RETIJiN- RESTRICTED

IREpoRTS DESKCI j1 J P Report No.TO-401b

I WITHIN I ll IJ[ 7AONE WEEK I

This report_s was prepared for use within the Bcank and its_ affiliated organ-1a-n..

They do not accept responsibility for its accuracy or completeness. The report may:noI b I ied nor I i e quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

APPDRDA AT T n L-

THE PORT OF kARACH1

EXPANSION AND IMPR.OVEMENT PROJECT

PAKISTAN

April 7, 1 94A

Department of Technical Operations

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CURRENCY EQUIVALENTS

1 Pa'istan Rupee = TUT . $0 211 U.S. Dollar = PRs. 4.76PRs. iOO, 000 = U.S. $21,000

KAIR.CHI POFOT TRUST

TABLE OF ''ONTTITS

S11IEARY

I . IT T R O D U CT I O N 1

II. KARACHI PORT TPUST

A. Ownership and General Powers 1B. Organization and Manazenient I- 3C. The Staff and Labor 3 -

III. TBE PORT OF KARACHI

A. Development of the Port 41R Princ-ipal Filit ie !t - 6

IV. PRESENT PORT ACTIVITTIES

B. Traffic 6- 7

Tr LlTTA MO IC A? TT A trJTMOfLV j ±1V±Uh'..j1:'J I-1I'aJ £ U r± '4U.

At. Ltes adU Port Charges:7B3. Finances 9 _ 10C. * £dvI.Ligs 1()

D. Accounting and Auditing 10 - 11

VI. THE PROJECT

A. General Description 11i- ,, _1 .L _:. . 4 _ 1 n D.- Ut b DUt S LUidt,4L .1.J - Le

C. Construction and Procurement 12D. Justificabionl of bthe Project 12 - 10

'VI I FuTURE FINMiCTAL RESIOLTS AND DEITErLOr'PIMENT FINA'NC.NIG

A. Future Financial Results i6B. Financing of the Development Program 17 - 18

VIII. CONCLUSIONS AND RECOKENDATIO)NS 18 - 19

Table of Contents (continued)

Appendices:

1. Tonnage of Imports 19L8/49 1962,/632. Tonnage of Exports 1948h/L9 - 1962/633. Actual Voluxie of Traffic Compared ',,ith 1955 Forecasts4. Number o- Passengers aibarked and Disembarked 1955/56 - 1962/635. Average Waiting Tiz.e of Vessels for Berths July 1961 -

November 19636. Surriary Balance Sheet as of June 30, 19637. Income Accounts 1953/51 - 1962/638. Deitails and Coiime,its on- the Project9. Estimated Cost of the Project

10. Forecast of Traffic VoLume 1963/61h - 1969/7011. Notes on Forecast Trendi of Tain Commodities1]2. Forecast of Income Accounts 1963/6h - 1967/6813. Estimated Cash Flow 1963/64 - 196'/68

Chart IJc= 2282

I4ap

PAKI STANi

THE PORT OF KAP.AC.II EXPAISION AND IINPROVENIENT PROJECT

SU-iSARY

The Government of Paklistan has requested the i ank to helpfinance the present expanision and improvement project of the Karachi Po;tTrust (KPT). Bank Loan 126-PAK of August 4, 1955 was made to helpfinance KPT 's reconstruction program at that time.

ii. Th2is report covers the appra:Lsal. of the foregoing projectestimated to cost PRFs. 178.5 million (IJS$37.5 million equivalent) over aperiod of 5 years, l963-64 to 15'67-68, incll'sive. Of the total costUS$17.0 million would be foreign exchangc.

iii. KIT is a c:orporation with limited authority. Separate accountsand armual budgets are prepared subject tc Government approval and control.The port's managemernt is reasonably conpetent but tlhe Engineering Departmeintrequires to be strengthened. The assistance of consulting engineers isrequired for the design, preparation of tender documents, analysis ofbids and the supervision of most of the projeco.

iv. The port complex consists principally of seventeen berths onthe East Jha2ves, four berths on the WJest Wharves, tw(o bulk oil piers andvariotus moorings ancd lighterage facilities. Depths alongside vary irom2h to 34 feet at Mean Low Water. The port is provided with eight transitsheds, some 500 acres of open storage space and a reasonable amount ofmechanicall-handl-ing equipment and floatiniy craft.

v. Traffic has develoned steadily: it totalled 5.6 mill:ion toinS in1962-63 as compared with 2.5 million i n 1948-49. Bearing in mind theinadeauacy of the present accommodation, operating efficiency is hi2lnbut is achieved at the cost of congestion to ships waiting for berths.

vi. Overall thle rate structure is such as to generate an adequatereturn on KPP s' i nvestments - nowemver the const nf ini 7- duHal servircesneeds to be periodically reviewed in order to rationalize rates.

'Jii. KFPT operates at a profit and has built up considerable reserveswhich are invested -Ln Governi,ent and Municipal secTurities ith theexception of IBRD Loan 126-PAK and Consortium loans totalling PRs.24.3mi 111 inn sq f`re ' 1 nn-t,'rm rlcdb. Its fi nnnrcnil posl tionn issound.

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viii. The Droject will materially assist in the economic develop-ment of Pakistan. The tiiain objective is to provide additionial capacityto cope with present and part of the forecast future traffic, and therelhabilitation and reconstruction of existing facilities in the port.A master plan study to determine the port's fliture developnent isincluded in the project.

ix. Estimates of futulre traffic have been made in the light ofinformation supplied. by the Government, the Oil Companies and KPT. Theyare considered reasonable and a suitable basis for port planning purposes.

x. KIT's accumulated reserves and prospective earnings are amplysufficient to finance the local currency cost of its development programwhich includes the project. KPT s debt service coverage will reniainsatisfactory.

xi. The project is technically feasible and economically justified.However KPT should undertake and implement; studies with respect to:-

(a) Costs and the rationalization of rates.(b) Collection and compilat:ion of statistics.(c) Strengthening of the Engineering Department.(H) Mechanization of the handlinrg of hulk rirv targoes.

xii. Satisfactory agreenmPt was reach.lhd on the above noints dchrinanegotiationS and the project is suitable for a Bank Loan of US$17.0 millioiequivalent= KPI l would he the borroweTr, a suitable term would be 25 vearsincluding a 5 year period of grace.

I. INTRODUCTION

l.~~1 Th Goe.et on -aistarn has requested the Barnki .o assi st.1..iI1 uUvV.L1t'ii, .i. r r.J-Lu Li ~ vu u u±ii Dd:' LA) d-L L

in financing the present expansion and development project of the KarachiPort' Trusti which is parti of Pakistan' s Second Five-lea Plan. Theproject is a suitable one for a Bank loan of US$17.0 million equivalentanu th-is report i s an aiJpraisa± therle0f.

2. This report is based on iniform ation obtained by a iission wiichvisited Pakistan in April 1963 and provided at that time by the KarachiPort Trust, their consultants, and various other agencies. Additionalinformation was rece4ved in October/Nove.ber 1963 and incorporated inthis report as was data provided by monthly progress reports supplied bythe port authority in connection wiTlh i:ank Loan 126-PAK of August 4, 1955.

3. The 1955 loan amounting to UTS$14.8 million was made to reconstructand modernise 13 cargo berths, Nos. 5 to 17, of the East iTharves and toprovide cargo-handling facilities and transit sheds at the reconstructedberths. After some initial difficulties the project was satisfactorilycompleted in 1962 except for some minoor works in the area of the rew transitsheds.

II. KARACHI PORT TRUST

A. Ownership and General Powers

4. The Karachi Port Trust Act of 1886, as modified to date, createda Board called "the Trustees of the Port of Karachi" more commTonly knownas Karachi P'ort Trust (KPT). The Board is a body corporate with perpetualsuccession anLd is vested with the property and management of the port.KPT has legal juriscliction over the 1 and, water and facilities within the!port boundcaries which are adequate for its operations.

5. KIT has limited autonomy. Its general powiers are limited bythe overriding author-ity of the Central Government which must approrepolicies ancd decisions of major importance. Government approval isrequired for the ordinary and capital budgets, the rates to be charged bythe port and loans incurred by KPT. A7ain subject to Governmaent approval,KPT has all the powers necessary to manage and operate the port and water-ways under its jurisdiction; to maintain, improve and regulate their use;to provide 1;erminal facilities for ships, cargo and passengers; and toestablish iits rates and dues. Subject to the directions of the Govern-mejit men-tioned above, KPT has the necessary powers to operate the portefficiently..

B. Organization and Management

6. The 1960 Government of Pakistan Ordinance reduced the number oftrustees on the Board from 17 to 11, including the Chairman. The trustees

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presently represent the following organizationsi:

Government of Pakistan -- KIT Chairman 1Karachi Chamber of Commerce andIndustrv 2

Pakistan Ship Owmers' Association 1Karachi Cotton Association 1Collector of Customs 1 )Pakistan Western Railwiayr 1 ) AppointedPakistan Navy (Karachi Area) 1 ) byRPT Labor Un .ons I I rlovernmentIlin1stry of Agriculture and Works 1 )Karachi TMufini ci.pal Corporation 1

1'

The memm.bers are appc,inted 'by te Centra-l Inrn.ln.en+ bvarlou local

Chambers of Commerce and by other port users; they hold office for a,nn mJ ,\f +T- ,rnnc nvA -f ni ,; A4; r_+. Ir br

41o C'1h n A-m' 1 e,

J2- /99__v - -_ a-z- J - - -Av_ * ;}=w -_- v._.. .j>>.

frequently than once a fortnight.

7. The Chairman is appointed by the Central Government. He isWautoie to execut.e- --- - contracts cand Eexp,enditLu- es v- -. i=; lir,.its; t1-4 o ac4t~L4U1J.~.LOQ',U UU I., V ~ LAU. aA ~aLL WIViU. U I J UL.LI1 11LSLU. U,

for the trustees in specific circumstances, and to delegate his general

period as the Government may prescribe, is normally for three years, buttlie present Ch1c.JrmaVA. Lia ±11-Lu in1U si.nc 19U9. Teiu Ulida±LIsI1 iLresponsible for carrying out the general policy of the Board and the dayto day operations of the port.

c. The organiization of tne port is weii established and is soulnd,but there is need of a fresh approach to some of the operational, technicaland fi.nancial problems of a modern port,. KrlP's main departments areheaded by the Deputy Conservator, Traffic Manager, Chief Accolmtant,Chief Engineer and the Mqechanical Engineer.

9. Tthe operations of the Deputy Conservator s department includethe pilotage and allocation of anchorages of vessels and the buoying andlighting of the navigation channels. The Traffic Manager's departmentallocates berths to vessels and arranges for the receipt and deliveryof cargoes. The senior officers on tthe traffic and operational sideof the administration are experienced in the operations of the Port ofKarach.i, bui are in need of new ideas, especially in the application ofmodern cargo-handling techniques.

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10. The Chief Accountant is capable and w-ell-versed ill KPT's folmof accountancy. Previous promptings of the Bank to have KPi' initiatean improved accounting system have not been too successful, but certainimprovements have been introduced mnd the present system of account keep-ing is acceptable.

11. The Chief Engineer's departnent is concerned with the surveyand maintenance of depths in the navigational channels and alongsideberths and waith the planning, provision and maintenance of the facilitiesof the port. New construction is normally done by outside contractors,KPT having no New rWJorks departmernt or adequate equipment to undertakework of tins nature. For the major reconstruction scheme recentlyfinanced by Loan 126-PAK and now practicall-T completed, a separateengineering department was set up under an "Engineer-in-Chief." Thisdepartment is now largely disbanded and most of the engineers who wvereseconded to it have returned to their previous employment.

