Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 4212-TA,

STAFF APPRAISAL REPORT

TANZANIA

PORT REHABILITATION PROJECT

November 8, 1984

Eastern Africa Regional Office

This docuiment has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALEN1S

Currency Unit = lanzaniia Shillirng

lSh 1.0 = US$0.06

I Sh 17.0 = US$1.00

FISCAL YEAR 1/

July 1 to June 30

WEIGHTS AND MEASURES

1 meter (m) = 3.2808 feet (ft)1 kilometer (km3) 0.6214 miles (ml)1 kilogram (kg)' 2.2046 pounds (lbs)1 metric ton (tonne) 1.023 short tons

GLOSSARY OF ABBREVIA1IONS

AMI Agence Maritime InterrnationialAIC = Air lanzania CorporationBEACON British East Africa Contairier ConsortiumDANIDA = Danish International Development AgencyEAC = East African CommuLityEAHC East Africarn Harbours CorporationEEC European) Economic CommiunityEDF = Economic Development FundFINNIDA Finnish Irnterriational Development AgencyKOJ Kurasini Oil JettyMCW = Ministry of Commurnicatiorns and WorksMOCI Ministry of Communications and IransportMOW Ministry of WorksMPEA = Ministry of Planninrg arid Economic AffairsNMC = National Milling CorporationNORAD = Norwegian Agency for DevelopmentNTC National Transport CorporationODA Overseas Development Administration (lJ.K)RSA = Republic of South AfricaSWI = Ship Waitirig limeIHA = lanzaniia Harbours AuthorityIRC = lanzaria Railways CorporationZBR = Zaire, Burundi arid Rwanda

1/ Years givern in this report refer to the twelve months endinig in the yearmentiorned.

FOR OFFICIAL USE ONLY

UNITED REPUBLIC OF TANZANIA

PORT REHABILITAIION PROJEC1

lable of Contents

Page No.

I. Ihe Transport Sector .................................... 1

A. Economic Background ................................. 1B. The Transport Sector ................................ 1C. Transport Policy, Planning and Coordination ......... 5D. Summary .......... 7E. Past Bank Group Sector Operations ................... 7

II. The Port Sub-Sector ..................................... 10

lanzania Harbours Authority ............................. 10

A. Organization Management and Staff ................... 10B. Budget Accounts, Audit and Insurance .... ............ 11C. Management Information System (MIS) and

Port Planning ..................................... 12D. Tariffs ............... .............................. 12E. Training . ........................................... 13

The Port of Dar es Salaam ............................... 14

F. General . ............................................. 14G. Port Physical Characteristics ....................... 15H. Port Operations and Maintenance ..................... 16I. Past and Present Traffic ............................ 18J. Technical Assistance ................................ 19

III. The Project ............. 21

A. Background ............ .............................. 21B. Objectives ............ .............................. 21C. Description ........... .............................. 22D. Cost Estimates and Financing Plan ..... .............. 25E. Implementation ...................................... 26F. Environmental Aspects ............................... 27G. Procurement ........... .............................. 28H. Disbursements .......... ............................. 29

This report has been prepared by Messrs. J. Lethbridge (Sr. Port Engineer),M. C. Dick (Sr. Economist) and A. A. Krishnarn (Financial Analyst) on thebasis of their findings during an appraisal mission in November/December1981, and subsequent post appraisal missions.

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Table of Conternts (Continued)

Page No.

IV. Economic Analysis ........................................ 35

A. Future Traffic ................................. 35B. Project Benefits ................................ 38C. Sensitivity Analysis . . .42D. Project Risks... 43

V. Financial Evaluation .. .. 49

A. General .49B. Past Performance .49C. Financial Forecasts .51D. Projected Operating Statements .52E. Projected Cash Flow .52F. Projected Balance Sheet .54

VI. Agreements Reached and Recommendations .61-62

ANNEXES1 Selected Documents and Data Available

in Project Files . .63-642 Engineering Aspects .. 65-673 Channel Improvements .. 68-694 Bank Projects in Transport Sector .705 Ports Iraining .. 71-766 Technical Assistance and Training

Detailed Requirement .. 77-867 Progress Rpoorting System . .87-90

CHARTS1 THA Organization .................... . ............. 912 Port Organization ................. .............. . 923 Implementation Schedule .... 93

MAPS1 Existing and Proposed Developments2 Project Locations

TANZANIA

PORT REHABILITATION PROJECT

Credit and Project Summary

Borrower: United Republic of Tanzania.

Beneficiary: Tanzania Harbours Authority (THA).

Amount: SDR 26.2 million (US$27 million equivalent).

Terms: Standard.

Re-Lending Terms: Total credit will be on lent to THA for 20 yearsincluding 5 years of grace at 11% per annum. THA tobear foreign exchange risk.

Co-financing: The United Republic of Tanzania is arranging co-financing as follows: grants from the Governments ofDenmark-DANIDA (US$7.9 million equivalent); Finland-FINNIDA (US$6.8 million equivalent); Italy (US$3.8million equivalent); Netherlands (US$10.3 millionequivalent); Norway-NORAD (US$2.8 million equiva-lent); and United Kingdom-ODA (US$0.3 million equiva-lent).

Project Objectives The proposed project is designed to provide for theand Description: rehabilitation and modernization of the Port of Dar

es Salaam, Tanzania's major port which also serves asan important regional port for several neighboringcountries (Burundi, Malawi, Rwanda, Zaire, Zambia).The proposed project would provide special containerhandling facilities and equipment, replace somedeteriorated general cargo equipment, modernize grainhandling facilities, rehabilitate lighterage facili-ties and the petroleum jetty, repave sections ofberths, and provide for a review of additionalrehabilitation requirements, technical assistance andtraining, and consultancy services.

The container and grain facilities would lower trans-port costs for Tanzania and land-locked neighbors,while the jetty, lighterage and paving investmentsare necessary to restore facilities to acceptablecondition. Technical assistance and training wouldimprove the Tanzania Harbours Authority's ability totrain its personnel, and improve its operational andmaintenance capability.

Risks: Traffic could fail to increase as forecast; however,container traffic is likely to continue to grow

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rapidly and grain and petroleum imports are unlikelyto decrease significantly. Institutional benefitsmay materialize only slowly, but training andtechnical assistance should reduce this risk. Nomajor physical risks are anticipated in implementingthe proposed project beyond those that are normallyexpected in the construction of a project of thistype and for which provision has been made by use ofconsultants.

Estimated Project Costs: Local Foreign Total--------US$ millions-----

Components:Advance Civil Works 3.0 1.7 4.7Main Project Civil Works 11.9 24.4 36.3Main Project Equipment 0.6 17.6 18.2Technical Assistance/Training 0.9 3.1 4.0Consultative Services a/ 0.7 2.5 3.2

Base Cost (mid-1984 prices) 17.1 49.3 66.4

Contingencies:Physical 1.9 2.1 4.0Price 13.0 7.6 20.6

Total Project Cost b/ 32.0 59.0 91.0

Financing Plan: Local Foreign Total------…US$ millions------

Sources:IDA - 27.0 27.0Co-financiers - 32.0 32.0THA 32.0 - 32.0

Total Project Financing 32.0 59.0 91.0

a/ Includes refinancing of a US$950,000 PPF advance.

b/ Identifiable taxes and duties amount to US$9.4 million equivalent andthe total project cost, net of taxes, is about US$81.6 millionequivalent.

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Estimated Disbursements: ---------------US$ millions…----------

IDA FY 1985 1986 1987 1988 1989 1990

Annual 1.4 8.6 8.8 6.9 1.0 0.3

Cumulative 1.4 10.0 18.8 25.7 26.7 27.0

Economic Rate of Return: About 33%.

Map: IBRD 1674R and 1675R.

I. IHE TRANSPORI SECIOR

A. Economic Background

1.01 Tanzania has a large territory (945,000 km2) with a widelydispersed population of 19.8 million and a low population density(20 persons per square kilometer). Population growth is estimated at 3.4%per annum with both fertility and mortality at relatively high levels.About 42%O of the total land area is devoted to agriculture. More than 80°oof the population lives in rural areas and is dependent directly orindirectly on agriculture. The agricultural sector accounts for over 45%of GNP, 90%O of employment and roughly 85% of total foreign exchangeearnings. The industrial sector is still small, contributing about 13%oo ofGDP. The large government and service sector produces about 30%O of GDP.Exports continue to be dominated by the traditional primary products whichinclude coffee, cotton, cashew nuts, sisal, tea and tobacco.

B. The Iransport Sector

1.02 Roads are the predominant transport mode, especially for domestictraffic. There are about 50,000 km of roads of which about 2,500 km arepaved. Ihe rail network conlsists of two systems, the lanzania RailwaysCorporation (IRC) operating about 2,640 km of track and the Tanzania ZambiaRailway Authority (lAZARA)--jointly owned by lanzania and Zambia with970 km of track on Tanzanian territory. There are three main oceanports--Dar es Salaam, langa and Mtwara, operated by the parastatal TanzanliaHarbours Authority (IHA). The port of Zanzibar operates independently.International airports are located at Dar es Salaam and Kilimanjaro which,together with more than 20 other small domestic airports, serve the airtransport system. An oil pipeline carrying oil between Dar es Salaam andZambia completes the transport infrastructure. The two maindomestic/interrnational land transport arteries are the TRC rail linesconnecting Dar es Salaam to Kigoma on Lake Tanganyika and Mwanza on LakeVictoria while the TAZARA rail line and Tanzania Zambia (TANZAM) highwaylinks Dar es Salaam and Zambia.

1.03 The total tonnage transported in the country is estimated to beabout 4.6 million tons. About 40%O of this is handled by TRC and TAZARA andthe remaining 60% by road. Railway traffic has now stabilized aftersteadily declining due to motive power difficulties of TRC and TAZARA. Theheaviest flow of passenger and commodity traffic is in the east andnortheasterrn parts of the country and on the international corridor toZambia. Parts of the country are not adequately integrated into andserved by the transport facilities, leaving large areas in the western andsouthern parts of the country virtually cut off from transport services.International transit traffic is sizeable--about 1.3 million tons or 28%o oftotal commodity flow in the country. Most of this traffic is Zambian anduses the IAZARA railway and the IANZAM highway. lraffic to Zaire, Burundiand Rwanda (ZBR) uses the IRC.

1.04 Ihe transport sector's potential capacity is appreciably greaterthan that presently realised. IRC, IAZARA and the trucking sector all seem

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to suffer from the same deficiencies: weak management (resulting partlyfrom the policy framework), shortages of qualified staff at most levels,lack of adequate maintenance procedures and shortages of spare parts whichin turn results from a shortage of foreign exchange.

Ports

1.05 Ihe main physical characteristics af the port system arediscussed in Chapter 2. However, it is important to emphasize the key roleplayed in the transport sector by the port of Dar es Salaam. As indicatedin para 1.02, Dar es Salaam is the focal point for the two main transportarteries which not only serve Tanzanria but also Zambia and ZBR. Modernshipping development, particularly corntainerisation, favours concerntrationon a limited number of ports, and Dar es Salaam's dominant position inlanzania is likely to be reinforced. Its international role, particularlyin serving Zambia and thus generating foreign exchange earnintgs is,however, sensitive to the quality of service provided. The transformationfrom a traditional general cargo port to a modern, medium sized, efficientcontainer port cannot be achieved without significant investment. Withoutthis investment, which is covered by the proposed project, the fullbenefits from investment in other transport sub-sectors, notably the tworailway systems, will not be fully realized. Thus the port project is anessential complement to the other measures being undertaken to revitalisethe transport sector and, through that, facilitate the flow of goods withinand through the country. The thrust of the project, with emphasis firmlyplaced on rehabilitation and on increased efficierncy in the use of existingfacilities, is fully in line with Bank Group strategy towards Tanzania.

Roads

1.06 Of the total road network of 50,000 km, 9,500 km are designatedas primary, about 7,300 km secondary and the rest rural roads and tracks.Of the 50,000 km, 41,000 km were earth tracks and only about 2,500 km werebituminous paved by end of 1982. The paved portion of the main trunksystem consists primarily of the road from Dar es Salaam north to Arushaand the TANZAM highway from Dar es Salaam west to the Zambian border. Therest of the road system consists of low standard primary, secondary andfeeder roads, many of which become impassable during the rainy season.

1.07 Average daily traffic on the roads is relatively light, under 200vehicles per day on most roads. The average road density is 2.8 km of roadper 1,000 inhabitants. Regional road density is not always in lirie withthe population density and the productive needs of the local community.

1.08 Road maintenance has been inadequate. This has led to a gradualdeterioration of trunk, secondary arid rural roads. This, in turn, hasadversely affected the quantity and quality of agricultural production andexports. Under the Fourth Highway Project (507-IA), and particularly theFifth Highway Project (876-TA), some improvement in the organizatiorl andexecution of maintenance operations have been effected. However, muchremains to be done and the Assocation is pursuing this with the Governmentwithin the framework of preparation of the proposed Roads RehabilitationProject.

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1 .09 Responsibility for maintenance of primary and secondary roadslies with the Ministry of Communications and Works (MCW) while mainterianceof tertiary and rural roads is undertaken by the country's twenty regionalauthorities. Inadequate planning and executive capability in MCW, arisingfrom (i) shortage of experienced and qualified staff and (ii) insufficienttransport, equipment and particularly spares, have been the chief reaso..for the poor road condition. Similar problems affect the regionaladministrations in charge of rural roads. Attention has been drawn to thegeneral problem of inadequate sectoral allocation of funds in the course ofBank Group discussions on the Government's structural adjustment programwhich was formulated in 1982 as a result of an international task force'srecommendations.

1.10 Road transportation is further hindered by a shortage ofeffective capacity in the trucking industry. The total estimated roadtransport demand is about 2.6 million tons or 1 billion ton km. Althoughthere are no reliable statistics on effective capacity, this is believed tobe declinirig due to shortages of spare parts and tires, a result of foreignexchange shortages. Even though the private sector still handles two-thirds of the road freight transport in the country, priority in the allo-cation of foreign exchange, and thus the ability to purchase spare parts,has been given to the 10 regional parastatal and state-owned crop truckingcompanies. Rehabilitation of the latter's equipment is presently beingassisted under an EEC two-year program. Governmernt attentiorn has beendrawn to this imbalanced treatment in the Bank Group's Transport SectorMemorandum issued in November 1984.

Railways

Tanzania Railways Corporation (IRC)

1.11 The TRC is a parastatal organization under the jurisdiction ofMCW. With a total length of 2,640 km and 1,200 km maximum haul, IRC linksthree important port areas, Dar es Salaam and langa on the Indian ocean,the Lake Victoria ports (Mwanza and Musoma) and Kigoma on Lake langanyika.The IRC network serves the regions which produce about two-thirds of allexported agricultural products, 80%° of all marketed cereal and food grainsand contain almost all of the cereal milling and processing facilities formajor exportable agricultural products. It also serves the transit trafficto and from ZBR. However, inadequate investment arid shortage of skilledpersonnel have resulted in poor utilization. In 1982 TRC carried about 1.1million tons, only 70%O of the peak year, 1972, when it was part of the EastAfrican Community Railway System. Passenger traffic declined over the sameperiod from 4.2 million to 3.3 million. IRC has incurred net financiallosses since its inception as an indeperndent carrier in 1977.

1.12 Inexperienced management and a shortage of skilled personnrel,especially engineers, mechanics and accountants (in part caused byexcessive turnover), have been critical factors in the poor plannirng aridoperations of IRC though the recent establishment of a Corporate Planningoffice is a promising step. While IRC has adequate physical capacity tocarry current and near future demand, capacity utilization has been poor.This has been due mainly to (i) long wagon delays experienced at the lake

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ports of Mwanza and Kigoma due to inadequate interface facilities at theseports and at the port of Dar es Salaam; (ii) an inadequate and obsoletecommunication and signalling system which hinders effective trafficmanagement and wagon control (iii) lack of adequate maintenance facilitiesand equipment, especially for diesel locomotives. Proposals to addressthese problems, based on the recommendatiorns in a Canadian InternationalDevelopment Agency (CIDA) financed consultant report completed in mid-1981were considered at a technical co-doner meeting held in November 1983 andled to a formal doners conference in May 1984 which failed to elicit muchsupport for IRC's ambitious investment program.

Tanzania Zambia Railway Authority

1.13 Construction of a direct rail link between Zambia and Dar esSalaam resulted from the export difficulties Zambia experienced whenSouthern Rhodesia unilaterally declared independence in 1965. In September1967, the Government of the People's Republic of China agreed to providethe Governments of Tanzania and Zambia with physical and financialassistance to construct a railway between Tanzania and Zambia. Construc-tion began in October 1971 and TAZARA became fully operational in August1976.

1.14 TAZARA has been unable to handle consistently the traffic onoffer due to inadequate locomotive capacity. Locomotive availability hasbeen low due mainly to poor maintenance and the inherent unsuitability ofthe existing locomn*`ves for the mountainous central section of the TAZARAroute. An aid agreemernt with the Federal Republic of Germany (FRG)provides for financing (i) the re-engineering of 16 existing locomotiveswith compatible German engines and (ii) purchase of 14 more powerful Germanlocomotives. This program is likely to be largely effective by end FY1984and should provide sufficient capacity for the immediate future.Additionally UNDP/UNCTAD have identified other possible investmentrequirements and a Bank-financed study, completed in September 1984,analysed operational and managerial weaknesses, which have also besetTAZARA, and propose remedies. The Bank expects to assist in addressingthese issues. Although the uncertain financial situation has been aproblem, recent meetings between Heads of State is believed to have placedemphasis on finding a solution.

1.15 Wagon utilization is poor because of long wagon delays in thesystem. As a result, effective capacity has fallen short of demand andTAZARA has had to meet this shortfall by using Zambian railway wagons.While the introduction of additional locomotives is likely to reduce wagonturnaround time, IAZARA will experience operational problems so long as itis unable to overcome its shortage of trained and experienced staff. Ihishas recently been recognized in an agreement with the Government of Chinawhereby 250 experts have recently returned to assist in operations. Thelikely duration of their stay is not known. There is moreover a need toconvert at least a quarter of the TAZARA wagons to make them suitable forcarrying containerized traffic. Containerization is already important onthe TAZARA route and this is likely to increase over the next five years.Though none of the TAZARA wagons were built especially for containers, asufficient number of these can be easily adapted.

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Civil Aviation

1.16 Due to the poor roads, which are costly to build and maintain,and the substantial distances between major population centers, airtransport has the potential of becoming an impcrtant means of transport.At present there is a lack of effective policy and direction as to the roleof air transport in the overall transport system. The Air lanzaniaCorporation (ATC), established in February 1977 after the dissolution ofthe EAC, is under the jurisdiction of MCW. It is the national Tanzanianairline and provides both domestic arid international services. It operates2 Boeing 737's, 7 Fokker Friendships and 4 Iwin Otters; ATC's scheduleincludes about 19 domestic and 12 to 14 regional/internationaldestinations.

1.17 ATC has not operated profitably since it was established and hashad to rely on extensive government subsidies since 1979. Prolongedreliance on costly foreign technical assistance for aircraft maintenance,aircraft overhaul overseas and the lack of sufficient funds for procurementof spares and fuel are major constraints, and possible solutions to theseproblems are not obvious in present economic conditiorns.

C. Transport Policy, Planning and Coordination

1.18 While the necessity for an efficient and extensive transportationnetwork for the development of the lanzaniarn economy has long beenrecognized, this concerni has not been reflected in terms of investmentallocation to the transport sector, and Tanzania ranks low in the share ofpublic capital resources allocated to transport. Even though the countryis large, economic activity widely dispersed and transport systemsrelatively underdeveloped, the share of public capital resources proposedfor transportation in the Fourth Five Year Plan (1982-1986) was only 13%o.(The transport sector's share in government budget allocation has averagedabout 26%o in neighbouring countries.) The meager allocation to rural roads(roughly 1%) is also inadequate given the economy's dependence onsmallholder rural agriculture.

1.19 Despite increasing needs, the allocation of scarce foreignexchange to the transport sector has also been declining. Foreign exchangecontributions from external resources to the sector decreased sharply (by40%) in absolute and relative terms in 1981 compared to 1980 and hasremained at a low level. If foreign assistance is excluded, only 4%(Tsh 82 million) of Tanzania's foreign exchange was made available for thetransport sector in 1981, (excluding fuel for transport).

1.20 Government policy of favoring the growth of public sectorundertakings has sometimes failed to appreciate fully the burden such apolicy imposes on scarce resources in terms of experienced managers,trained engineers, qualified accountants and skilled staff. There areindications that this is now recognized and the role of parastatals will bereduced in future.

1.21 Ihe proposed three year structural adjustment program (see para1.09) assignis priority to the improvement of road maintenance particularly

in the rural areas, while new road construction is to be limited to themost needed links between productive rural and urban areas. In railways,high priority is assigned to repair/rehabilitation of existing facilities,while a limited number of locomotives, carriages and freight wagons will beordered. On.the civil aviation side, the Government decided to constructwith bilateral assistance a new airport passenger terminal and otherimprovements at Dar es Salaam, estimated to cost at least US$110 million inforeign exchange, which represents a significant over-investmernt in view ofthe low actual and prospective traffic levels.

