Report No. 629a-PAN Panama FILE COPY Appraisal of a ... · Report No. 629a-PAN Panama FILE COPY...

Report No. 629a-PAN

Panama FILE COPYAppraisal of aFishing Port ProjectApril 9, 1975

Latin America and Caribbean Projects Department

Not for Public Use

Document of the International Bank for Reconstruction and DevelopmentInternational Development Association

This report was prepared for official use only by the Bank Group. It rnay notbe published, quoted or cited without Bank Group authorization. The Bank Group doesnot accept responsibility for the accuracy or completeness of the report.

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Currency Equivalents

US$1.00 = B 1.00 (one Balboa)

Fiscal Year (Government and National Port Authority)

ganuary 2 - December 31

Weights and Measures

Metric US Units

1 meter (n) = 3.28 feet (ft)1 kilometer (km) = 0.62 mile (mi)1 kilogram (kg) 2.2 pounds (lb)1 ton 1/ = 2,205 lb = 1,000 kg1 long ton 2,240 lb1 short ton 2,000 lb1 US gallon 3.8 liters1 hectare 2.47 acres

Abbreviations

APN - Autoridad Portuaria Nacional (National Port Authority)CYRA. - Commission's Yellowfin Regulatory AreaFAO - Food and Agriculture OrganizationGTRT - Gross Registered TonnageIATTC - Inter-American Tropical Tuna Commission'IDB - Inter-American Development BankUNCTAD - United Nations Cowmission for Trade and DevelopmentUNDP - United Nations Development ProgramUSAID - United States Agency for International Development

/ Unless specifically mentioned otherwise, a ton means a metric tonthroughout this report.

PANAMA

APPRAISAL OF A FISHING PORT PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS .................................. i-ii

1. INTRODUCTION ............................................. 1

2. BACKGROUND ............................................... 2

A. General .......................... 2B. The Fishing Industry .......................... ; 2

3. PORT ORGANIZATION AND MANAGEMENT ......................... 6

A. General Situation ................................... 6B. National Port Authority ............................. 6C. Administration of the Fishing Port .................. 7

4. THlE PROJECT .............................................. 8

A. Project Objectives and Description .................. 8B. Cost Estimates ...................................... 9C. Project Execution ................................... 10D. Financing Plan for the Project ...................... 10E. Procurement ......................................... 10F. Disbursement ........................................ 10G. Road Access, Power and Water Supply and Housing 11H. Transfer of Fishing Industries to the New Port ...... 11I. Ecology ............................................. 12

5. ECONOMIC EVALUATION ...................................... 12

A. General ............................................. 12B. Demand Forecasts .................................... 12C. Methodology of Economic Evaluation .................. 13D. Economic Benefits to the Panamanian Economy .... ..... 14E. Economic Return ..................................... 15F. Adjustment of the Economic Rate of Return by

Shadow Pricing Labor Costs ........................ 16

This Appraisal Report has been prepared by Messrs. R.N. Vinekar (Engineer)J.W. Parker (Financial Analyst), and F. Kada (Fisheries Expert) and has beenedited by Miss V. Foster.

Table of Contents (Continued) Page No.

6. FINANCIAL EVALUATION ...................................... 16

A. Present Position ...... ............ ................... 16B. Tariff Policy .................... .................... 17C. Audit and Insurance .................................. 17D. Investment Plan ...................... 17E. Fishing Port Financial Forecasts ..................... 17F. Extraordinary Capital Gain ..... ...................... 18

7. AGREEMENTS REACHED AND RECOMMENDATION ..................... 19

TABLES

1. Shrimp Landings2. Shrimp Catch and Export3. Demand for Tuna Transshipment Facilities in Panama4. Annual Port Traffic in Panama (Excluding Fish)5. Cost Estimates6. Estimated Schedule of Disbursements7. Fishing Industry Processors' Concessions8. Forecast Shrimp Landings9. Projected Calls of Tuna Seiners10. Tuna Cold Storage and Cold Container Filling Operations11. Changes in Land Values due to the Project12. Preliminary Capital Investment Program 1975-197913. Fishing Port Revenues14. Forecast Revenues 1978-198715. Revenues from Rentals of Land and Buildings and Charges for Services16. Pro Forma Income Statement17. Pro Forma Sources and Uses of Funds18. Pro Forma Balance Sheet

ANNEXES

1. Present Status of the Fishing Industry2. Future Organization of the National Port Authority3. Project Description4. Terms of Reference and Qualifications of the Special Project Team5. Estimated Schedule of Project Execution6. Base Case Economic Benefits7. Economic Savings for Tuna Vessels Transshipping through Cold Storage

Facilities at the New Port8. Extraordinary Capital Gain from Land Purchase and Sale of Land around the

Fishing Port

MAPS IBRD 11415 Fishing GroundsSketch Map 1 Existing Fish Landing FacilitiesSketch Map 2 Eastern Pacific Tuna Fishing AreaIBRD 11416 Proposed Port at Punta Vacamonte

PANAMA


SUMMARY AND CONCLUSIONS

i. Improvement of the fisheries industry ranks high in the develop-

ment plans of the Republic of Panama. Because there is scope for increasing

the earnings from fisheries exports and services to the international tuna

fleet and for augmenting the country's food production through increased

supply and consumption of food fish, the Government has prepared a compre-

hensive program for fisheries development in which the construction of a

fishing port at Punta Vacamonte has a high priority.

ii. In the Gulf of Panama, where the country's principal fishing grounds

are located, there is a lack of adequate port facilities. Of the five wharves

available for landing shrimp and the two serving the fishmeal factories, six

are dry at low tide and are exposed to the wave conditions in the bay. Food

fish is landed on the sea wall and other places along the shore in the city.

Tuna transshipment is carried out in the stream since alongside facilities

are not available. Because three of the shrimp wharves are located along

the waterfront in the heart of the city, the shrimp plants served by them

lack room to expand, and the central part of the city is subjected to con-

siderable nuisance. The construction of suitable port facilities some dis-

tance away from the city is necessary, not only for the efficient operation

and development of the fishing industry but also for improving environmental

conditions in Panama City. Such a port will make it possible to exploit the

newly discovered resources of deepwater species of shrimp and to develop the

national tuna fleet and the fish canning industry.

iii. The project, which is based on the consultants' studies financed

under Loan 784-PAN, provides for the construction of a modern fishing port

at Punta Vacamonte, about 30 km from Panama City. The port will be shel-

tered by a breakwater and will have berths for landing shrimp and food fish,for transshipment of tuna, and for servicing all fisheries vessels; build-ings for fish processing and cold storage, fish marketing and offices, andship repair yard and utilities will also be provided. The facilities willbe adequate to meet the demand forecast for 1987, with provision for furtherexpansion at a later date. The project, which also includes consultant ser-vices for supervision of construction, and technical assistance for portoperation and management and for training of the Port Authority's staff, isestimated to cost US$34.0 million, with a foreign exchange component ofUS$20.5 million. Project execution is expected to take three years and becompleted by March 1, 1979. Interest during construction, estimated at

US$3.5 million, is recommended for financing by the Bank.

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iv. Contracts for civil engineering works and equipment will be awardedthrough international competitive bidding in accordance with Bank "Guidelines".

v. Autoridad Portuaria Nacional (APN), the newly established NationalPort Authority, will be the executing agency for the project. It will havea special project team which will be assisted by consultants acceptable tothe Bank.

vi. The local currency costs of the project will be financed by theGovernment, and the amount will be treated as its equity contribution toAPN. It will be a condition of the loan that APN will maintain the porttariffs at the new fishing port so as to produce revenues sufficient to yieldan acceptable return on the port's net fixed assets and will pay a dividendto the Government on its contribution. The level of tariffs to meet the rateof return will be justified by the benefits accruing to the fishing industryfrom the use of the new port.

vii. The project is economically justified, with a rate of return of15%.

viii. The project provides a suitable basis for a Bank Loan of US$24.0million (US$20.5 million foreign exchange cost plus US$3.5 million interestduring construction) to APN with a guarantee of the Government for a termof 20 years, including a grace period of four years.

PANAMA


1. INTRODUCTION

1.01 The Republic of Panama has requested the Bank to help finance theconstruction of a new fishing port at Punta Vacamonte to fulfill an impor-tant need of the country's fisheries industry. The FAO/IBRD CooperativeProgram mission, which identified and prepared a fisheries project ror Panamain 1969, noted that, while there was need and scope for the development ofthe fisheries industry, which could earn more foreign exchange by increasedexports of products and better service to the international tuna fleet andalso supply more food fish for consumption in the country, the expansion ofthe fisheries industry was hampered by the lack of suitable port facilitiesin the Gulf of Panama. It recommended, therefore, that the constructionof a fishing port should be given high priority in the fisheries developmentprogram. Accordingly, in the loan of US$3.4 million (Loan 784-PAN) made bythe Bank in 1971 for a fisheries project, a sum of US$400,000 was includedfor a feasibility study for a fishing port. On the basis of the study car-ried out by Messrs. Livesey & Henderson, Consulting Engineers of U.K., theGovernment proposed to provide a modern port for the fishing industry atPunta Vacamonte, about 30 km west of Panama City.

1.02 The proposed project involves construction of a breakwater tocreate a sheltered harbor which will be equipped with all necessary facili-ties for the berthing, servicing and repair of the shrimp, tuna and inshorefishing fleet based in Panama Bay as well as for the processing of itscatch. In addition to providing improved conditions for the operation andgrowth of the major part of the fisheries industry in Panama, the proposedproject will also facilitate the implementation of the urban developmentplan of Panama City, which has been slowed down by the present location ofthe fishing industry in the proximity of the City's business center. Thecost of the project, including provision for consultant services and train-ing of Port Authority staff, is estimated at US$34 million, with a foreignexchange component of US$20.5 million.

1.03 This will be the first port project to be financed by the Bank inPanama and the second project related to the fisheries industry. Under thefirst fisheries project (Loan 784-PAN), presently under execution, 40 oldwooden shrimp trawlers were intended to be replaced by standard steel traw-lers, but, owing to the steep rise in shipbuilding costs, only 23 vesselswould be procured. The project, as amended, is expected to be completed byJuly 1976. Bank operations in Panama include four loans in the agriculturalsector, three in the power sector and three in the transport sector, witha total lending of US$118.1 million.

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1.04 The appraisal of the project is based on the feasibility studyprepared by the consultants Livesey & Henderson, information furnished bythe Government and the findings of a Bank mission comprising Messrs. R. N.Vinekar (Engineer), J. W. Parker (Financial Analyst), and F. Kada (FisheriesExpert), which visited Panama in April and September 1974. The report hasbeen edited by Miss V. Foster.

2. BACKGROUlD

A. General

2.01 Panama, a long isthmus occupying about 74,000 km stretching east-west between Costa Rica and Colombia, has a population of about 1.5 million,which is growing at the rate of 3% per annum. A mountain range, which runseast-west almost in the middle of the country, has a strong influence on theclimatic conditions, population distribution and regional economy, especiallyin the area west of the Panama Canal. The range divides the Caribbean andthe Pacific Coastal areas into two separate and economically different re-gions. The former gets heavy rains and is densely forested. Apart frombanana cultivation in some favorable locations, the region is largely un-developed and is inhabited by a little more than 1% of the country's popula-tion. The Pacific Coast region, on the other hand, has many fertile valleyswhich provide good scope for agriculture and cattle raising. Being wellserved by the Pan-American Highway and a good network of roads, it has at-tracted about 45% of the country's population. The bulk of the remainingpopulation lives in the Metropolitan Area, adjacent to the Canal Zone, whichconstitutes the main axis of economic activity. The eastern part of Panama,the Darien, is presently the least developed and inhabited area, mainly dueto lack of transport facilities, but conditions there should improve whenthe existing gap in the Pan-American Highway is bridged. The MetropolitanArea and the western Pacific Coastal region will continue to dominate thecountry's economic activity.

B. The Fishing Industry

(i) Role in the National Economy

2.02 In spite of the lack of adequate port facilities, the fisheriesindustry has developed vigorously during the last two decades. About 7,500tons of fish and shellfish are landed each year. About 4,600, or 1% of theeconomically active population, are employed by the fisheries industry, inwhich over US$20 million have been invested. The bulk of the Panamanianshrimp catch is processed and exported, yielding a foreign exchange incomein 1973 of about US$17 million. Fisheries are thus one of the major sourcesof foreign exchange for the Republic of Panama.

2.03 In spite of an active fishing industry and considerable importsof salted cod, canned sardines and tuna (amounting to more than US$2.0 mil-lion), the annual per capita consumption of fish in Panama is only about

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4 kg, which is low compared with that of many other nations; this is probablydue to cultural preferences reinforced by poor marketing practices. TheGovernment has sponsored fish cooking demonstrations and television shows toencourage consumption of food fish and has also promoted fishermen's coopera-tives for improving the marketing of food fish. Under a project financed bythe Inter-American Development Bank (IDB), coastal fishermen are being pro-vided with fishing boats, ice plants and better landing facilities. Furtherdevelopment of the food fish industry is necessary in order to bring up theprotein intake to a desirable level.

