanthe rate of growth of 5% p.a. in the late 70's and early 80's, and results ina traffic forecast for 1995 which is 8% lower than the actual traffic handledin 1931. Another potential risk in the lack of sufficient budgeted fundswhich may result in slower project implementation. However, thVi risk issmall since the items included in the project constitute the essential coreof the sector investment program which will be kept under close review in thecontext of our overall relationsbip with Mexico.

H. Project Execution

3.18 SCT through DGOM, CNCP, the various ESPa, and SEDRA, would beresponsible for the implementation of the project. Though FIDENAP hasofficially been dissolved as a separate trust fund, its functions are beingcontinued by a special equipment unit set up within CNCP, still referred toas "FID&AP". A project coordinator with necessary support staff, has beenappointed in the Ports and Systems Directorate of CNCP to be responsible forImplementation and monitoring progress, including the preparation ofquarterly reports for IBRD. Such a coordinator will also be responsible forobtaining the necessary budgetary appropriations from SPP to assurecontinuity of the works. A detailed program for project execution has beenprepared (Annex 10). During negotiations, agreement was reached with SCT andthe various agencies on that program and on the project implementationschedule attached thereto.

3.19 The project would be supervised and monitored by the Bank throughthe normal supervision mechanism, and through provision by SCT of regularreports to the Bank, in a manner satisfactory to the Bank, on all phases ofthe project. These reports would be produced by the project coordinatorusing data and contributions from each of the agencies carrying out theproject. In addition, the Bank and SCT would meet during March of each year,to assess the status of the project using the agreed targets and monitoringindicators established under the project and to discuss and resolveoutstanding issues and implementation problems. SCT will, in addition,provide, within six months of the Closing Date of the Loan, a ProjectCompletion Report. During negotiations, it was agreed that SCT will provideadequate and timely data and information to the Bank for project monitoringpurposes. Annex 11 provides details concerning project execution andmonitoring.

I. Performance Indicators, Targets and Monitoring

3.20 In order to maintain close control of project execution activities,set goals to attain, and correct deficiencies or solve problems beforedifficulties become unmanageable, SCT will continuously monitor appropriateperformance indicators including physical operational and financial targetsset out in the Action Plans. (Action Plans targets for each of the relevantentities are presented in Annex 6). The operational targets relate to thequality and efficiency of the maintenance operations of the various ESPa andof SEDRA, and will include: (a) average number of hours that the equipment

- 22 -

is utilized; (b) percent of fleet available for use; (c) percent of fleetactually utilized; d) equipment (including dredge) downtime; and (e) numberof cubic meters of in situ material or tons of dredged material removed perday per dredge. SCT will provide infcrmation concerning these performanceindicators to the Bank by February 28 of each year prior to the joint reviewof project progress that will take place each March. During negotiations,agreement was reached regarding this process, along with confirmation of thespecific physical and operational targets to be achieved in the Action Plans.

J. Procurement

3.21 Procurement under the project would be carried out as shown in thefollowing table. Agreement was obtained from the Government duringnegotiations that the procurement processes used will be satisfactory to theBank.

Procurement Method (USM Million)Responsible

Project Element Agency ICB LCB Other TotalCivil Works

Construction DGOM 10.1 13.8 - 23.9(4.4) ( 6.1) (10.5)

Rehabilitation DGOM - 3.9 - 3.9<1.5) (1.5)

EquipmentPurchase of New Equipment

and Spare Parts 2/ 39.0 - - 39.0(23.4) (23.4)

Rehabilitation of 2/ - 3.0 - 3.0Existing Equipment (1.8) (1.8)

DredgesSpare Parts, AuxiliaryCraft and MeasuringInstruments 3/ 8.9 - - 8.9

(5.4) - - (5.4)Rehabilitation 3/ 8.8 - - 8.8

(5.3) (5.3)Project Supervisionand Studies 4/ - - 2.7 2.7

(2.1) (2.1)Totals 66.8 20.7 2.7 90.2

(38.5) (9.4) (2.1) (50.0)1/ Amounts in parentheses show the allocations from the proceeds of the Loan.2/ The local procurement committee assisted by "FIDEMAP" except for major

pieces of equipment which would be "FIDEMAP".3/ SEDRA assisted by "FIDEMAP".4/ DGOM for civil works including the National Dredging Study, SEDRA for the

dredge rehabilitation and "FIDEMAP" for assistance in the procurement ofequipment and spare parts.

3.22 Civil Works: The major items of work/procurement under the projectand the procedures for bidding are shown in the table above. The domesticconstruction industry is quite active and there are many competent andexperienced construction firms located throughout the country which would be

- 23 -

prepared to bid on both large and small construction contracts. Contractsfor civil works with an estimated cost of US$1 million or more will becontracted on the basis of International Competitive Bidding (ICB) utilizingprocedures and bidding documents comparable to those approved by the Bank forLoan 2281-ME, suitably modified for the components in this project. Thecivil w.orks rehabilitation is scattered in four ports and is likely to be toosmall to be bid as ICB, therefore it will be let on the basis of LocalCompetitive Bidding (LCB); however, any foreign contractor who wishes to doso may participate on an equal basis with the domestic contractors.

3.23 LCB Procedures: Local competitive bidding procedures have beenreviewed and, except where indicated below, have been found to besatisfactory. Procurement pract4ces, relating to contracting of civil worksunder LCB, which need to be modi id in order to conform to Bank policiesare: the registration process (prequalification); the time periods allowedduring the procurement process for the various steps and functions to becarried out; the evaluation and award process and the budgetary process.

3.24 New Equipment: Under the project, cargo handling equipment, aidsto navigation and spare parts valued at approximately US$39 million will bepurchased. Of this amount, about US$23 million equivalent will be financedby the Bank. All equipment to be purchased with financing under the projectwill be procured in accordance with ICB based upon the Bank's Guidelines,utilizing bidding documents and procedures comparable to those approved bythe Bank for Loan 2281-ME, suitably modified for the components in thisproject. The preference for domestic manufacturers will be 15% of thec.i.f. bid price of the foreign goods or the amount of customs duties andother import taxes which a non-exempt importer would have to pay, whicheveris lower.

3.25 Equipment Rehabilitation: Under the project, about US$3.0 millionequivalent will be spent to rehabilitate port equipment. This work will bedone by domestic industry or local commercial machine shops on a contractbasis using LCB. It is very unlikely that foreign firms would be interestedin this work due to its small size, except in special cases where particularexpertise or special machinery is needed to carry out the required work, butis not available in the country.

3.26 Dredge Rehabilitation: The existing trailing suction hopperdredges and cutter suction pipeline dredges are in need of rehabilitation.In addition, it is intended to procure and fit the dredges with modernmeasuring and recording equipment to attempt to improve the productivity ofthe dredges and make it much easier to monitor their performance. Therehabilitation work on the dredges will be procured through ICB. Thedetailed evaluation procedure will be outlined in the bidding documents.

3.27 Dredge Measuring Systems: The measuring and recording system foruse in controlling and monitoring the dredging operation will be procuredthrough ICB and will be provided to the shipyard for installation duringdredge rehabilitation work. The purchase price of the system will includethe cost of a factory representative to inspect and certify the installation,train operators in the use of the systems and also technicians in theservicing of the systems.

3.28 Dredge Auxiliary Plant: Barges, tugboats, auxiliary craft andspare parts will be procured through ICB.

- 24 -

3.29 Consulting Services: Consulting services for technicalassistance, for studies and for design of improvements and supervision ofconstruction amounting to approximately US$2.7 million equivalent will beobtained in accordance with the Bank's Guidelines for the Use ofConsultants. The local domestic consulting industry is very active,qualified and experienced and will be able to satisfactorily carry out thework required with the possible exception of certain specific expertise thatmay not be readily available within the country. While the consultantselection process will be open to foreign firms, it is likely that foreignexperts, when needed, will be engaged as individuals or through jointventures with local firms. During negotiations, agreement was reached withthe Government on outline terms of reference (Annex 7) for these consultingassignments and on the procedures to be followed in making selections,appointments and awards, i.e., Bank Guidelines for the Use of Consultants.

3.30 Prior Review. All contracts for civil works costing the equivalentof US$500,000 or more and all contracts for goods costing the equivalent ofUS$250,000 or more wlll be subject to the Bank's prior review of biddingdocuments and price quotations. The consultants' terms of reference, theirsuitability for the specific assignment and the draft contract for allassignments will be subject to prior review and approval by the Bank. Thesecriteria will enable the Bank to make an ex-ante review of some 60% of totalcontract amounts to be financed by the Bank.

K. Disbursements, Accounts and Audits

3.31 Disbursements from the Loan Account will be made on the basis of42% of total expenditures for civil works; 100% of foreign currencyexpenditures, 100% of local expenditures (ex-factory) for equipmentrehabilitation or repair work performed locally through contract and 65% oflocal expenditures for purchases of new equipment or for spare andreplacement parts for existing equipment; and 100% of costs for consultingservices. Agreement was reached during negotiations that retroactivefinancing wil be provided for project related expenditures incurred afterDecember 1, 1986 but before the date of loan signature, up to a maximum of10% of the Loan Amount, for civil works and associated consultant servicea;and for expenditures connected with the equipment rehabilitation and repairprogram.

3.32 No disbursement of funds will take place for the port of Veracruzsubproject until a program contract has been signed between SERPOVER and SCTwhich incorporates the relevant elements of the Action Plan outline(Annex 6), and agreement is reached with the Government concerning the futureadministration of the port (para 3.15). Disbursements on the other ports aresubject to the condition that each port operating company enter into anappropriate Subsidiary Loan Agreement with BANOBRAS and agree to carry outits action plan.

3.33 BANOBRAS will be the borrower at the Bank's carrent terms of 15year repayment, including 3 years of grace. On-lending terms would be thesame, plus a small fee to BANOBRAS fcr its intermediation role.

3.34 In order to reduce the time interval during which the Governmentwould be financing the Bank's share of' project costs with its own funds, aSpecial Account would be set up in the Banco de Mexico under the control of

- 25 -

BANOBRAS, which could be drawn against on the basis of project expendituresfor previously approved subprojects and/or contracts and which would bereplenished from time to time by the Bank at the request of the Borrower asneeded for project purposes. These replenishments would be made on the basisof documentation justifying the withdrawals previously made but would notexceed US$6 million at any given time. Disbursements and withdrawals fromthe Special Account will be made on the basis of Statements of Expenditurefor civil works, for costs incurred relating to the equipment rehabilitationprogram, and for costs of services. Disbursements relating to the newequipment purchase program and for consulting services will be based on theBank's usual documentation requirements. BANOBRAS has adequate accountingand auditing procedures and control to permit disbursements to be made on thebasis of Statements of Expenditure. Supporting documentation would beretained by executing agencies, would be subject to auditing under agreedprocedures and would be available for inspection by Bank staff during projectsupervision missions.

3.35 Standard disbursement profiles prepared by the Bank for the LACRegion, and in particular for Mexico, Indicate that a seven-year period isrequired to obtain full disbursement for this type of project and theimplementation period has accordingly been estimated to be seven years(Table 4.1).

3.36 Agreement was reached during negotiations that annual audits of thespecial account and the SCT project accounts would be carried out in a mannersatisfactory to the Bank in accordance with the Memorandum of Understan lng(Aide Memoire) of November 25, 1986, between Bank representatives and thoseof the Mexican Government. Annual audit reports, from each of the ESPs andfrom SEDRA, by auditors satisfactory to the Bank, and in a formatsatisfactory to the Bank, would also be furnished to the Bank within sixmonths of the close of the fiscal year.

L. Environmental Aspects

3.37 The project is not expected to have serious environmental effects.However it does include dredging at the port of Altamira, and theenvironmental Impact of this and other project related a sivities will bestudied with financing under the proposed project, and appropriate actionstaken.

IV. *SREAIS RECUK AND RKCC§ZXATIONS

4.01 During negotiations, agreement was reached with the Government andBANOBRAS on the following:

a) The planning for formulating and coordinating overall strategyin the federal port system will continue to be consolidatedin the Ports and Systems Directorate of CNCP under the generalguidance of DGP (para 2.17);

b) Scope and timing of consulting services for improvingequipment maintenance, scrapping and acquisition programs foreach of the project ports over the period to December 31, 1992(para 2.23);

c) Cost studies to be done by November 30, annually, for projectports to indicate appropriate levels of dues and tariffs(paras 2.29, 2.30 and 3.13);

- 26 -

d) Cost and tariff adjustments as needed to attain Action Planfinancial targets (paras 2.29, 2.30 and 3.12);

e) Setting up by June 30, 1989 consolidated port financialreports in CNDP with help from each of the CDPs on the basisof a program to be reviewed with the Bank by November 30, 1988(paras 2.30 and 3.11);

f) A Special Action Plan for SPTA to strengthen operations,including control over operational contractors would beprovided to the Bank by the Government by June 30, 1989 (paras2.31 and 3.10);

g) Annual joint review with the Bank by November 30 of proposedport investment program and use of agreed evaluationmethodology for port investments, as well as Bank agreementfor additional investments in project ports (para 2.34);

h) Government's investments in project ports in accordance withagreed financing plan (para 3.08);

i) Action Plans for ports and SEDRA agreed and monitored by SCT(para 3.20).

4.02 Agreement was also reached on:

a) Project implementation schedule and Execution Program (para3.18);

b) Project reporting requirements (para 3.19);

c) Procurement procedures and documentation to be applied forcivil works, goods and services (para 3.21);

d) Amount of retroactive financing as US$5 million maximum (para3.31);

e) Audit procedures and reporting (para 3.36).

4.03 A Condition of Effectiveness would be the signing of at least twoof the subsidiary loan agreements between BANOBRAS and the ports.

4.04 Conditions of disbursement would be as follows:

a) For Veracruz: The signing of a program-contract satisfactoryto the Bank between SERPOVBR and SCT (paras 3.15 and 3.32);

b) The signing of Subsidiary Loan Agreements with each of SEPOG,SEPOM, and SPTA would be a special condition of disbursementfor the respective components being implemented by each ofthem, as well as agreement by each of them on their respictiveaction plan (para. 3.32).

4.05 In view of the above agreements and subject to th.e aboveconditions, the proposed project is recommended for a Bank loan of US$ 50.0million.

- 27 -

Table 2.1

PORTS RERHABILITATION PROJECT

Prior Transport Lending

8a M Amount DVto ScatusLesa No Prolsct Name (U omlllioo ) TFTY) MY103-4z Firot Railvay Project to

Ferrocarril del Pacifice 61.0 1954 Completed 1959268-4 First Hlghvay Project 25.0 1961 Completed 1968517-H nirst Toll load Project 30.5 1962 Completed 1967

354-4Z Second tighvay Project 40.0 1964 Complet*d 1972401-M Second Toll Road Project 32.0 1965 Complted 197052S-4X Thrd Nlghvay Project 27.5 196J Completed 1973

695-4 Fourth tlghvay Project 21.8 1970 Completed 1977620-4i nrst Port Project 20.0 1972 Completed 1977625-4 Second RalvYy Project (V de l) 75.0 1972 Completed 1977

968-I Seventh tighvay Project 90.0 1974 Completed 19821022-M Airport Developmeat Project 25.0 1974 Completed 19821232-4Z Tird RaAlvay Project (8 de 1) 100.0 1976 Completed 1983

1671-1 Ftrst Nighvay Sector Project 120.0 1979 Completed 19841929-1 Fourth Railvay Project (N de )1l50.0 1981 Completed 19861964-1 Port Development Prep.Project 4*51/ 1981 Completed 1986

2428-4E Second Righvay Setor Project 200.0 1964 Est.Comp. 19882450-E Lataro Cardenas tnd.Port Pr. 76.3 1984 Ito.Coap. 19902525-4 O Chapas Rural Roads Project 22.0 1965 Kt.Comp. 19912575-4E Railvay Sector Project 300.0 1965 Est.Comp. 19922875-ME Highway Maintenance Pro5ect 135.0 1988 Est.ComP. 1991

1/ After cuacallations.