1.22 One of the major and generally recognized conistraints in thesector has been inadequate planning and coordination of the transportmodes. Since the disintegration of the EAC, Tarnzania has, except forroads, had to build up new transport sub-sector institutions. With fewexceptions, the ministries and parastatal organizatiorns involved withtransport have done little planning. Besides poor micro-planning of capitalinvestments at the level of parastatal companies, deficiencies haveoccurred in planninig of operations and mainternarice of existing facilities.Until mid-1984, three ministries were directly involved in the managemeritand development of the sector: (i) the highway subsector was under theauthority of Ministry of Works (MOW), (ii) the Ministry of Communicationsand Iransport (MOCI) was responsible in principle for the development ofthe remaining transport modes, while (iii) the Ministry of Planning andEconomic Affairs (MPEA) through its Division of Infrastructure, reviewedtransport investments in development plans. In addition, there arenumerous government-controlled parastatal agerncies, nominally under theauthority of MCW, (e.g) IHA and TRC, involvesd in the sector with their ownactivities and objectives. Due to the lack of proper organization andinadequate staffing, MOCT did not function effectively, particularly incoordinating modal investment and program implementation and neither it,nor other transport associated ministries and parastatals have been able toassemble and analyze data in the comprehensive manner necessary for longterm planning. Since mid-1984, the roads branch of MOW has been absorbedin MOCT to form a new ministry (MCW). This is clearly a desirabledevelopment as it now insures that activity in the two main competing formsof transport--highways/trucking and railways--falls under the scrutiny ofthe same ministry.

1.23 To help address problems in the transport sector, the Goverrimentdecided in 1979 to undertake a study of sectoral planning and coordination,under terms of reference prepared in consultation with the Bank. Ihe studywas completed in 1980 but focussed too narrowly on staff numbers in theMinistries involved, and too little on preparation of a program of action.Accordingly, in early 1981, Bank staff prepared proposals for a three phaseaction program. This covered (i) strengtheninrg of the MOCI Planning Unit(PU) by recruitment of three technical assistants for three years, togetherwith lanzarnian counterparts, (ii) preparation under PU supervision of anatiornal transport study and (iii), based upon this study, the developmentof a five to ten year transport development program.

1.24 During 1981, the Government agreecl on the action program, and anunderstanding was reached with the Bank that the whole exercise (estimatedto cost about US$1.7 million) should be grar-nt financed. Although progress

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in identifying financing sources was slow, in late 1983 Denmark, throughits aid agenicy Danida, agreed to finance technical assistance to reinforcethe PU and prepare the framework for more systematic and coordinateddevelopment of the sector. Three technical assistants, of which one hasalready been identified, will be provided to take up duty early in 1985.

D. Summary

1.25 Ihe main issues that need addressing urgently other than thosedirectly covered by this project are, (i) strengthening of effective sectorplanning, (ii) improvements to the highway network through reconstructionwith improved periodic and routine maintenance as necessary, (iii) rehabil-itation of the trucking industry, particularly private, primarily throughthe provision of spare parts, and (iv) increasing the effective capacityand reducing costs of operation of the railway system.

1.26 The Government has accepted that there is a need to improvesector planning. It is formally committed to pursuing a policy ofencouraging public trucking but is increasingly aware of the need to assistthe private sector arid reduce the role of crop authority trucking activity;and in association with the Bank is making attempts to deal with thehighway maintenance issue. International assistance will be sought toimprove TRC and attempts are being made to improve TAZARA, although asystematic approach to the deeper rooted problems of managerial and staffweaknesses has yet to emerge. Improvements in transport sector planning canbe expected to emerge from the formation of MCW arid the strengtheninlg ofthe planning unit.

E. Past Bank Group Sector Operations

1.27 The general strategy of past Bank Group Sector operations, parti-cularly since the breakup of the East Africa Community in 1977 has been to:

(i) attempt to increase the Government's capability to determinepriorities within and across transport sub-sectors, both incapital investment proposals arid in the distribution of resourcesbetween investmenit and maintenance; and

(ii) while this improvement in expertise was being developed, assistin the identification of priority investments, and support theirexecution through the Association's lending program

1.28 However, project implementation has been hampered by a number offactors. Of particular importance are (i) reluctance of the Government tomake decision based primarily on economic criteria; (ii) lack of experienceof interlocutors at senior management level; (iii) shortages of local fundsresulting, inter alia, from the aforementioned weak economic and Governmentbudgeting situation; and (iv) ineffective technical assistance.

1.29 The Bank group has assisted in finarncing seven projects concernedwith roads and road transport: (a) IDA Credit 48-TA (US$14.0 million) in1964 for construction of various road sections totalling 860 km;supplemented by Credit 115-IA (US$3.0 million) irn 1968; (b) IDA Credit

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142-TA (US$15.5 million) and Bank Loan 586-lA (US$7.0 million) supplementedby a US$7.5 million Swedish Credit in 1969 for highway reconstruction; (c)IDA Credit 265-TA (US$6.5 million) in 1971 for construction of a main roadin the south east and betterment of selected feeder roads; (d) IDA Credit507-lA (US$10.2 million) in 1974 for improving the maintenance of primaryroads and for carrying out a study of the road transport industry; (e) IDACredit 743-IA (US$15.0 million) in 1977 for a trucking industry rehabili-tation and improvement project, arising out of a road transport industrystudy under the previous project; (f) IDA Credit 876-TA (US$20.5 million)in March 1979 for improving the maintenance of trunk roads and forinitiating a pilot program for regional road mainteance; and (g) IDA ExportRehabilitation Credit 1133-TA (US$50.0 million) in 1981 which provided,inter alia, for the procuremerit of spare parts and tires for the trucksowned by parastatal companies transporting export crops. The first fourhighway projects have been completed with limited success in theachievement of project objectives. The Bank Audit Reports which have beencompleted on the first three, note that the physical targets were mostlyachieved in that the civil works components were completed though, in thecase of the third project, rather late and at considerably increased costs,adversely affecting the economic rate of return. Furthermore,institutional development and training of staff were unsuccessful becausethe highway maintenance units which were developed and trained werediscontinued.1/ Attention is now increasingly directed to ensuringcontinuity anfr ongoing training.

1.30 The Bank has also participated in the development of railways inTanzania through the East African Community. In 1955 Loan 110-EA (US$24.0million) was made to the East African High Commission to cover in part, thepreparation of development plans for the railways of the East AfricanRailways and Harbours Adminstration. In 1970, Loan 674-EA (US$42.0million) was approved for the East African Railways to assist in financingright of way improvements, rolling stocks, materials and equipment. Boththese projects were completed satisfactorily. The Bank has participated infinancing three port projects, through the former East African Community(EAC), which included improvements to ports in Tanzania. In September1965, Loan 428-EA (US$24.0 million) was approved to provide assistance infinancing railway and harbor improvements through the then East AfricanRailways and Harbours Administration for use, in part, for cargo handlingequipment, harbor craft and construction of berths 4, 5 and 6 at Dar esSalaam as well as financirng for railway rolling stock. The projectwas satisfactorily completed in 1971. Loan 638-EA (US$35.0 million), wasapproved in July 1969 to provide financial assistance through the then EastAfrican Harbours Corporation (EAHC, established in June 1969 to operate theharbors of the three member countries of the 'East African Community), interalia, for completion of berths 4, 5 and 6 and construction of berths 7 and8 together with a single buoy mooring for tan<ers, a dhow wharf,

1/ Ihere is a detailed account of failures in institutinoal developmewntin the highway sector in Chapter III (c) of Institutional Developmentin Africa: A Review of World Bank Project Experience: Volume IIprepared by Operations Evaluation Department dated May 17, 1984.

improvements to the lighterage berth and cargo handling equipment at Dar esThese projects have been completed and an Audit Report (PPAR) covering bothhas been issued. The PPAR points out that despite costs overruns (30%) andimplementation delays, (2-3 years) the two projects can be consideredsuccessful since the additions to physical capacity provided facilitiesessential to the foreign trade of Kenya and lanzania and the neighboringland-locked countries; however, they had limited effect on productivity,managerial and operational aspects of the ports. The PPAR suggests thatfuture projects should place special emphasis oni productivity, manpowerdevelopment and on the maintenance of facilities and equipment. These arebeing addressed in the proposed project. In addition, an EngineerirngCredit (S-24-lA) for US$2.5 million was approved in February 1980 tofinance preparation of the proposed project, and a Project PreparationFacility advance (US$950,000) was approved in March 1983.

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II. IHE PORI SUB-SECTOR

lanzania Harbours Authority

A. Organization, Management and Staff

2.01 During the existence of the East African Community the ports ofthe member countries were administered by the East African HarboursCorporation (EAHC) with headquarters in Dar es Salaam. With the collapse ofthe community in 1977, the Government of Tanzania established bylegislation (The Tanzania Harbours Authority Act of 1977), a separatestatutory authority, the Tanzaria Harbours Authority (THA), to develop,improve, maintain, operate and regulate the harbours of Tanzania and alsoto construct and operate new ports as and when required. lhe IHA isadministered by a Board of Directors which, under the Act, is to "carry outthe functions and manage the business and affairs of the Authority". TheBoard consists of: (a) a Chairman appointed by the President of lanzania;(b) a General Manager appointed by the MCW; and (c) not less than seven andnot more than nine members who are appointed by the Minister of MCW on thebasis of their experience arid involvement in commerce, industry,agriculture, finance and administration.

2.02 The Board is under the general supervision of the Minister ofMCW, who gives directions of a general nature relating to the managemelntarid business affairs of the Authority, approves major alterations to thetariffs, sanctions the annual and supplementary budgets, approvesindividual capital works, etc. Ihe resulting fairly close control by theMinister and, hence, the Government, of a port authority is normal,particularly when it is a major source of foreign exchange earnirigs.

2.03 The chief executive of the Authority is the General Manager, whois also a member of the Board. He is assisted by a team of managerial andtechnical officers and other staff distributed, primarily on a functionalbasis, among different departments, such as engineering, administration,finance and traffic. The existing organization structure is given inChart 1. The qualifications of middle and upper management personnelare satisfactory but because of the difficulty in getting qualified staffand the absence of a suitable information system the degree of managementcontrol over operations is inadequate. The project addresses this problemthrough its technical assistance and training component.

2.04 The Authority is legally responsible for the 4 major ports of Dares Salaam, Zanzibar, langa arid Mtwara as well as several minor ports.However, Zanzibar essentially functions as a separate entity under thedirect control of the MCW arid is riot, in actual practice, under the controlof the THA, nor do its accounts form part of the accounts of IHA. Iheother three major ports function as separate adminiistrative and operationalunits managed by port managers, under the supervisory control of theGeneral Manager of THA. The minor ports are attached to one of the majorports for administrative and operational purposes, depending on theirlocation.

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2.05 Tanga and Mtwara, the largest of the coastal ports, handle only alimited amount of traffic (about 350,000 tons and 145,000 tons,respectively, per annum) and the bulk of the traffic is handled by the portof Dar es Salaam. Consequently, the staff employed in the former two portsis small, being only 1,500 and 450 respectively. Dar es Salaam currentlyemploys about 8,900 of which 6,300 are in the operations department. Mostof these are in cargo handling gangs. Productivity improved over the1968-80 period; dry traffic nearly doubled while the number of gangsincreased by only two-thirds, and by 1980 the number of gangs was nearly30% below the peak of 1978. This declining trend is expected to continue,particularly as container penetration increases. THA policy is generallyto reduce staff numbers by natural attrition equivalent to about 250-300per year.

2.06 At the time of the East Africarn Community, cargo-handlingoperations in the various ports were not the responsibility of EAHC butwere managed by a separate organization called the East African CargoHandling Services (EACHS) that had its own labor force and cargo handlingequipment. With the termination of the Community and the establishment ofIHA, the government considered that a separate organization for cargohandling operations was not necessary and that the staff and equipment ofthe old organization should be taken over by IHA as a part of itsoperations department. The actual transfer took place in 1978. Sincethen, the receipts and expenses pertaining to cargo handling have beenincluded in the accounts of THA.

B. Budget, Accounts, Audit and Insurance

2.07 The Finance Department of THA prepares the annual budget aridcompiles the accounts. Both the annual budget arid the supplementary budgetare to bti submitted 'L the Minister of MCW fur approval. ihe mechanism forscrutiny is satisfactory to the Association.

2.08 The computerized accounts of IHA are compiled centrally by theFinance Department on the basis of monthly statement submitted by thevarious ports arid the transactiorns recorded in the head office. Ihere havebeen delays in the compilation of the accounts mainly becuase of theproblems created by the disintegration of the East African Communicy aridthe. merging of the cargo handling operations. ihe accounts for the periodending June 1979 were not submitted for audit until November 1981; thosefor the year ending June 1980 and June 1981 were submitted in 1982 arid 1983respectively; and accounts for the year ending June 1982 were ready forsubmission by November 1983. The accounts for the period ending June 1980and 1981 have been audited arid certified; those for the period ending June1982 are expected to be audited by the end of December 1984. The accountsfor FY1983 arid FY1984 will be submitted for audit thereafter. According tothe THA Act the annual accounts are to be audited within six months afterthe close of each fiscal year. SUch audited accounts are to be submittedto the Minister not later than nine months after the end of each fiscalyear. To ensure that the annual accounts are compiled and audited in timein the future, a covenant has been included in the Credit Agreementrequiring that future audited accounts shall be forwarded to theAssociation not later than 9 months after the end of the financial year.

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2.09 Under Sec.49(2) of the IHA Act, the accounts of the Authority areto be audited by The lanzarnia Audit Corporation (TAC), a statutory bodyestablished under the Tanzarnia Audit Corporation Act of 1968 for the auditof all parastatal organizatiorns in lanzania. Ihis arrangement is accept-able to the Association. The Audit Corporation is fully independent andhas a satisfactory standard of professional competence. It has a staff ofabout 230, including about 49 qualified accountants and 56 undergoingtraining. The TAC is taking various measures to augment its staff so thatit can more effectively meet its growing responsibilities.

2.10 THA has an internal audit department managed by the ChiefInternal Auditor with a staff of about 50 distributed among the three mainports and the head office. The Chief Internal Auditor reports to theGeneral Manager. The department is not at present adequately staffed toundertake a comprehensive audit, but steps are being taken to appointadditional qualified staff, and it is expected that the department willbe able to function effectively thereafter.

2.11 IHA is insured with the Tanzania Insurance Corporation, aparastatal enterprise, against fire, third party liability, accident, etc.The agency and the types of insurance are adequate.

C. Management Informatiorn System (MIS) and Port Planning

2.12 The system of management informationr is the key to determining ina timely fashion the strategy for port planning, whether in the short,medium or long terms. It requires the availability of data, the timelycollection of such data arid its analysis. Once that is done, thepreparation of detailed proposals for investment necessitates specializedinputs which can only economically be provided by consultants. Untilrecently investment decisions were fairly simple but with the rapid changesnow underway in the characteristics of traffic handling, the weaknesses ofthe management information system, and associated with it, the ability ofthe Directorate of Planning to handle its responsibilities in this area arebecoming clear.

2.13 What is not obvious, however, is the best way of addressing theissue, particularly in a dynamic sense. For example, port planningindicators which, as part of the MIS may be important now may lose validityas containerization develops. Acordingly, the MIS will require expertreview in order to determine the most appropriate system, the liaisonrequirements between departments, the means by which information can beproduced with the most efficient combination of comprehensiveness andtimeliness, and the most appropriate channels of information. Provisionfor such review is included under the proposed technical assistance(para 3.05 (x) and Annex 5).

D. lariffs

2.14 The THA Act provides that the Authority shall conduct itsbusiness according to commercial principles and shall perform its functionsin such a manner as to ensure that its annual revenues are sufficient tomeet its operating expenses includirng depreciation of capital assets,pensiorn and debt service liabilities as well as a proper allocation to

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general reserve. Since its inceptiorn, IHA has been able to achieve thisobjective because of an adequate tariff structure which is based on afunctional distributiorn of charges between shipping and cargo in relationto the services rendered. Charges on shipping cover pilotage, towage,mooring/unmooring and miscellaneous services, (e.g. supply of water, etc.);those on cargo include wharfage, handling (cargo handling and stevedoringplus separate charges for containers) as well as storage. However, thoughthe overall earnings have been sufficient, so far, to cover operating costsand to provide a surplus, the individual tariffs for different services(especially to shipping) are not, in many cases, sufficient to covercosts. A tariff revision on the basis of a tentative costing exercise wasintroduced in January 1981. Ihough this has enabled THA to meet risingoverall operating costs, it was not adequate for a proper and rationalreview of the costs of the various services. A costing expert from UNCTADis at present assisting THA in introducing suitable procedures for: (a) asystematic analysis of the cost incurred; and (b) a periodic review of thetariff on the basis of cost. These procedures are being based on theexisting activity-wise classification of income and expenditure that issuitable for a comparison of the revenues earned from the differentservices with the direct expediture incurred on them. Technical assistancewill be provided under the project to assist in implementation. Duringnegotiations it was agreed with THA that: (i) a specific procedure for aperiodical review of the tariff based on actual costs shall be introducedby September 30, 1985 and, (ii) based on such a review and taking intoaccount the anticipated changes in traffic and in expenses, IHA will submitproposals for a revision of the tariff to Government annually in sufficienttime for the results of Government consideration of such proposals to beincluded in the annual budget of IHA.

E. Training

2.15 lraining has been of a rather low level to date, both insophistication and in volume. In 1982/83 the Bandari (port) TrainingCollege ran some seven courses, aggregating about 550 man months withattendence ranging from about 20 to 80. These courses were conducted byBandari college staff, who comprise a principal and nine instructors andwho operate in college facilities constructed in 19B0 and located about 10kilometers from Dar es Salaam port.

2.16 While the courses are judged to have been well prepared, thetraining program to date has suffered from major deficiencies: (i) thecollege is almost totally devoid of equipment, ranging from audio-visualaids to machines and facilities for operational conditions to be simulated;(ii) the college instructors are substantially out of touch with the day today problems encountered under operating conditions, have had little or nocontact with the port for several years, and as a consequence conduct thesetraining programs in a rarefied atmosphere with results that do not inspireconfidence in the working departments who are the ultimate clients; and(iii) the task of producing a manpower development plan, admittedlydifficult under the changing circumstances affecting THA and in particularDar es Salaam port, has so far been attempted in only a perfunctory manner.

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2.17 Of on-the-job training, the most successful example has been thatin equipment maintenance supplied by Sheridan College, Canada in connectionwith rehabilitation of Canadian equipment. rhe personnel undertaking thiswere enthusiastic about the willingness to learn of Tanzanian artisans,while at the same time, emphasizing that unless such training was estab-lished as a continuing feature, the benefits would be quickly lost.Unfortunately this short term rehabilitation program finished in 1982.

2.18 The above factors have determined the proposals for a comprehen-sive training program to be financed under the project, which is describedin para 3.05 (x), and Annex 5.

The Port of Dar es Salaam

F. General

2.19 Dar es Salaam is Tanzania's largest sea port. It is served bytwo rail systems connecting with the Tanzaniarn hinterland and Zambia arid aradiating road network, described under the Trarnsport Sector (paras 1.02through 1.17). (Other sea ports: Tanga, Mtwara and Kilwa are principallyserved by coastal vessels from Dar es Salaam, while the Port of Zanzibarhandles small coastal vessels arid provides lighterage for larger oceangoing vessels). The Dar es Salaam port facilities are located on thewestern side of a well sheltered natural harbor immediately adjacent to thecity. The natural entrance channel to the harbor is narrow and has fourbends, three of which are difficult for larger vessels to navigate becauseof tidal currents and cross winds. Tugs accompany vessels during thepassage at all times. This 3.5 km long channel was dredged in 1953 toprovide not less than 7.6 meters of water depth at low water. There is riohistory of siltation occurring in the channel.. Pilotage is compulsory.

2.20 The tidal variation is semi-diurnal with a springs range of about4.2 meters. Most vessels wait for high water conditions to pass throughthe channel, with vessels entering against the ebb and leaving against theflood to ease the problems of navigating the bends. No night navigationtakes place and thus there are many days when vessels can only arrive aridleave the port during the one high water period that occurs in daylight,resulting in some ship waiting time. Navigation aids exist but are in needof replacement. The dredged depth of 7.6 m and the present bends in thechannel limit the size and length of vessels using the port. Proposals forimproving the channel have been prepared by IHA's consultarnts, but would bevery expensive to execute. They should be ccirisidered for a future stage ofport development. An assessment of channel improvement proposals is givenin Annex 3.

2.21 There is an excellent outer anchorEige available for a largenumber of vessels with a water depth of 14-16 meters. Adjacent to theanchorage area in Mjimwema Bay is a single buoy mooring used for theimportation of crude oil for both Tanzania and Zambia. For many decades,up to 1956, the port operated as a lighterage port. The lighters weredischarged on quays adjacent to the city. Ihese quays have been preserved,partly rehabilitated and exterided to serve continuing lighter traffic,coastal vessels and ferries.