12. KPT's Engineering Department is small and reqiLres strengtherning.Tt deals only with the civil enAineerIng aspects of NC?P 's work a-nd areorganization appears necessary. An increase in the number of engineer-s

mnmrwr nuei nn,i nn nt.+pm-nt. +.n -ar-riii +. tTeI 1 qnIln i fi rl Pn; ngpnrs shoul rb ehmade. It is consi(iered that, as presently constituted, the Chief Engineer'sDepartmnent is not caipable of efficiently carri ng out supemrision overthe variouF items in the project.

13. During negotiations a "memorandum of understanding" was adopted;it oulie KT's,Ien,,n prps' to- strngt-*hen andA~,nntn improv the nChe ~%,gincer'sDepartment both in respect to maintenance work and supervision of partoJ± ~'.4- -oic

14. ThAe eCIHaLical Enn11eer s JJ.U U11r.en Ideals w Ith e maintenance

of cranes and other cargo-handling equipment and is also responsible forr ' fUI-Loat:iing craf; . The Mec'--ca' -ig-neer does ilO' cori,e -u1nUer the

control or the Chief Engineer and has direct access to thle Chairman.Tihe departmletntd carrLI es Oult its duieLsJ *eason aL11LLyL, tVUlL adu lou chanes aUr

recommended to its organization.

C. The Staff and Labor

15. So-nd procedures, set up over many years, are in operation forthe recruitment, promotion, welfare andt discipline of KP] s staff.Clerical ancd administrative staff are generally not of a high standard,prIMJarily because salaries ofLerea Dy KPrv are low. rrivate industryoffering higher wages can attract the best-qualified people that areavailable. However KPrr provides fairl:y comprehensive welfare, housing,medical and school programs. Such facilities and services are generallyin short supply and help considerably in attracting and retaining workers.In addition there are various recreational facilities, libraries, canteerns,co-operative societies and an employees' welIfare fund.

16. Port labor is increasingly well organi zed by two main laborunion, but is, in general, reasonably satis ied and Karachi port hasbeenl remark-ably frae of strikes. Labor relations are good and proceduresfor the settlement of disputes are sound and have been successful. Over5,500 men are employed on the permanelnt staff and the average number ofhoarly employees has been about 3,,U00 in recent years.

17. The number of men employed by KPT is relatively large and itmay be that with increased mechianization, accompanied by increased strengthin the labor unions, a redundancy in ranpower will result and a necessaryreduction will be difficult to effect. Expansion of port traffic will,of course, compensate for this tendency.

IIIe THE PORT OF KAFACHI

A. Development of the Port

18. About 100 years ago the Port; of Karachi consisted only of asheltered anchorage, surrounded by many islets and creeks, capable ofhandling ocean-going ships in almost any state of tide or weather. Sincethat time improvements to the anchorage include wharves, railway sidingsand transit sheds. By 1910 there were 17 deep-water berths at the EastWharves aggregating 8,600 feet and the port was primaril-Y engaged in thehandling of exports - particularly wheat. Between 1920 and 1929, fourdeep-water berths (Nos. 18 - 21) were constructed on the west side of tL.eharbcr and land reclamation continued to provide additional areas forfuture port develorment. The present, port layout is showJn on the attacledmap.

B. Principal Facilities

19. The entreuace to the harbor -s protected by the Manora break-water and the Keamari groyne from which a channel, about 700 feet wideand about two miles in length, leads loo the first berths of the EastWharves. These wharves provide the main berthage facility of the harborand number from 1 to 17 in all; berths 5 to 17 have been reconstructed duringthe l=ast few years with the help nof T.oan 126-PAK. Onnosite tile RastWharvres there are four berths which presently constitute the latest develop-ment of the nort. and consist of foeur conc-rete t iiqs vwi th a dienth alongs ideof 32 to 31 feet at low water. In addition, there are two lighterageberths and one ship rpi pair berth VesseDls can also he a-ccnmmordted atmoorings. Ship building and repairs are carried out at the Karachi Ship-yard which has 22 mile long access channel dredged tn a depth of 20 too25 feet. In 1957 an old bulk oil pier was extended so that two oiltankers coul-d berth at one time.

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20. The limiting depthl across the bar is 28 feet at mean low waterwhich norma'.lv enables a 25 foot draft shi.p to enter at low tide. Themean tidal ra.nge is aboat 7 feet so that vessels of 32 foot draft canenter the port on anv da7r of the irear. IThe depths available in the innerharbor are greater than those across the b.ar. The main berthing facilitiesinclude the followirng insta,latimo.s

Description Un- & , Berths Tnh.th nf Waterat low tide

1. x+ Eat Whrarves (NTo 1 to ) ), 29Q

(Nos. 5 to 17) 13 32 (capableof being

deepened

9 T^ra+~4c I,.j, 7..a }

L. e ViZo *,.d-LL vv, . Vz i*. V.. J.. v- iV4

3. Moorlr.gs, etc. . L-4 - 27

4. OJL,ther W1aIes ad.I igatu ag

facilHties - 8- 8

5. Bulk oil piers 2 32

21. With the exception of the Manora breakwater, the older of thetwo Bulk Oi:L Piers and berths 1 GD 4 Of o te East 5Whnarves, tre fac'.itivesof the port are, in general, in good condition. The port is reasonablyprovided w-ith quay cranes (52 of which were part of the project fLinaiced

by Loan 126-PAK) and there is a modest number of mobile cranes and othercargo-handling equipment. There are two shore-based heavy lift cranes(25 and 30 tons capacity). Bunkering facilities are provided at theEast and West Wharves and there is no shortage of water or electricityin the port. The port is wiell provided with roads and over-bridges anihas a comprehensive railway network of over 100 miles of track servingall of the main berths. In the harbor area, under the control of KPTand private enterprise, over 500 acres of storage space is available.Covered storage is provided in eight transit sheds, aggregating about825,000 square feet.

22. There are 60 steel barges and a number of' lighters in the portvarying from 25 to 250 tons. Among FKPT's floating craft are:-

6 tugs2 bucket dredgers1 grab dredger4 hopper barges (800 tons)1 30-ton floating crane1 60-ton floating crane

(about) 20 launches of various types

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Many of the above floating craft are over .30 years old and are in poorcond-ition and in needrofl rp-ilnt fKPT is presently nrocsiring replace-ments from some of t,he Pakistan consortiu,n countries and none is included

23. S-nor ir s nl4houE>h

of the navigable channel and of the depths alongside berths have to beaci eav-ed by mechn.c '.eans i Inre yrs about 2.0 +n nssilt have been removed by KPT annua:lly.

TT7 NrDlSVl8Tl l pm A ,M TSTM TOvL. rV..o"aJi ru.Ix ,ui.LVljjO

2i4. The prLncipal febaL-leb of Irl o UpeI-atLons, its LtrafficLUan

operating ef'ficienlcy are set out below:-

A. Operations

25. The port n.ormally works on a two shift basis and weckends andholidays are worked as required. Stevedoring on board ship is perforned.by private contractors but KPI personnel handle goods on shore and operatemechanical-htandling equipment. General cargoes are normally check<ed bytally clerks, this being particularly essential when berths are workedwith ships clouble-banked, which frequently has been the case during thecongested conditions of recent years.

26. Passengers are handled under fairly pirimitive conditiorns at theWest Wharves and at Berths 1 to 4 of the East Wharves. These latterberths are in a generally dilapidated condition, the quay cranes havdingbeen removed, and no railway locomotives allowed to run on these berths,as a safety precaution. All berths in the harbor are normally servicedbv road and rail. Road traffic has increased in recent years while rail.traffic has decreased, but normally all long distance cargo, because ofKarachi's relatively isolated position from its main service area, ishandled by tlhe railways.

27. Ships moored at the anchorages sometimes load cargo overside toand from lighters. Ships under repair are handled at the moorings when.-ever possible. The lighters ply to and from lighter berths at the WestWharves and also at the upper end of the harbor. Heavy lift imports arehandled by PI'M's floating cranes into lidhters and thence to the WestWharves where they can be put ashore by the land-based heavy-lift cranes.

B. Traffic

28. In recent years out'bound cargoes have averaged 25 percent ofthe total tonnages through the port as compared with 60 percent in theimmediate pre-war years. Since Partition, in 1947, the basic patternof trade of the port has changed. The main outgoing7 products now arerice, cotton, oilseeds and cement. Import traffic is composed largelyof pe-troleum produc-ts, U.S. commodi.ty aid wheat (under P.L. !8o), ironand steel products and a wide range of general dry cargo goods.

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29. From 2.5 r5 illion tons moving through the poit in 1943-49(incllusiXvre Df pJL 1, there -,as been. Jn-,rcrease of' aboult 125

percent to ,.6 milliLon tons in 1962-63) (see Appendices 1 and 2 fordeta iled ann;ual ard.d commodUty figure. I onnaes act'ua'ly hianILLed haveexceeded those forecast, byr KPI and used a- the basis for Loan 126-PAK\see Appencx t 3. Th-* s i s rr.inlLy be;au7,e ol. counti large importsunder P.L. 480; a faster thani eipected. rate of increase in dieselizationon the railway; a raFid growth in motorization and unforeseen large ship-ments of rice and cement either for export or to East Pakistan.

30. Over 120,000 passenigers, including Haj pilgrims, have b3enhandled in the port during each of the past eight years; 156.500 werehandled duping 1962-63 (see Appendix L-). Of this total, 138,000 travelledan international or coastal vessels arnd 18,500 uilgrims used speciallychartered shins.

31. I^hbile there has been no significant increase over the past 10years in the numoer of vessels engagecd in international shipping whichrentered the port annually, the average size of vessels and their cargoeshave been increasing.

32. Karachi is the "home" port for most Pakistani flag vessels:six shipping companies, which at the raoment jointly control over 40 vesse's,are based t,here. The Pakistan Navy, which operates its own installationswithin the general area of the port anid harbor, often uses K?I' s anchoragesto moor its oim vessels.

33. Despite some dislocation of traffic during the reconstructionof the East Wharves the proportion of the total traffic handled at thedifferent locations has not changed significantly in recent years. Thedistribution of traffic handled is roughly as follows:

East Wharves 50%West W-harves 15%Oil Piers >, 30%Bunders, etc '/ 5

C. Operating Efficiency

34. KPPT's Traffic Department has not, until recently, kept separatestatistics of berth occupancy and of tonnage handled at each berth, andtherefore the efficiency of port operations had to be appraised on a"wharves" basis. As already described in paragraph 19, there are fourdeep-water berths at the West Wfharves and seventeen at the East hliarves.Berths 1 to ,. the reconstruction of which is part of the project now

1/ POT - petrol; oil and lubricants

2/ Open vharves and basinqs suitn'ole fr small coastal and sailing vessels

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under consideration, are in poor condit4-on and, according to KPT, canon:Ly be operated at 50Z of their caDacitv. Therefore it will be con-sidered that, for the purpose of detenrining the average dry tonnagehandled -er berth, the Eas-t Wharves aLig7regate only 15 berths.

35. The average dry tonnage ner- b2rth per year handled during thelast three years car.n be approximate`ly determined as follows:

East Ullarves West Wharves

1960-61 173,00 217,000

1962-63 190,000 179,000

36. The above figures take into account the cargo lightered fromdo lab 1 e-b ank c d s hi- s- and neglect the traffic h;Pcd a+ +the nrya 'a'in (abc i

20,000 tons a year). This represents an average of 1,150 tons per me-terar7nEaa..1y~ -over +h pas thre years-. J. ,- ) are A-xe r -igre '-ndanua,l 1 ir -ircn. + I-,c, mc o+ + >n, --- ,- cr-c fl" ,,s-c _ - 1 I a+ FM- - -..n nrA

compare very favorably with the averages for dry cargo handling in boththe Eastern, and Western nem.ispheres.