Source: teak staff

November 1987

28 -

Table 2. 2

MEXICO

PORTS REHABILITATION PROJECT

Dry Cargo Traffic at Principal and Project Ports(Thousands of Metric Ton~s)

1980 1982 1985A B A B A B

IMPORTSGeneral Cargo 3,589 2,575 2,582 1,697 2,026 1,617Agricultural Bulk 5,808 4,013 3,227 2,118 4,243 2,715Mineral Bulk 3,233 1,041 2,855 775 2,630 669

Other 444 - 1 - 16 -Total Imports 13,074 7,629 8,665 4,590 8,915 5,061

EXPORTSGeneral Cargo 1,134 838 1,232 782 1,424 882Agricultural Bulk - - 14 14 101 101Mineral Bulk 8,480 1,251 6,965 1,238 9,444 2,835

Other 23 - 14 - 15 -Total Exports 9,637 2,089 8,225 2,034 10,984 3t818Total Inter-national 22,711 9,718 16,890 6,624 19,899 8,879

CABOTAGE (in plus out)General Cargo 1,854 221 2,123 312 3,017 253Agricultural Bulk 232 62 627 168 752 271Mineral Bulk 7,768 927 6,988 1,110 8,072 833

Other 221 - 281 - 288 -Total Cabotage 10,075 1,210 18,557 1,590 12,129 1,357

TOTAL PORT TRAFFIC 32,786 10,928 26,909 8,214 32,028 10,236

Source: SCTNovember 1986

A - Principal Ports (18)B - Project Ports (4)

- 29 - TABLE 3.1Page I

PMTS REWILITATION CTTable 1. Suavs /aDetailed Cu,t Table

De Costs Totals Includinr ContiUnciesfUS 'OO0) 113$'000)

88/89 89/9 0191 n/92 92m 93/4 9/95 Total 889 8"99 90 1M 92m 94 94m Totl

i.uw n u a

At C4Ata btUh

-- ontrol Sdg. I Lighting 104 04N 209 123 125 - - - - - 247Ttasaine (1) 366 - - - - - - 366 422 - - - - - - 422hais u(4) 8 50 - - - - - 148 113 5S - 172

Fork Tics 230 - - 230 265 - 265

M-Totl COntat Btrth m 154 - - - - - 954 923 183 - - - - - 1106

bain to bilus Ttacs 423 495 - -918 4m 52 - - - - 1cat.w 1 NW 40 - - - 40 47 - - - - - - 47

but Mateo Rehabilitation 74 ……… 74 88 - - ---Elctrical onto RailitatIon 1 2 --- 2Eulpsont Rhbilitton 108 - - - - - - 108 124 - - - - - - 124Eauimnt Raplocesent I1t51 382 382 3 382 38 2 382 3446 14327 447 461 475 491 511 531 4P241

Tol South I East fru 1,9 77 382 382 382 382 382 458 2,087 1,040 461 475 491 511 531 5'515Ct Storftm Ae

l lld 43 - - - - - - 43 50 - - - - - - SOPavin 517 - - 1 - - - 517 608 - - - - - - 608Stcipirn I - 1 2 - - - - - - 2Aeceusoris 13 - 13 1s - - - - - - 15TrakobUle (14300 T Traction) 132 - - - - - - 132 152 - - - 152Fin Pus (2) 27 - - - - - 27 32 - - - - 32

SI-Total Storai Am 3 - - - - - - 7 II9 - - - - - - 0593o Brain andaing

Brain Cnmvos (1,000 TIl) - 27- -- - - 2 -- 301-303Stain S Duon D n (8810 TIl) - 378- - - - 378 - 443 - - 443

SI-ToWl Stairn lird - - - - - - t30 746 - - - - - 746

otal IlNVE lT CUtS 3.331 1.46? 382 382 392 302 362 6,913 3.169 1968 461 475 491 511 531 82306TOUI NGTNM Cam in 2 r 3023823mm1 mm - m.233 23332233

Totl 3.331 1469 382 382 382 382 382 6.913 3369 1,968 461 475 491 511 531 8,306333333323333322333 3m - ag m 3 223o32322332332232

/a For civil uorks and eiulents includn 203 MA an toreim costs. I2 scial b etits,0.52 insmcton lmev 0.2 trinini lvws ad 152 VAT on t cost.

APiW 159 198 WOO30

- 30- TABLE 3.1Page 2

mXicOMUT HIIIITATIU PRUEC

TaSl 2. Nazallo /a* htalIed Cost Table

Dos Cosds TOtals inciWin Counttamcl(to OW) n 'W)

me "inl 1m /M2 2 1 994 5 Tetd 99 sM o 909 992 2M 931N 4/ Tota

A. Nederotsh son pdrito lhat

Cntanr Noding Ess (4 T Torliftr) 325- -25 375- - - 375

MTotal lduolzal So Pedrito har -25 -. 2 - - 2 - - - 375R, Grain Storas

Nslticsl Storage 1N (29000 T) 254 - - - - - 254 296 -2 26tors I Ttailers 325-- 225 375 -- 35

hmae Unloads (WOO 1N) 10 - -1 222 -- - - - 222

9-Tal 6dn Stora 25 44--r79 375 518--92C. bhabilitatlon of lb Fdrito

EuA n 992 397 397 97 W 2 297 m3U6 1132 465 479 493 510 531 552 4161Eletrka ivte 22- - 21 26 - - - - - - 26Vater s - - - - - -1120 142 - 142

FinrPrtecton 4 - - - - - - 4 5 - 5stririn It - - - - - - 11 13 - - - - - - 123

SbTt oalW ilitatlon of San Pdrito .19 m m m 297 397 2 32522 1,317 465 479 493 510 521 552 436

taWl VETM COTS 1799 041 297 297 m 7 m 4.617 2066 9 479 49 510 531 52 5,614m a.o m m m -am am m 1m, - -mM m

TOWI 1,799 941 297 397 m 27 397 4617 24046 9 479 493 510 531 52 5614

Is For civil wvoks and siAsnt inluhde 22M b an toeit cts. 12 s1cial bnst its.0.52 nseton leme 0.22 ttdan lew and 152 VAT on totl cost.

rtil 15, 1998 ll30

Ii I E | If [f[uE'> I: " Xg1XX [rtq ii[ j [111111ll11 1IHI"1

gg~~ gllEElla, I :1 & 1 1l IlglglXl#X.bXs*^E.Eg ElsEs ;1i1i i1i glX}sgs*# Slsl"S 21a" II

ff W1 &.......... 11 IE 1..1....R g le1||.1.1...... .... ... 1. ".|. "S$s|. g51IIl#le.I .......I... . Ii ... l. ui . . .I . . l.... . I ., ...I~lil clef.. ..... ... ..i.... .1. .1 .... cit . .ei .1... 15

I II I ....... i.* ... .....,. 1. .... *. I.I UIVIl .I. ... ......i S. *@ . I ..1. ml...... 1... IIE I N I3I. l.. .. ....... . .1. J . I .e...... i.. 1..S (a..ltist..!.... ...I..i..i ........ O F| ..... q

- 32 -

TABLE 3.1Page 4

11 IUil3ATIO mmECTal 4. Vuaum IsDtiled Cd Table

kw Cos ToWls Inludisr Contlinuis(M1US000) (Iii '000)

M 8990 nm/92 92m 9494ns otl 1/89 O 9/ 90/9 M 2 92n 9M U4 945 Totl

It DEw COST

CA. esale Terslnl/htio emi

to Civil gabt

Naotind olNiIn - 125 1 U S 20 - 1S I 1t - - - - 309Pb'el Ctsoi - 20…2 - - -0 - 112 - - - - - 31:Otn Ttmtev Si.t" 451 902 4 - - - -. 1404 544 1,105 569 - - - - 2.21

lTotl Cvill U4 1 23T 576 - - - - 24314 544 1.57 74 - - - - 248342, E 4Aumt

Eaulat hiabllltal n U7 28 252 282 292 22 202 2.369 77 29 3 349 361 7 2,923Contim OWNr (1) - 2,000 2000 - - - - 400 - 2.31 2,40t - - - - 44MStraddle Ctr (2) - 1.024 1.04 - - - - 2,049 - 1t198 1234 - - - - 2432TardTrator (6) m - - 18515 2- " 31 - - 30 2 - - 839Oawhs (15s - 129291 9 --- 7W - I 1 1-- - 466For tUn (4) - 1N 13 13- 459 - 179 194 190 -- - 53

-Total EglAE t 9m 3-513 3.8 l749 n467 22 M 9.96 1,149 4919 4.22 929 19 376 39m 11961

TtalO tiubr tei /rdtid Tel 1,450 4.875 4.164 749 467 2 2C2 12,270 1695 5a,735046 92 599 3 14,M

TOta IIESTENT COSTS 1a5 4.754164 749 467 212 232 12,270 1,691 5.76a 54 929 59?37 391 14,79

TOta 1.450 4.875 4164 749 4a 292 282 12270 1969 5763 59046 29 9 36 391 4,7M

/a For eivil sois a bamt In 20 *At a torl* cdst 11 sowial b1eit.0.1 im tiWon lev. 0.23 tralalM I. ad 13 UT an tt cst.

irl 15, 193 11131

r

itill out Su ;;sq

I= tp. MD us X Pp WIT XI atd us" WPM ' w Ut W'M M R sq e I

9UQt- tt w't "lot wi't WMt - IT - st m; fast UN - tRl

a - wt wt ap t efst a" t- et't - a Stt't W t& an - tam tis i __

5; - - - - - t~ t - en - -t - - - @en - _pqe .* But - £wt w'4I Meiqm lt - on'#- ti" m et ' - - inw a t "w'a 'W t6si

93qC * - - - .t 9c - a a - - - ft tu 0.gS - a; ae;z sue; t; S; * .t - pj 3 " pa m, - oIatd Mq

IS - - - 189 - - oNc - - - - UC - - (,)luU W11 uSlq

wa$ - Ru us rt ur - - tIS'; - Ca; ttt Wt l - - 'u"u fnaatnoi-

tU - * - - - - - £t - - - gt- . -RU - - RU- - - - £t - - £91- - - - 0l1AAan - - - t- - - Vt - - -t - - - - s-e - - - 91- - - Ut -- - U- - -WI 43.- - - WI- - U - - - WI - - - Gt'wsa2* - - - - tt - - .3 - - ' - us - - n wn

::9 .; . . - . z - - - S -t4 - oUma;. -_ e;t 1t11 1Z' -_ - _ t' ij; m pe;.- _ wtSsO

"'t - - 11tPt - - - wO - - - - w4mllutg - - tl#' -- * fWI - No- - 1SUn - - - - 6t - - £91 - - - - £91 - - S3tSPIplusP - - - - us - - mul - - - - am * - oaeetw 4mu a- - - -- --- e

tlC - - - -- tin- £1?-£- - - - 1t - 36tW

urn =.m m m mm mummmingnm commato asm= "Mso

tovi Wm S.U (u uuuw a lW U Wu Wu A) W6

owl WMlWJ mWbzaaI stotoi '. ORIONwPO ttl t"°l~~~~~~~tP tsoo 393

if UIPAO Is OWLIUI 1UIUhU sam

Om

T

v*~~~~~~@ 'S 1

- 34 -

TABLE 3.1Page 6

MMOFm "wwwn tam

tailed Cat TPble

kw cost TOWs rimluid Cbstis(U 'OO) ( '00)

MM " tM 9/ 2/M3 U4 Totl U/ O 9M 9011 1M 92 92M 9/4 YS4 ToW

so AVIo m nmuuu um- mun C-M u

A. hojwt lSwuvision wA Stuis

to Uetvisian ot CmNtiUtm

son .u J 2 m 4 - - 24 I 7 5 -- 32N0lllo 17 13 5 2 - - 4 211 10) 3 - - 6Tticoamlta 6 131 10 29 5 4 4 342 73 161 1 82 7 6 6 4Vretuz 14 51 4 1 4 - - 122 17 63 56 12 5 -- 152

T-Ttd Swemsimo mt n en V/ 21 2616 4 15 4 4 57 146265 2 l 211 220 6 6 7172, Port Studies

FmiblUtvt uls A VW U 20 333 46 229 111 26 - - - 413bred"lMStudw * 450 350 - -00 - 52 442 - - -KM U3 tfanhbational tudu - 45 35 - - - - 80 - 55 44 - - - - 99as FWaucolzid bl: atiun -s60 40 -10 - 74 51 - - - - 124EuAuont Nainwn Podr S - 1N------120 - 147------14Cut kisuind - 196……………… 1% - 241 - - - - - 241

Si-rTo Pert Studies 28 1.053 513 20 - - - 9 46 1299 640 26 - - - 2,09

SToa Pt At SUPrViuim aNd studies 15 1274 6 06 15 4 4 2204 192 1,563 I59 09 20 6 6 29735

To ta l E IBIT OWS 159 1.274 68 63 15 4 4 2,204 192 1U 859 9 20 6 6 2,735- _ _ _~ _~ _- ---- -__ _ _ _- _ _

Totl 159127460 68 15 4 4 2.204 192 1 O563f 89 20 6 6 2.35

Aril 15. 1M 1181

35 -

TABU 3.2

Pil U3LT. ISFUE

P.M., kme ts by veat

hU CosMs1I '00) Fu ut

MM 0 / "M 1/9 92M 3/94 9/ Tota I _mu,t

it mom m - .un m si

1. "ff COPS/A. civil VDAS /a

1t NM 31.10 7.21? 6417 2.119 - - - 19.43 42.9 .3312. Ibhalltim 1.31 1.134 532 20 - - - 3.25 79 1235

Total civil Wh*s/s 4,510 0353 749m 232 - - - 22.9 42.2 953. b ul _ ut /b

= 1. mb 5.796 11.376 0332 2.324 1.594 1372 1.246 32.542 59.3 192m2. IbdbilitatIon 715 282 282 232 282 2 282 29478 59.1 1.464

WiY-Ttl EuleA nt lb 6.581 11658 83.614 34106 1l376 1,654 1,530 35.020 59.3 20.755C. DOM*" /c

1. sar.e ars - 1,33 2.323 034 634 834 - 6.667 60.0 3.9992. IsdlbiAltatluo - 1,027 1#349 1,457 2.501 147 - 6,482 60.0 3,987

SWb-Total Iadris /c - 2.366 39677 2.291 3435 980 - 13,14 60.0 7,9863. Teical ASiSte

1. Suervidsinotf Cmstruction 121 216 167 48 15 4 4 575 76.0 43J2 fort Studis 38 1,056 513 20 - - - 1,629 76.0 1.230

Total Tedmial Asdstanr 15 1,274 60 63 15 4 4 2.204 76.0 19675

Total WOUEWE C0TS 11.250 24.151 205471 7.793 5.226 2.639 1.534 73dO65 54.6 39.82Total IMEINE COMS 11.250 249151 20.471 77M 5.226 2t39 1.534 73.063 54.6 39O82

ftluical CmtlOmCi.s 796 1,75 1.800 739 596 230 77 6213 53.8 39345Price Cotinmnciu 1.076 2.755 3,085 1.470 1.285 774 513 1093 61.38 673

Total MMBECT CoSTS 13W123 238A82 25,356 10,002 7,107 3.443 2.129 90241 55A4 504000

TAM 3277 7021 6202 2.457 i821 947 564 220290 0.0 0hremi*t fN_ 7V137 15.13 13.803 5189 4.330 2M224 1.303 50,000 0*0 0

/a For civil rks Ed 1d t. inclules 20X " i our fomis costs 1t ro6ia e titstO.5 inmtion lm. 0.25 tranina Ioen and 15 VAT on otal ost

lb for civil vorks aN emuSnt inclden 20! dut, on toreign co sts 1Z socid betits0.5! imcUon Iw 02M trdanine Im. rd 152 VAT total cost,

lc for dmd. hbilitation incluus 2012 du, tforein ts pluco s k 15 vslue adu tax an the total cut,

bril 15. 198 11:31

No=FM CMDIM AC

IIEI3 IIF 3331t IHIM ''F00

ins 118) ~ ~ ~ ~ ~ ~ ~ ~ ~ KO g D M3.. C"in at (omal M_in Prire C _iu TItal I nel. t UtOsO old~~~~~~~~~~~~~~~~~~~~~~~t Fl kme Cuts

(Ear. besI(El.bAs I (Eal.he (ta bAls am Xer1 . t mFor lId Tuns 1m Tte Fats lth TS) Tu TVA Foh. Et. Tus Tus totld For, It. Turs TrB Tota ctt kw cuts

t CM1. UmW -a

I. NW &a 6W 44w 1"VW u a6 46s 1994 1.27S23 59 2W 1a"4 6 s3 z9 m 2.12 21.12. SiUtl 1215 1.s8 na b2.6 1 2 n 36 14 0 a 229 12m3 t1=2 IN M 356 164

-WT -- il -1 W - T -IW -m -aZ-

-TWI Cd il h 1his Su 5994 53166 6.0 ff7 2.513 MM1383. Imra

1 no VM.2 4.72 315 2oS52.50 227 46 12 ld ; 42 13 4#.35 223p S4 120. 29A0 1.03 27.12.I llltat 1.46 266 6472 24 73 a 22 14 4 N 1 446 10 48 31S2.AM 1to 1.