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G. Port Physical Characteristics

2.22 The main port facilities cornsist of 11 general cargo berthstotalling 2,013 meters in length built between 1956 and 1977 arid having adepth alongside varying from 9.8 m to 12.3 m below mean low water springs.

2.23 The land area behind the berths is unforturiately restricted by ahigh, natural embankment. Historically the port has evacuated and receivedmost of its cargo by rail, hence the port lands are partly taken up withseparate rail sidings and distribution networks for the TRC and IAZARAsystems, which are of different gauges.

2.24 Transit sheds in good condition, totalling 112,000 sq.m of floorarea, are provided on the berths. Additional shed space behind the berthsis used for unclaimed cargo. At present, container stripping and stuffingtakes place in one of the sheds behind berths 9 and 10.

2.25 Vessels discharging grain normally occupy berth 8 and portablepneumatic equipment, hoppers and trucks are used to unload the vessel andto carry the grain to storage depots or silos outside the port area. Thisprocedure is slow. The fleet of rented trucks used to transport the grainis old, ill-maintained arnd unsuitable, and unable to mainitain a regular andfrequent round-trip service. Ihe percentage of grain spoiled and lost ishigh. The existing grain silo, belonging to the National MillingCorporation (NMC), at the port is not used for the transit storage ofimported grains but as a feeder for an adjacent flour mill.

2.26 Bunkers and petroleum products (imports and exports) are handledthrough the Kurasini oil terminal situated at the south end of the mainberths. Ihis terminal has been neglected in the past few years since theTHA intended to demolish it and build a new terminal on the east side ofthe harbor adjacent to the refinery. Thus it is in a poor and hazardouscondition. Some urgent remedial work has been carried out arid the berth isnow operating but still needs major rehabilitation to be undertaken underthe proposed project. Edible oils and molasses are handled throughexisting pipelines at berth 10.

2.27 Container traffic has grown very rapidly in the past three yearsand the port has reserved berth 9 as the berth for container vessels, withberths B arid 10 being used when more than one container vessel has to beserved. (Ro-Ro vessels are normally handled on berth 8). There is notransit shed on berth 9 and thus there is good access to the open areasbehind the berth which have been cleared and laid out as. a containerstacking area. Berths 1 to 3 in the port have traditionally handled thetransit traffic for ZBR and thus the storage areas behind these berths areused for the storage of containers associated with that traffic. The splitin container storage and handling into two separate areas results in amajor loss of efficiency, time and equipment availability.

2.28 Ihe port's cargo harndling equipment consists of fixed cranes,forklifts, tractors, trailers, mobile cranes arid vehicles. Ihough somereplacement has taken place in recent years, the age of most of thisequipment exceeds normal life expectancy and maintenarnce is made difficult

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by shortages of essential spare parts. The IHA's fleet of marine craftincludes port tugs, mooring boats, pilot boats, lighter tugs and a newfloating crane. The older craft are in poor condition. Through a loanfrom the Kuwait Fund, 1 berthing tug, 2 lighter tugs, 2 mooring boats and1 pilot boat have been recently acquired. Through an EEC loan, a furtherpilot boat and 2 mooring boats are expected to be supplied.

H. Port Operations and Maintenance

2.29 All operations within the port are undertaken by the THA, withsome minor exceptions described below. Marinie operations are the respon-sibility of the Senior Harbor Master. Cargo handling operations are theresponsibility of the Operations Manager. There are regular scheduledmeetings with TRC and TAZARA to ensure a smooth flow of traffic in and outof the port. Customs clearance takes place within the port boundaries andis rather slow primarily due to a shortage of skilled staff.

2.30 To assist in the movement of ships, the THA provides tugs, pilotboats and berthing gangs. In line with usual practice, cargo handlingoperations are divided into sections, each section including one or moreberths with their associated sheds and open storage areas. Some of theshedwork on berth 1, which handles ZBR traffic, is done by a privatecompany, Agence Maritime Internatiornal (AMI), on behalf of the governmentsconcerned. Delivery of import cargo to road t:ransport is done by agents'staff and to rail by railway staff. The THA plans to take over thisdelivery work by redeploying labor made surplus with the growth ofcontainer traffic. Otherwise all work, inclucding stevedoring on ships, isdone by the THA.

2.31 The port works two regular 8-hour shifts, 6 days a week, with athird shift worked at the ship's request. Two optional shifts areavailable on Sundays. About 40 to 45 gangs work on each of the regularshifts, giving about 3 gangs per ship on average, with some gangs allocatedto the lighter wharf. About 20 gangs work at night when necessary. Cargohandling methods are generally good but their application suffers fromequipment problems. Overall productivity is about 62 tons per gang shift.Individual commodity data is sketchy but productivity appears to range fromabout 25 tons per gang shift for light general cargo, to 60 tons per gangshift for oil cake and up to 200 tons per gang shift for copper.Productivity in 1981 was the best since 1976 arid the level has beensubstantially maintained since then. Productivity declined in 1977 and1978 due to congestion caused by high traffic levels and slow clearance ofimport cargo, made worse by the merging of the Tarnzarnian sections of theEAHC arid the EACHS. the average tons per gang shift was 69 in 1976,declining to 48 in 1978 and recovering to 62 in 1981. 1981 handling ratesfor the most important cargo categories and improvement targets for 1988are shown in Table 3.3.

2.32 Productivity improvements have come from the IHA's efforts andfrom the effect of the rapid increase in containerization. The seriouscongestion experienced between 1977 and 1980 is unlikely to recur, providedlandside clearance rates can be maintained.

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2.33 The backlog of import cargo has now been largely overcome throughthe efforts of IHA and the governments concerned. Some residual Zambiancargo, a substantial tonnage largely unmarked and much of it now scrap,awaits disposal at government level. Ihe clearance of ZBR cargo is slowlargely because of a combination of capacity problems: (a) on the lanzaniaRailway; (b) at the transhipment port of Kigoma on Lake langanyika whereworking space and cargo handling equipment are presently inadequate, thoughimprovements is expected under an EEC finariced project underway; and (c) onthe lake itself where efficient utilization of the cargo fleet is hamperedby poor rail/port/shipping communications. Because security in the port ofDar es Salaam is greater than on railway sidings outside the port, IRC isslow to clear ZBR traffic from the port until through up-country transportcan be provided. Through road transport from Dar es Salaam to Kigoma isnot a viable alternative as there is as yet no suitable road from Tabora toKigoma, a distance of some 400 km traversing a region of low population andeconomic activity.

2.34 All cargo is handled on a time worked basis. Government policyis to introduce incentive schemes throughout state enterprises and a portcommittee is studying how best to put this into effect. Efforts shouldconcentrate initially on introducing incentive payments for straight-runcommodities such as sisal, cotton and possibly copper, where progress canbe made rapidly and moving later to the more difficult question of generalcargo. The effect of productivity incentives will be to increase portcapacity.

2.35 Container handling is carried out using 4 toploaders and onesideloader. This is increasingly inadequate for the growing throughput andthe shortfall is being met by replacement equipment partly financed by theEEC which should meet requirements until the proposed project becomesoperational. Ihe container control system is adequate for present needsbut will also need to be upgraded during the project period to cope withincreasing volumes.

2.36 Operational records are extensive but require systematic revisionto reduce their volume, to provide more information on the handlingproductivity for individual commodities as a basis for the incentive schemeand to identify separately the traffic of cellular container ships and ofRo-Ro ships. Container traffic statistics also need improvement.

2.37 Maintenance of mechanical port cargo handling equipment is theresponsibility of the Port Mechanical Engineer, under the Port ChiefEngineer. All major mechanical maintenance was transferred to a newcentral workshop in 1981. Daily checks are done at service stations nearthe operational areas. The new workshop, which is largely full of parkedequipment awaiting minor attention or spare parts, is still beingorganized.

2.38 It is not easy to assess the effect of present maintenanceefforts as equipment availability figures (overall average 45%0) aredepressed by the extensive inventory which includes marny items that shouldbe scrapped. There are many complaints from the Operations Departmentabout equipment performance. Planned basic maintenance is carried out on

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forklift trucks and tractors outside the workshops in the open and underinadequate conditionis. Container handling equipment is also maintainedoutside under the overhang of a shed, without proper facilities. Theworkshop includes a machine shop, but a few machines have never been usedbecause they are incomplete or lack skilled operators. Although theMechanical Engineer is energetic and enthusiastic, major problems ofworkshop organization, operation and control are evident and theimplementation of improvements will be time consuming.

2.39 Civil engineering and marine maintenance faces differentproblems. Civil maintenance requirement is of an intermittent nature, andis mainly concerned with berth resurfacing. IHA entered into a contractwith a local firm to undertake repairs to the older berths, work commencedin early 1983, but has since ceased due to shortage of materials andtransport. This work is now to be included in the civil works to beexecuted under the proposed project. Marine maintenance is presentlylimited to small craft, and THA's capability is being upgraded under anongoing project, supported by Norwegian aid. Large tugs have to gooverseas (to Mombasa) for maintenance, a satisfactory practice likely tocontinue.

I. Past and Present Iraffic

2.40 lotal import and export traffic through Dar es Salaam Portfluctuated considerably during the period 1976-1982. Dry cargo (i.e.excluding petroleum) increased in 1977, but by 1979 had declined sharplyand has since recovered slightly (Table 2.1). In 1982, Tanzanian trafficaccounted for 47o, Zambian 45%o and ZBR 8°o of total non-petroleum traffic.There have been fluctuations in these shares an recent years, due largelyto external factors, described in Chapter I.

2.41 The experience of non-petroleum imports and exports has diverged;while the former were at almost the same level in 1982 as in 1976, exportsdeclined sharply, and have only recently shown signs of stabilizing andpossibly recovering. The result has been a marked shift in the balance oftraffic; in 1976 imports accounted for 52%o of the total while by 1982 theshare was about 64°o. Within imports, grain has increased due to localshortages in both Tanzania and Zambia, while most other import commoditieshave declined due primarily to severe constraints on the availability offoreign exchange in lanzania and Zambia.2.42 Exports of copper, lead, zinc, cotton and cottonseed cakeconstituted almost 75%o of all non-petroleum exports in 1976. While theirimportance declined somewhat over the period 1976-1981, they still formedthe bulk of non-petroleum exports in 1981. Copper exports through Dar esSalaam peaked at 727,000 tons in 1976 and after a sharp decline in 1979recovered to 412,000 tons in 1981. This largely reflected the decline intotal Zambian copper exports: from 735,000 tons in 1976 to 560,000 tons in1981. The Dar es Salaam share has remained within the 70-75°o range sincethe Zimbabwe border was reopened. The 1981 fitgures were in turn influencedby the depressed world market for copper. Ihere was also a drop in theexports of lead and zinc and cotton and cotton-seed cake but this decline

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was less marked and more erratic than copper. Exports of coffee increasedconsiderably between 1976-81, but the increase was almost exclusively in1981.

2.43 Crntainer traffic has increased rapidly after commencement in1978. Ihis was largely due to the lead taken by the BEACON Line inestablishing a regular specialized container service between Europe andEast Africa. Ihe number of loaded containers handled annually at Dar esSalaam has on average been doubling every year over the last five years.In 1982 total loaded contairner traffic was over 19,000 twenty footequivalent urnits (IEU) of which 13,290 TEU were imports and 6,034 exports.

2.44 The number of dry cargo ships declined 1977-1981 and recoveredslightly in 1982. This was mainly due to changes in traffic volumes,with the average tonnage per ship increasing slightly.

Dry Cargo Ships and Loading

1978 1979 1980 1981 1982

*No. of ships 738 668 691 608 640Average Cargo (tons) 3003 2780 3080 3060 3040

*Adjusted to reflect different characteristics of deep sea arid coastalvessels.

J. Technical Assistance

2.45 Present technical assistance to the port of Dar es Salaam is inthe areas of marine operations (7 men including the Harbour Master, theAssistant Harbour Master and 5 pilots) and the dockyard (one man, theDockyard Manager). There is also an electrical design draftsman in the lHAengineering office. All the above expatriate personnel are supportedthrough United Kingdom bilateral aid. During the period 1980-81, withCanadian assistance, a team from the Sheridan College, Canada, providedtechnical assistance to the port of Dar es Salaam mechanical engineeringsection for the rehabilitation of forklift trucks and other equipmentprovided by Canadian aid. Ihis assistance was extended to cover somegeneral maintenance and stores management. No other technical assistanceoutside tariff review (para 2.14) has yet been provided, although ILO andUNCTAD have prepared studies on requirements. Appropriate technicalassistance is provided under the proposed project.

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1ANZANIA

HARBOJURS I PROJEC1

Tale 2.1 - Export aid In2rt Iraffic ihiouq Dsr es Salaan: 1976-1982(tlousand toas)

1976 1977 1978 1979 1980 1981 1982 1983 1/Exports

Flour, Meal, Bran, Millet 20.9 28.6 61.9 18.3 14.3 3.0 - 2Cotton and Cotton-Seed Ca<e 58.5 50.9 38.7 69.0 58.0 49.8 45 45Coffee 22.0 18.9 26.8 29.9 28.6 47.9 32 35Sisal 29.0 22.7 14.9 18.1 12.5 13.2 13 8Sugar 22.5 10.1 3.1 4.7 16.2 3.9 12 21Oil Seeds 31.6 17.6 31.2 10.6 24.5 33.2 30 20Copper 726.7 698.3 589.5 369.3 430.3 411.9 436 424Lead ad Ziric 53.5 51.8 42.2 47.3 43.1 47.6 46 51All Others 161.3 180.4 130.6 138.0 133.1 142.5 101 12Petroleun Products 182.0 147.0 121.0 117.0 115.0 118.5 108 111

Total Exports 1,308.0 1,226.3 1,059.9 822.2 875.6 871.5 823 729

Total Exports ExcludimnPetroleun Products 1,126.0 1,079.3 938.9 705.2 760.6 753.0 715 618

Inmports

Grains in Bulk 141.9 210.7 143.8 82.5 234.5 276.7 165 92Rice 0.1 40.2 24.2 18.5 74.8 28.1 59 58Flour, Malt, Grain in Bags 66.6 61.6 23.5 47.9 33.6 56.3 116 138Other Foods 55.6 84.1 76.6 40.2 61.8 31.7 71 39Paper 24.1 30.3 48.1 42.9 26.0 32.2 27 17Mabhinery, Metal Pipes adSheets, Mtor Spares aidVehicles, Railway Material 225.7 253.1 307.8 281.4 233.8 214.3 202 129

Cement in Bags 17.6 32.0 25.3 8.3 8.5 19.8 31 2Fertilizers in Bags 163.8 161.5 80.5 62.8 113.1 95.3 164 65All Others 561.1 650.1 668.4 573.0 584.1 354.6 624 344Petroleun Products 1,185.0 1,571.0 1,748.0 1,673.0 1,689.0 1,535.1 1,297 1,544

Total Imports 2,441.5 3,094.6 3,146.2 2,830.5 3,059.2 2,643.2 2,756 2,427

Total Imports ExcludinqPetroleum Products 1,256.5 1,523.6 1,398.2 1,157.5 1,370.2 1,109.0 1,459 883

Total Imports a-d Exports 3,750.4 4,320.9 4,206.1 3,652.7 3,934.8 3,514.7 3,579 3,155

Total Inorts ad ExportsLxcludirq Petroleum 2,383.4 2,602.9 2,337.1 1,862.7 2,130.8 1,862.0 2,174 1,501

Loaded Contairers (nos.) - - 1,115 4,331 6,813 12,636 19,324

1/ 1983 figures are estimates.

Source: IHA

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III. THE PROJECT

A. Background

3.01 The Government of Tanzania has assigned high priority to expand-ing and improving the operational efficiency of the country's portsystem. However, the THA does not presently have the capability to under-take long-term port planning and engineering studies. A study, completed in1974, was commissioned by the UNDP with the Bank as executing agency, toexamine ports of the then East African Community, including the Port of Dares Salaam, and to make recommendations with respect to the facilities andinvestment required to handle forecast traffic. A supplementary study,completed in 1979, was used as the basis for a proposed Bank project,preappraised in May 1979. As some of the cost estimates were consideredto be insufficiently precise, appraisal was deferred arid an EngineeringCredit (Cr.S24-TA) was approved by the Bank in 1979 to finarnce detailedengineering. Later, in December 1981, supplementary studies were carriedout to focus on the highest priority items. These studies provided thebase for the proposed project which comprises part of the transport sectorinvestment component of the Governmernt's structural adjustment program.

3.02 Ihe succession of reports is an indication of the rapid expansionand change in port operations from a lighterage port to a conventionalgeneral cargo port and recently into container operations. Significantfactors that have affected the port are: (a) the break-up of the Communitywhich forced Tanzania to develop its own port management and operationsstructure; (b) the development of the TAZARA railroad which offeredincreased scope for transhipment operations; and (c) the rapid shift tocontainerization of general cargo. The port was originally designed tohandle general cargo by conventional means. It is ill-equipped to copewith rapid growth in containerized traffic or large container ships.In order to meet the needs of Tanzania, exploit its favorable location andoffer fast, efficient transit service on a competitive basis to Zambia,ZBR arid even possibly Malawi arid Uganda, it is essential that both thephysical facilities and the institutional capacity to handle traffic inincreasingly sophisticated form are improved. The proposed projectaddresses the highest priority needs of the port and, in particular, theability to handle container vessels and grain ships expeditiously. Itshould be rioted that the inland long distance flow of containers is largelyundertaken by rail, and both IRC and Tazara are including the necessaryprovisions in their investment plans. Tanzanian cargo is largely destinedfor Dar es Salaam in the first instance and container movements do notpresent signficant problems. Development of the skills necessary to manage,operate and maintain this new infrastructure are also addressed. THA aridthe main shippirig companies are in agreement that the proposed projectrepresents the priority areas to be addressed before Dar es Salaam canbecome an efficient container port.

B. Objectives

3.03 The objectives of the project are to enable THA to provideadequate port services to Tanzania, and landlocked neighbouring countries

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by enabling THA to adapt to technological change in cargo handling,particularly expansion of contairner operationfa, and to rehabilitate andimprove grain and petroleum handlirig operations.

3.04 Ihe project will:

(i) create a modern container handling facility by theconversion of existing general cargo berths (10 and 11);

(ii) provide modern container handling equipment replace somelife-expired general cargo equipment and provide spare partsfor other general cargo equipment;

(iii) enable the port to discharge grain vessels more effectively,thus avoiding excessive ship time alongside, and loss andspoilage of grain by providing modern grain handlingequipment and 26,000 tons of silo storage within theconfines of the port;

(iv) complete the rehabilitation of the existing lighterageterminal, enabling the port to continue working at itspresent capacity while the conversion of berths 10 and 11 toa container facility is carried out;

(v) rehabilitate the existing Kurasini petroleum productsterminal;

(vi) provide consultant services to provide engineering andsupervision services with respect to the proposed works; and

(vii) provide trairiing of and technical assistance to, IHA staffto ensure the start-up of the new port training school(Bandari College), improve the control and handling ofcontainers, improve the present management informationservices, and improve the maintenance and control of portmechanical handling equipment.

C. Description

3.05 The physical elements of the proposed project are:

(i) The Development of a Container Handling FacilityThe existing general cargo berths 10 and 11 will be convertedto a container handling and storage facility. The existingtransit shed located on berths 10 and 11 will be dismantledand re-erected as part of a Zambia transit traffic terminallocated outside the port. The civil works include therehabilitation of the port area behind the berths toaccommodate re-aligned railway networks for both the TRC andTAZARA, the installat-ion of rails for gantry cranes, andpaving the container handling area. Some paving work will becarried out on berth 9 to upgradie the existing paving so thatpresent container operations can continue without

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disruption. A new roadway from the TAZARA copper depot tobypass the future container facility will be built.

(ii) EquipmentThe equipment included in the proposed project for theoperation of the proposed container terminal consists of:

(i) Two quayside gantry cranes for containers;

(ii) One rail-mounted gantry crane for container transferto railway wagons;

(ii) Six rubber tire gantry cranes for stacking containersin the yards; and

(iv) Tractors and trailers for container handling.

(iii) Grain Discharge and Handling, Improvements at Berth 4Steel silos with 26,000 tons of storage capacity will beconstructed. These silos will be connected to the existingNMC flour mill silos and to berth 4, where grain ships willprimarily be handled, by simple belt conveyors or by adedicated truck system. Mobile quayside pneumatic equipmentwill be provided to extract the grain from the vessels andtransfer it to the conveyors using moveable hoppers. Abagging plant, as well as truck and rail loading platformsare also included in the project together with provision forfuture installation of equipment for bulk operations by rail.

(iv) Rehabilitation of the Lighterage TerminalDuring implementation of the proposed project, the need forberths in the port to be taken out of service for conversionto container operations and the installation of the graindischarge facilities means that it is desirable that thelighterage terminal is rehabilitated so that the port cancontinue to operate at full capacity. Later, when theproject is completed, the lighterage terminal willaccommodate surges in deep sea and coastal traffic, as wellas service the vessels associated with the offshore petroleumindustry.