(ii) Development and Administration

2.04 The improvement of the fishing industry ranks high in the economicdevelopment plan of the Government of Panama. Included in the comprehensiveprogram for this purpose are: (a) resource surveys through exploratoryfishing by the research vessel Canopus (UNDP/FAO-assisted project); (b)modernization of the fishing fleet (IBRD Loan 784-PAN); (c) strengtheningof the infrastructure for local distribution and marketing of food fish(UNDP/FAO regional project); (d) promotional campaigns designed to increaselocal fish consumption (USAID assistance); (e) development of coastal fishing(IDB Loan); and (f) construction of a new fishing port. In addition tothese efforts in the public sector, the Government has also been encourag-ing the private sector to develop fish processing/canning and boat building.

2.05 The Directorate for Marine Resources, under the Ministry ofIndustry and Commerce, is responsible for the administration and develop-ment of the fishing industry. This Directorate formulates and enforcesfishing regulations and legislation, conducts biological investigations,performs exploratory fishing, collects and publishes fishing statistics,and assists in fish marketing efforts and the development of coastal fish-ing. In the discharge of these responsibilities, the Directorate receivesguidance and advice from the National Fisheries Commission, comprising rep-resentatives of public organizations, the fishing industry and the seamen'strade unions, which reviews and makes recommendations concerning key fish-ing policies and legislative issues.

2.06 The National Association of the Panamanian Fishing Industry, anactive trade association whose membership includes nearly all processingcompanies and over 75% of the vessel owners, works closely with the Govern-ment in its efforts to develop the fishing industry. -

2.07 All commercial fishing activities in Panama are licensed and reg-ulated by the Directorate of Marine Resources. In order to ensure that thecatch does not go beyond the sustainable yield of the shrimp fishing grounds,the Directorate has set limits on the number, size and engine power of thefishing vessels and the installed capacity of the processing plant. In re-cent years, the Directorate has also been forbidding shrimp fishing in themain fishing grounds from February 15 to April 15 in order to prevent thefishing of white shrimp before they are fully grown.

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(iii) Fishing Port Facilities

2.08 The fishing industry in Panama has developed so far without thebenefit of adequate port facilities, but further expansion, for which thereis scope and need, will not be possible unless proper facilities are madeavailable. In the Gulf of Panama, where the most important fish resourcesare concentrated (Map IBRD 11415), the existing facilities comprise fivewharves for landing shrimp and two wharves for landing anchovy and threadherring. Their location is shown in Sketch Map 1. All the shrimp landingwharves are dry at low tide, thereby severely restricting the time availablefor the approach and departure of the vessels using them. Three of them arelocated along the waterfront in the heart of Panama City while the fourthlies immediately to the east of Paitilla Airport and the fifth is out ofthe city at the mouth of the Rio Juan Diaz. Except for the last, which isa marginal berth in a sheltered part of the river, all the berths are fingerjetties fully exposed to the natural wave conditions in the Panama Bay area.While alongside these jetties, the vessels are subject to considerable buf-feting, resulting in damage both to themselves and to the jetties.

2.09 The jetties in Panama City serve shrimp processing plants locatedimmediately inshore. The plants are hemmed in by the sea on one side and bystreets on the other and have no room for expansion. The presence of theshrimp plants and the shallow water jetties close to the center of the cityis a nuisance to the citizens and a hindrance to the urban development planof the Government. Construction of suitable port facilities some distanceaway from the city has consequently become necessary, not only for the effi-cient operation and development of the shrimp industry, but also for improv-ing environmental conditions in Panama City.

2.10 Of the two wharves serving the fishmeal industry, one is locatedat Taboga Island and the other at Caimito in the Bay of Chorrera. The lat-ter has restricted water depth at low tide, but this is not a serious prob-lem since the fast unloading of anchovy/herring by pumping takes less thanan hour. No special landing facilities have been provided in the PanamaCity area for coastal fishermen; they use the sea wall in the city andother accessible sites along the shore as landing places. Tuna transship-ment is presently carried out mainly in stream off Taboga Island, and thelack of adequate facilities is inhibiting the growth of this operation,which could offer considerable economic benefits to Panama. The existingfishing port facilities are far from satisfactory, and the construction ofa new fishing port is a prerequisite for the development of Panama's fish-eries.

(iv) Fisheries

2.11 The main activities pursued by the Panamanian fisheries industryare: shrimp trawling and processing, fish reduction, inshore fishing forfood fish, and servicing of the international tuna fleet. Fish canning andtuna fishing are carried out presently only to a small extent. The presentstatus of the fisheries industry is described in some detail in Annex 1 andis summarized as follows.

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(a) Shrimp

2.12 During the last decade, the Panamanian shrimp catch has averagedabout 6,000 tons per annum. The landed value of the catch in 1973 wasUS$14.7 million (Tables 1 and 2). The shrimp grounds within the 6-fathomline, which are currently being exploited, have reached the maximum sus-tainable yield and there is little scope for increase of this resource, butthe recently discovered new varieties of deepwater shrimp offer good pros-pects for further growth. According to current regulations, the number oflicensed shrimp boats (above 20 gross tons) is limited to 238 and Lhe en-gine horsepower to 260. For exploiting the deepwater shrimp, bigger bo,atswith more powerful engines and winches will be needed. Because such boatswill not be able to operate from the existing wharves, the development ofthe new resources will be possible only after the proposed fishing port isready.

(b) Fishmeal

2.13 In 1972, the production of fishmeal amounted to 9,063 tons andthat of fish oil to 2,641 tons; the production fluctuates markedly accord-ing to the catch of anchovy and thread herring. There is scope for in-creasing the catch through improved fishing effort. The combined capacityof the two fishmeal plants is considerably in excess of the present or po-tential catch. While the plants have some disadvantages in their presentlocations at Taboga and Caimito, it is unlikely that they would find itworthwhile to move to the new port in the near future.

(c) Food Fish

2.14 The production of food fish grew from 2,377 tons in 1963 to 4,729tons in 1972; the incidental catch of the shrimp trawlers and fishmeal boatsand the catch of the semi-industrialized and coastal fishery are the sources.There is scope for considerable increase in the contribution of the latter,which presently is only 20%. The Government's policy of encouraging fish-ermen's cooperatives, the IDB-financed project for developing coastal fish-ing, and the promotional measures being sponsored by the Government to in-crease the consumption of food fish (para. 2.03) will facilitate the growthof this fishery sector. However, lack of suitable port facilities in thePanama Bay area hampers the development of the inshore fishery.

(d) Tuna Fishing

2.15 Panama lies at the geographical center of the eastern Pacific tunafishing grounds, in which a large international fleet competes for the primespecies of tuna (yellowfin) (Sketch Map 2). Fishing of yellowfin is regu-lated by the Inter-American Tropical Tuna Commission and is limited to thefirst quarter of the year. Because of the short duration of the fishingseason, the distance of the ports of delivery, the prohibition pertaining tothe landing of fish in U.S. ports by foreign flag vessels and the recentsteep rise in fuel costs, transshipment of tuna offers economic advantages.At present, tuna is transshipped in Panama Bay, mostly off Taboga Island.

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Table 3 shows the number of operations and the quantity transshipped in theyears 1968-1973. Because no cold storage facilities or a low cost containerfilling location are available, transshipment must take place directly fromthe fishing vessel to the reefer, resulting in costly detention to bothvessels; but for these disincentives, transshipment would have been practicedon a much larger scale than hitherto. Due to its central location, readyavailability of spare parts and skilled labor, Panama is very convenient forthe servicing of the international tuna fleet, which comprised about 400vessels in 1974. Although some vessels carried the Panamanian flag, nonebelonged to the country until mid-1974, when a national tuna fleet was estab-lished in Panama.

(e) Ship Repairs

2.16 Minor repairs and maintenance of the fishing vessels are carriedout by a number of small workshops in Panama City. The mechanics usuallyhave to make more than one trip between the workshop and the vessel anchoredin stream or moored at the jetty before the repairs are completed. For re-pairs below the waterline, vessels are beached or hauled up on slipways.A ship repair and construction yard in the San Francisco suburban area ofPanama and two fleet operators have installed slipways, but access to themis possible only at high tide. Although the capacity of the repair firmsis adequate, their service is not efficient due the distance of the work-shops from the vessels.

3. PORT ORGANIZATION AND MANAGEMENT

A. General Situation

3.01 The five major ports which serve Panama at present are eitherforeign controlled or principally related to foreign controlled enterprises.The two major ports of Balboa and Cristobal are controlled and administeredby the U.S. Panama Canal Company and handle about 70% of national imports.Petroleum imports are handled through the oil refinery terminal at Bahiade Las Minas. The two banana ports of Armuelles and Almirante handle morethan 80% of national exports. Most of the remaining international andlocal traffic is handled through small Government-owned and operated light-erage facilities in Panama City, Colon and other locations. Traffic sta-tistics for these ports are shown in Table 4.

B. National Port Authority

3.02 Prior to the formation of the National Port Authority (APN) inMay of 1974, no Government agency had specific responsibility for adminis-tering the national ports. The National Treasury collected port dues, andthe Ministry of Public Works was responsible for building and maintainingpiers. Although the Treasury was responsible for maintaining navigationalaids, it had no resources to fulfill its responsibility.

3.03 APN has been empowered to plan, design, build, operate and improveall national ports, to provide navigational aids and to grant concessions.It is authorized to set and collect tariffs as well as to contract loans,so that its revenue should cover its operating costs and debt amortization.The Basic Law of APN was drawn up with the advice of an UNCTAD expert onport administration and is considered generally acceptable to the Bank.The management and direction of APN are the responsibilities of its ExecutiveCommittee, composed of the Minister of Commerce and Industry as its chair-man; the Ministers of Public Works, Finance and Treasury, Planning andEconomy; and one representative each for port workers and port users. Therecently appointed Director General has good qualifications and is a capableadministrator. APN's future organization chart is shown in Annex 2. Itspresent staff is quite small, with 40 budgeted staff personnel and SO portworkers; of the latter, about 20 are assigned to Panama City and 20 to Colon,with only an administrator and an assistant at each of the two banana portsand at two other locations. Since the Basic Law of APN does not adequatelyspecify the qualifications of the Director General, or the Directors ofFinance, Operations, and Engineering, agreement was reached during negotia-tions regarding the qualifications of the future appointees to these seniorpositions.

3.04 The Director General is expanding his staff, arranging for increas-ing its technical assistance and developing a training program. An UNCTADadvisor will be hired to begin the installation of a cost accounting sys-tem, and his terms of reference have been agreed with the Bank. Twenty man-months of overseas fellowships are presently available to APN from othersources for training local staff. APN has provided the Bank with a detailedand satisfactory inventory of training requirements and the resources avail-able to it under UNDP. Although the training program forms part of theproject description, it will be financed by UNDP and the Government.

C. Administration of the Fishing Port

3.05 APN will own and operate the fishing port, and its administratorwill report directly to the Director General. Due to the size, complexityand specialized nature of the fishing port, a fishing port committee shouldbe created, chaired by the Director General of APN and consisting of thefishing port administrator and representatives of concerned Government de-partments such as the Directorate of Marine Resources and representativesof the fishing industries. It would provide a forum for the discussion ofproblems of all those concerned with port activities and would advise theDirector General on policies to be carried out by the fishing port adminis-trator. Agreement was reached during negotiations that such a committeewill be permanently established by December 31, 1975, and that, by July 1,1976, the borrower will appoint and thereafter employ a fishing port adminis-trator whose qualifications and experience are satisfactory to the Bank.

3.06 The consultants have included, in the fishing port feasibilitystudy (para. 1.01), recommendations for the port's organization and opera-iton. All buildings and service connections will be provided by APN and

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leased to the various processors, who will be responsible for supplyingthe equipment each uses. The tuna cold store building and equipment will beowned and operated by APN, although private participation in this businesswill be arranged, if possible. Labor for the tuna transshipment and stor-age operation is expected to be supplied by a private stevedoring company.APN will build and staff the food fish auction hall and ice plant. Theland and buildings for the ship repair businesses will be leased from APN,which will also provide and operate the syncro-lift. Fuel will be distribu-ted by the National Association of the Panamanian Fishing Industry, whichwill pay APN a concession fee, presently estimated at 2, per gallon, for thedistribution rights.

4. THE PROJECT

A. Project Objectives and Description

4.01 The objectives of the proposed project are:

(a) to promote efficient operation and growth of the fisheriesindustry by providing adequate port facilities;

(b) to provide improved transshipment and other services tothe national and international tuna fleet by installinga cold storage plant on the mainland;

(c) to provide better facilities for inshore fishermen oper-ating in Panama Bay;

(d) to facilitate the implementation of the urban developmentplan for the Maranon Section of Panama City by the removalof the fisheries industry from the city; and

(e) to assist in developing the management capability ofAPN through technical assistance and staff trainingprograms.

4.02 The project consists of:

(a) construction, at Punta Vacamonte, of a fishing port witha protective breakwater, a dredged access channel, 10berths for shrimp trawlers, four berths for tuna clippers,adequate quays for berthing inshore fishing vessels andfor servicing trawlers, a ship repair berth and yard,buildings for shrimp processing and tuna cold storeplants, a fish market, administrative and other offices,storage areas, roads and utility services within theport area;

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(b) provision of consultant services for design and supervisionof construction; preparation of administrative and operationalprocedures and cost accounting and budget control systemsrequired by APN and each of its ports; and

(c) a program for training the Port Authority's staff (to befinanced by UNDP).

Project design has been based on proposals of consultants, which optimizedthe capacity of the port with the pattern of demand, the cost of the facil-ities and the quality of service. The original design was revised by theBank, in agreement with APN, to further cut costs without significantly re-ducing capacity. A more detailed description of the project components isgiven in Annex 3. The layout of the proposed fishing port is shown on MAPIBRD 11416.