-Tua Elb. A 2U.1 5.10 .1312 8 1 11 48 1t.1 2W 47 1.4 5s.1 2.8 SAM U.6 42.9 2.1 4°m

1. _ Gm" Prtf 2l l.w 1.6 4.10 do 1to 2S 1. 812 122 37 1.24 5.410 1.272 2.267 .9V2 1.11 772. bIl_Ut M 387 72 1.2 6.D 146 242 m IN 1n34 36 132 5.34 1.252 221 3W I.146 71

bA-Total hohi Ic 7.38 1.971 d2.292 14 1.1m 216 494 17M .1 2.6 4 2.S94 10735 2.5Z 4.4 177 W31 15.45

to .kmvlsl . 42 52 86 55 44 5 9 M 6? 4 1 6 Su 6 1 717 65 a2. ot Sis 1t28 147 24 16 124 15 24 16 11 2 11 34 2 1. 172 2.1 to 1.2

bToa Teiskl . a& t. a U 228 2 is 4 21 202 2 410 2.75 2 2.

ta Dl lWE3lI l51 O.m U 2 1M6 17.94 MM 2,245 16 1.51 6.21 63 1.248 2.30 a.1 l 17.3 22.290 9.261 .0 3b2wTIa 29.00 15m.2 17.94 7h0 1.4 1.w 1.t3 6.213 6.7 1,33 246 19a .011V,1 2.0 9.241 7.0 3s2.1

/a r F ivdiU w _and umlomlt lawt 2M em tos em , dt soa Smofts.0.3 looecema Iw. 0.3 trala I"" ad Ust ema tote cOot._Uz 1m dW m1 and smdsUi3n2 A Ztw mb n sii bm1A hor ciil is __rm. olb 211J e 90m tlst. 12 mill SmtiA leetl*m law 8.3i talal low. tad 13 m t rest.

Jr Fa MO idihta m do_l 2 s em foe0 *es pltS 1= vale iibt eto totaI cost

bOml.1 um

- 37 -

TABLE 3.4

Mm U_aitAI3 ICt$mm keswit by VW

Ttal. tiug"Ua Couatniue Total litliM" bilm lo.mOmN 1*) 4810a)

so 89/93 Om/9 91/9 92/9 93/9 9 TOW NW W9/9 90/9 W92 am/ 9219 94/ tow

3. _."m

is.civil bib/a1.o N 3,4 11060 80,4 2sM - - - 23.M 3.ISM 06" 39 2,70 - - - 2.3.7m2. bI lttim 1sm9 Im 7 2M 0 - - - 3.92 1ow 1362 m 263 - - - 3192

al-Total cid ii bib IaZ 5.52 10.051 .3-17 29M - - - -;67.? 1. 9.31? 2.6 - - - Vo.n*. a lot ie /b

i. bu* 6,5 13,276 10.6 2 3,433 2 , 0 1.1 1tO 390 67 126 .2 3.4MM 20 11 1M732 3.062. alit Um 92 -9 319 10 361 3 391 3t 902 9 3 30 31 37 31 3D04w

ToW Eswith Ab 5 1W 10.361 m32 2,407 2.20 2.2 421095 73 13U 10.3 3.152 2.407 2.20? 2.123 42.93C.gobi /c

t. Pt- 2.1 30 1,3 1WO 1.1 - ,929 - 2.MO MU lt3 17 12117 - -tt292. _ltm * 132 1iM 1976 39W 214 - 8.W - 1.312 17M 1M9 39 214 - elm

Totad bo / -3 49 3htO 4.9 1.43) - 17716 - 6 4 3.10 4.6 1.41T - 17716s ToWl st

I.woslm omstlim 146 2U1 21 6 2 6 6 717 146 26 21 2 20 6 6 n72.fttltdio 46 1.293 64 26 - - - 20t1 416 1,21 63 26 - - - 2019

Sb-Total Todalall hsi,tmmd _ 19 1.14 59 39 20 6 6 2,135 2 1.92 s 9 20 6 6 2.735

Total 116BII 3131A 1.123 23 2 5 10 2.02 7,107 2 0 12J 3 3 102 710 3.64 2.1 0,24-- - - m~~~~~~ --- ---- - ------- m---m-m-m

Total CT 6l 3 13123 23.|2 36 100 7,i17 htO7 2,2 9U0,241 131123 2 25,35610 IO 1 3.64W 2,2 90.241lm wsuim n mm - ema mu mu mu m m mu

/a Ve NMIvi Cuibmloiwt ISiMu26 I%08 M15 fo I cat 11W mcli 2ut Us. 4 VM N R61 oW 3021 *4

/b for civil aftib ad ouuut tudust M eU am ftuias cost. 11 sial b.tlUt.

0. For vUtm low. 0.3 tdoiU lW. 2d 13 m totl os t .

0.31 im Ue 1918 0*9tI r#StI n Wet/c rot Ivab twiuItiam iwludss 201 Us a total MoUt ptiA 13 vwe amb toe onm Wb to MLcot

brill 15o1903113

- 38 -

TABLE 3.5

P RMLITATION PMCProjet CoIwornts by Tar

(U '000)

3au Costs Total

88/89 89" 9om 91M/2 92m 93(94 9/95 US$ MUS '000)

At Part klbiltUtion I Emdmnt

I Ouan# 3,331 1669 382 382 382 3 382 6.913 .132. Imnillo 1 789 841 397 m 397 397 397 4,617 4,6173. TwpicWAltait 4.521 12:626 11,170 3,905 629 592 468 33,912 3i9124. Vr'aciut 1,450 4.975 4,164 749 467 m 292 12,270 12,270

Sub-Total Port ROhWbilitation I Eguipunt 11,091 20t012 16,114 5.434 1,876 1,654 1,530 57,711 57,711h. Riabilitation Of Dredes - 2M866 3677 24291 3,335 90 - 13149 13,149Co Institutional Dhvuloimt 159 1.M 680 68 15 4 4 2M204 2M204

Total SEUINE COSTS 11.250 24,151 209471 7.793 5M226 24639 1534 73,065 73,065Pheuical Contingmncies 796 1975 1,800 739 596 230 77 6,213 6,213Price ContiiUwins 1,076 2.755 3M085 1470 1.285 774 518 10,63 10U63

Total POJECT COSTS 134123 29.882 25.356 A0,002 7,107 39643 2W129 90,241 90"241

Tus 377 7,021 6,202 2s437 1,321 947 564 22P290 22M2M0Forhe* Excb e 7,137 15.813 13,503 5,389 44330 2.224 1.303 50Q00 50,000

April 15. 193 Mi:"1

tcoPORTS RBIt IUTATII3 PRJIECTProJEct C_mONnts by year

Totals Ineludns CoatnUnies Totals IhludinM Continuiues(USS '000) (MS '000)

NMW891/0 99 TIM 92/ m 93/4 94m Total 88/89 89/ /91 91/92 92/3 4 4/95 Total

A. POt bhd Iltton I E_im't

1. us 31369 1,968 461 475 491 511 531 8,306 3M86 1968 461 475 491 511 531 8,3062. Nanill 206 983 47? 493 510 .531 52 5,614 2,066 983 479 493 510 531 552 56U43. Talceo/Altaoir 5.302 14.943 134672 4912 87 78? 649 41073 5t302 14,943 13.672 49912 807 789 649 41,0734. sVa,e 1.693 5,763 5.046 929 5? 376 391 14797 1,693 5.763 5046 92 59 376 391 14,77

Totd Port _lbiltatiwn 1 Euimmt 12.930 23,18 19.657 ,806 2,407 2P207 2,123 69,790 12,930 23t658 194657 6,808 2,407 2W207 2,123 06.903. td.llitatimn ot DveBds - 39661 4839 39106 4,679 19431 - 17,716 - 3661 4,839 3t106 4.679 1t431 - 17716C. Institutimwl hvelou 192 1,563 859 89 20 6 6 2,735 192 1,563 859 89 20 6 6 27M

Tota PRE COST 13J123 2689M2 254356 10,002 7,107 3,643 29129 90.241 13.123 23,882 25.356 10M002 7.107 3.643 2.12? M0241_- _= _3 = = s -== == == = := s=s=

Ari 15, 199 1131

W

- 40 -

TABLE 3.7

MM IrO TAU NMITSuasm ftcoimt bv ProJec COeWmNo

tul3 100)

uicadporlt w.sbilt.uion I £wieun cantiadeci.s

-Muttion of IfuuiMW_ e es Imewilio Tapico/Alts"lra WVrarz Dr DWloent TOtl I _iwI

I. IIIUESNT COT

As Civil Works/a

I. New 221 - 16.900 2,314 - - 19A436 10.0 1.942. Ibhbilitation 1,594 156 1,105 - - - 3256 10.0 326

sub-Totl Civil lorks /a 1,816 156 18.406 2.34 - - 22691 10.0 2,269t. EMu /f

t. " *.1 4,461 15,96 7.V - - 32,542 5.0 1t62. kabflitatn - - 2.369 - - 2.478 50 124

W -Tot Eminent lb 5,097 4,461 15106 9.956 - - 35S020 5.0 1751C. *ndo% /c

1. Ir Parts - 6 - - . 667 - 6,667 15.0 1,0002. RAilitatim - - .42 - 6,432 15.0 m

Taotal Drd / - - - - 13.149 - 13,14 15.0 1.972I. TedrAical Asistac

1s :evisian ot Costrution - - - - - 575 575 10.0 a2. Port Studies - - - - - 1.9 1.629 10.0 1a

Staul Tcdl A - - - - 2.204 2,204 10.0 220

Total JIIETHEI OlTS J6913 4W61 33.912 12,270 13,149 2,204 73,065 8.5 6,213Totl WAMLIIE COSTS 6913 4.617 33,912 12,270 13.149 2,204 73.065 805 6.213

iwical Cotinowies 436 239 2.U6 729 17m 220 6,213 0.0 0Price Ctienciu 957 78 4545 1,7W 29594 311 10,943 7*9 869

ToaI OT COSS 0.306 5,614 41.073 147M 17?716 2,735 90M241 7.8 7,082

TaxO 2.108 1496 9.893 3J925 4458 410 22290 7*7 1.724Foriln Etmne 4,595 3,464 20,078 9,036 10.735 2.092 50.000 7,8 3ao79

Is Fet civil wrk ad =iuu4. inclde 20t Ms o ?seM cLsts 1 socid beitst0.1 insection 1gw 021X taint Iv and 12 VAT on total cost.

lb For civil works &i euiset, inclues 20 Me on toreign cost 1S soil bets.0.52 i _seo lows 0.22 trainlW levt eN 13 VAT an toal cot

/c For dOW rebilitationt inclun 205 Mut on forien costs F0ut1S vaue a tax an t totl cost,

deil 15. 198 1131

J

- 41 -

TABLE 3.8

EXCOPORTS REHWALITATION PRJET

PRJECT COST MMW

(USS '000) (US '000) Z Total- - --- ZI Foreign Omse

Local Foreign lotal Local Foreign Totl Exchange Costsummt= an=== auuu= mums= #Uumu cmca= umount= a

As Port abilitatim I Ewireent

I. 0 a ms 3W141 3&M 6913 3.141 37M 6.913 S5 92. Nm anillo 179 2,824 4.617 l17 2.824 4,617 61 63. Tawico/Altairia 174615 16,297 339912 17P615 16297 33,912 48 464, VerwcrVU 4^841 7,429 12.270 4.841 79429 124270 61 17

Dub-Totl Port RehbIlitation Euipemnt V739 30,322 57.711 27,390 30.322 57,711 53 79fibhabilitstion of Dredges 52264 7MU06 13,149 5,264 7M886 13,149 60 18

C. Institutional Dawloesnt 529 1,67 2,204 529 1,675 2W204 76 3

Total AS9ELINE COSTS 33,182 39,882 73,065 33,182 39.882 73.065 55 100P"hsical Contingencies 2N868 3,345 69213 2.86 39345 6.213 54 IPrice Cmntingmcies 4.190 67M 10963 4.190 67M 10,963 62 15

Total PROJECT COSTS 40.241 50.000 90.241 40.241 50.000 90.241 55 124

bril 15I 1988 ll31

- 42 -

TABLE 3.9

MEXICO

PORTS REIABILITATION PROJECT

Project Financing Plan

(US $ Million)

Funds Required: local _/ Foreign Tbtal

Guaymas: 3.7 4.6 8.3 7

Manzanillo: 2.1 3.5 5.6 5

Tampico-Altamira: 21.0 20.1 41.1 36

Veracruz: 5.8 9.0 14.8 13

SEDRA 7.0 10.7 17.7 16

Other Items: 0.6 2.1 2.7 2

Project Total: 40.2 50.0 90.2 79

Debt Service during Project: 2/ 22.5 22.5 21

Total Funds Required: 40.2 72.5 112.7 100

Funds Available:

internally generated:

- 4 Ports 2/ 20.6 20.6 18

IBiD Loan: 50.0 50.0 44

Government Finance: 19.6 22.5 42.1 38

Total Funds Available: 40.2 72.5 112.7 100

Notes:1/ The above figures represent US$ equivalent at MEX$610 to the dollar and

include all duties and taxes (about US$ 24 million)2/ Includes 8% interest (assumed), 3/4X commitment fee during project

Implementation.3/ The four project ports are expected to generate approximately US$69

million equivalent during the project period. However, some US$48 millionequivalent will be used for maintaining existing assets aud capitalreplenishment.

Source: DGP & Mission Estimates

-43 -TABLE 4.1

MEXICO

PORTS REHABILITATION PROJECT

Estimated Schedule of Disburse,rents(US$ Million)

IBRD Estimated Estimated EstimatedFiscal Year Semester Cumulative Cumulativeand Semester Disbursements Amounts As X of Total

1989

December 31, 1988 11.0 1/ 11.0 22June 30, 1989 3.0 14.0 28

1990

December 31, 1989 4.5 18.5 37June 30, 1990 4.5 23.0 46

1991

December 31, 1990 6.9 29.9 60June 30, 1991 6.9 36.8 74

1992

December 31, 1991 2.7 39.5 79June 30, 1992 2.7 42.2 84

1993

December 31, 1992 2.2 44.4 89June 30, 1993 2.2 46.6 93

1994

December 31, 1993 1.1 47.7 95June 30, 1994 1.1 48.8 98

1995

December 31, 1994 0.6 49.4 99June 30, 1995 0.6 50.0 100

1/ Including initial deposit of US$6.0 million into the Special Account.