(v) Ihe Rehabilitation of the Kurasini Petroleum ProductsTerminalThis jetty has been neglected over the years and, until veryrecently, was in a dangerous condition with vessel ownersreluctant to berth. Although emergency repairs have beencarried out to reduce the risks, rehabilitation is neededand the firefighting system must be renewed to meetpresent-day standards. It is planned to rehabilitate theexisting jetty which is a more cost effective solution thanthe alternative of construction of a new jetty across theharbour. lhe rehabilitation work includes civil, electricaland pipeline works both on the jetty and ashore.

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(vi) Other Container and General Cargo Handling and MainterianceEquipment Even when the new container terminal, is inoperion it is likely there will be some contairier traffic,mainly in small consignmerits, heindled over the general cargoberths. Thus some essentially replacement items forcontainer handling are included in the project; a containerhandling forklift truck and a mobile crane, plus smalleritems of handlirng and moving equipment. Also, as generalcargo traffic will decline only slowly and many items ofTHA's mobile general cargo equipment are over-aged (averageage 8 to 9 years) replacement forklift trucks, tractors andtrailers, plus a crawler tractor for grain handling and threemobile cranes, are included. Together with spare partsprovision (pars 3.05 (h)) THA should be able not only torespond flexibly to unpredictable variations in traffic atDar es Salaam , but once the container terminal is fullyestablished to transfer equipment to the secondary ports ofTanga and Mtwara where shortage of equipment is also inevidence.

(vii) Navi ational and Communications Equipment]he tortuous nature of the entrance channel means that ifnight navigation is to be provided, even for comparativelysmall vessels, improved navigation aids will be necessary.Also, good communications within the port are hampered by thedeteriorated state of equipment, which should be renewedincorporating more modern technology. Both requirements areprovided for in the project.

(viii) Spare PartsMany exis ing equipment items--cranes, forklift trucks,tractors and trailers are inoperative due to lack of spareparts. In many cases; inadequately recorded"cannibalization" has taken place making accurate assessmentof the feasibility of rehabilitation difficult. Accordingly,a detailed study is to be carrieid out, (see para 3.05 (k)below) and spare part requirements in excess of that whichcan be met from THA resources, determined. A maximumprovision of Tsh 30 million has been made.

(ix) Consulting Services - Engineering and SupervisionThe THA appointed engineering consultants Bertlin andPartners of the United Kingdom, for the detailed engineeringwork and the preparation, issue and evaluation of tenders.To maintain continuity and avoid practical difficulties inimplementation, THA will retain the services of theseconsultants. This is acceptable to the Association.

(x) Technical Assistance and TrainingThere is an urgent need to upgrade port personnel in almostall disciplines through in-service training programs. Manydepartments apparently do not cornprehend their training needsand therefore, it is necessary to identify training needs

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more explicitly. Further, THA's training capacity is to beexpanded by upgrading the Bandari College, by increasing thejob training in the port and by increasing the number oftrainees. lo make the Bandari College fully operational,audio-visual aids, library books, and trainiing equipment willhave to be provided especially for the various trainingworkshops. It is envisaged that three ports trainingspecialists will have to be recruited for the Bandari Collegewhose main task would be to assist in identifying trainingneeds in the port, organizing courses in agreement with theappropriate port department and training and upgrading thecollege instructors. Additionally, a mobile equipmentspecialist would be needed. Besides about 50 manmonths ofoverseas training for college instructors and portoperation's staff would be required. Details of the trainingrequirements are given in annexes 5 and 6.

(xi) A study will be undertaken, by THA's present consultants, todetermine the requirement for spare parts for exisiting THAequipment. This study will be completed by July 31, 1985.

3.06 During negotiations, agreement was reached with THA on thecomposition and scope of technical assistance, and on a timetable for thepreparation of a manpower plan, to enable a comprehensive manpower trainingprogram including a mechanism for annual review satisfactory to theAssociation to be commenced by December 31, 1985.

D. Cost Estimates and Financing Plan

3.07 The total project cost is estimated to be 1Sh 1545 million(US$91 million) of which US$59 million would be the foreign exchangecomponent. A financing plan has been arranged between Government ofTanzania (GOT), IHA, the Association and bilateral sources. The bilateralparticipation has been arranged in the course of discussions between GOTand the individual bilaterals between December 1983 and September 1984.While some bilaterals have or will subject their components to their ownappraisal processes, these processes are to confirm project cost estimatesand timetable for implementation to the satisfaction of the financingsource, and will not affect the committment to the project. However,equipment suppliers (Danida and Finnida) have informally advised theAssociation that their participationi is contingent upon Associationparticipation in the project. THA is expected to finance all local costs.The total project cost and financing plan are shown in Tables 3.1 and 3.2.

3.08 The proposed Association Credit of US$27 million will be onlentto THA for a period of 20 years including 5 years of grace at an interestrate of 11°o p.a. The execution of a subsidiary loan agreement between theGovernment and the THA, acceptable to the Association, would be a conditionof effectiveness. No exemption from taxes or duties will be permitted bythe Government for this project. Provision is made for taxes and duties inthe cost estimates. The local cost component will be mainly financed bythe THA, with funds allocated for the purpose from its reserves. The THA

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will bear the foreign exchange risk. Ihis has been agreed upon duringnegotiations. All cofinarncing commitments have been confirmed by therespective cofiriaricers. lhe signinrg of the agreements for the Danish,Finnish and Norwegian grants, which are critical to the initialimplementation of the project, would be a conditiorn of effectiveness of theIDA credit, with the Italian and Netherlands financial agreements to besigned by June 30, 1985.

3.09 The estimates of costs shown in the Cost Table are on the basisof detailed engineering by consultants Bertlin and Partners (UK) at mid1984 prices for non-Association financed items and on the basis of actualbid prices for Association financed works.

3.10 Consultant costs include about 120 man-months for supervision.Technical assistance is included in the project to provide about 250 manmonths for on-the-job training, formal instruction and development ofoperations and maintenance procedures. Physical contingencies are based ona percentage of the cost of each project element and average 6°%. The pricecontingencies are based on the following table; the high local rates takeinto account the expected effect of 1983 arid 1984 devaluations.

1985 1986 1987 1988 1989

Escalation %0 - Foreign Costs: 8.0 9.0 9.0 9.0 7.5(annual) - Local Costs: 30.0 25.0 25.0 20.0 20.0

E. Implementation

3.11 The Borrower will be the Governmernt of lanzania. Implementationof the proposed project will be the respons;Lbility of the THA with whom aProject Agreement would be executed. The supervision of the civil worksand the procurement of the equipment will be carried out by consultantsappointed by the THA and financed from the proposed Credit. The IHA isextremely short of qualified and experienced engineers and to ease theburden of project management, the THA will appoint a project coordinatorwho will be a suitably qualified engineer and who will be responsible tothe Director of Engineering's office in accordance with terms of referenceand conditions satisfactory to the Association. The services of thisengineer will be financed by the British ODA and candidates have alreadybeen interviewed. He will continue his coordination and liaison workthrough to completion of the project, preparing such reports onimplementation as are required by the co-financiers and assisting in thepreparation and processing of withdrawal applications. The appointment ofthis engineer will be a condition of Credit effectiveness.

3.12 Implementation of the proposed project is expected to take fiveyears from the start of work on the main contracts. Prequalification hasbeen undertaken and tenders have been received for the principal civilworks. The award of contracts to be financed from the proposed credit willbe made after Board consideration. To assist the IHA in financing theconsultants' work for the final detailed engineering, preparation of tenderdocuments and evaluation of tenders, an advance from the Bank Group'sProject Preparation Facility in the amount of US$950,000 has been

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arranged. This advance will be repaid from the proceeds of the proposedcredit as soon as it becomes effective. The proposed implementationschedule is given in Chart 3 and has been agreed upon during negotiations.

Project Monitoring

3.13 For purposes of monitoring the project during implementatiorn, thefollowing matters were reviewed and agreed on with the IHA duringnegotiations with respect to format and appropriate data to be provided byIHA in quarterly reports to the Association (see Annex 7 and lable 3.3):

(a) progress of the project works with cost data;

(b) training and technical assistance;

(c) THA and the Port of Dar es Salaam financialperformance, including operating ratios and cash flowrequirements and overall operations;

(d) equipment operation and maintenance (availability andcosts); and

(e) general and bulk cargo, container, RO-RO and grainmovements, berth utilization, ship waiting time andproductivity indicators.

3.14 IHA will be responsible for preparing a project completion reportwithin six months of the closing date of the proposed credit. This wasagreed upon during negotiations.

F. Environmental Aspects

3.15 Ihe proposed project will make no material change in the presentport environment with the exception that dust and spillage from thedischarging of grain vessels should be considerably reduced following thecompletion of the new grain discharge facility. The rehabilitation of theKurasini petroleum products terminal will reduce the likelihood ofspillages and fire during normal operations.

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G. Procurement

3.16 Procurement arrangements are summarized in the table below anddetailed in the following paragraphs.

US$ (million)lotal

Project Component ICB 1/ LCB 1/ I Other 2/1 NA 1/l Cost I

Kurasini Rehabilitation1 i 3.2 3.2

Pipelines Diversion andj 4 0 I | 4.0 iLigherquay Renovation (0.3) 1 l(0.3)1

Container lermitial and I 37.8 I I 37.8Ubungo Depot, 3 (19.0) 3 1

19.0I I 90)Grain Facility 1 15.0 J I 15.0 1

Project Equipment incl.1 0.7 1.8 | 19.5 I | 22.0Spare Parts 1 (0.7) (1.8) 1 (2.5)

Technical Assistance 2.3 2.3 4.6and Training (1.7) (1.7)

Training Equipment 0.5 0.5

I(0.5) (0.5)Consultant Services 3.8 3.8

(3.0) (3.0)

TOTAL 44.8 2.3 40.0 3.8 91.0(21.7) (2.3) (0) (3.0) (27.0)

1/ ICB - International Competitive Bidding; LCB - Local Competive Bidding;NA - Not Applicable.

2/ In accordance with each bilateral agency's procedures and regulations.

Note: Figures in parantheses are the amounts to be financed by theAssociation.

3.17 Works: The construction of the civil works financed from theproposed Credit would be procured by international competitive bidding(ICB) in accordance with the Association's guidelines. Eligible domesticbidders would be afforded a preference of 7.5% under ICB procurement.

3.18 Goods: Equipment and materials are expected to be mainlyprocured by means of co-donor financing. Equipment or materials financedfrom the proposed Credit would be procured by ICB in accordance with Bankguidelines with eligible domestic bidders afforded a preference of 15%.Training equipment, contracts for which are expected to be less thanUS$50,000 (the total aggregate not exceeding US$500,000) will be procuredunder local competitive bidding under Government procedures satisfactory to

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the Association and in which foreign suppliers are eligible to participate.Equipment spare parts will be procured on the same basis as trainingequipment except that the total aggregate should not exceed US$1,750,000and to ensure compatability with THA's existing equipment, items may beprocured directly from the original supplier.

3.19 lechnical Assistance and Training: Ihese elements of the projectwhich will be financed under the proposed credit are estimated to have aforeign exchange component cost of about US$1.7 million. Ihey will beprovided by specialist consultant firm(s) who will be appointed from shortlists in accordance with the Association's guidelines.

3.20 Consultant Services: Engirneering and supervision services withrespect to the proposed works, are expected to be provided by the firm ofconsultants which has prepared the project.

3.21 NORAD financed works will be undertaken by a Norwegian contractorappointed in accordance with procedures of the agency. The Government ofthe Netherlands will appoint a contractor to undertake the grain facilitywork. Equipment (other than the training equipment to be financed by IDA)will be supplied by Danish and Finnish manufacturers in accordance withDANIDA and FINNIDA procedures, and by Italian manufacturers in accordancewith Italian Government procedures.

H. Disbursements

3.22 All disbursement requests shall be fully documented. A scheduleof estimated disbursements is shown in Table 3.4. The proceeds of theproposed Credit are expected to be disbursed against the followingcategories of expenditures. No withdrawals would be made in respect of therehabilitation and spare parts component (see (f) below) of about US$1.8million until the rehabilitation study (para 3.05 (xi)) has been completedand specific items prioritized.

(a) civil works: 100%o of foreign costs;

(b) PPF Advance for enigineering consulting services: 100%;

(c) consultants for supervision of civil works: 100% of foreigncosts;

(d) technical assistance and training: 100% of foreign costs;

(e) training and workshop equipment; 100% of foreign costs; and

(f) equipment spare parts; 100%o of foreign costs.

3.23 Assuming that the credit can be declared effective about March1985, the project should be completed at latest by December 31, 1989, theclosing date of the credit being June 30, 1990.

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3.24 In view of the simple nature of the works involved, the use offoreign contractors, suppliers and consultants for the supervision, thattenders have been received, and that contractors should be able to mobilizeon site rapidly after contract award, it is considered that the standardTanzania disbursement profile should not apply in this case. The projectshould be completed within about five years of Board approval and not nineyears as provided in the Bank's standard profile for Tanzania.

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TANZPNIA

PORI REHABILIATION PROJECT

Table 3.1 - APPRAISAL COS1 ESTIMAIE

Local ForeigT lotal Local Foreion lotal °,TSh Umillion) TWElli) Foreign

Excharie

A. Adva-ce Works

1. Kurasir Oil leniinalRehabilitation 15.3 23.8 39.1 0.9 1.4 2.3 61

2. Pipelire Diversicx 1.7 1.7 3.4 0.1 0.1 0.2 503. Lighterage Quay Renovation 34.0 3.4 37.4 2.0 0.2 2.2 9

SW-Total 51.0 2B.9 80.1 3.0 1.7 4.7 36

B. Main Project Civil Works

1. Contairer Terminal andUbun Depot 160.0 270.0 430.0 9.4 15.9 25.3 67

2. Grain Facility 42.5 144.5 187.0 2.5 8.5 11.0 78

SWb-Total 202.5 414.5 617.0 11.9 24.4 36.3 71

C. Project Equipnent

Container and lburgoTerminal Equipnet 6.8 214.2 221.0 0.4 12.6 13.0 97

Other Contairer Equiipwt - 11.9 11.9 - 0.7 0.7 100

General Carqo EquipTet - 28.9 28.9 - 1.7 1.7 100Navigation & Connunication Eq. 3.0 13.6 16.6 0.2 0.8 1.0 808,are Parts - 30.6 30.6 - 1.8 1.8 100

Su-Total 10.0 299.2 309.2 0.6 17.6 18.2 97

D. lechnical Assistanceand Irairuwg

lechnical Assistance 10.2 32.3 42.5 0.6 1.9 2.5 76Iraining 2/ 5.1 20.4 25.5 0.3 1.2 1.5 80

SWb-Total 15.3 52.7 68.0 0.9 3.1 4.0 78

E. Consulting Services 3/ 11.9 42.5 54.4 0.7 2.5 3.2 78

lotal Baselire Costs 290.6 838.1 1,128.7 17.1 49.3 66.4 74Physical Contingencies 33.0 36.0 69.0 1.9 2.1 4.0 53Price Contingencies 219.0 129.0 348.0 13.0 7.6 20.6 37

Total Costs 4/ 542.6 1,003.1 1,545.7 32.0 59.0 91.0 65

1/ Canversion rate Tsh 17.0 US$1.0.2/ Includes US$400,000 training equipTent.3/ Incluces lJS$950.00 fina-ced fran PPF avaece.4/ Identifiable taxes ard duties are estimated at Ish 160 miflimn (US$9.4 million

equivalent) therefore ret of tax project cost is 1sh 1,385 millioa.

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TANZANIA

PORI REHABILITAIION PRJECT

Table 3.2 - Project Fin'trir9 Plai (Tsh millions)

Project Carpanert INORAD IDA I Netherlands | DANIDA FINNIDA Italy MA TM

i I I I I L IKuras" Foreign - I Local IKurasIJ I 28 1 1 1 I I I 1 26 1

Pipeline Diversion 2 8 26Lighter Quay I 1 321 * I I I 1611

Container Tenrinal I I 325 I I I 1318and Ubuo DepotGrain Facility I I | 175 I I I I 179

Equipment A I I I 1 134 I I 1 7 IB I I I I 116 I 5 1C II 8 l 1 1 I I I ID I I I I I |65 I 151E I 341 1 1 1 1 1

Tednical Assistance I I IBaidari 1 12 1 1 1 1 1 1 1 6 1

;.gram CAArdination I i 1 6j 31O0her I 1 251 1 1 I I I9 ITrainin 1 81 41 1 1 1 1 151Training _quipment 81 3 1 1 1 131Consultant Services I I 50 1 1 1 14 1

TOTAL I 48 I 459 1 175 I 134 1 116 1 65 I 6 1 543 I

Equiprent A = Container gmtry cranes.B = Container yard cranes and eqipient.C = Workshop equWinent.D = Other container equiprent, general cargo equipment, navigation and

comrunication aids.E = Spare parts.

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PORT REHABILIIAIION PROJECT

lable 3.3 - Dry Cargo Handling Rates

I I Average Average I AverageI I Berth I Cargo/ I CargoI I Time I Gang/Shift I Ship/dayActivity (days) I (tonnes) | (tonnes)

I _ I _I_A _

Year I 1981 11988 i 1981 1 1988 1 1981 1 1988 Il~~_ I __I. 11

IBreak bulk I I I I I

Main Quayl 7.9 17.5 I 48 150 1 422 1 450 IStream 1 7.5 17.0 40 45 1 159 1 200

|Bagged) I I I 57 |65Bulk grain 1 17.7 16.0 1 - 1 I 718 1 2,400

IContainer 2.7 1 - I I85 IEU I300 TEU______I j____ I ship/dayl ship/day I

Note: The expected improvements in break-bulk handling are quite modest,in view of the reasonably high level of efficiency presentlyexperienced, and the probability that as containerization proceeds,the residual break-bulk cargo will be that with comparativelydifficult handlirng characteristics. Bagged cargo also has littlescope for improvement. The main impact will be on bulk grain, andon container traffic, where the improvement forecast are based uponthe technical characteristics of the new facilities.

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TANZANIA

PORI REHABILITATION PROJECI

Table 3.4 - Estimated Schedule of Disbursements

IDA -------US$ million equivalent --------Fiscal Year Quarterly Cumulativeand Quarter Disbursements Disbursements

1984-85

June 30, 1985 1.35 1.35

1985-86

September 30, 1985 2.00 3.35December 31, 1985 2.20 5.55March 31, 1986 2.20 7.75June 30, 1986 2.20 9.95

1986-87

September 30, 1986 2.20 12.15Dlcember 31, 1986 2.20 14.35March 31, 1987 2.20 16.55June 30, 1987 2.20 18.75

1987-88

September 30, 1987 2.20 20.95December 31, 1987 2.20 23.15March 31, 1988 2.20 25.35June 30, 1988 0.30 25.65

1988-89

September 30, 1988 0.30 25.95December 31, 1988 0.30 26.25March 31, 1989 0.30 26.55June 30, 1989 0.15 26.70

1989/90

September 30, 1989 0.15 26.85December 31, 1989 0.15 27.00

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IV. ECONOMIC ANALYSIS

A. Future Traffic

4.01 The future levels of Dar es Salaam port traffic will be largely afunction of the speed with which the economies of lanzania and Zambia, andto a lesser extent, ZBR, recover from the current recession. The pro-portion of Zambian traffic transitting Dar es Salaam is not forecast tochange significantly, nor is that of ZBR traffic. These assumptions may beconservative, particularly regarding Zambian traffic, given1 that theproposed project should significantly increase Dar es Salaam operationalefficiency and that there are prospects for improvement in the effectivecapacity of TAZARA both in the short term, through assistance from FederalRepublic of Germany, and in the longer term, with Bank Group involvement.

4.02 In aggregate, non-petroleum traffic is forecast to recover by1987 to rather less than the level recorded in 1977, and thereafter to growat under 3-1/2%o p.a. to 1992. While recovery and growth would be areversal of recent experience, it is generally accepted that imports,excluding foodstuffs, are at a highly constrained level, both in Tanzaniaand Zambia, that an easing of import restrictions is regarded as aprerequisite for recovery in the export sectors, and that, with populationgrowing at 3.5% p.a., there is an underlying pressure for growth in theaggregate levels of economic activity and, inter alia, foreign trade.

4.03 Traffic projections based upon a recently completed study by IHAconsultants are detailed in Tables 4.1 to 4.3.Exports

4.04 In the period to 1988, and even thereafter, Tanzanian exportgrowth is likely to be slow and total exports will increase slightly to288,000 tons in 1988 with, however, agricultural exports remaining at the1981 level with a slow recovery thereafter to a level in 1992 about the1976-81 average level. The modest growth of non-agricultural exports isexpected from surplus production of paper and cement factories that willshortly come into operation.

4.05 The main Zambian export is copper and both total exports and theshare transitting Dar es Salaam have declined from the levels of themid-1970's. Total exports are forecast to remain stable at about600,000 tons. This is in line with industry forecasts. The Dar es Salaamshare is predicted to remain at the level of the last recorded three years,about 75% (446,000 tons in 1988) of total copper exports from Zambia. Inview of prospective increases in TAZARA's effective capacity, and in thatof Dar es Salaam port, this is a conservative estimate. Other actual andprospective exports of significanice are lead and zinc, exports of which areexpected to remain relatively stable at current levels.