I 7 Jl 2 u t ~ i~ 1± .'i~~02 je±± lC it ± 4-1- J. -4J V '37. On~~Ure o-f th'Ie. Ireasons fpor 4thi.Ls good _LL'rmnc is the re-l aULVtivel,ligh percentage of bulk and sacked cargo in the composition of Karachi'st- raFfi.c.P_ .]:t4 l4- s-_ ' fican t4-ha4 the _ 4 -s

apprec:iably lower than thct of foreign ships. This is because Pakistami.slhps frequenttlY undergo r sairs at wo.king berths, and are m;ore re-luctant to pay for overtime and week-end working.

38. Appendices 1 and 2 show that in 1962/63, some 43% of dry cargotraffic was of a bulk nature, comprising coal, wneat, sugar, cement,fertilizer, rice, oil seeds, salt, scrap iron and iron ore. Hlethods ofhandling these various types of bulk cargo dif-fered, but in no case washandling fully mechEaized.

39. The effici;ency of port operations is corroborated by the numbersof torns of bULk handled, per nooK per hour, in Karachi and. compared -withU.S. ports' averages.

U.S. Karachi

Wheat (sacked on shore) 22.5 27.1Cotton (bales) 19.5 Ib.7Cement (bags) 22.5 18.)

40. However, this quite favorable comparison does not hold good forgeneraLl cargo handling where the latest f-igures for the handling of generalcargo impor1;s is 9.5' tons and for expo:rts 12.6 tons per hook per hour.

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Li. Chronic congestion of ships ensures a very high berth occupanc,in the port. Alloring Sor one berth being out of cor,miSsion annuallyfor dredging and maintenance and incliidirg vessels that have been double-ba:nked, KPT estimate that berth occupancy was as high as 99.3 percentfor the year ending Jlune 30, 1963. Dven figures well below this canonly oe achieved at the expernse of delays to silippi-i and cargoes. Atpresent the port is generally in an over-worked condition and without"breathing space" between different sh:ipmenlts of cargo which would a'lowfor efficient receipt and delivery, clearing of sheds, maintenan^e ofinstallations, etc. Despite these adverse conditions operating efficiencyon the present two-shift system has been good.

42. Congestioin of vessels waiting for berths at Karachi has persistedfor many years, but,, rnotwri.thstanding increasing traffic, waiting time ofvessels has actualliy been reduced. The average waiting time for foreignvessels, excluding oil tankers, which was 36 hours in 1960-61 became 16hours in 1961-62 and 13 hours in 10962-63. However waiting ti-me varieslargeLr from one month to another as can be seen from Appendix 5 and cannot be explained by seasonal causes. Rather congestion is due to thLe!bunlching! of ships, particularly vessels carrying food grains.

v, F7NATCES AND TARNY1NGS

A. Rates and Port Charaes

L3. 1Main services for which rates are assessed are wharfage, storage,berthing, mooring, cranage, water supply and pilotage. Wharfage and-t,orang charges renresent the main inrome of the ponart, aot. 2/3 of' it_,

totLa operating revenue. In March 1962 KPT submitted for Govermientalapprov1 a reni sed scale of charges. These h.ave recently ;een apnrovedand will be implemented by iPT in July- 1964.

44. The new scale aims to rationalize the major tariff rates underfepfer and broader headings .to adapl-t the charges to the actual cos ofthe services renidered. However, service costs are not taken as the solerc'id1nrg factor alndi various commorr iie-s, w.7hich are included in IJOestPakcistan's export promotion effort, benefit from reduced rates. Simnilaradranta-es are offered to food- in impo,r^s and to certain materialsrequired for developing industries. In certain instances correctionshave been m.,ade to adjust the rates to those appli in Indi an pots

The overall financial effect of the new scale wil-L be a slight increase

B.s proinded fo5 nteKrciPotTutAt eere r netdi

As provided, for in the Karachi Port Trust Act, reserves are invested inuoverr±ientui anhU r,i ip aIi'y seciurtie , I rLJich amount tuo aboutu PrLs. 1)

million. Investments with respect to the Sinking Fund amount to PRs. 35.7million uhi-c representus 65 percenu o' thie o-utstanding long term adebtu,the Bank being KPT's only long term. creditor as of June 30, 1963.

46, The Act also provides Lhat a Revenue Reserve Fund Account Wi'-].be kept at 2/3 cf the avcrage annulal revenue oT the )ast three yeEars;this reserve now sta.nds at PRs. 30.3 million. Investmentes made inReveni.e Reserve Fuid. and in fwids entitled ';other", such as Pro 'oAentFund, Fire and Accident Insurance, Snpl oyees Welfare etc. are not avail-able for the financiing of the project.

47. The debt/equity ratio is 20/8O and the current ratio standsat 2.L : 1. KPT's financial position Is sound.

C. Earnings

45. Appendix 7 gives KPT's income accounts fror,m 1953/54 through1962/63. With the exception of 1958/59 and 1961/62, operating revenueshave grown steadily and lhave more than douibled since 1953/54.

49. Operating expenses include contributions for Depreciation andReplacement. Depreciation is calculated on an annual basis of 1,'3Othof the tota:L value of equipment, machinery, craft, etc. and 1/70thl ofthat of construction works, buildings, etc. which, when related to areasonable service 'Life, appear to be :Lnadeouate. Since 1959/60 theseannual contributions also provided about PRs. 1.0 million for majorreplacements.

50. By 1956, KtPT had paid off all outstanding long-term debt excepltIBRD Loan 126-PAK for iwhich redemption contributions are made to theSinking Fund. Provision was rmiade in Loan 126-PAK for pay,ment of "interestduring construction." INotwithstanding t:his provision, KP1' continuedto make equal annual contributions to the Sinking Fund of PRs 5.S5 millicnwhich covered not only the amortization but also the interest chargesalreadv paid from the Loan 126-PAK account. Thus the contrib'utionsmade to the Sinking Fund exceeded the actual requirements of the debtservi-e. In the oresent oroiect no interest during construc,ion hasbeen included.

51. The operating ratio remains good; since 1953/54 it varied fron52 nercent to ?4 ne:rcent. Debt serv-ice is amplv covered and siince 1956when KPT's old long-term debts were repaid, its debt coverage ratio hasnever dropned lower than 2) 1.

TD A cr.oinuJ ngr anTd Airli tA mn

52= Revenues are held by KPr in trust and are to be applied for(1) payment of operating expenses and debt interest; (2) the establish-me.nt and periodic conttrbution to providentj welfare nnd other specal1funds as may be established by the Board; and (3) the cost of any newwork or installations which the Board mar y decide to charge to revenue.After meeting all such charges to revenues, balances may be invested inpubic, v or+ ohrr- approvmedrA nsec-ritiA - Jr .-i. annonvs an.nu, r lly pr-scribed by

the Central Goverrment.

53. During 1959 and 1960 a team of specialists provided by RalphM. Parsons C'o. (Los -ngeles) _ras engaged, muder the auspices of ICA, andcompleted a study of KPP's operations. The consultants' recommendationsr e 'g-n- ar ding the deten -i ` Aon of tari.ff -,e±rvice cosJts - Ar the estal-ish>.entJof a costing section liave only been partially adopted by KPT. Duringthe~ CXrasa _1.LDC1 on itU wa c rmeLd Ut.at the "oarkd does rnotl wish Ithex1~ .jl ..UL0~~L±±I~U UCU U1 DU±U V~ii U1Il

port to operate on a strict service cost basis and t'¢e new scale of chargesreferre d toiC pr, 1!4 -LLI b LI I s the Bo.d! -wJ ews.V_, I

4. KP1 ' S double entry acco-uting system was also reviewed in 1960/61by a team of Governnent employees appoin-ted by the Auiditor General's offhce.Eigrht manua-ls oI operations rnave oeen preparedL by the team ann s x accept euby the Board. RecoTnmendations regarding the setting up of an inspactionIunit and modiLfied auditing procedures have not yet been adopted by !KPT.

55. Accoun-ts are audited by the Auditor General's office on a haalf-yearly and annual basis, as is usual for Government agencies in Pakistani.

VI. THE PROJECT

A. General Description

56. Except for the new bulk oil jetty, whic-h was completed in 1957,there has been no increase inI the dieep-sea shippinlg berths in the port ofKarachi since 1929. As has been shown, the facili'ties of the port arebeing very exten-sively utilized - at a rate hiaher than average and whicoiis beyond the normal maximum for efficiency.

57. In order to eliminate the present over-worked condition of theport, JP., with its consultants, has devised the present project which

'ill provide a moderate expansion of the port's capacity. The projectirnciudes a new oil berth to replace an old dilapidated jetty, reconstruct-ion of berths 1 to 4 of the East Wharves, construction of thiree nevrberths at the WJest Wharves, widening and deepening of the navigablechannel, rehabilitation of Manora breakwater and the Dreparation of amaster plan. A detailed description and comments on the individual itemsof the project are provided in Appendix 8; the estimated cost of eachproject item is given in Appendix 9.

58?. The Droiect is the maximum that can be provided within the presentphysical layout of the port, but, as explained in Sara. 71 it iwill be in-sufficient to cater for the forecast increase in traffic. The futureneeds of the port require to be studied and its further development co-ordirated within the framework of a master plan; the u)reparation of iu hichis includecd in the project.

B. Cost Estimates

59. T'he total estimated cost of the project is PRs 178.5 million ofw.i-,.h PP., PR 5RI I i]lo (TTCZ7 17 0 mii,rn) -i in forelg.n -.re-ch nng (See .C4CPenli

9). The quantities involved in the e3timates have been carefully worked out,

- 12

costs are realistic and the detailed engineerirg design has in son.einstarices, and will bei n the others, pnric oit. hv nn-isul'tants., Thec osts inclucde contirngencies of aboit 10 per(;ent whiichl, when added to thleh,r 1 +A n 5~ percent alo1Jc^n.ce in +l, esl,;.mate,- nap m,r& d're sii 'fi ci ent.

A contract has already. been let f3r the co:istructicen of the naew oil berthand th, elrm,rtaved, p>iQo o,.er V..t,V, vrefirIJl solhd

J. J u CUI. … 1.J11 - -UL I .L L

t0. Af'tel~ cor-`s-a"taon- w` thte "arikth contracv for -"-e new oilL'J. HI111 uer coUI ULuadWLO WUl1 UlIU D f.IHi~ U1±I- Cf1 Id J. Ull -1LV -~L

berth has been awarded, after -nternational competitive bidding, and thecoinltractor is aoUt-UU to star't the physi.cal co1stJracztionL of t,his item.Contracts for the other items will be awarded as :!oon as detailed desi.gnsare approved and the contract doc'zuments prepared. AlI co.tllracts snou'dbe under way before the end of 190L and the physical completior c.'n beexpected by the end o-f 1y67. Su-pervis-orL at the site ar,d at the worksof raanufacturers will be under the direct control of consultants. Somreminor works will be supervised by Mi;s, C-r.ief Engineer's department,suitably auirmented by thie recruitment or secondment of Pakistani engineers,on a basis agreed during negotiation.

61. AL- major construction and procu-ement contracts involved in

the project i-ill be awarded on the basis of internawional cominetlitivebidding and the Bank will be given the opporturity to comment on tenaerdocuments and the analysis of bids.

D. Justification cf the Project

(a) Greneral

62. The economy of Pakistaan, and that of West Pakistan in particalar.has grown steadily since Partition. During the ten years 1950-5J to1959-60 GNTP for the country as a :hole (no satisfactory breakdown byProvinces is available) grewi at a compound rate of 2.2 percent per arnnr,which was almost equal to the rate of population groXith durirng the period.Over the first three years of the Second Plan (1960-65) GNP has beeninzreasing at an annaal average rate of' 3.7 percent. Given aver2gew-eather conditions in the remaining twc years of the Plan, the totalincrease in GINP will be about 22 percent (equivalent to an average of4 percent per annum).