- 44 -

ANEX 1Page I of 4

MEXICO

PORTS REHABILITATION PROJECT

The Institutional Framework of Mexico's Ports

A. Background

1. The present instituti,ial organization makes it almost impossibleto do any central operational analysis or to prepare a coherent andcomprehensive ports investment plan. The principal reason for this is thefragmentation of responsibility for different parts of the planning process.Ironically, the most difficult step--namely, to have all the relevantagencies under one ministry-has already been taken. Furthermore, thedecision to make the SCT Planning Directorate (DGP) ultimately responsiblefor coordinating the planning of all transport modes, is also a step in theright direction. However, the DGP is not as yet equipped with thespecialized skills required for detailed port planning, nor for that matterfor the more detailed aspects of railway or aviation investment planning.Clearly, it should be responsible for putting the whole picture together andassuring the application of proper economic evaluation criteria fordetermining the optimal modal split of freight and passenger traffic. Thecollating, analysis, forecasting, evaluation and recommendation of possiblealternative ways of solving future transport problems could be done by therespective specialized agencies. This, however, requires an agreed systemwhereby the overlapping responsibilities and/or responsibility gaps areeliminated.

B. The Present Situation

2. The proliferation of Government agencies dealing with port mattershas created a certain overlapping of some investment planning functions onthe one hand and a lack of clear, fully integrated functionalresponsibilities on the other. A brief look at these agencies' roles in thisprocess is presented below:

(a) The National Commission for Port Coordination (CNCP), which comesdirectly under SCT is, among other things, the holding agency, onbehalf of the Government, of most of the shares in the PortServices Companies (ESPs). It employs a staff of some 320 peoplein Mexico City, pl'zs others throughout the country. It can, anddoes, obtain its own port operating data as part of its control ofthe ESPs. It also has available relevant cost data on portoperations, equipment, etc., but has little or no informationconcerning the cost of port infrastructure and its maintenance.This situation may currently be changing with the retention by CNCPof a part of port dues to cover costs of infrastructure maintenancein the ports. CNCP has also the responsibility for producing longtenm traffic forecasts. However CNCP's forecasts are notnecessarily those used as a basis for the physical planning done bythe Direccion General de Obras Karitimas (DGOW).

(b) The General Directorate for Port Operations and Development (DGODP)is the Government agency in charge of port operations, under the

- 45 -

ANNEX 1Page 2 of 4

Subsecretary of Operations for SCT. It employs some 1700 peoplethroughout the country (19 Port Superintendency offices and centralstaff in the capital). Though its name implies otherwise, it is nomore than nominally in charge of development. The central officein Mexico City gathers traffic statistics and productivity datathrough superintendency offices in all the principal ports andpublishes this data with little or no analysis. In its presentform such data serves little purpose and has not, in the past,always been easily obtainable by other agencies which require it.The new Director General appointed in 1986, is planning to relateproductivity statistics to targets agreed upon formally as part ofthe operating concessions given to the ESPs.

(c) The General Directorate of Marine Works (DGOM) is responsible todate for the construction and maintenance of all the civil works inMexico's ports, and thus also responsible for the majorinvestments. It seems to work somewhat independently of theothers. This may be due partly to the fact that, unlike the twoabove-mentioned agencies, this one comes under the SCT'sSub-Secretary for Infrastructure, whereas DGODP is responsible tothe SCT's Sub-Secretary for Operations and CNCP comes directlyunder the Secretary of SCT. DGGK therefore, has its own PlanningOffice where it develops its own traffic forecasts as a basis forits port master plans. Its statistical and productivity data onpresent and past operations must be obtained from one of the othertwo agencies. Whereas dredging, both capital and maintenance, wasup to recently also the responsibility of DGOM, the Governmentformed SEDRA, in late 1985, a separate, semi-autonomous entity withnational responsibility for dredging surveys and operations.

(d) Dredging Service (SEDRA), has been set up as a separate unit tobring some order and organization into the Government employed2,300 strong work force and 24 dredges (plus two on order).However, it is to remain financed by the Federal budget. Thedecree setting up this new agency states that one of its tasks isto formulate a dredging program for the short, medium and longterms. However, no indication is given as to how such programmingwill fit into an overall scheme of port construction andmaintenance, and the criteria and procedures to be applied. Itwould be unfortunate if SEDRA were to develop yet anotherindependent planning unit, which is what seems to be indicated bythe language of the decree.

(e) Port Services Companies (ESPs). Port services in the principalports are the direct responsibility of commercially constitutedcompanies which, with some notable exceptions mentioned below, arepublicly owned. The Government, through CNCP, holds the majorityof the shares in the country's ESPs. Important exceptions to thisare in Veracruz where the union has the majority holding of theshares, and Tampico where the port operations are done by theStevedore's Union, which is a union cooperative. In the latter,with the opening of the nearby deep water port of Altamira in 1985,the Government set up a new type of autonomous Port Administration(Sistema Portuario Tampico-Altamira) which is totally responsible

- 46 -ANNEX 1Page 3 of 4

for the overall management and administration of the two-portcomplex. The Union has been contracted as the sole operator in thetwo ports. As commercially oriented enterprises, the ESPs areexpected, in principle, to establish their own requirements withregards to investments in port equipment, with technical assistancefrom CNCP and FIDEMAP, the latter being a Government financed trustfor the purchase of equipment for the ports. In 1985, however, itwas decided to dissolve FIDEMAP progressively and let the ESPepurchase their own equipment. This decision is currently beingreconsidered in the light of some ESPs' financial problems.

(f) Port Development Committees (CDP). The most encouragingdevelop!tent to date is the creation, as of 1984, of regional PortDevelopaent Committees. These committees, of which nine arealreadj in existence, are presided over by the local SCT residentengineer in each of the states and are where all the Governmentagencies involved in the operation of a port (or several smallports) coordinate and control all port matters at the local level.It is also where the BSPs short and medium term investmentrequirements are supposed to be examined and confirmed. However,to date this has not been the case.

(g) In addition to the agencies referred to above, there is theGeneral Directorate of the Merchant Marine which comes under theSubsecretary of Operatlons and which is responsible for navigationaids around the coasts and in the ports, and there is alsoFONDEPORT-an autonomous trust responsible for the development ofport lands, to-date, principally in the industrial ports and thefishing ports. Both these agencies develop their own budgetaryrequirements with regard to port investments.

3. Thus, the proliferation of agencies dealing with the ports has notcreated complementary functions in all cases, but rather some functions forwhich two or more agencies are nominally responsible and fighting fordomination. Investment in the port subsector has until recently beendictated largely by political considerations (as for instance, theinvestments made in the Industrial Port of Altamira and in the commercialport of Manzanillo) with insufficient economic justification, whereas noinvestments were made in Veracruz-the country's second most important port,which requires rehabilitation. The proposed reorganization of the portssubsector and the consolidation of the port planning functions may well bethe key to a more rational use of scarce resources.

C. Recommendations

4. Clearly, if the investment planning process is to improve, certainchanges are required. The following is a brief outline indicating somepossible solutions and discussing their implications.

5. A Ports Planning Bureau. The present duplication of effort withregards to traffic forecasting and planning and the isolation of thestatistics function in DGODP could be resolved by consolidating thesefunctions in one organizational unit. Considering the regulatory function ofDGODP and its title, this might well seem the most logical directorate inwhich to place such a central ports planning office. Oa the other hand, CNCP

- 47 -ANX 1Page 4of 4

seems to have more of the relevant skills, and is the officially designatedports coordinating body responslble for port systeme and portadministration. It also has the most direct access to port operations andtheir costs. In addition, CNC? Is a staff unit and does not come undereither of the Sub-Secretaries, Operations or Infrastructure respectively, butdirectly under the Secretary of SCT. This puts It In a good position to beabove the Inter-departmental fray, and makes It a fairly obvious cholce forlocating a central ports planning bureau.

6. Such a unit should contain the functions of compilation andanalysis of statistical data for the whole port system, traffic forecastingand the presentation and study of lnvestment programs. It will, of course,have to cooperate closely with DGOM, SEDRA and other agencies with regards tocost estimating of the proposed Investments. All the statistics, forecastingand investment planning functions should be consolidated in such a bureau.

7. The Role of the Port Development Committees. The evolving networkof these regiona comittees, nine of which have been set up since 1984, wlllplay a critical role in the investment planning process. It is through thesethat the primary information on port capacity and demand for port serviceswill be fed to the central body.

8. The CDPs should appoint specialized subcommittees of two or threemembers to deal with the following:

a. Review costs and revenues on a periodic basis. Approve budgetsand review budgetary performance;

b. Organize consolidated port accounts and ensure proper controlprocedures;

c. Review equipment and civil works situation, new acquisitions,and the implementation of a planned maintenance program; and

d. Review productivity, set standards for efficient operations andmonitor these.

9. The office work for the above subcommittees should be done eitherthrough the Superintendencies' staff, that of the ESP, or where necessary,contracted out.

10. Ideally, the CDPs should be developed, by a phased two-year plan,into local or reglonal Port Authorities, having legal and financial autonomyand Incorporating all the present functions of the Superintendencies ofDGODP, the Captaincies, local offices of Maritime Works and CNCP, PONDEPORTand others, and contracting operations to the ESPe and/or others on an annualregulated basis. This should be an iastitutional objective in the longerterm, connected to a future sector loan. A precedent of similar naturealready exists in the Decentralized Entity of Tampico-Altamira which shouldbe strengthened through this project.

II. At the center, the gradual merger of all port related functionsshould take place, beginning with that of DGODP and CNCP, and all thosefunctions which are not long-term or central budget or control related,should be progressively relinquished.

March 1987

- 48 -ANNX 2Page 1

MEXICO

PORTS REHABILITATION PROJECT

Port and Waterway Dredging

A. Dredging Organization

1. Responding to a clearly perceived need to improve the effectivenessof ports and waterway dredging in Mexico, a Presidential Decree was issuEd inNovember 1985 establishing the Dredging Service (S1DRA), a deconcentratedFederal Government agency. Formerly the function had been carried out by theDirectorate General of DredgiAg (DRAGADO), which operated the dredging fleetcarrying out most of the maintenance dredging and some of the conetructiondredging, although the latter work was and will continue to be carried outmainly by private dredges under contract to the Directorate General ofMOritiam Works. S1DRA took over DRAGADO's fleet of 11 self-propelled hopperdredges, 17 pipeline dredges, two grab dredges and a number of barges andmiscellaneous auxiliary craft (which has carried out maintenance dredging ofas much as 13.5 million m3 in 1981 but whose output bad decreased to 8.0million m3 in 1985) as well as DRAGADO's approximately 2,500 employees, andits 1986 budget of approximately US$12 million equivalent. The budget for1987 is about the same. Since SEDRA is a deconcentrated agency instead of aregular government organization, it is permitted a higher degree ofIndependence and flexibility in establishing its organization andprocedures. It has already begun some actions to take advantage of thissituation, but meanwhile, it is still made up largely of the peopletransferred rrom DRAGADO and, of course, must continue to carry out an activedredgivg program.

B. Dredging Work Load

2. Construction dredgiog in Mexican ports carried out by DRAGADO'sfleet and private contractors, has averaged about 6 million m3 per year sincearound 1965. Largely as a result of this construction, maint. nance dredging.carried out almost entirely by the Government fleet, has increased from about2.5 million m3 in the mid-sixties to around 10 million m3 per year in the1980's. Future increases in maintenance dredging will depend upon the newcanital dredging projects carried out. Inevitable growth of the Mexicaneconouy as well as a continuing worldwide tendency for the use of vesselswith greater draft will result in the construction of new dredgedinstallations and increasing depths of existing channels and basins. Alsothere is an existing backlog of needed dredging which has resulted fromdeferred maintenance dredging in several ports. It is estimated that annualmaintenance dredging will amount to 12 million m3 by 1995.

3. It appears that a more rigorous analysis of proposals for dredgingprojects could slow the rate of increase of maintenance dredging. In thepast, projects involving major capital dredging and changes in adoptedproject areas and depths bave often been authorized and undertaken withoutproper economic and financial analysis. There has been little effort todetermine th true cost of the projects and to pass these costs on to theusers and beneficiaries. There is a need for a national dredging study whichwould initiate procedures to properly determine optimum channel alignments,

- 49 -ANNEX 2Page 2

cross-sections and depths and set up more rational means for transferring thenecessary funds from the beneficiaries. This study would be financed underthe project.

C. 1redging Capability

4. With the exception of projects which can clearly be accomplishedmore economically by SEDRA's fleet (usually small projects in relativelyisolated locations) construction dredging should be increasingly carried outby contract with privately owned dredges. SEDRA should be prepared to carryout maintenance dredging, although where it can be demonstrated that contractdredging is more economical, such procedures should be adopted. SEDRA has anexisting fleet which should be more than adequate to carry out even the 1995program provided that the fle,et is properly utilized and maintained. Thefleet consists of 30 dredges. Many of the pipeline dredges are old and havelow production capabilities. Also they are better suited to capital dredgingthan to most maintenance works. SEDRA tentatively plans to reduce its fleetof pipeline dredges from 17 to 5 over the next few years, retaining onlyVeracruz II, Sonora, Tamaulipas II, Baja California and Xunan-Ha. It is alsoplanned to retire two (possibly three) hopper dredges (Frontera andPapaloapan); they are to be replaced by two dredges already on order and duefor delivery in October 1987 and March 1988.

5. Although the combined capacity of SEDRA's fleet is over 20 million" 3 per year, recent annual production has been around 8 million m3. Thecapacity of 20 million m3 is calculated on the basis of labor practices,efficiency of operation and standards of maintenance that are achieved bywell-organized contractors. One major difference between DRAGADO practicesand those of a well-organized contractor is in the hours worked per year(including time spent dredging, carrying spoil to disposal areas in the caseof hopper dredges, moving from job to job and routine maintenance).International practice is to work 24 hours per day seven days per week for upto 48 to 50 weeks per year. Theoretically, tais system would provide over8,000 working hours a year, but breakdowns and other losses reduce the timeworked to an average of 5,000 to 6,000 hours. DRAGADO had been averagingabout 2,240 hours of effective dredging per year using three crews working 2shifts per day, for a total of 14 hours per day, 5 days per week. SEDRA isattempting to increase effective working hours (para 10).

6. Only 2 of the 11 hopper dredges have modern equipment for thecontrol and measurement of dredging. Adding such equipment to the remaininghopper dredges could increase their output by 20 to 30%. Crews andsupervisors are generally in need of training in modern efficient dredgingtechniques. The postponement of regular maintenance and rehabilitation ofthe dredges has resulted in loss of capacity and more frequent breakdowns.

7. Although the present dredge fleet is not expected to be enlarged(in fact the number of pipeline dredgers will be reduced) it appears that byintroducing the measures discussed in paragraphs 5 and 6 above, the capacityof the fleet can easily be increased from its 1985 output of about 8 millionM3 to at least 15 million. However, the increased capacity will be achievedonly if corrective actions similar to those discussed below are carried out.

- 50 -

ANNEX 2Page 3

D. Corrective Actions

8. Management and organization. In the short run SEDRA needsassistance in optimizing its existing organization and procedures. While theexisting organization appears to be generally adequate, SEDRA is new and itsorganization is untried. A detailed study by consultants to recommendchanges, to devise and document procedures, to prepare such items as jobdescriptions and operating manuals, ard to advise on such matters as careerprograms, pay scales and labor relations would appear appropriate. Thechanges recommended should be designed to take full advantage of theflexibility permitted to SEDRA as a deconcentrated agency including:

a. flexibility in administering its budget;b. direct negotiation for budget increases;c. easing of import restrictions for spare parts;d. aimplified customs procedures; ande. flexible personnel procedures.

9. In the longer term SEDRA should move toward becoming an autonomousself-financing Government corporation which would finance itself by chargesto port operators which in turn would collect from port users andbeneficiaries. The consultants that carry out the ehort term managementassistance should be in a good position to help develop the longer rangeproposals which would be included in the National Dredging Study.