4.06 The main ZBR exports are coffee and, from Zaire, copper and otherminerals. Coffee exports via Dar es Salaam are expected to be approxi-mately stable through 1988, but thereafter better surface connections inTanzania through,Isaka are expected to result in doubling of Rwandan

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exports of coffee through Dar es Salaam. Copper exports are constrained bythe lack of capacity on the TRC system (including the bottleneck port ofKigoma). Ihe consultants realistically assume it will take several yearsfor these constraints to be overcome and consequently only a modestincrease in Zairian mineral exports via Dar es Salaam is forecast for 1988,with a greater increase thereafter.

Imports

4.07 A significant proportion of total Tanzanian imports in recentyears has been for externally financed projects. On average, in 1979-80 to1981-82 they accounted for 37°% of the imports by value. Many of theprojects so financed are operating below capacity because of raw materialand spare part shortages. Government, through its Structural AdjustmentProgram (SAP), and aid agencies have indicated that the main thrust in thenext several years will be to ensure that these shortages are alleviatedrather than to commence new projects. It is against this background thatthe Tanzanian import forecasts should be viewed.

4.08 Total Tanzanian dry imports are forecast to increase from 713,000tons in 1981 to 905,000 tons by 1988. This ;s marginally higher than thetotal reached in 1978. Grain and flour imports are expected to remain at ahigh level, about 235,000 tons; lower than in 1981 but about double the1978 level. The main explanation is the probable slow growth of domesticgrain production and a continued growth in population. Similarly, a returnto a more "normal" level of vehicle and machinery spare part imports ispredicted while import substitution in cement and paper should reduceimports of these commodities. The main problem is the availability offoreign exchange to pay for even this modest growth. Should this problemnot be resolved, imports may continue to be highly restrained.Accordingly, the sensitivity analysis assumes non-grain imports remainingat about the 1976-81 average of 558,000 tons to give total imports of800,000 tons in 1988.

4.09 There are two critical factors determining the volume of Zambianimports through Dar es Salaam: the total volume of imports (in turndependent upon Zambian economic conditions) aind the ability of the Dar esSalaam route to provide a service comparable to the southern (essentiallyThe Republic of South Africa ERSA]) route.

4.10 Bank projections show copper prices increasing from $1592/ton in1983 to $2402/ton by 1985 in current prices and accordingly, a recovery ofimports through Dar is forecast to approximately the average 1978-81 levelby 1987. This is equivalent to an increase in volume of 34% over theadmittedly abnormally constrained 1981 level. Supporting this projection,there is no doubt that the Dar es Salaam route, if operated efficiently,represents the lowest cost route by at least .20%. Even allowing for thefact that some mining supplies inevitably oriiginate in RSA, there arestrong reasons for believing that the proportion of traffic passing throughDar es Salaam will increase: (i) the project port improvements will makethe port attractive compared with the RSA alternatives; (ii) the rail(TAZARA) system capacity and, hopefully, efficiency will also be improved;

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and (iii) the advent of containerization provides a significant benefit, byvirtue of its suitability for "Through Bills of Lading", for a countrywhose importers are relatively poorly represented at the port of entry, asis the case at Dar es Salaam. The main features are a fairly stable levelof grain imports, reflecting increased demand due to population growthbeing offset by increased domestic production, arid a recovery in the broadrange of intermediate and consumer goods which were heavily constrained involume in 1981.

4.11 ZBR imports are mainly for Burundi. The future ZBR imports are,therefore, primarily a function of the growth of Burundian imports, theshare handled by Dar es Salaam, and the possible penetration of the Dar esSalaam route into the Zairian and Rwandan traffic. Burundi imports areexpected to grow in line with the forecasts made in the Bank's study("International Transportation Bottlenecks Affecting Rwarida and Burundi"),and the Dar share should lie in the 40-45% range. The Dar es Salaam sharehas fluctuated between 82%o arid 34%0' and there is little doubt that thedeficiencies of the lake-rail service via Kigoma and TRC have been thecause of the decline to the lower percentage. How quickly these inlandtransport problems can be addressed is problematical, but attention hasbeen focused on them by a CIDA-financed study published in 1981, ("TanzaniaRailways Iransport Sector Study", by W.F. Crandall), and in anEEC-sponsored meeting in February 1982 to discuss the Central (and Northernvia Kenya) Transport Corridor development. If these transport problems areaddressed, the share of traffic on the Dar es Salaam route, which is theshortest and cheapest for Burundi, could irncrease. Taken together with theassumption that Rwandan traffic through Dar es Salaam will remain stablethrough 1987, the aggregate ZBR import is forecast to increase by 27%' by1987.

4.12 For 1992, however, a marked shift in Rwaridari imports routing isenvisaged due to the prospective improvement in land/rail connections viaIsaka on the TRC system with an increase in the Dar es Salaam share to 15%'to 20%o (about 40,000 tons) in 1992.

Container Penetration

4.13 A high proportion of non-bulk traffic, some 80%o to 85%' byconsultant estimates, is containerable. In 1982, only about 10% actuallywas containerized. Ihe critical determinant of future container trafficis, therefore, the speed of pernetration rather than the overall growth oftraffic. Consultants analysis, which assumes that by 1987 only theEuropean and North American routes would have full container services,indicates that by that time about 500,000 tons, or 23%' of non-bulk trafficwould be conitainerized. Ihis seems low, particularly in view of theattractions of containerization for land-locked countries and a more rapidbuild-up to 600,000 tons is accordingly forecast. This should increase toabout 1,100,000 tons by 1992. The forecast traffic volumes for 1987 and1992, disaggregated by country and mode of handling (container, bulk andresidual general cargo), are shown in Table 4.3.

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B. Project Benefits

4.14 Three main features of the prospective operations of the port inthe short and long terms, without or with the project, can be discerned.First, with an undramatic forecast rate of :Lncrease in traffic, operatingconditions would not become intolerable without the project for three orfour years. Secondly, because the work on berth 9 and on 10/11 followsequentially with an overlap of the latter with grain terminal work, therewill inevitably be disruptions to normal port activity in 1985 and 1986.As a result of this, the effective capacity of the main berths will bereduced from 11 to about 9-3/4 during this period. Thirdly, as a result,the provision in advance of the main works of adequate lighteragefacilities is desirable to enable some diversion of traffic from the mainberths while the main works are executed.

4.15 In analyzing the net economic benefits of operational improve-ments, the following procedure has been adopted: (i) the justification forlighterage investment is demonstrated; (ii) the benefits and costs of themain works (repaving berth 9, conversion of berths 10/11 to containerterminal, provision of grain handling facility) are analyzed assuming thatadequate lighterage facilities will be provided. In these calculations,the lighterage investment and increased operational costs are included aspart of the project.

4.16 To make the above calculations, a number of assumptions have hadto be made. These are based on consultants' operational assessmentsmodified in the light of experience at other ports. ihey are: (i) generalcargo will be handled at about 540 tons per day average of bagged and breakbulk cargo; (ii) container traffic would be handled at about 85 TEU (1,000tons) per operating day without the project, increasing to 300 TEU with theproject; (iii) the grain facility will increase discharge rates from about700 to 2,400 tons per day; (iv) lighterage will be employed only after mainberth occupancy reaches 80%, except for a base lighterage traffic of100,000 tons per year resulting from seasonal and other fluctuations intraffic; and (v) container traffic will rise to 610,000 tons by 1987 and1,096,000 tons in 1992, on the best traffic forecasts. Obviously, theseassumptions are all subject to margins of error. However, it is clear thattwo features emerge: (i) container traffic will continue to grow rapidlyand (ii) realization of the benefits of this development will be frustratedif appropriate facilities and equipment are not provided. This isdemonstrated in the calculations below of berth utilization and resultingship waiting time.

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Berth Utilization and Ship Waiting lime

1981 1982 1988 1992

Without Project Act Est Forecast

Utilization % 80 83 93 100 1/SWT (days) 3/ 400 675 3167 3167

With Project

1. With Container Terminalonly utilization % 90 83SWI days 1420 624

2. With Container Terminalanid Grain Facilityutilization 80 74SWI days 402 227

1/ Assumed increase in occupancy beyond 93%O translated into "paperquere" of ships and actual SWI remains constarnt.

Civil Works and Container Facilities

4.17 The works to be undertaken on berths 9, 10 and 11 will inevit-ably cause disruption of activity over these berths, adding to pressure onthe capacity of other mainline berths and through that, to demand forlighterage facilities. There is thus a need for the lighterage wharf to berehabilitated as soon as possible. Ihis work is expected to be completedabout two years before the main container terminal, and during this periodwould partly offset the reduction in effective capacity of the port. Ihebeneficial effect wuld be at least the equivalent of 300 swd per yearduring the two years, or US$1.8 million per year. As the facility willcost only US$3.0 million equipvalent to rehabilitate, almost all in localcosts, and will generate some additional benefits, which however aredifficult to quantify with acceptable precision, in handling surges intraffic after the project is completed. The facility has a payback periodof under two years and its inclusion in the project is well justified.

4.18 Despite stagnation in total traffic, containerized traffic hasgrown rapidly in the last three years. It has now reached the level wherefurther growth could be inhibited for lack of suitable space behind theberths to receive containers from ships, to stow them prior to transit toinland destinations, and to prepare them for outward loading with orwithout export cargo.

4.19 The effective capacity of the port is a function of (i) the timecontainers stay in the port area (the "dwell" time), (ii) the availablearea for storage and the density of storage, i.e., the number of containers

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that can be stored in a given area. The dwell time in port is partly afunction of port storage tariffs, alternative storage space, and thegeneral efficiency of container operatiorns. Tariff measures are beingtaken by IHA to increase the incentive to move containers out of the port,and the project will, in addition, provide storage facilities outside theport area. In addition, an increase in the number of movements shouldenable operational procedures to become smoother, resulting in fastermovement through the port. This will, however, require expertise aridtraining which will be provided under the technical assistance and trainingcomponent of the project.

4.20 The area available for storage wi:ll be increased by (i) reorgan-izing the layout of berths 9, 10, and 11, including the removal ofunclaimed goods which presently occupy space behind the transit shed onberths 10/11 and, (ii) removal of the trans.Lt shed and its re-erectionoutside the port area. The density of storage will be approximatelydoubled as a result of adoption of new handling methods, based upon gantrycranes in the storage area, compared with the present forklift trucksystem.

4.21 The net effect of the above measures is that the containerhandling capacity of the port will be increased to about 120,000 TEU peryear. This exceeds the container traffic forecast for 1992. Without theproject, only limited improvements could be made and the capacity would notexceed about 30,000 TEU per year, and could well be constrained to a lowerfigure through organizational weaknesses.

4.22 Should container traffic growth be restricted by lack offacilities, there would be three main result:s. First, more traffic wouldmove in general cargo form, with a resultant decrease in berth productivityand increase in congestion. Secondly, the speed of discharge and loadingof containers would be reduced. Thirdly, the benefits from containeriza-tion in terms of reduced cargo damage arid Iciss would be correspondinglyreduced.. The economic costs resulting from these factors constitute themeasurable benefit from this project element. Furthermore, and moreproblematically, the port's role as a transit port for Zambian and ZBRtraffic could be reduced, with consequent loss of foreign exchange earningsfor Tanzania. The extent of this decline is difficult to predict and thenet economic costs even more so, and these effects have, therefore, notbeen included in the economic analysis.

4.23 The unit benefit streams are based upon (i) 1984 estimated costsof waiting time in port for ships, and (ii) for calculation of benefitsfrom damage and loss avoidance, an estimated reduction in insurance costsequivalent to about 1/2% of average c.i.f. value of general cargomultiplied by the volumes of container traffic in excess of that whichcould be handled efficiently without the project.

Grain Handling

4.24 The present bulk grain handling methods are primitive. Dischargefrom the ship is either via a vacuvator of limited capacity, or by grabwith the grain then being loaded directly into trucks. There is

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substantial spillage, and, with year-round activity, spoilage during therainy season. The wastage and spoilage have been estimated by theconsultants to be equivalent to about 2-1/2%O' of volume in aggregate.Additionally, the overall discharge rates are very slow, partly due to thepoor state of the equipment, partly to shortage of trucks. The net resultis that discharge rates vary between about 650 and 1,000 tons per day,averaging about 750 tons per day and resulting in an 18,000 ton ship (thenorm for wheat) taking up to a month to discharge. It is not uncommon fortwo ships to overlap with the result that two berths can be pre-empted forlong periods.

4.25 The proposed facility should largely eliminate these deficien-cies. Grain will be discharged in covered conditions, at a high rate (ofup to 300 tons per hour) and conveyed by conveyor belt or a truck shuttleservice to storage. An average discharge rate of 3,000 tons per day shouldbe achieved and, on that basis, berth occupancy by grain ships should bereduced by about 75%. This reduction constitutes the first benefit. Inassociation with this, the demurrage payments resulting from excessive timespent at berth by ships should be virtually eliminated. Details of thesepayments are not readily available for Tanzania and Zambia cargo, but basedupon experience elsewhere are estimated at up to US$500,000 p.a. Finally,significant (i.e. about 50%°) elimination of loss and spoilage constitutes amajor benefit. Employing wheat as the main import, the benefit will amountto about US$6.0 per ton.

Kurasini Oil Jetty

4.26 The Kurasini Oil Jetty (KOJ) is in a hazardous condition and thealternatives are to repair and re-equip or rebuild elsewhere. Rebuilding(a site at Kigomboni on the other side of the harbor has been considered)would enable larger ships to be accommodated. However, with a virtuallystatic volume of petroleum product traffic, larger consignments would leadto more infrequent deliveries. The net benefit from larger ships would,therefore, be small and, as the jetty cannot be used for any other traffic,the reduced occupancy would confer no benefits. Accordingly the projectprovides for rehabilitation of the existing jetty to its original state.

4.27 The benefits from this project element are, therefore, the sub-stantial reduction in the risk of conflagration that could be induced bythe present state of KOJ, and which could not readily be controlled withthe existing fire fighting equipment. Ihe potential benefit, accordingly,ranges between zero (if no accident occurred) and a sum well in excess ofthe rehabilitation cost if it did (a product tanker and its cargo of thesize employed to service Dar would be worth about US$25-30 million in 1983prices). An ERR calculation is, therefore, not meaningful for this projectcomponent. The cost has, however, been included without attributiori ofbenefit, in the calculation of total project ERR.

4.28 The economic cost and ben1efit streams are shown in lable 4.4.The ERR on the overall project is 33%0; on the container terminal andassociated equipment it is 37%0 and on the grain facilities 47%'. lhe rateof return in the first full year of operation (1988) is 29% indicating theproject is already overdue.

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Benefit Distribution

4.29 Shipping services to Dar are highly competitive with conferencesforced to monitor carefully rates charged by non-conference lines andadjust their.rates accordingly. Thus, benefits related to avoidance ofincreasing and excessive congestion, with resultant ship delays, can beexpected to be translated directly into shared benefits to Tanzania, Zambiaand ZBR. In the absence of a better allocation mechanism, the assumptionis that the share of these benefits is proportionate to traffic. Thereduction in damage can be expected to benefit consignee and consignorequally, while the grain facility benefits (loss and spoilage anddemurrage reduction) are attributed to Tanzania and Zambia in proportion totheir grain traffic. On this basis, Tanzania obtains more than 50%O oftotal benefits directly. The secondary effects are difficult to estimate;if Dar es Salaam provides superior service to other ports serving Zambiaand ZBR it may be able to increase its tariffs in real terms and thusTanzanian foreign exchange earnings. Most probably, however, other portswill also improve and accordingly secondary effects are not included.

C. Sensitivity Analysis

4.30 A sensitivity analysis was conducted on the total project,employing the following assumptions separately or in combination:

(i) total non-petroleum traffic reduced by an average of 13° from2.35 million tons to 2.04 million tons in 1988, and from 2.78million tons to 2.42 million tons in 1992, with proportionatedecreases in intervening years. These reductions give aggregatetraffic in 1988 nearly 10%°o below the 1976-81 average;

(ii) investmernt costs increased by 10%o;

(iii) a slower than forecast growth of container traffic, reaching only400,000 tons in 1988 (rather than the level of over 500,000 tonsindicated by a reduction proportionate to that described in (i)above); and

(iv) a lower capacity to handle containers reasonably efficientlywithout the project (20,000 TEU per year) than in the baseassumption (para 4.21).

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Sensitivity ERR

I Traffic Iraffic (c) Efficiency 2/ II and i Container 1/ -33%"a'lI Operations (a) (b) Penetration -20% I Traffic -13% I

I Best| -13% | Traffic -13 1lICosts I I l I

Best estimate 133 I 12 .11 I 23I I I I I

____________ IL I I .i+10% 130111 1

I~~~~~~~~ ,1 1 i I I

1/ See paragraph 4.30 (iii).2/ See paragraph 4.30 (iv) .

4.31 The results of the sensitivity analysis shows that a project costincrease will not have a major effect on the ERR, but that reducedprojected traffic will, whether accompanied by reduced containerization ornot. The reasons are clear; currently the port is not heavily congestedarid generous assumptions have been made in the base case as to the IHA'sability to handle container traffic through an improvement in theefficiency of operations. Whether THA can in fact improve their efficiencysignificantly without external assistance is doubtful and the result ofassuming a smaller improvement in productivity (para 4.30 (iv)) is toincrease the sensitivity ERR on the reduced traffic scenario from 12 to23%. Alternatively, the sensitivity traffic reduction can be doubled, toabout -25%° on best estimate, and a project ERR of 12%°o would still beobtained. With respect to the grain facilities, even if traffic were only50%D of that forecast, the ERR would still be over 20%,o. The ERR in thesensitivity analyses, which range between 11 and 30%o compared with an ERRof 33%O from the best estimate, are considered acceptable.

D. Project Risks

4.32 The first risk is that even the modest growth in traffic forecastwill not materialize. In this connection it is noted that the aggregatelevel forecast for 1987 is only 7%0 above the 1976-81 average arid 10%O belowthe peak level of 1977. In any case the main physical focus of the projectis in provision of container facilities, the demand for which is certain togrow, and for improved handlirng of declining but substantial levels ofgrain imports. The second risk is of costs exceeding estimates. There isno guidance from recent experience as port work of this magnitude has notbeen undertaken in Tanzania for several years. In consequence receipt ofbids on the Association financed component of the project were requiredbefore finalizing the cost estimates herein. The third risk is thatinstitutional improvements will not materialize even at the modest rate

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projected. The fact that the introduction of new technology associatedwith containerization normally induces improved managerial methods (use ofcomputers etc.) should, however, minimize this risk.

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IANZANIA

PORT REHABILITATION PROJECI

Table 4.1 - NN--PETROLELM TRAFFIC FORECAST ITIHUM DAR ES SALAPM PORT 1/

1988-1992(0'00 tais)

1981 1982 1983 1988 1989 1990 1991 1992

EXPORTS Actual 1/

Taa,zaia 234.3 288 305 342 363 384ZaTbia 430.0 521 519 512 505 497ZBR 88.7 97 10B 135 151 168

Total 753.0 715 618 906 932 989 1019 1049

IMPORTSleaiania 712.9 905 930 983 1010 1034Zanbia 337.5 453 466 495 510 525ZBR 58.6 86 98 129 148 170

Total 1109.0 1459 883 1444 1494 1607 1668 1729

AGGREGATElaiza-tia 947.2 1193 1265 1325 1373 1418ZaTbia 767.5 974 985 1007 1015 1022ZBR 147.3 183 206 264 299 338

Total 1862.0 2174 1501 2350 2456 2596 2687 2778

1/ Malaian and Uqada traffic which has recently carenced roving through Dar es Salaan is notincluied in the above forecasts due to difficulty in estimation of future trends.

