ASIAN DEVELOPMENT BANK

PPA: MLD 24342

PROJECT PERFORMANCE AUDIT REPORT

ON THE

SECOND MAL PORT PROJECT (Loan 1226-MLD[SF])

IN

THE MALDIVES

October 2000

CURRENCY EQUIVALENTS Currency Unit At Appraisal (February 1993) $0.096 Rf10.445 Rufiyaa (Rf) At Operations Evaluation (March 2000) $0.086 Rf11.55

Rf1.00 $1.00

= =

At Project Completion (July 1998) $0.085 Rf11.77

ABBREVIATIONS ADB EIRR FIRR GDP m MCPW MFA MPA OEM PCR SDR TA teu Asian Development Bank economic internal rate of return financial internal rate of return gross domestic product meter Ministry of Construction and Public Works Ministry of Foreign Affairs Maldives Ports Authority Operations Evaluation Mission project completion report special drawing rights technical assistance twenty-foot equivalent unit

NOTES (i) The fiscal year (FY) of the Government and the Maldives Ports Authority ends on 31 December.

iv (ii) (ii) In this report, $ refers to US dollars. Operations Evaluation Office, PE-554

CONTENTS Page BASIC DATA EXECUTIVE SUMMARY MAP I. BACKGROUND A. B. C. D. E. F. II. Rationale Formulation Purpose and Outputs Cost, Financing, and Executing Arrangements Completion and Self-Evaluation Operations Evaluation ii iii v 1 1 1 1 2 2 2 3 3 4 4 5 5 5 6 8 9 9 10 10 11 11 12 12 12 13 13 13 14

PLANNING AND IMPLEMENTATION PERFORMANCE A. B. C. D. Formulation and Design Cost and Scheduling Consultant Performance, Procurement, and Construction Organization and Management

III.

ACHIEVEMENT OF PROJECT PURPOSE A. B. C. Operational Performance Performance of the Operating Entity Sustainability

IV.

ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS A. B. C. Socioeconomic Impacts Environmental Impacts Impacts on Institutions and Policy

V.

OVERALL ASSESSMENT A. B. C. D. E. F. G. Relevance Efficacy Efficiency Sustainability Institutional Development and Other Impacts Overall Project Rating Assessment of ADB and Borrower Performance

VI.

ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

vi A. B. C. APPENDIXES Key Issues for the Future Lessons Identified Follow-Up Actions 14 14 15 16

vii BASIC DATA Second Mal Port Project (Loan 1226-MLD[SF])

PROJECT PREPARATION/INSTITUTION BUILDING TA No. Type Amount Approval Date

TA Name
1656 1865 Second Mal Port Institutional Strengthening of Ministry of Public Works and Labor
1

the

PPTA A&O

$250,000 $200,000

13 Jan 1992 1 Apr 1993

KEY PROJECT DATA ($ million equivalent) Total Project Cost Foreign Exchange Cost Local Currency Cost ADB Financed Borrower Financed ADB Loan Amount/Utilization ADB Loan Amount/Cancellation KEY DATES Appraisal Loan Negotiations Board Approval Loan Agreement Loan Effectiveness Project Completion Loan Closing Months (effectiveness to completion) KEY PERFORMANCE INDICATORS (%)

As per ADB Loan Documents 10.41 8.80 1.61 8.80 1.61

Actual 10.20 7.85 2.35 7.85 2.35 7.85 1.26 Actual 2-9 Dec 1992 1-4 Mar 1993 1 Apr 1993 6 May 1993 12 Aug 1993 30 Apr 1997 12 Mar 1998 45

Expected Dec 1992 End Feb 1993 End Mar 1993 4 Aug 1993 30 Apr 1996 31 Oct 1996 33 PCR

PPAR

Appraisal
Financial Internal Rate of Return Economic Internal Rate of Return BORROWER EXECUTING AGENCY IMPLEMENTING AGENCY MISSION DATA Type of Mission Fact-Finding Appraisal Project Administration Review Missions (no.) 1 1 3 Person-Days (no.) 30 28 17 12 25 18 22 23 27

Republic of the Maldives Ministry of Foreign Affairs Ministry of Construction and Public Works

A&O = advisory and operational, ADB = Asian Development Bank, PCR = project completion report, PPAR = project performance audit report, PPTA = project preparatory technical assistance, TA = technical assistance.
1

ADBs loan amount was approved in special drawing right (SDR) equivalents for SDR6.395 million.

viii
Project Completion Operations Evaluation 1 1 36 7

ix

EXECUTIVE SUMMARY The Project aimed to increase port capacity at Mal for foreign shipping, and was included under the Governments Eighth Five-Year Plan (1991-1995) for sustaining economic growth. The project scope included (i) construction of an alongside berth to service vessels up to 6,000 deadweight tons; (ii) ancillary works covering pavement, pier reclamation, utility extension, seawall rehabilitation, and construction of a marine workshop; (iii) provision of cargohandling equipment, port service craft, workshop tools, and navigation aids; and (iv) consulting services for detailed design, preparation of tender documents, implementation administration, institutional strengthening of the Maldives Ports Authority (MPA), construction supervision, and a planning study. In conjunction with the Asian Development Banks (ADB) loan, additional consulting services were included under technical assistance (TA) to strengthen project management capabilities of the Ministry of Construction and Public Works (MCPW). ADBs Appraisal Mission was completed in December 1992, and ADBs loan of SDR6.395 million ($8.8 million equivalent) and TA for the Project were approved on 1 April 1993.2 The Borrower was the Republic of Maldives. The Ministry of Foreign Affairs was the appointed Executing Agency, and MCPW, with responsibility and experience in public works construction covering harbors, seawalls, and roadworks, was designated the Implementing Agency. MPA was the operating authority with responsibility and control over Mal Port operations. The Project was implemented with an expansion in the project scope to extend construction of the alongside berth from 70 meters to 101 meters, and to purchase a 45-ton stacker and additional 25-ton forklift. The overall Project was completed in May 1997, nearly 12 months later than envisaged at appraisal. The final project cost of $10.2 million was slightly less than the appraisal estimate of $10.4 million. ADBs loan disbursements were $0.95 million less than the amount approved. The attached TA financing amounted to $183,992 or 92 percent of the total amount approved. Overall financing by ADB represented 77 percent of the total project cost. The Projects evaluation results provide strong support for the Projects overall success. The project rationale to increase port capacity and help sustain economic growth proved relevant with cargo throughput double the appraisal forecasts. The efficacy of project outputs and operational targets measured against appraisal expectations was achieved except for delays in completion. The economic internal rate of return for the Project of 26.8 percent attests to the operational efficiency achievements and economic viability of the Project. The financial internal rate of return for the Project is a high 23.3 percent and compares favorably with the weighted average real cost of capital of about 11 percent. The overall financial performance of MPA also proved stronger than projected, and development impacts for institutional strengthening of MPA and MCPW were largely achieved. The socioeconomic benefits were largely in the form of avoided congestion costs that would deter investment in the Maldives and lessen the growth of employment opportunities. Improved working conditions for port labor and opportunities for higher paid employment in accounting, computer, and management services were also beneficial outcomes.
2

Loan 1226-MLD(SF): Second Mal Port Project, for SDR6.395 million; and TA 1865-MLD: Institutional Strengthening of the Ministry of Public Works and Labor, for $200,000, approved on 1 April 1993.

The less than satisfactory efficacy aspects of the Project include implementation delays in appointing consultants and awarding civil contracts, and the continuing weaknesses in MPAs capacity to (i) meet reporting covenants, (ii) provide timely annual reports, (iii) operate effective information and accounting systems, and (iv) take responsibility for planning future port operations. ADBs covenanted time-bound action plan for MPA to carry out a review of privatizing operations was also ineffective. These weaknesses detract from the overall effectiveness and achievements of the Projectwhich is rated successful. The single key issue to arise from this operations evaluation concerns the need to overcome political constraints against the deeper privatization of MPAs operations. The key lesson from the Project is the shortage of qualified and experienced staff in MPA to operate the computer-based accounting and information systems, and take responsibility for planning and identifying expansion requirements as intended under MPAs Charter. Staff requirements for institutional strengthening of MPA should have been more comprehensively addressed under the Project. Apart from loan administration, no follow-up action is recommended for ADB. Follow-up actions aimed at addressing observed weakness in organization and planning for port development requirements are recommended. The Government should, as soon as possible, (i) clarify and strengthen the organization responsible for planning and identifying expansion requirements at Mal Port, (ii) develop a master transport plan that identifies port expansion requirements consistent with meeting least-cost development considerations for Mal Port and the outer islands, (iii) initiate an immediate feasibility study to extend the wharf area at Mal Port to two berths, and (iv) initiate a study for privatizing the management and cargo-handling operations of MPA by way of a lease.

I.

BACKGROUND

A.