10. Operational improvements. SEDRA has already started taking steps toincrease the efficiency of its dredging operations. Oae of the mostimportant innovations is a system to greatly improve the number of workinghours of its dredges by adding a fourth crew or shift to the three formerlyemployed and adjusting working schedules. Under the new system, the dredgeswork 24 hours per day, 7 days a week for 48 weeks per year; it is expectedthat this change will result in more than doubling the effective working timeper year. Two hopper dredges began working under the new system in October1986. The remaining hopper dredges are to be under the new system by early1989; the pipeline dredges to be retained in the fleet will receive a fourthcrew by early 1989 and the remaining pipeline dredges are to be phased out by1991. Crews and labor union leaders seem to approve of the new system.

11. SEDRA intends to install modern measuring instruments and controlsystems on all of its hopper dredges. Seven sets will be required since twoexisting dredges and the two on order already are or will be so equipped.Training in the use and servicing of the new equipment would be provided bythe equipment supplier.

12. Consultants should also be engaged to analyze the skill levels ofSEDRA's employees at all levels, calculate training requirements to bring thework force up to internationally acceptable standards, design a trainingprogram, and assist in carrying it out.

- 51 -

ANNEX 2Page 4

13. Maintenance and rehabilitation. Largely because of a shortage offunds, regular maintenance (including overhaul every two to three years) hasbeen seriously neglected in the dredging fleet and auxiliary equipment hasnot been replaced as it deteriorated; spare parts stocks have not beenproperly replenished. Dredges with sufficient potential capacity to meetrequirements should be overhauled and rehabilitated as soon as possible.

14. Consultants should be engaged to carry out a detailed analysis ofSEDRA's procedures for calculating spare parts requirements, and theacquisition, inventory, storage and issue of spares. The review shouldinclude an analysis of the use of local purchases to replace, in part,centralized procurement.

15. TD permit the dredge fleet to operate more nearly to its capacity,a program for the acquisition of auxiliary equipment is needed. SEDRA withthe assistance of its consultants has prepared a list of equipment which hasbeen reviewed by the Bank staff and appears to be reasonable, Major itemsinclude replacement of steel pipe for the pipeline dredges. Dredge pipe is ahigh-wear item which must be frequently replaced. SEDRA also proposesreplacement of existing quarterboats which are over 30 years old; replacementis planned only for the five pipeline dredges which will be retained in thefleet. The justificatioa will be reviewed under the National Dredging Study.

16. The Wational Dredging Study. As discussed in paras 3 and 9 above,there is a need for more accurately assessing the optimal program formaintenance dredging in Mexican ports. The optimal division of dredgingactivity between SEDRA's fleet and private contractors and an appropriatesystem for passing the cost of maintenance dredging to the users andbeneficiaries should also be determined. Outline Terms of Reference for aNational Dredging Study to accomplish these objectives has been prepared andis in the Project Files. This study would be complemented by a more narrowlyfocussed study on Relocation of Port Related Industries from Rio Panuco(Tampico) to Altamira (Outline Terms of Reference are in the Project Files).

B. Schedule of Implementation

17. It would be very desirable to initiate all of the actions discussedin paragraphs 8 through 16 above as soon as practicable. SEDRA has alreadyinitiated some of them (e.g., increasing the effective hours worked by thedredges (see para 10), but most of the actions wlll require additionalfunding. Funds to initiate the dredge rehabilitation program and to acquirea limited amount of spare parts are included in the SEDRA part of the 1987federal budget. However, to carry out the bulk of the program, externalfunding will be required which makes slippage likely. Retroactive financingunder the loan could help overcome the financial constraint.

F. Investment Program

18. The investments required to support the progras of correctiveactions is shown in Table 3.1.5 and 3.1.6. The investments would beundertaken in two phases; the second would be contingent on the findings ofthe National Dredging Study and satisfactory implementation of itsfecommendations. The costs of the programs for rehabilitation of dredges and

- 52 -

ANNEX 2Page 5

for purchase of spare parts are based on an analysis by Consultants FOA(Mexico). The costs of the control and measuring equipment and the auxiliaryequipment is based on typical prices in the international market. Both costsappear to be reasonable. Since all of these it6ums will be procured throughinternational competitive bidding, the costs are mainly in foreign exchange.Technical assistance will be carried out by qualified local consultants wherepersonnel acceptable to the Bank are available, otherwise, foreignconsultants would be required. The Plan of Action for rehabilitation ofSEDRA fleet and associated actions by SEDRA assisted as necessary bytechnical assistance to be provided under the project is shown in the ProjectFile.

- 53 -

ANNEX 3Page 1

MEXICO

PORTS REHABILITATION PROJECT

Port Efficiency

1. There is a wealth of raw data on the operations of the Mexicanports but much less analytical information. Quite wide variations areobservable in the statistics of the main measures of productivity (inparticular the speed of ship handling, the occupancy of berths, the timeships spend awaiting berths, the gang productivities and equipmentavailability and utilization). Nevertheless, a review of the four projectports, together with for comparision, two other major ports (Lazaro Cardenasand Coatzacoalcos) reveals some clear features. These are described withrespect to the main productivity measures below. Tables 1 to 4 showproductivity indicators.

2. A key measure is the number of tons of general cargo handled hourlyby each gang (Table 1). For break-bulk the Veracruz rate of 15 tons pergross gang hour is low compared with other Mexican ports; it is not so whencompared with rates achieved in other developing countries where 10 tons pergross gang hour or less is commonplace. For unitized cargo the rates aremore uniform among the four project ports, but significantly higher at LazaroCardenas and Coatzacoalcos. There is no obvious explanation for this.

3. Looking at the general pattern of port employment, it is clear thatVeracruz is the largest employer by a substantial margin with an average ofnearly 1 million man-hours_/ worked in 1984 and 1985, compared with halfthat for Tampico-Altamira, while neither Guaymas nor Manzanillo have exceededa quarter of the Veracruz total (Table 2). While the cargo mix has had somelnfluence-a larger proportion of Guaymas and Manzanillo traffic hasgenerally been in the semi-mechanized categories-the general impression isthat the size of the labor force dictates the labor productivity, rather thanthe volume of traffic determining the labor requirements. It is notablehowever, that in all four ports there was a reduction in man-hours between1984 and 1985 and an increase in average productivity.

4. Another important measure is the ratio between the time spent byships awaiting a berth and the percentage occupation of berths (Table 3).Normally low occupation results in minimal waiting while at higher occupationship waiting time can increase sharply. At none of the four ports wasoccupancy very high in 1984 or 1985 but at Guaymas and Tampico it was at alevel where significant ship waiting could be expected. Consequently, therecorded ship waiting/ship service ratios of about 14X average at each ofthese ports, while somewhat above expected levels, was probably reasonablegiven the draft limitations at some Guaymas berths (now being rectified) andthe generally constrained operating conditioyi at Tampico. At Veracruz there

1/ We suspect the actual figures are not entirely accurate, but the ratiosprobably are.

- 54 -

ANNEX 3Page 2

was virtually no waiting time (the only significant waiting was at the grainterminal in 1985). However, at Nanzanillo significant shipwaiting, almost atthe same level as Guaymas and Tampico, was recorded despite consistently lowberth occupation. The reason is not obvious but may well be associated withthe comparatively low equipment availability recorded (Table 4).

5. A conventional measure of the efficiency with which berthing spaceis used is the number of tons handled annually per meter of wharf length, anda rather crude norm for general cargo is 1000 tons/meter/year. On that basisVeracrus and Manzanillo averaging 760 and 640 tons/meter/year respectivelyover 1984/1985 are below standard, while Tampico and Guaymas with averages of1980 and 1370 tons/meter/year respectively are well above. Even if adjust-ment is made for the differing levels of berth occupancy between the fourports, the relative efficiency levels are not significantly changed. It mustbe added, however, that at a time when port traffic is down from peak levels,a crude measure of this type is not very meaningful; its main value is tosupport the conclusion reached elsewhere that Tampico will benefit fromdiversion of traffic to Altamira and that the focus of attention at Veracruzand Manzanillo should be better utilization of existing capacity.

6. In summary, the above port efficiency analysis shows that even atVeracruz, where productivity is lowest, the labor productivity is acceptableand improving, while at Tampico most indicators suggest a port which isoperating well in difficult circumstances. Guaymas operational indicatorsare generally satisfactory, but at Manzanillo ship delays and low equipmentavailability are cause for concern.

March 1987

-55 - AMII 3HDKXI(X Table 1

m RAB^T?MOD PR

Pbrt Productivity

ProjetPorte Tori/Ship Hour T_oo/Gross Gong Hour

-Tra-------qTaffic fi 'ye. T-raffic lBroZ --1.1 1.2 2.3 2.4 2.5 2.6 1.1 1.2 2.3 2.4 2.5 2.6

WRfl 51 56 327 - 181 -1984 - 69 217 127 191 706 35 - 140 - 53 -1985 36 88 245 - 234 525 24 52 148 - 74 -

maumnillo1981 54 77 125 - 149 -1984 68 92 143 - 143 - 38 46 52 - 461985 69 101 109 - 177 - 30 56 60 - 62 -

Veracruz1981- 26 47 50 - 92 1531984 39 92 84 312 107 214 15 65 35 - 23 -1985 37 78 76 511 121 308 15 44 31 - 37 -

1_pco1981 45 63 97 - 89 -1984 51 77 141 - 116 - 25 46 67 - 341985 65 84 137 - 108 - 29 52 78 - 33

CoaMratorPorts lazaro Carden"a1984 - 130 488 515 109 - - 98 422 - 471985 36 123 497 - 66 - 47 105 463 - 29

coatsacoalcos

1984 107 171 69 272 113 - 50 92 25 - 331985 162 124 98 219 91 - 83 80 31 - 35

31MiF~iOect Ports)1984 57 87(3) 146 219(2) 139 460(2) 28 52(3) 73 - 391985 49 88 141 511(1) 160 416(2) 27 51 79 - 51

Average

S:ixect Ports )

1L984 66 112 190 306(4) 129 - 32(5) 69(5) 123 - 391985 74 100 193 365(3) 133 - 39 65 135 - 45

1.1 General Cargo Break-ult1.2 Genoral Cargo Unitized2.3 Mlneral Semtiecbtmdcal2.4 Ntneral Mechanizad2.5. Agriultural Grain Semi4lecbanized2.6 Agricultural Grain Mechanized() PNmber of PortsSource: SCI

- 56 -

ANNEX 3Table 2

PORTS REHABILITATION PROJECT

Labour Productivity

Cargo Category Average1.1 1.2 2.3 2.5 All Cargo

1984 1985 1984 1985 19_84 1985 1984 1985- ii9Ti1985

Guaymas A - 1.7 3.3 4.6 16.9 18.4 6.7 9.3 7.8 10.9B - 1 38 23 35 38 140 97 213 159

Manzanillo A - 3.8 3.0 5.5 16.9 13.8 6.7 14.7 7.8 8.1B - 48 38 30 35 23 140 23 213 124

Tampico/ A 2.5 2.8 5.1 7.9 9.6 10.9 2.7 2.5 4.5 6.4Altamira B 229 201 87 54 110 110 78 109 504 474

Veracruz A 1.2 1.2 4.0 2.8 4.0 3.8 2.8 4.6 2.5 3.3B 402 364 203 293 26 34 403 231 1034 922

A - Average tonnage per man/hourB - Total man-hours ('000)

1.1 Break-bulk General Cargo1.2 Unitized General Cargo2.3 Minerals Semi-mechanized2.5 Agricultural Graine, Semi-mehanized

Source: SCr

- 57 -

ANNEX 3Table 3

MNIcO

PORTS REBABlLrAON PRWECT

1986 Equipdent Availability (X)

Vehicle Froet leAxe iForklft Trucks Truck/Tractors Trucks Crates loader

NarsT (Guay.ma) OMnixarllo) (Veracruz) (Veracruz) (Veracruz) (Veracez) QManzanillo)

1 100 80 - - - - -2 - 80 89 80 88 - -

3 - - 79 85 - - 804.5 - - 51 - 75 - 696 50 56 61 63 70 69 -7 48 4 67 43 57 51 -8 52 55 66 47 62 61 579 - 49 63 - 52 35 4510 24 - 56 - - - -10 + 47 17 57 - 35 32 -

source: SCT

- 58 -ANNEX 3Table 4

PORTS REHABILtATION PROJECT

Berth Occupancy and Shlp Waitlng Time

Guaymas Menzanillo Tepico/Altamlra Veracruz1984 1985 1984 1985 1984 1985 1984 1985

A. 53 47 32 35 58 55 38 44

B. 77 63 43 47 70 65 52 58

C. 17 11 12 11 13 15 1 4

D. 5 3 0 0 5 2 0 0

A - Average Berth Occupacy (%)

B - Maximm Mouitly Berth Occupancy ()

C - Umreighted hAerae Ratio of Ship WaitingTim (SWT) to Ship Service Tim (SST) ({)

D - Theoretica Ratio SIT/SST (X)(Based UpOn queirg theory sasusminga random arrival of shippin In port)

Souroe: ssr and Nission Estimates

- 59 -ANNEX 4Page 1

MEXICO

PORTS REHABILITATION PROJECT

Survey of Cargo Handling Equipment

1. In 1986, the CNCP instructed FIDEMAP to conduct an inventory andcondition survey of equipment and maintenance shops in the national ports.This was carried out by four teams of consultants. The survey:

a. appraised the physical condition of each piece of equipment;

b. estimated the useful remaining life;

c. estimated the actual value In its present condition;

d. stated whether the equipment should be scrapped, repaired orreconstructed; and

e. determined the requirements of the maintenance shops.

FIDEWAP used the findings of the survey and short term cargo forecasts forthe ports to develop a program of equipment rehabilitation and procurementto satisfy the requirements of the ports through the year 1992.

Study Methodology

2. The following methodology was established to minimize subjectivefactors. The percentage of total cost was established for each of theprincipal components of the various types of equipment: trucks, tractors,trailers, cranes, forklift trucks, grain suction dischargers, conveyors,wheeled loaders, etc. Each principal component was then disaggregated. Themethodology was developed from procedures followed by manufacturers,insurance companies and equipment specialists. It utilized visualinspection, operational testing and certain physical tests. For example, ifthe tires on a forklift truck had an estimated 50% of their life remainingand tires make up 5% of the cost of the equipment, then they would contribute2.5% to the total remaining value of the forklift truck. To illustrate, thebreakdown of the main components of a forklift truck were taken in accordancewith the following:

X ofTotal Cost

Appearance 10Engine 20Drive Train 15Brake System 5Tires 5Steering System 10Hydraulic System 35

Total 100

- 60 -ANNEX 4Page 2

3. The sum of the various percentages multiplied by the cost of asimilar piece of equipment yields the net replacement value of the forklifttruck. This was done for each piece of equipment in the national portssystem.

Useful Remaining Life

4. The method followed to assess the useful remaining life of eachpiece of equipment included four modifying factors. These modifiers were:

a. apparent standard of maintenance which had been followed, withthe modifiers ranging from 0.6 for very good, to 1.4 for very bad;

b. normal utilization, with factors ranging from 0.6 for one shiftper week, to 1.4 for three shifts per day;

c. environmental, with factors ranging from 1.0 for Acapulco with itsrelatively clean atmosphere, to 1.2 for Lazaro Cardenas with thepossibility of industrial pollutants in the atmosphere; and

d. operating conditions, ranging from 0.6 for very good to 1.4 forvery bad.

5. The above modifiers were utilized to estimate the useful life ofan item of equipment from the value given by the manufacturer or normallyused for that type of equipment.

Reconstruction

6. Port cargo handling equipment can normally be reconstructed twice.The first comprises reconstruction of the principal components with a maximumcost of about 45% of the cost of a new piece of equipment. The useful lifeafter the first reconstruction is estimated to be about 90% of the usefullife of the new piece of equipment. The second reconstruction would costabout 50% of the cost of a new piece of equipment and would provide a usefullife of about 80% of the useful life of a new piece of equipment. Therecommendation for reconstruction in the first phase of the study was madeindependent of the traffic forecast for the port. The second phase of thestudy considered the forecast traffic including method of cargo handling.