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TANZANIA

PORT REHABILITATION PROJECI

Table 4.2 - FORECAST OF COMMODlIY IRAFFIC IHROUGH DAR ES SALAAM PORI

1987-1992(000 tons)

1988 1992

IMPORT Tanzania Zambia ZBR Tanzania Zambia ZBR

Grain, Flour and Malt 240 72 na 200 68 naDairy Products 23 4 na 32 5 naCement 12 - - I 5 _ _Fertilizers 82 29 5 101 33 13Paper 12 16 - I5 8 0Lubricating Oil and Greases 29 13 na 34 16 naMachinery, Motor Vehicles,

and Spares 93 47 17 1 133 56 38Metal Sheets, Pipes, etc. 87 36 10 I 127 42 25Other Imports 327 236 54 397 297 94

TOIAL NONPEIROLEUM IMPORTS 905 453 86 I 1034 525 170

EXPORI

Grain and Flour 12 10 - I 12 15 _Cotton, Cotton Seed Cake and I

other Oilseeds 92 10 3 111 15 4Coffee 4 - 35 1 12 4Tea 13 - 3 17 - 4Sugar and Molasses 25 8 -I 37 10 4Tobacco 10 3 I 14 5 -

Other Agricultural Commodities 61 - - I 78 _ _Paper 8 - - 17 -Copper - 446 30 7 409 50Lead and Zinc - 41 20 - 39 25Other Minerals 13 3 3 29 4 4Cement 8 - -_ 8 4 4Other Exports 42 - 3 1 49 - 11

TOTAL NONPETROLEUM EXPORTS 288 521 97 384 497 168

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TANZANIA

Table 4.3 - PORT REHABILITATION PROJECT

Forecast Traffic

AGGREGATES AND BY HANDLING METHODS

Imports 1988 1992

Tanzania 905 1034Zambia 453 525ZBR 36 170

Total 1444 1729

ExportsTanzania 288 384Zambia 521 497ZBR 99 168

Total 908 1049

Grand Total 2350 2778

By Mode Cont. Bulk Other Cont. Bulk Othergc gc

ImportsTanzania 207 229 469 338 216 480Zambia 113 67 273 192 66 267ZBR 25 61 66 - 104

Total 345 296 803 1 596 282 851

ExportsTanzania 90 25 173 160 40 184Zambia 155 8 358 245 10 242ZBR -20 - 7995 - 73

Total 265 33 610 500 50 500

Grand Total 610 329 1413 1096 332 1351=====~~~~~~~~~~~ ~~~~~ === =====

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TANZANIA

PORT REHABILITA1ION PROJECT

Table 4.4 - Economic Costs and Benefits(US5 million)

1985 1986 1987 1988 1992

Total Costs 13.0 25.0 23.0 2.9 1/Total Benefits 25.0 - 28.1

Container Terminaland Ubungo Depot

Costs 8.0 16.3 16.0 (2.5 2/)Benefits Total 15.4 - 23.8(i) SWT Avoidance 14.7 21.3(ii) Damage reduction 0.7 2.5

Grain FacilityCosts: 2.1 4.6 4.0 - -

Benefits Total 9.6 4.3(i) SWT Avoidance 8.5 3.3(ii) Grain Loss Reduction 0.6 0.5(iii) Demurrage Reduction 0.5 0.5

Other Costs 3/ 2.9 4.1 3.0 2.9 1/ -

1/ US$2.9 milion p.a. 1988 and 1989.7/ Additional equipment estimated US$2.5 p.a. 1988-1990.3/ Kurasini lighterwharf other container and general cargo equipment, spares,

technical assistance and training, consultancy.

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V. FINANCIAL EVALUATION

A. General

5.01 The Tanzania Harbours Authority was established in 1977 under IheTanzania Harbours Authority Act of 1977 to maintain and operate the portsin Tanzania. Prior to the establishment of THA, the ports in Tanzania wereadministered by the East African Harbours Corporation which ceased to existwith the demise of the East African Community.

5.02 Effective from October 1977 the assets and liablities of the EastAfrican Harbours Corporation pertaining to Tanzania were taken over byTHA. The records of accounts of the East African Harbours Corporation andthe East African Cargo Handling Services have been taken as the basis fordeterming the assets and liabilities. The value of fixed assets have beentaken from the asset registers (the assets were revalued in 1975 on thebasis of a report by consultants Coopers and Lybrand, (UK)) and 49% of theloan liability reflected in the accounts as of October 1977 have beenadopted. The fixed assets have also been physically verified and listedand also evaluated by a task force of the MCW. Since this did not revealany material discrepancies with the accounts figures, no accountingadjustment is being made until the details are worked out on the recentagreement on the allocation of assets and liabilities of the East AfricanCommunity. Because of the delay in the compilation of the accounts, therehas been a delay in their audit and certification; but this is expected tobe remedied shortly (para 2.08).

B. Past Performance

5.03 The unaudited accounts of THA show a satisfactory financialposition. THA has recorded an operating surplus in all years since itsinception and has been able to accumulate fairly substantial cash reservesamounting to ISh 453 million by the end of fiscal year 1983. Details ofthe operating statement and the balance sheet for the years 1979 (the firstfull year of operation of IHA) to 1983 are given in Tables 5.1 and 5.2.

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5.04 Condensed operating statements for the years 1979 to 1983 aregiven below:

Summary Operating StatementsISh million)

Year Ended June 30 1979 1980 1981 1982 1983

Operating Revenue 520 524 664 726 755Operating Expenses(including depreciation) 419 488 487 566 630

Surplus 101 36 177 160 125Operating revenues have increased by about 27%o in 1981 because of theincreased tariff that was introduced in January 1981. The 16%°o increase inoperating expenses in 1980 as compared to 1979 was due to the increase insalaries and wages that was agreed with the staff union.

5.05 Condensed balance sheets for the years 1979 to 1983 are givenbelow:

Summary Balance Sheets(TSh million)-

1979 1980 1981 1982 1983

AssetsFixed Assets - Net 905 856 931 873 825WIP 200 220 105 99 117Investments 21 44 47 43 34Current Assets - Net 533 572 578 613 679

Total Assets 1659 1692 1661 1628 1655

LiabilitiesLoans 390 378 374 372 383Equity: Treasury Grant/Capital 4 16 28 32 79Retained Earnings 1265 1298 1259 1224 1193

Total 1659 1692 1661 1628 1655

Debt/Equity Ratio 24/76 22/98 23/77 23/77 24/76Return on net fixed

assets -'%' 11 4 19 18 15

The net current assets at the end of fiscal year 1983 include cash reservestotalling Tsh 453 million (Table 5.2). The current assets also include

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stores of ISh 47 million and sundry debtors of ISh 247 million representingabout 2.5 months consumption of stores and about four months revenue, whichfigures are satisfactory. Much of the outstanding revenue represents duesfrom Government departments. IHA is making efforts to clear theoutstandings. During negotiations, agreement was reached with Governmentthat appropriate measures will be taken to ensure that from September 30,1985, aggregate dues from Government departments do not exceed the totalamount billed to the departments during the previous 90 days.

C. Financial Forecasts

5.06 Financial projections up to 1990 have been made based onunaudited accounting data up to 1983 and the anticipated increase intraffic and expenses for the future. Ihe following assumptions have beenused in the projections:

(a) Revenues are based on the traffic forecasts given in chapterIV. Shipping charges are based on the percentage increase inships and their gross registered tonnage (GRI). Wharfagecharges on import and export traffic are covered by an advalorem rate. Berthing charges arid port dues are based on anincrease in the number of ships arid their GR1. Handlingcharges are based on the increase in traffic. A 10%O tariffincrease has been provided in fiscal year 1984 arid furtherincreases of 30%0 in 1985, 15%o in 1986, 20%,o in 1987 and 1988and 25%a' thereafter to provide for the annual increases inexpenses since 1983 and the resources required to meet thedebt service charges. IHA is presently undertakirng a costingstudy (para 2.14) and depending upon the speed of itsimplementation, other tariff increases may be introduced.However, THA will probably be in a stronger position to pressfor a program of substantial tariff increases once theproposed project is firmly underway.

(b) Expenses have been increased at 30%O per annum for inflationin 1984 arid 1985, at 25%°o in 1986 and 1987, and at 20%Oothereafter less a nominal reduction of 2%O' on account ofanticipated reduction in staff.

(c) Depreciation has been calculated on a straight line basisusing the commonly accepted standard rates currently appliedby IHA and on the assumption that the project assets will becommissioned by 1989.

(d) Foreign exchange cost of the project amounting to TSh 1003million will be financed from credits, loans or grantsprovided by the Bank Group and other aid agencies. Theproceeds will be on-lent to THA by the Government at aninterest rate of 11%o per annum and repaid in 20 years,including a grace period of 5 years. Local costs of theproject will be financed by IHA. The foreign exchange risk

will be borne by IHA but the fluctuations in foreign exchangeare not reflected in the financial statements.

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(e) Besides the project investment, an amount of ISh 20 millionper annum has been included for small items of a capitalnature. Ihese would be financed by THA.

(f) Debt service charges shown in the cash flow statement includerepayment of the loans taken over from the East AfricanHarbours Corporation.

Details of the financial projections are given in Tables 5.3, 5.4and 5.5.

D. Projected Operating Statements

5.07 The projections show that there will be an operating surplus eachyear between 1984 and 1990, though the level, of surplus will be below thoseachieved in the past. Ihis is mainly because of the estimated increase inexpenses. The proposed tariff increases will enable THA to generateenoughfunds to meet its escalating costs and debt service charges. Duringnegotiations agreement was reached with THA and the Government that, basedon the actual annual operating results of THA, the cash requirements ofTHA will be reviewed on the basis of the costing study being undertaken(para 2.14) and adequate tariff increases introduced so that sufficientsurplus is generated to meet all operating expenses, debt service chargesand new investment costs. Condensed operating statements are given below:

Projected Operating StatementISh millions)

1984 1986 1988 1990

Revenues 819 1258 1811 2830Working Expenses 717 1129 1667 2401Depreciation 69 71 73 133

Surplus 33 58 71 296

E. Projected Cash Flow

5.08 The annual cash flow is expected to be very satisfactory till theend of FY1986 (cash balance ISh 96 million) because of the satisfactoryoperating results, dependent on the tariff increases that are envisaged andthe limited debt service obligations. Provision has been made for annualrepayments of the loans that have been taken over from the old East AfricanHarbours Corporation and also of the new debt: incurred for the project.(Repayment of the latter will commence from fiscal year 1989). By the endof FY1986, THA would have incurred TSh 401 million towards the local costsof the project, leaving a balance of ISh 141 million to be incurred duringthe next three years. Because of this substantial investment, THA will be

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unable to meet its various obligations without a short-term loan ofTsh 7 million in 1987 and 1Sh 30 million in 1988. Taking these loans intoaccount, THA will be left with a limited cash balance in 1987-1989; butwith the completion of the project investments and an improvement inoperational results, THA, in 1990, will have a closing cash balance ofTSh 61 million after repaying these short-term loans of TSh 37 million.A summary of the cash flow statement is given below:

Projected Cash Flow(ISh millions)

Funds Required 1984 1986 1988 1990

Project - 664 9 3Other Investment 20 20 20 20Corporation Tax 63 52 24 151Debt Service 16 16 16 79Working Capital (13) 11 10 20

Total B6 763 79 273

Funds Available

Opening Cash 453 415 7 3Net Surplus 32 13 (27) 195Depreciation 69 71 73 133Loans - 431 36 3

lotal 554 930 89 334

Closing Cash 468 167 10 61

5.09 Although there is a satisfactory cash balance at the end of theproject period, it is dependent on the estimated revenues (based onappropriate tariff increases) and a limitation on the anuual capitalinvestment to be incurred by IHA. To safeguard IHA's cash position itwas agreed durirng negotiations that Government and THA will consult withthe Association prior to making any capital investment not included in theproject, involving in any financial year an aggregate amount in excess ofUS$2 million.

5.10 THA should continue to maintain a reasonable relationship betweennet cash revenue and debt service requirements. During negotiations itwas agreed that, unless the Association otherwise agrees, THA would notincur any debt if its net cash revenues for the fiscal year or the 12months immediately before the date of occurrence, whichever is greater,would be less than 1.5 times the maximum debt service requirements of anysucceeding fiscal year.

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F. Projected Balance Sheet

5.11 Due to the profitability of the operations, the satisfactory cashposition and the low level of long-term debt service requirements, theprojected balance sheets show a favorable position. They are given indetail in Table 5.5 and summarized below:

Condensed Balance Sheets(ISh millions)

1984 1986 1988 1990

Net Fixed Assets 776S 675 570 1822Work in Progress 25 900 1435 25Net Current Assets 681 387 218 355

Total 1482 1962 2223 2202

Loans 392 1142 1318 1169Equity:(i) Treasury Grant/Capital 95 568 778 979(ii) Retained Earnings 995 252 127 54

Total 1482 1962 2223 2202

Debt/Equity Ratio 26/72 58/42 59/41 53/47

5.12 The fixed assets reflect the value of assets taken over from theEast African Harbours Corporation and East African Cargo Handling Servicesas well as assets acquired by THA since 1977 and those expected to beacquired during the forecast period. The old assets had been revalued in1975 on the basis of the report of consultants appointed by the EastAfrican Harbours Corporation to review the assets and assign reasonablevalues to them depending on their technical condition and expectedremaining useful lives. The assets acquired since 1977 have been shown attheir acquisition costs. In view of the prevailing inflationary conditionsit will be advisable to revalue the assets periodically and to adjustsuitably the depreciation charges. Accordingly, during negotiations itwas agreed with the Government and THA that the assets will be revaluedon the basis of replacement costs not later than June 30, 1987 and everythree years thereafter. To enable THA to have sufficient financialresources to meet its operating expenses including depreciation, debtservice charges and additional investments in capital assets, it was alsoagreed with Government and THA that all appropriate measures will be takento ensure that the net operating revenues will be sufficient to yieldannual rates of return on net fixed assets in use, as periodicallyrevalued, of not less than 7%. However, since the rate of 7%0 might bedifficult to achieve in the two years immediately following the revaluation

- 55 -

of assets without a very large increase in tariffs, agreement was alsoreached io the effect that a review would be made of IHA's finances in thesame year as the completion of the revaluation of assets, at which timeagreement would be reached among the Government, IHA and the Association onan approoriate rate of return for the subsequent years that would reflectthe adequacies of THA's tariffs as well as IHA's financial requirements.Until such time of the revaluation of assets and subsequent review of THA'sfinancial requirements it is recognized that in the event of significantfluctuations in net operating income or large irncreases in the net fixedassets in operation by THA from one year to another, application of theminimum 7%O rate of return for each year may necessitate sharp increases intariff and other revenue measures in one year compared to another. In thisconnectiorn, therefore, agreement was reached to the effect that in theevent that such fluctuations or increases are due to these temporary orexceptional circumstances, IHA may adopt the principle of averaging oneyear with the other as provided by the THA Authority Act.

5.13 Ihe financial projections have not taken into account the effectof any future devaluation of the Tanzania shilling as it is not possible atpresent to estimate the quantum of devaluation and the stages at which itwill be introduced. Since the IHA is expected to accumulate a cash balanceof TSh 61 million by the end of 1990, after meeting the present estimatedlocal costs of the project, it should be able to meet increases in projectcosts because of any minor additional devaluation.

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TANZANIA

PORT REHABILITATION PROJECT

TANZANIA HARBOURS AUTHORITY

Table 5.1 - REVENUE ACCOUNTS(in million TSh)

Operating Revenues 1979 1980 1981 1982 1983

Shipping 14.0 12.4 15.4 17.4 17.8Wharfage 220.4 252.7 279.9 282.7 297.9Operations 178.2 160.8 206.1 253.2 263.5Storage 95.5 88.5 154.4 155.9 159.2Others 12.0 9.6 7.7 16.8 16.9

Total Operating Revenues 520.1 524.0 663.5 726.0 755.3

Operating Expenditure

Shipping 30.7 27.9 29.2 36.2 40.9Wharfage 44.3 48.4 30.1 39.7 44.8Operations 225.3 250.9 219.8 245.8 277.7Storage 7.2 7.2 6.8 13.7 15.4General 61.3 102.9 135.2 162.5 183.6

Total Operating Expenditure 368.8 437.3 421.1 497.9 562.4

Depreciation 50.1 50.3 66.0 68.0 68.0

Total Expenses 418.9 487.6 487.1 565.9 630.4

Operating Surplus 101.2 36.4 176.4 160.1 124.9

Non-Operating Revenue (Net) 13.3 13.6 0.5 0.6 0.6

Net Surplus 114.5 50.0 176.9 160.7 125.5

Working Ratio 71 83 63 69 74

Operating Ratio 81 93 73 78 83

Return on Net Fixed Assets - 11 4 19 18 15

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TANZANIA

PORT REHABILITATION PROJECT

TANZANIA HARBOURS AUTHORITY

Table 5.2 - Balance Sheet(in million TSh)

Fixed Assets 1979 1980 1981 1982 1983

Gross Fixed Assets 1532 1533 1674 1684 1704Less Depreciation 627 677 734 811 879

Net Fixed Assets 905 856 931 873 825

WIP 200 220 105 99 117Investment 21 44 47 43 34*

Total Fixed Assets 1126 1120 1083 1015 976

Current Assets

Stores 31 42 43 44 47Sundry Debtors 127 224 220 242 247Cash and Bank Deposits 441 365 375 394 453

Sub Total 599 631 638 680 747

Total Assets 1725 1751 1721 1695 1723

Liabilities

Loans 390 378 374 372 383Equity:Treasury Grant/Capital 4 16 28 32 79Retained Earnings 1265 1298 1259 1224 1193Current Liabilities 66 59 60 67 68

Total Liabilities 1725 1751 1721 1695 1723

Debt/Equity Ratio 24/76 22/78 23/77 23/77 24/76

* Pension Fund investments of EAHC to be transferred to a Public Trust in1984.

- 5B -

TANZANIA

PORT REHABILITATION PROJECT

TANZANIA HARBOURS AUTHORITY

Table 5.3 - Revenue Accounts(in million TSh

Operating Revenue 1984 1985 1986 1987 1988 1989 1990

Shipping 19.5 26.1 30.0 35.9 43.1 53.9 67.4Wharfage 325.8 435.4 510.7 600.8 721.5 901.8 1127.3Operations 283.6 378.5 435.2 522.1 626.2 782.8 978.5Storage 172.1 229.8 264.3 317.0 380.2 475.3 594.1Other 18.3 24.5 28.2 33.8 40.5 50.6 63.2

Total Op. Revenue 819.3 1094.3 1258.4 1509.6 1811.5 2264.4 2830.5

Op. Expenditures

Shipping 52.3 67.0 82.4 101.4 121.6 145.9 175.1Wharfage 57.4 73.4 90.3 111.1 133.3 159.9 191.9Operations 355.4 454.9 559.5 688.2 825.8 991.1 1189.3Storage 17.5 22.4 27.5 33.9 40.7 48.8 58.6General 235.0 300.8 369.9 455.1 546.1 655.3 786.3

Total Op. Exp. 717.6 918.5 1129.6 1389.7 1667.5 2001.0 2401.2

Depreciation 69.0 70.0 71.0 72.0 73.0 132.0 133.0

Total Expenses 786.6 988.5 1200.6 1461.7 1740.5 2133.0 2534.2

Op. Surplus 32.7 105.8 57.8 47.9 71.0 131.4 296.3Non-op Revenue (Net) (1.1) (13.2) (244.5) (T2.1) (98.0) (104.0) (101.0)Net Surplus 31.6 92.6 13.3 (24.2) (27.0) 27.4) 195.3

Working Ratio 88 84 90 92 92 88 85Op.Ratio 96 90 95 97 96 94 90Return on AverageNet Fixed Assets %,0 4 14 8 7 12 10 15

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TANZANIA

PORT REHABILITATION PROJECT

TANZANIA HARBOURS AUTHORITY

Table 5.4 - CASHFLOW STATEMENT(in million TSh)

Funds Required 1984 1985 1986 1987 1988 1989 1990

Project - 519 664 341 9 9 3

Other Investment 20 20 20 20 20 20 20

Corporation Tax 63 16 52 29 24 35 151

Debt Service 16 16 16 16 16 79 79Inc/Dec in Working

Capital (-)13 (-)4 11 15 10 29 20

Total 86 567 763 421 79 172 273

Funds Available

Opening Cash 453 468 415 167 7 10 3

Net Surplus 32 93 13 (24) (27) 27 195

Depreciation 69 70 71 72 73 132 133

Short-Term Loan - - - 7 30 - -

Project Loans - 351 431 206 6 6 3

Total 554 982 930 428 89 175 334

Closing Balance 468 415 167 7 10 3 61

- 60 -

TANZANIA

PORT REHABILITATION PROJECT

TANZANIA HARBOLIRS AUTHORITY

Table 5.5 - BALANCE SHEET(in miIlicn TSh)

Fixed Assets 1984 1985 1986 1987 1988 1989 1990

Gross Fixed Assets 1724 1744 1764 1784 1804 3301 3321Less Depreciation 948 1018 1089 1161 1234 1366 1499

Net Fixed Assets 776 726 675 623 570 1935 1822

WIP 25 350 900 1405 1435 26 25

Total Fixed Assets 801 1076 1575 2028 2005 1961 1847

Current Assets

Stores 53 61 69 77 88 90 92Sundry Debtors 222 215 220 230 245 260 279Cash & Bank Deposits 468 415 167 7 10 3 61

Sub Total 743 691 456 314 343 353 432

Total Assets 1544 1767 2031 2342 2348 2314 2279

Liabilities

Loans 392 727 1142 1332 1318 1245 1169Equity:

Treasury Grant/ 95 299 568 739 778 880 979Capital

Retained Earnings 995 674 252 192 127 74 54

1090 973 820 931 905 954 1033

Current Liabilities 62 67 69 79 125 115 77

TOTAL LIABILITIES 1544 1767 2031 2342 2348 2314 2279

Debt/Equity Ratio 26/72 43/57 58/42 59/41 59/41 57/43 53/47

- 61 -

VI. AGREEMENTS REACHED AND RECOMMENDATIONS

6.01 During negotiations, agreement was reached with the Governmentthat:

(i) Government concurs in the conditions for onlending of thecredit to THA (para 3.08);

(ii) it will execute a subsidiary Loan Agreement with THA,acceptable to the Bank. Execution of this agreement shouldbe a condition of credit effectiveness (Para 3.08, 5.06);

(iii) signing of the Danish, Finnish and Norwegian cofinancingagreements would be a condition of IDA credit effectiveness,with the Italian and Netherlands cofinancing to becomeeffective by June 30, 1985 (para 3.08);

(iv) arrears in payment of outstanding dues from Governmentdepartments to THA will be reduced to not more than anaverage of 90 days by September 30, 1985 (para 5.05);

(v) Government will annually review THA operational results andapprove adequate tariff increases as necessary (para 5.07);and

(vi) Government and THA will consult with the Association prior toany capital investment by THA in excess of the equivalent ofUS$2 million per annum (para 5.09).