B. Cost Estimates

4.03 The total cost of the project is estimated at US$34.0 million,with a foreign exchange component of US$20.5 million. The following is asummary of the estimates given in Table 5.

(B or US$ million)

Local Foreign Total % of Total Cost

A. Harbor Works 8.52 10.66 19.18 56B. Buildings 0.57 0.83 1.40 4C. Equipment 0.13 1.42 1.55 5D. Consultant

Services 0.79 1.14 1.93 6

Sub-Total 10.01 14.05 24.06 71

E. ContingenciesPhysical 1.05 1.43 2.48 7Price 2.44 5.02 7.46 22

Sub-Total 3.49 6.45 9.94 29

TOTAL 13.50 20.50 34.00 100

4.04 The base estimate cost for harbor works, buildings and equipmentis derived by updating, to March 1975, the consultants' estimates, which werebased on December 1973 prices; contingency provision includes (a) physicalvariation in civil engineering works at 15% on dredging and breakwater and10% on other items and (b) price escalation at varying rates between 1975 and1978 amounting to 31% of estimated base cost (Table 5).

4.05 Interest during construction, which is recommended for Bankfinancing (para. 6.01), is estimated at US$3.5 million approximately.

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C. Project Execution

4.06 APN will be the executing agency for the project. It has entrustedthe detailed engineering and preparation of tender documents to a consortiumof consulting engineers - Livesey & Henderson (U.K.), Greiner (U.S.A.) andPISTSA (Panama) - whose qualifications and terms of reference are satisfac-tory. For this assignment, retroactive financing is recommended up toUS$300,000 toward foreign exchange costs incurred after January 1, 1975. Be-cause its own staff has had little experience in administering large civilengineering contracts, APN will retain consulting engineers acceptable to theBank for the technical supervision of the contract. In addition, for attend-ing to the administrative matters pertaining to the day-to-day execution ofthe project, a special project team should be appointed under the DirectorGeneral of APN. The team should comprise an adequate number of professionalswith experience in large construction contracts (possibly seconded from theMinistry of Public Works), and will be headed by a qualified project manager.The terms of reference of the project team and the qualifications of the teammembers have been agreed with APN (Annex 4). The dates for the appointmentof the members of the project team were agreed during negotiations. Theappointment of the project manager under the agreed terms will be a conditionfor the effectiveness of the loan. With the assistance of the consultantsand the proposed project team, APN can be expected to have the capability toexecute the project satisfactorily.

D. Financing Plan for the Project

4.07 The Bank loan for the project will cover the estimated foreignexchange cost (US$20.5 million) and interest during construction (US$3.5million), making a total amount of US$24.0 million for the loan. The balancewill be provided by the Government as contribution to APN (para. 6.08); thiswas agreed during negotiations. APN, the project beneficiary, will be theborrower with a guarantee from the Government.

E. Procurement

4.08 All contracts for civil works and equipment will be procured byinternational competitive bidding in accordance with Bank "Guidelines". Biddocuments for the civil works will permit bidding either for the entire workor for separate groups of items such as harbor works, buildings, pavingutilities, etc. It is possible that local contractors may perform part ofthe civil works either as direct contractors for smaller items or as sub-contractors or partners in major contracts. It is not expected that domesticsuppliers will participate in the tenders for equipment.

F. Disbursement

4.09 A schedule of estimated disbursements is given in Table 6; it isbased on a provisional project execution program shown in Annex 5. The Bankwill disburse on the basis of;

(a) 56% of the total expenditures for civil works (representingthe estimated foreign exchange component).

(b) In the case of equipment, 100% of the foreign exchange cost.

(c) In the case of consultants' services, 60Z of the total cost.

Upon completion of the project, any savings in the loan account might beused for similar items, in consultation with the Bank.

G. Road Access, Power and Water Supply and Housing

4.10 The Government will construct the road connecting the Pan-AmericanHighway to the port site. About 10 km in length, the proposed road willadditionally serve some residential areas to be developed in the region.Since the fishing port will be one of the beneficiaries of this road, theGovernment will charge 25% of its cost to APN. Provision for this amounthas been made in the estimate of the project cost.

4.11 The Government has also prepared schemes for extending the utilityservice lines up to the port limits. The cost of bringing water pipes, elec-tric cables and telephone lines up to the port entrance will be borne by theGovernment agencies concerned and recovered through the normal tariff forthese services. APN will not have to make any capital investment for theutilities, except for the services inside the port area.

4.12 Development of residential areas with necessary community serviceshas also been planned by the Government close to the port site where portemployees could find housing.

4.13 During negotiations, agreement was reached with the Government thatthe access road will be built before the contracts for the main civilworks of the port are awarded, that the utility services will be ready beforethe port works are completed and that housing facilities will be provided asneeded.

H. Transfer of Fishing Industries to the New Port

4.14 In order to achieve the goals of the project, it is necessary thatthe major components of the fisheries industry move to, and use, the new portas soon as it is ready. The shrimp processing plants and dockyards operateunder concessions granted by the Government (Table 7). The benefits offeredby the new port facilities are expected to provide an inducement for such trans-fer (paras.5.07-5.10), and there are indications that the industry intends tomove. In .addition, in order to assure the full and early achievement of economicbenefits at the new port as soon as it is completed, the Government has enactedlegislation requiring this transfer; it was agreed during negotiations that theGovernment will furnish, by June 30, 1976, a timetable for such transfer.

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4.15 APN has already obtained letters from a substantial number of tunavessel owners, declaring their intention to use the transshipment cold storageand servicing facilities proposed at the new port.

I. Ecology

4.16 The proposed project will improve the ecology of the Maranon sectionof Panama City, where considerable nuisance is caused by the fisheries indus-try. The piers serving the processing plants are located in shallow waters,and the sea bed becomes dry during low water; consequently, the fish droppedduring unloading operations and the organic matter discharged by the process-ing plants decompose quickly under exposure to the tropical sun and give offan offensive odor. The removal of the fisheries industry to Punta Vacamontewill eliminate the problem. Since the berths at the new fishing port willalways have sufficient depth of water to prevent decomposition of the deadfish, and because a small hill separates the new port from the areas proposedfor residential development, the fisheries in the new location will not be asource of nuisance.

5. ECONOMIC EVALUATION

A. General

5.01 The construction of a specialized fishing port at Vacamonte willcreate many benefits for the Panamanian economy. The greatest ones will, ofcourse, accrue to the fishing industries, but valuable land in the heart ofPanama City will also be freed for urban renewal. The economy will benefitfrom the servicing, transshipment and cold storage operations of the inter-national tuna fleet. A new port will act as a stimulus for economic activityto the west of the Canal and will offer new opportunities for the developmentof a national tuna fleet and related industries.

B. Demand Forecasts

(i) Shrimp Catch

5.02 The future catch from present resources is assumed to remain at itspast ten-year average of about 6,000 tons (Table 1). Landings of a new species(Cabezon and Fidel), as well as an unnamed, very deepwater species which wasdiscovered last year by the FAO exploratory fishing program, are assumed togrow from 900 tons in 1978 to 2,000 tons by 1985. The deepwater species willrequire a larger, deeper draft vessel, which can be berthed only at the newport. The total shrimp catch is thus conservatively forecast to reach 8,000tons by 1987, as shown in Table 8. Because this forecast is based on presentGovernment regulations and legislation designed to prevent overfishing, anychange in this legislation, adversely affecting the project, should be con-sidered as a basis for default of the proposed loan. This was agreed bythe Government during negotiations.

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5.03 The average annual catch per vessel lhas fluctuated between 24 and30 tons in the past and is presently about 24 tons. The maximum number ofvessels fixed by law is not expected to increase in the future; therefore, theaverage catch per vessel, including all species, is forecast to increase from30 tons per vessel in 1978 to 34 tons by 1987. Such an increase is wellwithin the performance attained elsewhere in the world and is consideredlikely in this case since older vessels are being replaced with larger, moreefficient ones.

(ii) Food Fish Catch

5.04 The Government, with the help of FAO technical assistance and an IDBloan, is trying to increase coastal fishing and the per capita consumption offish in Panama. Although both institutions and the Government are projectinghigher rates of growth, for the purpose of assigning economic benefits to thenew port, the Bank has projected a 5.5% p.a. growth in food fish demand overthe project period, compared to the continued growth of the market populationof 4.5% p.a. After 1977, tie incidental catch of shrimp and fishmeal vesselsis expected to decline due to the capacity constraints of the industry, butlandings by other fishing boats are projected to increase to meet the expecteddemand of 5.5% p.a. already mentioned. In order to achieve this growth rate,the number of larger food fish boats which will use the new port must increasefrom about 34 in 1977 to 60 in 1987.

(iii) Tuna Transshipment and Servicing Calls

5.05 The Government plans to discontinue the transshipment operations attheir present locations when the new fishing port is completed. The consul-tants' forecasts as revised by the Bank are shown in Table 3. The demand fortransshipment--direct ship to ship, with cold storage facilities or with coldcontainers--is expected to grow from an estimated 24,300 tons in 1974 to40,000 tons by 1979. Transshipment and storage demand at the new port isexpected to grow at about 3.5% p.a. until 1987, when it will reach 64,500 tonsand will stabilize (Table 9). The demand for fuel and repair facilities atthe new port is related to the number of vessels transshipping there, plusan estimate of the requirements of the other tuna vessels that might operatein the area. Because of the port's proximity to the Canal and the inter-national fishing fleet's practice of moving back and forth between theAtlantic and Pacific fisheries, the Bank has forecast approximately 420 vesselcalls for servicing each year after 1978.

C. Methodology of Economic Evaluation

5.06 For the purposes of this evaluation, it is conservatively assumedthat, without the new fishing port, the fisheries industry would continue tooperate indefinitely at its present location while, in fact, the pressuresfor redeveloping the urban center would force them to move or to go out ofbusiness. The rate of return calculation is based on the incremental, ormarginal, benefits which result from the investment in a new port.

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D. Economic Benefits to the Panamanian Economy

(i) Benefits Included

5.07 Quantifiable benefits are expected to accrue to shrimp vessel ownersand operators, shrimp processors, coastal fishermen, the Government as a landowner, and the labor force by creating new jobs. The economic benefits alsoinclude net value added in Panama by the expected increase of tuna transshipmentoperations. A detailed description of these benefits is included in the follcw-ing paragraphs, and the US dollar value by year and beneficiary is shown inAnnex 6. A calculation of the present value of project benefits indicates thatthey will accrue to the various beneficiaries in the following proportions:shrimp boats, 22.3%; shrimp processors, 25.9%; coastal fishing, 14.0%; foreignexchange from tuna services, 27.7%; and the Government as land owner, 10.1%.

5.08 For shrimp vessels, the economic benefits average about US$3,600per vessel for the first year of port operation. They include savings inrepair, maintenance and waiting time associated with a deepwater port whichis not affected by tides. A reduction in damage to the vessel's catch ofabout 1% is forecast with the use of a 24-hour facility and better handlingmethods. A deepwater port will also allow the construction of the larger,deeper draft vessels necessary for the fishing of the deepest shrimp varieties(500 tons by 1987); therefore, the net value added, generated by this catch,has been included as a benefit.

5.09 For the processing sector, the net value added on both the reductionin damaged shrimp and the new deepest shrimp species is counted as benefits.The additional work space provided at the new port will allow the processorsto produce larger amounts of individual quick frozen shrimp (1,250 tons p.a.)as well as to process scallops (45 tons p.a.). The net value added on theseamounts is included.

5.10 The capacity constraints at the present food fish landing facilitieswill limit the growth and marketing of this catch to about 3% p.a. after 1978.The net value added on the difference in growth rates for the catch of 3% p.a.without a new port and the 5.5% p.a. forecast with the new port are includedas benefits.

5.11 Because a large part of the tuna fleet is internationally owned, onlybenefits to the Panamanian economy are included in the analysis. (Benefitswhich apply only to the tuna fleet are discussed in Annex 7.) Berthing, fuelconcessions and transshipping fees collected by the port authority are benefits,as well as the value added generated by the cold storage and cold containeroperation (Table 10). The net value added on the increase in handling of tunaat the new port over the present operation at Taboga is also included.

5.12 The calculation of benefits was based on the average trend prices forshrimp and food fish landed in Panama as of March 1975. All prices were heldconstant after this date, but a strong case can be made for expecting a realincrease in shrimp prices of about 2% p.a. thereafter.

(ii) Increase in Land Value due to the Project

5.13 The relocation of the shrimp processing plants in the Maranon areaand the ship repair yard in the San Francisco suburban area at the new port

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will release some valuable land in Panama City for development purposes. TheGovernment is presently finalizing an urban renewal plan for Maranon whichcalls for the removal of the shrimp plants. The value of the land acquiredor reclaimed for a port at Vacamonte is a cost to the project, and the valueof the land released for urban renewal is considered as a benefit since thereis a shortage of prime development sites in the city. The difference betweenthe March 1975 value of the existing plots, given their current usage and theirvalue after removal of the fishing industry in March 1975 prices (but beforeany further development takes place), provides an additional economic benefit.These benefits, which go primarily to the Government, are conservatively valuedat US$2.4 million, and are taken during the last two years of port construc-tion and the first three years of operation (Table 11).

