Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No. 17240-CHA

IMPLEMENTATION COMPLETION REPORT

CHINA

SHIP WASTE DISPOSAL PROJECT

(CREDIT 2391/TF. 28613-CHA)

December 19, 1997

Transport Sector UnitEast Asia and Pacific Regional Office

This document has a restricted distribution and may be used by recipients only in theperformance of thier official duties. Its contents may not otherwise be disclosed with-out World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Name RenminbiCurrency Unit Yuan (Y)

1991 $1 =Y5.321992 $1= Y 5.531993 $1=Y5.761994 $1 Y 8.621995 $1 = Y 8.351996 $1 = Y 8.301997 $1 - Y 8.30

FISCAL YEAR

January 1 - December 31

WEIGHTS AND MEASURES

I meter (m) = 3.281 feet1 square meter (mi) = 10.764 square feetI cubic meter (in3) = 35315 cubic feet1 kilometer (km) = 0.621 mileI ton-kilometer (ton-km) = 0.621 ton-mileI ton (metric) = 2,208 pounds

ABBREVIATIONS AND ACRONYMS

BOMTA - Bureau of Maritime Transportation AdministrationDPA - Dalian Port AuthorityEACCF - Country Director of China, East Asia and Pacific RegionEA2IN - Infrastructure Division, Country Department 2, East Asia and Pacific RegionEASTR - Transport Sector Unit, East Asia and Pacific RegionEMC - Environment Monitoring CenterG-BOMTA - Guangzhou Bureau of Maritime Transportation AdministrationGEF - Global Environmental FacilitiesGOC - Government of ChinaGPA - Guangzhou Port AuthorityICB - International Competitive BiddingICR - Implementation Completion ReportLME - Large Marine EcosystemMOC - Ministry of CommunicationsNCB - National Competitive BiddingNPA - Ningbo Port AuthorityS-BOMTA - Shanghai Bureau of Maritime Transportation AdministrationSAR - Staff Appraisal ReportSEATRAC - Ship Waste Tracking Systemteu - Twenty-foot equivalent unitTF - Trust FundTPA - Tianjin Port AuthorityXPA - Xiamen Port Authority

Vice President Jean-Michel Severino, EAPCountry Director Yukon Huang, EACCFSector Manager Jeffrey Gutman, EASTRStaff Member Toshiro Tsutsumi, Senior Port Engineer, EASTR

FOR OFFICIAL USE ONLY

CONTENTS

PREFACE ...................................................... iii

EVALUATION SUMMARY ..................................................... iv

PART I: PROJECT IMPLEMENTATION ASSESSMENT ................................. 1A. Project Objectives and Description ...................................................... 1lB. Achievement of Project Objectives ....................................................... 3C. Implementation Record and Major Factors Affecting the Project .............. 13D. Project Sustainability ...................................................... 14E. Bank Performance ..................................................... 15F. Borrower Performance ..................................................... 16G. Assessment of Outcome ..................................................... 17H. Future Operation ..................................................... 19I. Key Lessons Learned ..................................................... 20

PART II: STATISTICAL TABLES ..................................................... 22Table 1: Summary of Assessments ..................................................... 23Table 2: Related Bank Loans/Credits ..................................................... 24Table 3: Project Timetable ..................................................... 24Table 4: GEF Grant/ Credit Disbursement .................................................... 25Table 5a: Key Indicators for Project Implementation ..................................... 26Table Sb: Training (MOC and the Six Ports) .................................................... 27Table 6: Key Indicators For Project Operations ............................................ 28Table 7: Studies included in Project ..................................................... 29Table 8a: Project Costs ..................................................... 30Table 8b: Project Financing ..................................................... 30Table 8c: Allocation of Grant/Credit Proceeds . .............................................. 31Table 9: Economic Costs, Benefits and Major Financial Indicators ............. 31Table 10: Status of Legal Covenants ....................................... 32Table 11: Compliance with Operational Manual Statements .. 32Table 12: Bank Resources: Staff Inputs ..................................... 33Table 13: Bank Resources: Missions ....................................... 33

APPENDIX A: ICR MISSION'S AIDE MEMOIRE ............................................. 35

APPENDIX B: BORROWER'S CONTRIBUTION TO THE ICR ...................... 53

APPENDIX C: MAP ................................................. 61

ANNEX 1: FINANCIAL ANALYSIS ................................................. 63

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

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IMPLEMENTATION COMPLETION REPORT

CHINA

SHIP WASTE DISPOSAL PROJECT

(CREDIT 2391/TF. 28613-CHA)

PREFACE

The Ship Waste Disposal Project in China, Credit 2391-CHA (SDR 11million/$15 million) and Global Environment Facility (GEF) Grant TF. 28613-CHA(SDR 22 million/$30 million), was approved on June 17, 1992 and made effective onDecember 12, 1992. The Credit and GEF grant were extended for one year, with projectclosure on June 30, 1997. Final disbursements (recovery) is expected to be made inDecember 1997; it is estimated that SDR 21,931,154.89 and SDR 10,894,540.45 weredisbursed, and SDR 68,845.11 and SDR 105,459.55 were canceled from the GEF grantand Credit, respectively. In terms of US dollars, due to the appreciation of the SDR,$32,309,401.27 and $15,378,043.23 were disbursed, and $93,758.73 and $141,010.71were canceled from the GEF grant and Credit, respectively.

This Implementation Completion Report (ICR) was prepared by Messrs. ToshiroTsutsumi (Task Manager), Han-Kang Yen (Economic and Financial Analyst) of theTransport Sector Unit of the East Asia and Pacific Region (EASTR) and ScottMacKnight (Environmental consultant), and reviewed by Mr. Jeffrey S. Gutman (SectorManager, EASTR). The Borrower provided comments that are included as Appendix B.

The ICR was begun with the Credit and GEF grant closing and was based onproject supervision information and material in the project file. The Borrower contributedto the ICR by evaluating the project execution and initial preparation. The Borrower alsoagreed to provide information on project performance indicators for the period to June 30,2003 (six years after closing).

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CHINA

SHIP WASTE DISPOSAL PROJECT

(CREDIT 2391/TF. 28613-CHA)

EVALUATION SUMMARY

Introduction

1. To protect and further enhance its sensitive marine and coastal environment frompollution related to dumping of ship wastes, the Government of China (GOC) became asignatory to the International Convention for the Prevention of Pollution from Ships(MARPOL 73/78). One component of the Convention is the need to provide portfacilities to receive and treat/dispose of wastes from ships. As the internationalcomponent of its marine commerce increased, reflecting a very large increase ineconomic activity, China initiated an application to the Global Environment Facility(GEF) to assist in a project to provide appropriate waste reception facilities within its sixmajor sea ports: Dalian, Tianjin, Shanghai, Ningbo, Xiamen and Guangzhou. The ShipWaste Disposal Project, Credit 2391 (SDR 11 million/$15 million) and GEF TF. 28613-CHA (SDR 22 million/$30 million), was approved on June 17, 1992 and made effectiveon December 12, 1992.

Project Objectives

2. The goal of the project was to reduce marine pollution, in both territorial waters ofChina and adjacent international waters, through implementation of various measuresrelated to port and shipping wastes. Five specific objectives were used to achieve thisgoal:

(a) To assist the Government of China in meeting its obligations as asignatory to MARPOL 73/78, through construction of port facilities toreceive and treat/dispose of wastes from shipping.

(b) To augment and extend the pollution monitoring capabilities of theMinistry of Communications, the Ports of Dalian, Tianjin, Shanghai,Ningbo, Xiamen, Guangzhou Bureau of Maritime TransportationAdministration and S-BOMTA.

(c) To develop and implement oil spill contingency and response plans for thePorts of Dalian, Tianjin, Shanghai, Ningbo, Xiamen, Guangzhou Bureauof Maritime Transportation Administration and S-BOMTA, and topromote the implementation of similar plans throughout the coastal portsof China.

(d) To develop and implement a Ship Waste Tracking System (SEATRAC)among the Ministry of Communications, Ports of Dalian, Tianjin,Shanghai, Ningbo, Xiamen, Guangzhou Bureau of MaritimeTransportation Administration and S-BOMTA.

(e) To develop and implement a new fee schedule to provide adequate capitalrepayment and maintenance operating funds for the facilities, thusensuring project sustainability.

Implementation Experience and Results

3. The project was completed satisfactorily by June 30, 1997. The closing date wasextended for one year due to delays in the national policy component (development of anew port tariff schedule) and in construction of some of the civil works.

4. Cost estimates at appraisal were reasonable. The final cost was estimated at about$69.5 million (or Y 175.2 million plus $47.7 million) against $77.5 million (or Y 174.6million plus $45.0 million) at appraisal (para. 13). The difference, when expressed in USdollars, is due to the devaluation of the local currency since the appraisal mission ofSpring 1991.

5. The five project objectives were met. Further, GOC and various localgovernments and agencies have initiated laws and measures that will significantly extendthe scope of the project to include all marine coastal areas of China. The Government willprovide to the Bank information on project performance indicators to June 30, 2003.

Summary of Findings, Future Operations, and Key Lessons Learned

6. Summary of Findings. Port and coastal environmental management is inherentlycomplex due to overlapping jurisdictions of different departments and ministries, portauthorities and private interests. While numerous agencies and ministries were involvedin the project, key leadership was provided by MOC, ensuring a national consistency andproviding a mechanism to utilize "model components" in other ports. Further, GOC has awell-established base of environmental laws and agencies, with trained staff, to monitorand enforce these laws permitting the project to build on a strong existing base of law.

7. This project was the first major GEF project within the "Pollution Reduction inInternational Waters" category. The China Ship Waste Disposal Project can be judged tohave clearly met GEF objectives, through reduction of pollution of international waters;devising innovative and replicable systems for collection and disposal of ship wastes andfor the tracking of these wastes; designing mechanisms (policies and fee structures) toensure project sustainability; and providing resources to support increased pollutionmonitoring to permit evaluation of actual systems created by the project, as well as itsimpacts on regional seas, using the Yellow Sea as a model marine ecosystem.

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8. The SAR provided an estimate of approximately 1.1 million tons of wastes thatwould be treated per year rather than being discharged to international and Chinesecoastal waters. However, actual shipping traffic was much higher, so that an estimated 6.3million tons of wastes will be diverted annually by 1998. Assuming a "working life" of20 years for the treatment systems and no further increase from the 1996 traffic figures, atleast 126 million tons of wastes will not be dumped into the oceans (46 million tons ofoil-contaminated wastes, 76 million tons of sanitary sewage, and 20 million tons ofgarbage).

9. Future Operations. Implementation of project goals was extended by MOC,resulting in further significant environmental benefits. The success in implementation ofan oil spill contingency and response plan in the six ports enabled development of ageneric plan, which was adopted by MOC and is being implemented in all other coastalports. Training has been extensive and a pilot oil spill response exercise in May 1996 wasso successful, MOC will be organizing an annual exercise in different ports. MOC is inthe process of obtaining approval to adopt a new environmental fee schedule for all ports,which will ensure sustainability of the new treatment facilities and provide funds in otherports to develop new or extend existing facilities.

10. Performance indicators were developed and agreed to by MOC: (a) provision ofwaste management data to 2003; (b) provision of information on the financial status andrecords of the waste treatment facilities to 2003; and (c) provision of information onfuture training programs.

11. Success in implementation of the project has identified a new project, "Port andCoastal Environmental Improvement," with five components: (a) investments inadditional oil spill response and cleanup equipment for the ports and coastal waters;(b) investments in the State Oceanographic Administration to provide for improvedmonitoring capabilities; (c) additional oil spill response training; (d) extension ofSEATRAC to other marine ports in China; and (e) investments in ship waste treatmentand reception facilities in the next 10 largest (defined by ship traffic) marine ports inChina.

12. Key Lessons Learned. Success of the project can be attributed to both theBorrower's and the Bank's approach to the project. The Bank utilized a multidisciplinaryteam of an economic/financial analyst, a port engineer and a marine environmentalspecialist. This provided a consistency throughout the project, from design and appraisalto implementation. While 10 Chinese agencies and ministries were involved in theproject, key leadership was provided by MOC, ensuring a national consistency andproviding a mechanism to utilize "model components" in other ports. Further, GOC has awell-established base of environmental laws and agencies, with trained staff, to monitorand enforce these laws; i.e., the project could build on a strong existing base of law.

13. Port and coastal environmental management is inherently complex due tooverlapping jurisdictions of different departments and ministries, port authorities andprivate interests. If China did not already have a strong and existing regulatory base upon

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which the project could be constructed, coupled with good leadership from MOC, thisproject would have been much more difficult to implement and would likely haverequired more time. Replication of this project in other countries can be successful, ifthere are established regulatory and management regimes suitable to the task.Alternatively, such regimes should be first established and stabilized, followed byconstruction of facilities and other components.

14. Management of ships and port wastes is only one aspect of port and coastalmaritime environmental management. The success of a ship waste project can be furtherenhanced by (a) adoption of an environmental coastal zone and port management plan (aconcept already be initiated by the Xiamen Special Economic Zone); (b) implementationof other pollution control activities (e.g., oil spill response); and (c) control andmanagement of land-based sources of pollution.

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CHINA

SHIP WASTE DISPOSAL PROJECT

(CREDIT 2391/TF. 28613-CHA)

PART I: PROJECT IMPLEMENTATION ASSESSMENT

A. PROJECT OBJECTIVES AND DESCRIPTION

1. Pollution of the marine environment can originate from several sources, includingdumping of wastes from ships at sea, nonpoint sources along a coast, river-bornetransport from inland sources and point sources represented by ports and coastalcommunities. Such pollution degrades the marine environment by reducing the size andquality of marine-harvestable resources, rendering harvestable resources inedible(particularly shellfish) and degrading of recreational and tourist potential of coastal areas.

2. Since marine pollution typically results from the actions of several countries,regulation and reduction of such pollution has been best achieved through variousinternational conventions, such as the International Convention for the Prevention ofPollution from Ships (MARPOL 73/78). With reference to the discharge of wastes fromships at sea, the Articles of this Convention detail the type of wastes to be regulated, thescope and extent of wastes that can be discharged at sea, how wastes are to be treatedbefore discharge, allowable amounts that can be discharged and the requirement forsignatory countries to provide ship waste reception and treatment facilities in their ports.Initially focused on oil-contaminated wastewaters (Annex 1), the Convention has beenextended to address chemically-contaminated wastes (Annexes 2 and 3), sanitary sewage(Annex 4) and general garbage and solid wastes (Annex 5). At this time, Annexes 1, 2, 3and 5 are in effect and final signatures for Annex 4 are pending.

3. China, beginning in its Sixth Five-Year Plan, initiated a policy to protect andenhance its environment, both terrestrial and marine, while also ensuring economicgrowth. This policy has been implemented through a series of laws and regulations andthrough China becoming signatory to several international conventions, includingMARPOL 73/78. Over the past two decades, China has experienced very significanteconomic growth, reflected by a sharp increase in marine commerce, both domestic andinternational. For example, between 1991 and 1995, freight volume for all major coastalports grew by an average of 10.8 percent, with the international portion growing by anaverage 20 percent per year. Recognizing the stresses resulting from increasedurbanization, industrialization and commercial traffic on its marine environment, theGovernment of China directed its Port Authorities to develop plans to reduce port-related

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pollution and to protect coastal resources. These plans were to address ship wastes, port-related wastes, degradation of coastal water quality and the need for adequate oil spillcontingency and response plans.

4. The considerable increase in marine commercial traffic within Chinese territorialwaters has been paralleled by an increase in the overall marine traffic of the East andSouth China Seas responding to economic developments within Pacific Rim nations.Thus marine pollution in Chinese territorial waters reflects both national and internationalsources. To augment a credit from the World Bank Group being used to finance itsobjectives of reducing national sources of marine pollution, China applied to GEF forassistance to address wastes from international shipping.

5. The Ship Waste Disposal Project, Credit 2391 (SDR 11 million/$15 million) andGEF TF. 28613-CHA (SDR 22 million/$30 million), was approved on June 17, 1992 andmade effective on December 12, 1992. The goal was to reduce marine pollution, in boththe territorial waters of China and adjacent international waters, through implementationof various measures related to port and shipping wastes. This was to be achieved throughfive specific objectives:

(a) To assist the Government of China in meeting its obligations as asignatory to MARPOL 73/78, through construction of port facilities toreceive and treat/dispose of wastes from shipping.

(b) To augment and extend the pollution monitoring capabilities of theMinistry of Communications, the Ports of Dalian, Tianjin, Shanghai,Ningbo, Xiamen, Guangzhou Bureau of Maritime TransportationAdministration and S-BOMTA.

(c) To develop and implement oil spill contingency and response plans for thePorts of Dalian, Tianjin, Shanghai, Ningbo, Xiamen, Guangzhoui Bureauof Maritime Transportation Administration and S-BOMTA, and topromote the implementation of similar plans throughout the coastal portsof China.

(d) To develop and implement a Ship Waste Tracking System (SEATRAC)among the Ministry of Communications, the Ports of Dalian, Tianjin,Shanghai, Ningbo, Xiamen, Guangzhou Bureau of MaritimeTransportation Administration and S-BOMTA.

(e) To develop and implement a new port fee schedule that would provideadequate capital repayment and maintenance operating funds for thefacilities.

6. The project consisted of national and port-specific components, with an emphasison ensuring each aspect could serve as a model for implementation in other ports withinChina.

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(a) National Component

(i) Establishment of a data collection and reference system of shiptraffic to related waste types and quantities to facilitate monitoringand regulatory enforcement;

(ii) Preparation of a comprehensive oil spill contingency and responseplan for ports (Tier 1) in a "generic" format and to test the planthrough the development of individualized plans for each of the sixports (including identification of selected equipment);

(iii) Preparation of terms of reference for a multilateral study of a largemarine coastal ecosystem, using the Yellow Sea as the examplesystem;

(iv) Development of a system for the treatment of chemicallycontaminated wastewaters as defined under MARPOL 73/8Annexes 2 and 3;

(v) Promotion of coordination among the various agencies to upgradeand augment environmental monitoring capabilities within ports,coastal waters and adjacent international waters;

(vi) Preparation and implementation of a revised port tariff schedule toenhance cost recovery of the use of ship waste facilities; and,

(vii) Provision of technical services and training in connection with orrelated to activities within the project.

(b) Port Component

(i) Design, construction and provision of appropriate waste reception,treatment and disposal facilities in the Ports of Dalian, Tianjin,Shanghai, Ningbo, Xiamen and Guangzhou; and

(ii) Augmentation of environmental monitoring and enforcementcapabilities in the Ports of Dalian, Tianjin, Shanghai, Ningbo andGuangzhou; establishment of such capabilities in the Port ofXiamen.

B. ACHIEVEMENT OF PROJECT OBJECTIVES

Project Implementation

7. Project Coordination. The Bank project performance was enhanced through theuse of one project team from project identification/appraisal through to projectcompletion. Further, two of the Bank staff had considerable project experience working

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closely with the six port authorities and MOC. The distribution of Bank resources isprovided in Tables 12 and 13 in Part II. During the project implementation, staff met atleast on an annual basis with the six port authorities and MOC, including site visits to thereception facilities. To ensure coordination of activities among the Chinese agencies (i.e.,Port Authorities, MOC, State Oceanic Administration, National EnvironmentalProtection Agency, Provincial Environmental Bureaus), coordinating tearns wereorganized for each port.

8. Training (Overseas and Domestic). While the six port authorities and M4OC hadstaff with a large body of experience, the ability for staff to visit other major NorthAmerican and European ports to view handling and management of ship wastes wasconsidered highly advantageous. Further, training was required for environmentalmonitoring staff with the introduction of new analytical testing and monitoringequipment. MOC divided the training budget to provide approximately $150,000 for eachport authority and S-BOMTA for domestic (primarily training for analytical testing andmonitoring) and foreign (primarily training in operation of port waste systems and oilspill response). This budget did not include training or technology transfer such asoccurred with the development of a generic oil spill contingency and response plan (inconjunction with the US National Oceanic and Atmospheric Administration) or operatortraining for SEATRAC.

9. All of the port authorities found the training to be very helpful to theimplementation of the project. Further, undertaking training in various foreign centers hasalso provided a linkage for the transfer of information at a future date. As there was acommonality of monitoring and analytical testing equipment for the eight environmentalmonitoring centers, it was possible to organize common training sessions in Beijing andother cities. This had the side benefit of providing more interaction among theenvironmental staff of the six ports.

Project Results

10. National Component. Five studies were funded under this component, withproject administration by MOC. All five subcomponents were successfully completed andall five offer significant potential contributions to other nations by way of model systemsof implementation or products.

(a) Treatment of Chemically-Contaminated Wastewaters (contracted tothe Department of Environmental Engineering, Xi'an TransportationUniversity; value, $100,000). To meet the requirements of treating Annex2 and 3 wastewaters, the Port Authorities required a system that wasrobust and simple to operate but could deal with a variety of chemically-contaminated wastewaters. A very detailed study was conducted in1993-94, with an excellent report provided in 1994. The recommendedsystem was adopted by those ports constructing facilities for suchwastewaters.

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(b) Oil Spill Response and Contingency Plan Study (contracted to theBeijing Academy of Transportation Sciences, with technical assistanceprovided by the US National Oceanic and Atmospheric Administration;project value, $290,000). This activity was to develop a "generic" Tier 1plan (port-level spill), which was further refined for each of the six projectports. The study was undertaken in 1994-95 with an excellent set ofreports provided in mid-1996. MOC accepted the study recommendationand has adopted the plan for all ports in China. The study also includedseveral scoping workshops and was followed by a well-attended oil spillresponse training exercise in May 1997 in Ningbo. The success of thetraining exercise has led MOC to plan for annual exercises to be hosted bydifferent ports.

(c) Cost Recovery and Port Fee Schedule Changes (contracted to theEnvironmental Center of MOC, with technical assistance from Belgianconsultants; value, $100,000). The project was initiated in late 1995 andfinalized in early 1997. MOC accepted the study recommendation of aunified national fee schedule, which represented costs of new and existingwaste reception facilities. While it was recognized the new fee schedulemay not provide sufficient funds for total cost recovery, it provides for areasonable coverage of expenses. Further, the new fee schedule will applyto all ports, with funds in the other ports to be reserved for construction orimprovements to waste-handling facilities. The recommended fee scheduleis being reviewed by the State Planning Commission and Pricing Bureau,although actual implementation will not be until 1998 at the earliest.

(d) Ship Waste Tracking System (SEATRAC) (contracted to the ChinaCommunication Planning and Design Institute for Marine Transportationand Tianjin Research Institute for Waterway Engineering; value,$100,000). The project was initiated in 1995 with final softwareinstallation and staff training in early 1997. The objective was to provide adatabase linking the six ports and MOC. The database provides (i) a meansof tracking wastes and ship traffic, (ii) an inventory of wastes processed bytype and location, and (iii) a database of environmental data generated bythe routine water and air quality monitoring programs. Under a separatebudget, computer hardware and printers were purchased for each of thePort Authorities, Harbor Superintendency Administration offices andMOC. If translated into other languages, the software has an excellentcommercial potential.