6.02. Agreement was reached with THA that:

(i) Audited accounts shall be forwarded to the Association notlater than 9 months after the end of the financial year(para 2.08);

(ii) procedures for a periodic review of the tariffs, based oncosts, shall be introduced by September 30, 1985. Based onsuch review, proposals for tariff revisions shall be submittedto Government annually in sufficient time for inclusion inthat year's budget (para 2.14);

(iii) THA will commence a comprehensive manpower training program,including a mechanism for annual review satisfactory to theAssociation by December 31, 1985 (para 3.06);

(iv) THA will undertake a study on equipment rehabilitation by July31, 1985. The results of this study will form the basis forthe rehabilitation and of spare parts component of the projectand would be a condition of disbursement for this component(para 3.05 (xi) and para 3.22);

- 62 -

(v) THA will bear the foreign exchange risks (pare 3.08);

(vi) THA will appoint a project co-ordinator, on terms andconditions satisfactory to the Association, such appointmentshould be a condition of credit effectiveness (para 3.11);

(vii) on the project implementation schedule (para 3.12);

(viii) on the project monitoring format and data system (para 3.13);

(ix) THA will be responsible for preparation of a PCR (para 3.14);

(x) the THA shall not incur any debt if its net cash revenueswould be less than 1.5 times the maximum debt servicerequirements of any succeeding fiscal year (para 5.10); and

(xi) THA will revalue its assets periodically and that allappropriate measures will be taken to ensure achievement ofan annual rate of return on net fixed assets of at least 7%(para. 5.12).

6.03 On the basis of the above, the proposed project provides asuitable basis for an IDA Credit of US$27 million equivalent to theGovernment of Tanzania, on standard terms to be onlent to THA at aninterest rate of 11% p.a. for a period of 20 years including a grace periodof five years.

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ANNEX 1

TANZANIAPORT REHABILITATION PROJECT

Selected Documents and Data Available in the Project File

A. General Reports and Studies Relating to the Project

A.1 "Study on Conversion of Berths 9/10/11 to a ContainerTerminal" by Bertlin and Partners in association with theEIU and Felixstowe port consultancy service. June 1982 (Twovolumes plus supplementary report on RIG and RMG systems).

A.2 "Grain Receiving in Tanzania" by the Harry Starr Co. October1981.

A.3 "Technical Memorandum on the Problems Existing in VariousSectors of the THA by ILO, Geneva, 1981.

A.4 Proposed Material Handling and Preventive Maintenance Planprepared for the THA by Sheridan College of Technology andCIDA (Canada) November 1979.

A.5 "1978/1982 Revised Ports Development Programme" by THA, June1978.

A.6 "Review of Dar es Salaam Port Development Study" by Bertlinand Partners and the EIU, March 1979 in 3 volumes.

A.7 "Dar es Salaam Port development--Dockyard Expansion" byBertlin and Partners, December 1977.

A.8 "Rehabilitation of the Kurasini Oil Termainal--Final Reporton Inspection and Recommendations" by Bertlin and PartnersApril 1982, 2 volumes.

A.9 Dar es Salaam Port Development Tender Documents Bertlin andPartners, May 1984.

B. Economic

Details of Economic Evaluation.

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ANNEX 1Page 2

C. Administration and Financial

C.1 The Tanzania Harbours Authority Act 1977.

C.2 Expenditure and Revenue budget of THA for 1981-82.

C.3 lariff Book of Harbour Dues and Charges of THA-three volumes.

C.4 Financial Statements of THA for fiscal year 77-78, 78-79,79-80 and 80-81.

C.5 Detailed calculations for projected financial statements from1982-90.

C.6 Details of traffic handled by Dar es Salaam Port during 1980and 1981.

C.7 Dar es Salaam Port - Summary of Imported Containers, 1981.

C.8 THA - Summary strength against establishment as at March 31,1982.

- 65 -

Annex 2Page 1

TANZANIAPORT REHABILITATION PROJECT

Engineering Aspects: Scope of Engineering and Investigations

2.00 The first major element of the project is the creation of amodern container facility. Various alternative methods for developing sucha facility were considered by the consultants. The main limitation of thesite at berths 9, 10 and 11 (or any other site in the port) is the shortageof flat land adjacent to the quayside. This makes it very important tomaximize the use of space and to exclude from the terminal all superfluousfunctions. Essential functions that have to be included in a containerterminal are an effective and efficient control system and maximumutilization of available land for the following activities:

(a) length of quayside able to support container gantry cranes;

(b) stacking yards for import/export loaded containers;

(c) stacking yards for empty containers;

(d) stuffing/stripping of LCL and port-to-port containers (theseoperations require a shed);

(e) customs inspection of containers (requires a shed see (d)above);

(f) terminal gate and control building;

(g) holding areas for trucks entering the terminal;

(h) railway transfer terminal; and

(i) maintenance workshops and equipment storage areas.

It has only been possible to exclude items (c) and (d) from the port sitein this particular case and some storage of empty containers must beprovided in the port, but limited to those just landed or awaiting export.An existing depot UBUNGO, located outside Dar es Salaam will berehabilitated under the project for (c) and (d). In addition, a Zambiafreight station Kurasini lerminal, will be constructed just outside theport area using the transit shed relocated from the berths 10 and 11 tostore Zambian import traffic, which is slow in being cleared from the port,in order to keep the port tranisit sheds and open storage areas clear.

2.01 The existing quays are strong enough to support the proposedelectric powered container gantry cranes with only minimal alterations to

- 66 -

Annex 2Page 2

the beam supporting the rear rail, providing that the crane loadings arekept within reasonable limits and the loads are spread over a large numberof wheels. The task of laying the rails will commence at the south end ofberth 11 and progress through berth 9 so that only half a berth will becompletely out of action at any one time. Similarly, the erection of thecranes will commence on berth 11.

2.02 The THA have decided to adopt rubber tire gantry cranes in thecontainer stacking area. All the horizontal movement of containers withinthe terminal area will be made with tractors and trailers using theelevating fifth wheel type which will graduially phase out the older tow bartrailers currently in use.

2.03 The rail terminal for the transfer of containers on and off railwagons is ideally located at the back of berth 11. The proposed designallows for a cantilevered rail-mounted gantry crane spanning two TRCtracks, three TAZARA tracks (one of which allows permanent through accessto other port areas), two lines of stacked containers and two road transferlanes. During the project implementation phase, the TRC rail interfacewill take place in the mid-port berth 8 area and the TAZARA rail access atthe back of the customs shed.

2.04 The second major civil works item in the project is the grainhandling facility. Following considerable discussion and investigation, theTHA has agreed to the use of galvanized steel silos for bulk grain storageon a higher level site recently acquired by the IHA (disused powerstation area). The use of steel, rather than concrete, silos results in asubstantial cost saving and since the grain is not expected to be storedfor long periods, no problems of deterioration are expected. Provision forthe future installation of aeration equipment has been included.

2.05 Four portable, electrically powered, discharge suction machines(with one spare) will discharge grain from the vessel through 25 tonstorage hoppers on to a 400 tons/hour capacity conveyor belt installed in areceiving gallery running parallel to berth 4. Through a transfer towerthe grain is then carried on another conveyor to the silos. A singleelevator then conveys the grain to two lines of feed-in conveyors to theintakes in the tops of the ten silos. The bins are flat-bottomed and grainis drawn out onto a central conveyor in a tunnel under the foundations.Road trucks can be loaded in bulk at the silos and a bagging plant is alsoincluded. A rail loading point has been provided at a mid-port site behindberth 5. A bagging plant for direct loading to TRC and TAZARA wagons isincluded and bulk handling can be provided in future. A direct conveyorlink to the existing NMC silos is also included.

67 -

Annex 2Page 3

2.06 The location of the road truck-loading facility will be outsidethe customs fence of the port and thus the present gate congestion causedby grain trucks will be removed. Ihe works on the lighterage quay arestraightforward and present no problems.

2.07 All the civil engineering works have been based on extensive siteinvestigations, testing and up-to-date surveys. Included in the project isa further amount of sea bed soil irnvestigation needed for the futuredredging of a container vessel turning circle opposite berths 8 and 9. Thedredging work is not included in the project but will be carried out sometime in the near future when dredging plant and foreign exchange areavailable.

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Annex 3Page 1

TANZANIAPORT REHABILIIATION PROJECT

Channel Improvements

3.01 It is widely accepted that the navigational characteristics ofthe channel entrance into the port are already unsatisfactory for thelargest ships currently entering the port, and inhibit the introduction oflarger ships, particularly fully cellular container ships.

3.02 Presently the largest container shlips which can enter the portare of about 1200 TEU capacity. If the channel were to be improved, largercontainer ships could be expected to be introduced within the next fewyears on Dar es Salaam's routes. In the foreseeable future these would beof about 1500 TEU capacity. For the main trade route to Europe, thesavings in unit transport cost per container from employing these ships issignificant, amounting to about US$50 per container in 1981 prices.

3.03 Presently the services from the U.K., the most important singletrading route for Dar es Salaam, are rapidly becoming containerized, andmajor North European companies are expected to join the British East AfricaContainer (BEACON) consortium in the near future.

3.04 BEACON services are already on a two-week basis. With serviceexpansion, either the frequency or the optimum size of vessel couldincrease. BEACON consider that the latter is more probable (and hencethat the delivery per call would become larger), reflecting the beliefthat, provided there is a reasonably frequent service, customers are moreinterested in a reduction in sea freight charges than increased servicefrequency.

3.05 The ship size and the annual volume of containerized traffic onthe approach routes are the main determinants of benefits from channel im-provements. On the basis of best traffic estimates the volume of containertraffic on the British/European routes, which are the only ones likely toemploy the 1500 TEU ships in the future, could increase to about 57,000 IEUimport/export movements per year by 1992. Assuming 50% of these movementstook place in 1500 TEU ships (and it should be noted that the 1150 TEU, oreven smaller, ships might still be optimal for some segments of this traf-fic) the savings would be about US$1.4 million per annum. If the same as-sumption were applied to all trade routes, the savings would increase toUS$2.1 million. No other types of ship are currently, or prospectively,prevented from entering the port by channel configuration; petroleumproduct tankers and bulk grain carriers serving Dar es Salaam are unlikelyto increase in size.

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Annex 3Page 2

3.06 A second set of benefits attributable to channel deepening(rather than widening and straightening) is the reduction in delays whileawaiting suitable tide conditions. There are two aspects to this. First,the high tide that occurs during darkness cannot be utilized by deep seaships, due principally to the absence of navigation aids. If these wereprovided, delays presently experienced could theoretically be reduced byhalf. Secondly, even if such aids were introduced there would still bedelays due to the necessity for larger ships to await high tide, or nearhigh tide, conditions. The benefits from the combination of installationof navigation aids and deepening the channel to 9 meters below chart datumshould yield benefits amounting to about US$2.9 million per annum by 1992.

3.07 Assuming a moderate growth in the total benefits, after 1992, ofabout 10%O per annum, which would be compatible with a slow growth of totaltraffic ofabout 3%O per annum and an increase to about 75%' in containerpenetration of general cargo by the early 21st century, the ERR on ChannelImprovements would be about 11 to 12%'. Even if the assumptions were madethat the incremental cost of deepening to 10 meters was negligible (due toeither narrowing the channel at the 10 meters depth or through theoperational costs of dredging the additiornal meter being small) and thatthis would eliminate all waiting for tides, the ERR would be unlikely toexceed 14%.

3.08 In view of the above, and the "lumpiness" of the cost of improve-ments (except for navigation aids), channel improvements cannot be giventhe same high priority as the proposed project elements. However, channelimprovements should be supported as potentially suitable for financing as asecond phase development. This approach will enable the above conclusionsto be reviewed in the light of actual development of container traffic, andat the same time give reassurance to the shipping lines that the limita-tions of the existing channel are recognized as a cause for concern andwill be addressed in a timely fashion.

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ANNEX 4

TANZANIA

PORI REHABILITATION PROJEC]

List of Bank Group Financed Projects in Iransport Sector

A. Through FY83 AmountDirect Investments Fiscal Yr. US$ million

1. Highways I & Supplementary 63/68 IDA 14.0/3.02. Highways II & Supplementary 69 IBRD/IDA 7.0/15.53. Highways III 72 IDA 6.54. Highways IV 75 IDA 10.25. Highways V 79 IDA 20.56. Trucking Rehabilitation 78 IDA 15.07. Harbours Engineering I 80 IDA 2.58. Telecommnication I 82 IDA 27.0

Through EAC

9. Railways I10. Railways II11. Railways III12. Harbours I13. Harbours II14. Harbours III15. Telecommunication I16. Telecommunication II17. Telecommunication III

-71- ANNEX 5

Page 1 of 6TANZANIA

PORT REHABILITATION PROJECT

PORTS TRAINING

Background

In 1970, the then East African Harbours Corporation and the EastAfrican Cargo Handling Service Ltd., realizing the need for training ofpersonnel decided to establish a port training sch6ol. Despite the 1976break-up of the East African Community, the Tanzania Hlarbours Authority(THA) in 1977 went ahead with the plan to construct the training school tobe named Bandari College. The Blue Print for Bandari College, a planprepared by THA for the organization, administration and operation of tnecollege was initiated in 1976 and completed and presented in 1981. Thisplan formed, inter alia, the base for the construction of college buildingswhich was carried out in phases and was comDleted in- 1980. It appearstoday that many of the objectives contained in the Blue Print have not beenrealized mainly due to lack of coordination between the college and therecipient depar-ments of the port and inadecuate staffing, equipment andmaterials.

Manpower DeveloDmnent

Responsibility for manpower develorment in the ports rests withthe Manpower Pevelonment Department of the THA. The department wasestablished rather recently and its present taskss were previcusly handledby the Personnel Department. It appears that the departmerit is involvedmainly ir. keeping record of staff employed at headquarters and the portsand has not got the capacity to fully engage itself in matters of manpowerplanning and development and related training needs.

Manpower SupDlv and Demand

The TEA employs about 11,200 people of whom about 9,300 havepermanent employment in the Dort of Dar es Salaam, while the remainder areemployed by TEA headquarters and other Tanzanian ports. The distribution ofstaff with regard to categories and departments ir. TEA headquarters and Dares Salaam port is as follows:

-72 ANNEX 5Page 2 of 6

Number of Employees by Department inHeadquarters and Dar es Salaam Port

Department Headquart:ers Port

Management 3 236Operations 12 6,661Finance 41 270Engineering 39 1,387Purchase/Supplies 40 87Manpower Development 44 98Planning 13 4Services, including legal,training, medical, security,logistics, etc. 165 578

TOTAL 357 9,321

Skilled andSub- Semi-skilled

Professionals Professionals Workers TotalDepartment HO Port Tot HO Port Tot FQ Fort Tot HO Total

Operations 9 48 57 1 684 685 2 5,917 5,919- 12 6,661

Engineering 7 4 11 19 139 158 13 1,205 1,218 39 1,387

16 52 68 20 823 843 15 7,122 7,137 51 8,048

From the table it is clear that there is a disproportion betweenprofessional and sub-professional staff on one hand and skilled andsemi-skilled workers on the other. More workers than needed for the portoperations are permanently employed, while there is a shortage ofsupervisory and managerial staff. Tne THA has not prepared any manpowerdevelopment plan, but is aware that more workers than needed arepermanently employed and that there is a severe shortage of middlemanagement staff, particularly trained techricians. In addition, there isan urgent need for upgrading of workers in the operations and engineeringdepartments through in-service training. In the absence of a manpowerdevelopment plan the college and the .Manpower Development Department willidentify training needs of the various port departments with the help oftechnical assistance to be financed under the project.

ANNEX 5Page 3 of 6

Recruitment

Professionals. Professionals to senior positions, particularlyengineers, are recruited from the market while junior positions are filledthrough allocations of fresh university graduates through the Ministry ofManpower. There is an apparent shortage of junior professionals in THA andgraduates with some working experience need to be recruited.

Sub-Professionals. There is little recruitment to the sub-professional category as these positions are filled mainly throughpromotions from the lower categories. Evidently, a number of sub-professioinal positions are held by staff who have been trained exclusivelyon-the-job and then gradually been promoted after long service in eachposition.

Skilled and Semi-skilled Workers. As there is a substantialsurplus of staff in these categories, there is no need for recruitment.However, some temporary workers tend to be included in the establishment'spermanent work force after having served a certain period of time in'teniporary positions.

Organization and Management of the Bandari College

The college is headed bv a principal who reports directly to theGeneral Manager of the THA and coordinates matters recardixig training needswith the Manpower Development Department. The policy making body of thecollege is the Board of Governors chaired by the General .Manager and havingrepresentatives from departments of Manpower Development, EngineeringOperations and Finance of the T 7A. The pri-ncipal of Bandari Col'lege actsas the secretary of the Board.

The College consists of four departments: Operations, Technical(Engineering), Maritime Studies and Management and Workers Education.Presently there are nine full-time Tanzanian instructors of whom five arein Operations, three in Technical and one in the Management and WorkersEducation Department.

Due to lack of equipment in the workshops, the scope of coursesoffered during fiscal year 1982/83 has been rather limited. For OperationsDepartment staff, there have been courses for assistant operations officers(1 course, 6 months duration, 19 participants), clerks (2 courses, 3 monthsduration, 86 participants), port police (1 course, 1 month duration, 45participants), fork lift operators (1 course, 2 months duratiou, 80participants). In Engineering, during the same period, one course wascarried out for 20 assistant artisans for six months of which three monthswere devoted to on-the-job training in the port workshops. One of theobjectives of this course was to qualify and promote the participants forpositions as artisans, but as yet such promotions have not been initiated.The Maritime Studies Department is not operational. Under the Managementand Workers-Education repartment, some introduction courses and seminarswere held for about 50 particiDants. The college has worked out anambitious program for FY 1983/84 hut the technical courses cannot beimplemented as planned due to lack of equipment.

ANNEX 5~ 74 ~ Page 4 of 6

The college buildings are in good condition and appropriate forits purpose and encompass 4 large workshops, one area for operationstraining in loading and off-loading, 13 classrooms, one library, 9 offices,one staff-room, one dining room and student hostels for 144 trainees. Thebuildings are well furnished but workshops, library and other trainingfacilities totally lack equipment.

Curricula and training programs are well prepared using moderneducational approaches. Most instructors have previously been inresponsible positions in the Operations and Engineering Departments of theport. Theyhave in many cases been further trained technically andpedagogically abroad and in-country. However,, it appears that some havenot been involved in port operations for some time and lack up-to-dateknowledge in new technologies and operations. Consequently, there is aneed for retraining of these instructors iin the port to enable them tocompetently handle the on-the-job training part of the program. Inaddition, operations and engineering staff should serve as part timeinstructors in the college. This approach of upgrading the quality oftraining and instructors is supported by THA.

Financing of Training

The financing of the training activities appears to be adequateand for FY83 about T.Shs 10.7 million (US$0.90 million) was allocated fromthe THA for running the college and related activities. For FY84, thebudget has been decreased to T.Shs 6.9 million (US$0.53 million) as aresult of the general economical situation in the country and also becausethe college enrollment has been less than planned.

Training Component

There is undoubtedly an urgent need to upgrade port personnel inalmost all disciplines through in-service training programs. However, manydepartments apparently do not comprehend their training needs and thecommunication between the college and the recipient departments needs to beimproved perhaps through the Boards of Governors of the college in whichmost departments are represented. Also, it would be the task of theDirector of the Manpower Development Department together with otherdepartment heads to identify the training needs in the short and longerterm.

The main objectives of the training component would consequentlybe:

(a) to identify THA training needs more explicitly;

(b) to improve THA's training capacity by upgrading Bandari Collegeand by expanding on-the-job training in the port; and

(c) to increase the number of THA trainees.

ANNEX 575 Page 5 of 6

In order to make the Bandari College ful'ly operational, trainingequipment would have to be supplied. An efficient running of theengineering courses would require equipment for the electrical, mechanical,marine and civil engineering workshops. For operations training thepractical on-the-iob training will be carried out in the port itself usingexisting equipment. In addition, audio-visual aids and library books wouldbe required.

The THA is aware that for an efficient implementation of thetraining programs, technical assistance would be necessary and hasrequested that consultants should be provided. It is envisaged that threeports training specialists need to be recruited for Bandari College, one

general ports training specialist and training coordinator,l/ one portsoperation training specialist and one maintenance engineering specialists.The main task for the training specialists would be to assist inidentifying training needs in the port, organizing the courses in agreementwith the port departments, reviewing course contents and making suggestionsfor improvements as appropriate and training and upgrading the college

instructors. The services of the specialists would be provided for twoyears each. Additionally, a mobile equipment specialist would be reauiredfor about 6 man-months for monitoring equipment operator training. Towardsthe end of the technical assistance period the college staff should be able.to handle the training independently. However, in view of the currenttransition period from conventional operations to introduction, of containersystems some consulting services in this type of operations might benecessary for a longer period.