General Remarks

7. In general there is a surplus of certain types of cargo handlingequipment in the ports. Forklift trucks are in surplus in both Veracruz andGuaymas. With a proper equipment rehabilitation program, replenishment ofspare parts stocks, and introduction of a proper preventive maintenanceprogram it would be possible to distribute the surplus equipment to otherports in the system. It appears to be easier to obtain replacement equipmentthan it Is to maintain an adequate supply of spare parts and have a properpreventive maintenance program and promptly carry out necessary repairs.

- 61 -

ANNEX 4Page 3

8. One common problem is that there are permanent operators and casualoperators. The permanent operators act as though the equipment were personalproperty and operate It accordingly. The casual workers exhibit much lessconcern for the equipment.

- 62 -ANNEX 5Page 1

MEXICO

PORTS REHABILITATION PROJECT

Description of Project Ports

1. The project includes the four principal general cargo ports in thecountry, two on the Pacific Coast and two on the Gulf Coast. A briefdescription of the four ports follows:

2. (a) Guaymas (see Map IBRD 20359). The commercial port includesBerths 1, 2 and 5 along the east wharves with a total length of 526 a andBerths 3 and 4 along the south wharves with a total length of 352 a. Berths3 and 4 have a water depth of 11 m, 2 has 10 m, and 1 and 5 have 8 m but thisis being deepened to 11 m. Immediately west of the south wharves is a berthfor loading cement in bulk. North of the east wharves is the terminal forthe ferries to Baja California, and to the east of this is the PEMEX pier. A64,000 ton capacity grain silo is located adjacent to the south wharves.This is owned by Almacenes Nacionales de Deposito (ANDSA). This wasinitially a grain export terminal but now grains are being imported throughGuaymas, with the silo being used as a storage depot for locally producedwheat and for cabotage shipments of the wheat. Although the terminal hasreversible belts, it is not adequately equipped for discharging grains fromships. An enclosed transit shed with an area of 4,800 m2 is located adjacentto Berth 2 and an open sided shed of 6,390 m2 is located in the open storagearea north of the silos. Dredging adjacent to the wharves and rehabilitationof the wharf structures was done in early 1987.

3. (b) Manzanillo (see Map IBRD 20360). The commercial portcurrently occupies both the outer harbor and the newly constructed innerharbor, San Pedrito. The outer harbor contains a two berth finger pier forPEMX, and the two berth, Muelle Fiscal, a finger pier used for general cargoand dry bulk cargoes. Until 1983, the Muelle Fiscal with a total berthlength of 512 m and a water depth of 11 m was used for all dry cargoesincluding imports of bulk grain and fertilizers. The bulk cargoes werehandled by direct discharge to railway wagons. The work at each of thehatches was limited to the performance of the slowest hatch. When a stringof wagons was loaded, it was pulled off the pier and across the principalstreets of the city. This is very disruptive to local pedestrian andvehicular traffic. The new wharves in San Pedrito are labelled A, B, and C.They all have a water depth of 11 n. Wharf A has a total length of 450 a, Bis 600 m long and 400 m of the planned 680 m of wharf C have been completed.In addition there are berths for Naval vessels, fishing vessels, touristlaunches and pleasure boats.

4. (c) Tampico/Altamira (see Map IBRD 20361). The combined port ofTampico/Altamira includes the Port of Tampico on the Rio Panuco and therecently constructed coastal port of Altamira which has been constructed bydredging an entrance into a coastal lagoon, using the dredged material toraise the level of the surrounding land. The commercial port of Tampico issituated along the left bank (north side) of the river at a distance of about12 km from the river mouth. The combined ports contain more than 5 km ofberthing length, only 250 a of which are located at Altamira. Public wharves

- 63 -

ANNEX 5Page 2

account for 74X of the berthing space with the balance being private. ThePort of Altamira is about 30 km north of Tampico. The principal portion ofthe public wharves at Tampico include 9 berths at the Zona Franca which areused for break-bulk, unitized and containerized general cargo and bulk grainImports, and 4 berths at the Metals and Minerals Terminal, which are usedprimarily for import and export of bulk minerals and export of semi-refinedand refined metals. These berths have from 10 to 11 m water depthalongside. The 250 m wharf at Altamira has 12 m water depth and is presentlyused for cabotage shipments of sorgo, containerized general cargo anddischarge of heavy-lift items and large process equipment. A rail mountedcontainer crane has recently been erected at this berth. The Rio Panucodrains a very large tributary area. The runoff is silt laden and maintenancedredging is a serious problem at Tampico with quantities ranging from 3 to 4million m3 per year. Maintenance dredging at Altamira is negligible.

5. (d) Veracruz (see Map IBRD 20362). The principal characteristicsof this port are 3,300 m of wharves with water depths ranging from 9 to 11 m,500 m of wharf with water depths of 6 to 8 m, 26.8 ha of open storage area,7.8 ha of enclosed storage and 0.7 ha of covered storage. The port has agrain terminal with a 25,000 ton capacity silo, a container terminal with arail mounted container crane, and a bulk liquids terminal in the northerncorner of the harbor. Unfortunately these three terminals share a single 500a long wharf. This is a very unsatisfactory arrangement. Break-bulk,unitized and containerized general cargo, bulk sugar and bulk cement clinkerexports and bulk grain imports are handled at finger piers along thesouthwesterly side of the harbor. A shipyard and a PEMEX oil terminal occupythe eastern corner of the harbor. Maintenance dredging at this port isrelatively minor.

- 64 -

ANNEX 6r-age =

MEXICO

PORTS REHABILITATION PROJECT

Action Plans for Port Operators

1. The following outlines several key elements of the Action Plansproposed for each of the four ports. The targets below should beincorporated Into the concession agreements as an integral pait of suchprogram-contracts:

A. Finances

2. Annual operating budgets to be prepared during the last trimesterof each year based on revised traffic forecast for the coming year. Costs 1Yand tariffs to be budgeted so as to achieve the following maximum operatlngand working ratios:

1988 1989 1990 1991W 0 W 0 W 0 O W O

SEPOG: 0.87 1.18 0.85 1.16 0.91 1.25 0.93 1.27SEPOM: 0.93 1.19 1.00 1.32 0.95 1.25 0.92 1.21SPTA 0.77 1.06 0.81 1.14 0.82 1.17 0.85 1.18SERPOVER: 0.89 1.15 0.86 1.10 0.95 1.22 1.00 1.35

1/ Costs should include capitp-l costs of owned fixed assets, regularlyrevalued in accordance with current Mexican accounting principles forinflation adjustments.

Definitions:

Working Ratio: All working expenses, i.e., excludingdepreciation, divided by revenues

Operating Ratio: All operating expenses, ie., includingdepreciation, divided by revenues

- 65 -ANNEX 6Page 2

B. Productivity Targets

3. The following targets should be achieved upon completion of relatedinvestments:

1985 1988 1990 1992 Target 27Port Cargo Type Actual Target Target Target Unit

Guaymas Containers n/a 10 20 20 Moves/br

GrainSemi-mechanizedMechanized 260 260 375 375 Tons/hr

Manzanillo GrainSemi-mechanized 177 177 200 250 Tons/hr

Veracruz Containers 3/ 9 9 15 20 Moves/hrGrain 4/ 300 300 Tons/hr

Altamira ContainersUsing ship's gear: 15 15 20 20 Moves/hrUsing containershore cranes n.a n.a 25 25 Moves/hr

SEDRA DredgesEffective DredgingTime per Dredgerin Oaration 2200 3600 5000 5000 Hours/Yr

C. Port Equipment (a) Rehabilitated 0 4 45 86 PercentageEquipment of Program

Implemented75 75 Availabi-

lity of Re-habilitatedEquipment (Z)

(b) Equipment with excessive down-timewill be retired from the port inventoryaccording to a planned retirement programto be completed during 1988.

D. Work Study

4. By December 31, 1989, SCT will caplete in each of the four project ports,a work-study of cargo-handling operations with a view to reducing unit costs ofhandling principal categories of cargo.

2/ Per gross hatch hour3/ Over container berth4/ Over grain berth

- 66 -

ANNEX 7Page 1.

MEXICO

PORTS REHABILITATION PROJECT

Technical Assistance and Studies Program

A. Assistance to SEDRA

1. Background. SEDRA was estab'ished in November 1985, and inheritedfrom DRAGADO a poorly maintained dredging fleet, and an organization that wastechnically rather than managerially oriented. Although SEDRA has ambitionsto expand its dredging capability to not only do all maintenance dredgingrequired but also some capital dredging, it is unclear that it either has thecapability to do so or that it is necessarily in the best interests of theMexican economy for SEDRA's capacity to be swiftly and massively expanded.

2. Objectives. The objectives of the three sets of studies andtechnical assistance briefly described below would be to determine the mosteconomical long-term level of SEDRA maintenance dredging capacity, and assistSEDRA in improving its operational capability to meet this demand.

3. Scope. (i) National Dredging Study. The study would determine theeconomically optimal level of maintenance dredging in Mexican ports, and theoperational and financial implications of this for SEDRA. Draft Terms ofReference are in the Project File.

(ii) Relocation of Port Activities from Rio Panuco to Altamira.This study would complement the National Dreding Study and would explore Indetail the economic costs and benefits of relocation to Altamira of portindustries which require substantial maintenance dredging of the Rio Panuco.It would also assess the financial measures necessary to achieve relocationshould this be found economically viable. Draft Terms of Reference are inthe Project File.

(iii) SEDRA Personnel Management Procedures and Inventory Control.As a new organization, SEDRA has not yet developed satisfactory methods ofpersonnel management, such as job descriptions and grading, pay scales, andcareer programs on the one hand nor operational procedures on the other.Inventories and their control are another item for which technicalassistance will be required. Descriptions of these weaknesses are given inAnnex 2, and the studies would be designed to establish a means of overcomingthem and timetables for implementation.

4. Timing and Cost. The National Dredging Study should be comencedby June 30, 1988 and completed by March 31, 1989. It will require about 120

- 67 -

ANNEX 7Page 2

man-months. A mixture of local and expatriate expertise will be required andthe cost is estimated at about US$800,000. The Rio Panuco relocation studyshould be undertaken with some inputs from the dredging study and shouldcommence by September 30, 1988 and be completed by March 31, 1989. About 24man-months will be required, mainly local, and the cost is estimated atUS$100,000. Establishment of personnel procedures should be commenced assoon as possible, no later that March 31, 1988 and should be completed bySeptember 30, 1988. It will require about 20 man-months. A mixture of localand expatriate expertise, mainly local, will be required and the cost isestimated at about US$80,000.

B. Assistance to FIDEMAP/ESPsEstablishment of Procedure for the Acquisition, Rehabilitation andMaintenance of Port Equipment.

5. Background. FIDEMAP and CNCP have undertaken a country-wide surveyof the state of port equipment, with a view to establishing a centrallycontrolled program for scrapping, rehabilitation and acquisition. It is alsoenvisaged that ESPs will in due course take over responsibility for the portspecific programs of scrapping, rehabilitation and acquisition. At presentwhile FIDEMAP has substantial engineering expertise, either in-house orreadily available from outside, they lack the capability to undertake theeconomic and financial analyses necessary for future programs, and have notyet established a fully satisfactory system for ensuring adequate equipmentmaintenance.

6. Objectives. The basic objectives will be (i) to improve thestandards of maintenance of port equipment which, for various reasons,including unsystematic inspection procedures, are generally low; (1i) ensurethat new equipment is not substituted for existing without adequate analysisnot only of engineering but economic and financial implications; and (iii)enable an orderly and timely transfer of responsibilities for port equipmentfrom FIDEMAP to ESPe.

7. Scope. The consultants would (i) aesist FIDEMAP in the firstinstance, and the ESPs as appropriate, in establishing clear procedures forequipment maintenance. In particular, the consultants would review andrecommend on periodic review of the physical conditions of equipment, themeans of restoring equipment to service (unit exchange, in-house repair,contract repair) and procedures for scrapping (terms of reference andfrequency of review by "boarding" committees, etc.); and (il) review thedecision making processes that presently are employed for the replacement ofequipment, and assess whether adequate economic and financial analysis isundertaken. In particular the consultants should determine whether changesin equipment specifications (changes in lifting capacity, operatingspecifications, etc.) are made after analysis of the financial implications

- 68 -

ANNEX 7Page 3

for FIDEMAP/ESPs and, at a more general level the economic implicationsthrough the necessary budgetary and foreign exchange allocations; and(iii) the consultants should also review the implications of their findingson the above subjects for the transfer of ownership of equipment from FIDEMAPto the ESPs or vice versa.

8. Timing and Cost. The study should start by March 31, 1988 and becompleted by September 30, 1988. It wAll require about 30 man-months. Therequired expertise can be largely provided locally and the estimated cost isUS$120, 000.

C. Assistance to SERPOVER and SPTA

9. Background. SERPOVER and SPTA management accounting procedures areinadequate to establish with reasonable accuracy the financial status ofthese organizations, their budgets and costs. Furthermore the contractualarrangements for the provision of port services between these organizationsand other parties are under review, and any changes will affect both theexisting and target financial indicators.

10. Objectives. The ultimate objective is to introduce managementaccounting systems such that the financial responsibilities and operationalresults of SERPOVER and SPTA are clearly established in a manner which permitsetting realistic financial targets and monitoring their attainment.

II. Scope. The consultants should (i) review the existing financialinformation and systems of SERPOVER and SPTA, and as necessary, otherorganizations concerned with operations of the ports of Veracruz and Tampico-Altamira; (ii) relate the results of such reviews to other indicators of portactivity (e.g., port employment, tonnage handled, etc.) to assess the degreeof consistency of the accounts; (iii) re-examine accounting and other datasystems where significant discrepancies exist; (iv) introduce consolidatedand internally consistent systems of accounting, budgeting and costing; and(v) produce financial targets for the relevant organizations, taking intoconsideration inter alia forecast traffic, proposed investments, the effectof such investments and available information on the future level of laborcosts. Proposed outline Terms of Reference are in Annex 9, Appendix l.

12. Timing and Cost. The study should commence by June 30, 1988 and becompleted by about December 31, 1988. It will require about 50 man-months.This will be largely locally provided and the total cost is estimated asUS$200,000.

- 69 -

ANNEX 7Page 4

Summary

TotalImplementation Costs

Description Period (US$'000)

National Dredging 6/88-3/89 800

Rio Panuco Relocation Study 9/88-3/89 100

Personnel Procedures 6/88-9/89 80

Equipment Procedures 3/88-9/88 120

Accounting Procedures 7/88-12/88 200

Project Supervision ImplementationPeriod 300

Contingencies - 332

Total 1932

- 70 -ANNEX 8Page 1

MEXICO

PORTS REHABILITATION PROJECT

Methology for Economic Evaluation of Port Projects

1. SCT commissioned consultants to prepare a detailed methodology forthe economic evaluation of port projects (Annex 12, para. 2). This wascompleted in August 1986, reviewed by the Bank, and found generallyacceptable. Below is given a synopsis of the general principles to befollowed.

2. The methodology distinguishes between different types ofinvestment, in particular: maintenance, rehabilitation, enlargement andcompletely new projects. These distinctions are used to indicate therelative importance of different forms of benefit from the project, withinthe spectrum noted below.

3. Maintenance projects. The benefits from maintenance projects aregenerally expressed in terms of reductions in the future streams of capitalinvestment in new equipment or infrastructure resulting from increased ormore effective streams of expenditure on maintenance. The maintenancestreams themselves can take varying forms, broadly ranging between theconcept of periodic replacement of inputs (lubricants, spare parts) tophysical examination of larger units and their repair/replacement only whencertain physical benchmarks are exceeded.