5.14 The enhancement in value of the adjacent property as a result of theindustry removal has also been counted as an economic benefit, but it is as-sumed to increase only half as much; thus, a further US$1.6 million wouldresult. A large portion of these benefits will accrue to the Government sinceits Ministry of Housing and APN either own the land or have options topurchase it at frozen prices.

(iii) Bernefits not Included

5.15 APN has the option to purchase the most desirable tracts of landaround the new port at Vacamonte for resale once the area is developed, butincreases in the value of this property, probably exceeding US$4.5 millionover the years 1979-1981, have not been included as an economic benefit.Benefits which were not included because they could not be quantified includethe enhancement of the city center's urban environment, the encouragement ofPanama City's expansion to the west of the Canal, the use of the port forhandling the small volume of coastal traffic, and the retention of presenttuna transshipment operations in Panama.

E. Economic Return

5.16 The economic return for the project has been calculated on the proj-ect as a whole, since a major part of the infrastructure (breakwater, dredgingand roads) is required for almost all activities. Although benefits to thefour user groups (shrimp vessels and processors and food fish and tuna vessels)are segregated, no means of assigning the capital costs to these groups ispractical. Because there is excess capacity in the shrimp fleet and processingplants, only the additional investment required for catching the deepest shrimpvarieties (para. 5.08), for processing quick frozen shrimp and scallops (para.5.09), and for catching food fish (para. 5.10) are included in-the economiccosts. This cost-benefit analysis is a comparison of the costs of the new portwith the additional benefits that will result from its operation. The costsof moving the shrimp plants to the new port are included in the analysis andare estimated by the consultants at US$435,000.

5.17 In addition to the capital costs of the project, there are annualcosts for administration and maintenance of US$650,000 in 1978, which grow

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in real terms at 2% p.a. until 1992. In addition, maintenance dredging, whichmust be undertaken at five-year intervals, is estimated to cost US$660,000 pertime. All costs, both capital and operating, are stated in terms of March1975 US$.

5.18 This project is assumed to have an economic life of 25 years withno growth in costs or benefits after 15 years of operation. The tuna coldstorage equipment is expected to last 15 years, and the cost of renewing theinvestment after this period is included. It is probable that the fishingindustry will continue to make use of the port after the end of the 25-yearperiod. A residual value of US$15.0 million is included in the calculations.

5.19 The project is expected to yield an economic rate of return of about15% over its 25-year life, with a first year benefit of 15%. Sensitivityanalysis shows that, if project costs increase 20% more than anticipated, thereturn is 13%, and, if they increase by 30%, the return becomes 12%. If thereal price of shrimp increases at about 2% a year, which it has done in thepast, the return on the project increases to 16%. If tuna transshipment traf-fic is reduced by 30%, the return drops to 12%, and, if the new deepwatershrimp catch does not materialize, the return becomes 13%. When the in-creases in land values around the new port at Vacamonte are included in thecalculation, the return rises to 17%, and, if no increases in land values inPanama City or Vacamonte are included, the return drops to 13%.

F. Adjustment of the Economic Rate of Return by Shadow Pricing Labor Costs

5.20 Unemployment for the unskilled labor population of the Panama andColon provinces is about 14%. Since unskilled labor will be employed in pro-'ject construction as well as in the operation of the port, the transshipmentof tuna, the processing of shrimp and the marketing of food fish, the costsand benefits of the project can be recalculated using a shadow price for thisunskilled labor. No exact estimate of the opportunity cost of unemployedlabor in Panama is available; assuming the opportunity cost to be 30% or 50%of the nominal wage rate, the economic return becomes, respectively, 16% and15%.

6. FINANCIAL EVALUATION

A. Present Position

6.01 Before the formation of APN, the national ports were not administer-ed in a commercial manner; therefore, records of costs and revenues are in-complete. True operating costs, including maintenance of navigation aids anddepreciation, will not be known until the cost accounting study (para. 3.04)is completed. Revenues from port charges increased from about US$280,000 in1971 to about US$450,000 in 1974 on higher volume of traffic. The prelimi-nary operating budget for 1975, which does not include capital investment,some maintenance costs or the costs of the detailed engineering for the new

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fishing port, totals about US$650,000. Because APN is a new organization withlittle operating revenue, it is recommended that the Bank finance interestduring construction amounting to approximately US$3.5 million.

B. Tariff Policy

6.02 APN is planning to increase both the navigation fees and the portcharges to cover respective costs as soon as they are known. Tariffs shouldbe revised from time to time so that APN's total revenues will produce anadequate return on investment. However, if economic factors so require,tariffs in a particular port could be lowered below fully distributed costs,but not lower than the relevant marginal cost. Agreement was reached withAPN and the Government during negotiations thet revenues from each port shouldbe sufficient to cover the full costs of services provided at each port andto earn a reasonable return on the-net fixed assets of each port. It wasalso agreed that, to accomplish this, independent commercial accounts will bekept for each port, which identify working costs, depreciation, centraloverhead, interest and repayments of any debts contracted by APN for facilitiesor equipment at each port.

C. Audit and Insurance

6.03 APN's By-laws call for it to be audited by the Government's GeneralAccounting Office. Agreement was reached during negotiations that APN willalso employ independent auditors satisfactory to the Bank. Aside from em-ployee insurance, APN has not yet insured itself against fire, theft andother business risks; therefore, agreement was reached during negotiationsthat adequate insurance will be maintained in the future.

D. Investment Plan

6.04 APN's preliminary five-year plan, 1975-1979, shown in Table 12, mustbe considered tentative. Aside from this project, a container port projectcosting about US$25.1 million is planned, as well as the spending of US$4.2million for improvements to existing national ports. Such expenditures wouldhave to be financed with Government equity contributions or debt, since APN'scash flow will be inadequate. For this reason, agreement was reached duringnegotiations that, before undertaking any investment in excess of US$1.0million per year prior to December 31, 1985, APN will satisfy the Bank thatsuch investment will not adversely affect its obligations under the loanagreement, and that APN will not incur any long-term debt without the priorapproval of the Bank, if its consolidated net revenues for the 12-monthperiod ended prior to the incurrence of the debt is less than 1.4 times itsmaximum future debt service requirements in any succeeding financial year.

E. Fishing Port Financial Forecasts

6.05 Financial forecasts have been made only for the new fishing port,since it is expected to make up about 80% of APN's future revenues, and thecosts of APN's existing operations will not be clearly defined until afterthe cost accounting study is completed. Shrimp, food fish and repair opera-tions are expected to begin at the new port in March of 1978, and tunaactivities at the beginning of 1979; therefore, the costs and revenues re-lating to these industries have been inflated until their starting dates,

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and then held constant in current terms, with increases due only to volumechanges thereafter. For this purpose, a yearly inflation rate of 15% for1975 and 10% p.a. thereafter was used for both costs and revenues. Costsare based on the consultant's feasibility study and revenues on the demandforecast in the economic evaluation. Table 13 outlines pricing and growthassumptions in 1975 prices. In principle, charges are designed to recoverabout 70-80% of the calculated economic benefits, the difference to be anincentive for each industry to use the new port. These revenues generatea financial internal rate of return of about 9%. If it develops that use ofthe port facilities by the international tuna fleet is only half of thatforecast, the financial return will probably drop to 7.5%.

6.06 The greater difference between the financial return and the 15%economic return is primarily due to the increases in land value and valueadded to fishing operations, which were included in the economic calculation butwhich would not be recovered in port charges for reasons indicated in the pre-vious paragraph. If the increase in land values and the resulting tax revenuesin the years that follow are included in the overall calculation of the internalfinancial rate of return, it increases from 9%1 to 11%.

6.07 Pro forma income statement, cash flow and balance sheet for the fish-ing port (1978-1987) are shown in Tables 14-18. After including full interestand repayments of the Bank Loan, the fishing port is still expected to generatea substantial cash surplus. Interest is capitalized until the beginning ofthe first full year of operation in 1979, and repayments will begin, afterfour years of grace, in 1979. Return on net fixed assets is projected toincrease from 6.7% in 1979 to over 10% after 1986.

6.08 The Government's contribution to this project should amount toUS$13.5 million or about 36% of total project costs of US$37.5 million. Theforecast financial statements show that the fishing port should be in aposition to begin paying out a partial dividend in the third full year ofoperation, 1981, and that this dividend can be increased to 5% in 1984 andmaintained at this level thereafter. During negotiations, agreement wasreached that APN -will maintain user charges at the fishing port sufficient(a) to yield annual rates of return on the fishing port's net fixed assetsin use of not less than 7% in the second and third full years of operation,8% in the fourth and fifth and 9% in the years that follow, and (b) to paythe Government a return on its contribution to the fishing port's financingplan of 3% in the third, fourth and fifth full years of operation, and 5% inthe sixth and followling years. This payment may be reduced in any one yearif the Government agrees that APN can better use this cash for internalcapital investment.

F. Extraordinary Capital Gain

6.09 APN is planning to take options on 100 hectares of land behind thenew fishing port site at Vacamonte and to sell this to developers when themain services have been connected. The net profit on this transaction might

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yield US$6.6 million over the period 1979-1981. This revenue has not beenincluded in the financial forecast, but it should be noted as a potentialsource of additional cash flow in early years of the project life. Detailson the calculation are shown in Annex 8.

7. AGREEMENTS REACHED AND RECOMMENDATION

7.01 During negotiations, agreement was reached with APN and theGovernment on the following points:

(a) Qualifications of future appointees to senior positions ofthe Director General, and the Directors of Finance, Opera-tions and Engineering, of APN (para. 3.03);

(b) A fishing port committee to be permanently established byDecember 31, 1975, and the fishing port administrator, whosequalifications and experience will be satisfactory to theBank, to be appointed by July 1, 1976 (para. 3.05);

(c) The members of the project team to be appointed by agreeddates (para. 4.06);

(d) The cost of the fishing port in excess of the loan amountto be provided by the Government as contribution to APN(para. 4.07);

(e) Access road to be built before the contracts for themain civil works of the port are awarded, utility servicesto be ready before the port works are completed, and housingfacilities to be provided as needed (para. 4.13);

(f) The Government to furnish, by June 30, 1976, a timetablefor the transfer of fishing industries to the new port(para. 4.14);

(g) Any change in present Government regulations regarding over-fishing, adversely affecting the project, to be consideredas a basis for default of the proposed loan.(para. 5.02);

(h) Revenues from each port to be sufficient to cover the fullcosts of services provided at each port and to earn areasonable return on the net fixed assets of each port(para. 6.02);

(i) Independent commercial accounts to be kept for each port inorder to accomplish (h) preceding (para. 6.02);

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(j) APN to employ independent auditors satisfactory to the Bankand to maintain adequate insurance against fire, theft andother business risks (para. 6.03);

(k) Before undertaking investments prior to December 31, 1985in excess of US$1.0 million per year, APN to satisfy theBank that such investment will not adversely affect itsobligations under the loan agreement (para. 6.04);

(1) APN not to incur any long-term debt without the prior approval ofthe Bank if its consolidated net revenues for the 12-monthi per.lodprior to the incurrence of the debt is less than 1.4 times itsmaximum debt servicing requirement in any succeeding financialyear (para. 6.04); and

(m) APN to maintain user charges at the fishing port sufficient(a) to yield annual rates of return on the fishing port's netfixed assets in use of not less than 7% in the second and thirdfull years of operation, 8% in the fourth and fifth and 9% inthe years that follow, and (b) to pay the Government a returnon its contribution to the fishing port's financing plan of3% in the third, fourth and fifth full years of operation, and5% in the sixth and following years (para. 6.08).

7.02 Retroactive financing is recommended up to US$300,000 toward foreignexchange costs for detailed engineering incurred after January 1, 1975 (para.-4.06).

7.03 Appointment of the project manager to the satisfaction of the Bankwill be a condition for the effectiveness of the loan (para. 4.06).

7.04 Since APN is a newly constituted Port Authority with a small income,it is recommended that interest during construction, which is estimated atUS$3.5 million, be financed by the Bank (para. 6.01).

7.05 The project provides a suitable basis for a Bank loan of US$24.0million (including interest during construction) to APN, with a guarantee ofthe Government, for a term of 20 years inclusive of a grace period of fouryears.