63. The past growth of the economy has been accompanied by anincrease in traffic through the Port of Karachi:

G!NP DrY Cargo Drv Cargo Total Dry Bulk PetroleluImports Exports Cargoes Imports

i7a,-7. -Lqq0--7i ~= '00)

1950-51 100 100 Ico LOO lGO1956-57 :115 120 110 116 1401 9h2 -_3 13 1'4)4 121 136 19I

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64.. On the bas- s of existing information, it is not p,ossible todeterpiine thJe relatiorshi p becieen the _roTth of specific traIffics through;Karachi port :rith the growth in provincial or national GN?. The volumeand type of imnports for example is inflj.enced by aedidnistrative changesin quotas, rhanges in t.he Open General Licerce list, tne a'Tai.ability ofexport Bonus Vouchers (i.e. right-s to a portion of the foreign exchangeearned from ex-ports v`hat can be uased to buir imports), the specifiLc reqwure-merits of particular capital development p2ojec-ts as well as by the avail-ab'ility of foreign eKchanrge earnecd or niade available bri thle Aid toFakistan Consortium, and by agreement+s made under the US P.L. L,80 Commodit-Aid Sche.mT. Tn recent years pxnort..s q ,av.e incraased partly as the rs-l.-tof a number of positive measures which include an Export Bonus Scheiie;an Fxnort (.b,-its Gu4rantee S hi 1 eral trardp !agre=nP t+.he fhp. ,ii ment of icport Promotion Councils; trade and commercial intelligenceorF'ices overseas theh cren-val of -all oit a fea roest-ic ondrawbacks on imported raw materiais used in exports; etc., and partl'.y asa result of the largs investments made in ind-try, agiculture and iln-frastructure during the Frst and cLurrent Five Year Plaris.

65. The fact that Karachi is the only, deep-water port serving the4-4 M..].J:Lion Jo.le ln W;est Paki± ar has ± UiLt the c eLU.ion of a'lnorma', irnport/export trade and inter-wing trade on this one port. TheU4VISi10i on [f FISVCi11 iLtuu UtrU W.LU1J' W,jdep;-atedPiUU aLlso ;Ineans thU1atu

a grea-t deal o-' traf.Cic which, in other circumstances would parobably gOby lan transport, moves bUy sea.

f N' - u - - n - .uj itmurue ra-±ll

66. Thea question of estimaating future traffic through the port w%asapproached in two ways. First, a product by product forecast was examinedin the Baxic in the :Lght of provisional information relating to the ThirdFive Year Plan (1965-70) which became available after the rnission's visit.WIhiere necessarly, adjustments were made to the forecast which had beenprepared on the basis of information suppl:ied by Governm.ent Departments,private oil cormpaides and KPTt s ovm enqiLries. The changes were mainlywith respect to the somewhat optimistic performances expected from theagricultural sector as comnared wsith past progress and technical possibilities.

67. The result of this analysis, details of which are given inAppendices 10 and 11., p;oduced tlle following forecast total figures;

(000,000 tons)

L962-63 1969-70 PercentActual Forecast Increase

Dry Cargo Iriports 2.3 3.2 39Dry Cargo Exports 1.5 1.9 27

Total Dry Cargo 3.8 5.1 34

Bulk Petroleum 1.7 2.8 65

- 14 -

These forecast totals ar3 compared in Chart ITo. 2282 in the Appendix withprojections of pas`.- shori.-term and long-term trends.

68. The second approach was one relating traffic through the portwJith past and future tota' GNP. Tn -its recently published "Guide'inestc) the Third l'ive Year Plan" the Goverrmer.t has ainrcanced. it hopes tostepD up the 2rowth rate of GNP from an average L oerceont Te:' annum inthe Second Plan to 5.4 percent in the Thi.rd Plarl. This would producea total inrrasep in fli\IP of 30 nnrcent. hnbewren '-65 anid 1970. To achJ evethis, total capital development expendi.tires will have to rise substantiallyin the Third Plnr., abo- t one-half of wrhich worid.`rl si ne in West FakistanExpenditures relating to the Indus BaEin Vlorl:s Program are outside the Plan:ra.,metork. The fi m, ures nro,-due i- hir- oc' nc he+.hr re-rl t in n 'rt-TPepnthe totals of past GNP and each broad category of traffic through Karacii-crt produced figuircs e 1 e;:-cs -of +1-,- i, + p-N-%r 'vreclle-+. !rcduct IT cz

which the mission, feels may 'be accepted as a reasonable basis for port

69. '0U1hil -in Ap-penAd- 10 4o-ag 4sirae are given a,=Lual -]-- fori.LL.UJ.. 6 II..J_JdT -h .dJ V I LL1; t~, -llLU O ~ LU i -i -. J

eacn cormodityr or product group to 1969-70, they shoulld be regarded onlyas steps towards 'he forecast for that'L year and as a basis for planning.Particular items may, in practice, vary from these ainual. figures or fromithe trends projected in the graphs shcuw-n in the attached chart.

70. The three new berths at the luest T,harves wfLi proQvide addiJti oilcapacity. The reconstruction of berths 1 to 4 at the East Wharves willremove the present limitations on their full utilization. After thecompletion of these works the port will nave 24 effective deep-water berths:or dry cargo. On the basis of a hig:h average rate of hnandling of 2u0,009tons per deep-water berth annually the porttS capacity will be about 4.8rmillion tons of dry cargo. This tonnage is forecast to be reached oy1966-67, one year before the project is expected to be completed.

(c) Alternatives to the Project.

71. By using more inechanical-handling equiprmient, by the work-ing oflonger hours and by the adoption of ot-her means to increase operationaleffic:iency some redLction in the p;^esent over-worked condition of the portmight be achieved. Given the immediate forecast and longer term trafficincrease that are expected, these measures will not avoid the need tobuild additional berths and restore existing ones to full operationalcapacity. While some of the items in the project could perhaps be locatedelsewhere within the harbor area, the proposed sites are the most practicaltc meet tihe immediate foreseeab'e traf'fic reauire.nents. They are alsothe most easily exploited and, therefore, the least costLly alternatives.According to both KPT and its consultarnts they do not conflict with theenvisaged master plan of long term development. Any further physicalexpansion beyond that in the project would have to take place away fromthe present port layout and vill form part of the master plan study.

72 There can be n. rlinhtf that, ssaLv+r±-.1 Far nt's. both in hnndl.ingcost and ship s time!, would result from full mecnanization in suitablecases. How-ever, the formjlna`iic nOf r, fi.- nciT proposa.ls is ;ii ff'h ri)lfbecause of uncertainty as to the futv..re VO'alunes of traffic in particular

report (referred to in Append-ix 11) recommended the constcli'c o0± off silosa-r.d ,--a- for - vlea Lml- i .s,bu 7 s n this is u se

because it considers that wheat wmport- will continue to fall. It iscor.sJ-de-ed thlat,LL fur.1t:e Udeta.l_LV Z.-UU sho;;ldu Ibe g-Ven Lto1U -the who-le

quiestion of mechaniized handling of oulk dry cargo, and during negotiations XPTun d ertook to em,lploy, as soon as praciablcabl-e, sULtabLe experts TO advise on Tis.t

73. vrlle some re iel can be axpocbta lrom ii1cIeaeQ prcductivity,increased mccilanisation and gieater Use of lighterage, furtlher physicalexpansiorn wii undoubtedly have to De undertaken to nandle dry cargo atan earl- date after the completi on of the r,.aster plan 'nvestIgaio.o.The project cannot wait until tnhs olarL is foipllLated WitilOUb carsnrgserious congestion ana delays in the port -ohich is, and is lJi:ely tGremain, the only one servirg lUest Pakista1.

(d) Benefits of the Project

74. The new oil bertlh, with the complementary channel widering anddeepening scheme, will replace the dilapidated oil berth and give KFT amocdern, t-wio berth terminal with sufficient' capacitj for all foreseeablePOL traffic. The rehabilitat-ion of Marora breakwater will ensure pro-tection to ships and help maintain the existing hydraulic regime at theentrance to the harbor thus maintaininn: access to the port.

75. Approximately 40 percent of the total cost of' the Project, orsome us$l14.7 million equivalent, is to keep in serrice or renlace exist-ing facilities which need urgent repair or are du.e for reconstruct`on.The repairs to the LTanora breakwaater, the reconstruction of berths 1 to4 of the East W-1harves and the replacement of the bulk oil pier come withinthus category.

76. The three new, berths at the West Wharves and the reconstructionof' berths 1 to 4 of the East V.Tharves Till elimrinate some of the delaysto shipping and corresponding delays tc cargo. The arnual average ofslhoping days lost w,aiting for berths in recent years has been one shipday on all vessels using the port. Shipping companies engaged in theKarachi trade estimate that one day!s delay to a ship costs PRs. 6,000or US$1,250 equivalent. Withi the increased traffic and greater demandfor berthing space, delays and costs can be expected to increase. Thusbyt 1969-70 lost shipp ing days may reach 1.800 each year ( a figure wxhichwas exceeded in 1960) and the financial loss to be about 1S732A million.The savin, of this amount would represent a gross return of about 9 per-Cent on the TJSt?5.0 m1illion to be irve:tod in wfarvres

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77. The perslistence and probable `nc;ease in delars would havetie effect' of npi.ng rnranie.s el tie:r evoi,ding +.he port or surchargi ngcargoes t o and from Harachi. The effect of this increase in freightrates would be to increase both the costs of liirng and pr,duction inWest Pakistan and adversely affect the com-petitive ability of its exports.Th eli.. n ri.a JtionL of s.pn de ay is a'.s of beeft +^ th Pa'.i

economy in that capital is ti.ed up ini :ocics aboard -hip which have to)-Qb' ^e Q +4 _;,P1 -;_4-__ , Tc. + 5 * ̂ f D m. 1- 4-+ I t-nI !5 wllL'v~ s I LCOUI'..-aLi. my 10 v 14. .LILU v± . V . W Ij .A-S V±.a _ J',. . 1 .L

of sea-borne trade through Karachi in 1L961-62 vwas PIRS. 2.7 bi'llion or

7TOO"Ef7- -- .r A… --1 .. ,.,.US,570 rC, n IliJon.

78. In v`e-w oi the probaI-e siae of -the a.-voidabe costs mien`tione'above, a large part of the projectu is recuired just to raintajn 0xistingoperat ionIls arid tUat traafiC isexpecu5 e out--groCwJ even UtnU UXUCa r oapacity

to be provicded, the project is f-u-lly justified.

V/II. * 'JTUY%L FiNjk1M.ULU Vd-iUbI'b AI\ u-DD;V-Ii_uiihmin' 2-Th\A-I1lGt-lIl

A. Future Financial Results

79. Earnings expected to be realized during the construction pericdof the Project (1963/64 - 1967/68' are given in Appendix 12. The l9`3/6!'figures are those of KPT's budget, wh.ich a.ppear conscrvative. Operatingreventres from l96l/65 to 1967/68 are c-alcula-ted on the basis of I'PT'spresent scale of chargea. Operating expenses take into account expectedsalary increases and the cost of additi.onal staff requJired to deal w;iththe nort's increasing activities. The forecast income accounts providefor (i) depreciation as presently calculated by KPT, (-i) major rep2ace-ments by a fixed annual contribution of PRs. 1.0 million, and (iii) mincrreplacemrentS and reneowals by a fixed annual contribution of PRs. 0.4million.