4. Rehabilitation Projects. These are generally applicable when anasset's state of repair has deteriorated to the extent that it is out ofservice for a significant period, and the alternatives ere substantialexpenditure on replacement/repair of existing units or complete replacementof the asset. Given that the expected life of a new asset is almostInvariably greater than that of one rehabilitated, the rate of interestassumed plays an Important role in these calculations.

5. Enlargement projects differ from the above in that an expansion ofactivity is envisaged. This requires the explicit consideration of theextent to which a change in the scale of activity will change the type ofactivity. A common example is the expansion in volume of a traffic to thelevel that specialized bulk handling facilities become appropriate. Failureto recognize that such developments can render existing facilitieseconomically (and financially) obsolete makes this probably the mostimportant form of port investment, and the difficulty in forecastingtechnological progress makes it one of the most difficult to accuratelyanalyze.

6. New Developments. These require careful definition. They may beenlargement projects under another name, as when bulk facilities areconstructed where simple methods of discharge existed previously. At theother extreme, they can comprise port developments at virgin sites. Unless

- 71 -

ANNEX 8Page 2

associated with an equally 'new' traffic (e.g. a new automobile plant orsteel mill) they involve consideration of the reasons why a customer willtransfer from another port, and in the analysis require consideration notonly of the costs and benefits of the new development per se, but of theeffect on existing ports. Such developments normally require to be assessedin the light of an overall national port development plan If they are not torun the risk of resulting in duplication and over-capacity. For completelynew facilities, so remote or specialized that the effect on existinginstallations is negligible, a careful study of the market for the principletraffic is an essential pre-requisite.

7. The costs of the various types of investments are net costs. Netin two senses, first that if, e.g, a maintenance investment enables avoidanceof another smaller investment required to prevent further performancedeterioration from the existing (base) level then either the investment costused In calculations should be the difference between the two investmentlevels, or the future decline in performance without the minimal investmentshould be considered in benefit calculation. The costs are net also in thesense of net of taxes and subsidies. This latter set of exclusionsinevitably is a rather crude calculation if there are a whole spectrum ofinputs to the investment.

8. Finally, the conditions under which shadow pricing of inputs mightbe applicable should also be noted. Prominent among these would be strictcontrol and therefore non-free market determination of the exchange rate forthe domestic currency. In Mexico there is, effectively, a freely convertiblecurrency and therefore shadow pricing based upon exchange rate considera-tions does not apply.

9. A copy of the consultant's study is available in the project file.

March 1987

-72 - ANX 9Page 1

MEXICO

PORTS REHABILITATION PROJECT

Detailed Project Description

A. General

1. The proposed project would consist of: (a) rehabilitation offacilities at four deepwater commercial public ports, namely, Guaymas andManzanillo on the Pacific Coast, end the dual port complex of Tampico-Altamira and Veracruz on the Gulf Coast; (b) specialized cargo handlingequipment, primarily for containers at all the ports and grain handlingequipment for all the ports except Tampico Altamirs; and a tugboat forTampico-Altamira; (c) rehabilitation of cargo handling equipment at the fourports; (d) rehabilitation of the Government's dredging fleet Includingreplenishment of spare parts and procurement of new survey and measuringsystems, and auxiliary craft; and (e) professional services for: (i)technical assistance to help introduce appropriate port tariffs and dues; and(II) technical assistance for a National Dredging Study and other studies toassist SEDRA to become more efficient and develop a higher standard ofequipment maintenance and environmental protection.

B. Civil Works

(i) At Guaymas

2. Container Yard: This yard is immediately behind the new extensionof the East Wharves 'wich serves as the new container berth. A controlbuilding would be constructed and lighting installed in the yard to Improveoverall control and operation and permit safer nighttime operation. RailwayTracks: The railway tracks within the port would be rehabilitated to permitfaster, safer movement of railway cars. Utilities Systems: The water andelectrical system. have badly deteriorated and would be rehabilitated.Transit Shed Relocation: The transit shed behind Berth 2 causes interferencewith cargo handling at the berth and would be relocated to the open storagea.ea north of the grain silos. Open Storage Area: The pavement In the openstorage area is in poor condition and the area does not drain properly. Theproject includes levelling and paving of the area to provide for properdrainage and permit safer vehicular movement and cargo storage, and stripingfor better cargo and traffic control.

(ii) At Manzanillo

3. Grain Storage: There Is presently no grain storage installation atthe port. All grain handling is done by direct discharge from ship torailway cars using grabs operated by ship's gear and hoppers. The projectwould provide for pneumatic dischargers and two 5,000 ton capacityhemispherical storage structures to provide a buffer for grain discharge fromvessels at the new wharves in San Pedrito. Utilities Svstems: The utilitiessystems in the port are badly deteriorated. The project would includerehabilitation of the potable and fire water systems and the electricalsystem. Striping: The open storage area would be striped to permit bettercargo and traffic control.

-73 - ANNEX 9Page2

(iii) At Tampico

4. Groins: The groins adjacent to the channel and along the beach tothe south of the harbor entrance have deteriorated. The project includes therehabilitation of these groins to avoid progressive deterioration and permitthem to serve their function. Lighthouse and Beacons: The lighthouse andbeacons have fallen into a state of disrepair. They are necessary for safenighttime navigation and would be rehabilitated under the project to increasesafety and reduce ship turnaround time. General Cargo Berth and Metals andMinerals Berths: The Transit shed and warehouse at the General Cargo Berthhave deteriorated and been damaged by vehicles and cargo handling. Theproject would provide for repairs to these buildings to avoid progressivedeterioration and weather damage to cargoes stored in the sheds. Mooringfittings and fenders have been damaged. This permits increased damage to thewharf face and to vessels berthing at these wharves. The lack of adequatemooring fittings results in awkward and unsafe mooring of vessels. Theproject would provide for rehabilitation and replacement of mooring fittingsand fenders. Paving and drainage: The pavement has deteriorated and therehas been some subsidence and damage to the drainage system adjacent to thewharves. The project would provide for rectification of these conditions.Metals and Minerals connection: These two wharves were built and operatedindependently. They are n* being operated as a unit but are physicallyseparated. The project would provide for construction of a 20 m connectionbetween the two wharves. This would permit easier vehicular access and moreflexibility in operation of the terminal. Wharf deck: The deck of theMetals and Minerals wharves is deteriorated and damaged due to weathering andtraffic of heavy vehicles. The project would provide for repair of the deck.Utilities systems at both the Muelle Fiscal and Metals and Minerals Terminalshave badly deteriorated. The project would provide for rehabilitation of theelectrical and water systems. Railway tracks serving the Metals and Mineralsterminal carry heavy traffic and are subject to the loading of railway cranesused for discharging the cars. The project would include the rehabilitationof these tracks. Port access: The roadway access to the port is veryheavily travelled and has been a serious problem for several years. The.project would include rehabilitation of 3.5 km of the Calsada Blanca access.

(iv) At Altamira

5. Port Access: There is a limited two lane road access to thecontainer terminal but the railway access was terminated about 9.5 km fromthe terminal. The project would upgrade and improve 5 km of the roadwayaccess and would construct 12.5 km of railway track to the container terminaland the proposed bulk fertilizer terminal for YERTIMEX (a separate possiblyBank financed project. A separate spur is included in the FERTINEXproject). Container wharf extension: The present 250 m long wharf atAltamira is used by fully cellular container vessels, cabotage vesselsloading sorghum and for discharge of heavy lifts and large process units.The project would provide a 250 m extension to this wharf to permit therelocation of container movements from Tampico. Associated with the wharfconstruction would be extension of the dredged basin to permit turning theships in front of the new berth. An equipment maintenance shop would beconstructed to permit maintenance for the container and break-bulk cargohandling equipment at Altamira. This would avoid the need for a 60 kmroundtrip to Tampico for servicing and repairs. A control building would beconstructed at the container terminal to permit better control of traffic andcontainer movements. A loading platform would be added to the existing

- 74 -ANNEX 9Page 3

transit shed at the container terminal to permit it to better serve itsfunction as a container freight station.

(v) At Veracruz

6. Container yard access: The existing container berth is on a wharfshared with bulk grain ships, liquid bulk carriers and bulk cement vessels.The backup area for the container berth is inadequate therefore a much largerarea was constructed on the western side of the railway tracks serving thegrain terminal and the pipelines from the PEMEX pier. The vehicular accessto this larger area is circuitous due to the pipelines having been installedabove grade. The project would include the lowering of 20 m of thesepipelines into a trench and construction of a bridge across this trench and agrade crossing of the railway tracks. This would permit much easier accessto this container yard from the container berth and from the port gate.Expansion of container yard would be provided toward the south. This wouldprovide needed additional storage capacity for containers and would be inkeeping with the mase. development plan of Veracruz which provides forrelocating the conta..1 .r berth to the south side of the harbor.

C. Equipment

7. Equipment requirements are based upon: (a) inventories and surveyscarried out by four firms of consultants (Annex 5), and (b) operationalanalyses carried out by FIDEMAP utilizing the recommendations resulting fromthe equipment inventory and condition survey and short range trafficforecasts. The project would finance rehabilitation of existing equipment,replenishment of spare parts inventory and acquisition of new specializedequipment for container and grain handling, and trackmobiles.

(i) At Guaymas

8. A trackmobile would be procured for shifting strings of railwaycars within the port. Guaymas has a grain terminal which was constructed forexport. The traffic has since reversed but the equipment for discharging thegrain is difficult to handle. Grains are presently being discharged usinggrabs and ship's gear. The project would provide for 8 new l00 ton per hoursuction dischargers and a 1,000 ton per hour conveyor. A transtainer and 4container chassis would be procured for use in the container yard. Othercargo bindling equipment would be rehabilitated and/or replaced as justifiedduring the course of the project.

(ii) At Manzanillo

9. Tractors and trailers and 2,100-ton per hour suction dischargerswould be procured for use in handling bulk grain discharge and temporarystorage in the hemispherical storage structures. A container handlingtoplifter would be procured for use in the container yard. Existing break-bulk general cargo handling equipment would be rehabilitated and/or replacedas justified during the course of the project.

- 75 -

ANNEX 9Page 4

(iii) At Tampico

10. Existing cargo handling equipment would be rehabilitated and/orreplaced as justified during the course of the project. A 3,500 hp tugboatwould be procured to assist in vessel navigation and berthing/deberthing bothat Tampico and Altamira. This is to replace underpowered privately ownedtugboats.

(iv) At Altamira

11. The present container terminal at Altamira has one containerhandling crane which was relocated from another Mexican port. The projectwould provide a second container handling crane to supplement the existingcrane. Two transtainers, a mobile crane, 4 chassis, 3 wheeled loaders and 6forklift trucks would be procured under the project.

(v) At Veracruz

12. In addition to justified rehabilitation of existing cargo handlingequipment, the project would provide for procurement of a new containerhandling crane, 2 transtainers, 6 yard tractors, 15 chassis and 4 forklifttucks. The container handling crane would be erected on the existingcontainer berth. It is intended that the two container cranes would berelocated If, in the longer term, new container berthe were constructed inthe south west portion of the harbour now used for cabotage movements. Inthe meantime mooring dolphins would be provided to effectively extend thecontainer berth by 30 m. Faster grain discharge would be effected byprovision of an additional grain discharger and conveyor system.

(vi) SEDRA Dredging Plant

13. The project includes rehabilitation of dredges, replenishment ofspare parts stocks, procurement of small tugboats, water and fuel barges,survey and measurement systems and auxiliary craft. Also included are aNational Dredging Study and studies of the SEDRA fleet and organization and aprogram for implementation of the recommendations (Annex 2).

- 76 -ANNEX 10Page 1

MEXICO

PORTS REBABILfleATION PROJECT

Action Program for Project ExecutionCompletionof Activity

A. Civil Works

1. Prepare specifications and other tender documents inaccordance with criteria and standards agreed with theBank. Ai required, submit documents lncluding draftcontracts to the Bank for review, comments andapproval. September 1988

2. Advertise and lnitiate bidding process for tender orgroup of tenders for International Competitive Bidding(ICB) or Local Competitive Bidding (LCB), asappropriate, in accordance with the Bank's Guidelinesfor Procurement. Receive and evaluate bids and, asappropriate, send copies of evaluation report to theBank for its review and statement of no objection. December 1988

3. Where applicable, forward copies of the signed contractand all other relevant contract documentation to theBank for its records. March 1989

4. Submit quarterly and other reports to the Bank, inaccordance with agreed arrangements. September 1988

B. Acquisition and Rehabilitation of Equipment 1/

5. Update equipment inventory and requirements andprepare and/or update the rolling four-yeartime-bound programs and the detailed programs for thecurrent and coming years for scrapping of overage orunusable equipment, acquisition of new equipment andspare parts, and rehabilitation and/or repair ofexisting sidelined equipment, taking availablebudgetary resources into account. September 19882/

6. Obtain approval from Bank. December 1988

1/ Activities shown are on an annual cycle, with dates shown here only forthe first twelve months. Dates and timing for subsequent twelve monthperiods will be similar.

/ Final reports have been received for each of the four ports.

77 - ~~ANNEX 10

Page 2

Completionof Activity

7. Prepare specifications and other tender documents in Iaccordance with criteria and standards agreed with theBank, and submit to Bank for review, comments andapproval. September 1988

8. Advertise and initiate bidding process for tender orgroup of tenders for International Competitive Bidding(ICB) in accordance with the Bank's Guidelines forProcurement, for those project components for whichICB is to be used (new equipment and spare parts).For rehabilitation or repair of existing equipment,carry out the procurement process in the manner andunder the conditions agreed with the Bank. Whereapplicable, receive and evaluate bids, make awards andsign contracts in the manner agreed with the Bank. December 1988

9. Where applicable, forward copies of the signed contractand all other relevant contract documentation to theBank for its records. Submit quarterly and otherreports to the Bank, in accordance with the agreedarrangements. September 1988

C. Dredge Rehabilitation

10. Prepare specifications and other tender documents inaccordance with criteria and standards agreed with theBank. As required, submit documents including draftcontracts to the Bank for review, comments andapproval. October 1988

11. Advertise and initiate bidding process for tender orgroup of tenders for International Competitive Bidding(ICB) or Local Competitive Bidding (LCB), asappropriate, in accordance with the Bank's Guidelinesfor Procurement. Receive and evaluate bids and, asappropriate, send copies of evaluation report to theBank for its review and statement of no objection. January 1989

12. Make awards, sign contracts and, where applicable,forward copies of the signed contracts and all otherrelevant documentation to the Bank for Its records. April 1, 1989

13. Prepare final terms of reference for the studies to befinanced under this project and submit to the Bank forreview and approval. September 1988

- 78 -

ANNEX 10Page 3

14. Prepare short list and obtain Bank's concurrence, December 1988 forselect consultants, 3/ submit draft contracts to the Management andBank for review and approval, and appont and sign Dredgingcontracts after receiving Bank concurrence. Provide Studies; Marchcopy of signed contract to the Bank for record 1989 for Riopurposea. Panuco Study.

15. Proceed with studies, submitting reports to March 1989 forthe Bank in accordance with agreed arrangements. Management Study

June 1989 for RioPanucoEnvironmentalDredging Studies.

D. Assistance to SERPOVER and SPTA

16. As 13. before.December 1988

17. As 14. above.March 1989

18. As 15. above.September 1989

/ Appointment of consultants is preceded by a standard series of steps, asfollows:

Activity Days

1. Invite and receive proposals 452. Evaluate proposals 303. Obtain Bank concurrence 304. Notify, invite and negotiate with consultants 155. Prepare draft final contract 156. Obtain Bank approval 307. Sign contract and issue notice to proceed 158. Consultant's mobilization 15

Total Elapsed Time 195 days412

- 79 -

ANNEX 10Appendix 1

MEXICO

PORTS REHABILITATION PROJECT

Schedule

1988 1989 1990 1991 1992 1993 1994 1995

ITEM

GuaymasCivil WorksEquipment Rehabilitation -

Procurement

ManzanilloCivil WorksEquipment Rehabilitation/Procurement

Tampico/AltamiraCivil WorksEquipment Rehabilitation/Procurement

VeracruzCivil worksEquipment Rehabilitation/Procurement

DredgesHopper Dredge Rehab. -

Pipeline Dredge Rehab. -

Equipment and Spare PartsProcurement

Project SupervisionSupervisionStudies

Notes:

1) Civil Works will be executed by SCT through DGOM

2) Ports Equipment procurement will be done by each port, ESPS forManzanillo-Guaymas, SPTA for Tampico and by SCT for Veracrus.