Ato.ril 9., '.Q7-

0ANAMA

FISHING PORT PROJECT

Shrimp Landin(In Metric Tons)

Year White Red Titi Carabali Solenocera Fidel Cabezon Total

1967 2,476 1,275 2,595 98 12 - 6,456

1968 1,967 1,914 1,981 130 14 - - 6,oo6

1969 1,931 1,030 2,519 80 105 - - 5,665

1970 1,981 1,167 3,657 95 9 - - 6,909

1971 1,927 1,341 1,948 92 47 - - 5,355

1972 2,327 1,356 l,424 99 86 - - 5,292

1973 2,338 1,392 1,311 131 40 94 269 5,575

1974 1,743 1,373 1,667 165 47 67 230 5,292

Source: Direccion General de Recursos Marinos w

March 1975

PANAMA


Shrknp Catch and Export

Year L Landed Value Average Price ort FOB Value Average Price(Net Weight in Tus .) (per Metric ton (Net Weight in (per Metric tonMetric ton) in US$) MIetric ton) in US$)

1962 5,575 4,389,063 787

1963 5,583 3,873,561 694 -

1964 7,o55 5,933,945 841 5,595 7,404,809 1,323

1965 5,851 5,001,4a0 857 4,776 7,782,o54 1,629

1966 5,643 5,002,553 887 4,570 8,971,911 1,963

1967 6,456 6,493,352 1,007 5,o68 9,185,?92 1,812

1968 6,oo6 6,910,183 1,151 4,779 9,727,207 2,035

1969 5,665 7,226,823 1,276 4±,42c 9,740,545 2,204

1970 6,90? 7,287,753 1,n55 5,058 10,168,319 2,010

1971 5,355 9,756,400 1,821 4,985 11,952,615 2,398

1972 5,292 12,641,600 2,3<3 4,521 14,631,339 3,236

1973 5•,575 14,765,400 2,790 4,413 16,706,605 3,786

1974 5,292 10,56o,ooo (Est) 1,995 (Est) - - - |-

Source: Direccion General de Recursos Marinos

March 1975

TABLEiPANAMA


Demand for Tuna Transshipment Facilities in Panama

Year Number of Tuna -Direct Siener to -Use of Cold Use of ColdVesselsTransshipi Reefer Vessel Storage Containers

-Metric Tons - - - - - - - -1968 10 1,274

1969 1 . 161 - -

1970 i1 2,940 - -

1971 53 17,757 - -

1972 48 15,763 - -

1973 66 25,409 - _

1974 (Est) 47 22,307 - 2,000

Forecast

1979 90 15,000 15,000 10,000

1987 122 20,000 27,000 17,500

Non-US flag vessels which presently do about 90% of the transshipmentin Panama are expected to continue to transship about 30% of their total catch,while U.S. flag vessels which presently transship only about 2% of their totalcatch are forecast to transship about 5% of it by 1979. Total tuna catch bothin and out of the regulated area is projected to grow from 277,000 tons in 1974to 330,000 tons by 1979. The non-US flag share of these totals is forecastto increase from 27% to 35% over the same period.

Tuna Catch in The Tropical Eastern Pacific Ocean (1,000 metric ton)

Yellowfin Skipiack Total (Yellowfin/Year In Out Total Total (In/Out) Skipjack)

1970 129.7 27.1 156.8 56.2 213.01971 103.2 21.3 124.5 104.5 229.01972 138.5 40.7 179.3 33.5 212.81973 159.9 50.0 209.9 44.4 254.31974 166.0 36.4 202.4 74.4 276.81979 Forecast 175.0 50.0 225.0 105.0 330.0

Source: Inter-American Tropical Tuna CommissionL&Vesey and HendersonBank Appraisal Mission

March 1975

TABLE 4

PANAMA

FISMING PORT PROTECT

Annual Port Traffic in Panama (Excluding Fishj

(000' metric tons)

Canal Zone & Banana Ports 1970 1973

Balboa 102 142

Cristobal 257 266

Armuelles 412 331

Almirante 365 335

1,136 1, 12!4

APN Ports

Panama City 235 240

Colon 67 34

Aguadulce 73 103

Pedregal 47 60

Darien 24 40

Bahia de las Minas (general cargo) 36 144

Other 7 20

489 6241

Source: Livesey and HendersonNational Port Authority

March 1975

?APIAMA TABLE 5

FISHING ?ORT PROJECT

Cost Estimates

'000 Balboas or US$ ForeignExchange

Local Foreign Total %

A. Harbour Works

1. Dredging and NavigationalAids 1,030 2,374 3,404 70

2. Breakwater 1,807 3,314 5,121 653. Reclamation 3,362 1,440 4,802 304. Wharves and Jetties 1,045 1,922 2,967 655. "aved Yards and Roads 211 90 301 306. Access Road (25% share) 482 4827. Ship Renair yard 211 392 603 658. Services 374 1,133 1,507 75

Sub-total 8,522 10,665 19,187 56

B. Buildings

1. Shrimn 'rocessing 253 470 723 652. Inshore Fisheries 60 60 120 503. Shi- Reoair Workshops 46 87 133 654. Ship RepAir Store/Office 72 72 144 505. Administrative Offices of

lort Authority 76 76 152 506. Customs Office 15 15 30 507. Offices for Ship and

Tuna Agents 48 48 96 50

Sub-total 570 828 1,398 59

C. Equipment

1. Harbour Launches 3 55 58 952. Tugboat 15 275 290 953. Cold Store ?iant and Building 100 900 1,000 904. Cranes 4 77 81 955. Vehicles 3 55 58 956. VMiscellaneous 3 55 58 95

Sub-total 128 1,417 1,545 92

D. Consultant Services

1. Engineering and Sunervision 700 1,000 1,700 602. Management 9° 140 230 60

Sub-total 790 1,140 1,930 60

Total A-! B + C + D 10,010 14,050 24,060 58

B. Contingencies

1. Physical 15% on A 1 and 23 to 8 nd B 1 tn 7 1,050 1,434 2,484

2. "rice 2,440 5,16 7,456

Sub-total 3,490 6,450 9,940

Grand total 13,500 20,500 34,000 60

Note: (i) Base estimate up-dsted to Mlarch 1, 1975(ii) Price contingencies allow for the following rates of % increases during

the years 1975-19781975 1976 1977 1978

Civil works 16 14 -Equipment 14 10 8 8Services 9 8 7 7

Source: Livesey and Hendersonand Bank Appraisal Mission

January 1975

TABLE 6

PANAMA


Estimated Schedule of Disbursements

(US$TO-00~

Fiscal Year and Disbursment CumulativeQuarter Ending during. Quarter Disbursments

FY 1976

December 31, 1975 300 300March 31, 1976 300 600June 30, 1976 1,500 2,100

FY 1977

Sentember 30, 1976 2,000 4,100December 31, 1976 2,300 6,400March 31, 1977 2,500 8,900June 30, 1977 2,700 11,600

FY 1978

Sentember 30, 1977 2,500 14,100December 31, 1977 2,200 16,300March 30, 1978 2,000 18,300June 30, 1978 1,900 20,200

FY 1979

Sentember 30, 1978 1,500 21,700December 31, 1978 1,300 23,000March 31, 1979 1,000 24,000

Source: Bank Aooraisal Mission

January 1975

PANAMA


Fishing Industry Processors' Concessions

Company'r Name Contract Number Date of Contract rerm or Expiration Date Activity

__________ Duration

Flan Meal Processors

PROMARINA, S;A . ....................... 10 April 25, 1955 25.years October 25, 1980 Fish meal manufacturing and exportation

PESQUERA TABOGUILLA S.A. . .............. 93 December 17, 1964 16 years October 21, 1980 Fish meal manufacturing and exportation.

Shrimp Processors

CIA, MARISCOS ISLAS DE LAS PERLAS .... 34 August 10, 1955 25 years Augmst 30, 1981 Fishing,exportation, cold storage preservation and

packing of maritime products. Plant andWharf at Maranon.

FAUNA DEL MAR S.A. .1................... MCI-13 October 23, 1969 6 years December 7, 1975 Fishing, exportation, cold storage preservation and

packing of maritime products. Onlytheir trawlers operate from Maranon,

CIA, DE PRODUCTOS CRUSTACEOS S.A. 79 August 26, 1957 18 years December 7, 1975 Fishing, exportation, cold storage preservation and

packing of maritime products. Plant and

wbarf at Juan Dias.

EMPACADORA NACIONAL S.A. . ............. 13 December 30, 1963 25 years March 11, 1989 Fishing, exportation, cold storage

preservation and packing of maritimeproducts. Plant and wharf at Paitilla.

CARLoS CAMBRA E HIJOS S.A. . ........... 14 March 13, 1962 13 years Decemtber 7, 1975 Fishing, exportation, cold storagepreservation and packing of maritimeproducts. Plant and wharf at Maranon.

PANAMA PACENG CORPORATION ............ 45 November 14, 1955 25 years November 14, 1980 Fishing, exportation, cold storage

preservation and packing of maritimeproducts. Plant and wharf atBoca la Caja, Paitilla.

Dockyards

MODERN FIBERGLASS INCORPORATED ....... 13 March 2, 1972 15 years May 8, 1987 Construction of vessels and boats with

fibre-glass helmet special for shrimpfishing and others for marketing andsporting uses.

CONSTRUCCIONES NAVALES DE PANAMA S,A. 16 December 26, 1973 14 years May 8, 1987 Construction and repair of vessels

made in steel and/or wood.

FABRICACIONES MARINAS S.A. .......... 20 December 26, 1973 14 years May 8, 1987 Construction of Vessels, boats and

Source: National Port Authnrity (APr) crafts for shrimp fishing and othersfor industrial, marketing or pleasure uses.

December 1974

PANAMA

PISHING PORT PROJECT

Forecast Shrimp Landings

(metric tons)

Edst Species Cabeson & Fidel Unnamed, Very Deep Species Total Catch

1978 6,060 800 100 6,960

1979 6,060 900 150 7,110

1980 6,060 1,000 175 7,235

1981 6,060 1,100 200 7,360

1982 6,060 1,200 250 7,510

1983 6,060 1,300 300 7,660

1984 6,060 1,400 350 7,810

1985 6,060 1,500 400 7,960

1986 6,060 1,500 450 8,010

1987 6,060 1,500 500 8,060

1988 6,060 1,500 500 8)060

Source: Bank Appraisal Mission

March 1975

PANAMA TABLE 9


Projected Calls of Tuna Seiners(1975)

AverageFlag Unit old Number of Total Hold Expected Projected

CaDacity Seiners Capacity Number of Amount of(Metric Ton) (Metric Ton) Transshipments Transshipment

(Metric Ton)

U.S.(P.R.) 949 47 44,603 47 33,557

U.S.(S.D.) 488 76 37,088 - 0

Canada 699 8 5,592 8 4,474

France 1,319 3 3,957 2 3,166

Spain 1,008 5 5,040 5 h4032

Japan 490 2 980 2 784

Panama 537 7 3,759 7 3,007

others 1/ 387 50 19,350 50 15,480

Total 198 120,369 122 64,500

Fishing Vessel Expected calls Expected calls Totalfor transshipment for servicingand servicing only

Tuna Long Liners 0 300 300

Tuna Purse Seiners 122 78 200

Reefers 22 0 22

Total 144 378 522

Note: 1/ Others include Costa Rica, Mexico, Venezuela, Bermuda, lJetherland, Peru

and Ecuador. Cuba is excluded.

Japanese Tuna Long Liners

Year Number of Calls at Panama Estimated Number ofTuna Long Liners

1973 2h2 So

197[ 300 (est.) loo

Source: Japan Tuna (Panama) Corp.

December 1974

PANAMA


Tuna Cold Storage and Cold Container Filling Operations(Revenue US$ '000 of 1979)

1979 1980 1981 1982 1983 1984 1985 1986

Cold Storage OperationQuantity in Metric Tons '000 15 17 19 21 23 25 26 27

Revenue 689 781 873 965 1,036 1,148 1,194 1,240

Working CostsLabor 115 115 115 115 115 175 175 175Maintenance 45 50 50 50 50 70 70 70Rent to APN 145 145 145 145 145 145 145 145Electric Power 206 234 260 290 315 345 360 375

Total Working Costs 511 544 570 600 625 735 750 765

Depreciation 100 100 100 100 100 150 150 150

Total Operating Costs 611 644 670 700 725 885 900 915

Net Operating Income 78 137 203 265 331 263 294 325Profit on Handling 67 77 86 95 104 113 117 122Net Income 145 214 289 360 435 376 411 447

Cold Container Loading OperationQuantity in Metric Tons 10 11 12 13 14 15 16 17

US$ 6.0 per ton profit 60 66 72 78 90 9 1Q

Total Income Cold Storage 205 280 361 438 519 466 507 549and Contairers _ ___2 = __ -

US$ of March 1975 x 1.531 - us$ of June 1, 1979


March 1975

PANAMA


Chanaee in and aluenl due to the Project(All Values as' of March 1975)

eURRENT TOTAL PRICE AFTER REMOVAL OF TITAL VTLUU INCREASE IN

AREA MARKET PRICE CURRENT VALUE FISHING INDUSTRY AFTER REMOVAL TOTAL VALUE

(sq meter) (B/. per sq meter) (B/1) (B/. per aq meter) (B/.) B/.

Panama City Center (Marainon) 2,594 108 280,152 180 466,920 186,768

Paitilla 7,600 60 456,000 90 684,000 228,000

Boat Repair (San Francisco) 14,000 48 672,000 90 1,260,000 588,OOO

Total 24,194 1,408,152 2,410,920 1,002,766

Enhancement in value of surrounding land

Maranon 16,000 108 - 144 - 576,000

San Francisco 50,000 48 69 - 1,050,000

Total 66,000 1,626,000

2,628,768

The total current land value of B/. 1,408,152 was taken as an economic benefit in the last two

years of project construction 1977-1978 and the increase in total value of B/. 2,628,768 is

taken as a benefit in years 1979-1981.