(e) Large Marine Ecosystem (LME) Multilateral Study. One of thedifficulties in assessing and monitoring coastal waters is the need for anadequate baseline of conditions for areas, which may include territorialwaters of more than one country and associated international waters. Usingthe Yellow Sea as a model regional sea, an LME study was financedthrough GEF and other funding arrangements, with the partnership

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consisting of China, People's Democratic Republic of Korea (PDRK) andthe Republic of Korea (ROK). Although the PDRK subsequently did notparticipate, China and ROK conducted several study preparationworkshops through 1993 with a submission to the Ministry of Fiinance forproject approval in January 1994. Further workshops and meetings wereheld, culminating in a submission to be made, through the United NationsDevelopment Program to the GEF, in June 1997.

Port Component

11. Beginning in 1993 the six port authorities initiated planning and construction ofcivil works for their waste reception and treatment facilities. With the exception ofGuangzhou Port Authority, the facilities were substantially completed by early 1996. TheShanghai component was divided into two parts under the responsibility of Shanghai PortAuthority with the Port Authority responsible primarily for garbage collection andtreatment and the S-BOMTA responsible for treatment of oil and chemicallycontaminated wastewaters and oil spill response. This division reflected past practices inthe Port and that much of the bulk liquid cargoes were carried in S-BOMTA ships.Delays due to local financing in Guangzhou were overcome in 1995-96, vvith theirfacilities being completed in early 1997. In contrast to Shanghai, both G-BOMTA and theGuangzhou Port Authority operate oil product terminals. The extensive traffic andgeographical distribution of the port facilities necessitated the construction of twowastewater treatment facilities. The facility owned by G-BOMTA was not financed underthis project.

12. All projects under the Port Component have been successfully completed and areor have been fully commissioned.

(a) Shanghai Port Authority (SPA). Under this project, SPA constructed anew waste facility in Pudong for wastewaters from SPA ships and garbagefrom all shipping. The facility combines units for treatment. of oil-contaminated wastewater (capacity of 30,000 tons/year); garbage handlingand incineration (2 tons/day) and wharf berthing for three 500-ton capacitygarbage collection barges. All monitoring equipment and the monitoringvan have been delivered and are now in use. The new Pudong facility alsoincludes a new operations building that will also house a portion of theEnvironmental Monitoring Center, now located in older premises nearTerminal 2 in central Shanghai. SPA has a detailed program of monitoringfor air and water quality throughout the harbor area and at the separateterminal facilities.

(b) Shanghai Bureau of Maritime Transportation Administration(S-BOMTA). Under this project, S-BOMTA constructed a new facilitynear the Waigaoqiao Terminal in Pudong to receive and process oil-contaminated (capacity of 400,000 tons/year) and chemically-contaminated (capacity of 100,000 tons/year) wastewaters from their

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extensive fleet and other shipping. Located on the south side of theYangtze River, the facility provides ready access to all shipping bothentering the Port of Shanghai and proceeding up the Yangtze River. Aspart of this project, S-BOMTA purchased 600 meters (m) of oil boom toadd to their existing 600 m of equipment. An extensive monitoring andeffluent testing laboratory has been set up as part of the new facility.

(c) Ningbo Port Authority (NPA). Under this project, NPA constructedwaste-handling facilities at their Beilun and Zhenhai Terminals. At Beilun,the facility can process oil-contaminated wastewater (capacity of 30,000tons/year). In addition, NPA refurbished the iron ore wastewater treatmentfacility, generating treated water for reuse as a dust suppressant in the oreconcentrate storage area, thus saving about Y 400,000 per year. AtZhenhai, the facility can process oil-contaminated wastewater (capacity of30,000 tons/year) and process about 200 kilograms (kg)/hour of garbage ina new dual incinerator facility. The reception area also provides berthingfor a new 50 cubic meter (m3) garbage collection barge served by two newgarbage collection trucks. As the berthing facilities are geographicallydistributed and include an offshore deep-water anchorage, NPA purchasedtwo vessels related to oil spill response: (i) 500-ton waste capacitycollection vessel and (ii) an oil spill response emergency command vessel.NPA routinely uses the 2,000 m oil spill containment boom purchasedunder this project to surround vessels being off-loaded at the BeilunMarine Oil Terminal. In addition, NPA also purchased an additional2,000 m of containment boom also being used at the Beilun Marine OilTerminal. All monitoring equipment and a van have been delivered andare now in use.

(d) Dalian Port Authority (DPA). DPA has renovated and upgraded wastereception and treatment facilities (investments of $740,000) for oil-contaminated wastewater at Siergou Terminal (capacity of 1.2 milliontons/year, mostly from refined product cargoes) and at the New Harbor OilTerminal (capacity of 1 million tons/year, mostly from crude productcargoes and about 600,000 tons from refined product cargoes). Projectfunds were used to refurbish the chemically-contaminated wastewatertreatment system at Siergou (capacity of 100,000 tons/year) and a sanitarysewage wastewater treatment plant at the Xianglujiao Terminal. Throughfunding from this project, DPA has purchased 2,000 m of oil containmentboom (investment of $120,000) to augment an existing 3,000 m. Thebooms are routinely used to enclose vessels being off-loaded at both theSiergou and New Harbor Terminals. All monitoring equipment and alaboratory vehicle have been delivered and are now in use (investment of$300,000). While monitoring equipment augmented existing capabilities,DPA is planning to renovate its Environmental Monitoring Center,

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including provision of additional support infrastructure (e.g., fune hoods,etc.).

(e) Tianjin Port Authority (TPA). Under this project, TPA upgraded an oil-contaminated wastewater treatment facility at the Tianjin Oil BunkeringCompany (Beijiang) and constructed a new wastewater reception andtreatment facility in the Nanjiang area. The Beijiang facility (investment ofY 1.5 million and $429,000) improvements provided for two storage tanksof 4,000 m3 and associated piping to augment existing berthing facilities.The Nanjiang land-based facility has a capacity of 200 tons/hour and aholding capacity of 4,000 mi3 ; the multiwaste vessel has a holding capacityof 160 m3 and an on-board processing capacity of 10 tons/hour(investment of Y 33.82 million and $881,000). The Nanjiang facilityincludes a chemically-contaminated wastewater treatment system (100 m3at any one time, with storage in three holding tanks and a processingcapacity of 8 m3 per hour (completion expected by January 1998;investment of Y 12.23 million and $580,000). The Nanjiang facility alsoincludes a sanitary sewage wastewater treatment component (capacity of600 tons/day). Under this project, TPA purchased five garbage transfertrucks and constructed a waste incinerator in the Beijiang area, with acapacity of 300 kg/hr (investment of Y 6 million and $183,000 plus$143,000 for the trucks). TPA also purchased two roadway sweep and twowater spray vehicles to remove coal dust and clean roadways within theport area (investment of $271,000). As part of this project, TPA purchased2,600 m of oil containment boom (investment of $249,000), two oilskimmer units, 8 special oil mops, 1 surface concentration net, 1 ton of oil-absorbent material and 1.5 tons of oil-dispersant chemical. All monitoringequipment and a laboratory vehicle have been delivered and are now inuse. TPA initiated a cooperation agreement with the Department ofEnvironmental Studies of Tianjin Nankai University, in which seniorgraduate students and research fellows use the new port testing equipment,while assisting in the training of port staff and developing new testingprotocols.

(f) Xiamen Port Authority (XPA). As the harbor facilities aregeographically distributed, XPA, under this project, purchased a newenvironmental protection services vessel (capacity of 90 mi3 of oil-contaminated wastewater with processing of 2x10 tons/hour). In addition,the vessel is equipped with various oil spill response equipment and canact as a spill response vessel as required. This vessel is routinely berthed at

2a new 132 m wharf, with a new 262 m storage warehouse (investment of$2.21 million for the vessel, Y 4 million for the terminal and warehouseand Y 680,000 for related design work). XPA constructed a newsecondary treatment sanitary sewage wastewater facility at the Dongdu IITerminal area (investment of Y 850,000 for civil works and $570,800 for

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equipment). XPA is completing construction of a new incinerator facilityat the old Coal Terminal, with a capacity of 200 kg/hr. Garbage andsanitary sewage will be collected using a new barge with a holdingcapacity of 20 tons of garbage and 80 tons of sewage water (investment of$175,871 for equipment, Y 400,000 for civil works and approximatelyY 1,534,479 for the garbage/sanitary sewage collection barge). Under thisproject, XPA purchased 1,000 m of containment boom (investment of$92,364) and will be purchasing an additional 1,000 m (investment of$60,000). XPA also purchased oil response equipment, including oilskimmer and oil absorbent material (investment of $152,365 for the boomand approximately $200,000 for other related equipment).

Under this project, XPA initiated an Environmental Bureau. This effortincluded (i) a contract to a consultant to provide organizational, generaloperating and training plans (investment of $30,000); (ii) renovations to anexisting structure to house the Environmental Monitoring Center(investment of Y 500,000); and (iii) purchase of monitoring equipmentand a laboratory vehicle (investment of $482,340). XPA also intends tomake a further investment to purchase additional air quality monitoringequipment.

(g) Guangzhou Port Authority (GPA). Under this project, GPA constructeda new treatment facility adjacent to their XiJi Oil Terminal. The oil-contaminated wastewater component has a capacity of 500 tons/day.Alternatively, wastes can be collected by a wastewater reception ship(capacity of 420 tons of oil-contaminated and 100 tons of sanitary sewagewastewater; investment of $813,200) and brought to the Terminal. Thetreatment facility also has the capability of processing sanitary sewage(investment of $813,200). Total investment is Y 15.61 million for civilworks (also includes a laboratory/dormitory building) and $2.514 millionfor equipment. GPA is completing a chemically-contaminated wastewatertreatment system at the DanShuiHe Dangerous Goods Terminal(investment of Y 3.972 million for civil works; Y 1.08 million and$633,000 for equipment). This facility will also have components toprocess sanitary sewage from the port facilities at a rate of 100 tons/day.GPA constructed a new waste incinerator (capacity of 2.4 tons/day;investment of Y 880,000 (for civil works) and $279,000 (for equipment).Under this project, GPA purchased 2,500 m of oil-containment boom(investment of $150,000). Sections of the boom are routinely used tosurround vessels being off-loaded at the XiJi Oil Terminal. As part of thisproject, GPA purchased an oil spill recovery vessel (investment of$808,835) and an oil boom deployment vessel (investment of $484,620).In addition, GPA has invested about Y 300,000 to purchase other spillresponse equipment, such as oil skimmers, oil-absorbent material anddispersant chemical. All monitoring equipment and a laboratory vehicle

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(representing a total investment of $551,141) have been delivered and arenow in use. GPA has invested about Y 325,000 in additional laboratoryequipment and Y 1 million in building renovations for the monitoringcenter.

(h) MOC Environmental Monitoring Center. As part of the HarborSuperintendency Administration, MOC operates an EnvironmentalMonitoring Center in Beijing. The purpose is to undertake research onmethods of monitoring and analytical testing, conduct some monitoringeither as part of broader national objectives or to assist smaller PortAuthorities and to provide technical input to policy decision-makingwithin MOC. An investment of $1.77 million was made to upgrade theanalytical testing capability of the Center and to finance the purchase of all(MOC and Port Authority) computer hardware to be used in the ship wastetracking component.

Financial Performance

13. Cost estimates at appraisal were reasonable. Final project costs were estimated atabout $69.5 million (or Y 175.2 million plus $47.7 million) against $77.5 million (orY 174.6 million plus $45.0 million) estimated at appraisal (Table 8a). The differencewhen expressed in US dollars is due to the devaluation of the local currency since the1991 appraisal (Y 1.0=$1/5.32 in 1991; Y 1.0=$1/8.30 at completion or Y 1.0=$1/7.962overall average).

14. During implementation of the project, two major changes occurred that affect thefinancial condition and reporting procedures of the six ports:

(a) Revaluation of Fixed Assets. The revaluation of port assets wasconducted between 1992 and 1995, the first in over 40 years. This resultedin an increase in the value of fixed assets and related depreciation. Whilethe short-term effect was a dilution of the reported profitability andfinancial rate of return, in the long term, the revaluation will allow eachport authority to reserve a proper depreciation account (based on the newhigher value) to replace aging facilities, without jeopardizing the portfinancial capacity.

(b) New Financial Reporting Procedures. Under instructions from theMinistry of Finance, the six ports changed their financial accountingprocedures in July 1993 to be consistent with international accountingstandards. The new accounting and financial reporting system willaccelerate the potential for commercialization and privatization of the port.

15. The general financial condition of the six ports is good and they will continue toearn surpluses, despite some short-term sudden increases in operating costs due to causesbeyond their control (e.g., Port of Guangzhou). During the project implementation,

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between December 1994 and June 1996, the Bank also completed six ICRs for the sixports under different projects. Besides the need for continued capital investments forgeneral port construction, the port authorities were also able to provide sufficient funds tosupport the capital investment of the Ship Waste Disposal Project largely throughinternally-generated cash derived from operating revenues (Tables la-6a).

16. The current financial strength of the six ports is superior to the original staffappraisal report (SAR) estimates. The conservative financial forecasts were developed inthe SAR during a period when China was hit by severe economic recession in the early1990s. The recovery, beginning in the spring of 1994, was rapid and was reflected in ahigher demand for freight transport, both in domestic and foreign trades. Between 1991and 1995, for example, the freight volume for all major coastal ports grew an average of10.8 percent per year, of which, the international freight grew by average of 20 percentper year.

17. High transport demand resulted in a fast growth of operating revenues. The flowof funds for all the six ports is much larger than the original estimates, with increases of125 to 441 percent. This provides for a greatly strengthened financial position for the sixports and better than projected. The detailed annual funds flow is provided for each port

in Tables lb-6b and summarized, in comparison to the SAR estimates as follows:

FUNDS FLOW STATEMENT SUMMARY (CLOSING BALANCE)-1995 La(Y million, Consolidated)

Shanghai GuangzhouDalian Tianjin Port BOMTA Subtotal Ningbo Xiamen (Huangpu)

ICR actual (1) 254.7 547.0 636.1 1,002.7 1,638.8 310.2 345.7 164.7

SAR estimate (2) 76.5 101.1 282.7 n.a. n.a. 93.8 75.1 73.0

Increase (1)/(2) 233% +441% +125% n.a. n.a. +231% +360% +126%

n.a. = not available.

da The latest year available in the SAR.

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18. Based on the current operations scale of the six ports, the Port Authorities shouldnot experience difficulties in maintaining the new waste reception and treatment facilitiesin the future. Further, the total capital investment of the Ship Waste Disposal Projectcontributes only a very marginal component of total net fixed assets (overall average of2.1 percent, ranging from 0.6 percent (Dalian) to 5.3 percent (Xiamen). Details areprovided in Tables lc-6c and summarized as follows:

CAPITAL INVESTMENT AND NET FIXED ASSETS-1996(Y million, Consolidated)

Total Investment of Net Fixed Assets of Ratiothe Project the Port

(1) (2) (3=1/2)

Dalian 28.4 4,749.7 0.6%Tianjin 111.7 3,872.7 3.0%

Shanghai:Port 70.0 4,216.5 1.7%BOMTA 189.4 10,301.5 1.8%/o

Subtotal 259.4 14,518.0 1.8%

Ningbo 57.2 1,447.6 4.0%Xiamen 43.7 827.5 5.3%Guangzhou (Huangpu) 88.6 2,622.3 3.4%

Total 589.0 27,947.8 2.1%

19. To ensure the long-term financial viability of these facilities, a study to reviewport tariffs and waste facility operating costs formed a component of the project and wascompleted by MOC, with assistance from consultants. The study recommendedinstitution of a unified set of port fees, to be applied to all ports in China with theconcepts of "full recovery of costs" and "pay whether used or not." MOC has acceptedthis recommendation and will provide a proposal to the State Planning Commission forapproval for the new tariff schedule.

20. While implementation of a new waste reception fee is desirable, the financialimpact of not having a new schedule would be minimal, as existing subsidization by theports constitutes only a small fraction of the port fund flow. Based on the actual 1996record, the amount of subsidies from the six ports is typically less than 1 percent of theirfund flow; e.g., for the Port of Guangzhou, the annual subsidy constitutes only 0.04percent of its fund flow. This low ratio indicates the project presents a low financial riskbased on lack of resources to support the future operations of the project facilities.Summarized as follows:

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SHIP WASTE COST, REVENUE AND FUNDS FLow-1996(Y million)

Shanghai GuangzhouDalian Tianjin Port BOMTA Subtotal Ningbo Xiamen (Huangpu)

Total cost 1.6 2.0 2.57 9.10 11.67 0.70 0.20 0.66Total revenue 0.8 - 0.47 5.70 6.17 0.14 - 0.57Subsidies (1) 0.8 2.0 2.10 3.40 5.50 0.56 0.20 0.09Fund flow of the port (2) 496.2 403.7 741.7 608.3 1,350.0 578.0 357.4 256.8Ratios (1)1(2) 0.16% 0.50% 0.28% 0.56% 0.41% 0.10% 0.06% 0.04%

C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT

21. The project included several elements to be implemented directly through MOC(National Components) and through six ports (Port Components). This made for acomplex and difficult-to-implement project. Several major factors affected the project,having both positive and negative influences.

(a) Positive influencing factors were numerous:

(i) GOC already had an established regulatory regime. Theirenvironmental structure, first enunciated with the Sixth Five-YearPlan in 1981, now includes a broad set of laws and regulations atthe State, Provincial and Municipal levels. Further, this policyapproach was adopted by enterprises, such as Port Authorities.Thus the Borrower had in place a strong supportive administrativemechanism to ensure implementation success.

(ii) To be able to implement all provisions of MARPOL 73/78, bothcurrent and future proposed, GOC recognized the need foradditional facilities for waste treatment and reception. Further,GOC also recognized the need for research and development toprovide for adequate treatment of chemically-contaminatedwastewaters and cargoes to meet changes in their industrial base.Thus the Borrower had begun to develop supportive plans for thisproject.

(iii) While somewhat limited in capability or undersized to meet currentand future demands, the six ports, with the exception of Xiamen,already had waste reception and treatment facilities andEnvironmental Monitoring Centers. Thus the project was based onexisting infrastructure operating with trained personnel.

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(iv) While GOC recognized the benefits to their own territorial waters,extensive benefits to the environmental quality of internationalwaters would also result from implementation of the project.Provision of supporting funds through GEF ensuredimplementation of the project as a whole and, in particular,components other than the basic waste treatment and receptionfacilities. These included development of SEATRAC, purchase ofenvironmental monitoring equipment, development of oil spillcontingency and response plans and training.

(v) Through provision of loans to the six port authorities, the Bank hadestablished a long and fruitful working relationship with theMinistry of Communications and the six port authorities. Thisestablished relationship ensured a deep degree of trust andconfidence on both sides, which while not critical to success,certainly made project implementation smoother.

(b) There were also some negative factors:

(i) All aspects of maritime commerce within China requireconsiderable investments to meet traffic demands set by thecontinuing economic growth, both within and external to thecountry. This competition for funds within each Port Authoritymade investments in "environmental improvements" difficult topromote.

(ii) While the Port Authorities had responsibility to provide wastereception facilities, much of the regulatory authority is vested inthe Harbor Superintendency Administration. Port Authorities arepartially under MOC and partially a component of mnunicipalgovernments, while the Harbor Superintendency is totally withinMOC. Thus regulatory decisions are divided and organizationallinkages, confused.

(iii) Where the Port Authorities had an existing foundation of receptionfacilities and environmental monitoring centers, the planning andconstruction of additional facilities was readily accommodated. Insome ports, the project placed heavy demands on port staff,resulting in slower implementation of the project.

D. PROJECT SUSTAINABILITY

22. The project was financed through a loan from the World Bank to the Governmentof China (Credit 2391 for $15 million) augmented by a grant obtained from GEF (GEFTF. 28613-CHA for $30 million) and administered by the World Bank. This combinationof financing recognized the national and international benefits of the project

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implementation. Although the existing port revenues are adequate for both repayment ofthe credit and maintenance of the new infrastructure, MOC is finalizing approval forimplementation of a new Port Tariff Schedule. Approval and adoption of this newschedule will further ensure project sustainability and place most reception facilities on a"user-pay" basis. Some facilities will still not be fully "user-pay" due to high local costs(e.g., electricity), the need for a nationally standardized tariff schedule for all ports toensure continued competitiveness and the provision of a full suite of reception facilitiesalthough the demand for all facilities is not required at this time.

23. Repayment of the credit onlending will be made from general revenues of each ofthe six ports. The current financial strength of the six ports has considerably improvedover the 1991 staff appraisal report estimates. During the implementation period of theproject, the freight volume for all major coastal ports grew an average of 10.8 percent peryear, with the international component growing by an average 20 percent per year. Hightransport demand resulted in a fast growth of operating revenues, providing a greatlystrengthened financial position for the six ports. This strengthened position means there isadequate financing available, based on the continued use of the existing Port TariffSchedule.

24. By way of comparison, current treatment unit costs for oil-contaminatedwastewater ranged from Y 12.17 to Y 18.83/ton; for chemically-contaminatedwastewater, from Y 35.98 to Y 36.62/ton; for sanitary sewage, from Y 6.30 toY 16.13/ton; and for garbage, from Y 305.40 to Y 321.85/visit. The Ministry ofCommunications, in consultation with the six port authorities and other port authoritiesand users, has developed a new tariff schedule that will ensure adequate financing forboth the repayment of the loan and an adequate maintenance fund. Further, adoption ofthe new tariff schedule, nationwide, will generate funds in other ports for construction ofnew or additional ship waste reception facilities or renovation of existing facilities. Theproposed unified tariff schedule is provided in the following table:

Average Unit Operational Proposed UnifiedCosts (Y/ton) Tariff (Y/ton)

Oil-contaminated wastewater treated in land-based facility 15.00 15.75Oil-contaminated wastewater treated by ship 49.04 51.50Sanitary sewage treatment 10.55 11.10Chemically-contaminated wastewater treatment 36.52 38.30Garbage reception 317.35/ship visit 333.20/ship visit

E. BANK PERFORMANCE

25. The Bank identified key issues and prepared the project in a timely fashion. Theproject was identified in November 1990 and appraised in March/April 1991, with thestaff appraisal report issued in November 1991. The loan was approved on June 17, 1992

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and made effective on December 12, 1992. Bank supervision was also efficient. Theannual average input of staff resources for supervision was 11.2 staff-weeks, whichincluded various specialties (see Tables 12 and 13). This was possible becausesupervision of six Bank-financed port projects was coordinated with supervision of thisproject.