80. Allowances are also miade for the se;vice of long-term debtinclud:ing (i) IB2D Loan 126-PAK, (ii) loans from consortiuam, coluntries at6 percent. interest for ?5 years -nclud-ng a five year pericd of grace,and (iii) a propoced second IBRD loan "assturied at 51 percent interest for25 years including a five year grace period), allowance being made fo- a'-2 percent Government charae as guarantor fee, maling a total of 6 percentinterest. Notwithstanlding the grace periods of above loans (ii) ard (ii:i),KPT intends to make advance annual contributions to the Siniong Fundstarting in :1964/65 for future debt amortization.

31. During the construction period the operating ratio is expectedto remain low, some 65 percent. The debt coverage ratio will drop from3.4 to 2.8 : 1, no allowances being made for the advanced contributiolnsto the Sinkiiig Rand re'erred to in nara. R80 The inerost,P earnerd ratiowill decline from 7.2 to 3.7 : 1.

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B. Financ]in. of tli TD.hvel ornent Program

82- rGoncrrrPn*ly with the proMecr± KFT iJ-.tpnds to carry out otherworks included in tlhe Second Five Lear Plan, the estimaLted cost of' which

is deta~~=ie belown-.r:

Gomple tl+o n of 77n t zI. Rec^r.s+luetiorl

Proj ect PRs. 9,450,0C0P ,,n1 rcn~nmnn+ OnyA PDve".r-'-1 q v:,v'w' ~fc~ Pn lflfl

Other Capital 1urks 30,000,000

rrT ot- a IRsT. - 75 f0 ,000

83. The foreign exchange cost of' the Eest Wnar-es PeconstructionA4nA - - w 4'4 1- L.-- 1 _ TI__ \'_, -lT .. .-2 - - _ -.-- L- I

pr.LU.-C; LU d.X± y a ±1d_i_Ur LJ,y ijUzflIi .L D L J .,J U U Uq_u

fully disbursed during 1363,X64. Foreign exchange component cost ofI'le replacemer,t and rene-vals p-irog.-ai awInd oL t.e Vuull-r uapu;ic wUork is

estimated at PRs. 24.3 million i-hich .s financed by the supplier countries(IJ.K., 0 fapan, Canaua). Local currency cos0 of tie project. and of theexpenditures listed above will be fullay financed bor KPT's accumulatedreserves and prospective ea:nings.

84. The capital resources available to thie KPT and the neei of fundsduring the five-year pericd 1963/64 to 1967/68 are summarized be'low:

Avai lahle Funds PRs. OCO

Cash 18,874Investments 84,5S1Profit, Depreciation, Sinkir.g Fundand Salvage Sales 1.244 L0

LoansProposed Second IBRD Loan 81,100Balance Loan 126-PAK 5,873Consortium 24,300 111,273

Total available 339,148

Required Funds

Expansion and Improvement Project 173,500Replacemen-t, Renewal and other Works 75,250Debt Pmorti-zation 13,575Replenishlment of Revenue Reserve 9,900

Total required 277,225

Balance of Ftunds A^vailable 61.923

- 1P -

8';. The above table indicates t';at 60 percent of the requiredfunds would co..e 4ro. the KPmT-s reIso,ces It s4 - - l- +'in+ Iawir"!

the Thi.rd Five Year Plan (1965 - 1)70) about PRs. 200.0 million w'Jillbe irrvested in the o.rt, of -J-4,1i ROs. l.J., r Ju be spe..U or,

the project in the first three years, 1965/66 to 1967/68, of the Plani.Thia al_loc1atior;i to) theu pro-Uect i incuue inr tlse 2;0.ti tabIVle,trbace

of PRs. 31.5 rmillion wlfichi would be reouired if t he t1otal Plan figure ismaiL1t-J.ned at PRs. L 00.0 ridl Lion± is not. Ih lZ sourtce of fIuLds for thlisbalance and the rate of its exper.diture are not nowi knonm, but on theassumption olf a.n equal rate of disbursemert, PRs. 16.) milIon per annummnKPT w-ould 2ppear to hav-e no difficlilty in meeting the cost frowi t'le lun,isavailable to it in the period to 1967/680, as indicated above, and bey^ndthat date. Kowever in Appeiidt- 13 wIhich is a detailed statement of cashtlow dLring the project construction period, the oalance of funds iorthe Plan is designated as to be secure.

56. Pro4ect enpenditures, as included in the cash flow, are schjeduledas follows:

(FRs. million)

1963-64 1964-65 1 965-66 1966-67 1967-68 Total

Foreign exchange 10.5 20.0 25.0 20.0 5.6 01.1J,ocal Currency 9.5 20.0 25.0 25.0 17.9 97.L

Total 20.0 !,.0.0 50.0 45.0 23.5 178.5

Foreign Culrrer±cy (Inmillion dollar equivalent) (2.2) (4.2) (5.2) (4.2) (1.2) (17.0)

VTII CONCTUSTONS AN;D REC0I-HBQDATTOS

87. The organization of the Port. of Karachi is good and the manage-ment is rcasona'bly corapetont. Thc operations of tho port are rcasonablyefficient. The project is technically, economically and financiallysound. and uil provide in a reasonable manner additional capacity neededto help eliminate the present congestion in the port and wrill provide forpart of the forecast increase in traffic. A master plan studv is re-quired to determine how further expansion of the port should be undertaken.Those items of the project dealing with repair and replacement willmaintain the existing facilities of the port.

88. Future finances will be amply sufficient to complete the projectand meet KPT's napital investment nrn'oram-

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89. Thie following recommendations are made:

(a) Cost studies should be carried out pe-iodicilly so thatmanagement maay more clearly 1;noT, the cost of specificoperations in orCer to ratior.alize rates.

(b) Studies s'hould be undertaken to improve the collectionand compilation of statistics in connection v:itth Dortoperations in order to de.ise means of iimpro-ing eff ciency.

(c) The Engineering Denartnment slhould be strengtl'ened so thatit naiy more adequatel, cope witlh the problems of now ITorsv,

maintenance and port 0l,-aninp.

(d) Studi-es of the handling of bulk dry cargoes should beundertaken to determine the extent to which rnechaLx; zationcan be appliod to i nces the Pffirieonev or' tnee rcanoperations.

90. The action required by the above recomrendations was discusseddu, ng,r neg±.-i Atio'- and a -s qntisfac-vrv nagreemPnt rcfhed.

91. It is recommended that a Bank loan ot f'S$17!.0 7 .llion be madeto KFI', a suitable terra vould Ie 25 years including a five year period o:"

Bank

PORT OF KARACHI

Bi- - '. '2KiRJDITItS(tolls uuO .nterim neriod

April I -Fisc-al Yea:r Runs From Ajrl 1 to iriarch 1 June 30, Fiscal Year Runs PromJul 1 to Jane 0

CU-0DITIES 8 9 1 1956/57 199/558019559 19S9 _ I95Z960 -

Coal 505 534 585 5:37 536 216 187 219 358 312 155 22 194 71. 35 21

Iron zLnd Steel N.A. 47 246 229 201 90 199 174 107 182 190 46 154 357 226 222

Wheat 44 35 -- 534 988 1 47 594 626 650 164 773 1100 699 553

Sugar 40 112 39 162 104 43 66 100 62 87' 1 -- 7 94 44

Texti:Les N.A. 6 40 44 36 11 11 18 13 6 11 1 1 16 29 5

Cement; N.A. N.A. N.A. IA. N.A. ..A. :.A. 7.A. N.A. N. A. .1. N.A. 1:L5 30 2 38

Fertilizers N-4. N.A. N.A. N.A. N.A. l.A. N.A. N.A. N.A. N. - N.A. N.A. N,A. 139I 155 99

General Cargo 509 660 706 706 8o2 _5698 _ 679 92'3 _ 786 82, 732 LL7 _ 854 827' 938 136Sub-TotalDry uargc 1098 1394 1616 1678 2213 1916 1143 1481 1920 2036 1756 350 20'31 2547 2178 2338

Kerosene Oil 100 142 146 2]L4 231 279 223

Liquicd Fuel 806 950 891 953 1005 902 1403 *'

Petro]. 186 97' 188 167 127'_ 129 52Sub-TotalP,O.L. Products 5C5 522 776 9 _ 853 830 909 108S 1092* 1239* 1225* 273* _ 13 34 136 1310* 1678*

GFRKND TOT'AL 1603 1916 2392 2622 3066 2746 2052 2569 3 012 3275 2981 623 3425 3910 3488 4016

Percerntage cf:Dry Cargc 68 73 68 64 72 70 56 58 64 62 59 56 61 65 62 58

P.O.L. Products 32 27 32 36 28 30 44 42 36 38 4-1 44 39 35 38 42

*Converted as followis: Kerosene Oil 287 Imperial Gallons = 1 Long TonLiquid P'uel 244 " " =Petrol 310 ' =

"Including Crude Oil -

.OYT O'F KALCF.IT

MaR:KD(,ON CF ACTUAL EXIPC.i BY irIN CCCiQ01TIES(tons 000) lnterim ieriod

April 1 -Biscal Year Ru-ns From Apri.l 1 tc) flarch 31 June 30, Fiscal Year luns Fr,u_Ju4E to June 30

COIiODITIES 194 290j58 1958/ 9 _ 959 1959/60 1960/i61 1961/62 1962/63 _

Rice 116 150 60 323 240 131 144 321 85 135 20`7 65 207 236 157 461

Oil Seeds 162 87 149 104 68 84 80 84 108 96 62 42 sO 146 102 :119

Salt 106 48 71 159 34 134 1(1 147 196 130 89 30 106 22 103 65

Cotton 167 153 313 204 264 271 14,7 210 15;8 112 1,3 28 118 107 160 205

Wool 15 16 21 14 .19 16 1]7 14 1.8 17 19 5 18 17 19 17

Food Grains Ž'.A. 176 214 76 21 20 37 39 61 47 1.7 7 40 26 l.A .

Iron and Ore N.A. 29 23 21 18 20 12 17 31 23 19 11 32 1,4 62 16

Oil Cakes N.A. 6 10 18 :24 30 39 72 87 36 49 10 49 27 28 29

Cement N.A. N.A. N.A. N.A. N.A. N.A. A.A. N.A. ' il 69 , 0 N.A. 90 46 190 .220

Other 374 260 221 237 1'91 202 263 _ 198 __ 228 24_ _ ___82 27 270- _ __-271

Sut-Total Dry Cargo 940 925 1082 1156 929 908 84>O 1102 1041 893 872 280 104 1031 1092 1480

Kerosene Oil 1 2 1 1

Liquid Fuel 62 34 24 21

Petrol ____ __ 1 1 1_ _ _____4

Sub-Total P.O.L,. Products 64* 37* 26* 66*

Grand Total 940 925 1C82 1156 929 9o8 840O 1102 104l 893 872 280 1078 1068 1118 1546

*Converted as follows - Kerosene Oil - 287 Lmperial Gallons - 1 Long TonLiquid Fiue:L - 244 -

Petrol - 3-LO -

Appendi x 3

PORT OF KAIUCHI

ACI'UAL EXPCIRTS AND IMPORTS, ICLUDING POL PRODUCTS, SINCEPARTITION UNTIL JUNE 30, 1963, AS COPIARED WITH KPT'S FORECASTS

OF TRAFFIC SINCE 1.955/56 1/

IMF'ORTS EXPORTS TOTALKPr I I of KPT f % of KPT

Year Fore- ' 'Total I Fore-' 'Total Fore- IEndine casts 'Actual I Traffic t casts'Actual'Traffic casts ' Actual

March 31; 94i8 1 -I56 53 1.028 1h7 2.18a1.94h9 1,603 63 9h10 37 2,5431950 1.916 67 925 33 2.8LL11951 2,392 68 1,032 32 3,4741952 ,.622 70 '1 I 46 0 3 -7781953 3),066 76 920 24 3,95c5

"f 9 95)' ' 2 -2746 75 908 25 3,6'41955 2,052 70 840 30 2,8921 06 2,272 20569 70 905 I102 30 3.177 3.671