It is envisaged that some 50 man-months of overseas training forcollege instructors and port operations staff would be required. The mainobjective would be to familiarize both operations staff and trainers in new

methods and procedures with regard to modernizing of port operations, inparticular, container handling systems.

1/ This expert would also assist THA's Manpower Development Department inidentifying manpower shortages and weaknesses and related trainingneeds.

ANNEX 5- 76 - Page 6 of 6

Cost Estimate (Training Components)

July 1983 PricesUS$'000

A. Technical Assistance

1 Pbrts Specialist and Program Coordinator(Training Programs, Course Revision andImplementation, On-the-job Training) 2 man-years 240

1 Ports Training Specialist (Operations) 2 man-years 240

1 Pbrts Training Specialist (M!aintenanceEngineering) 2 man-years 240

1 Mobile Equipment Specialist 0b5 man-years 60(Operations)

Overseas Training for operationand instructor training 50 man-months 150 930

B. Equipment (including furniture)

(M) techanical workshop 170(ii) vlectrical workshop 50(iii) Automotive workshoc 75(iv) Plumbing workshop 30(v) Masonry workshop 12(vi) Carpentry workshop 30(vii) Technical Drawing 25 392(viii) Audio-visual Aids

(ix) Library Books 10 15Vehicles 25 25

Total 1,362

TANZANIAPORT REHABILITATION PROJECT

Technical Assistance and TrainingDetailed Requirements

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training(and main report Required

reference paragraph) |

1. Bandari College not realizing (i) interchange of Port specialist and Chairman, In addition to inCollege its full potential as Bandari College Program coordinator Board of country training

focus ofGport training. instructors with port 24 man-months Governors 50 man-monthsReasons: (i) although departments on second- abroadtraining programs ment basis; (ii) pro- Mobile equipment Principal Training liaisonadequately prepared vision of specialized specialist officer (see con-theoretically, lack of assistance to coordi- 6 man-months tainer operations)adequate contact and nate programs withinterplay between manpower development Maintenance engi- Principalcollege (and its and client departments neering specialistinstructors) and the and in fields of oper- 24 man-monthsclient departments, ations and mechanicalparticularly in Dar engineering; andport; and (ii) shortage (iii) provision of Operations training Principalof training equipment. equipment (basic specialistEq. 3.13 - 3.20 approx. US$400,000 24 man-months

plus specialized oper-ations training equip-ment; price uncertain)

0

Technical Assistance and TrainingDetailed Requirements

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training(and main report Required

reference paragraph)

2. Mechancial Despite container Establishment of a 1. see BandariEngineering penetration, general three to six year College Mainten-

cargo operations will training program to ance engineeringEquipment be substantial for bring suitable specialistMaintenance several years and main- unskilled workers up 2. Engineer-(general tenance and control of to artisan level and Instructor to workcargo) general cargo equipment possibly beyond. Up in the port work-

will require attention. to 20 trainees per shops for on-the-Problems: Lack of year. Training at the job trainingtrained maintenance in college supplemented (24 man-months)adequate numbers-- by workshop practiceshortage of artisans in the port.196 against establish- Eq. 3.21 - 3.26, App.5ment 258; excess ofunskilled 184 againstestablishment of 127

Engineering Plann-Problem: Unsystematic Set up work control ing/Work Study Port engineer On the job train-work control office for senior specialist 6 man- ing work controlEq. 3.02 - 3.09 mechanical engineer months to set up office staff

system; 3 man-Low availability of Introduction of use of months to reviewequipment. Basic proforma, example after about oneproblem; lack of attached, to identify year and assist insystematic criteria financial break-even instituting anyfor write-off point at which changes necessaryEq. 1.21 - 1.22, App. 3 replacement preferable

to repair

m x

o0

Technical Assistance and TrainingDetailed Requirements

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training(and main report Requiredreference paragraph) |

General cargo Ad hoc to date; usually Operations andequipment done by consultants Engineering Depts.requirement during project prepar- should establish jointforecasting ation. As container- committee to period-

ization accelerates, ically (say everyneed increases for 3 months) review incareful and frequent detail equipment needsmonitoring of equipment on a 1 and 2 yearneeds. rolling program.Eq. 2.06 - 2.07

Container Maintenance of large Careful work schedul- see under work (a) engineer and shandling expensive units will ing will require study specialist supervisor twoequipment have to be done during establishment of months in gantrymaintenance periods of low shipping section devoted to crane manufactur-

activity (in contrast container plant under ers works (b) thento general cargo equip- an assistant engineer 2 months beforement where large and based at the cranes erected innumbers enable a flow container terminal "twin" port main-of units through repair (close liaison with tenance facilitiesfacilities). container terminal (c) electricianEq. 2.06 - 2.07 manager's office and supervisorEq. 3.35 - 3.36 necessary). training in con-

tainer equipmentelectronics atworks/twin port.

OQQ

m . c

Technical Assistance and TrainingDetailed Requirement

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training(and main report Requiredreference paragraph) __|

Overall sett- Present establishment Senior mechanical Maintenance engi- Work planninging and of separate mechanical engineer should become neering specialist office staff maycontrol of and electrical engi- senior mechanical and should assist in need some on-the-maintenance neering organizations electrical engineer work planning job training.program under port engineer (senior electrical office establish-

likely to lead to con- engineer position is ment.fusion in ordering of in any case vacant)priorities. and establish a workEq. 3.02 - 3.09 planning office to

systematically controlactivities and liaisewith Operations Dept.

3. Purchasing Poor control of spares Improvement in To establish policy Director ofand supply ordering in general. purchasing and and procedures (12 purchasingcontrol Ops. 4.01 - 4.12 supplies function man-months); to and supply

critical to equipment implement (8 man-maintenance. months)(i) determine clearpurchasing and supply copolicy; (ii) implement o(iii) within aboveframework, improvemechanical sparescontrol in particular.

Stores Excessive distance Relocate mechanicalLocation (3 km) of Malindi store within Dar port

stores from port has area (under control ofled to informal stock- Director of Purchasingage in port and conse- and Supply)quent loss of control.Formal transfer oflocation to Dar portarea inhihited hv needto maintain THA ratherthan Dar port control.Proposal before THABoard. Also poorcontrol of sparesordering in general. _ _ _ _ _

rQ z

Oh

Technical Assistance and TrainingDetailed Requirements

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training

(and main report Requiredreference paragraph)

4. Operations Major recent and pro- Bonus system needs 3 man-months visit under C (ii)

spective developments careful preparation to recommendationsGeneral include introduction of ensure that it isoperations permanent gangs and adaptable to changing 1 man-month

bonus scheme. Both are conditions. There are modification after

to be encouraged. no hard and fast rules C (ii)Operator training is and best approach willincreasingly important be to (i) have reviewto ensure minimization undertaken by special-of damage under adverse ist with experience ofphysical conditions. such schemes in otherOps. 2.01 - 2.10, ports (ii) THA review 2.15 - 2.18 of resulting proposals

by visiting selectedports where introduced

Operator Mobile equipment Basic training at

training operator training Bandari should bepresently limited due combined with prac-to lack of space/equip- tical training at portment at Bandari. in an area designatedOps. 2.19 as "Bandari Annex"f.

An unused shed behindmain transit shedswould be suitable.

Crane driver training Should be undertakenOps. 2.20 on a crane designated

for this purpose.

0

Technical Assistance and TrainingDetailed Requirements

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training(and main report Requiredreference paragraph) _

Winch oper- Winch operator training Declining use ofator training not possible at Bandari winches suggests

due to lack of equip- investment should bement. minimized. AttemptOps. 2.21 - 2.22 should be made to

obtain second-handequipment from ship-breakers. Suggestreview by dockyard/civil engineeringstaff.

ODSupervisor Essential to obtain (i) identify 6 oper- (a) operationstraining cross fertilization of ational staff to work training specialist

ideas between Bandari with and periodically (see under Bandari)and port. interchange with, the (b) arrange recip-Ops. 2.23 - 2.26 2 Bandari operations rocal program with

instructors; similar port with(ii) appoint training established train-liaison officer from ing program whooperations department wouldto liaise with Bandari (i) send instructor and (ii) receive

in equipment oper- traineesator training

>0 z

(D

Technical Assistance and TrainingDetailed Requirements

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training(and main report Required_ reference paragraph)

Container (a) Container operators continued technical container terminaloperations will be subject to some assistance from major operations

disruption during con- shipping consortium specialiststruction/renovation of or similar desirable 24 man-monthsberths 9/10/11 during this period toOps. 2.27 - 2.30 ensure orderly

transfer of activities

(b) once berths A "twinning" arrange- Container manage- Container Attach THA con-complete and equipment ment should be made ment specialist terminal tainer terminaltype decided, most with an overseas port (18 man-months) manager manager (CTM) andefficient organiza- of similar configur- control and 2 or 3 key stafftional pattern will ation and equipment document system to "twinned" portneed to be determined type. In parallel specialist (6 man- C.T.M. for 3 months

management and systems months) (Both from (preferably incontrol should be "twinned" port) two sequentialdetermined visits to minimize

disruption tooperations at Dar)

(c) after definition Training instructor C.T.M. Gantry crane oper-of organization, staff from "twinned" port ator trainingtraining required (15 man-months) initially at twinOps. 2.31 - 2.37 port, then Dar.

Bandari instructorshould be closelyinvolved to enablecontinuity afterend of "twinning".

0

Technical Assistance and TrainingDetailed Requirements

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training(and main report Requiredreference paragraph)

5. Management While there is a large Specific issues need 18 man-months toinformation volume of information to be addressed (i) review existing General (i) identificationsystem produced within THA (i) the appropriate- systems; Manager THA of counterpart THA

(and particularly Dar ness of information (ii) discuss con- unit (ii) probablyport), it does not available; (ii) the clusions with and strengthening ofalways sem to be need for additional recommend to THA on unit partly bycollated in an appro- (or reduced) infor- changes; and recruitment,priate form to provide mation flows; (iii) assist partly by in-housea basis for managerial (iii) the timeliness counterpart depart- training, partlydecision making at of information--sig- ment to implement by attendance ofvarious levels, in a nificant delays con- selected personnel Otimely fashion. A sistency occur which at courses abroadcosting system, based considerably dimin- (est. 12 man-upon UNCTAD recommenda- ishes usefulness; months)tions, is being intro- (iv) accuracy ofduced. This is a information--discrep-necessary input to MIS ancies persist inand continuation of operational and engi-this work, including neering data emanatingrefinement to enable from different sourcestariff policy to (v) channel of infor-become systematically mation; if thecost based, is Directorate ofdesirable. Planning is to performOps. 3.01 - 3.12 this role effectively

it will need training(particularly instatistical tech-niques) and possiblystrengthening eitherfrom within Tanzania U zor by technical Xassistance. _o

0

Technical Assistance and TrainingDetailed Requirements

A B C D E F

Activity Analysis Recommendations Technical Assistance Reporting To Training

(and main report Requiredreeece paragraph)

6. Project The Habours project is While the supervising 36 man-months Director of T.A. should also

Coordination complex due to consultants can and Engineering identify weak-

(i) diverse activites; presumably will give (with access nesses in civil(ii) need for careful considerable assist- as necessary engineering

control of work plan to ance to THA in ensur- to GM's control, with

ensure minimum inter- ing smooth project office). particularruption to port execution, responsi- reference to civil

activities; and bility rests with THA engineering main-

(iii) probably diverse and particularly tenance, and

financing sources with Director of Engi- recommended on Xdiffering procedures. neering office. Few training needs

Ops. 5.01 - 5.05 staff have first hand (probably involv-experience of a ing some second-project of this size, ment to "twin"and accordingly tech- port)nical assistance isnecessary as projectcoordinator in theDirector of Engi-neering's office. Heshould be a wellqualified engineer,with experience ofproject processing(possibly a formerResident engineer).

Total Project X X

0

ANNEX 6Attachment-86-

TANZANIA

Harbours Project

Training and Technical Assistance

Summary Table

1. Bandari College:

- Port Specialist and Program Coordinator 24 mm- Maintenance Engineering Specialist 24 mm- Operations Training Specialist 24 mm- Mobile Equipment Specialist 6 imn

78 mm2. Mechanical Engineering

- Engineer--Instructor 24 mm- Engineering Planning/Work Study 9 mm

33 mm3. Purchasing & Supply

- Specialist (Policy and Procedures) 12 mm- Implement Mechanical Spares Control 8 mm

18 mm4. Operations

- Specialist in Bonus Schemes 4 mm- Container Operations 24 mm- Container Berth Management 18 mm- Container Systems 6 mm- Specialized Instructor Inputs 15 mm

67 mm5. MLanagement Information Systems

- Specialist in Information 18 mm

6. Project Coordination

- Specialist in Project Control 36 mm

TOTAL 252 mm

- 87 -

ANNEX 7

TANZANIA

PORT REHABILITATION PROJECT

PROGRESS REPORTING SYSIEM

I. Project Progress Reports:

1. Progress Reports should be submitted quarterly in triplicate, nolater than one calendar month after the end of each quarter. Ihe first reportshould cover the quarter ending December 1984.2. The Report should contain the following information:

a) General Informatiorn

i) the physical progress accomplished to date of report andduring the reporting period;

ii) actual or expected deviations from the project implementa-tion schedule;

iii) actual or expected difficulties or delays and their effecton the implementation schedule and the actual steps taken orplanned to overcome the difficulties and avoid delays;

iv) expected changes in the completion dates of the project;

v) key personnel changes in the staffs of the THA consultantsand contractors;

vi) matters which may affect the project cost; and

vii) any development activity likely to affect the economicviability of the project components.

b) A bar-type progress chart, based on the project implementationschedule, showing the progress in each project component andincluding a planned and actual expenditure graph.

c) A finarncial statement in the attached form showing details ofthe expenditure incurred under the various components of theproject and the withdrawals from the credit and fromcofinanciers together with a separate statement showing:

- 88 -

ANNEX 7Page 2

i) original cost estimates;

ii) revised cost estimates, if any, with reasons for changes;

iii) original estimated expenditure to date;

iv) reasons for variations of (iii) above from actual expendi-ture; and

v) estimated expenditure for the remaining quarters of theyear.

d) Brief statement of the status of action in each of the covenantsof the Credit Agreement.

II. Project Completion Report

3. The Borrower will prepare a Project Completion Report (PCR), to besubmitted to the Association not later than six (6) months after the ClosingDate.

4. The primary objective of the PCR is to reinforce self-evaluation bythe Borrower and the Association's operating departments and to facilitatedissemination of lessons learned through the project. In particular, the PCRshould include an assessment of the following:

a) the performance by the Borrower and the Association of theirrespective obligations under the Credit Agreement and whetherthe Association could have been more helpful;

b) the results that can be expected from the project, as comparedwith expectations at appraisal, and whether the original expec-tations were realistic; and

c) whether in retrospect the project was worth doing or could havebeen done better.

5. For those components of the project for which a rate of return wasestimated during appraisal, the PCR should contain a new estimate of thereturn the project is now likely to yield and analyze the reasons for physicalor economic deviations. However, the new rate of return calculation should beas simple as possible under the circumstances and should absorb only a minorportion of the time devoted to the preparation of the PCR. An annex with therelevant information supporting this analysis should be included.

6. The basic documents to be referred to are:

a) Credit Application;

b) Appraisal Report;

- 89 -

ANNEX 7Page 3

c) Credit Agreement Documents, Supplementary Letters, etc.;

d) Supervision Reports;

e) Quarterly Progress Reports;

f) Project Correspondence Files; and

g) Miscellaneous Evaluation Reports.

ANNEX 7- 90 - Attachment

TANZPNIAPORT E MBILITATIU N PROICT

PR!JCT DEW) ITLIES - QIIRTERLY PFRME55 IFUT FOR THE WT EI¶DNG

Etrditures to BEgin- Eveditures Dzring The Total Epditure toCategory nM of %lwter _rter Erd of t.ater Paarks

Local Foreicn Totl Local Fomei Total Local Foricp Total

A. Advame WbrksT(i F799E Oil Terminal

(ii) Pipelire Diversion(iii) Lighterage Qa Rerovtin

Sib-total

B. Main Pro.ject Civil Works{i) uitaLer leii ariali

UixrKp Depot(ii) rain Farility

Slb-Total

C. Main Proiect EC i) Cantauer Ti al

Luxgo EqApt(ii) Other Cartairer Eq tipfrt(iii) Gereral Cargo Eqc.mt(iv) Nawigation "d Catzictien

Eqent(v) Spae Parts

Sib-Total

0. Tenical Assista: and Trnini(1J) ieducal Asslstan(ii) Traindrg

Sib-Total

E. Cort ltirg Services

TOTAL ClST

C ast fir.nad unbr PPF.

Firocirq Till Birgninm of Ouwter Dirijn This Quarter Total to Erd of This QLarter

Il)A

THA

Total

- 91 -

TANZANIA CHART 1TANZANIA HARBOURS AUTHORITY

PORT REHABILITATION PROJECT - ORGANIZATION CHART

I -. . . . . . . . . . . . . . . . . Secretary

aand Legal

I Public Relationsi| Manager

* ~~~~~~~ ~_k E-DP M antia g-e-r

* I I .1

* ~~~~~~~~Interral Auditor

* I I

| ___L Chief MedicalOfficer

I IiBoard f GnrlI___ st GenerallIDirector Sianager| Manager

DirectorPlanning

I _ J a[irec or

Operations

Director Purchasingland Supplies

Director Enginieering1

I I _ _ _ _ _ _

Director ManpowerIDevelopment and Administration

I Port Manager - DSM

Port Manager - Mtwara

- 92 -

CHARI 2TANZANIA

TANZANIA HARBOURS AlJIHORIIY

PORT REHABILIIATION PROJECT - PORT ORGANIZATION CHART

Operations

Commercial.Asst.Port Manager _

(Operations) Harbour Master

P E

Port Personnel

Port _ __

IManager1 _ | L Finance

Asst. Port ____1_1

Manager I jPurchasing &| I (Services) I SuppliesII I____ I I__ _

Principal MedicallI I t Officer

I ~ ~~ ~ ~~~~I I_

Administration

___ ___ ___ ___ ___ ___ ___ Sr. Security Officer

Public Relations

__ __ __ __ __ __ __ __ __ __ __Planning

Internal Audit

- 93 -

CHiART 3

TANZANIA

PORT REHABILITATION PROJECT

IMPLEMENTATION SCHEULE

1984 1985 1986 1987 1988 1989

KDJ Pehabiliation xxxxoooxxxxxxxx

Lighterage Tenminal xxxxxx

Container Terminal xxOxxxxcxxxxc

Grain Terminal r)ooox (

Ubungo Terminal xxxxxxxxx

Technical Assista-ce xxxxxxxxxXX XXXXXXX _ _ voooxxxxxxx

Training _ __ _

Engineering & l lSupervision xxxxxxxxxx: XXXXo ------xxx-xxxxx--xxxxxxx xxx-x--

__ _ ________ I __ I_ i __

Note: Detailed Engineering Financed Fran Credit 524-TAFinal Preparation of Tender Documents, Prequalification andTender kction finared fron PPF.

T~~~~~~~~N~~~~~~~~,d ~~~~~~~~~rRD 16,7."RJGAN DAATh-' ThM-LiJ . ( N s LOARDA

\A )a rS I J - E '\X w/ v KFNYA

N >~~~~N Y A

R VV A N D A~~~~~~~~~~~~~~~y

N j ; S 6; X rMoMa4. N 5 9± N T~~~~~~~~~~~~~~~~~~~~~~~~~~~ANZAN .A

Z~ R EW.

'\, \ > tA J f1" X~~~~Sh,/- 2_ ., I'

TA ZA N OZAM

NZC~~~~~O ,~~~~~. . N M~~~~~~OMBAS4 DAR ES SALAAMPORT REHABILITATION PROJECT

PROJECT LOCATION

St,ft,o _ , I,S

X V / \, ' LAWl e 1\ X , w - ' _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~r,rcorl odon

Jll-~~~~~~~~~~~~~~~~~~~~~~~~~~

Nj-b~~~~~~~~~~~~~'

ECMTRER 1984

IBRD 16748R1

z 4 = CP TANZANIA

,i. 1 : - J : ., ... /G

REZAN

* -j = t g ; 4 2 | KURASINI WAREOUSE ! ' .' 4 K , . ' . W... 'g - h ' 'M. . .........

''A':' "'"' ' ' ''-K i r : . . .2 KURASII OILJETY ' . '^': * '0 . .H-

w tr 4S,,,,, J.+;,;; h 3 CONTAINER TEEMINAL s W ItPt < / <~~~~~~~~~t. N

.<~ ~ ~~~~~~~~~~~- RWl :q, DpIGTR WHRF.1 G "" .. 't

... mhs xn

thRt op rANzANl t--,16 oUtNO ... ' , ' ^

i ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- 1 | 3 °