Source: Livesey and Henderson

March 1975

PANAMA

FISHITNG PORT PRDJECT

Preliminary Capital Investment Program 1975-1979('000 Balboas) Current Prices

Total 1975 1976 1977 1978 1979

Fishing Port Project 33,630 911 10,218 19,243 3,258 _

Container Port Project 25,100 - 5,200. 10,500 9,400 -

National Port Improvement 3,300 500 300 500 1,000 1,000

Port of Aguadulce (dredging) 900 900 - - - -

Total Investment 62,930 2,311 15,718 30,243 13,658 1,000

Source: National Port Authority (APN)

December 1974

PANAMA TABLE 13

Fl5ISG PORT PROJECT

Fishing Port Revenues

(March 1975 Prices)

Average Anual Basis for Charge 1978 1979Growth Rates B/. 'OOO B/. rooo %

Shrimp Vessels

Port and BerthingCharges B/. 3,600 per vessel 857 857 29

Food Fish Vessels

Port and BerthingCharges 5.5% 1978-1993 2% catch value 46 4B 2

Tuna Industry

Berthing 2% 1979-1987 630/ft Oal/Day - 75 3Transshipment Charge 4% 1979-1987 2% of S.D. price - 557 19

Other Revenues

Building Rentals - see Table 15 694 864 29Cold store profit 7% 1979-1987 see Table 10 - 126 4Fuel concessionLocal 1.2%, 1978-1987 20 per gallon 337 344 12Tuna 2% 1979-1987 ½!, per gallon - 95 3

Total Revenue (1975 prices) 1,934 2,966 100

Inflation Rates CummxlativeFactor

end 1975 15,end 1976 101 1.265end 1977 1O0; 1.392end 1978 10% 1.531

No escaation for fuel concession

Source: National Port Authority (APN)and Bank Appraisal Mission

March 1975

PANAMA


Forec ast Reveus-4j1 j 2/

1978 1979 .1980 .1981 1982 1983 .1984 JZ985 1986 1987

*Shrimp boats 895 1,193 1,193 1,193 1,193 1,193 1,193 1,,193 1,193 1,193Food fish vessels 48 68 71 75 79 84 88 93 98 104Tuna berthing - 115 118 121 123 126 128 131 133 136

Transshipment - 853 886 922 959 997 1,037 1,078 1,121 1,166Rents 725 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200Cold store andContainers - 205 280 361 438 519 466 507 549 549Fuel local 253 344 350 356 363 371 378 385 388 390Fuel tuna - 95 99 102 106 110 115 119 124 129

Total Revenue 1,921 4,073 4,197 4,330 4,461 4,600 4,605 4,706 4,806 4,867

1/ Current price of 1978-79

Source: National Port Authority (APN)anid Bank Appraisal Mission

March 1975

TABLE 1I

PANAMA


Revenues from Rentals of Land and Buildings and Charges for Services

March 1975 PricesCapital Cost

Area (including Annual Rental Total Annualsq. m. Engineering per sq. m. Rental

& Contingencies)

B/ 000 B/ B/000

Building Rentals:

Shrinp processingplants 5h400 795 34 182

Inshore FisheriesM4arket, etc 1,000 132 24 24

Port AuthorityBuildings - 167 - -

Shin repairWorkshops 700 146 40 28

Ship repairOffices 1,000 158 30 30

Ship repair yard - 656 - 125

Agents' Office 500 139 40 20

Total Building Rentalswithout Tuna 410

Service Charges:

Electricity supplyand distribution,

Water supply anddistribution andtelephones - 1,8oo 360

Total Rents and ServiceCharges without Tuna _ _ 770

Cold Store ground rent k,700 - 20 94

Total Rents and ServiceCharges with Tuna 864

Source: Livesey and HendersonMarch 1975

PANAMA

,FISHING PORT PROJECT

Pro Forma Income StatementI000 US$

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

Total Revenue 1,921 4,073 4,197 4,330 4,461 4,600 4,505 4,706 4,806 4,867

Operating ExpensesWages 562 573 584 596 608 620 633 646 658 672Maintenance 167 167 167 167 167 167 167 167 167 167Accrued Dredging Costs 153 153 153 153 153 153 153 153 153 153Utilities 28 28 28 28 28 28 28 28 28 28Other 70 70 70 70 70 70 70 70 70 70

Sub-total Working Costs 980 951 1,002 1,014 1,026 1,038 1,051 1,064 1,076 1,090Depreciation 495 660 660 660 660 660 660 660 660 660

Total Operating Expeises 1,475 1,651 1,662 1,674 1,686 1,693 1,711 1,724 1,736 1,750

Net Operating Revenue 446 2,422 2,535 2,656 2,775 2,907 2,9Y4 2,892 3,070 3,117Less Interest - 2,040 2,000 1,926 1,852 1 772 1 685 1 591 1 488 1 377

Net Income 9 2 3a 5 70 3 1,35 8 1t74

Dividend _ _ 400 400 400 700 700 700 700% Return of Equity - - _ 3% 3% 3% 5% 5% 5% 5%

Return on Net Fixed Assets 1.2 6.7 7.1 7.6 8.1 8.6 8.9 9.2 9.7 10.0


March 1975

PANAMA


Pro Forma Sources and Uses of Fnmdm'000 TtSt

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

*SourcesTotal Revenue 1,921 4,073 4,197 4,330 4,461 4,600 4,605 4,706 4,806 4,867Less Working Costs 980 991 1.002 1, 014 1,026 1,038 1,051 1,064 1-076 1.090Cash Generation 941 3,082 3,195 3,316 3,435 3,562 3,554 3,642 3,730 3,777

Total Sources 941 3.082 3,195 3,316 3,435 3,562 3,554 3,642 3,730 3,777

ApplicationInterest - 2,040 2,000 1,926 1,852 1,772 1,685 1,591 1,488 1,377Repayments - 365 780 854 928 1,008 1,095 1,189 1,292 1,403Dividend - - - 400 400 400 700 700 700 700

Total Application 2,405 2,780 3,180 3,180 3,180 3,480 3,480 3,480 3,480

Cash Surplus in Year 941 677 415 136 255 382 74 162 250 297


March 1975 1!

PANAMA


Pro Forma Balance Sheet

1978 1979 1980 1931 1982 1983 1984 1985 1986 1987

Cash 80 160 160 165 170 180 180 185 190 200Cash Available for Investment 921 1.608 2 028 2 159 2 414 2 786 2 865 3 022 3 272 3,559Total Current Assets 1,R01 1,7 6 5 3 3 3 462 3,759

Fixed Assets 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37,500Less Accumulated Depreciation 495 1,155 1,815 2,475 3,135 3,795 4 5 5,115 5775 6,435Net Fixed Assets 37,005 36,345 35,685 35,025 34,365 33,705 33,045 32,385 31,725 31,065

Total Assets 38,006 33,113 37,873 37,349 36,949 36,671 36,090 35,592 35,187 34,824

Current Liabilities 60 150 155 155 163 160 165 165 170 170Long Term Debt 24,000 23,635 22,855 22,001 21,073 20,065 18,970 17,781 16,489 15,036Equity 13,500 13,500 13,500 13,500 13,500 13,500 13,500 13,500 13,500 13,500Retained Earnings 446 828 1,363 1,693 2,216 2,946 3,455 4,146 5,028 6,068Total Equity 14,046 14,328 14,863 15,193 15,716 16,446 16,955 17,646 18,528 19,568

Total Liabilities and Capital 38,006 38,113 37,873 37,349 36,949 36,671 36,090 35,592 35,187 34,824


March 1975

ANNEX 1Page 1

PANAMA


Present Status of the Fishing Industy

A. Shrimp Fishery

(i) Resources

1. Coastal waters on the Caribbean side are poor in fish resources,and their exploitation is hampered by lack of roads and scarcity of popula-tion along the coast. On the Pacific side, on the other hand, conditionsare favorable for fish culture-. Seasonal upwellings in the Gulf of Panamaaccount for a light biological production which supports sizable stocks ofcommercially important fish species. The alluvia brought down by many riversand accumulating in the layer of mud in the gulf also provide a favorablehabitat for shrimp.

2. The principal shrimp fishing grounds of Panama are located in theGulf of Panama and the Gulf of Chiriqui. At the present time, shrimp re-sources are extensively exploited up to the 60-fathom line. The areas cur-rently fished are shown on Map IBRD 11415. They are all located within the200-mile limit of territorial waters claimed by Panama.

3. The three main species of shrimp found in Panama are:

(a) White shrimp (Penacus Occidentalis) - this is themost sought after species because of its large sizeand higher commercial value.

(b) Pink shrimp (Penacus Brevirostris) - these aresmaller in size and therefore command a lower pricethan the white variety.

(c) Titi or Sea Bob (Xiphopenacus Rivertis) - these arevery small and, although found in large quantities invery shallow waters, have a low commercial rating.

In addition to these major species, small quantities of Carabali and Solenoceraare also fished. The average annual Panamanian shrimp catch has been about6,000 tons. Details of catch by species in the years 196( to 1974 are givenin Table 1 of the report. The available data suggest ttnat the shrimp groundswithin the 60-fathom line currently being fished are fully exploited to theirmaximum sustainable yield and that no further increases can be expected.

ANNEX 1Page 2

4. The recent discovery, by the FAO's exploratory fishing vesselCanopus, of new varieties of deepwater shrimp has opened up good prospectsfor considerable addition to Panama's shrimp catch. Two such species dis-covered in 1973 are:

(a) Fidel (Solenocera Agasizi) - found in 100 to 150fathom deepwaters, this red shrimp is medium tosmall and is said to have an excellent taste.

(b) Cabezon (Heterocarpus Vicarious) - this is also asmall red shrimp with a large head and hard shellfound in depths of 150 to 200 fathoms.

Commercial fishing for their varieties commenced in the second half of 1973and the catches made were encouraging.

5. Further trail fishing by Canopus resulted in the discovery, in 1974,of two more varieties (as yet not named) in depths of 450 to 550 fathoms.The trails so far have indicated that these snecies are found over a widearea and in commercial quantities. Both these varieties are commerciallymore attractive than fidel and cabezon because they are larger in size andone of them is white. Exploitation of the new fishing grounds in deeper andmore exposed waters calls for bigger and more powerful fishing craft whichwill not be able to operate from the existing wharves. The development ofthe substantial resources 6f these new species will be possible only afterthe proposed fishing port is ready.

(ii) Fleet

6. The shrimp fishing fleet in operation in 1973 consisted of 232boats. A license is required for operating a shrimp boat over 20 CRT, and,under the present regulations, the maximum number of licenses is fixed at238. Details of age, size and engine power of the 229 boats which hadvalid licenses in 1973 are given in Table 1 of this Annex. While some ofthese licensed boats are non-operative, there are in operation some smallboats not requiring a license, making the total operative fleet of 323units. Except for a small number (between 12 and 18) of boats based inPedregal, the bulk of the fleet operates from Panama Bay, where nearly 95%of the shrimp catch is landed. Nearly 75% of the boats are still of wood,but the trend toward steel hulls is increasing. The 23 new trawlers beingfinanced under Loan 784-PAN will all be of steel construction. In accord-ance with current regulations, the power of the boat engines is limited to260 hp. Ownership of the shrimp fleet is divided between the processorsand the independent owners. The processors already own the major part ofthe fleet, and the trend is toward increasing their share of ownershipsince access to the raw material is critical for the success of theiroperations.

ANNEX 1Page 3

(iii) Production

7. The average annual catch per vessel has fluctuated quite markedlyover the years 1963 to 1972, but the general trend has been downward, witha maximum of 38,981 kg in 1964 to a minimum of 23,473 kg in 1970, possiblyreflecting the increase in the number and age of the boats. With a restric-tion on the number of licenses and a program for replacing older units, theproduction trend should improve. The shrimp processing capacity availablein the six plants in Panama is adequate for the type of processing currentlybeing done in peeling and freezing. Recourse to other forms of processing,such as individual quick freezing (IQF), canning, and, possibly, breading ofshrimp, may be desirable for securing a higher return. For this purposeand for the processing of the expected additional catch of new varieties,some expansion of the processing capacity may be required.

(iv) Market

8. The principal market for Panamanian shrimp is the United Statesof America, to which 97% of the country's supplies are exported. Sincethe United States depends on imports for about half of its growing demand,Panama, which supplies only 5 to 6% of that import, should have no difficultyin retaining its share of the market at the ruling world prices. Japan andthe Western European countries, the other major consumers, also have to relyincreasingly on imports to satisfy local demand. A large increase in worldtrade in shrimp and a reasonably substantial rise in its real price is ex-pected. The United States National Marine Fisheries Service (NMFS) hasestimated that, between 1970 and 1985, the real price of shrimp would in-crease by 38%, or about 2% per annum, and that the rise would be steeperas time passes.

B. Fishmeal

(i) Resourees

9. The main species fished for reduction to fishmeal are anchovy andthread herring. The total catch, during the last eight years for whichfigures are available, has fluctuated markedly, with a high of 66,000 tonsin 1966 and a low of 22,700 tons in 1969 (Table 2 of this Annex). Of thetwo species, anchovy has been exploited more intensively. There is a strongseasonal pattern in the catch for fishmeal, anchovy being abundant betweenApril and August and thread herring between September and November. Thepresent constraint on the volume of catch appears to be the unsatisfactorycondition of the fleet rather than availability of the fish. The FAO/IBRDCooperative Program Mission concluded that use of improved vessels and gearwould increase the catch, especially of thread herring. The consultantsestimate that a potential exists for improving the catch up to 112,000 tons(62,000 tons of anchovy and 50,000 tons of thread herring) if there is aneffective fishing effort.