1.957 2,223 3,012 74 935 1,041 26 3,158 4,0531 ].958 2,291 3,275 79 9 A5 8Q3 21 3,256 ) , .fi1959 2,351 2,981 77 1,C00 872 23 3,351 3,653

Interim PeriodAp.1J. e ~w4 30/5 - 623o 69 . 280 31 -°03

June 30, 1960 2,4002/ 1,425 76 1,035 1,078 24 3,435 4,5(3"~~~~L%- 196 24_f0n ,P',9 7 9L 1,05 L, 1,068 21 ,Lc4,9, '8

1962 2,500 '3 3,488 76 1,09 5 1,118 24 3,595 4,6o6J-7'J W L_~.L I C. -L ,J.J..J , ./I. A ,J'# J.\

2/ rFgorestde c iLca yr.tearsng ar,ud c roas'l sAhprLp pL 11 t ah

21 Forecast in fiscal years running from ,,pr-4l 1 to M^arch 311

Appendix 4

PORT OF KARACHI

Ntunber of pa.ssengers embarked and disemlarked includcingHAJ DiL7zrims

Ye'ar rifel n- Passegrir Movraempnts

Marrlh 'Al 1956 i 139 480

March 31, 1957 186,2h)7

MlUarc:hl L1 9I 8 12

April 1 - June 30, 1959 18,397

June 30, 1960 120,79L5

June 30, 1961 126,525

June 3C, 1962 110,159

JunMez 30, 1963 156,481

Appendix 5

POFtT OF XKARICHI

AVEILGE WACTTTNG TIMJS OY VESSEIS-' FOR BERTHS

Avora-e .TaitingTota:L N.umber of timne outside port

Year Month Vessels calling per shio (in hoi'rs)

1961/62 Jully 38 37August 9L 22September 38 lhOcltober Th 8No,,-ember 90 10December 79 6January lO5 36Februarv 85 22March 39 6Anr 1 :)11Iay 235 5

Jimp QOin

August 97 12Septenber 7Lt 8Ocltober 36 4

December 33 8Jaruary 3a llFebruary 70 15

Maril 910 1L

June 39 3 2

1963/64 Ju:Ly l1DO 9AuI,u 3) 4

September 76 6

Novrember 81 13

*, Exc]uding Pakstaii vessels and tanKers.

Appendix 6

KARACHI FORT TRUST

Summary Balance Sheet as of June 30, 1963

(PRs. 000)

Assets

Curre,nt 26,799Debtors 6,866Stores and Materials 1,211Investments:

Revenue Account :L8,711Rsvenust Rpserve Fund 29;898Depreci.ation anldRoplar-pmEnt Fund '30. 165

Sin4ng Fund 35,685nther '2;hh

137,103

Flxed Assets based on original cost(41JACIU-Ifr,g? I.Jor.,S '^n prog-ress:q 246,665AC

T ntal 41 ),I (b18

T 4 l i + 4 e4

Credit,ors 1,0041D rse r,ers eez andJ super Ae h.cco.rts of;

Revenue Balance Account 9,748Revenue. ARlpserve:3,0Depreciation and

ieserve fot Sinking F'und 143,526v vh 13% ,( 6

129,661

Long-T erm Debt 54,971.

Total 418,644

Debt/Bcuity Ratio 20/80Current; Ratio 2.4 s 1

Aonendix 7KARACHI PORT TRUST

INCOME ACCOUNTS 1953/54 - 1962163

(PRs 000)

Interi, Period1953/54 1954/55 195i/56 1956'57 195/ 58 1958/59 April 1 - 1959/60 1960/61 1961!62 1962/63(i)

June 30, 1959Oneratine Revenues

Wharfage on:

P.O.L. products. 2,480 2,721 3,276 3,016 3,269 5,000 2,162 9,644 6,555 7.443

Impor-ts (excluding 1'.O.L.) 6.090 5,089 5,419 9,579 8,089 7,228 1,475 6,924 1I,056 9,525

Exports (xcludir, ?.O.L.) 2 -,7 54 3,:i23 3,369 2,953 2,842 ?24 3,800 13,85 3,91?

Storage 6,652 7,990 8,997 10,275 14,736 6,n68 1,099 7,721 10,CO4 8,552

Land and Buildings 2,641 2,451 2,430 2,979 5,t476 3.818 728 3,375 '4,652 4,420

Port Department 563 520 536 557 625 762 108 1,938 2,652 2,578

Pilotage 693 622 635 673 717 1,084 140 1,035 1,482 1,155

Other 2,469 2,522 _2481 2,844 32,80 5,506 2,628 10,744 13,690 10,097

Total Operating Revenues 24,'341 24,469 27,297 33,292 39,045 32,08 Q,464 15,221 53,476 47,801 52,295

Operating Expenses

General Charges 3,163 4,334 4,049 h,615 4,845 6,479 1,907 8,n03 7,609 7,266

Wharves, Warehouses and Railways 7,520 6,687 8,(77 7,515 8,857 9,508 2,461 12,052 10, ,314 12,289

Land and Buildings 232 384 441 360 L43 470 103 666 566 838

Port Department 2,293 2,515 1,561 1,209 1, 603 2,110 099 3,240 2,671 ',666

Pilotage 540 464 534 598 734 808 225 982 910 919

Other -14 35 _ 42 22 -52 62 _ 37 73 _ 47 54

Total 13,782 14,419 14,704 14,319 16,534 19,437 5,632 25,106 22,337 25,032 26,016

Contribution to Funds

Depreciation and Replacenent 2,000 3,000 5,500 4,000 4,000 4,000 1,075 5,300 5,500 5,500 5,500

Other funis 21 32 32 - 32 32 7 142 45 47 60

Total Operating Eopeces 158aO3 17,451 20,336 18.1S 1 2( 236169 6,i:14 30,548 27,882 30,579 31,6;6

Net Operating Reen.ues 8,538 7,018 6,961 4,941 18,479 8,839 2,,750 14,673 z5, i94 17,?22 20, U19

Non-Operating Revenues:

Interest on Investments 1,422 1,358 1,533 1,285 1,979 2,474 718 2,000 , 507 1,949 2, 339

Irterest on loans 3239 780 _ 139 24 -381 _ _ - _ --

Net Income 6,721 7,596 8,355 16,202 20,077 11,313 3,468 16,673 27,101 19,171 23,008

Contribution to Sinking Flund for Debt Redemptian 4,6 6

8 3,968 3,35L6 4,782 5;383 5,183 1 ,60 5,446 __Ž46 5,446 5,446

Z,o;i ~3, 4,799 ii,420 14,694 5.930 2,108 11,227 21,745 13.725 17,542

Operating Ratio 1:%) 65 71 74 55 53 73 71 68 52 64 60

Debt Coverage Ratio 1.3 2.1 3.6 3.9 3.9 2.4 .8 1.7 5.7 4.2 4.8

(2) Brvukdo,n of Operating kavanuos and Expenses no-t ,vailaule.

ADpendix 8

KARACHI PORT TRUJST

DX.AILS AND COINUTS ON THE PROJECT

1. The 1Ned.w Oil PierPi

T.he new oIl pier, for wrAhich the cont-act has bhen let-, .r71 1 "PrOnthe existing, old bulk oil pier which was constructed about 53 years ago andis in a dilapidated condition i Th- new c be U to andaligned with a second, 644 ft. long, concrete jetty which was constructe(d;- -101f7

1Tlle rnew structure -vJill be of U0.dtei, Ud3tesi-g lU andcop;^Jlse aci rJ.l-ti V e±ly

small reinforced concrete jetty, 235 ft. x 35 ft., supported on steel boxpiles, flank-rued by four mooring dolphins and complete with a shore conUecio'±Lncarrying the pipes and a 12 ft. access road. It has been possible -to designthe new facility as a short, open structure rather than as a continuous,closed one, and hence at a lower cost because of the inclusion in the projectof the widening of the channel opposite the new oil pier. Tne wideiJ.ng ifillenable sihips to move more freely in the channel opposite the oil installationwith a reduced risk of colliding with the oi.l piers or ships berthed thereat.Designed de-pth alongside wil]. be 36 ft. at Mean Low Wlater and the new- facility,together with the 1'357 jetty will meet the demands of the increased petroleumtraffic and in particular those of the new oil refinery which started opera-tions in Karachi in 1962.

2. IWidening and Deepening of the Navigable Channel

This item provides for the widening and deepening of a portion ofthe main navigable chlaannel. The existing fixed moorings in the area 1wfill bemoved to new positions in order that the channel may be widened and someadditional moorings will be provided in new locations.

At present the channel width in the lower harbor is 600 ft. andtho depth of water provided in the area of the oil piers is 31 ft. belowi MIeanLow Water. This improvement scheme will provide a width of channel of1,100 ft. and a depth of 34 ft. below Mean Low Wlater. The length of thedredged area will be about 7,500 ft. and the quantity of dredged materia:L wzillbe approximately 3.0 millioin cubic yards.

KPT has sought the advice of an internationally knotn dredgingcompany, their past and present consulting engineers, and the VlallingfordHydraulic Research Station, U.K., and the consensus of opinion gathered isthat the iob can readily be done and will not be detrimental to the regime ofthe waters in the harbor area.

A side benefit of the scheme will be that most of the dredgedmater-ial bell hp. mitahlp for repelmaton purnposes and will be used to ricliyrnabout 150 acres of marshy foreshore land on Manora Island adjacent to theirm.rproved channel. The wiTidened navnigable ch an.nel wrill prorie,nd irTnn.rnei ri'refor ships proceeding to and from the upper harbor and safer clearances between

_ Appen_adix _ DPage 2

passing ships and vessels moored at anchlorages and o-l tankers berthed atthe oil piers. This will help eliminate the chance of collisions leading tooil spreading in the har'bor area -vwith its inherent risk of fire.

3. Reconstruction of Berths 1 to 4 East W.rharives

The main item in the project, financed by Loan ITO. 126-PAK was thereconstruction of berths 5 to 17 of 't,he East W1harves. KPT has nowr decidedthat berths 1 to 4 of the East Wharves should be reconstructed. The existingquays are some 50 years old and much of the superstructure has been corrodedand weakened, and consequently IJPT has had to reduce the permissible loadingson the quays thereby severely limitinp their usefulness in the last few years.

The reconst-Lncted berths 1 to L Till have the follo.wing lengths anddepths at hbean Low Water:

No. 1 500 ft. long 28 ft. deepNo. 2 500 "l if ifNo. 3 550 11 I 34 t< txNo. L 500" i 3t"

The netT berths will 'h nrovidedA wi th t3hreP t.ra t, sheds and wi-th the usilaroad, railua,r, electricity, water, bunkerage and cargo-handling facilities.In addition it is T-Pr ?s inten.tion to~ inzororate amoc'ern passenger ter.ninalinto the upper level or the sheds for coastal and intercont'nental traf'ic.

The arrangements for designing and supervising the construction willbe the saMe! as for the Ucest `,narves -par.sion schem,.e descriibed below,

I,. Addi4ticnal Berths atWest Tave

This scherm,e will prov de the onl.-y exansion of deep water bertagein the present project. As showrn on the map, three new berths will be builtas In contuinu ati- on of the exls`ing fOUr beirths of th4-Ie ITest- .Tllarves,C~~2 IiULIJ ~~UcLL~l .L Ulii ! -L~ U±II LUU V UiJUj4t 'L ul,i L!t u. MId~LV ~

AI sU ±U qUayd a' LJoUt U U .ft, logU -. Ube U UU ±U1l!1 UthrUe Udep

water berths wzhich wv.ill be designed for a wiTorking depth of 31 to 38 ft. atnaiL LTow wat er. ne new UerInls wi i nave one translt s.hea kuU 1U. oy LU_9 L U.J

and be complete wjith storage areas, transit plinths and quay cranes aithl road,rail, electricity, i ater and bunskerage services. Tne transit sned will bedouble storied -writh a modest passenger terminal. The existIng lightera-e andship-repair facilities will be relocatea.