Rationale

1. The Project was included as a priority under the Governments Eighth Five-Year Plan (1991-1995) for sustaining economic growth. The Governments strategy was to continue to encourage expansion of the tourist and fishing industries, and remove congestion constraints for the transfer of freight. The Asian Development Banks (ADB) strategy for development assistance to the Maldives at the time of appraisal was to continue assistance with infrastructure over the medium term. ADBs support for the Project was of particular relevance given the high economic growth of the 1980s, the lack of wharf facilities for foreign shipping, the increasing cost of freight as reflected in an average turnaround time of 18.5 days for the loading and unloading of vessels by lighter system, and the absence of foreign investment funding. B. Formulation

2. The Project was formulated as a follow-on from Loan 911,1 which addressed congestion constraints through rehabilitation improvements and construction of a separate harbor for interisland vessels.2 Consideration for construction of an alongside berth under Loan 911 was deferred pending findings of a site selection study. Technical assistance (TA) for a feasibility study of the Project, including site selection, was approved in January 1992.3 Fact-finding for the Project was carried out in May 1992, and the Appraisal Mission was completed in December 1992. ADBs loan of SDR6.395 million ($8.8 million equivalent) and TA for the Project were approved on 1 April 1993.4 The Borrower was the Republic of Maldives. C. Purpose and Outputs

3. The stated project objective5 was to improve foreign cargo handling and enhance port productivity. The project scope included (i) construction of an alongside berth of 70 meters (m) in length to service vessels up to 6,000 deadweight tons; (ii) ancillary works covering pavement, pier reclamation, utility extension, seawall rehabilitation, and construction of a marine workshop; (iii) provision of cargo-handling equipment, port service craft, workshop tools, and navigation
1

3 4

Loan 911-MLD: Mal Port Development Project, for SDR4.968 million, approved on 20 October 1988. The project scope included reclaiming land for the future construction of an alongside berth, increasing the port storage area, and constructing cargo sheds. PCR: MLD 20069: Mal Port Development Project, March 1993, rated the Project generally successful. The need to tailor technical assistance for institutional strengthening to the absorptive capacity of the institution (Maldives Ports Authority) and available human resources was identified as the only lesson learned. Postevaluation in August 1994 reconfirmed the project completion reports assessment rating, and identified the advantages of allowing flexibility in the design of a project to respond to changing circumstances. TA 1656-MLD: Second Mal Port Project, for $250,000, approved on 13 January 1992. Loan 1226-MLD(SF): Second Mal Port Project, for SDR6.395 million; and the attached TA 1865-MLD: Institutional Strengthening of the Ministry of Public Works and Labor, for $200,000, approved on 1 April 1993. Hereafter, the meaning of objective also encompasses the achievement of project and sector goals and intended developments from the Project.

2 aids; and (iv) consulting services for detailed design, preparation of tender documents, implementation administration, institutional strengthening of the Maldives Ports Authority (MPA), construction supervision, and a container storage and transportation planning study. In conjunction with ADBs loan, TA (para. 2) was provided to strengthen the operation and management capabilities of the Ministry of Public Works and Labor.6 This was to be achieved by providing advice on organization, management of maintenance, and procurement including preparation of tender documents and bid evaluation, and overseas training for the Ministry of Construction and Public Works (MCPW) staff.7 4. The alongside berth was expected to reduce dependency on the existing lighter system for cargo loading and unloading, reduce ship turnaround time, and facilitate cargo transfers by container. The cargo-handling equipment, port service craft, and other facilities were expected to supplement MPAs working capital and improve the efficiency of cargo transfer from the wharf and basin apron to storage areas. The institutional measures from consulting services specified under the project scope and advisory TA were expected to strengthen project management capabilities of MPA and MCPW. Appendix 1 provides details of the project scope and targets. D. Cost, Financing, and Executing Arrangements

5. Details of expected project costs, TA costs, and sources of financing at appraisal are presented under basic data (page ii). ADBs loan of $8.8 million equivalent to the Government was drawn from ADBs Special Funds resources to cover the entire foreign exchange cost of the Project, including service charges on ADBs loan during construction. The Ministry of Foreign Affairs (MFA) was the Executing Agency; and MCPW, with responsibility and experience in public works construction covering harbors, seawalls, and roadworks, was designated the Implementing Agency. E. Completion and Self-Evaluation

6. ADBs project completion report (PCR) circulated in July 1998 rated the Project generally successful as the Project (i) was completed below the appraised cost estimate, (ii) met its basic objectives, and (iii) was financially and economically viable.8 The TA for institutional strengthening of MCPW was not given a rating assessment, but from the stated favorable points of completion and outcomes, a generally successful rating is inferred. Based on the information covering implementation and operations of Mal Port to year-end 1996, the Operations Evaluation Office is of the opinion that the PCR assessment of the Project was realistic. Recommendations from the PCR for follow-up included (i) reducing the free-parking period for containers from 10 days to 7 days, (ii) converting the existing transit shed into a container freight station, and (iii) making pilotage compulsory to ensure the safe passage of vessels in the port.

Along with initiatives for strengthening the Ministry of Public Works and Labor in 1996, the Government renamed the Ministry of Public Works and Labor the Ministry of Construction and Public Works. 7 As a result of savings on the cost of construction and depreciation of the dollar against the Borrowers loan in special drawing rights, ADB approved an expansion in the project scope to extend construction of the alongside berth to 101 m, and to purchase a 45-ton reach stacker and an additional 25-ton forklift. The PCR estimated a financial rate of return of 18 percent and economic rate of return of 22 percent. The corresponding estimates at appraisal were 12.3 percent and 24.6 percent.

3 Other recommendations included making investments to augment service facilities for electric power supply, telephone connection, and fresh water outlets; and publishing an annual report. F. Operations Evaluation

7. This project performance audit report reviews the findings of the PCR and presents the findings of the Operations Evaluation Mission (OEM) that visited the Project from 26-30 March 2000. Special attention is given to assessing the Projects relevance, efficacy, efficiency, and sustainability.9 The report is based on the findings of the OEM after three years of operational data; a review of the PCR, the appraisal report, and material in ADB files; discussions with ADB staff, senior officials of MFA, other government agencies, and representatives of the shipping agencies; and interviews with beneficiaries. Copies of the draft project performance audit report were provided to the Government, MCPW, MFA, MPA, and ADB staff concerned for review. Their comments were considered in the preparation of this report.

II.

PLANNING AND IMPLEMENTATION PERFORMANCE

A.

Formulation and Design

8. At appraisal, MPA was in the process of taking responsibility for operational management of Mal Commercial Port.10 MCPW 11 was responsible for all public works including harbors, jetties, and seawalls. With the enactment of its Charter, MPA had the operational, administrative, and financial autonomy to operate on a commercial basis. However, as an institution, MPA was lacking operational experience and had no guidelines. For this purpose, in January 1993 ADB approved an advisory TA, Second Maldives Ports Authority,12 to draft rules to regulate the movement of cargo and shipping and establish administrative procedures consistent with the provisions of MPAs Charter. Further institutional strengthening was agreed under the Project as a series of time-bound actions beginning with issuing rules and regulations under MPAs Charter, and appointing a harbor master and manager of the stevedoring division; monitoring and meeting performance achievement targets; and reviewing operations for tariff setting, container storage and cargo handling, and options for privatizing cargo-handling activities. This approach appears to have worked satisfactorily in ensuring the effective management of the ports operations. However, little progress was made under the agreed action plan to develop plans for privatizing MPAs stevedoring and cargo-handling operations.

As relates to the Projects rationale, formulation, achievement of purpose, operating performance, and institutional strengthening of MPA, effectiveness of TA for institutional strengthening of MCPW, and follow-up progress on the PCRs recommendations. 10 In 1988, MPA was entrusted with responsibility for all stevedoring and cargo handling, and ordered to function as a statutory commercial unit. MPAs Charter was drafted under ADB TA 1371-MLD: Maldives Ports Authority, for $100,000, approved on 11 September 1990, and approved by the Government in March 1994. 11 Then the Ministry of Public Works and Labor. 12 TA 1841-MLD: Second Maldives Ports Authority Project, for $90,000, approved on 8 January 1993.