26. Bank performance was enhanced by use throughout the project of the same team,consisting of an economic/financial analyst, a port engineer (as task manager) and amarine environmental specialist. This provided an element of consistency of approach tothe issue and an assurance the project design would be successfully implemented.Further, team members had worked with the six port authorities on other port-relatedprojects and thus had established a successful working relationship.

27. The project implementation was supervised on a regular site-visit basis withsupervision staff including the three key project staff. Some of the supervision missionswere undertaken solely for this project; others were undertaken in conjunction with othersupervision projects to the ports.

F. BORROWER PERFORMANCE

28. With the exception of the Port of Guangzhou, Borrower implementation of thePort Component of the project was excellent and timely. During 1994 and early 1995, thePort Authorities focused on facility design, equipment procurement and training. Mostcivil works were well into construction by the May 1995 implementation supervisionmission and were essentially complete by the May 1996 mission. The Port of Guangzhouexperienced some delays due to availability of local financing, but had managed tocomplete construction and begin commissioning during the supervision mission of May1997.

29. With respect to equipment procurement for the waste facilities and vessels, theBorrower was able to obtain excellent price quotations through competitive bidding. Withrespect to monitoring equipment, MOC worked with the environmental sections of thePort Authorities to maximize purchasing power through consolidated bid packages. Thisformat generated both competitive prices and provided a commonality of equipment base.The commonality also provided for savings through joint training programs and willprovide future savings through joint procurement of spare parts. In response to increasedestimates of ship wastes, the Borrower provided timely proposals to use the remaininggrant/credit to procure additional treatment capability, equipment or spare parts.

30. Borrower performance with respect to the National Component, primarily thedevelopment and implementation of policy, was slower. Delays can be partially attributedto a change in staff within MOC and partially to an underestimation of difficulties incompletion of some tasks, such as development and implementation of the SEATRACsoftware and development of a new Port Tariff Schedule. The one-year extension of theProject Closing Date to June 30, 1997 permitted these components to be fully completed,

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although the State Planning Commission and other agencies must still approve formaladoption of the new tariff schedule.

31. One of the key objectives of the project was to use successful application ofvarious aspects as a model for other ports within China. This objective was met andexceeded. The proposed oil spill contingency and response plan has been made thedesignated national model and is being introduced in other ports. The new Port TariffSchedule is to be adopted by all ports, thereby providing a means of financing ship wastereception and treatment/disposal facilities in other ports, which primarily serve domesticmarine commercial traffic. Further, the successful development and implementation ofthe project components, both National and Port, provide a model for other countries touse as part of their efforts to manage and reduce ship and port wastes. As shown in Table10, Part II, covenants were generally met. The Borrower's performance is evaluated asvery good.

G. ASSESSMENT OF OUTCOME

32. Benefits. China has some 30 major ports, with freight traffic handled by the sixports constituting 53.2 percent of total foreign-going or 55.0 percent of the total nationalvolume. One of the criteria for support of investments by GEF is a positive"environmental rate of return." With implementation of the Ship Waste Disposal Project,the SAR provided an estimate of approximately 1.1 million tons of wastes that would betreated per year rather than being discharged to international and Chinese coastal waters(311,500 tons of oil-contaminated wastes, 750,405 tons of sanitary sewage, and 30,016tons of garbage). Successful completion of the project will not only prevent dumping ofwastes as estimated in the SAR, but will also address the higher loading of wastes relatedto higher shipping traffic and economic activity. Using volume estimates provided in theSAR and ship traffic for 1990-96, for example, the average annual growth rate was 33.8percent (Table 7). Thus, projected waste loadings were also underestimated. With therevised traffic figures, an estimated 6.3 million tons of wastes will be diverted (2,320,662tons of oil-contaminated wastes, 3,800,236 tons of sanitary sewage, and 1,013,394 tons ofgarbage). Assuming a "working life" of 20 years for the treatment systems and no furtherincrease from the 1996 traffic figures, at least 126 million tons of wastes will not bedumped into the oceans (46 million tons of oil-contaminated wastes, 76 million tons ofsanitary sewage, and 20 million tons of garbage).

33. The project provides significant, although not quantified, economic benefitsthrough provision of environmental benefits. While forrnal economic return analysis(environmental economic benefit) has not been attempted for the SAR and the ICR, it iswidely recognized that pollution impacts on all aspects of the marine economy from thefishery to recreation. Maintenance of and improvements to the existing coastal marineenvironmental quality are necessary for the continued success of the coastal fishery, amajor industry to China and neighboring countries. Further, methods and protocolsproviding improvements to marine environment quality, as achieved by the project, willserve as a model for establishing similar facilities in other Chinese ports.

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34. Two other environmental benefits were achieved by the project. An objective wasthe development of a "generic" oil spill contingency and response plan and a"groundtruthing" of this plan using the six project ports. The success in meeting thisobjective led MOC to implement the plan on a nationwide basis for all ports. Further,MOC and the six project Ports held a national oil spill response exercise in Ningbo inMay 1997. The evident success of this exercise (about 100 interested parties attendedcompared to 50 expected) will shift the program to an annual series, thereby furtherenhancing the skill set of Port Authority staff to respond to oil spills.

35. Project implementation in the six ports has resulted in the Port Authorities beingconsidered leaders with respect to coastal zone and environmental management. Forexample, the City of Xiamen has drawn upon the Xiamen Port Authority's experienceswith this project in their new Coastal Zone Management Law. Successful projectimplementation in China also serves as a model for other nations along the majorshipping routes of the East and South China Seas. Concepts and approaches developed inthis project are being utilized by the Bank to develop maritime environmental projects inthe Philippines and Indonesia.

36. Costs and Negative Impacts. A major concern expressed by the six ports andGOC was the impact of project implementation on price competitiveness, particularlywith adoption of a new tariff schedule. The project has developed and MOC hasrecommended to GOC adoption of a uniform nationwide tariff schedule that will provideadequate financing to cover the capital and maintenance cost of the reception facilities,while ensuring no port within China suffers a financial disadvantage. Provision of thefacilities also enables China to meet broader regional goals of reducing marine pollutionwithin the context of sustainable development and good environmental stewardship.

37. The focus of this project has been on wastes originating from foreign and largerdomestic shipping in six coastal ports. As much of the current Chinese shipping is viasmall coastal and inland waterway vessels, a considerable portion of wastes is still notbeing addressed. Success in implementation of the project over the next five years willprovide MOC with further support to implement the project in other ports and to addressall domestic shipping. Some policy change has already occurred; e.g., as part of the InlandWaterway Project (Loan 39106-CHA) and the proposed Second Inland WaterwaysProject, the Bank has persuaded GOC to address ship wastes generated by the veryextensive inland fleet. The resultant decrease in pollution of waterways and riversdischarging to the coastal waters will also provide an environmental benefit. MOC hasindicated environmental improvements to the coastal and inland shipping fleets will beimplemented over the next five years.

38. The sheer size and complexity of the maritime transportation industry withinChina makes successful implementation and continued derivation of benefits in the longterm difficult. MOC will continue to have to devote considerable manpower and financialresources to fulfilling its role within the Chinese government policy of protecting themarine environment.

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H. FUTURE OPERATION

39. Under this project, MOC and the six Port Authorities have provided considerabletraining for staff, both in China and overseas, where training consisted of formal coursesoffered by training institutes or equipment suppliers, as well as extensive tours of foreignport facilities and operations. In 1996, using some of the designated training funds,supplemented by local funds, the Environment Monitoring Center (EMC) of MOCorganized an oil spill training exercise with the Ningbo Port Authority as host. Initiallyplanned for 50 participants, the exercise was considered very successful in attracting over100 participants for a five-day program, both classroom and field. Workshop staffincluded both MOC experts who had developed the National Oil Spill Response Plan andother Chinese experts from both the government and industry. The success of thistraining exercise has led MOC to plan similar exercises in different ports on an annualbasis.

40. Financial sustainability of project was a key component in ensuring the fullparticipation of the Port Authorities. Based on an assessment of the cost structures forexisting ship waste reception and treatment facilities, MOC has developed a new portenvironmental fees schedule. This has been approved internally and submitted to theState Planning Commission and Pricing Bureau for final approval and implementation.This fee schedule will ensure the project facilities can be repaid, operated and maintainedon an essentially self-sustaining basis. Further, MOC has implemented a policy to extendthe new fee schedule to all ports, with other ports devoting the collected fees to a fund forthe provision of new treatment facilities or upgrading of existing facilities.

41. The Project developed several outputs that were adopted by MOC forimplementation in all marine ports, not just the six Port Authorities involved in thisProject. These outputs include: (a) generic oil spill contingency and response plan;(b) port environmental fee schedule; (c) strengthened environmental monitoring systemsfor ports (through the MOC-EMC); and (d) oil spill response exercises. While the wastetracking system, SEATRAC, is now being actively used in the six ports, other ports areevaluating the system for implementation over the next five years.

42. Performance indicators were developed during implementation of the project andhave been agreed with MOC and the six Port Authorities. These indicators are:(a) provision of data from SEATRAC and routine waste data records for the next sixyears. This will permit assessment of quantities received and treated thereby defining thequantities not disposed into the marine environment (both territorial and internationalwaters); (b) provision of financial records for the ship waste disposal facilities. This willpermit assessment of sustainability of treatment facilities and implications of feeimplementation on port operations; (c) provision of information on future training andspill response exercises. This will permit assessment of how Port Authorities aremaintaining the quality of their staff.

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43. During appraisal for this project, MOC and the six Port Authorities wanted to alsoinclude considerable investments in oil spill response and cleanup equipment. Whilesome equipment and ships were purchased under this project, the appraisal teamrecommended and MOC agreed that development of response plans, training of staff andassessment of needs should be undertaken first. During the project, these goals were met.The environmental benefits of this project should be extended through a new project, Portand Coastal Environmental Improvement, which would address five components:(a) investments in additional oil spill response and cleanup equipment for the ports (Tier1) and coastal waters (Tier 2); (b) investments in the State Oceanographic Administrationto provide for improved monitoring capabilities in outer territorial and internationalwaters through the Yellow, East China and South China Seas; (c) additional training forboth management of oil spill response and implementation of oil spill response;(d) investments in hardware and training to permit extension of SEATRAC to othermarine ports in China; and (e) investments in ship waste treatment and reception facilitiesin the next 10 largest (defined by ship traffic) marine ports in China.

1. KEY LESSONS LEARNED

44. This project was partially funded by a grant from GEF and was the first majorFund project within the "Pollution Reduction in International Waters" category. TheChina Ship Waste Disposal Project can be judged to have clearly met GEF criteria.

45. In 1991, pollution levels and sources of pollution in Chinese territorial andadjacent international waters, were poorly defined or could not be adequately quantified.In the absence of other methodology, the project appraisal team calculated the GEFcontribution to the project on the basis of foreign-going and domestic ship traffic at thesix ports in China that served most of the foreign-going traffic. Although approximatelyone third of the traffic was foreign-flag, vessels in the six ports used territorial andinternational waters about equally. Thus it was agreed that China should contribute atleast 50 percent of total project costs, representing the estimated "national baseline". Theship waste tracking system put in place under the project would then verify actual wastegeneration, permitting an ex-post assessment of sources of waste (national versusinternational). In retrospect, if we assume, based on the shipping pattern and practices,that (a) ocean going vessels stay 15 percent in domestic water and 85 percent ininternational water, and (b) coastal vessels 70 percent and 30 percent, respectively, andwe estimate ship waste quantities following the formula provided in the same formulaprovided in the SAR, ship waste quantities in domestic and international waters in 1990and 1996 are estimated as follows:

(a) In 1990, ship waste generated by ocean going and coastal vessels wasestimated at 355,400 tons and 736,600 tons, respectively, and ship wastegenerated in domestic and international waters at 568,900 tons (52 percentof the total) and 523,100 tons (48 percent of the total), respectively; and

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(b) in 1996, ship waste was generated by ocean going and coastal vessels wasestimated 621,700 tons and 1,240,900 tons, respectively, and ship wastegenerated in domestic and international waters at 961,900 tons (52 percentof the total) and 900,700 tons (48 percent of the total), respectively.

Thus, it was considered appropriate that GEF provided about 46 percent of the totalproject cost.

46. Diversion quantities and associated environmental benefits will be quantified andcollated using a multiport ship waste tracking computer database and supplemented byadditional monitoring facilities and capabilities acquired through this project. This willpermit an ex-post assessment of sources of wastes (national or international).

47. The project has proven to have a high demonstration value. Through enhancingand upgrading national standards, policies and waste monitoring and construction ofadditional waste reception and handling facilities, the project has convinced GOC of the"environmental benefit" of the investments. This has triggered adoption of a multiportship waste tracking system, port oil spill contingency and response plan for all Chineseports and holding of oil spill response training exercises to train all ports and otheragencies. Further, the ship waste tracking system is truly unique and, with translation intoother languages, could provide a revenue-generating component.

48. With approval of a proposed new port tariff fees schedule, the project will alsomeet the GEF criterion of ensuring project sustainability, not only for credit repayment,but also for system maintenance. Further, GOC will be implementing this fee schedule ona national basis, providing a reserve fund in other ports for refurbishing or expandingexisting facilities or constructing new facilities.

49. Success of the project can be attributed to both the Borrower's and the Bank'sapproach to the project. The Bank utilized a multidisciplinary team of an economic/financial analysts, a port engineer and a marine environmental specialist. This provided aconsistency throughout, from design and appraisal to implementation. While 10 Chineseagencies and ministries were involved in the project, key leadership was provided byMOC, ensuring a national consistency and providing a mechanism to utilize "modelcomponents" in other ports. Further, GOC has a well-established base of environmentallaws and agencies, with trained staff, to monitor and enforce these laws; i.e., the projectcould build on a strong existing base.

50. Port and coastal environmental management is inherently complex due tooverlapping jurisdictions of different departments and ministries, port authorities andprivate interests. If China did not already have a strong and existing base upon which theproject could be constructed, coupled with good leadership from MOC, this project wouldhave been much more difficult to implement and would likely have required more time.Replication of this project in other countries can be successful, if there are establishedregulatory and management regimes suitable to the task. Alternatively, such regimes

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should be first established and stabilized, followed by construction of facilities and othercomponents.

51. Management of ships and port wastes is only one aspect of port and coastalmaritime environmental management. The success of a ship waste project can be furtherenhanced by (a) adoption of an environmental coastal zone and port management plan (aconcept already being initiated by the Xiamen Special Economic Zone);(b) implementation of other pollution control activities (e.g., oil spill response); and(c) control and management of land-based sources of pollution.

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PART II: STATISTICAL TABLES

TABLE 1: SUMMARY OF ASSESSMENTS

A. Achievement of Objectives Substantial Partial Negligible Not Applicable

Macroeconomic policies XSector policies xFinancial objectives XInstitutional development XPhysical objectives XPoverty reduction XGender issues XOther social objectives XEnvironmental objectives XPublic sector management XPrivate sector development X

B. Project Sustainability Likely Unlikely Uncertain

x

C. Bank Performance Highly Satisfactory Satisfactory Deficient

Identification XPreparation assistance XAppraisal XSupervision X

D. Borrower Performance Highly Satisfactory Satisfactory Deficient

Preparation XImplementation XCovenant compliance XOperation (if applicable)

E. Assessment of Outcome Highly Satisfactory Unsatisfactory HighlySatisfactory Unsatisfactory

x

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TABLE 2: RELATED BANK LOANS/CREDITS

Year of ApprovalLoan/Credit Title Purpose Status

Preceding Operations1. Three Ports Project Expansion 1982 C mpleted on 06/30/882. Tianjin Port Project Expansion 1986 Completed on 10/31/943. Huangpu Port Project Expansion 1987 Completed on 12/31/944. Dalian Port Project Expansion 1988 Completed on 12/31/935. Xiamen Port Project Expansion 1988 Completed on 03/31/956. Ningbo and Shanghai Ports Expansion 1988 Completed on 12/31/95

Following Operations1. Shanghai Port Restructuring and Expansion 1992 To b¢ completed on 06/30/99

Development Project

TABLE 3: PROJECT TIMETABLE

Steps in project cycle Date planned Date actual

IdentificationPreappraisalAppraisal 04/04/91-05/02/91Negotiations 04/22--24/92Board presentation 06/17/92Signing 07/02/92Effectiveness 12/21/92Project completion 06/30/97Loan closing 06/30/97

- 25 -

TABLE 4: GEF GRANT/ CREDIT DISBURSEMENT

($ million)

Planned ActualGEF IDA GEF IDA

Quarterly Cumulative Quarterly Cumulative Quarterly Cumulative Quarterly Cumulative

12/31/92 3,000,000

03/31/93 3,000,000

06/30/93 3,000,000 6,000,000

09/30/93 6,000,000 12,000,000

12/31/93 6,000,000 18,000,000

03/31/94 6,000,000 24,000,000 1,908,176 4,908,176

06/30/94 2,000,000 26,000,000

09/30/93 2,000,000 28,000,000 3,000,000 432,846 5,341,022

12/31/94 2,000,000 30,000,000 3,000,000 6,000,000 4,318,198 9,659,220

03/31/95 3,000,000 9,000,000 2,286,456 11,945,676

06/30/95 1,000,000 10,000,000 3,415,315 15,360,990

09/30/95 3,000,000 13,000,000 4,622,570 19,983,560

12/31/95 2,000,000 15,000,000 7,600,580 27,584,141

03/31/96 2,307,931 29,892,072 1,033,711

06/30/96 169,593 30,061,665 3,433,870 4,467,581

09/30/96 1,071,702 31,133,367 868,826 5,336,407

12/31/96 49,338 31,182,705 1,543,046 6,879,453

03/31/97 347,457 31,530,163 2,354,358 9,233,811

06/30/97 68,059 31,598,222 4,114,960 13,348,771

09/30/97 606,129 32,204,351 112,325 13,461,096

12/31/97 105,050 32,309,401 1,916,947 15,378,043

- 26 -

TABLE 5A: KEY INDICATORS FOR PROJECT IMPLEMENTATION

Planned ActualAction Responsibility Starting Completion Starting Completion

date date date date

1. Oil boom materialsMaterial identification Port Authorities 05/01/92 08/01/92 05/01/92 08/01/92Material sourcing Port Authorities 07/01/92 09/01/92 07/01/92 09/01/92Approve purchase MOC/Port Authorities 09/01/92 10/01/92 09/01/92 10/01/92Call ICB tenders Port Authorities 10/01/92 03/01/93 12/01/93 05/01/94Purchase equipment Port Authorities 03/01/93 09/01/93 05/01/94 05/01/95

2. Oil water treatment facilitiesPrepare plans Port Authorities 05/01/92 09/01/92 05/01/92 09/01/92Prepare construction specifications Port Authorities 09/01/92 12/01/92 09/01/92 12/01/92Approve plans MOC/Port Authorities 12/01/92 01/01/93 12/01/92 01/01/93Call NCB tenders Port Authorities 02/01/93 04/01/93 12/01/94 12/01/96Call ICB tenders Port Authorities 02/01/93 06/01/93 12/01/93 12/01/96Initiate construction Port Authorities 08/01/93 12/01/94 06/01/94 06/01/97Purchase equipment Port Authorities 08/01/94 10/01/94 06/01/94 06/01/97Install equipment Port Authorities 10/01/94 02/01/95 08/01/94 06/01/97

3. Sewage systemsPrepare plans Port Authorities 05/01/92 09/01/92 05/01/92 09/01/92Prepare construction specifications Port Authorities 09/01/92 11/01/92 09/01/92 11/01/92Approve plans MOC/Port Authorities 12/01/92 02/01/93 12/01/92 02/01/93Call NCB tenders Port Authorities 03/01/93 06/01/93 12/01/93 12/01/96Cal! ICB tenders Port Authorities 03/01/93 08/01/93 12/01/93 12/01/96Initiate construction Port Authorities 07/01/93 07/01/94 07/01/94 06/01/97Purchase equipment Port Authorities 03/01/93 01/01/94 06/01/94 06/01/97Install equipment Port Authorities 01/01/94 04/01/94 08/01/94 06/01/97

4. Garbage systemsPrepare plans Port Authorities 05/01/92 08/01/92 05/01/92 08/01/92Prepare construction specifications Port Authorities 07/01/92 09/01/92 07/01/92 09/01/92Approve plans MOC/Port Authorities 09/01/92 11/01/92 09/01/92 11/01/92Call NCB tenders Port Authorities 11/01/92 03/01/93 06/01/94 12/01/96Call ICB tenders Port Authorities 11/01/92 04/01/93 06/01/94 12/01/96Initiate construction Port Authorities 04/01/93 04/01/94 07/01/94 06/01/97Purchase equipment Port Authorities 05/01/93 12/01/93 12/01/94 06/01/97Install equipment Port Authorities 01/01/94 04/01/94 06/01/95 06/01/97

5. Environmental monitoring stationsPrepare plans Port Authorities 05/01/92 08/01/92 05/01/92 08/01/92Prepare construction specifications Port Authorities 07/01/92 09/01/92 07/01/92 09/01/92Approve plans MOC/Port Authorities 09/01/92 10/01/92 09/01/92 10/01/92Call NCB tenders Port Authorities 10/01/92 01/01/93 06/01/94 12/01/96Call ICB tenders Port Authorities 10/01/92 02/01/93 06/01/94 12/01/96Initiate construction Port Authorities 12/01/92 12/01/93 07/01/94 06/30/97Purchase equipment Port Authorities 02/01/93 12/01/93 12/01/94 06/30/97Install equipment Port Authorities 12/01/93 02/01/94 04/01/95 06/30/97Staff training Port Authorities 06/01/93 02/01/94 01/01/95 06/30/97

6. Oil spill contingency planning studySelect consultant MOC/IDA 07/01/92 10/01/92 07/01/92 10/01/92Developing plan MOC/consultant 01/01/93 05/01/93 01/01/93 05/01/93Staff training MOC/consultant 06/01/93 12/01/93 06/01/93 12/01/93Equipment selection MOC/consultant 01/01/94 05/01/94 01/01/94 05/01/94

7. Chemically contaminated waters studySelect consultant MOC/IDA 07/01/92 10/01/92 07/01/92 10/01/92Assess problem MOC/consultant 11/01/92 01/01/93 11/01/92 01/01/93Develop effluent criteria MOC/consultant 01/01/93 04/01/93 01/01/93 04/01/93Design system MOC/consultant 04/01/93 08/01/94 04/01/93 08/01/94

8. Technical assistance to XPASelect consultant XPA/MOC/IDA 05/01/92 08/01/92 05/01/92 08/01/92Prepare plan XPA/consultant 08/01/92 09/01/92 08/01/92 09/01/92Staff training XPA/consultant 12/01/92 03/01/93 12/01/92 03/01/93Program implementation XPA 03/01/93 06/01/93 03/01/93 06/01/93

- 27 -

TABLE 5B: TRAINING (MOC AND THE SIX PORTS)

Training course 1992 1993 1994 1995 1996 1997 Total

Overseas Training (Actual)MARPOL 18 13 5 8 44Oil Spill Contingency Plan 20 4 24Tracking 5 5Chemical Waste 6 2 8Oily Waste 13 6 19Monitoring 14 5 6 25Project Implementation 5 14 9 17 45