The design, preparation of t.ender documents, analysis of bids andsupervision of the quays and of the transit shedc will be done by KFT' sconsultants. KPT i will do the supervision ofl the ancillary wori such as roads,railway sidings, transit plinths, storage areas, water, electricity anddrainage services b-y empioying K-P staff as agreed during negotiationis.

Ap-endix &Page 3

5. Rehabilitation ofi Nianora Dreakuater

The Hianora breal:water was bu)ilt in lo'2-74 at the Fouth end ofianora Island. it is 1,500 ft. lIong, 24 ft. wide ard is constructed of largeconcrete b:locks. The breakwater has freqnlently been danmaged during severemonsoon conditions., th1e last major repair be-ng carried out durir- 1952/53at a cost of PRs 1.7 million.

The reconstruction of the b-eakwater wTill involv.re the placing ofsmall stones as a protective berm, placing precast concrete blocks or patentedtetrapods of about 12 tons vie-ght as a protective armoring on each side ofthe breakwater and special protection using larg,er armoring up to 20 tons inweight at the head of the breakwater.

"'he breakwater Drovides protection to vessels entering the nalrigab'echanniel and is an integral part of' the h,ydr-aulic parameters controlling thesiltatior conditionqs at. the e_ntranrce-- bar.

''U)T1 s connsiutarts nvP Yeporte orn this rehahilitation sc,-me wliniwll' be superTised by them and carried out on a contract basis.

6. Preparation of i1ster Dlan

KPT s consultants have been entrustea iTith the preparation of amaster plan for future development of the port In their stdies Co le andPartners w-ill undertake a scientific investigation into the sub-soil st:^at-a.,ci'1+ Adepos.ts, a- d '-A ,,n,l v.rrg l e of +

1,- prt-+ araad fl deter1.in

eth-

optimum land utilizatio.n and reclamation possibilities for future expansion.

'iThe studies will provide a basis for reclar,ation work and futureconsty_IC1 4 oln, and wdrll delineate areas for -- ------ 4al arc n2zu-tA_ a'4 epansion

as wvell as explore the need for road and rail approaches to thle port and iorothliflfi e.-,intVr fi e s. T he n4- -- w,-1 1 p n - f-' co l At- t,,1 4 on anA coordna-

tion lwith the other interested authorities in the area and wdill reslllt indetaile p o -P dev of' 4th1± e port over the ViLIU tL') n Jears.*

general indications winll be given for development over a similar periodt,W . ¶a4 U~l .

Append4x 9

PORT OF KARACII

FISTit^TAAT COST OF P''O.TJEECT (In ,;illions 'f Rupecs)

ITENII NJO DESCRIPTION TOTAL COST LOCAL CURRENCY FOREIGN EXCHANiGE

New Oil Pier 9.5 3.9

2. Wi-dening and deepening of thenavigable channel. 16., 9 . 7.2

3. Reconstruction of berths 1 to 4,East Wharves 56.1 30 7 25.4

lh. Adjditional berths at West Wharves 63.9 36.i. 27.5

Rehabilitation of Manora breakwater 4.5 2.c0

6. E:ngneering services 6.7' 2.h 4.3

7. Preparation of Master Plan 1.2 o.h 0.8

8. Ccntingencies 20.1 1 6 9.5

TOTAL 2.78. 97 A 81.1

U.S. MILLION :DOLAR (EQTJIVALENT) (3 $) (20.5) (l'.O)

Appendix 10

PORT OF KARACHI

'I.CCAST O" TAF.IC VULU'ff. (tons 000)

IMPORTS 1961/641 19c,4/65 1965 /66 1966/67 1l)67/o8 1965/69 1969/70

Coal 20 20 21) 15 10 5 -

Tron .-d Steel 250 250 250) 300 400 500 550

Wheat 500 450 40) 350 300 250 200

Sugar 40 35 30 25 20 15 IO

Cement 30 25 21 15 10 5 -

Fertilizers 150 1/5 20C) 225 250 275 300

General Cargc 1,400 1,450 1,50) 1,550 1,600 1,650 1,700

Indus Basin Works 200 200 30( 400 400 300 200

Afghan Transit Traffic 250 250 251) 250 250 250 250

Sub-Total 1ry Cargo 2,840 2,855 2,970 3,310 3,240 3,250 3,210

Refined i.O.L. Products 400 200 30) 400 500 600 700

Crude Oil 1,500 2.100 2.10) 2,100 2,100 2,100 2,100

SubTotal P.O.L. ?roi3ncts 1,900 2,3C0 2,40) 2,500 2,600 2,707) 2,100

TOTAL ]I4PORTS 4,740 5,155 5,370 5,630 5,840 5,950 6,010

EXPORTS

Rice 295 3130 335z 355 380 405 430

Oil Seed and Cakes 150 150 15') 150 150 150 150

Salt 100 100 103) 100 100 100 100

Cotton 225 250 27 j 300 325 350 375

Wool 25 25 2 5 25 25 25 25

Cement 250 260 27'S 275 275 275 275

lron .od 0-0 25 25 2:i 25 25 25 25

Other 350 375 40) 425 450 475 500

TOTAL EXPORTS 1,420 1,495 1,585 1,655 1,730 1,805 1,880

TOTAL EXPORTS AND IIPORIS 6,160 6,650 6,955 7,285 7,570 7,755 7,890

PEliCEiiTAGE OP TRAFFIC:

Dry Gargo imports 46 43 4:3 43 43 42 41

P.O.L. Imports 31 35 34 34 34 35 35

Exports 23 22 2:1 23 23 23 24

Anpendix 1].

PORT OF KARACHI

Notes on Forecast Trenld of Main Commodit'LeS hTandled

iIVIORT S

COAL

Although local coal is of poor quality w-th a low calorific valueit can be improved by briquetting and coking. EXplorations are urderwav toincrease Local production which is esxpected to reach 1.5 million tons -t)br1965. A tJarget of 3.0 million tons is being set for 197C, by tihlch timeimports are expected to cease.

IRON AND STEEL

:Imports which at present average about 250,000 tons a year areexpected to remain on the same level until 1966 when the new steel furnaceand mill Tlhich are to be constructed in Karachi come into production. 1henill; -.ith an initial capacity of 350,000 tons, till require inmported scrcpcnd otiler raiu naterials which cre expocteo.d o anount to L50,000 tons a year.Iirports of manufactured iron and stee:L products are expected to decline tosor.e 1C0,000 tons - year macing a total i>mport under this hoading, therefore,of abouu 550,000 tons b: 1970.

WHEAT

During the first Five Year Plan period (1955-1960) foodgrainproduction increased at a slower rate than the population. Large tonneaesof commodity aid wheat have been imported from the United States underPublic Law L80. One objective of the Second Five Year Plan was to continueraising foodgrain production in order that self-sufficiency could be achievedby about 1970. The plan targets were based on an estimated annual increaseof 1.8 percent p.a. in population. The 1961 census, however, has revealeda rate of growth of 2.3 percent p.a. Some recent statistical studies haveshown that population may, in fact, be growing at an even faster rate tharn2.3 percent. p.a. This suegests that the target of self-sufficiency infoodgrain production is likely to remain elusive even at the present modestlevels of per capita consumption. Therefore. the mission has assumed animport of 200,000 tons of wheat as being still necessary by 1970.

SUGAR.

The import of sugar which has declined as a result of greaterlocal nroduct.on is t-xnPrt.P1 to bh fTirthir rc.Pdri_

Appendix 11

Page 2

The new kil, s eominrg into pnrodrctioni l n the Karachi area willgradually satisfy the total local neecis. Total produic-tion in Pakistan iscy-rctd to rise from 1 million tons througlnh a Target of 3=0 milli' on trun

in 1965 to 5.0 raillioil in 1970.

FERTILIZERS

Fertilizer use, which is expected to increase rapidly, averagedonly -le 1 .,1+41 -,A O ) r,,'-,r,A- _ O/ -. -- v,~'

-nlJ-l * poLa Me cutv a u acre in 1952, 5, pond ln 196 nn isj Y

to reach 50 pounds in 1930. The present capacity of the local fertilizer~~LdJ1U ~ ± ~~L~y nJ.jULu JJ. -U ' X. 1iI1, CflL.- V '-4L -~LJ± CJplaints represents or'y.A 21 pounds per c.uli-1vCated alcre. The -ostico of

new plarnts is included in the Second 1Ive Year Plan. Imports of phosphaticrocks for processln.g in the new plants is expected to increase proGressiv-ely.

n Y-T Av t 0 nUs!twirtUj uirtuu

General cargo imports, exclusive of iniports drectly related to tbenddus Basirn Works, are expected to increase by about 50,0CO tons a year.

This figure may be conservative when compered with the s'arp increaserecordod under this item during the first three years of the Second Fiveiear Plan.

P,O.L. PRODUCTS

The Karachi refinery was cormpleted in November 1962 with an aniua.lnitial capacity of' 1,500,000 tons. The company concerned has decided tobuild additional urits which will increase the refinery's capacity to2,100,000 tons a yejar. The figures showm in Appendix 10 take inbo accoluntthis maximum capacity which wrill probably not satisfy the total needs.Imports of refined products, therefore, are still to be expected. Accordingto the "Transportation Survey of West Pakistan 1962" carried out by Trarnsport-ation Consultants Incorporated, the total needs will amount to 4,000,ooc tonsin ltSoO.

EXPORTS

RICE

T'he Second Five Year Plan envisages that rice production in WestPakistan will increase by some 10 percent p.a. to a total of 1.3 milliontons by 1965. A target of 1.8 million tons has been set for 1970. It, isexpected that increased quantities of the highly desired West Pakistan ricecan be sold oversea,s, particularly to the Middle East. In the informationpre ar~cr dlr~ngoin t.iission'is visit it ;.tas 7.3.3us';er' th it t'C.e 1962/63 export figurof 461,000 tons would be maintained and increased at a rate of 25,000 tons,annually through 1970. However, in view of the greater than expected rateof population increase and the inodest increases in purchasing power thlat cai.be ex>;eC,SC in '.eSt Pakistan by 1970 it is felt that, in thiS casc, it -ouldbe more p<de-id. to assume tha.t theo i2/A il;,irpr 7as but a fluctuaticn on a

Appendix 11

Page 3

lon--term trenrd :.-hich can be expected to reach some 430,OCO in 1970.

SALT

Rock salt, which is m3n.red mainly irn Nor-th East Punjab, is not anattractive export item because of the great distance of the mines from 1t.hecoast. Only sea salt produced in the Karachi area is eccnomicallyexportable.. Any increase, however, in prodlAcion is likely to be absorbedby the expanding local cherwicE%l indrstries and the growing popilation anldtherefore salt export is foreeast to remain at a moxi:m,um level of l00,000tons a year.