4 9. TA for a feasibility study of the Project (para. 2) identified the need for an alongside berth as an alternative to expanding and improving the then existing lighter system for loading and unloading foreign vessels. The study also verified the limitations on existing cargo equipment and addressed detailed engineering requirements that ensured design parameters, equipment, and contract requirements were reasonably certain. Construction of the alongside berth was completed for the feasibility evaluation with no unaccounted for difficulties. No environmental risk was expected, and MPAs financial viability was expected to remain satisfactory with projected traffic growth and tariff increases. Concern for possible delays in implementation was allayed by extending the responsibilities of consulting services to cover both project management and supervision, and approving advance recruitment of the consultants. 10. Except for delays in project completion (paras. 12-14) and an extension in project scope (footnote 7), project design as envisaged at appraisal was closely followed. Efficacy for expanding cargo throughput proved appropriate even if not part of an overall master plan for development.13 However, the project design elements for institutional strengthening of MPA and MCPW were implemented with significant delays in appointing consultants, and without serious support for following through on commitments to transfer autonomy responsibilities under MPAs Charter. There was also less than full compliance with the Projects covenanted time-bound action plan to improve container handling efficiencies. The Projects financial covenants to ensure MPAs financial viability was maintained proved inappropriate for ensuring an adjustment of port charges and tariffs sufficient to meet long-term expansion requirements from selfgeneration sources. These weaknesses call into question the appropriateness of using covenants to achieve institutional strengthening objectives. Notwithstanding the ineffectiveness of some covenants, the overall formulation and design for the Project is considered to have worked satisfactorily. B. Cost and Scheduling

11. The actual project cost of $10.2 million equivalent was below the appraisal estimate of $10.4 million. The foreign exchange cost of $7.85 million equivalent, less $0.11 million for borrower service charges, was met from the proceeds of ADBs loan. The local currency cost of $2.345 million was met from MPAs internal cash generation, and an undisbursed loan amount of SDR936,897 ($0.95 million equivalent) was canceled. The disaggregated project costs for foreign expenditure on civil works, equipment, and consulting services were less than the appraisal estimates, but higher for local expenditure. The attached TAs to cover consultants fees and expenses amounted to $183,992. ADBs loan represented 77 percent of the total project cost, and financing by MPA from self-generated sources represented 23 percent. 12. The Project was deemed complete in May 1997, nearly 12 months later than envisaged at appraisal. The completion delay resulted in three extensions to the closing date for ADBs loan from 31 October 1996 to 12 March 1998. A PCR prepared by the Transport and Communications Division (West) was completed and circulated to the Board in July 1998 (para.

13

Port development has largely been an urgent response to growing congestion. ADB loan and TA support, while responsive to the need for implementing port improvements, provided a short-term solution without being part of an overall plan that necessarily meets least-cost development considerations. There are, for example, no plans for earmarking future land requirements that identify when it will be necessary to switch port operations to a different location or that ensure the timely upgrading of cargo-handling systems. These factors point to the need for a critical path management approach to planning and supporting proposals for port development.

5 6). A comparison of the actual implementation schedule with the appraisal schedule is shown in Appendix 2. C. Consultant Performance, Procurement, and Construction

13. Project implementation with respect to selection and performance of consultants, awarding of contracts, and management by MFA was satisfactory. The three-month delay in appointing consultants resulting from protracted contract negotiations contributed to the overall project completion delay (para. 12). 14. The consultant's input to detailed design and services to the project management office provided a sound basis for satisfactory implementation and subsequent operation of the project facilities. Consulting services to the project management office included preparing bid documents for the procurement and award of civil works contracts. Bid documents were prepared according to ADBs Guidelines for Procurement, with procurement of the service craft (including tugboat) and cargo-handling equipment carried out on the basis of international competitive bidding and international shipping. No significant difficulties were encountered with ADBs procurement procedures, and the quality of materials supplied and equipment performance were satisfactory. Because of clarifications required from the two lowest bidders regarding their construction methods, the contract awards were delayed by nearly five months. The quality of civil works, as finally completed, was satisfactory. Summary details of contract awards are provided in the PCR (Appendix 3).

D.

Organization and Management

15. Organization and management of the Project was consistent with arrangements envisaged at appraisal and proved satisfactory notwithstanding the delay in appointment of consultants (para. 13). The project management office established under Loan 911 (footnote 1) was retained, and the MFA director of external resources was the appointed project coordinator to act as the liaison between the Government and ADB. 16. ADB provided adequate monitoring during project implementation with three review missions and one project completion review mission. Coordination meetings were held during review missions with MCPW, MFA, MPA, and consultants to solve problems and minimize delays. The decision to appoint consultants with responsibility for full implementation services including preparing tender documents, overseeing bid evaluations, and awarding contracts, in addition to attending to technical aspects of implementation and supervision, was considered appropriate and helpful by MCPW. 17. The Government, MCPW, and MPAs compliance with loan covenants was satisfactory except for the transfer of powers and duties to MPA arising from provisions of the MPA Charter approved by the Government in March 1994. These include specific responsibilities relating to defining the limits of port and port load areas.14 Noncompliance with this covenant prevented MPA from proceeding with the consultants recommended plan under TA 1656 (footnote 3) for relieving congestion of container movements and storage. Important operational covenants for MPA relating to the appointment of key staff, management systems, tariff structure, and achievement of financial targets were complied with.

III.

ACHIEVEMENT OF PROJECT PURPOSE

A.

Operational Performance

18. Operational performance of the Project is assessed in terms of the improvement in ship turnaround times, meeting demand forecasts, capacity utilization, and effectiveness of the Project in relieving congestion constraints. Before the Project, all cargo transferred through the port docks was by barges to and from ships at anchor.15 The introduction of an alongside shipping berth avoided the necessity for double handling between ship and the dock area. Reflecting the least-cost development option, the transfer of cargo was to be handled as a combination of the ship berth and lighter systems. The Project achieved all handling targets envisaged at appraisal (Appendix 1).16

14 15

Loan Agreement, Schedule 6, Article 6e. Known as the lighter system. 16 Statistical information relating to operational performance are variously available from port statistics collated under MPAs management information system and MPA accounts. Accounts information after 1999 was generally not available, and some port statistics were discontinued. The approach taken is, therefore, to report the statistics as

19. Before the Project in 1991, the average turnaround time for foreign cargo vessels was 18.5 days. With completion of the Project in 1997, the average turnaround time was 11.5 days against an expected 13.5 days. 20. Total cargo throughput was 273,000 freight tons in 1991 and was projected, at appraisal, to increase by 7.5 percent per annum to 420,000 freight tons in year 2000, and thereafter at a slower rate of increase to 765,000 tons in 2010.17 Actual cargo throughput reached 855,000 freight tons in 1999, which was more than double the forecast. The increase on projected cargo volumes was significant for both imports and exports. Exports, which were not expected to be more than 5,000 freight tons, reached 173,000 freight tons in 1997. The increase was due to the enhanced competitiveness of fish exports and the advantages of the project berth facility, which ensured temperatures in reefer containers for chilled and frozen fish were kept within allowable limits.18 21. On completion of the Project, the number of berths available for lighterage were reduced from 8 to 5. With cargo growth, maximum handling capacity of the lighter system of around 320,000 freight tons was expected to be reached by the end of 1997. Actual cargo handled by lighter was consistent with the appraised forecasts and equivalent to 312,000 freight tons. The increase in cargo throughput over the projected capacity limit was made possible by increasing the number of stevedore gangs and utilizing the advantages of additional lifting equipment provided under the Project. 22. Containerized cargo as a proportion of total cargo throughput increased from 12 percent in 1991 to 27 percent in 1997. Actual container traffic in terms of twenty-foot equivalent units (teu) grew from 2,690 teu in 1991 to 16,230 teu in 1999, and represented an increase of 29 percent per annum. The increase was due to the inherent advantages of freighting cargousing containers, and improved handling operations attributable to the Project. Associated with the increased trend to containerization, there was an increase in the number of ship calls and slight trend to larger vessels. There were 202 ship calls before the Project in 1991 and 438 ship calls in 1999. 23. While project operating performance exceeded forecasts, congestion over the wharf area is again increasing because of the (i) limited storage areas for containers, (ii) narrowness of entry and exit roads, and (iii) lengthy dwell time between emptying and refilling containers. All shipping agents interviewed by the OEM pointed to the need for additional alongside berthing and expansion of the storage aprons.19 A historical summary of cargo-handling performance and alongside berth occupancy are provided in Appendix 3. B. Performance of the Operating Entity

they relate to operational performance after project completion, that is for 1997, and where extensions of the same statistics are available to 1999 to report the results to give some idea of the continuing performance trend. 17 Historically, the growth in cargo throughput at Mal Commercial Port paralleled the growth in gross domestic product of around 11 percent per annum. 18 Fish exports fell significantly in 1998; overall exports were 140,000 freight tons, and an estimated 126,000 freight tons in 1999. 19 Berthing occupancy in 1999 was a high 87 percent (Appendix 3).