ANNEX 1Page 4

(ii) Fleet

10. In 1973, the fleet operating for the fishmeal industry comprised25 vessels (23 licensed, being over 20 GTR, and two smaller unlicensed).Fourteen of these vessels are old, converted shrimp trawlers unsuited forpurse seining. The remaining eleven are purse seiners, seven of them pur-chased second-hand from Peru and only four newly built in Mexico. Due tothe age of the major part of the fleet, the effective fishing period isconsiderably reduced. The two fishmeal factories which own the fleet haveplans for acquiring additional purse seiners up to the full limit of 20vessels allowed to each under the current regulations.

(iii) Production

11. In 1972, Panama produced 9,063 tons of fishmeal and 2,641 tons offish oil. The processing is done by two factories, both of which are locatedin Panama Bay, one on Taboga Island and the other at Caimito on the main-land. Each plant has a jetty capable of berthing two vessels and equippedwith pumps for unloading the catch. The combined capacity of the two plants,estimated at more than 300,000 tons of raw fish, is considerably in excess ofthe present and forecast catch. The plant at Caimito is severely restrictedin its operation due to the berths being dry at low tide and to the lack ofspace on the land side where it is surrounded by-the village. The Tabogaplant does not have these problems, but its island lbcation adds considerablyto its operating costs. Despite these deficiencies, it appears unlikely thatthese plants would be inclined to move from their present locations sincetheir present operations, involving short voyages and fast unloading bypumping, and the level of production expected in the short run do not makethe benefits associated with such moving sufficiently attractive.

(iv) Market

12. Nearly all the production of fishmeal and fish oil is exportedto Central American countries. Even though this exported quantity is neg-ligible in comparison to the world production of over 5 million tons, it bringsmore than US$1.2 million at current favorable prices. It is expected that,with the progressive reduction in the availability of raw materials, thegrowth rate in world production of fishmeal will tend to fall, and, accordingto the estimate of the U.S. National Marine Fisheries Service, it will leveloff by 1985 to about 6 million tons. Since this should result in the con-tinuation of the upward trend of world price, Panama's production, even ifincreased to the full level of its potential catch, should easily find amarket.

C. Inshore Fisheries

(i) Resources

13. The production of food fish in Panama has steadily risen from 2,377in 1963 to 4,729 tons in 1972; a major part of this catch is consumed in

ANNEX 1Pag,e 5

Panama City. About 3,600 tons, or over 75% of the catch in 1972, are es-timated to have been landed in Panama Bay. The catch comes from threeprincipal sources: (a) the incidental catch of the shrimp trawlers andfishmeal purse seiners; (b) the semi-industrialized fishery consisting ofex-shrimp and fishmeal vessels and (c) the coastal fishery consisting ofmany boats and canoes, some with outboard motors, owned by individualfishermen or by cooperatives. The proportion of landings contributed bythese sources is roughly 80, 15 and 5%, respectively. Food fishing isentirely an inshore operation, and, since inshore shrimp trawling hasreached the maximum sustainable level, the semi-industrialized and coastalfisheries will mainly have to be relied upon for the bulk of growth in foodfish landings. There is no indication that the food fish resources areanywhere near fully exploited. Scope exists for increasing the catch ofnot only the popular varieties of fish such as corvina, pargo, lenguado,etc. but also of sharks, which can he a substitute for imported dried cod.

(ii) Fleet

14. Apart from the shrimp trawlers and fishmeal purse seiners whichparticipate in incidental fishing for food fish, the other vessels engagedin this trade in 1972 included 14 trawlers, 18 small purse seiners and 39open boats without board motors comprising the semi-industrialized fisheryand 21 small motorized vessels and some 190 canoe type boats belonging tocooperatives and individual fishermen. Fishermen's cooperatives are re-ceiving encouragement and increased from four in 1968 to 20 in 1972. ElChorrillo cooperative in Panama City, which provides refrigeration, ice-making facilities and marketing services for its members, is an example ofthe growth of this institution.

(iii) Promotional Measures

15. For encouraging increased production and consumption of food fish,the Government sponsors fish cooking demonstrations and TV shows. Improvedstorage, transportation and marketing facilities are made available to thecoastal fishermen through cooperatives. Under a project financed by theInter-American Development Bank, 90 medium-sized fishing boats and some iceplants and the shore facilities are to be provided.

D. Tuna Fish Industry

(i) Resources

16. Panama lies almost at the geographical center of the extensivetropical tuna fishing grounds which extend from California Bay to the Gulfof Guayaquil. The major part of this area is regulated by the Inter-AmericanTropical Tuna Commission (IATTC) as a fisheries conservation zone with aview toward preventing overfishing of yellowfin tuna, currently the mostpopular species. IATTC sets the maximum limit beyond which yellowfin shallnot be fished in tile year within the regulatory zone. This ranges between

ANNEX 1Page 6

118,000 and 140,000 tons. The other principal variety of tuna caught inthe area is skipjack. Sketch Map 2 shows the location of the tuna fishinggrounds and the Commission's Yellowfin Regulatory Area (CYRA), inshore andoffshore.

17. IATTC's regulatory system results in making tuna fishing a seasonaloperation, especially for the large vessels. Unrestricted fishing for yellow-fin is permitted from January 1 each year until such time as the IATTC ordersthe closure for the season. The closing date is so fixed that the total catchof yellowfin would match closely with the limit set for the year, leaving abalance reserved for the small boats of the member countries (Canada, CostaRica, Ecuador, Japan, Mexico, Panama and the United States). As a consequence,the large tuna fleets fish for yellowfin from January 1 to the closing date(March 5 in 1974), and the smaller vessels operate during the remaining partof the year. After completing the last voyage after the closing date, thelarger vessels withdraw from the CYRA to the central Pacific or to theAtlantic or African fishing grounds via the Panama Canal. They return tothe CYRA area and are in port by Christmas in readiness for the next season.Table 3 of this Annex shows the typical seasonal distribution of yellowfincatch in CYRA with a high concentration in the first quarter; the catchalso shows a marked regional distribution, almost 50% being caught north ofthe Equator and south of the 10th parallel. More than half of this (or 26%of the total) is caught north of the 5th and south of the 10th parallel,i.e., in the area closest to Panama.

(ii) Fleet

18. Tuna vessels of several countries operate regularly in CYRA. Dur-ing the last decade, the international tuna fleet has grown considerably innumbers and capacity as will be evident from Table 4 of this Annex, whichdoes not include Japanese long-line vessels or small vessels of Central andSouth American countries. The growth was marked after 1967 mainly under theincentive provided by the IATTC regulatory system. When the open season foryellowfin begins, the competing fishing enterprises are literally engaged ina race to claim as large a share of the quota as possible before the closingdate, and the expansion of the fleet has been their effective method ofachieving that objective. The distribution of the international fleet accord-ing to country and according to the types of vessels is shown in Table 5 ofthis Annex. Purse seiners of the larger size (over 363 tons) have become thedominant vessel type for the tuna fleet in CYRA. Until recently, althoughsome vessels in the tuna fleet carried the Panamanian flag, none belonged tothe country. In mid-1974, a Panamanian national tuna fleet was establishedwith secondhand purse seiners purchased from Peru.

(iii) Tuna Transshipment

19. Since there are no processing facilities for tuna in Panama, trans-shipment is the only tuna operation being carried out in the country. Thenumber of such operations and the quantity of tuna transshipped during the

ANNEX 1Page 7

years 1968-1974 are shown in Table 3 of the report. These operations takeplace mostly in the sheltered waters north of Taboga Island but sometimes inthe port of Balboa, where, most recently, the use of cold containers for thetransshipment of tuna have been used. Labor costs at Balboa are high; there-fore, the lower handling costs associated with the new fishing port shouldgreatly expand this type of service. The containers would be filled at thefishing port and trucked to Balboa for loading on container vessels. Becauseno cold storage facilities or a lower cost location for filling containers arepresently available, transshipment has to take place directly from fishingvessel to reefer, which inavariably results in costly detention either to thetuna boat or the reefer. But for this disincentive, transshipment would havebeen practiced on a much larger scale than hitherto because the fishingvessels would normally wish to spend as much of their productive time aspossible at the fishing grounds in order to take the fullest advantage ofthe short season. Encouraging transshipment of tuna by providing cold storage,a low cost location for filling containers and servicing facilities wouldbenefit the international tuna fleet as well as the Panamanian economy.

20. More than 50 tuna vessels presently start the season from Balboa,which they use as a pre-season port; the port management is finding it in-creasingly difficult to accommodate them. The international tuna fleetconsiders Panama Bay a convenient base because of the good repair serviceit offers through ready availability of spare parts and skilled labor. Itwould, therefore, welcome the provision of suitable port facilities.

E. Ship Repairs

21. Repair service to the fisheries industry is provided to a largeextent by a number of small mechanical workshops, mostly located in the oldcommercial center of Panama City. They send out crews to vessels anchoredin the Bay or moored at the jetty. Parts requiring repairs or replacementusually must be taken to the workshop and brought back for being fitted.Because of the distance between the vessel and the workshops, and thefrequent need to cover a part of it by boat, the repairs often involve morethan one trip and take much longer than they should. Repairs requiring thevessel to be taken out of the water are conducted by beaching the vessel orby handling it up a slipway. One shipyard at San Francisco, in the easternsection of Panama City, and two fleet operators at Paitilla and Juan Diazhave provided slipways for this purpose. All the slipways, however, aresited in tidal waters, and access to them is restricted, The tidal condi-tion also limits the size of the vessel which can be serviced on the slipway.

22. Adequate skilled labor and spare parts are available, and the capabil-ity of the repair service is good, but efficiency is not satisfactory, mainlybecause of the workshops being located far away from the vessels and the tidalcondition of the slipways. Faster and more economical repairs would be pos-sible with the facilities proposed at the new fishing port.

March 1975

ANNEX 1

PANAMA TA_LE 1


Age, Size and Engine Capacity of Shrimp Fleet - July 1973

VESS!MS LENGTH (in metres) HORSEPOWE OF ENGINE

Year of PercentConstruction Number of total Range Average Range Average

1973 11 4.8 18.3 - 25.3 21.7 225 - 380 335.5

1972 11 4.8 21.3 - 26.8 23.3 340 - 425 372.3

1971 4 1.7 1823 - 22.9 21.0 225 - 500 367.5

1970 5 2.2 21.3 21.9 21.8 220- 425 352.0

1969 1 3.1 19.8 - 22.9 21.2 220 - 385 350.0

1968 18 7.9 15.5 - 25.3 19.8 170 - 380 300.8

1967 17 7.4 18.3 - 25,6 21.8 220 - 380 349.8

1966 13 5.7 14.0 - 23.1 19.14 220 - 385 323.1

1965 23 10.0 14.6 - 22.6 19.1 150 - 380 248.3

1964 17 7.4 15.8 - 20.4 19.0 170 - 320 225.6

1963 6 2.6 28.3 - 21.3 19.6 170 - 225 200.0

1962 5 2.2 17.4 - 19.2 18.3 170 -- 225 212.0

1961 14 1.7 13.7 = 21.3 18.3 150 - 325 216.3

1960 4 1.7 12.5 - 19.2 16.6 135 - 250 196.3

1959 9 3.9 16.2 - 18.3 17.8 203 - 380 235.7

1958 27 11.8 16.3 - 22.3 18.6 110 - 365 198.3

1957 34 14.8 15.2 - 19.2 18.2 150 - 225 18 .7

1956 11 4.8 i6.2 ; 22.9 18.4 150 - 225 172.3

1955 1 0.4 18.3 18.3 150 150.0

1952 1 0.4 18.9 18.9 270 270.0

1948 1 0.4 16.2 16.2 180 180.0

Total 229 100.0 12.5 - 26.8 19.5 110 - 425 256,0Fleet

Source: Direcoion General de BecurSos Aarinos-December 1974

AIT.'''X 1TABL3 2

PA..AMA


Anchovy and Thread Herring Catch(Metric Tons)

Year Anchovy Thread Herring Total

1966 53,1d4 12,873 66,0171967 36,837 26,828 63,6651968 53,156 12,195 65,3521969 8,799 13,912 22,7111970 28, 634 6,859 35,4931971 51,570 5,775 57,3461972 3h,500 1h,312 L,8121973 56,800 20,277 77,0771974 13,170 35,742 L9,912

Source: Direccion General de Recursos Marinos Panama

Dec6mber 1974

I'NEX LTABLE 3

PANAIIA

FISHI1JG PORT PROJECT

Seasonal Distribution of Tana CatchIn GYHA lY6(-iy7U

Percentage Distribution

Period Yellowfin Skipjack Total

lst,Quarter 5o.3 21.8 39.9

2nd.Quarter 40.3 40.0 40h1

3rd. Quarter 7.1 23.6 13.2

hth. Quarter 2.3 14.6 608

Source: Livesey and Henderson: Fishing Port Study

December 1974

A',' ThX I1TA!BLE )


Growth of Tuna Fleet Operating in CTRA

Year No. of Vessels Capacity (Metric Tons)

1963 249 40,7O71964 251 41,6231665 253 42,7731966 245 42,3361967 239 42,1341968 249 51,8251969 250 59,5611970 270 66,1681971 352 86,2161972 373 104.,9961973 355 125,6oo1974 322 129,700

Source: IATTO Report

January 1975

ANI V, 1TABLE T

PANAMA


Number and Capacity of Vessels Operatingin CYRA 1967 and 1974

I. According to Flag

Country No. of Vessels Capacitv (Metric Tons)1967 1974 1967 1974

U.S.A. 153 197 37,514 95,865Canada 3 8 741 5,591Mexico 6 22 1,021 8,496Ecuador 65 66 1,474 3,556Others 12 29 1,382 16,167

Total 239 322 42,135 129,675

II. According to Size and Type of Vessel

Type of Vessel No. of Vessels Capacity (Metric Tons)1967 1974 1967 1974

Purse Seinersunder 363 m tons 98 79 22,199 18,833 (est.)