COTTON

The Government's policy which tended to emrphasize the productionof sugar and foodgrains to the detriment of cotton has been reversed. Itis expected to result in a total production of 2.2 million bales in 196;rising to 3.0 mi'lion bales in 1970. This is to be achieved m^re byincreasin2 yields, the greater use of fertilizers and better seed ratherthan by additicnal acreage which has to be shared with other agri c.l¢turaiproducts, mainl%r w-heat, for which self-sufificiencv is soup.g-h'. Desnite thepressure of increasing local demand, the Governrient has establishcd comnpil 3oiyt-.nrn-t ennotas. intr'rnnvnp A hi MPhr Vo-ei 7n Pxchrn!ee banii rat f'or th, vP.rn

exports and has undler consideration a reduction in cotton export duties.A forecasit ennuiatl -increase of 2qnnn Ltons or 10 nercent, of th.e nresent

exports, is considcered reasonable.

vIOCL

:No main changes are expected for this comnmodity, the export ofwbhich is -l to rr e ir rmain at. about 9 2000 ton annunanlly.1

A s expla:ined above, the new ins -. ,r o n tnhe p-duc+i-n in + b-

Karachi area will gradually satisfy the local needs of West Pakistan andmake po,si ble -- 4crea ed -ex , 1+'.st P -is4an. Tesses-,

Krupp (Germany) are conducting a geological study in East Pakistan intendedto 1~~_~z inceas th lo^al IUII ce.,.entLU.L product%on Urid - 1:he OL Eat anit Indust'ria:LI

Development Corporation is studying the feasibility of a second cement plan+,in the East Pro-vince. East Paidstan. however, is likely to remain a majorimporter of cement until at lcast l965-66. by which timrie the Karachi area

~L±1in are.L x wJecjteU to ue alJUe toUU OatbY vvtest rakisLtanu needs aLn tUo ot

250,000-275,000 to:ns a year for export to the East.

SCRAP IRON ANlD ORE

There are at preseat no blast furnaces in Pakistan. The need, o_the ;;araciii blest ^urnacc, which is phlnod tlo De bult svon,s .re e3::ecteJ tobe met from increases in the local production leaving small quantitiesavailable for export.

Appendix 11

?age 4

OTHEJR

Other exports have been asslxmed to increase by 25,COO tons a yaarto 1970 on the bas:is of the actual 1962-63 fi.gures. This tiend, which sprobabliy conservative, is expected to be possible because the gradualindastria:i_.zation of West Pakistan should res-ult in larger quantities c:F a.variety of manufactured items and consurer du.rables, porin ons of which 3houldbe availab:;e for export. One of the Second Five Year Plkn Coals is toincrease production of heavy industry by 15 perceent and srmall-scale i.L:dutryby 50 percent. Some 5 percent of this incroased industrial productior Isexpected to become available for export.

Aprendix 12

KARACHI PORT TRUST

FORUCR4T OF INCOME ACCOUNTS 1963j/64 - 196j/68

(PRs 000)

1960/64 1964/65 g65!66 1066/67 1067/(68Budget

Operating Revenues

Wharfage on:

P.O.L. products 9,870 10,200 11,100 12,000 12,900

Imports (excluding P.O.L.) 10,764 10,730 ii,300 12,050 12,450

Exports (excluding P.O.L.) 4,090 5,940 6,400 6,850 7,250

Storage 8,486 9,800 10,150 to,650 10,800

Land and Buildings 5.522 6,ooo 6,500 7,000 7,500

Port Department 2,446 2,600 2,700 Z,800 2,900

Pilotage 1,445 1,500 1,600 1,700 1,800

Other 11,200 12,000 13,000 13,500.'otal Operating Revenues 53,o3 58,770 og,250 66,050 b69,sO

Operating Expenses

General Charges 9,758 10,600 11,500 12,500 13,600

Wharves. Warehouses and Railwavs 13.088 13.500 14.000 14.AOO 1n000

Land and Builclings 902 950 1,000 1,050 1,100

Port Departmernt 3,700 4,000 4,?00 4,600 4,900

Pilotage 1,246 1,300 1,400 1,500 1,600

Other 100 100 100 t10Total 28l,769 30,450 32,300 34,250 36,300

Contribution to Rinds

Depreciation and Replacement 5,500 6,ooo 6.soo 8,500 9Q,8o

Other funds 40 500 00 00Total Operating Expenses 34,726 36,950 39,300 43,250 00

Net Operating Revenues 19,097 21,820 22,950 22,800 22,500

Non-operating Revenues:

Interest on Investments 2,214 2,000 1,800 1,600 1,400

Interest and Commitjnent Charges on Loans:

Loan 126-PAX 1,525 2,825 2,700 2 A70 _;431

Proposed Second IBRo Loan 1,160 2,210 3,522 4,592 4,866

Consortium Loans 804 1,1458 1,1458 1,h58 1,458

Net Income 17,822 17,327 17,070 15,780 15,1),l

Contribution to Sinking Fund for Debt Redemption:

T,-an 126-PAK 3,885 2,585 Z,s7- 2,,40 2,97,n

Proposed Second IBRD Loan - 3,000 3,000 3,000 3,000

Consortium Loans - 1,000 1,000 1,000 1,000

Net Profit 13,937 10,7h2 10,360 8,9ho 8,166

Operating Ratio (,) 65 63 63 65 67

Debt Coverage Ratio 3.4 3.1 2.9 2.8 2.8

Interest Earned Ratio 7.2 1.4 3.9 3.7 3.7

Assend,lx 13

KARACHI PORT TRUST

STATE IENT OF ESTIMATED CASH FLOI DURING PFOJECT CONSTPNCTION PERIOD(PR. 000)

1963/64 1964/65 1965/66 1966/67 1967/63 Tota

sour.es of fands

dra.llable it Cash 18,874 " 98,015 81,257 66,317 60,357 18,874

Available hr Iavesatests 84,561 J" - - - - 84,561

Cout:iboti.o. to k,pre.i.Lti.o and Repls--ent Ftrd 5,500 6,000 6,500 8,500 9,800 J6,300

Cor.tGniktiooa to Siskiag Food 3,885 6,585 6,710 6,840 6,975 30.995

Net Profit 13,937 10,742 10,360 8,960 8,166 52,1LI5

SGas of relesend materials fr-n. East Wh-ares ProJect 5,00 _ - - 5, oo

So.I- 126-PAK 5,673 - - - - 5,873

Proposedi S-ond IbnRD I1- 10,503 20,000 25,000 20,000 5,600 81,100

Consortit low- 13,403 .:0,900 - - - 24,300

Piooooiog of Third Five Yea PIan Capital Expenditures - - - 16,300 16,300 16,300 48,900to Le sacorsd.

TOTAL 161,530 15i2,242 L16,127 126,897 107,198 388,048

ADplicstio- of Fundo

Port Eaois a opr et Project 20,000 .0,000 50,000 45,000 23,500 178,500

Co-pletio- or E-ot A.Osrveo Projeot 9,450 - - - - 9,450

Other Capit.l l-ori 12,400 9,500 8,100 30,000

Replseem et a-d PNeosol Fro-grsa 15,800 17,500 2,500 - - 35,800

Third Five Yar Pisn Capital Fpeoditares - - 16,300 16,300 16,300 48,900

beN¢t onoorthoottioo,

Lonn 12f-PAK 2,465 2 2,585 2,710 2,840 2,975 13,575

ROpl-ilihme-L of reoRerterve Fund AooAt 3,,oC, 1,400 200 2,40i0 e,500 9,900

TOTAL 63,515 70,985 79,810 66,54o 45,275 326,125

Delano- c-rrisd foreard 98,015 81,257 66,317 60,357 61,923 61,923

,/ oe.t liqoid aoe-te n-lulttd as folloco (see Appeodio 6):

Assets - Carrzlt I'Rs. 26,799,000Debtors 6,866,000

33,665,0Oo

Liable - Currest- 4,750,000Creditors 10,041,000

--_________ 14,791,000

i.et liquid assets PRs. 18,874,000

2/ C..siotiog of: IRe. 30,165,000 ovailahls in Depreciation and PopLo-es-t- FP.,d18,711,003D n I evese -lance FPnd356 65 S000 e 'Ui,,ag Fe,,l

TcTAL IsR. 84,561,000

2 This figure does "t inluds the interest charges doe Noveaher 1, 1963(PRo. 1,420,000) ahi.k acre poid oat of Loes LV6-PAX fonda.

PAKIISTAN, KARACHI PORT: ACTUAL, TREND AND FORElCASTTONNAGES COMPARED WITH NArIONAL INICC)ME

6.0 _ FFFFTOTAL DRY CARGO- IMPORTS AND EXPORTS

FORECAST TREND

z 4.0 ....... -,,,, 3.0 H ->---DACTUAL 0 -

2.0 | 1950/51 - 1962/63 TREND0 3 . 0 - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

z

2.0- in~~~~~0- 1955/56 - 1962/653 TREND

1.5 - I I I I_I _ I I I I I I I_I1951 1952 1953 1954 1955 1956 1957 1958 1959 196S0 1961 1962 1963 1964 19655 1966 1967 1968 1969 1970

4.0D _ -l I _l I[)RY CARGO IMPORTS 1955/56 -

tU2 FORECAST TREND TREND

ACTUAL _ .. -. __ _

° 2.0 -___ _ .- _1950/51 - 1962/63 TREND0

c 21.5- v /z~~~

1.0 ~ ~ ~ I

1951 1952 1953 1954 1955 1'956 1957 1958 1959 1960 1961 1962 1963 11964 1965 1966 1967 1968 1969 1970

2.0 I - I I I I I

EXPORT' CARGO FORECAST TREND

H 1.5- ...........__ -____ _____

LL .........

O 11955/56 - 11962/63 TREND .. ---.-----

__ -.- O- 4- 195C/51 - 1962/63 TREND

E_ o . . .... .. A C T L IA L

0.9-~~~~~~~~~~~~~~~~~0.8 1 _ _ ____I I I __I _I _.

1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970

3.0 t ,| ,F ,,, ,BULK PETROLEUM IMPORT%S F T

FORECAST TRE.ND-

> --. ^.-..-

z 2.0 - __,_ __ _,_z

0 1.5 - '1955/56 - 1962/63 TREND

U,

z0 -n AC TUAL

_J _ =i;;>i _ 1950/51 - 1962/63 TREND

0.8 - - =_ _=

0.7 - _ _ , - _ - - i * , E ._. _1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 19163 1964 1965 1966 1967 1968 1969 1970

5CI NAINA I A _ - 5 C P

INATIONAL INCC)ME AT' 1949/'50 - 1952/53, C()NS'TANT PRICES

c 2.0 _ -z

O- 1.5 i955/56 - 1962/63 TREND#

zU 1.5 -- _ __ __ __ _ _E .o - -- 1950/51 -1962/63 TREND

0.8 , _ _____ _ __ _ _ , _ -,

1951 1952 19!53 1954 1955 IC156 1957 1958 1959 19613 1961 1962 1963 1964 1965i 1966 1967 1968 1969 1970

50 _NATIONAL IINCCIME AT 1949/50 - 1952,/53 CONS'TANT PRICES

40 --I.FIVE- YEAR PLAN TREND D -

u)

I 30 _ _ ___ _ACTUAL -

LL 1 _ _ _ 950/5 - 1962/63 TREIND

1951 1952. 1953 1954 1955 1956 1957 1958 1959 19610 1'961 1962 1963 1964 1965 15166 1967 1968 1969 197C)

FISCAL YEARS ENIDING

SEMI - LOGARITHMIC SCALEIBRD - Eccmomic Staff

' 2282

[- t 71 / ~~~~~~C I I N N A . C R l_ E K ID PA K I S TA N

| \ /ts - - e-. - /1 ~~~~~~KARACHI PC)RT TRU'ST\ \ \ \ 11 . ~~~~~~~~ << / ~~EXPA\NSICON t3 IMPROVEMENT PROJIECT

1 \ \ 0 / > e B S2s C K _ Ut A T E: R i/g(~~~~~~~~~~~~~ O Iooo :>OOO 3000 4000 X0oo

& > i / - U . /7 lo (0 ~~~~~~~~~~~~~~~~~~~~PROJECT SHOJVN IN COLOR NN L

: : ! q t X 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~N

' L' ts 0 *E -> 0 X ,/

. . . , . - :. -s .. -.-- ,- . .. /// /

Ot, ~~~ u /JANUARf 964 BRD-1279R~~~~~~~~~~~~~~~6