8 24. Table 1 summarizes the financial statements of MPA from 1991 to 1997.20 Appendix 4 provides additional details. At appraisal, MPAs financial performance as reflected in the audited accounts for 1989 to 1991 were considered satisfactory. Financial revenues were observed to be increasing at around 20 percent per annum. Profit performance was strong, and the projected financial statements for 1993-2001 indicated the financial viability of MPA would likely continue. 25. The actual financial performance of MPA to the end of 1997 is better than forecast. Operating revenues increased by an average of 26 percent per annum, total assets by 16 percent per annum, and net surplus (profit) after depreciation and loan service charges by 18 percent per annum. Profit performance relative to operating revenue and return on equity was strong, and ADBs financial loan requirement to maintain an operating ratio of not less than 70 percent was comfortably exceeded. MPAs audited financial accounts do not enable a strict comparative measure of performance in relation to (i) maintaining a rate of return on average revalued net fixed assets of 6 percent; and (ii) a debt service ratio of not less than 1.3. Proxy indicators for these performance covenants imply they were nevertheless comfortably complied with. Accounts receivable, which represented approximately 4 months of revenues in 1991, were reduced to 1.7 months in 1997. Since year-end 1997, cargo throughput increased to the end of 1999 by 29 percent, while operating expenditures increased by an estimated 15 percent. This widening operating margin together with increased loan servicing requirements suggest the profit performance of MPA was sustained. Table 1: Summary of Financial Performance of Maldives Ports Authority (Rf million)
Fiscal Year Ending Operating Revenue Operating Expenditure a Operating Surplus/(Loss) Net Surplus/(Loss) Before Tax b Dividend Provision Year-End Surplus/(Loss) Net Fixed Assets Long-Term Loans Total Assets Performance Indicators c Current Ratio d Debt Service Ratio Receivables/Revenue (months) e Return on Operating Revenue (%) Return on Equity (%) Equity to Total Assets (%) Return on Net Fixed Assets (%) Average Tariff per Freight Ton 1991 24.4 11.5 12.9 9.7 6.3 3.4 24.7 6.3 40.8 1992 27.0 13.7 13.3 2.3 7.2 (4.9) 67.9 77.4 118.4 1993 31.2 14.7 16.5 3.6 0.0 3.6 69.6 68.9 118.9 1994 48.3 16.7 31.6 19.4 0.0 19.4 70.0 62.2 120.2 1995 59.9 25.0 34.9 23.2 2.0 21.2 66.1 56.2 131.4 1996 74.5 24.3 50.2 30.5 15.0 15.5 89.9 57.4 154.3 1997 87.8 30.6 57.2 30.0 20.0 10.0 167.4 140.9 251.9

10.5 9.0 3.9 39.8 31.4 75.8 39.3 89.3

2.4 0.3 5.1 8.6 9.1 23.5 3.4 83.7

1.4 0.5 4.7 11.5 13.5 22.3 5.1 90.2

1.5 2.8 3.1 40.0 44.3 36.3 27.7 115.2

1.3 3.5 2.1 38.3 36.7 48.1 35.1 123.3

3.0 2.5 1.8 40.5 38.8 50.9 33.9 127.1

2.1 1.8 1.7 33.7 34.3 34.7 17.9 134.3

20

Last year for completed audited accounts. Data information after 1997 is independently available from MPAs management information system and generally relates to the ports cargo-handling operations.

Fiscal Year Ending

a b c d e

1991

1992

1993

1994

1995

1996

1997

Before depreciation and loan service costs. To Ministry of Finance. Ratio of current assets to current liabilities. Net surplus before tax/interest expenditure. Net surplus before tax/operating revenue.

26. Estimates at appraisal for the project financial internal rate of return (FIRR) and economic internal rate of return (EIRR) were calculated based on the expected incremental increases in cargo throughput and maintenance of an average tariff rate of Rf104.5 per ton. The base case benefits were conservative in terms of pricing and incremental output, and implementation arrangements were considered sufficient to enable completion of the Project as scheduled. Sensitivity tests showed the results were robust against increases in capital costs, operational expenses, and reduced cargo traffic. The FIRR and EIRR appraisal estimates are compared with the reestimates at project completion and for this PPAR in Table 2. 27. The PCR repeated the approach adopted at appraisal, taking into account the actual investment costs, completion date, incremental revenues, and operation and maintenance costs to FY1996. The PCRs higher FIRR of 18 percent mainly reflects the higher volume of cargo throughput. The slightly lower EIRR of 22 percent reflects the higher volume of cargo throughput, and a decision to apportion 50 percent (as against the appraisal approach of 100 percent) of the assessed value of service and waiting time savings due to the Project.21 28. Differences between the OEM and appraisal reestimates are explained by the same factors as for the PCR. The FIRR of 23 percent is higher than the weighted average cost of capital and confirms the Projects financial viability.22 The EIRR is a highly satisfactory 26.8 percent and confirms the Projects economic viability. Both results are robust and relatively insensitive to changes in projection assumptions (after 1999) concerning cargo throughput, port tariffs, and congestion impacts. Forecast cargo throughput would have to fall below the 1998 level of 823,000 freight tons for the EIRR to fall below 10 percent or 84 percent of the current throughput. Appendix 5 provides details of the methodology, assumptions, sensitivity, and workings underlying the FIRR and EIRR reestimates. Table 2: Overall Project FIRR and EIRR Estimates (percent) Item FIRR EIRR Appraisal 12.3 24.6 PCR 18.0 22.0 PPAR 23.3 26.8

EIRR = economic internal rate of return, FIRR = financial internal rate of return, PCR = project completion report, PPAR = project performance audit report.

21

This decision of the PCR is consistent with changes in evaluation practice in the World Bank, which recognizes the beneficiaries of port improvements are foreign shipowners as well as cargo exporters and importers. 22 The weighted average real cost of capital is estimated at about 11 percent.

10 C. Sustainability

29. Having been well maintained, the ports project facilities are in good condition and with normal maintenance should be usable for many years to come. Although actual cargo throughput has been much higher than forecast, the engineering design was made bearing in mind technical expansion requirements and the need for future heavier loads. The higher cargo throughput has served to bring forward the need for further expansion of the port, and there are no serious engineering or underdesign issues. The continued sustainability of project benefits is linked to (i) handling capacity of the port in the face of increasing congestion, and (ii) autonomy of MPA management. 30. Capacity-handling limits of the lighter berth system have been reached, and berth occupancy at the alongside berth is a high average 87 percent (Appendix 3). Maximum handling capacity at the alongside berth will be reached by 2002. The FIRR and EIRR reestimates take into account the ports capacity-handling limits and likely deterioration of handling efficiency as storage and transfer areas on the wharf area become fully utilized. Port handling capacity can be increased by constructing a second alongside berth, and expanding the wharf and storage areas over the commercial harbor basin.23 31. There are presently no plans to provide for further capacity expansion. Although vested under its charter with the autonomy and responsibility for planning, MPA is without the organization and qualified staff to carry out this function (paras. 37-38), and is mainly concerned with managing day-to-day port operations. Notwithstanding the limited autonomy and capacity of MPA to meet planning considerations, and taking into account the (i) acceptable management and maintenance history of the ports facilities, (ii) likely positive response of the Government to increase the ports handling capacity with appropriate study and justification, and (iii) demonstrated financial viability of the ports operations (para. 24) with ample capacity to increase tariffs given there has been no adjustment since 1992, future benefits from the Project are unlikely to be seriously eroded.

IV.

ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS

A.

Socioeconomic Impacts

32. The Commercial Port of Mal is the focal port of call for foreign shipping before distribution by interisland shipping. Twenty-five percent of the total population of 280,000 is located on the Mal Atoll. The balance of the population resides on more than 70 islands with the next largest population group comprising less than 3,000 persons. Because of the low populace on each island outside of the Mal Atoll Grouptrade volumes are insufficient to justify direct discharging and loadingand Mal Commercial Port has developed as a transshipment center.

23

With an additional alongside berth, the maximum handling capacity could conceivably increase from 1 million freight tons to 1.6 million freight tons per annum. Cargo throughput in 1999 was 855,000 freight tons.

11 33. The socioeconomic benefits attributable to the Project include improved working conditions for port labor, improved cargo-handling productivity, and institutional strengthening of MPAs operations. These factors required increased skill levels and resulted in increased opportunities for higher paid employment.24 Indirectly, productivity improvements have helped attract investment to the Maldives, which in turn has generated spin-off benefits for gainful employment. 34. Coinciding with the achievement of objectives, the Maldives gross domestic product (GDP) increased from Rf1.69 billion in 1991 to Rf4.3 billion in 1998, and reflected an average growth of 14.4 percent per annum or 6.3 percent in real terms. GDP per capita doubled from Rf7,553 to Rf16,203. There was strong growth in the tourism and construction sectors, which together account for around 45 percent of the domestic labor force. The number of tourist arrivals in 1999 was 380,000 persons or nearly 40 percent more than the resident population. Significant in the growth and number of tourists is the dependence of the tourist sector on importing food requirements, which account for approximately 22 percent of the value of total imports, and require port facilities that offer minimum transfer times and reefer facilities to keep perishables fresh.

24

Significant in this regard, the procurement of a tugboat, service boats, computers, and program systems has required additional boat crew, servicing engineers, computer operators, and accounting clerks. Improved facilities for refueling, refuse collection, and associated expansion of office and shop outlets at the South Harbor under ADBs first project also generated permanent business and additional employment opportunities.