Total 49 46 39 30 6 170

Domestic Training (Actual)MARPOLOil Spill Contingency Plan 76 102 178Tracking 58 61 119Chemical Waste 4 4Oily Waste 8 28 36Monitoring 7 29 2 38Project Implementation 1 3 4

Total 77 76 61 165 379

-28 -

TABLE 6: KEY INDICATORS FOR PROJECT OPERATIONS(ESTIMATED SHIP WASTE QUANTITIES FOR 1990 AND 1996)

Ship No. of Oily Waste Sewage Garbage TotalPort Type La Ships Lb Tons m;' L Tons ' Ld Tons m' L Tons m'

Dalian 0. G. 2,836 82,000 86,316 44,667 40,606 1,787 11,913 128,454 138,835Coastal 18.381 729,000 767,368 206,786 187,987 8,271 55,140 944,057 1,010,495

Total 21,217 811,000 853,684 251,453 228,593 10,058 67,053 1,072,511 1,149,330

Tianjin 0. G. 4,603 23,013 24,224 72,497 65,906 2,900 19,333 98,410 109,463Coastal 2,849 11,396 11,996 32,051 29,137 1,282 8,547 44,729 49,680

Total 7,452 34,409 36,220 104,548 95,043 4,182 27,880 143,139 159,143

Shanghai 0. G. 3,000 15,000 15,789 47,250 42,955 1,890 12,600 64,140 71,344Coastal 254,000 1,270,000 1,336,842 2,857,500 2,597,727 114,300 762,000 4,241,800 4,696,569

Total 257,000 1,285,000 1,352,632 2,904,750 2,640,682 116,190 774,600 4,305,940 4,767,914

Ningbo 0. G. 1,840 4,190 4,411 28,980 26,345 1,159 7,727 34,329 38,483Coastal 2,050 8,210 8,642 23,063 20,966 923 6,153 32,196 35,761

Total 3,890 12,400 13,053 52,043 47,311 2,082 13,880 66,525 74,244

Xiamnen 0. G. 1,119 5,595 5,889 17,624 16,022 705 4,700 23,924 26,611Coastal 11,229 22,458 23,640 126,326 114,842 5,053 33,687 153,837 172,169

Total 12,348 28,053 29,529 143,950 130,864 5,758 38,387 177,761 198,780

Guangzhou 0. G. 3,069 16,500 17,368 48,337 43,943 1,933 12,887 66,770 74,198Coastal 26,236 133,300 140,316 295,155 268,323 11,806 78,707 440,261 487,346

Total 29,305 149,800 157,684 343,492 312,266 13,739 91,594 507,031 561,544

Total ICR-1996 331,212 2,320,662 2,442,802 3,800,236 3,454,759 152,009 1,013,394 6,272,907 6,910,955SAR-1990 60,043 311,500 327,895 750,405 682,187 30,016 200,107 1,091,921 1,210,189

Growth p.a. (1990-96) 32.9% 39.8% 39.8% 31.0% 31.0% 31.0% 31.0% 33.8% 33.7%

/A O.G. = ocean going; Coastal = domestic shipping.Lb Number of ships were estimated by dividing the total throughput by the average ship size.Lg Oily waste weight: 950.0 kg/m 3.Ld Sewage: 50.0 liters/day/person. Crew: 35 for 0. C., 25 for coastal. Average collection period: 9 days. Unit weight: 1. I tons/m3.l Garbage: 2.0 kg/person/day. Unit weight of garbage: 150.0 kg/m .

- 29 -

TABLE 7: STUDIES INCLUDED IN PROJECT

1. Oil spill contingency planning study

The objective of this study was to protect environment and resources in the port area andto prevent oil pollution damage from ships, oil terminals and oil facilities on shore.Domestic consultants undertook this study. A generic port oil spill contingency planningmodel and the oil spill contingency plan for the six ports were developed upon study.

2. Chemically contaminated water treatment study

This study was aimed at raising the ports' technical level with relation to the receptionand treatment of bulk chemically contaminated water and resolving the problem thateffluent discharge was below set standards. The study was undertaken by the domesticTransportation University. The university has designated the effluent criteria for thechemical substances contaminating the ballast, bilge and wash waters in accordance withinternational conventions and Chinese laws and has finished the design of treatment studyto handle best the different types and quantities of chemicals for the ports in view of thechemical cargoes shipment situations in the local ports.

3. Ship waste tracking study

The objective of the study was to help to conduct effective supervision and tracking overthe quantities of wastes retained on the ship so as to prevent wastes discharge from shipsduring voyage. This study was jointly undertaken by domestic consultant ResearchInstitutes. Under the study, the system comprising of ship waste tracking and informationprocessing was established at each of the six ports with the headquarters stationed in theEnvironment Monitoring Center (EMC) of MOC. Ninety-one units of computers andsupplementary instruments were equipped and the network software has also beencompleted.

4. Cost-recovery and tariff/fee study

The objective of the study was both to settle the inadequate cost accountings presentlyused for the waste reception and treatment facilities that were under severe deficit due tolow service charge and to establish the rational tariff structure that would ensure normaloperation of the new facility. This study was executed by domestic consultants. New tariffstandards for ship waste reception and treatment services for the ports have been drawnupon the study.

- 30 -

TABLE 8A: PROJECT COSTS

Planned ActualLocal Local in Foreign Total Local Local in Foreign TotalY'000 $'000 IDA GEF $'000 Y'000 $'000 IDA GEF $'000

National ComponentEnvironmental monitoring & tracking 1,074 200 1,770 1,970 1,090 1,906 1,906Oil Spill contingency plan 290 290 312 312Chemical contaminated water study 250 250 269 269Cost & tariffstudy 100 100 108 108Preparation of TOR for Yellow Sea LME 60 60 65 65

Subtotal 1,074 200 0 2,470 2,670 1,090 0 0 2,660 2,660

Port ComponentsDalian Port 4,999 931 840 1,730 3,501 4,997 628 861 1,863 3,352Tianjin Port 21,212 3,950 2,220 4,230 10,400 21,210 2,664 2,276 4,556 9,495Shanghai Port

SPA 15,627 2,910 0 6,000 8,910 15,619 1,962 0 6,462 8,424Shanghai BOMTA 84,148 15,670 6,230 4,310 26,210 84,145 10,568 6,387 4,642 21,597

Ningbo Port 8,989 1,674 1,980 3,830 7,484 9,003 1,131 2,030 4,125 7,285Xiamen Port 5,329 992 1,480 2,920 5,363 5,863 736 1,517 3,145 5,398Guangzhou Port 33,224 6,187 2,250 4,510 12,947 33,224 4,173 2,307 4,857 11,337

Subtotal 173,528 32,314 15,000 27,530 74,815 174,061 21,861 15,378 29,649 66,889

Total 174,602 32,514 15,000 30,000 77,485 175,151 21,861 15,378 32,309 69,549

Exchange rate: Planned $1.00=Y 5.37Actual $1.00=Y 7.962

TABLE 8B: PROJECT FINANCING

($ million)

Appraisal estimate Actual/late estimateSource Local Foreign Total Local Foreign Total

GEF 13.0 17.0 30.0 - 32.309 32.309IDA 6.0 9.0 15.0 - 15.378 15.378GOCandthePortAuthorities 19.8 - 19.8 21.861 - 21.861

Total 38.8 26.0 64.8 21.861 47.687 69.549

- 31 -

TABLE 8c: ALLOCATION OF GRANT/CREDIT PROCEEDS

Planned Actual LaCategory Amount of Amount of the Amount of Amount of the

GEF Grant Credit Allocated GEF Grant Credit Allocated(in SDR) (in SDR) (in SDR) (in SDR)

(1) Civil Works 1,500,000 1,000,000 1,737,752.48 387,259.08(2) Goods 20,000,000 10,000,000 18,906,729.14 10,438,914.68(3) Consultants' services 500,000 0 1,160,753.57 108,674.00

and training(4) Unallocated

Special Account 125,909.70 -40,307.31Cancellation 68,845.11 105,459.55

Total 22,000,000 11,000,000 22,000,000 11,000,000

/a Estimate as of December 18, 1997.

TABLE 9: ECONOMIC COSTS, BENEFITS AND MAJOR FINANCIAL INDICATORS

Central Dalian Tianjin Shanghai Ningbo Xiamen Guangzhou Totalgovemment port port port port port port LA

Total Traffic (1996, million tons) ICR - 49. 56.0 94.1 61.2 8.5 46.6 -SAR - N/A N/A N/A N/A N/A N/A -

Financial (1996, in %):Retum on average net fixed assets ICR - 1 16 5 2 12 1 -

SAR - N/A N/A N/A N/A N/A N/A -Operating ratio ICR - 81 53 70 64 72 73 -

SAR N/A N/A N/A N/A N/A N/A -Debt service coverage ICR 0. 2.1 14.6 1.3 3.2 1.4 -

SAR - N/A N/A N/A N/A N/A N/A -Debt/(debt+equity) ratio ICR - 21 27 31 50 36 41

SAR - N/A N/A N/A N/A N/A N/A -

Current ratio ICR - 1. 1.3 0.9 1.2 1.4 1.0SAR - N/A N/A N/A N/A N/A N/A -

Economic:Total cost(Y million) ICR 17.6 28. 111.7 259.4 57.2 43.7 88.6 606.6

SAR 16.0 20. 48.2 130.9 44.1 52.2 32.8 344.1Total benefits (million ton)Le ICR - 1. 0.1 4.31 0.0 0.1 0.50 6.27

SAR - 0. 0.1 0.45 0.0 0.1 0.19 1.12

La Huangpu District./b Current costs.L Total quantities of ship waste.

- 32 -

TABLE 10: STATUS OF LEGAL COVENANTS

Cove- Original RevisedAgree- nant Present fulfillment fulfillmentment Section type Status date date Description of covenant Comments

Project 4.01 1 C Each of port authorities shallfurmish to the Association andTrustee (a) financial statementsand (b) audited report not laterthan six months after the end offiscal year.

Schedule 1 10 C Each of port authorities (a) byDecember 1992 prepare and fumishto the Association and Trustee agarbage and solid wastemanagement plan and by December31, 1994, adopt and implement sucha plan.

Schedule 2 10 C Each of port authorities shall, by Each Port hasJuly 31, 1994, adopt oil spill established ancontingency plan. adopted

satisfactory OilSpill ContingencyPlan

Schedule 3 10 C GPA shall enter into agreements GPA & BOMTAwith BOMTA for the handling of decided to havethe oil ballast and bilge water for all separate facilitiesport users at BOMTA facility at and the BankXing Zhao. agreed.

Schedule 5 10 C XPB shall establish, by June 30, XPB has establish1993, an Environmental Bureau, an EnvironmentEach of the port authorities shall Bureau.establish, by December31, 1992, acoordinating committee withfunction and power.

Covenant Class: Status:I = Accounts/audits 8 =Indigenous people C = covenant complied with2 = Financial performance/revenue 9 = Monitoring, review, and reporting CD = complied with after delay

generation from beneficiaries 10 = Project implementation not CP = complied with partially3 = Flow and utilization of project covered by categories 1-9

funds 11 = Sectoral or cross-sectoral4 = Counterpart funding budgetary or other resources5 = Management aspects of the allocation

project or executing agency 12 = Sectoral or cross-sectoral policy/6 = Environmental covenants regulatory/institutional action7 = Involuntary resettlement 13 = Other

TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS

There was no significant lack of compliance with an applicable Bank Operational ManualStatement (OD or OP/BP)

-33 -

TABLE 12: BANK RESOURCES: STAFF INPUTS

(Staff-weeks) la

FY 1992 1993 1994 1995 1996 1997 1998 Total

PreappraisalAppraisal 38.3 38.3Negotiations 47.9 47.9Supervision 13.9 14.9 13.1 25.4 67.3Completion 18.4/b 18.4 /b

Total 86.2 0 13.9 14.9 13.1 25.4 18.4 171.9

L/ Staff Week is combined for Marine Pollution and Ship Waste Disposal Project.Lb Staff Week in FY98 is an estimate.

TABLE 13: BANK RESOURCES: MISSIONS

Performance ratingSpecialized staff Imple- Devel-

Stage of project cycle Month! Number of Days skills represented mentation opment Type ofyear persons in field La status Lb objectives problems L/

Identification N/A /dPreappraisal N/A LdAppraisal 04/91 3 40 FA/EC,ENV(2)NegotiationBoard approvalSigningEffective

Supervision 1 06/92 3 2 EC,EGR,OP 2 2Supervision 2 03/93 3 4 EC,OP,EGR 2 2Supervision 3 08/93 2 6 OP,EGR 2 2Supervision 4 11/93 2 4 EGR,FA/EC 2 2Supervision 5 12/94 3 2 EGR,FA/EC,ENV 2 2Supervision 6 04/95 4 2 EGR,FA/EC 2 2Supervision 7 09/95 2 1 EGR 2 2Supervision 8 04/96 2 5 EGR,ENV 2 2Supervision 9 10/96 2 12 EGR,FA/EC 2 2Supervision 10 04/97 3 15 EGR,FA/EC,ENV 2 2Completion

La EGR: Engineer; EC: Economist; FA: Financial Analyst; OP: Operations Specialist; ENV: Environmental Specialist.

Lb 1: Highly satisfactory; 2: Satisfactory.

L/ 1: Delay in implementing Action Plan; 2: Procurement delay.

/d Identification and Preappraisal were combined with Appraisal mission.

-35 - Appendix A

APPENDIX A: ICR MISSION'S AIDE MEMOIRE

1. The Government of China initiated the Ship Waste Disposal Project in 1992, withthe objective of reducing coastal and harbor pollution, through provision of wastereception and treatment facilities for shipping, development and implementation of awaste tracking system, upgrading of environmental monitoring capabilities anddevelopment and implementation of an oil spill response and contingency plan. Theproject was undertaken in six major ports: Dalian, Tianjin, Shanghai, Ningbo, Xiamenand Guangzhou. A Bank supervision mission, consisting of Mr. Scott MacKnight(consultant to EA2IN), visited Shanghai on April 20-23, Ningbo on April 24-27 andGuangzhou (May 12-14). Messrs. Toshiro Tsutsumi and H.-K. Yen (EA2IN) joined himfor visits to Dalian (April 28-May 3), Tianjin (May 4-May 7), Xiamen (May 7-May 12)and a final wrap-up meeting with the Port Authorities and the Ministry ofCommunications (MOC) in Beijing on May 15, 1997. The mission wishes to thankMOC, the various port authorities and Shanghai Bureau of Maritime TransportationAdministration for their hospitality and cooperation, not only during this mission, butalso throughout the period of this project. A list of staff participating in the discussions isprovided in Annex 1. The conclusions reached and the comments provided in this AideMemoire are subject to review and acceptance by the World Bank.

Shanghai Port Authority (SPA)

2. Oil-Contaminated Wastewater. SPA has completed a facility in Pudong toreceive and process oil-contaminated wastewater from port ships. The facility, whichfinished commissioning in early April, will have the capability to process annually30,000 tons of wastes, with an effluent content of less than 10 ppm hydrocarbons.

3. Chemical-contaminated wastewater. Processing of this type of waste was notpart of the SPA component of the project.

4. Sanitary sewage wastewater. Processing of this type of waste was not part of theSPA component of the project.

5. Garbage and solid wastes. SPA has completed the civil works component of thePudong reception and treatment facility. Installation of the incineration equipment is inthe final stages and the facility should be completed commissioning by June 1997.Schedule problems were due to difficulties in equipment delivery that was not resolveduntil July 1996. When completed, the facility will be capable of processing about 2 tons/day of wastes. Two of the three 500-ton capacity garbage collection barges have beenreceived and are ready for use. The third unit was authorized in July 1996 and is presentlyunder construction in a Shanghai shipyard. The third barge is scheduled for delivery byJune 1997.

- 36 - Appendix A

6. Oil spill contingency and response. SPA participated in the national spillresponse and contingency training organized by MOC. The Shanghai Bureau of MaritimeTransportation Administration mainly carries out the oil spill contingency plan for thePort of Shanghai.

7. Environmental monitoring. All monitoring equipment and the air pollutionmonitoring van have been delivered and are now in use. At present, SPA has a detailedprogram of monitoring twice per year at each terminal to assess air and water quality.This is in addition to regular monitoring by the environmental monitoring unit of eachterminal. Current air quality is National Class III and water quality, except in the centralarea of the Huangpu Jiang is National Class III; the latter area is at Class IV due toextensive urban inputs via the Suzhou Creek. As part of the expenditures under thisproject, SPA has constructed a new operations building at Pudong which will also housea portion of the Environmental Monitoring Center, now located in older premises nearTerminal 2 in downtown Shanghai.

8. Ship waste tracking system. SPA has acquired all hardware for the system, butthere are still some problems in networking the computers and in the software.

9. Cost recovery. MOC has not authorized any changes in the fee system. SPA willcontinue to charge the existing rate and subsidize operation of the treatment facility.

10. Training. All training, both local and abroad, has been successfully completed. Insome cases, training was relatively limited in time provided and SPA would like toaugment this with additional training, particularly in the area of environmentalmanagement and waste facility operations.

11. Conclusions. The SPA portion of the project has been successfully implemented.There are two outstanding issues:

(a) Finalization of the ship waste tracking system, which will require furtherassistance from MOC.

(b) The current cost recovery fee structure is not sufficient and will requiremodification by MOC.

12. Project Sustainability and Benefits. Implementation of this project significantlyincreases the capability of SPA to process oil-contaminated wastewaters in the Port ofShanghai. This will result in a net environmental benefit through reduction ofhydrocarbons entering the estuarine and harbor environment during a period ofsignificant increase in shipping activity, both foreign and domestic. Projectimplementation also provides for improved collection and treatment of garbage and solidwastes. This will also provide a net improvement to the harbor environment. The costrecovery fee structure is not sufficient for full sustainability and operation of the facilityhas to be subsidized by SPA.

- 37 - Appendix A

Shanghai Bureau of Maritime Transportation Administration (S-BOMTA)

13. Oil-contaminated wastewater. S-BOMTA has completed a facility near theWaigaoqiao Terminal in Pudong to receive and process oil-contaminated wastewaterfrom both their extensive fleet and other shipping. The facility, which has just completedcommissioning, is managed by a wholly owned subsidiary company. Annual processingcapability is designed to be 400,000 tons of wastes, with a treated effluent content of lessthan 10 ppm hydrocarbons. Constructed on the south side of the Yangtze River, thefacility provides ready access to all sizes of shipping with a 330 m berth having -8.5 mLWT access. With completion of commissioning, the former tanker (moored off Liu HeKou, further upriver) which had provided a treatment facility has been taken out ofcommission and scrapped.

14. Chemical-contaminated wastewater. The Waigaoqiao facility also has thecapability to receive and process up to 100,00 tons annually of chemical-contaminatedwastewater. While the facility has not yet begun to process such wastewaters, it has beendesigned to handle a variety of wastes, including benzene and acid contamination.

15. Sanitary sewage wastewater. Processing of this type of waste was not part of theS-BOMTA component of the project. All sewage wasters from the facility are pumped tothe local municipal facilities for treatment.

16. Garbage and solid wastes. All garbage and solid wastes from the shipping arecollected by SPA and taken to their disposal facility in Pudong. All wastes from thetreatment center are collected by the local municipal service and disposed at their facility.

17. Oil spill contingency and response. As part of this project, S-BOMTApurchased 600 m of oil boom to add to their existing 600 m of equipment. However,S-BOMTA does not have a suitable vessel to deploy the boom and has had to makearrangements with other sources to lease a vessel to meet short-term needs. As a result,while S-BOMTA would like to deploy the boom at all times, it is not able to do so.

18. S-BOMTA is familiar with the oil spill response plan developed for the port. Itparticipated in the national training program and will be participating in the spill responseexercise to be held in Ningbo in May 1997.

19. Environmental monitoring. All laboratory equipment has been purchased and isin the final stages of installation. The equipment is to be used only for the testing ofeffluents and received wastewaters. The SPA Environmental Monitoring Centerundertakes any site monitoring (air and water).

20. Ship waste tracking system. While SPA has received the computer hardware forthe ship waste tracking system, neither the hardware nor the software has yet beeninstalled at the S-BOMTA treatment facility. No S-BOMTA staff has yet undertaken anytraining in the use of the software. In the interim, S-BOMTA has continued to maintaindata records on a manual basis.

-38 - Appendix A

21. Cost recovery. Operation of the facility is quite expensive. S-BOMTA hasestimated per ton costs to operate the former tanker off Liu He Kou as Y 1.5. Estimatedcosts for the new treatment facility are Y 48 per ton. After extensive negotiations withMOC, a new fee of Y 22 per ton has been implemented.

22. Training. All training, both local and foreign, has been satisfactorily completed.In some cases, training was relatively limited in time provided and S-BOMTA vvould liketo augment this with additional training.

23. Conclusions. The S-BOMTA portion of the project has been successfullyimplemented. There are three outstanding issues:

(a) Finalization of the ship waste tracking system, which will require furtherassistance from MOC.

(b) Provision of a small vessel to deploy the oil spill containment boom. Thiswas not included in the original project and will have to be addressedthrough internal or MOC funds.

(c) The current cost recovery fee structure is not sufficient and will requirefurther modification by MOC.

24. Project Sustainability and Benefits. Implementation of this project significantlyincreases the capability of processing oil-contaminated wastewaters in the Port ofShanghai and for shipping in the lower Yangtze River. This will result in a netenvironmental benefit through reduction of hydrocarbons entering the coastal, estuarineand harbor environment during a period of significant increase in shipping activity, bothforeign and domestic. Project implementation also provides for treatment of chemicallycontaminated wastewaters. While not yet a significant environmental issue, the scope ofindustrial investments indicates, there will be significant requirement for such capabilityin the near future. The recently modified cost recovery fee structure is still not sufficientfor full sustainability and operation of the facility has to be subsidized by S-BOMTA.

Ningbo Port Authority (NPA)

25. Oil-contaminated wastewater. NPA has completed two facilities to process oil-contaminated wastewater: one forming part of an oil terminal at Beilun; the otherassociated with an oil terminal at Zhenhai. The Beilun facility is capable of processingannually 30,000 tons of wastes; the Zhenhai facility is capable of processing, both withan effluent content of less than 10 ppm hydrocarbons.

26. Chemical-contaminated wastewater. NPA has refurbished the chemicallycontaminated wastewater at Zhenhai. This system provides for treatment of both acidicand organic chemical contaminated wastewaters. In addition, NPA has refurbished theiron ore wastewater treatment facility at Beilun to provide for treatment and reuse of the

- 39 - Appendix A

water to reduce dust from the storage piles. This process will save about Y 400,000 peryear.