Purse Seinersover 363 m tons 24 123 14,203 103,600 (est.)

Baitboats * 109 111 5,551 7,o58

Bolicheros * 8 4 182 100

Jigs* 0 5 0 84

Total 239 322 42,135 129,675

* These are all small boats with capacity less than 363 metric tons.

Source: Livesey and Henderson: Fishing Port Study

January 1975

ORGANIGRAt-viA DE LA AUTORIDAD PORTUARIA NACIONALA MEX 2

COMITE EJECUTIVO

AUOITORIA DE| A CONTLORIA |

DIRCCCION GENERALCOMITE DE

ASESORIA LECAL

AUDITORI INTERNA CONSULTORIA

tIlER NA EXTER?A

RELACIONESPIJSLICAS

DlRECCION DEADMIN;STRACION

DEPTO. DECOP.PRAS OLPTO. DE OPTGDEY PROVECDU; PERSONAL ISRVC; CEHERLESL

rOiRCCIOtl DE DIRECCION DEIZE I A E:A I A EXPLOTAC ION J

DEPTO OE . DEPTO. OE GEPTO. DE SiSTEMASJP.ESUPUESTO ESTUDIOS Y METODOS Y

PROYECTOS PROCEDIM!!NOs,

r E' DIE DEPTO.CE DEPTO DP-CONTASILIOAO MATNIMIENTO OPERACIO£ES

Y OSNAS bRITIAS

DcP I'-tO. CE1 P DE

Ls I -ttA_

;^;^ 4 vr I COLON Y AGUADULCE PEDREGALY ALAMIRA:.TE ILi LA' PA I .. L ~AHIA LAS MINAS IY AMU. IAE LL | Y SOCAS DEL TORC I

December 19714 .

ANNEX 3Page 1

PANAMA

FISHINC PORT PROJECT

Project Description

The project consists of (i) construction of a fishing port at PuntaVacamonte, (ii) provision of consultancy services and (iii) training of APNstaff.

The proposal for the fishing port at Vacamonte is based on thefeasibility study carried out for the Government of Panama by Messrs. Liveseyand Henderson (U.K.) and Abad y Asociados (Panama). After making a preliminaryinvestigation of three possible sites indicated by the Government, i.e., PuntaPaitilla, Punta Vacamonte and Mansabe, the consultants concluded that PuntaVacamonte was the most suitable for the development of a fishing port. Adetailed study of the Vacamonte site, covering hydrographical and topogra-phical surveys, tide and wave observations and soil investigations wascarried out by the consultants. The main findings regarding site conditionsare as follows:

Mean High Water Springs +5.0 mMean High Water Neaps +3.8 mWave Height - max. observed 1.6 mWave Period - max. observed 13.8 secondsCurrent Velocity - max. observed 0.5 knotsSuspended Material (max.) 627 ppm

After examining a number of alternative schemes, it was determinedthat a tidal port which was possible without requiring rock dredging (sincethe borings had indicated that the rock levels were sufficiently low) wouldbe more advantageous than a locked one. The study also concluded that abreakwater, preferably of the rubble-mound type, would be necessary to pro-vide the required quietude in the harbor for the fishing craft, and that aneasterly entrance to the port would be preferable. The layout proposed forthe fishing port is in accordance with these findings.

The project consists of the following elements:

A. Fishing Port at Punta Vacamonte Comprising

(i) A rubble-mound breakwater about 1,200 m long and enclosingapproximately 35 hectares of sheltered water area.

(ii) Reclamation of about 9 hectares of land.

(iii) Access channel dredged to 5.50 m and adequately providedwith navigational aids. (The depth of the channel is designed

ANNEX 3Page 2

to enable tuna carriers drawing up to 7.0 m to enter orleave the port during five hours each tide).

(iv) Two jetties with a quayage of 230 m for berthing 10 shrimptraxlers (20 m long and 2.5 m draft).

(v) Tuna wharf 240 m long with water depth of 9.0 m to berthfour purse seiners (50 m long) or one reefer (110 m long)and two purse seiners for transshipment and for servicing.

(vi) Food fish wharf 92 m long to berth eight vessels (10.0 mlong) for landing fish or for servicing.

(vii) Four servicing jetties with a total length of 580 m forservicing 80 shrimp trawlers.

(viii) Ship repair yard including one synchro-lift of 250 tonscapacity and fitting out wharf, and about 18,000 m2 ofpaved area.

(ix) Buildings for shrimD processing plants, fish market, shiprepair workshops, offices for ship repairs, agents, customsand port authority with a total floor area of about 14,200mn2 .

(x) A cold storage plant for tuna of about 3,000 tons capacity.

(xi) One tugboat of about 400 h.p. and two harbor launches about12 m long and 150 h.p.

(xii) Access road linking the port to the Pan-American Hlighway(one-fourth share of the cost allocated to the fishingport project).

(xiii) Roads, pavements and drainage within the port area.

(xiv) Fxtending electric, water and telephone services to portside(no capital cost allocated to the fishing portproject).

(xv) Electricity, water, and fuel supply and telephone serviceswithin the port area.

B. Consultant Services

(i) Engineering services for preparation of design, drawingsand bid documents and for the supervision of constructionof the port works.

ANNEX 3Page 3

(ii) Operations consultant services for preparing (a) adminis-

trative manuals for general, financial, personnel andpublic relations management; (b) operations manuals for

port services to fishing vessels, processors and shiprepairers, and (c) by-laws and regulations for thefishing port.

(iii) Accounting consultant services for completing thedesigning and installation of the accounting andcosting systems and procedures for the principalports of APN, and for establishing (a) proceduresfor preparing annual and long-term operating andcapital budgets; (b) an internal audit system; and(c) basis and procedure for framing tariffs.

C. Staff Training

(i) Continuation of the training program already beingimplemented with the assistance of ITNY)P. ((Althoughthis program forms part of the project description,it is not to be financed from the proceeds of theloan.)

March 1975

ANNEX 4Page 1

PANAMA


Terms of Reference and Qualificationsof the Special Project Team

A. Terms of Reference

The special team will:

(i) Assist the Director General of APN in executing allcomponents of the project in an efficient and expedi-tious manner.

(ii) Draw up, in consultation with the consultants, arealistic program for all principal items of workand prepare a critical path analysis.

(iii) Keep a close watch on the progress of the work andtake prompt action for correcting any slippagetherein.

(iv) Provide all necessary liaison and coordination withother agencies, ministries, Government departments,etc.

(v) Keep proper accounts of the expenditures of the projectand ensure that payments are made to the contractors andsuppliers promptly and in accordance with the conditionsof the contract.

(vi) Prepare monthly and quarterly reports on the progress ofthe project in accordance with the requirements of theBank.

(vii) Prepare and process all necessary documentation forwithdrawal of funds from the Bank loan.

(viii) Bring promptly to the notice of the Director Generaland the Bank any developments which are likely toincrease the cost of the project.

(ix) Review and make recommendations to the Director Generalor take necessary action on any proposals of the consultantsregarding variation orders on contractors/subcontractors,day work orders, claims of contractors and disputes withthe contractors, etc.

ANNEX 4Page 2

B. Qualifications

(i) The Project Manager, who will head the special Project Team,will be a qualified civil engineer with at least 12 years'standing and will have considerable experience in the admin-istration of major civil engineering contracts. He willhave a working knowledge of English.

(ii) The Project Accountant will be a chartered public accountantwith at least five years of accounting practice and will havea working knowledge of English. Experience in civil engineer-ing contract accounts will be desirable.

(iii) The Administrator will be a university graduate with at leastfive years of experience in a commercial or Government officeand will have a working knowledge of English.

January 1975

ANNEX, 5

PANAMA


Estimated Schedule of Project Execution

TEAR 1975 1976 1977 1978

QUARTER I TT III TV I III III IV I II TI- IV II111 IV

I. Port Construlction

Loan Effectiveness +Detailed Engineering P M-X

Tender Documents OEM"Prequalification of

BiddersInvite and Receive bidsAward Contract 4'Access Road -

Breakwaterad Recliata . -

Wharves and JettiesDredging - mm. - --

Roads and Pavements ,-

ServicesBuildingsShip repaif yard

II. Technical Assistance

Selection and Appoint-ment of Consultants

Report Preparation

December 1974

ANNEX 6

PANAMA


Base Case Economic BenefitsOOO'US$ of March 1975

Shrimp Shrimp Coastal Government TotalYears Boats Processin Fisi Tuna Land Benefits

1977 - - - 732 732

1978 948 959 67 - 732 2,706

1979 983 1,029 140 1,095 874 4,121

1980 978 1,063 222 1,205 874 4,342

1981 964 1,099 305 1,313 874 4,557

1982 987 1,168 399 1,426 - 3,980

1983 1,032 1,239 498 1,538 - 4,307

1984 1,077 1,308 606 1,650 - 4,641

1985 1,121 1,378 722 1,690 - 4,911

1986 1,164 1,447 847 1,731 - 5,189

1987 1,206 1,515 982 1,770 - 5,473

1988, 1,2o6 1,515 1,126 1,806 - 5,653

1989 1,206 1,515 1,281 1,840 - 5,842

1990 1,206 1,515 1,447 1,850 - 6,018

1991 1,206 1,515 1,626 1,850 - 6,197

1992 1,206 1,515 1,818 1,850 - 6,389

1993 1,206 1,515 2,022 1,850 - 6,593

1994-2003 Benefits are constant


April 1975

ANNEXY 7Page 1

PANAMA


Economic Savings for Tuna Vessels Transshipping

through Cold Storage Facilities at the New Port

Economic Savings for Tuna Seiner in 1975 Prices

1. Saving on Unloading Time

At Taboga Island, Panama tuna seiners presently take about

four days to transship 600 tons of tuna alongside a reefer vessel.

It is estimated that the use of special handling equipment

and a cold storage will decrease handling time by 25%, thus creating a

one-day time savings. The value of this day is equal to the profit tobe made fishing.

$510 per ton x 15 tons per day average catch = $7,650Less one day fishing cost differential $1,240

$6, 41o

Divided by 600 tons $10.68 per ton savingper day

2. Waiting for a Reefer

The average tuna seiner will save about two days.

Two days x $10.68 per ton/per day = $21.36 per ton saving

3. Saving in Servicing Time

At the present time,fueling at Taboga is done after transshippingat the new port. This can be done at the same time and should save 1/2 a day.Minor repairs and provisioning must be done separately at Balboa. With a new

port, this servicing could be done at the same time, saving another day. Totaltime savings equal 1-1/2 days.

1-1/2 days x $10.68 per ton/per day = $16.00 per ton saving

4. Saving in Fuel Costs

The new port will sell fuel at 1/2 cent less per gallon than Balboaor Taboga in order to encourage the tuna vessels to use the new port. Seinersare expected to buy 400 gallons of fuel for every ton transshipped.

400 x 1/2 cent = $2.00 per ton saving

ANNEX 7Page 2

5. Total Saving $50 per ton

Financial costs to tuna seiner:

1975 US$ per ton

Cold storage fee 26.50Extra handling over Taboga 10.00Port dues 3.00Transshipment fee 7.50

47.00

Economic Incentive to use cold storage $3.00 per ton

Economic Savings for a Tuna Reefer Vessel in 1975 Prices

1. Faster Turn-Around Time

Two days :=;,-d x '.2,400 $- $4,800Tuna transshipped per reefer vessel 2,400 tons

Total Savings $2.00 per ton savings

Financial costs to tuna reefer vessel:

Port Charges $1.50 per ton

Economic Incentive to use cold storage $0.50 per ton

MIarch 1975

ANNEX 8

PA4AMA


Extraordinary Cpital Gain from Land

Purchase and Sale of Land around the Fishin Port

Sales Less cost Net proceeds Net proceedsValue ofp_tion 1974 R4ces 1978 2irices

(i.e. assuming10% p.a. inflation)

US$000 US$000 US$000 US$000

1979 50 hectares 2,500 250 2,250 3,285

1980 30 hectares 1,500 150 1,350 1,971

1981 20 hectares 1,000 100 900 1,314

Total 100 hectares 5,000 500 4,500 6,570

It is expected that the cost of the land when the options areobtained will be about 50 cents per square meter, and that, upon completionof the port and connection of main services, the land can be sold for aboutUS$5.00 per square meter. The proceeds of sale are expected to be approx-imately as above.

The revenue expected from the sales of land is not included in thefinancial statements, but it should be noted as a potential source of addi-tional cash flow in the early years of the project's life.

Source: Livesey and Henderson.

January 1975

IBRD -114 15.a. | t* D bECEMBER 1974

C A R F 8 E E A E S E A

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rimp berthsAe c.an .

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M ETERS ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ -- 0m

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PAN AMA

FISHING PORT PROJECT K ~~~ ~~N. S rvcing berths - Tuna cold storage

Proposed Port at Punta Vacamot e >

W ~~~ Port facilities -. Breakwater

Roads

Areais to be dredged

??~~' Hill area

PROJECT WORKS SHOWN IN RED Poa c/,f/c Ocean

0 100 200 300 400

METERSFEBRUARY 197h

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