12

35. The Project was gender-neutral, yielding no particular social or economic benefit to women through its implementation.25 B. Environmental Impacts

36. No environmental concerns were visualized at appraisal, and there were no project improvements that changed the natural environment of marine life. The Project, together with other initiatives of the Government to improve the northern harbor area, resulted in the elimination of at least all visible pollution, diesel, and other fuel discharges.26 Although procedures exist for emergencies to attend oil spillages and fire, there have been no events of this nature, and training in awareness and procedures have become lax. Follow-up actions for MPA are recommended in this regard (para. 48). C. Impacts on Institutions and Policy

37. Section 39 of MPAs Charter (para. 8 and footnote 10) transferred, from MCPW and the Ministry of Customs to MPA, responsibility, duties, and powers in relation to (i) planning and civil works, covering ports and port land area; (ii) collections on cargo freight; and (iii) licensing and the issue of permits for use of the harbor area and facilities. Although MPA has full autonomy over the management of freight transfers at the port, responsibilities covering port planning, utilization of the port land area, and award of civil contracts have remained with MCPW. The requirement for Government approval of all senior management positions also undermines the hoped-for benefits from shifting autonomy powers to MPA. MCPW retains responsibility for planning, civil works, and rights to land areas for port development. The most disquieting feature of the situation is that concerns for meeting future growth requirements are lacking in urgency despite increasingly evident ship queuing and congestion problems. 38. The organizational structure and management capability of MPA appears adequate for the operation and maintenance of Mal Commercial Port. Management is systemized, operations are orderly, and the port area adequately controlled and maintained. Accounting systems and management information systems have been computerized. However, weaknesses prevail in their operation and timely availability of output (largely due to staff deficiencies), and the quality of data entry arising from preparatory manual collations is not always reliable. As a consequence, the ports management information and accounting systems are not being used to best effect. These deficiencies are recognized by MPA, and steps are being taken to overcome them with proposals to upgrade existing systems, enhance in-house software, and improve incentives for employment with MPA. 39. The TA attached to the Project (footnote 3) was intended to strengthen MCPWs organization, procurement and contract management, supervision capabilities, and
25

Government institutions in the Maldives, including those directly concerned with the Project, employ a relatively high proportion of women, including women in senior positions, who were involved in administration of the Project. 26 Up until 1997, pollution from the discharge of boat engines and rubbish discharged along the waterfront area was visibly problematic. The city waterfront area of Mal has been redesigned, and areas for boat craft delineated for the commercial harbor, interisland passenger vessels, tourist boat operators, and security patrol services. Licensing has been introduced and strictly enforced including meeting regulations covering pollution discharges.

13 maintenance workshop methods and skills. ADBs terms of reference adequately reflected these objectives and provided for 6 person-months27 of consulting services from a ports operation and maintenance specialist. Advice provided for project management (preparation of tender documents, procurement, and contracts) was considered by MCPW to be of direct benefit, as was advice on how to monitor project implementation. The consultants recommendations included (i) establishing a mechanical workshop equipped with spare parts and responsible for plant, equipment, and vehicles; (ii) engaging a specialist trainer in maintenance operations for two years; and (iii) developing a staff training program on management, accounting, and engineering including on-the-job training. Manuals prepared on project management and maintenance were usefully applied, and the recommendations of the consultant were taken up beginning mid-1996. On the basis of the satisfactory reports of MCPW and discussions with two persons who benefited from the training programs developed, and the resulting in-house training programs for staff development, OEO rates this TA successful.28 40. The recommendations of the studys implementation consultants for improving container storage and cargo-handling operations include (i) reduce the free-parking period for containers from 10 days to 7 days, (ii) convert the existing transit shed into a container freight station, and (iii) make pilotage compulsory to ensure the safe passage of vessels in the port. Other recommendations included making investments to augment service facilities for electric power supply, telephone connection, and fresh water outlets; and publishing an annual report. MPA reported that the consultants recommendations were accepted by the Government and were gradually being put into effect. As part of a time-bound action plan, the Project included support for MPA to carry out an 41. operational review to consider privatizing its operations. Although a more commercial approach to the contracting of stevedores was introduced, the fuller concept of privatizing all stevedoring, cargo-handling operations, and supply of port services is without strong Government support. ADBs TA 3099,29 completed in February 2000, was mandated to identify opportunities in MPA for private sector participation. This study verified the lack of commercialization that exists in MPAs operations,30 but offered no new insights or enthusiasm for fuller privatization of MPAs operations.

V.

OVERALL ASSESSMENT

27 28

During implementation and under a revision in scope, this was increased to 7 person-months. Timing for TA implementation coincided with restructuring measures of the Government for MCPW and redeployment of responsibilities to MPA so that some of the tasks required of the consultant for recommending improvements to the organization were made redundant. While there was general satisfaction with consultant performance, much of the content of the manuals was considered inappropriate or impractical, and required considerable editing. The OEM found the consultants final report superficial and lacking in comprehensiveness so that the TA objective of the study to provide guidance on improving the operation and management capabilities of MCPW was not totally fulfilled. These factors detract from assessing the TA highly successful. Advice provided for project management (preparation of tender documents and other) was considered of direct benefit as was advice on how to monitor. 29 TA 3099-MLD: Private Sector Participation in the Maldives Ports, for $400,000, approved on 20 November 1998. 30 Significant in this regard, tariffs were found to significantly favor general cargo transfers by lighter. Excessive operating costs associated with too many staff were also identified.

14 A. Relevance

42. The project rationale to relieve freight congestion constraints, premised on the basis of sustaining economic growth, proved particularly relevant given that the overall growth in cargo throughput was twice the appraisal target. Without the Project, port-handling capacity would have been insufficient and resulted in unacceptable ship turnaround times, increased freight and cargo-handling costs, and foreign investment would have been likely deterred. Without the benefit of consulting services for the preparation of tender documents and administration of contract awards, the inexperience of local project staff would have led to unacceptable completion delays. Without the benefit of TA for MCPW, the general operation and maintenance capabilities of MCPW would have remained undeveloped and limited the effectiveness of MCPW services. B. Efficacy

43. The Project benefited from competent consultants, an effective project management team, and the experience gained from ADBs first Mal Port Development Project under Loan 911 (footnote 1). The decision to include a feasibility study for the Project brought into perspective the need for an alongside berth as an alternative to expanding and improving the lighter system, and ensured that important technical considerations were addressed and the least-cost expansion option was applied. Procurement and construction was satisfactorily executed and the overall project cost of $10.4 million was within the appraised estimate of $10.8 million. The overall financial performance of MPA, as measured against the appraised project forecasts and ADBs loan covenants, proved significantly stronger than projected. The overall project completion delay of 12 months is largely explained by the approved change in scope to extend construction of the alongside wharf from 70 m to 101 m. Institutional strengthening of MPA and MCPW associated with the time-bound action plan and attached TA were largely achieved. The less than satisfactory efficacy aspects include implementation delays in appointing consultants and continued weaknesses in MPAs capacity to (i) meet reporting covenants, (ii) provide timely annual reports, (iii) operate effective information and accounting systems, and (iv) take responsibility for planning future port operations. ADBs covenanted timebound action plan for MPA to carry out a review of its operations in respect of privatizing operations proved ineffective. C. Efficiency

44. Apart from completion delays, actual achievements under the Project were better than envisaged. Cargo throughput was twice the approved forecasts. The average ship turnaround time was reduced from 18.5 days in 1991 to 11.5 days, against an expected 13.5 days. Improvements to the wharf area for storage and administration together with the benefits resulting from the Projects lifting equipment and introduction of better administration systems increased storage capacity and reduced the average holding time on container cargo from 22 days to 10 days. Maintenance operations are in order, the navigational lighting system is working, the workshop is utilized, the tugboat enables faster and more distant lighter services, and the additional service craft have enabled customs formalities to be more quickly attended

15 to. The project FIRR and EIRR reestimates of 23 percent (financial) and 27 percent (economic) confirm the financial and economic viability of the Project. D. Sustainability

45. The quality of civil works appears to be sound after four years of operation and is expected to long outlast the projected economic life of 2017. The cargo-lifting equipment and tugboats are well maintained, and navigation aids are kept in serviced order. The FIRR and EIRR reestimates take into account the ports capacity handling limits and likely deterioration in handling efficiency as storage and transfer areas on the wharf area become fully utilized.31 Institutional strengthening benefits require continuing focus to ensure management information systems are utilized in an effective manner.

31

Capacity handling limits of the lighter berth facilities have been reached, and maximum handling capacity of the port will be reached by 2002.

16

E.

Institutional Development and Other Impacts

46. Hoped-for development impacts for institutional strengthening of MPA and MCPW enhanced management operations, but continue to reveal weaknesses associated with the incomplete transfer of responsibilities under MPAs Charter, and insufficient accounting and computer-trained personnel. The socioeconomic benefits from the Project were largely in the form of avoided congestion costs that would deter investment into the Maldives and lessen employment opportunities. The Project also set standards for improved working conditions for port labor, and opened opportunities for increased accounting, computer, and managerial skill levels, and as a result opportunities for higher paid employment. To the extent that the Project facilitated economic growth and investment, spin-off benefits for gainful employment in the tourism, fisheries, and service industries were generated. ADBs project loan, while not designed with a specific environmental objective included covenants to ensure design requirements, and met international environmental safeguards. Since project approval, visible improvements associated with eliminating fuel discharges and garbage into the north harbor area have occurred. F. Overall Project Rating

47. Overall, the Project is rated successful as concluded after taking into account ADBs evaluation criteria for project relevance, efficacy, efficiency, sustainability, and development impact.32 Table 3 summarizes the project assessment rating. Table 3: Assessment of Overall Project Performance Criteria 1. Relevance 2. Efficacy 3. Efficiency 4. Sustainability 5. Development Impact Overall Rating Assessment HS S HS S PS Rating (0-3) 3 2 3 2 1 Weight (%) 20 25 20 20 15 100 Weighted Rating 0.60 0.50 0.60 0.40 0.15 2.25

Rating: 3 = highly successful, 2 = successful, 1 = less than successful, 0 = unsuccessful. Overall Rating: HS = highly successful >2.5, S = successful 1.6<S<2.5, LS = less than successful 0.6<LS <1.6, U = unsuccessful <0.6.