3) SEDRA - Dredges and related equipment wlll be procured by SEDRA.

- 80 -ANNEX 11Page 1

MEXICO

PORTS REHABILITATION PROJECT

Project Execution and Monitoring

1. Execution of the project would be the responsibility of the SCTProject Coordinator who would carry out his responsibilities through theindividual ESPs, CNCP, and SEDRA, each of which would have an action andperformance plan agreed with the Bank, following the steps and time frame inthe agreed Action Plan (Annexes 6 and 10), and complying with the physicaltargets for the project and the program given in the paragraphs below. Theseprograms and their execution would be reviewed annually with the Bank.Particular attention will be paid to the compliance with annual targets forroutine and periodic maintenance, equipment availability, and dredgeproduction that are to be expected with time.

2. SEDRA will submit to the Bank no later than November 1989 thefindings and recommendations of the National Dredging Study, the SEDRAManagement and Organizational Study, a report on the implementation of therecently introduced new manning schedule, and a report on dredge performanceincluding average daily production for the individual dredges. Theproduetion should be confirmed by the pre- and post-dredging surveys madewith the computerized survey systems to be acquired under the project.

3. The individual agencies wvould prepare, advertise, tender, and awardcontracts, subject to review by the Bank. The time allowed for preparationof bids would be at least 60 days for contracts having an estimated value ofUS$5.0 million enuivalent, or more and not less than 45 days for smallercontracts for International Competitive Bidding (ICB) and not less than 30days for Local Competitive Bidding (LCB). In addition, the followingprocedures would be followed:

a. Foreign contractors would not be required to register (prequalify),prior to being permitted to acquire the documents needed to preparea bid, but instead would be allowed to register on a post factobasis after an award determination is made. Documents would beavailable for procurement through the business day prior to the dayof receipt of bids. In keeping with SCT's usual practice, thequalifications of the winning bidder will be carefully reviewed andchecked to ensure that it is capable of performing the work;

b. Advertisements in local newspapers of wide circulation would beplaced for a minimum of three days, announcing bid opportunities,and the minimum bid preparation time stipulated above shall beallowed. Field visits would be at the bidder's discretion;

c. Arrangements would be made to allocate sufficient funds to completethe entire contract, even if the contract period exceeds one year.SCr would seek appropriate budgetary authority from SPP toaccomplish this purpose. If the contract period exceeds one year,

- 81 -ANNEX 11Page 2

appropriate and satisfactory arrangements would be specified in thecontract to provide a method for calculating equitable priceadjustments to account for inflation; and

d. The contract award would be made to the lowest evaluated bidder,except in the most unusual of circumstances. During the course ofpost-qualification, the low bidder would not be disqualified unlessvery specific grounds are found for such action; the bidder isprovided an opportunity to explain or refute the cause(s) for suchaction; and the Bank's concurrence is received.

4. Copies of each contract, together with the tender evaluation reportgiving the award decision and its rationale, would be provided to the Bank bySCT. Vor civil works contracts having a value of less than US$200,000equivalent, and contracts for goods having a value of less than US$50,000equivalent for which disbursements are made on the basis of Statements ofExpenditure, the contracts would not be sent to the Bank for review, butinstead would be kept on file by SCT in the office of the ProjectCoordinator, for inspection and review by Bank staff during supervisionmissions. In cases where reviews would show that agreed tender or awardprocedures had not been followed, the Bank would have the right to reject thespecific contract and to cancel the corresponding amount from the Loan.

5. In order to permit satisfactory close monitoring and supervision ofproject execution and progress by SCT and the Bank, comprehensive quarterlyreports covering all aspects of the project would be prepared by the ProjectCoordinator and submitted to the Bank. These quarterly reports would provideInformation on the compliance with agreed project implementation targets.In addition, detailed cost breakdowns in US$ equivalents would be providedfor costs incurred in implementing the project up to that point, forestimates of additional costs likely to be incurred in future, along with thereasons and/or justifications therefor and an estimate of the anticipatedtotal costs at the time of project completion. The disbursement schedulealso would be reviewed, and recommendations made for modifications of theprograms and, as needed, of the reporting requirements.

6. The reports would contain a narrative summary relating to each ofthe project's components, as well as to the project as a whole, providing ashort resume of the project's history up to the date of the report, whichwould give in detail the events of the previous quarter. The report wouldalso cover problems encountered in implementing each of the project'scomponents for the quarter under review, solutions proposed, and resultsanticipated. The narrative section would provide advance information, to theextent it is available, on problems likely to be encountered during theensuing months, together with actions to be taken to mitigate or avoid theanticipated difficulties.

7. Data (possibly in chart form) will be presented, giving theabsolute quantities and percentage completion of each project component (interms of financial expenditure, physical accomplishment, and elapsed time,separately), along with an estimate of the anticipated time of completion ofeach project component, and of the overall project, related to the periodsoriginally estimated.

- 82 -

ANNEX 11Page 3

Targets

8. As a means of providing easily monitored parameters, to aid indetermining whether project progress is satisfactory, the Government and theBank will reach agreement during negotiations on a series of targets to bemet, in order to help the expeditious and satisfactory execution of theProject and of SCT's program for improvement of ports infrastructure andequipment maintenance, and maintenance and production of SEDRA's dredges.Included in its agreed program would be a commitment by the Government tosimplify and expedite the procedures for scrapping of obsolete equipment.

9. Records of accomplishments compared to the agreed goals would bekept by the Project Coordinator, and annual reports, showing the comparisonwould be provided to the Bank at the time of the annual consultations onproject progress. These reports would also provide reasons for anyshortfalls experienced and identify difficulties and problems preventingImproved performance, together with proposed and intended actions to be takento remove obstacles and increase accomplishments. An updated detailed ActionExecuting Program (Annex 12) will be presented by the Project Coordinator atthe time of the annual consultation, for project execution during the comingyear, which will address any difficulties or problems encountered oranticipated in order to increase or maintain the rate of project progress.

Operational Targets

10. In addition to the targets above, the Government and the Bank wouldreach agreement during negotiations on a set of project monitoringPerformance Indicators, which would provide data and information on thestatus and quality of the ESPs and SEDRAs maintenance operations, providingbenchmarks against which improvement in equipment maintenance operations andcapability can be measured. A list of these monitoring indicators is givenIn the table below:

Performance Indicators

PresentItem Unit Level Standard

Percent of Permanently SidelinedEquipment Fleet Scrapped per Year Z 5 25

Availability of Equipment Fleet X (1/) 50 80Utilization of Available Fleet % (2/) 50 70

1/ Taking the 100% level as 220 working days per year, for a total of 1320working hours available. Present availability is about 50%.

2/ Using a total of six hours availability per working day. Presentutilization is about 60%.

- 83 -

ANNEX 11Page 4

II. At the time of the annual consultative meeting on project progress,the Project Coordinator would provide the Bank with a set of comparativedata, showing the actual values of the monitoring indicators as they relateto the year just past, compared to the standard values listed, giving reasonsfor any shortfalls or differences, together with an Action Plan listingspecific actions which would be taken to rectify any discrepancy.

12. During these meetings, the Government and the Bank would discussand reach pertinent agreements on the following, among other things:

- Financial summary showing the status of implementation ofthe project;

- Compliance with agreed targets for works and procurementfinanced under the Loan;

- Economic evaluation of works to be included in the annualprogram for the coming year;

- Use and deployment of consulting services for training andother purposes;

- Review of audit reports, data, and documents kept on file bythe Project Coordinator, and consolidation of disbursementsagainst actual expenditures;

- Updated targets and objectives of the project;

- Proposed maintenance budget for the comnig year;

- Detailed maintenance program for the coming year;

- Specific maintenance targets for the coming year;

- Review of the operation of the Special Account and of thedisbursement process, with particular focus on the system usingStatements of Expenditure; and

Proposed disbursement schedule for the balance of the projectperiod.

March 1987

- 84 -ANNEX 12

MEXICO

PORTS REHABILITATION PROJECT

Documents in Project File

1, Integracion y Evaluacion de Proyectoo para el Cradito de Rehabilltaciony Modernizacion Portuaria, Felipe Ochoa y Asociados, S.C., Octubre 1986.

2. Manual Metodologico para el Analisis Beneficio/Costo de Proyectoa delSistema Portuario Mexicano, SCT, Agosto 1986.

3. Proyect6 de Rehabilitacion de la Flota de SEDRA, Felipe Ochoa yAsociadoa, S.C., Septiembre 1986.

4. Propuesta de Programa de Capacitacion para los Puertos Guaymea, Sonora,Manzanillo, Colima, Sistema Portuario, Tampico, Tampe., y Veracruz,Ver., DMSP, Octubre 1986.

5. Programs pars Mejorar la Eficiencia Operativa de los Puertos, DOODP,Septlembre 1986.

6. Analisis del Sistema de Ingresos y Egresoo de los Puertos, CNCP, 1984.

7. Sisteme Estadistico Operacional de Indicadores de Rendimiento, SCT,DGODP, 1985.

8. Programa Nactonal de Desarrollo de la Infrastructura Portuaria, SCT,DGOM, 1985.

9. Previsiones de Trafico Maritimo, CNCP, 1984.

10. Manzanillo - Analisis Economico y Financiero, SCT, Octubre 1986.

11. Tampico-Altamira - Analisis Economico y Fianmciero, SCT, Octubre 1986.

12. Guaymas - Anallsis Economico y Financiero, SCT, Octubre 1986.

13. Veracruz - Analysis Economico y Financiero, SCT, Octubre 1986.

14. Financial Projection Tables of ESP's and Superintendencies, R. Laver,December, 1986.

15. Terus of Reference - National Dredging Study.

16. Terms of Reference Relocation of Port-Related Industries from Tampico(Rio Panuco) to Altamira.

17. Terms of Reference Environmental Impact Study.

18. SEDRA Action Plan.

19. M$XICO - Ports Rehabilitation Project - Economic Evaluation

20. MEXICO - Ports Rehabilitation Project - Financial Analysis of ProjectPorts, April 1987.

PORT REHABIUTAnON PROJEOTOrganIMion of Sewadrk$ ow Conmmnkgtlom and Tram9oet MC

De INp' aDfDet

I----L ,W 'mc:'-u I

DI _W

I rw<m- 1-to+-IrI-1 - -4-§

. DO l 4DO@ _bw be P SOb l

4~~~~~~D Dv _ O|eO_| O |

Igu*~~+ ww | L110 r,e. DC16 b_ O °

bOb i 00b | Obtt DC bb1 -1 s uV_sOwO

DO .

:.°-* --

AI g* I

Do*~~~*

I.. SO bbssi f Gum

a .*sg --

-~ ~~~ -a ~G p*.,- a .i.a r-,- ~

1 * *.~~~~~~~~~~~~~~~~~~~~~~

_________________________5O JP _________

X~~~~~~~~~Org NOILvflhIV3m m

CL 1 L IL r_L [ L r_ L [

g3Jes 4III_Il eIl*_ Iloc[L

M E X I C O I_%. UNJITED STATESN O ST AMOFRD TCE

PORT OF GUAYMAS '\,GuOymas

*' *N MEXICO 4 ' G|l|f*C c ol Meyico

aFbd end Pawed U PACIFIC OCEANA ~~~~~200 MEXICO 2 00

diVy

L~,j j '- -I o ~~

!g~~~~~~~~~~~~~ -. -|G~AA~

S~~~~~~~

_______________________

^ " _ _,eContaiw Yard _sok~~~ 111111 ~ ~ ~ ~ ~ ~~~~~andoWPamd A ; o

.1~~~~~o-J~~~~~~Me

METERS

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Ap-mf

_'io 1101 0

t * _ .r- UNITED STATES OF AMERICA

M E X I C 3

PORT OF MANZANILLO

MEXICO

i -20@ cm° j^20c

MonzanhIl S1 EUZ

-07>.~~~~~~~~~~~~~~- T .

GUAEMALA

- o

"PEMU ~ ~ ~ ~ -- - A~ EaLT

METERSApproxiw,ote

A~~~~~~~~~~~~~~~~~~~~~~~~~~~- ; - 27 7_d ___d

4 > < 0 ~~ _ d ~~ w _ d. _ i

At ,0 / / METALS AND MINERALS TERMINAL 1'00UNITED STATES OF AMERICA

'~MEXICO Gulf 0f MX.CO.

Wharww to be Cofled Pdf OE / - ~~~~~~~~~~~~~~~ ~ ~~~~~~~~~~~PAC,FIC OCEAN

- . ~~~~~~~~~~~ ~~~~~~~~~~~~~~~~20 t MEX100!

_,__ _ ~~~~~~~~~Panuco River ¢~. - BLZ

B ' ) COMMERCIAL PORT

. _ ~~~~~~~~~~Pcnuco River

a_bV**#__t I V . 'dI1

Put~~~~~blo Vu.jo & Putur.~~~~~~~~~TAIR INDUSTRIAL PORT

TAMPICO- 7< rJLjr- M E X I C OPORTS OF TAMPICO AND ALTAMIRA

- \ \ /ievb / . PROJECTsGulf of Ao exico _ROAD TO BE M VPROVED

>B _ _ _ _ _ _ _ _ / - R A RROAD TO BE EXTENDED

0 1 2 3 4 5 WHARF CONSTRUCTION AND DREDGING C

_ ~~~~~~~~~~~~F- ~~~~~~~~~~~KILOMIETERS N --- .-. _ ,,oximate.

. . -*r-\UNITED STATES OF AMERICA

M E X I C OPORT OF VERACRUZ ;

MEXICO

#.mco ~~~-

GUATEMALA

gD~~~~~1 .. 4..

h-- v_____

/t~~~~~~ - -

0 1020304050 W,.d110

:t~~~~~~~~~~~ o C

w / ~~~~~~~~~~~METERS , d_ _0 Approxcimot. 4fl. d- -- ~-- d_' O~~

IERD 2035il

UNITED STATES OF AMERICA M E X I C O

Xa 13 +> ~~~~~~~~~~~TRANSPORTATION NETWORK'Bt gAJA i \\w\'>- Jx-C AND PRINCIPLE PORT LOCATIONS

t A1IMORNj, ' - ) r~ \ .t No~ ~~~I

1 i;; 0 W (<;¢ Xa X 2- 9e UA5 - rHo.rresitio CdAc~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~Project ports

< o A H V I I A A # , Major bindutrial and comerciMl polrts

National capita! 'I> ". ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~State Capitosk

BAJA C CA NUl A)I 0 Principal citeseor tew,+FordatL * - Divitled highways

CALI1RNA N LIR~ ------ Salocied Minus roacds

RollroacdoRivers

* Principal airpwrtsStale heusndariRsInternat hioal rwem:s

A i c

For detati we IBRI 20361

''A ')r /-l\~ Ae!d

FItES O 1o0 Zeo 34§ 2 G~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~UCATEALA

b0 1,,~~~~~ ,,_,,,;-2, -,,,, ~ ~ ~ ~ ~ ~ Gadal1=00 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~e.eh nw _R A~:.S,S Se, o boddrb 10 - Pr _1nw0 C _ }/$o cam

For detail see IBRD 20-360 dtai se IRO2032

,o C. CAMPECrE

KILOMETERS 0 )OD 20 300 400 Al ' + 'A1

toor ~~~~~~~~~~~~~~HONDURASAPRIL 1987