27. Sanitary sewage wastewater. Processing of this type of waste was not part of theNPA component of the project. However, sanitary wastes from the marine oil andchemicals terminal at Zhenhai are also treated within the chemical wastewaters treatmentsystem.

28. Garbage and solid wastes. NPA has completed the civil works component of theZhenhai incineration facility and is in the final stages of commissioning the twoincinerators. The facility will be capable of processing about 200 kg/hour. A large 50 m3

garbage collection barge has been received and is now in operation. In addition, NPA haspurchased two garbage collection trucks to haul garbage from the barge to the incinerator.

29. Oil spill contingency and response. NPA participated in the national spillcontingency plan and has a specific plan for the Port of Ningbo. NPA will be hosting anational oil spill response planning exercise to be held May 8-15, 1997. NPA is awaitingdelivery of two vessels related to oil spill response: (a) 500-ton waste capacity collectionvessel and (b) an oil spill response emergency command vessel. NPA routinely uses theoil spill containment boom to surround vessels being off-loaded at the Beilun Marine OilTerminal. In addition to the 2,000 m purchased under this project, NPA has alsopurchased an additional 2,000 m of containment boom, which is also being used at theBeilun Marine Oil Terminal.

30. Environmental monitoring. All monitoring equipment and the monitoring vanhave been delivered and are now in use. In addition to a very extensive package ofanalytical testing equipment, NPA has purchased a Perkin Elmer AAS with graphitefurnace and autosampling attachment through funds made available through funds fromthe Ningbo Port Development Project. NPA agreed to provide the mission with a copy ofthe 1996 environmental monitoring data set in Beijing on May 15, 1997.

31. Ship waste tracking system. NPA has acquired all hardware for the system, butthere are still some problems in networking the computers and in the software. NPA isusing the system to maintain data records of wastes collected and handled.

32. Cost recovery. MOC has not authorized any changes in the fee system. NPA willcontinue to charge the existing rate and subsidize operations of the treatment facilities toa current cost of about Y 8 million.

33. Training. All training, both local and abroad, has been successfully completed. Insome cases, training was relatively limited and NPA would like to augment this withadditional training, particularly in the areas of environmental management and oil spillcontingency planning.

34. Conclusions. The NPA portion of the project has been successfully implemented.There are two outstanding issues:

- 40 - Appendix A

(a) Finalization of the ship waste tracking system, which will require furtherassistance from MOC.

(b) The current cost recovery fee structure is not sufficient and will requiremodification by MOC.

35. Project Sustainability and Benefits. Implementation of this project significantlyincreases the capability of processing oil-contaminated wastewaters in the Port ofNingbo. This will result in a net environmental benefit through reduction of hydrocarbonsentering the estuarine and harbor environment during a period of significant increase inshipping activity, both foreign and domestic (about 10 percent higher than was projectedin 1991). Project implementation also provides for improved collection and treatment ofgarbage and solid wastes and collection and treatment of chemically contaminatedwastewaters. This will also provide a net improvement to the harbor environment. Thecost recovery fee structure is not sufficient for full sustainability and operation of thefacility has to be subsidized by NPA.

Dalian Port Authority (DPA)

36. Oil-contaminated wastewater. DPA has renovated and upgraded reception andtreatment facilities to process oil-contaminated wastewater at Siergou (located in DalianBay) and at the New Harbor Oil Terminal (located at the mouth of Da Yao Bay). TheSiergou facility has a design processing capacity of 1.2 million tons per year, primarilyoriginating from refined product cargoes; the New Harbor facility has a capacity of1 million tons per year to an effluent content of less than 5 ppm hydrocarbons. The NewHarbor Terminal facility upgrades the existing capability of handling crude oilwastewater. The facility also treats about 600,000 tons of wastewater from refinedproduct cargoes.

37. Chemical-contaminated wastewater. DPA has refurbished the chemicallycontaminated wastewater treatment system at Siergou with a treatment capacity of100,000 tons per year. The treatment system is capable of handling such organiccontaminants as benzene, ethylene glycol and alcohols.

38. Sanitary sewage wastewater. DPA renovated a sanitary sewage wastewatertreatment plant at the Xianglujiao Terminal by installation of a new RBC system.

39. Garbage and solid wastes. There were no expenditures under this project for thistype of waste.

40. Oil spill contingency and response. DPA participated in the national spillcontingency plan and has a specific plan for the Port of Dalian, finalized in late 1995.DPA and the Dalian Harbor Superintendency Administration will be participating in theoil spill response exercise to be held in Ningbo in May 1997. Through funding from thisproject, DPA has purchased 2,000 m of oil containment boom to augment about 3,000 m,

- 41 - Appendix A

which it already owned. The booms are routinely used to surround vessels being off-loaded at both the Siergou and New Harbor Terminals.

41. Environmental monitoring. All monitoring equipment and the laboratoryvehicle have been delivered and are now in use. While the equipment augments existingcapabilities, DPA indicated the older building (near the Siergou Terminal) which ispresently occupied by the Environmental Monitoring Center will be renovated withprovision of additional support infrastructure (e.g., fume hoods, etc.). DPA provided themission with a copy of the 1996 environmental monitoring data set.

42. Ship waste tracking system. DPA has acquired all hardware for the system, butthere are still some problems in networking the computers and in the software. DPA isusing the system to maintain data records of wastes collected and handled.

43. Cost recovery. MOC has not authorized any changes in the fee system. DPA willcontinue to charge the existing rate structure (e.g., Y 1.7/ton for foreign vessel oil-contaminated wastewater) and subsidize operations of the treatment facilities. Day-to-dayoperations of both treatment systems are conducted by the respective terminal operatingcompanies and DPA will provide to the mission on May 15 with estimated operatingbudgets for each facility.

44. Training. With the exception of one final set of foreign training scheduled forJune 1997, all training, both local and abroad, has been successfully completed. In somecases, training was relatively limited and DPA would like to augment this with additionaltraining, particularly in laboratory testing.

45. Conclusions. The DPA portion of the project has been successfully implemented.There are three outstanding issues:

(a) Finalization of the ship waste tracking system, which will require furtherassistance from MOC.

(b) The current cost recovery fee structure is not sufficient and will requiremodification by MOC.

(c) Improvements to the Monitoring Center and Laboratory facilities.

46. Project Sustainability and Benefits. Implementation of this project significantlyincreases the capability of processing oil and chemical-contaminated wastewaters in thePort of Dalian. This will result in a net environmental benefit through reduction ofhydrocarbons and other chemical wastes entering the harbor and coastal watersenvironment, during a period of significant increase in shipping activity, both foreign anddomestic. The cost recovery fee structure is not sufficient for full sustainability andoperation of the facility has to be subsidized by DPA.

- 42 - Appendix A

47. Financial Evaluation. The mission reviewed and discussed the consolidatedfinancial statements provided by DPA during the visit. The statements cover the actualfinancial performance (income statement, source and applications of fund's statement andbalance sheet statement) of DPA during the period 1988-96.

48. The mission also discussed the project financing, revenue, expenditure, taxpayments, loan and related investments by the Port. The mission analyzed the revisedconsolidated financial statements of DPA. A draft financial evaluation for the project hasbeen given to DPA for review and comment. The mission requested and DPA agreed thatany comment from DPA on the draft financial statements would be sent to the Bankbefore June 30, 1997.

Tianjin Port Authority (TPA)

49. Oil-contaminated wastewater. TPA is in the process of upgrading thewastewater treatment facility at the Tianjin Oil Bunkering Company (Beijiang) and hasconstructed a new wastewater reception and treatment facility in the Nanjiang area. TheBeijiang facility improvements provide for two new storage tanks of 4,000 m3 withassociated piping to augment existing facilities. This represents an investment of Y 1.5million and $429,000. TPA is awaiting delivery in late May of steel for the constructionwith completion scheduled by December 1997. The new Nanjiang facility has a designprocessing capacity of 200 tons per hour and a holding capacity of 4,000 m3 . In addition,TPA has purchased a multiwaste vessel with a holding capacity of 160 mr and an onboardprocessing capacity of 10 tons/hour. This represents an investment of Y 33.82 million and$881,000.

50. Chemical-contaminated wastewater. TPA is constructing a chemicallycontaminated wastewater treatment system adjacent to the oil-contaminated wastewaterfacility at Nanjiang. This facility will be able to receive up to 100 m3 at any one time withstorage in three holding tanks and a processing capacity of 8 m3 per hour. Completion isexpected by January 1998 and represents an investment of Y 12.23 million and $580,000.The treatment system is capable of handling such organic contaminants as benzene,xylene and chlorobenzene.

51. Sanitary sewage wastewater. TPA also constructed a sanitary sewagewastewater treatment at the Nanjiang wastewater facility with a design capacity of600 tons/day.

52. Garbage and solid wastes. TPA has purchased five garbage transfer trucks and isconstructing a waste incinerator in the Beijiang area, with completion scheduled byJune 30, 1997. The incinerator will have a capacity of 300 kg/hr. This represents aninvestment of Y 6 million and $183,000 plus $143,000 for the five trucks. TPA has alsopurchased two roadway sweep and two water spray vehicles to remove coal dust andclean roadways within the port area, for an investment of $271,000.

- 43 - Appendix A

53. Oil spill contingency and response. TPA participated in the national spillcontingency plan and has a specific plan for the Port of Tianjin, finalized in late 1995.TPA and the Tianjin Harbor Superintendency Administration will be participating in theoil spill response exercise to be held in Ningbo in May 1997. TPA and the HarborSuperintendency will also be holding additional response training exercises in the harborlater this summer. Under this project, TPA purchased 2,600 m of oil containment boomfor an investment of $249,000. The booms are routinely used to surround vessels beingoff-loaded at both sides of the harbor. TPA has also purchased 2 oil skimmer units, 8special oil mops, 1 surface concentration net, 1 ton of oil-absorbent material and 1.5 tonsof oil-dispersant chemical.

54. Environmental monitoring. All monitoring equipment and the laboratoryvehicles have been delivered and are now in use. TPA has initiated a cooperationagreement with the Department of Environmental Studies of Tianjin Nankai University,in which senior graduate students and research fellows use the new port testingequipment, while assisting in the training of port staff and developing new testingprotocols. TPA provided the mission with a copy of the 1996 environmental monitoringdata set.

55. Ship waste tracking system. TPA has acquired all hardware for the system, butthere are still some problems in networking the computers and in the software. TPA andthe Harbor Superintendency will participate in a further two-week training session at theTianjin Hydraulic Engineering Research Institute in late May to enhance their operationof the waste tracking system.

56. Cost recovery. MOC has not authorized any changes in the fee system. TPA willcontinue to charge the existing rate structure and subsidize operations of the treatmentfacilities. The terminal operating companies conducts day-to-day operations of thetreatment systems.

57. Training. TPA has undertaken foreign training for staff members in the UnitedStates (oil spill response and environmental monitoring) and in Germany (chemical wasteprocessing). Domestic training has or will include oil spill response (2 for 1 week), shipwaste tracking (2 for 1 week), oil waste treatment (16 for 15 days) and environmentalmonitoring (40 for 1 week). TPA would like to augment this with additional training inoil spill response.

58. Conclusions. The TPA portion of the project has been successfully implemented.There are three outstanding issues:

(a) Finalization of the ship waste tracking system, which will require furtherassistance from MOC.

(b) The current cost recovery fee structure is not sufficient and will requiremodification by MOC.

- 44 - Appendix A

(c) Delivery and commissioning of (i) the Beijiang waste storage tanks,(ii) chemical waste processing facility and (iii) the garbage incinerator.

59. Project Sustainability and Benefits. Implementation of this project significantlyincreases the capability of processing oil and chemical-contaminated wastewaters in thePort of Tianjin. This will result in a net environmental benefit through reduction ofhydrocarbons and other chemical wastes entering the harbor and coastal watersenvironment, during a period of significant increase in shipping activity and land-basedoil and petroleum chemical processing. The cost recovery fee structure is not sufficientfor full sustainability and operation of the facility has to be subsidized by TPA.

60. Financial Evaluation. The mission reviewed and discussed the consolidatedfinancial statements provided by TPA during the visit. The statements cover the actualfinancial performance (income statement, source and applications of fund's statement andbalance sheet statement) of TPA during the period 1988-96.

61. The mission also discussed the project financing, revenue, expenditure, taxpayments, loan and related investments by the Port. The mission analyzed the revisedconsolidated financial statements of TPA. A draft financial evaluation for the project hasbeen given to TPA for review and comment. The mission requested and TPA agreed thatany comment from TPA on the draft financial statements would be sent to the Bankbefore June 30, 1997.

Xiamen Port Authority (XPA)

62. Oil-contaminated wastewater. XPA has purchased a new environmentalprotection services vessel that has the capacity to receive up to 90 m3 of oil-contaminatedwastewater and process the wastes through two 10-ton/hour treatment systems. Inaddition, the vessel is equipped with various oil spill response equipment and can act as aspill response vessel as required. This vessel is routinely berthed at a new 132 m wharf(4 m depth of water) within the Dongdu I Terminal area. In addition, there is a 262 m2

storage warehouse for the oil containment boom and other related equipment. Thisrepresents investments of $2.21 million for the vessel, Y 4 million for the terminal andwarehouse and Y 680,000 for related design work.

63. Chemical-contaminated wastewater. At this time, there are no such wastewatersbeing generated within the XPA and this component was not part of the project.

64. Sanitary sewage wastewater. XPA has constructed a new secondary treatmentsanitary sewage wastewater facility at the Dongdu II Terminal area. This represents aninvestment of Y 850,000 for civil works and $570,800 for equipment.

65. Garbage and solid wastes. XPA is completing construction of a new incineratorfacility at the Dongdu Terminal. This will have a capacity of 200 kg/hr and is located inthe old coal terminal area to the north end of the port. Garbage and sanitary sewage willbe collected using a new barge with a holding capacity of 20 tons of garbage and 80 tons

- 45 - Appendix A

of sewage water. Use of a barge permits XPA to collect wastes from ships anywherewithin the harbor area. Civil works should be completed by September 1997 and theincinerator fully operational by December 1997. This represents an investment of$175,871 for equipment, Y 400,000 for civil works and approximately Y 1,534,479 forthe garbage/sanitary sewage collection barge.

66. Oil spill contingency and response. XPA participated in the national spillcontingency plan and has a specific plan for the Port of Xiamen, finalized in late 1995.XPA and the Xiamen Harbor Superintendency Administration will be participating in theoil spill response exercise to be held in Ningbo in May 1997. Under this project, XPApurchased 1,000 m of containment boom for an investment of $92,364 and has proposedto purchase an additional 1,000 m for $60,000 derived from the SDR/US dollar exchangerate differences. As XPA does not have an oil terminal, the boom has been reserved forspill response. There are some discussions with a private terminal to provide routinedeployment during operations at that terminal. XPA has also purchased oil responseequipment, including oil skimmer and oil-absorbent material. This represents aninvestment of $152,365 for the boom and approximately $200,000 for other relatedequipment.

67. Environmental monitoring. A section of the building in which theenvironmental monitoring center is located has been fully renovated to serve the center.All monitoring equipment and the laboratory vehicle have been delivered and are now inuse. As part of their package, XPA has purchased air pollution monitoring equipment fortotal suspended particulate (TSP) and carbon monoxide. Total investment was Y 500,00for civil works and $482,340 for equipment and vehicle. XPA proposes to purchasemonitoring equipment for SO2 and NOx using funds derived from the SDRIUS dollarexchange rate difference. The mission was provided with a copy of the 1996environmental monitoring data for the harbor area.

68. Ship waste tracking system. XPA has acquired all hardware for the system, butthere are still some problems in networking the computers and in the software. XPA willparticipate in a further two-week training session at the Tianjin Hydraulic EngineeringResearch Institute in late May to enhance operation of the waste tracking system andobtain a copy of the latest version of the software.

69. Cost recovery. XPA has not had any waste treatment facilities in the past andtherefore has not yet established a fee schedule. XPA will use existing MOC-approvedfee structures.

70. Training. XPA has undertaken foreign training for staff members in Japan andKorea (ship waste treatment processing, 6 for 20 days), Singapore (environmentalmonitoring, 8 for 4 weeks) and France/Germany/Denmark/Norway (ship wasteprocessing, 2 teams of 5 for each of 20 days). Domestic training has or will include oilspill response (2 for 1 week) and ship waste tracking (1 for 1 week and 1 or 2 for 2weeks).

- 46 - Appendix A

71. Technical Assistance. As part of this project, XPA contracted with a foreignspecialist (US) to develop an operations and training program for the EnvironmentalMonitoring Center. The consultant visited Xiamen in March and will be submitting afinal report by May 15. He will return to Xiamen at that time to complete associatedtraining and program familiarization.

72. Conclusions. The XPA portion of the project has been successfully implemented.Outstanding issues relate to commissioning of the environmental services ship and theincinerator.

73. Project Sustainability and Benefits. Implementation of this project significantlyincreases the capability of processing oil-contaminated and sanitary sewage wastewatersin the Port of Xiamen. This will result in a net environmental benefit through reduction ofhydrocarbons and sanitary sewage entering the harbor and coastal waters environment,during a period of significant increase in shipping activity. The new waste treatment andmonitoring facilities also support the role of XPA in the recently approved[ XiamenMunicipal Coastal Zone Management Law and future Marine Superintendency andMarine Pollution Prevention Laws. It is notable that XPA was invited, along with otherstakeholders, to participate in extensive consultation with respect to the new laws. As thewaste facilities are a new undertaking by XPA, there are no comparable cost recoveryestimates to determine sustainability.

74. Financial Evaluation. The mission reviewed and discussed the consolidatedfinancial statements provided by XPA during the visit. The statements cover the actualfinancial performance (income statement, source and applications of fund's stateiment andbalance sheet statement) of XPA during the period 1988-96.

75. The mission also discussed the project financing, revenue, expenditure, cash flow,balance sheet and related investments by the Port. The mission analyzed the revisedconsolidated financial statements of XPA. A draft financial evaluation for the project hasbeen given to XPA for review and comment. The mission requested and XPA agreed thatany comment from XPA on the draft financial statements would be sent to the Bankbefore June 30, 1997.

Guangzhou Port Authority (GPA)

76. Oil-contaminated wastewater. GPA is completing a wastewater treatmentfacility at the XiJi Oil Terminal with a capacity of 500 tons/day. Wastes can be directlyreceived from ships at the Terminal or from a wastewater reception ship (investment of$813,200). The wastewater treatment plant will also be capable of processing sanitarysewage. Total investment is Y 15.61 million for civil works (also includes a laboratory/dormitory building) and $2.514 million for equipment.

77. Chemical-contaminated wastewater. GPA is constructing a chemicallycontaminated wastewater treatment system at the DanShuiHe Dangerous GoodsTerminal. The facility was to be originally designed for wastes resulting from the

-47 - Appendix A

handling of mostly packaged chemicals, but was redesignated to handling of liquid bulkcargoes in late 1995 to better reflect the nature of the cargoes. This has resulted in arequirement for design changes and has delayed initiation of construction until June 1997(projected investment of Y 3.972 million for civil works and Y 1.08 million forinstallation). However, equipment has been purchased (investment of $633,000) and themission was assured the equipment would be suitable for the proposed wastes. Thetreatment system will be capable of handling such organic contaminants as benzene andxylene and acid/alkali wastes.

78. Sanitary sewage wastewater. GPA has constructed a 300 ton/day facility withsecondary treatment at the XiJi Terminal to process sewage from ships, as collected by awastewater collection vessel (capacity of 420 tons of oil-contaminated and 100 tons ofsanitary sewage wastewater) representing an investment of $813,200. The facility isincluded in the investments described under oil-contaminated wastewater. The facility isbeing expanded using GPA funds to a capacity of 3000 tons/day to handle wastes fromadjacent port facilities. The chemical waste treatment facility at DanShuiHe will alsoinclude facilities to process sanitary sewage from the port facilities at 100 tons/day.

79. Garbage and solid wastes. GPA has constructed a new waste incinerator withfinal commissioning in April 1997. The incinerator has a capacity of 2.4 tons/day andrepresents an investment of Y 880,000 (for civil works) and $279,000 (for equipment).

80. Oil spill contingency and response. GPA participated in the national spillcontingency plan and has a specific plan for the Port of Guangzhou, finalized in late1995. The plan will not be altered without further direction from MOC. GPA and theGuangzhou Harbor Superintendency Administration have participated in the oil spillresponse exercise to be held in Ningbo in May 1997. GPA and the HarborSuperintendency have also held several oil spill response training exercises (classroomand field) in 1994, 1995 and 1996. Under this project, GPA purchased 2,500 m of oilcontainment boom for an investment of $150,000. Sections of the boom are routinelyused to surround vessels being off-loaded at the XiJi Oil Terminal; e.g., in 1995, GPAdeployed the boom around 303 vessels. As part of this project, GPA has also purchasedan oil spill recovery vessel (investment of $808,835) and an oil boom deployment vessel(investment of $484,620). In addition, GPA has invested about Y 300,000 to purchaseother spill response equipment, such as oil skimmers, oil absorbent material anddispersant chemical.

81. Environmental monitoring. All monitoring equipment and the laboratoryvehicle (representing a total investment of $551,141) have been delivered and are now inuse. GPA has invested about Y 325,000 in additional laboratory equipment and Y 1million in building renovations for the monitoring center. The mission was provided withdetailed maps of the water and air quality sampling sites throughout the port facilities anda copy of the 1996 monitoring data.

- 48 - Appendix A

82. Ship waste tracking system. GPA has acquired all hardware for the system, butthere are still some problems in networking the computers and in the software. FourteenGPA staff and others from the Harbor Superintendency will participate in a further two-week training session at the Tianjin Hydraulic Engineering Research Institute in late Mayto enhance their operation of the waste tracking system.

83. Cost recovery. MOC has not authorized any changes in the fee system. GPA willor is using the existing rate structure and is likely to have to subsidize operations. GPAdoes not have separate costs for waste facility operation.

84. Training. GPA has undertaken foreign training for staff members in the UnitedStates/Canada (4x23 days for MARPOL wastes), Netherlands/Germany (lx45 days forchemical waste processing) and Netherlands/United Kingdom (5x21 days for port wastemanagement). Domestic training has very extensive, primarily in oil spill response andlaboratory and monitoring equipment.

85. Conclusions. The GPA portion of the project has been successfully implemented.There are four outstanding issues:

(a) Finalization of the ship waste tracking system, which will require furtherassistance from MOC.

(b) Based on comments from the other five ports, the current cost recovery feestructure is not likely to be sufficient and will require modification byMOC.

(c) Construction and commissioning of the chemical waste processing facility.

(d) Commissioning of the XiJi wastewater treatment center.

86. Project Sustainability and Benefits. GPA has made a total investment of Y 29.5million and approximately $7.12 million. Implementation of this project significantlyincreases the capability of processing oil and chemical-contaminated wastewaters in thePort of Guangzhou. This will result in a net environmental benefit through reduction ofhydrocarbons and other chemical wastes entering the Pearl River delta environment,during a period of significant increase in shipping activity and land-based oil andpetroleum chemical processing. The cost recovery fee structure is not likely to besufficient for full sustainability and operation of the facility will likely have to besubsidized by GPA until direction is obtained from MOC to revise the fee schedule.