32

Deficiencies in the performance achievements resulting from institutional strengthening of MPA and TA to MCPW preclude a highly successful rating.

17 G. Assessment of ADB and Borrower Performance

48. ADBs performance is assessed satisfactory taking into account ADBs involvement in the overall project design and implementation elements including ensuring the (i) technical feasibility of the Project was correctly evaluated, and project design was consistent with the least-cost development considerations; (ii) general effectiveness of implementation and loan administration relating to procurement and contracting were carried out in accord with competitive bidding procedures and with appropriate supervision; and (iii) effectiveness of attendance to monitoring through timely review missions. Detracting from a higher assessment are (i) the underdesign features of the Project as reflected in the low projections for cargo throughput and need for additional cargo-handling equipment (paras. 20-21); and (ii) weaknesses in the TA design associated with developing MCPWs operation and management (footnote 28). 49. The Borrowers performance is assessed less than satisfactory. Detracting from a higher assessment are (i) the delays in completion, which can be attributed to unacceptable slowness in the appointment of consultants (para. 13); (ii) slowness in addressing expansion requirements to ensure the project benefits are sustained (para. 31); and (iii) failure to fully follow through on commitments relating to the Projects time-bound action plan (para. 10) and enactment of MPAs Charter (para. 37).

VI.

ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

A.

Key Issues for the Future

50. Privatization of MPA Activities. The operations of MPA are a monopoly that cannot readily be disaggregated into competitive and operationally efficient parts.33 Although there have been no adjustments to port charges and tariffs since 1992, MPAs financial viability has been sufficient to maintain ADBs covenanted ratio of 6 percent return on net fixed assets, and in 1997 (last year of available accounts) they were sufficient to pay a dividend of 22.5 percent of total revenues plus meet project development and depreciation costs amounting to 14 percent of total revenues. If the cost of a second berth and associated infrastructure and equipment requirements at about $20 million are considered,34 the interest on loan charges would place MPA in a loss position, and no dividend to the Government could be paid. 51. These factors underline that the political preference is to maintain tariff pricing, contain operational costs, and defer all fixed capital expenditure until the problems of congestion are acute and of broad public concern. The common method of circumventing this dilemma is to privatize the management and cargo-handling operations of the port by way of a lease, with the Government retaining ownership of the land and fixed asset structures. It is recommended that a study be conducted to address the long-term implication of noncommercial tariff pricing, and
33

Preventing this is the overall scale of operations that justifies only one alongside berth, and the severe constraint on availability of land for alternative port sites. 34 The consultants for TA 3099 estimate that some $46 million is needed to meet port expansion, including developments for the outer islands.

18 of how port operations at Mal (or part thereof) might be successfully privatized as a lease operation (para. 49).35 B. Lessons Identified

52. Although Section 39 of MPAs Charter approved in March 1994 mandates MPA with responsibility for port planning, the transfer of responsibility was rendered ineffective without the appointment of qualified staff. The shortage of qualified and sufficiently experienced staff to take responsibility for planning and developing proposals to meet expansion and development requirements should have been addressed under the Project (para. 10). Staffing requirements and training to operate the computerized accounting and management information systems should also have been part of the Project (paras. 37-38). C. 53. Follow-Up Actions Apart from administration of the loan, no follow-up action is recommended for ADB.

54. OEM observed significant weaknesses in organization and planning for port development requirements. The following follow-up measures (Table 4) are recommended for Government and MPA to overcome these weaknesses: Table 4: Recommendations for Government and MPA Follow-Up Follow-Up Actions Unit Responsible Action
(i) Clarify and strengthen the organization responsible for planning and identifying expansion requirements at Mal Port (paras. 8, 31, 37, and 38). Develop a master transport plan that identifies port expansion requirements consistent with meeting least-cost development considerations for Mal Port and the outer a islands (paras. 10 and 32). Initiate a feasibility study to extend the wharf area at Mal Port to two berths (paras. 30-31). MOFT

Timing

Monitoring
MOFT As soon as possible

(ii)

MPA/MCPW

MOFT

Within 18 months

(iii)

MOFT

MOFT

Immediate

35

Lease agreements for port operators vary considerably in their structure for determining the lease period, lease pricing, and participation of shipping lines; adjusting tariffs; meeting ongoing reequipment needs; and dealing with nonfixed assets (lifting equipment, etc.) at the end of a lease term. The unique circumstances at Mal suggest a study is warranted. The Government advised ADBs Country Programming Mission in April 2000 that corporatization of MPA will be completed in 2000.

19
(iv) Initiate a study for privatizing the management and cargo-handling operations of MPA by way of a lease (para. 51). MOFT MOFT Within one year

MCPW = Ministry of Construction and Public Works, MOFT = Ministry of Finance and Treasury, MPA = Maldives Ports Authority. a Although cargo transfers to any one outer island are small, the number of outer islands is large, and transshipment from ships at anchor to awaiting barges appears more cost- and time-effective than from Mal Port. Fresh produce items for delivery to tourist resorts present another unique but significant circumstance.

20

APPENDIXES

Number

Title

Page

Cited on (page, para.)

1 2 3 4 5

Goals, Targets, Inputs, and Results Appraisal and Actual Implementation Schedules Cargo-Handling Performance Financial Statements Financial and Economic Analysis

17 19 20 22 24

2, 4 4, 12 4, 14 6, 24 8, 28

GOALS, TARGETS, INPUTS, AND RESULTSa Objective

Project To improve foreign cargohandling productivity at Mal Port

Target
Project (i) To construct a 70-meter alongside berth for foreign shipping; (ii) provide operational equipment in the form of forklifts, tugboat, wharf tractors, and navigational aids; and (iii) complete transportation study and implement plan for container storage by 31 December 1994

Result
Project Berth of 101 meters constructed; Equipment supplied as detailed for appraisal plus 45-ton reach stacker and one additional 25-ton forklift; Transportation study completed, and plan for container storage partly implemented. Operations Lighterage was 312,000 freight tons in 1997. Overall throughput was 855,000 freight tons in 1999. Achieved

Economic Impact
Project Enhanced cargo-handling productivity and avoided pressures for higher shipping, cargo handling, and storage costs

Operations To meet cargo forecasts to 2010

Operations With maximum lighterage of 320,000 freight tons by 1997; with forecast overall throughput of 765,000 freight tons by 2010 To service vessels up to 6,000 dwt

Operations Addressed capacity constraints and reduced congestion

To provide serviced berthing

Extended servicing from 340 to 350 days per year Extended servicing capacity doubled cargo-handling capacity Efficiency improvements maintained cargo-handling capacity Enabled overall cargo throughput to double Increased capacity to hold shipping and port charges

17

To provide berth moorings

For vessels up to 15,000 dwt

Achieved

To reduce the ports operational dependency on lighterage

Limit the need to increase the number of lighterage berths until after 2010

The number of lighterage berths was reduced from 8 to 5.

To reduce ship turnaround time

From an average 18.5 to 13.5 days/ship

Reduced to 11.5 days/ship

To reduce cargo damage

By 0.1 percent of cargo value

Not monitored

Appendix 1, page 1

To increase container handling and storage capacity Project viability

Reduce average container holding time by two weeks. FIRR = 12.3 percent EIRR = 24.6 percent

Achieved

Improved utilization capacity and reduced unit holding costs Not applicable High

FIRR = 23.3 percent EIRR = 26.8 percent

Objective

Target

Result

Economic Impact

dwt = deadweight ton, EIRR = economic internal rate of return, FIRR = financial internal rate of return. a Although some similarity in format exists, this comparison is not intended to represent a logical framework. A logical framework was not prepared for this Project at appraisal.

Inputs Project cost Project funding ADB Government Consulting services Implementation Technical assistance Container storage study

Inputs $10.4 million

Inputs $10.2 million

Least-cost development

$8.8 million $1.6 million

$7.8 million $2.4 million

Met foreign capital constraints Participatory commitment

60 person-months

60 person-months

Provided knowledge transfer

3.5 person-months

3.5 person-months

Rationalized best options and recommendations

ADB = Asian Development Bank. Source: Operations Evaluation Mission.

18 Appendix 1, page 2

APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULES 1990 1991 1992 1993 1994 1995 1996 1997 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Implementation Task A. Consulting Services

B. Procurement of Equipment

C. Civil Works

At appraisal. Actual.

Project was deemed completed by end of May 1997

19

Source: Project Completion Review Mission.