Ministry of Communications (MOC)

87. Several studies have been completed by consultants operating under contractswith MOC. The status of these projects and their implementation is as follows.

- 49 - Appendix A

88. Oil Spill Response and Contingency. MOC provided the Bank with copies (inEnglish) of the national plan and separate plans for each of the six ports in late 1995.These were reviewed and found to be very satisfactory. MOC has initiated internaldiscussions including the Harbor Superintendency Administration (HSA), the PortAuthorities and other interested agencies as to how best to implement the plans and toensure smooth cooperation. MOC informed the mission the general guidelines fordeveloping the plans for the six ports will be extended to the other major ports in China.MOC indicated the necessary documentation (regulations, guidelines for plans andtechnical guidelines for equipment) should be ready for implementation in autumn 1997.As proposed to the Bank in May 1996, $20,000 was used to conduct a one-week oil spillresponse training program (classroom and field exercises) in Ningbo. This was heldMay 8-15, 1997 and was very successful with 106 participants. MOC has requested theBank consider making available funds to cover the additional costs incurred.

89. Cost Recovery and Port Fee Schedule Changes. MOC provided the Bank witha revised report (in English) in April 1997. The report recommended one national feeschedule combining the costs of the new and existing waste reception facilities. MOC andthe Ports recognize the new fee schedule may not provide sufficient funds for total costrecovery, but is reasonably fair to all ports. Further the new fee schedule will apply to allports, with funds in the other ports to be reserved for construction or improvements towaste handling facilities. The recommended fee schedule is now being reviewed withinMOC and a recommendation for revisions to the Port Fee Schedule will be made to theState Planning Commission and Pricing Bureau by September 1, 1997. MOC agreed toforward a copy of the recommended schedule to the Bank at that time. MOC indicatedthey were unable to provide a date for approval by the Planning Commission, but hopedchanges could be made in 1998. MOC agreed to keep the Bank informed of the progressof approval for the new fee schedule.

90. Large Marine Ecosystem (LME) Multilateral Study. The LME was financedthrough GEF and other funding arrangements with the study to be conducted jointly byChina, People's Democratic Republic of Korea (PDRK) and the Republic of Korea(ROK). Although the PDRK subsequently did not participate, China and ROK conductedseveral study preparation workshops through 1993 with a submission to the Ministry ofFinance for project approval in January 1994. Further workshops and meetings were held,culminating in a submission to be made, through the United Nations DevelopmentProgram to GEF, in June 1997. The State Oceanographic Administration (SOA) agreed toprovide the Bank with copies of the Terms of Reference for the program (as derived fromthe January 1994 submission to the Ministry of Finance) and the proposal for furtherfunding under GEF.

91. Training. Under the GEF portion of the project financing, approximately $91,000is available, but to complete four study groups proposed for Canada/United States andBelgium/Netherlands will require about $150,000. MOC asked the Bank to considerpermitting transfer of some funds within the IDA portion to cover training costs. The

- 50 - Appendix A

Bank will consider this request. MOC was informed of the need to complete any foreigntraining by June 30, 1997.

92. Ship Waste Tracking System. The mission discussed some concerns withimplementation of the tracking system, primarily related to staff training. MOC informedthe mission there will be a detailed training session (classroom and practical experiencewith computer terminals) to be conducted by the Tianjin Hydraulic and EngineeringResearch Institute. The session will begin on May 20 for 15 days and will be attended byestimated 60 participants from the port authorities and HSA's. Some other technicaldetails have been resolved through modifications to the software. The Bank requested andMOC agreed to provide a copy of the software and the detailed documentation.

Next Steps

93. The mission requested and MOC agreed to provide copies of the borrowers'evaluations of the project by July 30, 1997. This will permit incorporation of allcomments into the Implementation Completion Report (ICR). The draft ICR vvill be sentto MOC in October 1997 for further comment and provision of last financial statements.The final ICR will be submitted to the Board of the Bank by December 30, 1997.

94. The mission requested and MOC agreed to provide copies of fuiture wastereception data as compiled through the Ship Waste Tracking System from each of the sixports for the years 1997 to 2001. The Bank will forward this information to GEF as partof a report on implementation success.

95. The mission reiterated the need for all foreign purchases and spending to becompleted by June 30, 1997 with provision of final financial statements by October 30,1997.

- 51 - Appendix A

ANNEX 1: LIST OF STAFF

Shanghai Port Authority

Ma Zhong Pei (Planning Division)Yang Yu Ming (Financial Division)Zhang Hao Chang (Engineering Division)Zhang Jian Lie (Environmental Protection Division)Shi Xin Di (Environmental Protection Division)Wang Xiao Long (Environmental Protection Division)Wu Yan Hong (Foreign Affairs Department, translator)

Shanghai Bureau of Maritime Transportation Administration

Zhang Jian Zhong (Ship Waste Treatment Plant)Wang Nian Zu (Ship Waste Treatment Plant)Wu Miao Gen (Sales & Marketing Dept., translator)

Ningbo Port Authority

Huang Rui Cong (Environmental Protection Department)Wu Yue Sheng (Environmental Protection Department)Xu Hui Fang (Environmental Protection Department)Wu Jin Kun (Deputy Director)Jiang Feng Xiang (Foreign Affairs Bureau, translator)

Dalian Port Authority

Zhang Guang Zhou (Capital Construction and Engineering Dept.)Yang Wei Qun (Sanitation and Environmental Protection Dept.)Liang Zuo Min (Capital Construction and Engineering Dept.)Sun De Quan (Siergou Stevedoring Company)(Ms.) Fang Li Jun (New Harbor Stevedoring Company)Lu Pei Xian (Finance Dept.)Wei Guang Long (Foreign Economic Cooperation Dept.)(Ms.) Wang Min (Business Operations Dept.)Jiang Lu Ning (Foreign Economic Cooperation Dept.)Zhang Feng Qiang (Foreign Affairs Office, translator)

- 52 - Appendix A

Tianjin Port Authority

Liu Pei Ran (Planning and Financial Department)Shao Bing Hua (Planning and Financial Department)Yang Xue Jun (Planning and Financial Department)Yao Hao Ping (Environmental Protection Department)Liang Zhu Gang (Foreign Economy & Affairs Department, translator)

Xiamen Port Authority

Dai Hui Wang (Deputy Director, XPA)Li Shi Fang (Environmental Monitoring Center)Hong Li Juan (Environmental Monitoring Center)Li Jin Zhai (Finance Department)Li Hui (Finance Department)

Guangzhou Port Authority

Wu Shao Dong (Deputy Director)Chen Zhi Min (Deputy Director)(Ms.) Feng Jin Sun (Deputy Director, Sanitary and Environment Division)Ma Chu Jiang (Huangpu Engineering Command, Planning Section)Ma Dong Jun (Huangpu Engineering Command, Equipment Section)Li Xu Bin (Environmental Section, Sanitary and Environment Division)Luo Ying Tian (Huangpu Engineering Command, Financial Section)Xu Zhi Jun (Financial Division)Liu Bin (Planning Division)Margaret Guo (Foreign Affairs Office, translator)He Chao Xiong (Harbor Engineering Command, translator)

Ministry of Communications

Sun Gou Qing (Planning Department)(Ms.) Xia Hong (Planning Department)Lao Hui (Harbor Superintendency Administration)Gao Jie (Harbor Superintendency Administration)

Other Organizations

(Ms.) Feng Yong Mei (China International Tendering Company, translator)Wang Zhong (State Oceanic Administration)Fu Pei Nan (China Academy of Transportation Sciences)Tan Xiao Gang (Ministry of Finance)

- 53 - Appendix B

APPENDIX B: BORROWER'S CONTRIBUTION TO THE ICR

1. General

1.1 Name of Project: China Ship Waste Disposal Project

1.2 Background

Since the opening policy and economic reforms introduced in 1979, the scale of bothforeign and ship traffics in the coastal ports are continuously being developed andexpanded along with the rapid development of the Chinese economy. As required byMARPOL 73/78 of the International Maritime Organization, the coastal ports need tohave sufficient reception and treatment facilities for wastes from ships. Yet, the anoint ofthe ship waste disposal equipment already existed in the ports could not satisfy the newrequirements. As the waters of the Yellow Sea, the East China Sea and the South ChinaSea by which the six major ports are located are the critical waters for internationalshipment and key marine ecosystems in the world, and for the sake of global marineenvironment covering specially Chinese territory waters, MOC initiated in October 1991,the Ship Waste Disposal Project with funding of GEF and loans from the World Bank soas to fulfill conventions set by IMO. -The project was undertaken in six ports where theBank has already financed in the port development projects, S-BOMTA and EnvironmentMonitoring Center (EMC) of MOC with the objective of reducing coastal and harborpollution, through provision of waste reception and treatment facilities, development andimplementation of four policy study items consisting of Waste Tracking System Study,Oil Spill Contingency Plan Cost-recovery and Tariff Study and the Treatment ofChemically Contaminated Waters Study.

1.3 Department in charge of project organization

The Planning Department, Ministry of Communications

1.4 Project implementation mechanism

The port authorities of Dalian, Tianjin, Shanghai, Ningbo, Xiamen and Guangzhou;Shanghai BOMTA and EMC of MOC.

1.5 The project was officially approved on 2 July, 1992.

- 54 - Appendix B

1.6 Source of funds

GEF USD 30,000,000World Bank USD 15,000,000Local RMB 175,150,000

1.7 Project financing

Table 1 - Flow of Funds

Foreign (USD '000) LocalGEF Loans Subtotal (RMB '000)

A. Facilities 27,500 15,000 42,500 174,0611. Dalian 1,730 840 2,570 4,9972. Tianjin 4,230 2,220 6,450 21,2103. Shanghai 6,000 --- 6,000 15,6194. Shanghai- BOMTA 4,310 6,230 10,540 84,1455. Ningbo 3,830 1,980 5,810 9,0036. Xiamen 2,890 1,480 4,370 5,8637. Guangzhou 4,510 2,250 6,760 33,224

B. Environmental Monitoring Center 1,770 --- 1,770 1,090

C. Technical Assistance and Studies 730 --- 7301. Oil Spill Response Plan 290 --- 2902. Chemically Contaminated Water 250 --- 2503. Technical Assistance to Xiamen Port 30 --- 304. Cost recovery and tariff/fee 100 --- 1005. Marine ecosystem 60 --- 60

Grand total 30,000 15,000 45,000 175,150

2. Project implementation

2.1 Project organization and management

The Planning Department of MOC was to organize the project coordination andmanagement.

2.2 Construction of facility components under the project

2.2.1 Facility components of the project

- 55 - Appendix B

2.2.1.1 Oily waste water reception and treatment system (MARPOL, Annex 1)

Under the project, 7 facilities of newly-built and refurbished to receive, treat and processwaters from oil-contaminated ballast, bilge/engine rooms and tank wash have beencompleted and 6 new barges with facility to receive and process oil waters have beenprovided.

2.2.1.2 Reception and disposal system for chemically-contaminated water (MARPOL,Annex 2)

In addition to upgrading one facility by using advanced technique, 4 new facilities toreceive and process chemically-contaminated waste water from ships have beencompleted.

2.2.1.3 Reception and treatment facilities for sanitary sewage (MARPOL, Annex 4)

The facilities constructed in the projected ports include 4 new sewage treatment plantsand 1 refurbished plant. Means of transport for transferring sewage waters off loadedfrom ship to the sewage center have been purchased.

2.2 1.4 Reception and treatment facilities for garbage or solid wastes (MARPOL, Annex

5)

4 garbage reception and treatment plants and 7 incinerators with provisions ofbarges/trucks for garbage collection have been built.

2.2.1.5 Environmental monitoring equipment

Laboratory equipment and 45 sets of large analytical instrumentation consisting ofAtomic Absorption Spectrometer, Gas chromatograph/mass spectrometer, Gaschromatograph, Spectrofluorescence spectrometer, Fourier-transform infraredspectrometer and UV-visible spectrometer have been provided for the six ports and EMCof MOC.

2.2.2 Procurement

In the light of the guidelines for procurement set by the World Bank, MOC authorized theInternational Trading Company of China National Technical Import and ExportCorporation as the agent for the purpose of procurement. Most facilities under the projectwere procured through International Competitive Bidding, while on the other hand, a fewnumber of minor components as well as all civil works concerned were performed byways of direct shopping and Local Competitive Bidding. All procurements under theproject have been completed and equipment installed are gradually put into operation.

- 56 - Appendix B

2.3 Implementation of study teams and technical assistance

MOC chose the competent research institute to fulfill the study components mentionedabove through local competitive bidding.

2.3.1 Oil spill contingency planning study

The purpose of this study was to protect environment and resources in the port area and toprevent oil pollution damage from ships, oil terminals and oil facilities on shore. ChinaAcademy of Transportation Sciences of MOC undertook this study. A generic port oilspill contingency planning model and the oil spill contingency plan for the six ports weredeveloped upon study.

2.3.2 Chemically contaminated water treatment study

This study was aimed at raising the ports' technical level with relation to the receptionand treatment of bulk chemically contaminated water and resolving the problem thateffluent discharge was below set standards. The study was undertaken by the Xi'anHighway Transportation University. The university has designated the effluent criteria forthe chemical substances contaminating the ballast, bilge and wash waters in accordancewith international conventions and Chinese laws and has finished the design of treatmentstudy to handle best the different types and quantities of chemicals for the ports in viewof the chemical cargoes shipment situations in the local ports.

2.3.3 Ship waste tracking study

The objective of the study was to help to conduct effective supervision and tracking overthe quantities of wastes retained on the ship so as to prevent wastes discharge from shipsduring voyage. This study was jointly undertaken by China Communication Planning &Design Institute for Marine Transportation and Tianjin Research Institute for WaterwayEngineering. Under the study, the system comprising of ship waste tracking andinformation processing was established at each of the six ports with the headquartersstationed in EMC of MOC. Ninety-one units of computers and supplementaryinstruments were equipped and the network software has also been completed.

2.3.4 Cost-recovery and tariff/fee study

The objective of the study was both to settle the inadequate cost accountings presentlyused for the waste reception and treatment facilities that were under severe deficit due tolow service charge and to establish the rational tariff structure that would ensure normaloperation of the new facility. This study was executed by domestic consultants. Newtariff standards for ship waste reception and treatment services for the ports have beendrawn upon the study.

- 57 - Appendix B

2.3.5 Technical assistance to Xiamen Port

The expert hired for technical assistance has worked out a design for the organization ofEnvironment Protection Bureau for the port in view of a particular situation in XiamenPort.

2.3.6 Large Marine Ecosystem activity

This activity was undertaken by SOA.

3. Training and visits

During project implementation, varied types of technical training were held to enhancethe abilities of the staff engaging in environmental protection affairs. The training wasexecuted on these fields including the technique currently used in oil waste watertreatment, chemically contaminated water treatment, operation of testing instruments,promulgation of MARPOL conventions, ship waste tracking and oil spill contingencyplanning, etc. The number of staff trained was up to 540. The detailed number of stafftrained are given below:

Number of staff trained

Table 2 - Training

1992 1993 1994 1995 1996 1997 Total

Overseas TrainingMARPOL 18 13 5 8 44Oil Spill 20 4 24Tracking 5 5LMEChemical 6 2 8Cost & TariffOily Waste 13 6 19Monitoring 14 5 6 25Others 5 14 9 17 45

Total 49 46 39 30 6 170

Domestic TrainingMARPOLOil Spill 76 102 178Tracking 58 61 119LMEChemical 4 4Cost & TariffOily Waste 8 28 36Monitoring 7 29 2 38Others 1 3 4

Total 77 76 61 165 379

- 58 - Appendix B

4. Evaluation of the Project

4.1 It was very essential to implement the Ship Waste Disposal Project in order toimprove the environmental conservation at China's coastal sea and adjacent internationalwaters by reducing pollution from ships. This project is successfully constructed. Theestablishing of this project will be of great significance to the growth of China's marinefreight and the prevention of ships waste pollution around Chinese territory waters.

4.2 This project became effective and was launched in October 1991 andaccomplished completely on time at end-June 1997. The facility constructed under theproject has increased the wastes processing capacity for the six ports which include: theoil water treatment capacity 4,340,000 tons per year, chemically contaminated wastewatertreatment capacity 368,000 tons annually, shipboard sewage water disposing capacity440,000 tons per year, and the garbage reception and disposal capacity 20,000 tonsyearly. Due to the increases of capacity, the pollution around China's coastal waters andthe adjacent international waters might be significantly reduced which would help toimprove and protect the marine ecosystem environment.

4.3 Under the Oil Spill Contingency Planning study, the Generic port oil spillcontingency planning model and separate plans for each of the six ports have beenprovided. The oil spill response exercise was held in principle of the plan. This indicatesthat the study can furnish an operative model concerning oil spill accident caused oncoastal waters and would be of instructive significance to international oil spill responsestudy and handling practice. The model can be best applied by other major ports in Chinaas the basis to develop their oil spill response plans.

4.4 The treatment of chemically-contaminated wastewater study was carried out withreference to the international conventions and the factors that the chemically-contaminated waters generated in the ports during cargo handling were uncertain involume with different chemical substance. Advanced techniques in the world has beenconsidered in the study. The new treatment process with SDR-COR system was designed,which has been successfully used in ports and has reached the international level.

4.5 The physical interport ship waste tracking system was built with the provisions ofcomputer automatic management facility and modern long-distance communicationnetwork technique. When putting into operation, this system can provide reliabletechnical assurance for putting into effect the international conventions and effectivecontrols over ship wastes. After trial operation and upon slight modification, this systemcan be extended to other ports in China. This ship waste tracking system would be muchmeaningful to other countries and regions in respect of the prevention of waste dischargefrom ships.

4.6 The cost-recovery and tariff study was undertaken by Environmental MonitoringCenter (EMC) of MOC in terms of establishing a costing and tariff system for wastereception and disposal services. The unified tariff standard that was concluded at thearithmetic means of direct costs plus 5% profit is a practical tariff standard at present. The

-59 - Appendix B

conclusions may be of assistance in maintaining sustainable development and operationof all waste reception and treatment facilities.

4.7 During project execution, visits and training were organized to improve thetechniques presently used in environmental protections and the management's capabilityregarding technical management in the ports. Staffs up to 549 persons have participatedin training held both at home or abroad. For purpose of training, the combined method"goes abroad to visit and invite experts home for training", has been utilized. Throughvisits and training, staff of each entity concerned have more understanding on the currentdevelopment of ship waste reception and treatment around the world, opened their viewsso that these staffs' ability concerned new technique application and technicalmanagement were enhanced. All of this would lay sound foundation for ports staff tooperate best the facilities.

4.8 Advanced reliable monitoring instruments and laboratory equipment have beeninstalled at the six ports, S-BOMTA and EMC of MOC under the construction of theShip Waste Disposal Project, which would provide the scientific means for marineecosystem conservation and prevention of pollution from ships. The application of thesefacilities would effectively strengthen the ports' capacity in performing ship wastesmonitoring and tests.

4.9 During project implementation, the officers of each mission from the World Bankalways worked in the rigorous style of work and in the spirit of high sense ofresponsibility. The project supervision staff usually went deep into the site for inspectionand timely settled the complicated problems arising from or related to projectimplementation. This efficiently ensured the quality and progress of the project.

4.10 MOC has attached great importance to the project implementation and hasundertaken a lot of project arrangements and coordination with respect to different cases.All entities involved in the project have given their full cooperation during projectexecution so that this project could be successfully completed.

Findings and Proposal

5.1 Because there were more than ten entities involved in the project, it was veryessential to undertake general coordination by the competent department of MOC. This isa valuable experience that has benefited the timing completion of the project.

5.2 Each specification related to the facility to be purchased under the project wasgenerally discussed and reviewed by experts arranged by MOC. In so doing, the technicalrequirements from respective ports could be unified at a high parameter base, which ishelpful to elect facility, contractor awards and obtain high quality equipment withreasonable prices. Also, the equipment maintenance and upgrading may be ensured withease and the utilization ratio of machines can be raised.

- 60 - Appendix B

5.3 To coordinate all the overseas and domestic visits and training under such a majorproject was necessary for learning advanced techniques and managing experience, whichmay expeditiously enhance staff capability for technical management, and this isadvantageous to the sustainable development of environmental protection among thecommunication field.

5.4 The procurement for minor component or small quantity of equipment might beoperated through direct shopping rather than ICB. It is suggested that volume of funds fordirect shopping should be augmented. In this case, except that the quality of facility willbe ensured, the duration for procurement may be lessened.

- 61 - Appendix C

APPENDIX C: MAP

r 6. ~~~ ~~~ ~~~~~~~FEDERAT\

UZBEJSTA MONGOLIA

KYRGYZ~~~~~~~~~~~~~~,1

REPBCCHiNA S O iCE4N

a SHIP WASTE DISPOSAL PROJECT .1: -;:5: ;, ~~NIngbo PROJECT poRTS I; Guangzhou .............................;1,.-.- . :t

IKL AN----TERAN ATNA BV

CHINA ~ ~ ~~~~~~rr~?PIIPIESHIP WASTE DISPOSAL PROJECT HILNDE PX,

_____________PROJECT__PORTS

-63 - ANNEX I

ANNEX 1: FINANCIAL ANALYSIS

TABLE 1A: DALIAN PORT AUTHORITY-INCOME STATEMENT(Y'OOO)

1988 1989 1990 1991 1992 1993 1994 1995 1996

Traffic ('000 ton)Whole Port 48,526 50,918 49,523 54,720 59,092 59,590 62,118 64,168 64,274Port Authority (DPA) 43,982 46,167 45,335 49,587 52,065 52,878 51,187 51,020 49,546Of which: Containers 942 1,221 1,368 1,781 2,121 2,347 2,824 3,438 3,867

RevenueLoadinglunloading 245,826 289,230 370,978 473,704 621,548 791,310 825,810 711,270 620,853Storage 36,539 39,451 46,937 55,507 45,372 58,990 57,038 51,367 49,827Other 68,885 67,862 84,952 113,207 131,038 205,043 319,644 365,663 395,960Marketing 8,019 11,892 9,180 13,264 13,397 17,730 7,355 28,174 22,751

Subtotal 359,269 408,435 512,047 655,682 811,355 1,073,073 1,209,847 1,156,474 1,089,391

Less: Operating tax 12,402 14,411 17,851 23,242 28,037 52,543 37,600 35,195 32,706

Total Net Revenue 346,867 394,024 494,196 632,440 783,318 1,020,530 1,172,247 1,121,279 1,056,685

Operating Costs /aLoading/unloading 73,216 106,124 139,103 226,296 299,082 445,261 506,298 437,438 414,021Storage 15,395 24,693 33,085 49,673 62,954 75,019 76,339 76,293 81,383Other 33,660 37,190 53,817 89,871 126,119 270,583 277,187 322,376 344,360Marketing 6,799 10,129 8,519 11,742 1!,812 18,830 6,735 26,564 20,264

Total Operating Costs 129,070 178,136 234,524 377,582 499,967 809,693 866,559 862,671 860,028

Operating Profit 217,797 215,888 259,672 254,858 283,351 210,837 305,688 258,608 196,657Investment profits - 47,291 61,382 38,257Nonoperating Income 145 3,187 757 8,729 2,346 43,737 5,775 27,852 77,092Nonoperating Expenses 17,215 18,917 30,737 33,486 38,878 41,869 27,933 20,324 20,704Other Expenses-wage, admin. 3,109 5,078 5,502 6,700 14,427 -- 149,689 144,661 157,261Finance charges 2,174 2,146 17,080 2,000 2,048 12,560 (27,017) 362 113,717

Profit Before Taxes 195,444 192,934 207,110 221,401 230,344 200,145 208,149 182,495 20,324

Income tax -- -- .- .. .. .. ..Other taxes -- - -- -- 30,964 17,571 2,251Payments to State 5,273 5,273 5,273 3,564 3,564 3,564 20,000 20,000 --

Net Profit after Taxes 190,171 187,661 201,837 217,837 226,780 196,581 157,185 144,924 18,073

La Includes depreciation.