Appendix 2

Table 4 EVALUATION STUDY ON THE IMPACT OF STAKEHOLDER PARTICIPATION IN PROJECT PREPARATION AND IMPLEMENTATION Cost Schedule Stage/ Consultancy Inputs 1/ A. Selection of Countries, Projects & International NGO group Selection of PPTAs/Projects Identification of international NGOs & discussion of TOR International Consultant Input (1) 14 PHI PHI 7 7 15 45 21 5 7 3 3 3 3 25 175 21 21 21 21 35 35 35 35 2 2 2 2 7 7 7 7 142 PHI 35 35 36 85,200 35,300 9,000 4,250 13,265 International Consultants Remuneration 1/ Per Diems, Airfares, etc., 2/ NGO contracts Case Study Operational Costs 5/ Others costs 6/ Contingencies 7/ Total

B. Contracting of International NGO group Preparation of proposals by PHI international NGO groups Evaluation of proposals PHI Contracting of international NGO PHI group Preliminary discussions with local Country 1 NGOs in the selected countries Country 2 Country 3 Country 4 International Consultant Input (2) various C. Case Studies Preparatory Work Preparatory Work Preparatory Work Preparatory Work Field Work Field Work Field Work Field Work Final Workshop Final Workshop Final Workshop Final Workshop Report preparation Report preparation Report preparation Report preparation International Consultant Input (3) D. Process Documentation Final report preparation International Consultant Input (4) Total Country 1 Country 2 Country 3 Country 4 Country 1 Country 2 Country 3 Country 4 Country 1 Country 2 Country 3 Country 4 Country 1 Country 2 Country 3 Country 4

15,000

5,750 6,300 6,300 6,300 6,300 10,500 10,500 10,500 10,500 600 600 600 600 1,400 1,400 1,400 1,400 2,000 2,000 2,000 2,000 5,000 5,000 5,000 5,000 3,000 3,000 3,000 3,000 500 500 500 500 830 830 830 830 1,600 1,600 1,600 1,600 360 360 360 360 190 190 190 190

20,775 9,151 9,151 9,151 9,151 17,635 17,635 17,635 17,635 3,962 3,962 3,962 3,962 2,097 2,097 2,097 2,097 120,642

500 500 500 500

21,600 130,800

7,400 52,700 75,200 42,000 2,000 11,920

29,036 315,098

Notes: 1/ International Consultants Remuneration assumed $600 per day. 2/ Airfares for International Consultants estimated at $2,000 for each input together with $5,000 for preliminary country visits and $10,000 for Case Study travel. Per diems estimated at $150. 3/ NGO contracts costed at $300 per day together with additional amount of $2,000 for travel during Preparatory Work and $4,000 during Cast Studies. 4/ Costed at $200 per day plus $500 for report production costs. 5/ Case Study Operational Costs estimated at $1000 for each project. 6/ Other costs mainly for communications estimated at $500 per country together with $3,000 for the final workshop in each country. 7/ Contingencies estimated at 10 percent of cost.

CARGO-HANDLING PERFORMANCE
Item Ships Ship calls (cargo vessels) Size of vessels Cargo Throughput Containers in/out Total cargo Operating Times/Call Waiting time Service time Ship turnaround timeb Berth occupancy Handling Performance Cargo handling Containers Breakbulk Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999

no. GRT

212

245 1,007

268 1,373

334 1,464

356 2,139

309 2,554

356 2,367

419

438 2,492

teu FT

2,690 273,000

3,967 322,532

5,024 345,466

6,550 419,315

7,760 490,985

9,554 591,275

11,177 660,765

14,304 822,762

16,230 854,590

days days days %

1.5 7.5 18.5

1.4 7.6 18.5

1.0 6.6 16.8

0.8 4.6 14.6

0.8 4.6 14.6

0.8 4.6 12.2 60.4

0.7 4.2 11.5 67.6

0.8 4.3 11.6 84.1

0.8 4.3 11.6 87.4

20

FT/day nos./shipday FT/shipday

803 45 123

948 44 113

1,016 53 114

1,233 77 115

1,444 101 110

1,739 146 106

1,943 180 102

2,420

2,513

= not available, FT = freight ton, GRT = gross registered tonnage, no. = number, teu = twenty-foot equivalent unit. a Of which export cargo was 34 percent. b Ship turnaround times under the lighterage system averaged 18.5 days. With the Project, the average turnaround savings per ship was expected to be a minimum of 5 days. Sources: Maldives Ports Authority and mission estimates.

Appendix 3, page 1

FINANCIAL STATEMENTS Table A4.1: Summary Income Statement, 1991-1997 (Rf million)
Item 1991 1992 1993 1994 1995 1996 1997 Growth Rate Percent per Year 26.1 25.9 16.9 31.1 25.2 31.1 38.1 0.0 0.0 0.0 37.3 0.0 0.0 73.2

Total Revenue Operating Revenue Operating Expenditure Gross Operating Profit Less: Finance Interest Depreciation Net Operating Profit Less: Project Development Assets Written Off Extraordinary Expenses Year End Net Surplus Prior Year Adjustment To Finance Ministry Surplus Carried Forward Performance Indicators (%) Net Operating Profit/Total Revenue Net Operating Profit/Equity Net Operating Profit/Total Assets
..

24.38 24.38 11.52 12.86 1.09 2.06 9.71 0.00 0.00 0.12 9.59 1.85 (6.27) 5.17

27.00 27.00 13.66 13.30 8.36 2.65 2.33 0.00 0.00 0.07 2.26 0.56 (7.19) (4.37)

31.16 31.16 14.67 16.49 7.76 5.16 3.57 2.04 0.00 0.35 1.18 (0.07) 0.00 1.24

48.32 48.32 16.74 31.58 7.03 5.20 19.35 2.05 0.00 0.10 17.20
..

60.53 59.87 25.00 34.87 6.64 5.06 23.17 2.05 0.07 0.16 21.62 (0.12) (2.00) 19.50

75.17 74.47 24.33 50.14 12.44 7.25 30.45 2.05 0.00 0.00 29.03 1.32 (15.00) 15.35

88.77 87.85 30.63 51.22 16.67 10.60 29.95 2.05 0.00 0.00 28.82 0.00 (20.00) 8.82

22

0.00 17.20

Appendix 4, page 1

39.83 31.43 23.81

8.63 9.18 2.15

11.46 13.47 3.00

40.05 44.27 16.02

38.28 36.66 17.64

40.51 38.76 19.73

33.74 34.28 11.89

= less than $0.005 million. Source: Maldives Ports Authority's audited accounts.

Table A4.2: Summary Balance Sheet Statement, 1991-1997 (Rf million)

Item Fixed Assets Work in Progress Project Development Investments Current Assets Stocks Debtors Cash Total Assets Equity Current Liabilities Term Loans Total Liabilities Performance Indicators Current Operating Ratio Debt-Service Ratio Equity/Total Assets (%) Term Loans/Total Assets (%) 1991 24.73 0.47 0.00 0.00 15.58 0.54 8.00 7.04 40.78 30.89 3.61 6.28 40.78 1992 67.89 4.24 19.48 0.00 16.63 2.00 11.57 3.06 108.24 25.39 5.47 77.38 108.24 1993 69.56 7.38 18.36 0.00 23.57 5.04 12.19 6.34 118.87 26.51 23.48 68.88 118.87 1994 69.96 6.37 16.38 0.00 28.09 7.25 12.45 8.39 120.80 43.71 14.90 62.19 120.80 1995 66.05 10.45 14.33 0.00 40.55 6.14 10.83 23.58 131.38 63.21 12.00 56.17 131.38 1996 89.91 2.32 12.28 0.00 49.82 8.25 11.45 30.12 154.33 78.56 18.40 57.37 154.33 1997 167.42 2.42 26.76 11.72 43.56 7.04 12.24 24.18 251.88 87.38 23.59 140.91 251.88

23

4.32 5.88 75.75 8.85

3.04 (0.40) 23.46 5.05

1.00 0.13 22.30 19.75

1.89 1.98 36.18 12.33

3.38 2.48 48.11 9.13

2.71 1.91 50.90 11.92

1.85 0.45 34.69 9.37

Appendix 4, page 2

Source: Maldives Ports Authority's audited accounts.

24 Appendix 5, page 1 FINANCIAL AND ECONOMIC ANALYSIS 1. The reestimated financial internal rate of return (FIRR) and economic internal rate of return (EIRR) are calculated following the same approach as for appraisal and the project completion report (PCR), and take into account the overall net incremental stream of benefits and costs for the with- and without-project cases. Differences between the project performance audit report (PPAR), appraisal, and PCR estimates are largely differences associated with scheduling, the size of revenue benefits, and associated operating costs. Further details of differences are discussed in para. 6. 2. Principal assumptions relating to the PPAR analyses are (i) All costs and revenues are converted into year 2000 constant prices. The World Banks manufacturing unit value index is used for inflating actual foreign currency costs to year 2000 constant prices and converted to the Maldives currency using the exchange rate of Rf11.770 per dollar. Actual local currency costs are inflated using the implicit gross domestic product deflator for the Maldives. The operating life of the Project is projected to 2017 (same as for appraisal and PCR). No residual value for the Project is assumed. The capital investment costs are based on the project record of payments as prepared for the PCR. No taxes are included in the financial expenditures and a capital conversion factor of 0.9 is applied to the financial investment costs to arrive at economic investment costs. Cargo throughput is projected after 1999 at 11 percent per annum to 2002 when maximum handling capacity is reached. Incremental financial operating costs are computed from figures for actual operating costs for 1991-1997 (last year of reported accounts), and projected after 1997 based on operating costs for 1997 (adjusted to 2000 prices) and actual increases in cargo throughput to 1999. The economic operating costs for the Project represent financial costs adjusted for distortions created by direct taxes, duties on imports, and differences between international border prices on inputs including utility services, and the shadow price of international and national labor. These are corrected using an overall adjustment factor of 0.9. Details of the project investment costs are shown in basic data (page ii) and the PCR. In line with adopted general practice, the combined national economic benefit from savings in ship service and waiting times are assumed to be 50 percent of the total benefit estimate.