Source: DPA.

- 64 - ANNEX I

TABLE lB: DALIAN PORT AUTHORITY-SOURCES AND APPLICATIONS OF FUNDS(Y'000)

1988 1989 1990 1991 1992 1993 1994 1995 1996

SourcesNet profit 190,171 187,661 201,837 217,837 226,780 196,581 157,185 144,924 18,07Depreciation 20,306 59,939 6,842 57,216 475,984 190,856 208,513 217,939 66,14State contribution -- -- -- -- -- -- 25,000 40,000 40,00Borrowing: - IBRD 25,434 14,926 54,772 167,306 149,130 114,712 25,412 -- 4,66

- Local 59,445 19,026 15,793 34,151 26,439 16,270 154,290 81,000 155,00Other -- -- -- -- -- -- -- -- 400,00

Total Sources 295,356 281,552 279,24 476,510 878,333 518,419 570,400 483,863 683,87

ApplicationsCapital expenditure 99,734 100,590 158,835 231,402 365,979 678,658 546,781 322,957 136,69Special fund expenditure 151,084 81,621 49,026 215,369 423,977 -- - -- -Loan repayment: - IBRD -- -- -- -- -- -- -- 52,953 105,90

- Local 8,482 34,815 16,429 31,517 30,738 22,293 22,483 14,269 176,66Change wlcapital (7,296) 47,364 19,934 (32,958) 31,137 (281,391) (106,473) 233,668 23,17

Total Applications 252,004 264,390 244,224 445,330 851,831 419,560 462,791 623,847 442,44

Net Funds Flow 43,352 17,162 35,020 31,180 26,502 98,859 107,609 (139,984) 241,43

Opening Balance 35,024 78,376 95,538 130,558 161,738 188,240 287,099 394,708 254,72

Closing Balance 78,376 95,538 130,558 161,738 188,240 287,099 394,708 254,724 496,16

Source: DPA.

- 65 - ANNEX 1

TABLE lc: DALIAN PORT AUTHORITY-BALANCE SHEET(Y'OOO)

1988 1989 1990 1991 1992 1993 1994 1995 1996

ASSETSFixed assets

At cost 922,774 1,249,850 1,409,174 1,555,317 2,938,944 3,720,830 4,221,416 4,400,600 6,228,062Less: depreciation 194,976 254,915 261,757 318,973 794,957 985,813 1,194,326 1,412,265 1,478,408

Subtotal 727,798 994,935 1,147,417 1,236,344 2,143,987 2,735,017 3,027,090 2,988,335 4,749,654

Construction-in-progress - 196,420 168,725 188,262 310,332Current assets

Inventory 21,300 24,163 24,171 29,884 39,964 34,408 36,079 35,200 45,766Receivables & others 50,423 102,147 114,253 54,705 150,945 505,490 576,122 437,169 506,564Cash 78,376 95,538 130,558 161,738 188,240 287,099 394,708 254,724 496,162

Subtotal 150,099 221,848 268,982 246,327 379,149 826,997 1,006,909 727,093 1,048,492

Special fund assets 224,156 235,977 179,830 281,986 241,258 -- -- - --

Long term investment -- - - -- -- 120,600 176,481 174,343 896,781Other assets /a -- -- -- -- -- 962,893 1,357,528 1,637,092 1,423,262

Total Assets 1,102,053 1,452,760 1,596,229 1,764,657 2,764,394 4,841,927 5,736,733 5,715,125 8,428,521

LIABILITIES & EQUITYState funds-Contributed 613,956 613,956 613,956 613,956 613,956 613,956 613,956 613,956 613,956Internal funds for port

development 280,230 548,954 700,243 852,490 1,796,752 2,733,202 2,169,216 2,380,433 5,432,150L/Tloans: -IBRD 10,000 82,000 82,000 114,290 97,118 373,875 679,155 673,777 668,399

- Local 9,347 12,107 12,107 16,875 14,339 248,285 1,223,021 1,369,074 979,344

Current liabs. 86,260 93,483 85,663 64,786 139,969 770,349 949,125 575,625 632,412

Special funds 102,260 102,260 102,260 102,260 102,260 102,260 102,260 102,260 102,260

Total Lia. & Equity 1,102,053 1,452,760 1,596,229 1,764,657 2,764,394 4,841,927 5,736,733 5,715,125 8,428,521

/a Including intangible, deferred and other assets.

Source: DPA.

- 66 - ANNEX I

TABLE 2A: TIANJIN PORT AUTHORITY-INCOME STATEMENT(Y'OOO)

1988 1989 1990 1991 1992 1993 1994 1995 1996

Traffic:Whole port ('000 ton) 21,094 24,369 20,633 23,776 29,286 37,192 46,521 57,867 61,883Port authority ('000 ton) 20,316 23,344 19,417 22,458 27,678 34,591 48,502 54,974 55,993Of which: containers ('000 teu) 266. 265. 286. 339. 393. 481. 630.8 702.1 822.

RevenueLoading/unloading 199,990 242,446 236,031 297,300 438,140 550,022 728,094 891,452 1,142,527Storage 25,595 43,395 32,479 23,062 39,318 49,358 65,338 79,997 62,760Sales 18,141 18,447 17,289 19,871 17,028 21,376 28,297 34,646 --Other 69,374 100,414 92,507 123,681 172,496 216,544 286,650 350,964 148,786

Subtotal 313,100 404,702 378,306 463,914 666,982 837,300 1,108,379 1,357,059 1,354,073

Less: operating tax (10,771) (14,219) (13,258) (15,815) (22,709) (32.030) (35,560) (43,316) (42.974)

Total- Net Revenue 302,329 390,483 365,048 448,099 644,273 805,270 1,072,819 1,313,743 1,311,099

ExpenditureLoading/unloading 78,869 108,223 113,425 138,795 202,826 192,672 297,848 388,547 463,082Storage 16,768 20,505 23,115 27,683 46,323 44,004 68,025 88.739 75,095Sales 16,978 18,432 16,592 19,694 16,595 15,764 24,369 31,790 --Other 30,786 44,576 47,689 69,452 95,111 90,350 139,670 182,201 150,568

Total operating costs 143,401 191,736 200,821 255,624 360,855 342,790 529,912 691,277 688,745

Operating Profit 158,928 198,747 164,227 192,475 283,418 462,480 542,907 622,466 622,354

Add: Nonoperating revenue 694 1,242 6,023 15,546 10,708 3,690 6,674 11,714 11,272Less: Nonoperating expense (8,489) (10,126) (12,054) (14,698) (20,010) (13,540) (22,023) (28,645) (32,130)Other incomes / expenses (net) /a -- -- -- -- (140,750) (213,095) (290,479) (379,889)

Profit Before Tax 151,133 189,863 158,196 193,323 274,116 311,880 314,463 315,056 221,607Income tax -- -- -- -- -- -- 93,561 87,576 54,873

Profit After Tax 151,133 189,863 158,196 193,323 274,116 311,880 220,902 227,480 166,734

/s Including administrative overhead, financing charges and other business / investment gain (loss).

Source: Tianjin Port Authority and Bank staff.

- 67 - ANNEX 1

TABLE 2B: TIANJIN PORT AUTHORITY-SOURCES AND APPLICATIONS OF FUNDS(Y'000)

1988 1989 1990 1991 1992 1993 1994 1995 1996

SourcesIntemal cash generation 151,133 189,863 158,196 193,323 274,116 311,880 220,902 227,480 166,734Other enterprises 1,463 2,052 -- -- -- -- -- --Port development fund 110,635 98,788 108,994 87,802 83,292 80,465 111,196 15,779 12,275World Bank loans: (1) 17,782 -- -- -- -- -- -- -- --

(11) -- 194,559 934 344 685,535 99,941 37,420Otherloans -- -- -- -- 5,300 199,600 155,159 278,073 428,745Depreciation 31,663 37,803 41,346 50,934 75,815 100,590 177,524 269,536 308,338Sales of fixed assets 1,344 5,425 1,269 3,548 30,875 3,100 15,620 14,003 4,975Interest incomes 2,523 4,892 4,400 5,000 5,471 -- -- -- --Others (net) (889) (13,950) 5,241 714 (4,894) 48,350 86,153 166,879 189,961

Total Sources 315,654 324,873 319,446 535,880 470,909 744,329 1,452,089 1,071,691 1,148,448

ApplicationsInvestments and renewals 175,529 162,686 162,993 453,600 122,102 208,422 1,046,146 537,190 632,027

Funds provided to THCDC 144,162 119,985 178,644 (48,979) 247,084 567,693 299,988 151,707 123,497

Loan repayments - IBRD 4,707 4,707 5,972 32,329 58,039 60,615 78,588 72,038 72,000Others -- -- -- -- -- -- 129,994 309,621 155,130

Subtotal 4,707 4,707 5,972 32,329 58,039 60,615 208,582 381,659 227,130

Change in working capital (13,519) 21,763 (38,654) 57,935 (29,943) (310,592) (180,639) (44,044) 309,129

Total Applications 310,879 309,141 308,955 494,885 397,282 526,138 1,374,077 1,026,512 1,291,783

Net funds flow 4,775 15,732 10,491 40,995 73,627 218,191 78,012 45,179 (143,335)Opening balance 60,009 64,784 80,516 91,007 132,002 205,629 423,820 501,832 547,011Closing balance 64,784 80,516 91,007 132,002 205,629 423,820 501,832 547,011 403,676

Source: Tianjin Port Authority and Bank staff.

- 68 - ANNEX 1

TABLE 2c: TIANJIN PORT AUTHORITY-BALANCE SHEET

(Y'000)

1988 1989 1990 1991 1992 1993 1994 1995 1996

ASSETSFixed Assets

At cost 4 1,519,713 1,660,095 2,082,066 2,177,236 3,055,930 4,540,464 5,110,603 5,369,696Less: depreciation 146,322 176,638 212,069 258,341 323,884 809,750 959,314 1,206,775 1,496,982

Subtotat 1,218,134 1,343,075 1,448,026 1,823,725 1,853,352 2,246,180 3,581,150 3,903,828 3,872,714

Other fixed assets /a -- - -- -- -- 1,076,850 856,808 909,726 1,348,183

Current AssetsCash & bank deposits 64,784 80,516 91,007 132,002 205,629 423,820 501,832 547,011 403,676Accounts receivable 32,355 24,882 15,239 27,290 37,871 297,609 183,468 223,237 475,483Inventories 24,202 32,200 23,088 25,388 30,774 50,070 51,650 50,248 88,055

Subtotal 121,341 137,598 129,334 184,680 274,274 771,499 736,950 820,496 967,214

Special Fund Assets 157,475 172,572 183,767 225,294 327,314 -- -- -- --Long-Term Investments - -- -- -- -- 211,490 293,751 332,815 438,715Other Assets /b -- -- -- -- -- 1,030 2,204 5,075 6,489

Total Assets 1,496,950 1,653,245 1,761,127 2,233,699 2,454,940 4,307,049 5,470,863 5,971,940 6,633,315

LIABILITIES & EQUITYCurrent liabilities 47,216 25,978 45,877 2,293 48,203 637,829 705,907 788,318 769,242

Long-term debt 51,930 47,363 43,437 232,864 182,875 1,024,230 1,256,791 1,1194,302 1,566,888

Equity 1,166,204 1,295,712 1,416,525 1,616,524 1,696,377 2,644,990 3,508,165 3,989,320 4,297,185

Special funds 231,600 284,192 255,288 382,018 527,485 -- -- -- --

Total Liabilities & Equity 1,496,950 1,653,245 1,761,127 2,233,699 2,454,940 4,307,049 5,470,863 5,971,940 6,633,315

La Including construction in progress and disposal assets./b Including intangible and deferred assets.

Source: Tianjin Port Authority and Bank staff.

-69 - ANNEX 1

TABLE 3A: SHANGHAI PORT AUTHORITY-INCOME STATEMENT

(Y million)

1988 1989 1990 1991 1992 1993 1994 1995 1996

Traffic ('000 ton)Whole port 133,292 146,044 139,590 146,788 162,968 175,956 165,809 165,672 164,018Port authority 102,380 104,106 96,414 97,328 104,765 112,641 98,924 95,090 94,097Of which:Container (in '000 ton) 2,748 2,774 4,455 6,105 7,156 8,474 10,581 13,889 17,851Container (in '000 teu) 313 354 456 577 730 934 1,199 1,527 1,971

RevenueLoading/unloading 350.92 367.28 420.92 498.01 675.01 1,241.54 1,163.90 1,350.40 1,039.75Storage 99.25 137.48 149.26 164.01 140.23 257.92 241.79 280.53 121.60Other 255.94 296.91 358.61 472.70 454.08 835.18 782.95 908.41 1,236.78Marketing 50.41 102.21 74.72 74.39 219.35 403.45 378.23 438.84 363.73

Subtotal 756.52 903.88 1,003.51 1,209.11 1,488.67 2,738.09 2,566.87 2,978.18 2,761.86

Operating TaxesLoading/unloading 11.26 11.80 13.51 15.99 21.67 36.54 35.65 39.21 34.11Storage 5.31 7.35 7.99 8.78 7.50 12.65 12.34 13.57 6.67Other 8.09 9.65 10.61 12.76 15.10 25.46 24.84 27.32 38.64Marketing 1.44 2.27 1.26 1.45 2.35 3.96 3.87 4.26 4.47

Total Operating tax 26.10 31.07 33.36 38.97 46.62 78.61 76.70 84.36 83.89

Net SalesLoading/unloading 339.66 355.48 407.41 482.03 653.34 1,205.00 1,128.25 1,311.19 1,005.64Storage 93.94 130.13 141.27 155.24 132.73 245.27 229.45 266.96 114.93Other 247.85 287.26 348.01 459.94 438.98 809.72 758.11 881.09 1,198.14Marketing 48.97 99.94 73.46 72.94 217.00 399.49 374.36 434.58 359.26

Total Net Sales 730.42 872.81 970.15 1,170.14 1,442.05 2,659.48 2,490.17 2,893.82 2,677.97

Operating CostsLoading/unloading 173.17 225.44 260.74 347.68 483.92 842.21 816.20 975.50 658.02Storage 20.99 25.32 30.50 43.38 56.03 97.51 94.50 112.94 73.67Other 125.61 168.63 229.63 317.86 283.64 493.64 478.39 571.76 813.11Marketing 43.40 98.30 73.54 72.49 214.32 373.01 361.49 432.05 324.29

Total Operating Costs 363.17 517.69 594.41 781.40 1,037.91 1,806.37 1,750.58 2,092.25 1,869.09

Operating ProfitLoading/unloading 166.49 130.04 146.67 134.35 169.42 362.79 312.05 335.69 347.62Storage 72.95 104.81 110.78 111.85 76.70 147.76 134.95 154.02 41.26Other 122.24 118.63 118.37 142.09 155.34 316.08 279.72 309.33 385.03Marketing 5.57 1.64 (0.08) 0.45 2.68 26.48 12.87 2.53 34.97

Total Operating Profit 367.25 355.12 375.74 388.74 404.14 853.11 739.59 801.57 808.88

Surcharges 0.24 0.43 0.54 0.73 39.75 449.77 517.07 781.98 835.83Nonoperating Income 0.53 1.17 0.00 0.00 0.00 4.66 13.14 43.12 28.08Nonoperating Expenses 38.35 54.61 65.24 78.80 93.65 90.42 49.35 57.73 82.65Other Income (expenditure) (9.27) (5.71) 4.89 5.28 7.67 15.08 120.72 245.44 262.78

Profit Before Taxes 319.92 295.54 314.85 314.49 278.41 332.66 307.03 250.42 181.26

Income Tax 51.55 51.55 51.55 51.55 51.55 35.00 35.00 35.00 59.82Adjustmnent Taxes -- -- -- -- -- -- -- -- --Other Payments to State 21.00 21.00 21.00 21.00 21.00 -- -- --Tax credit to State -- -- -- -- -- 76.00 130.00 130.00 --

Net Profit after Taxes 247.37 222.99 242.30 241.94 205.86 221.66 142.03 85A2 121.44

- 70 - ANNEX I

TABLE 3B: SHANGHAI PORT AUTHORITY-SOURCES AND APPLICATIONS OF FUNDS

(Y million)

1988 1989 1990 1991 1992 1993 1994 1995 1996

SourcesNet profit 247.37 222.99 242.30 241.94 205.86 221.66 142.03 85.42 121.44Depreciation 42.76 31.77 50.66 98.30 221.52 152.00 165.00 244.57 237.00State contribution -- -- -- -- -- 76.00 130.00 130.00 116.60Borrowing:

Foreign - IBRD 5.38 30.00 88.69 208.17 15.00 0.00 358.00 202.00 366.00-Others 9.23 -- -- -- -- 70.00 78.00 41.00 --

Local 98.10 - - - -- 331.00 272.00 35.00 336.00Others La -- 42.20 -- -- -- -- -- -- --

Total Sources 402.84 326.96 381.65 548.41 442.38 850.66 1,145.03 737.99 1,177.04

ApplicationsCapital expenditure 128.75 29.90 352.14 355.00 383.76 900.15 868.96 931.98 1,242.46Net Payments to State -- -- - - -- -- -- -- --Special find expenditure 212.09 36.80 41.80 41.73 31.55 -- -- -- --Loan repayment:

Foreign -IBRD 7.00 6.52 0.84 0.84 15.67 27.00 39.00 19.00 16.50-Others 55.26 -- -- -- -- 7.00 29.00 23.00 8.00

Local 7.08 2.50 -- -- - 96.00 413.00 6.00 -Change w/capital (14.30) 195.61 40.50 38.97 (105.51) (490.31) (289.22) (101.77) (195.50)

Total Applications 395.88 271.33 435.28 436.54 325A7 539.84 1,060.74 878.21 1,071.46

Net Funds Flow 6.96 55.63 (53.63) 111.87 116.91 310.82 84.29 (140.22) 105.58

Opening Balance 143.48 150.44 206.07 152.44 264.31 381.22 692.04 776.33 636.11

ClosingBalance 150.44 206.07 152.44 264.31 381.22 692.04 776.33 636.11 741.69

La Harbor due and other incomes.

-71- ANNEX 1

TABLE 3c: SHANGHAI PORT AUTHORITY-BALANCE SHEET

(Y million)

1988 1989 1990 1991 1992 1993 1994 1995 1996

ASSETSFixed Assets

At cost 1,379.99 1,668.14 2,226.84 2,945.67 3,182.77 3,028.20 3,466.96 4,620.38 5,558.12Less: depreciation 357.37 389.14 439.80 538.10 759.62 754.19 859.58 1,104.15 1,341.58

Net fixed assets 1,022.62 1,279.00 1,787.04 2,407.57 2,423.15 2,274.01 2,607.38 3,516.23 4,216.54

Otherfixed assets /a -- -- -- -- -- 1,047.35 1,316.72 1,724.61 1,573.36

Current AssetsInventory 70.65 95.56 107.93 117.05 164.03 318.92 546.85 646.46 609.86Receivable 114.58 181.27 282.39 261.79 509.01 626.78 808.59 948.21 997.68Cash 150.44 206.07 152.44 264.31 381.22 692.04 776.33 636.11 741.69

Subtotal 335.67 482.90 542.76 643.15 1,054.26 1,637.74 2,131.77 2,230.78 2,349.23

Special fund Assets 402.90 278.07 285.81 319.54 764.06 - -- - --

Long-Term Investments -- -- - -- -- 1,254.65 1,371.84 1,478.80 1,659.45Other Assets /b -- -- -- - -- -- 1.03 7.64 16.55

Total Assets 1,761.19 2,039.97 2,615.61 3,370.26 4,241.47 6,213.75 7,428.74 8,958.06 9,815.13

Liabilities & EquityState funds-Equity 914.70 1,138.31 1,446.40 2,011.24 1,934.39 3,935.26 4,046.29 4,671.75 4,989.11Internal funds for

port development 79.95 35.76 103.01 124.53 126.29 - -- - --

L/T loans:Foreign -IBRD 108.03 48.16 35.73 25.39 129.15 416.33 437.00 620.40 1,232.00

-Others -- 3.79 20.60 -- 1.55 -- -- -- --Local -- 196.86 381.86 550.80 868.34 519.84 904.17 1,283.63 1,003.37

Subtotal 108.03 248.81 438.19 576.19 999.04 936.17 1,341.17 1,904.03 2,235.37

Currentliabs. 261.11 157.10 230.09 179.64 579.35 1,342.32 2,041.28 2,382.28 2,590.65

Special funds 397.40 459.99 397.92 478.66 602.40 -- -- -- --

Total Lia. & Equity 1,761.19 2,039.97 2,615.61 3,370.26 4,241.47 6,213.75 7,428.74 8,958.06 9,815.13

/a Including construction-in-progress and disposal assets.Lb Including intangible and deferred assets.