(ii)

(iii)

(iv)

(v)

(vi)

3. Savings from Reduction in Ship Service and Waiting Times. The aggregate service time requirement for ships was calculated for the with- and without-project cases using the known average cargo-handling rates applying in 1996 and 1997 (Appendix 3). These dates correspond approximately to the period before and after commissioning of the alongside berth. While earlier improvements were also effected associated with the transfer of cargo using the lighter system, these are not taken into account.

25 Appendix 5, page 2 4. The aggregate savings in waiting times for ships was calculated based on the known average waiting times that applied between 1992 and 1999. Improvements in cargo handling using the lighter system reduced the average waiting time from 1-4 days to 0.8 days up to 1996. There was a marginal improvement with commissioning of the alongside berth to 0.7 days; but with berth occupancy in 1999 more than 85 percent, the waiting time for ships before service has increased to 0.8 days.1 5. The aggregate savings in service times were calculated based on the difference in cargo-handling rates before and after the alongside berth was completed. Before the alongside berth was completed, the average cargo-handling rate was 1,943 freight tons per day. After the alongside berth was commissioned, the average cargo-handling rate improved to 2,420 freight tons per day and the next two years to 2,600 freight tons per day. 6. Comparison with Appraisal and PCR Estimates. Table A5.1 compares the estimates obtained for appraisal, PCR, and PPAR. Table A5.1: FIRR/EIRR Estimates Item FIRR EIRR Appraisal 12.3 24.6 PCR 18.0 22.0 PPAR 23.3 26.8

EIRR = economic internal rate of return, FIRR = financial internal rate of return, PCR = project completion report, PPAR = project performance audit report.

7. Although the approach to calculating the estimates for each evaluation was essentially the same, the data applied in terms of scheduling revenue benefits and real operating costs proved to be significantly different. The increasing FIRR results are largely a reflection of these factors. The EIRR results (as also for the PCR) are influenced by the assumption to halve the estimated savings in ship service and waiting times (in recognition that not all the benefit from savings are passed on to the Maldives). 8. Sensitivity and Switch Value. Table A5.2 shows the sensitivity in the underlying projections concerning incremental revenues, operating costs, service, and waiting time savings. Significantly, the economic benefits after 1999 would need to fall on average by 49 percent per annum to reduce the EIRR below 10 percent.

It is a common practice to use the Erlang 2 queuing model to estimate the aggregate ship waiting time for the withand without-project cases and calculate time savings as the net difference. Beyond 80 percent occupancy, the Erlang distribution function becomes a symptomatic and the derived waiting time/service time ratio cannot be meaningfully applied.

26 Appendix 5, page 3

Table A5.2: FIRR and EIRR Sensitivity to Parameter Changes (percent) Item A. B. Base Case (Incremental) With the Following Charges 1. 10 percent increase in incremental cargo revenues after 2000 2. 10 percent increase in incremental operating costs after 2000 3. 20 percent increase in service and waiting time savings after 2000 C. Switch Value Yearly decrease in economic benefits after 1999 required to reduce EIRR to 10 percent a 50.0 b 26.3 22.3 30.0 25.8 30.2 FIRR 23.3 EIRR 26.8

EIRR = economic internal rate of return, FIRR = financial internal rate of return. a Maximum cargo throughput of 1,266 freight tons is forecast to be achieved in 2003. b This would be equivalent to maintaining cargo throughput at the port to around the 1998 volume of 823,000 freight tons or 84 percent of the current (2000) throughput.

27 Appendix 5, page 4

Table A5.3: Benefit Cost Streams for Evaluating FIRR (Rf million-2000 Prices)
With-Project Case Operating and Maintenance Operating Cost Revenue B C 20.720 20.139 20.899 29.246 27.098 32.302 35.583 38.723 42.139 48.039 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 54.764 40.957 42.777 60.331 70.038 82.914 92.097 114.249 123.658 139.418 158.936 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 181.188 Without-Project Case Operating and Maintenance Operating Cost Revenue D E 20.720 20.139 20.899 29.246 27.835 26.209 26.010 25.500 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 25.000 40.957 42.777 60.331 70.038 82.914 92.097 91.399 89.607 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850 87.850

Fiscal Year

Project Investment Cost A 2.605 8.015 9.767 29.860 47.096 21.842 3.437

Net Revenue Benefit F (2.605) (8.015) (9.767) (29.860) (46.359) (27.935) 9.840 20.828 34.429 48.047 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 63.573 23.3%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Financial internal rate of return =

F = incremental revenue benefits minus incremental costs, i.e., (C-E)+(D-B)-(A).

28 Appendix 5, page 5 Table A5.4: Benefit Cost Streams for Evaluating EIRRa (Rf million-2000 Prices)
Actual/Projected Incremental Cargo b Volume (freight ton) Project Investment Cost Incremental Operating Costc Cargo Handling Cost Savingd 0.00 0.00 0.00 0.00 0.00 0.00 28.98 29.02 40.71 58.43 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 78.62 Ship Waiting Cost Savinge 0.00 0.00 0.00 0.00 0.00 0.00 10.21 11.59 11.33 12.82 12.82 10.68 10.68 10.68 10.68 10.68 10.68 10.68 10.68 10.68 10.68 10.68 10.68 10.68 10.68 10.68 =

Fiscal Year

Net Benefit

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

161,997 193,827 313,470 449,863 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351

2.34 7.21 8.79 26.87 42.39 19.66 3.09

0.00 0.00 0.00 0.00 (0.66) 5.48 8.62 11.90 15.43 20.74 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79 26.79

(2.34) (7.21) (8.79) (26.87) (41.72) (25.14) 27.49 28.70 36.62 50.51 64.66 62.52 62.52 62.52 62.52 62.52 62.52 62.52 62.52 62.52 62.52 62.52 62.52 62.52 62.52 62.52 26.8%

Economic internal rate of return

a b c d e

Refer to Table A5.5: Workings for Estimated Waiting Time and Service Time Savings. Total cargo throughput less cargo throughput without project improvements. Projected at 2.5 percent of project investment costs. Represents the savings in ship service times arising from improved cargo handling rates (Table A5.5). Represents the savings in waiting time (before berthing/servicing) as a consequence of having to queue before a berth or lighter and handling crew are available. Ship waiting and service time costs are assessed at $14,500 per day.

Table A5.5: Workings for Estimated Waiting and Service Time Savings
(Rf million-2000 Prices) Fiscal Year With-Project Actual/Projected Cargo Volume (freight ton) Without-Project Actual/Projected Cargo Volume (freight ton) Incremental Savings Service Waiting a Time Saving Time Savingb (day) (day) Service Time Savingc (Rf'000) Waiting Time Savingc (Rf'000) Total Time Saving (Rf'000)

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
a
b c

322,532 345,466 419,315 490,985 591,275 660,765 822,762 854,592 974,235 1,110,628 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116

322,532 345,466 419,315 490,985 591,275 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765

340 340 477 685 921 921 921 921 921 921 921 921 921 921 921 921 921 921 921 921

120 136 133 150 150 125 125 125 125 125 125 125 125 125 125 125 125 125 125 125

28,980 29,017 40,714 58,429 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624 78,624

10,214 11,588 11,330 12,819 12,819 10,683 10,683 10,683 10,683 10,683 10,683 10,683 10,683 10,683 10,683 10,683 10,683 10,683 10,683 10,683

39,195 40,605 52,045 71,248 91,443 89,307 89,307 89,307 89,307 89,307 89,307 89,307 89,307 89,307 89,307 89,307 89,307 89,307 89,307 89,307

29 Appendix 5, page 6

Incremental cargo volume divided by the improvement in gross cargo handling rates. Incremental number of ship calls multiplied by the average saving in waiting time before servicing. Time savings in hours multiplied by average ship costs.

ADDITIONAL WORKINGS

WITH Project Fiscal Year Actual/Projected Cargo Volume (Freight Tonnes) a/ # # # # # # # # # # # # # # # # # # # # # # # # # # 322,532 345,466 419,315 490,985 591,275 660,765 822,762 854,592 974,235 1,110,628 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116 1,266,116

W/OUT Project Actual/Projected Cargo Volume (Freight Tonnes)

Incremental Actual/Projected Cargo Volume

322,532 345,466 419,315 490,985 591,275 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765 660,765

161,997 193,827 313,470 449,863 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351 605,351