- 72 - ANNEX I

TABLE 4A: NINGBO PORT AUTHORITY-INCOME STATEMENT(Y'000)

1988 1989 1990 1991 1992 1993 1994 1995 1996

Traffic ('000 ton)Whole port 20,020 22,098 25,535 33,899 43,669 53,210 58,498 68,000 76,388Port authority 15,687 17,993 20,343 27,121 34,592 42,945 47,054 55,000 61,198

RevenueLoading/unloading 59,012 64,219 87,382 122,347 203,229 321,492 416,473 434,240 474,376Storage 21,032 26,113 29,540 39,124 45,182 47,069 40,911 42,656 40,042Other 16,947 20,230 31,612 31,569 41,612 52,191 73,706 76,850 124,879Marketing 533 920 615 638 1,206 43,453 91,768 95,683 109,893

Subtotal 97,524 111,482 149,149 193,678 291,229 464,205 622,858 649,429 749,190

Operating TaxesLoading/unloading 1,922 2,098 2,797 3,927 6,524 10,582 13,799 14,280 15,726Storage 1,135 1,420 1,580 2,093 2,417 2,579 2,259 2,338 2,212Other 541 664 1,018 1,001 1,313 1,681 2,556 2,645 4,126Marketing 10 26 10 8 18 -- -- -- 3,703

Total Operating tax 3,608 4,208 5,405 7,029 10,272 14,842 18,614 19,263 25,767

Net SalesLoading/unloading 57,090 62,121 84,585 118,420 196,705 310,910 402,674 419,960 458,650Storage 19,897 24,693 27,960 37,031 42,765 44,490 38,652 40,318 37,830Other 16,406 19,566 30,594 30,568 40,299 50,510 71,150 74,205 120,753Marketing 523 894 605 630 1,188 43,453 91,768 95,683 106,190

Total Net Sales 93,916 107,274 143,744 186,649 280,957 449,363 604,244 630,166 723,423

Operating CostsLoading/unloading 44,672 50,382 71,929 101,747 170,004 205,290 193,248 194,583 235,636Storage 5,848 6,115 6,708 14,582 12,686 29,750 16,445 16,559 23,807Other 11,047 13,661 17,610 14,514 28,506 52,000 45,305 45,618 80,127Marketing 490 762 622 635 1,110 36,201 118,306 119,123 123,931

Total Operating Costs 62,057 70,920 96,869 131,478 212,306 323,241 373,304 375,883 463,501

Operating ProfitLoading/unloading 12,418 11,739 12,656 16,673 26,701 105,620 209,426 225,377 223,014Storage 14,049 18,578 21,252 22,449 30,079 14,740 22,207 23,759 14,023Other 5,359 5,905 12,984 16,054 11,793 (1,490) 25,845 28,587 40,626Marketing 33 132 (17) (5) 78 7,252 (26,538) (23,440) (17,741)

Total Operating Profit 31,859 36,354 46,875 55,171 68,651 126,122 230,940 254,283 259,922Surcharges 4,068 9,350 -- -- -- 59,753 192,298 195,930 237,454Nonoperatinglncome 753 1,015 2,612 1,401 2,416 4,132 1,820 4,540 9,719Nonoperating Expenses 3,482 4,384 12,021 7,467 9,613 18,539 12,626 51,929 16,172Otherexpenses/(income) 2,477 3,448 3,956 8,445 13,019 (3,137) (33,195) (11,921) (14,785)

Profit Before Taxes 22,585 20,187 33,510 40,660 48,435 55,099 61,031 22,885 30,800

Income Tax 5,270 5,270 5,270 5,270 5,270 6,000 6,000 6,000 6,000Other Taxes 1,000 1,059 4,000 4,000 4,000 4,000 -- -- -

Net Profit after Taxes 16,315 13,858 24,240 31,390 39,165 45,099 55,031 16,885 24,800

Source: NPA and the Bank.

- 73 - ANNEX 1

TABLE 4B: NINGBO PORT AUTHORITY-SOURCES AND APPLICATIONS OF FUNDS(Y'OOO)

1988 1989 1990 1991 1992 1993 1994 1995 1996

Sources

Profit before taxes 22,585 20,187 33,510 40,660 48,435 55,099 61,031 22,885 30,800Depreciation 20,254 20,740 24,403 43,951 70,584 119,728 158,531 90,000 116,506State funds -- 32,970 62,455 97,236 224,796 (327,513) 77,655 -- --

Other government contribution 9,250 -- 32,839 29,408 25,993 107,870 11,639 -- --

Borrowing -IBRD -- -- -- 42,698 120,815 10,736 55,212 26,736 8,659-Local 41,680 11,120 10,976 111,770 153,733 314,451 138,217 15,704 99,368

Total Sources 93,769 85,017 164,183 365,723 644,356 280,371 502,285 155,325 255,333

Applications

Payments to the State:Income tax 5,270 5,270 5,270 5,270 5,270 6,000 6,000 6,000 6,000Other 1,000 1,059 4,000 4,000 4,000 4,000 -- -- --

Capital expenditures 48,960 44,090 3,837 152,280 212,900 108,550 354,750 149,356 50,656Special fund expenditure 6,130 -- 819,354 (618,211) 229,871 -- -

Loan repayments - IBRD -- -- -- 11,829 8,433 9,166 17,991 27,399 25,697-Local 11,932 4,470 22,531 13,418 37,564 31,874 66,772 27,470 83,919

Port development funds 3,000 3,428 (617,527) 785,203 165,355 -- -- -- --

Change w/capital (62,567) 3,767 (12,398) 8,928 3,946 (137,473) 39,291 (34,444) (178,783)

Total Applications 13,725 62,084 225,067 362,717 667,339 22,117 484,804 175,781 (12,511)

Net Funds Flow 80,044 22,933 (60,884) 3,006 (22,983) 258,254 17,481 (20,456) 267,844Opening Balance 32,796 112,840 135,773 74,889 77,895 54,912 313,166 330,647 310,191Closing Balance 112,840 135,773 74,889 77,895 54,912 313,166 330,647 310,191 578,035

Source: NPA and the Bank.

- 74 - ANNEX I

TABLE 4C: NINGBO PORT AUTHORITY-BALANCE SHEET(Y'OOO)

1988 1989 1990 1991 1992 1993 1994 1995 1996

ASSETS

Fixed assetsAt cost 601,482 669,026 697,266 892,496 1,175,981 1,302,795 1,386,877 1,895,401 2,330,803Less: depreciation 70,635 87,650 112,053 156,003 226,588 346,316 504,847 766,686 883,192

Sutbtotal 530,847 581,376 585,213 736,493 949,393 956,479 882,030 1,128,715 1,447,611

Other Fixed Assets/a - - 212,219 349,913 469,864 279,908

Current assetsInventory 8,325 9,853 7,867 8,365 12,884 21,342 27,005 39,701 48,462Receivables 19,535 24,372 20,620 29,546 65,796 243,145 594,119 786,274 865,323Cash 112,840 135,773 74,889 77,895 54,912 313,166 330,647 310,191 578,035

Subtotal 140,700 169,998 103,376 115,806 133,592 577,653 951,771 1,136,166 1,491,820

Special Fund Assets 32,296 40,679 162,597 232,975 462,846 - - -- -

Long-Term Investments - - -- -- -- 100,541 178,994 213,162 279,417Other Assets L -b - - - 132 130 129 128

Total Assets 703,843 792,053 851,186 1,085,274 1,545,831 1,847,024 2,362,838 2,948,036 3,498,884

LIABILITIES & EQUITY

State funds-Contributed 421,486 477,059 490,958 516,102 547,055 701,675 779,330 1,062,435 1,139,503Intemal funds for port

development 4,008 3,626 5,199 11,728 36,721 - - --

L/T liabs and loans 109,361 105,032 93,477 223,304 397,249 739,396 860,209 923,007 1,130,194

Current liabs. 36,096 38,694 45,354 45,850 82,673 405,953 723,299 962,594 1,229,187

Special funds 132,892 167,642 216,198 288,290 482,133 -- -- -- --

Total Lia. & Equity 703,843 792,053 851,186 1,085,274 1,545,831 1,847,024 2,362,838 2,948,036 3,498,884

/a Including construction-in-progress and disposal assets./b Including intangible and deferred assets.

Source: NPA and the Bank.

- 75 - ANNEX I

TABLE 5A: XIAMEN PORT AUTHORITY-INCOME STATEMENT

(Y'000)

1988 1989 1990 1991 1992 1993 1994 1995 1996

TrafficWhole port ('000 ton) 4,686 5,126 5,289 5,700 6,479 9,206 11,406 13,139 15,330Port Authority ('000 ton) 3,951 3,676 3,444 4,136 4,645 6,285 7,883 9,279 8,540Container ('000 teu) 21.1 27.5 45.3 74.1 105.8 153.6 220.0 309.0 400.0

RevenueLoading/unloading 21,443 29,987 33,488 42,540 66,983 107,608 141,610 230,605 240,000Storage 3,662 6,405 5,411 7,126 13,631 21,898 28,817 46,927 18,740Other 9,863 7,698 10,410 22,495 35,634 57,246 75,335 122,680 151,525Marketing 4,866 6,023 6,424 -- -- - -

Subtotal 39,834 50,113 55,733 72,161 116,248 186,752 245,762 400,212 410,265

Operating TaxesLoading/unloading 700 980 1,097 1,365 2,150 3,117 3,911 6,839 8,040Storage 198 348 295 390 729 1,057 1,326 2,319 1,031Other 249 217 292 1,465 2,048 2,968 3,724 6,511 6,599Marketing 526 653 700 -- -- - -- -- --

Total Operating Tax 1,673 2,198 2,384 3,220 4,927 7,142 8,961 15,669 15,670

Net SalesLoading/unloading 20,743 29,007 32,391 41,175 64,833 104,491 137,699 223,766 231,960Storage 3,464 6,057 5,116 6,736 12,902 20,841 27,491 44,608 17,709Other 9,614 7,481 10,118 21,030 33,586 54,278 71,611 116,169 144,926Marketing 4,340 5,370 5,724 -- -- -- -- -- --

Total Net Sales 38,161 47,915 53,349 68,941 111,321 179,610 236,801 384,543 394,595

Operating CostsLoading/unloading 15,163 19,043 20,554 23,361 32,170 60,634 79,750 145,456 143,860Storage 2,155 4,364 3,279 2,695 6,518 12,285 16,158 29,471 25,000Other 4,529 4,835 6,707 11,295 18,884 35,592 46,814 85,383 115,242Marketing 814 970 1,015 - -- -- -- -- --

Total Operating Costs 22,661 29,212 31,555 37,351 57,572 108,511 142,722 260,310 284,102

Operating ProfitLoading/unloading 5,580 9,964 11,837 17,814 32,663 43,857 57,949 78,310 88,100Storage 1,309 1,693 1,837 4,041 6,384 8,556 11,333 15,137 (7,291)Other 5,085 2,646 3,411 9,735 14,702 18,686 24,797 30,786 29,684Marketing 3,526 4,400 4,709 - -- -- -- - --

Total Operating Profit 15,500 18,703 21,794 31,590 53,749 71,099 94,079 124,233 110,493

Nonoperating Income 333 567 1,555 1,226 1,556 1,150 5,099 1,597 833Nonoperating Expenses 1,301 1,681 2,110 2,608 2,998 2,882 1,063 3,896 2,650Other Expenses (net) 191 1,398 1,233 -- -- 9,046 12,179 31,078 24,553Other Income - -- 347 - -- 932 6,180 14,377 23,212

Profit Before Taxes 14,341 16,191 20,353 30,208 52,307 61,253 92,116 105,233 107,335

Income Tax 2,151 2,429 3,053 4,531 7,846 9,050 13,818 19,748 17,977Adjustment Taxes -- - -- -- -- - - -- --Other payments 5,593 -- - -- -- -- -- -- --

Net Profit after Taxes 6,597 13,762 17,300 25,677 44,461 52,203 78,298 85,485 89,358

- 76 - ANNEX 1

TABLE 5B: XIAMEN PORT AUTHORITY-SOURCES AND APPLICATIONS OF FUNDS

(Y'OOO)

1988 1989 1990 1991 1992 1993 1994 1995 1996

SourcesNet profit 6,597 13,762 17,300 25,677 44,461 52,203 78,298 85,485 89,358Depreciation 3,200 3,624 5,039 5,615 6,424 11,476 17,629 53,538 58,682State contribution -- -- -- -- -- 75,000 27,479 25,811 61,666Borrowing - IBRD -- -- -- -- 113 120,614 122,703 -- -

- Others -- -- -- -- -- 141,428 143,878 86,597 26,878Others -- -- -- -- -- 15,817 183,371 3,807 18,348

Total Sources 9,797 17,386 22,339 31,292 50,998 416,538 573,358 255,238 254,932

ApplicationsCapital expenditures 14,219 18,574 (512) 20,639 13,230 296,154 427,587 256,801 118,961Loanrepayment-IBRD - -- -- -- -- - 21,789 12,337 31,156

- Others - -- -- -- - -- 3,500 -- 10,200Port development funds (3,003) 2,828 2,495 17,808 35,188 4,940 105,184 41,042 41,861

Change w/capital (3,781) (31,151) (5,217) (8,901) (48,386) 37,004 (153,807) (30,720) 41,023

Total Applications 7,435 (9,749) (3,234) 29,546 32 338,098 404,253 279,460 243,201

Net Funds Flow 2,362 27,135 25,573 1,746 50,966 78,440 169,105 (24,222) 11,731

Opening Balance 14,586 16,948 44,083 69,656 71,402 122,368 200,808 369,913 345,691

Closing Balance 16,948 44,083 69,656 71,402 122,368 200,808 369,913 345,691 357,422

-77- ANNEX 1

TABLE 5c: XIAMEN PORT AUTHORITY-BALANCE SHEET

(Y'OOO)

1988 1989 1990 1991 1992 1993 1994 1995 1996

ASSETSFixed assets

At cost 155,449 165,559 175,417 185,374 204,553 293,705 498,303 1,027.308 1,044,917Less: depreciation 12,852 16,582 19,223 23,910 27,550 38,723 108,661 159.799 217,427

Subtotal 142,597 148,977 156,194 161,464 177,003 254,982 389,642 867.509 827,490

Construction in progress - -- 221,612 38,557 31.563 100,496Others/a L -- -- -- -- 331 471,130 --

Subtotal 142,597 148,977 156,194 161,464 177,003 476,925 899,329 899,072 927,986

Current assetsInventory 4,008 9,123 10,694 15,128 24,017 82,655 50,453 42.852 52,368Receivables 3,741 9,477 11,101 13,679 42,508 104,535 150,761 128.328 157,967Cash 16,948 44,083 69,656 71,402 122,368 200,808 369,913 345.691 357,422

Subtotal 24,697 62,683 91,451 100,209 188,893 387,998 571,127 516.871 567,757

Special fund assets 12,114 20,578 10,208 14,740 2,731 -- -- -- --

Long term investments -- -- -- 6,150 12,210 -- -- 124.990 196,682Other assets/ -- -- -- - -- 3,052 2 10.125 7,266

Total Assets 179,408 232,238 257,853 282,563 380,837 867,975 1,470,458 1,551,058 1,699,691

Liabilities & Equity

State funds-Contributed 142,597 148,977 155,194 164,710 -- 62,098 76,894 92,401 --

LiT loans -- -- -. .. 113 262,155 496,754 444,009 465,887

Current liabs. 15,440 57,442 65,854 81,767 167,871 251,532 419,363 420.049 418,181

Special funds 21,371 25,819 36,805 36,086 - -- -- -- --

Equity -- -- -- -- 212,853 292,190 477,447 594.599 815,623

Total Lia. & Equity 179,408 232,238 257,853 282,563 380,837 867,975 1,470,458 1,551,058 1,699,691

/a Completed fixed assets./b Including intangible and deferred assets.

- 78 - ANNEX 1

TABLE 6A: GUANGZHOU PORT AUTHORITY (HUANGPU DISTRICT)-

INCOME STATEMENT /a

(Y' 000)

1988 1989 1990 1991 1992 1993 1994 1995 1996

Traffic ('000 tons)Whole port 32,652 33,225 29,067 34,734 41,084 50,071 54,945 57,647 61,332Port authority 25,798 25,064 21,892 27,023 33,471 40,815 43,752 44,692 46,566

RevenueHandling 168,865 176,894 172,375 215,416 270,051 419,483 634,425 683,857 616,108Storage 37,965 47,334 35,547 37,380 45,914 56,075 87,952 95,515 91,438Other 38,404 22,412 16,990 19,584 35,124 67,296 126,125 125,543 131,383Marketing 5,755 7,792 4,957 7,910 5,543 34,959 69,112 71,345 81,961

Subtotal 250,989 254,432 229,869 280,290 356,632 577,813 917,614 976,260 920,890

Operating CostsHandling 78,827 88,630 92,330 126,434 163,646 248,514 399,903 416,103 400,390Storage 11,504 14,740 12,898 18,720 29,510 31,165 48,886 49,515 50,689Other 19,748 9,311 8,210 12,181 32,033 55,849 95,507 91,056 97,077Marketing 4,744 6,191 3,968 6,899 5,782 37,325 71,621 74,844 98,392

Subtotal 114,823 118,872 117,406 164,234 230,971 372,853 615,917 631,518 646,548

Business TaxHandling 5,495 5,778 5,532 6,914 8,663 13,688 20,706 22,509 20,262Storage 2,054 2,574 1,901 2,000 2,457 3,031 4,806 5,250 5,024Other 1,285 723 526 547 1,160 1,762 3,164 3,519 3,585Marketing 49 71 48 193 390 1,143 2,261 2,389 2,705

Subtotal 8,883 9,146 8,007 9,654 12,670 19,624 30,937 33,667 31,576

Operating ProfitHandling 84,543 82,486 74,513 82,068 97,742 157,281 213,816 245,245 195,456Storage 24,407 30,020 20,748 16,660 13,947 21,879 34,260 40,751 35,725Other 17,371 12,378 8,254 6,856 1,931 9,685 27,454 30,967 30,721Marketing 962 1,530 941 818 (629) (3,509) (4,770) (5,888) (19,136)

Subtotal 127,283 126,414 104,456 106,402 112,991 185,336 270,760 3111,075 242,766

Other expense (income) -- -- -- -- -- 78,596 163,629 221,874 228,907

Total 127,283 126,414 104,456 106,402 112,991 106,740 107,131 89,201 13,859

Education surcharge -- - 150 180 236 - -- -- --Nonoperating income 1,475 224 1,234 1,018 2,513 1,254 9,911 4,469 10,848Nonoperating expenses 9,942 11,790 15,447 17,031 23,385 19,575 20,093 25,847 20,134

Profit before taxes 118,816 114,848 90,093 90,209 91,883 88,419 96,949 67,823 4,573

Income tax 1,870 1,870 1,870 1,870 1,870 -- -- -- --Adjustment tax -- -- -- -- -- -- -- -- --Payment to State 9,450 9,450 9,450 9,450 9,450 11,000 11,000 11,000 11,000

Net profit 107,496 103,528 78,773 78,889 80,563 77,419 85,949 56,823 (6,427)

La In 1987, Huangpu Port (HP) was merged with Guangzhou Port, given the new name of Guangzhou Harbor Bureau (GHB), and become theHuangpu District (HD) of GHB. Financially, HD is the main source of income for GHB. In 1996, for example, HD's traffic, revenue andfixed assets constituted 81 percent, 80 percent and 80 percent, respectively, of GHB's. When figures in this report are compared with thoseof the SAR, they pertain only to the HD (of GHB).

- 79- ANNEX I

TABLE 6B: GUANGZHOU PORT AUTHORITY (HUANGPU DISTRICT)-SOURCES AND

APPLICATIONS OF FUNDS

(Y'000)

1988 1989 1990 1991 1992 1993 1994 1995 1996

Sources:Net profit 107,496 103,528 78,773 78,889 80,563 77,419 85,949 56,823 (6,427)Depreciation 31,913 27,194 46,615 42,075 58,614 51,318 65,645 80,010 154,776State contribution 10,000 - - 20,000 10,000 15,000 30,000 41,000Borrowing -IBRD 42,918 25,864 39,224 16,454 51,795 153,037 400,910 43,407 14,880

-Others -- 46,000 55,773 75,990 127,080 79,780 95,000 73,590 181,650Others -- -- 6,628 30,732 51,593 136,562 -- -- --

Subtotal 192,327 202,586 227,013 244,140 389,645 508,116 662,504 283,830 385,879

Applications:Capital expend. 72,282 104,279 147,693 105,729 191,921 262,845 567,192 145,325 156,530Other investments 6,633 6,587 3,304 30,732 51,593 186,564 -- -- --

Special fund expend. 73,525 59,569 73,174 87,177 122,747 111,454 79,880 150,699 38,372Loan repayments 18,795 11,334 15,239 15,597 17,502 69,992 59,170 79,800 103,700

Change w/capital 5,079 18,240 (25,803) 1,420 (9,837) (270,856) (58,011) 6,998 (4,828)

Subtotal 176,314 200,009 213,607 240,655 373,926 359,999 648,231 382,822 293,774

Net funds flow 16,013 2,577 13,406 3,485 15,719 148,117 14,273 (98,992) 92,105

Opening balance 50,102 66,115 68,692 82,098 85,583 101,302 249,419 263,692 164,700

Closing balance 66,115 68,692 82,098 85,583 101,302 249,419 263,692 164,700 256,805

- 80 - ANNEX 1

TABLE 6c: GUANGZHOU PORT AUTHORITY (HUANGPU DISTRICT)-BALANCE SHEET

(Y'000)

1988 1989 1990 1991 1992 1993 1994 1995 1996

ASSETSFixed assetsAt cost 733,459 689,404 728,280 771,425 910,175 1,031,032 1,153,531 1,973,624 3,288,414Less: depreciation 116,652 106,531 126,854 159,633 233,844 281,305 346,950 426,960 666,118

Subtotal 616,807 582,873 601,426 611,792 676,331 749,727 806,581 1,546,664 2,622,296

Construction- in progress (net) -- -- 7,609 7,609 7,609 174,016 194,209 129,075 149,882

Total 616,807 582,873 609,035 619,401 683,940 923,743 1,000,790 1,675,739 2,772,178

Current assetsInventory 19,209 19,505 21,472 23,827 29,656 38,314 45,971 43,991 42,490Receivables 21,277 25,812 18,572 25,021 41,852 94,304 118,253 155,793 128,268Cash 66,115 68,692 82,098 85,583 101,302 249,419 263,692 164,700 256,805

Total 106,601 114,009 122,142 134,431 172,810 382,037 427,916 364,484 427,563

Special fund assets 74,209 94,762 95,423 133,065 222,088 -- -- -- --Long-term investments 404 6,686 20,542 21,398 22,186 76,808 81,290 93,151 87,440Otherassets/a - -- - -- -- 216 1,789 1,214 475

Total Assets 798,021 798,330 847,142 908,295 1,101,024 1,382,804 1,511,785 2,134,588 3,287,656

LIABILITIES & EQUITYState funds (equity) 478,863 445,892 471,074 487,388 571,040 683,413 793,985 1,031,435 1,686,091Internal funds for

port development 35,304 30,257 16,693 24,700 34,045 -- -- -- --

L/T loans 138,347 151,913 155,570 180,421 218,917 285,084 213,876 669,659 1,192,269

Current liabs. 35,339 21,930 42,460 49,844 82,341 414,307 503,924 433,494 409,296

Special funds 110,168 148,338 161,345 165,942 194,681 - -- -- --

Total Lia. & Equity 798,021 798,330 847,142 908,295 1,101,024 1,382,804 1,511,785 2,134,588 3,287,656

/a Including intangible and deferred assets.