Z PheSs report is being declassified and sent to theI O > | Perrila;a aGvernment for information only.

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CURRENCY EQUIVALENTS

US$ 1.00 = 27.5 Soles1 Sol = US$ 0.0364

PER

REPORT ON T1E PORT OF S^AvLAVERY PROJECT

Table of Contents

Page

Summary

I. Introduction 1

II. General 1-2

III. Port of Salaverry 2-3

IV. The Project 3-6

V. Operations and Management 7-9

VI. Puerto Chicama 10

VII. Traffic Through the Port of Salaverry 10-13

VIII. Financial Aspects of the Project 14-15

IX. Economic Benefits from the Project 16-17

X. Future Action at the Port of Salaverry 18

XI. Conclusions and Recomnendations 18-19

Appendices

1 Estimate of Cost2. Operating Revenues and Expenditures of Port Administration3. Revenues of Port Administration Assigned to Port Works4. Traffic by Class of Trade, Salaverry5. Traffic by Class of Commodity. Salaverry6. Traffic at Puerto Chicama7. Expected and Potential Traffic at Salaverry8. Expected and Potential Economic Benefits9. Repayment of Supplier Credits

10. Sources and Application of Capital Funds11. Comparison of Revenue with Cash Operating Expenses

Mans

1. Ports and Communications of Peru2. Salaverry Region3. Lnyout of Existing Port4h Layout of Port Project

PERU

REPORT Oi\1 THE PORT OF SALAVERRY PROJ3CT

i. The Peruvian Government has asked for a loan to meet the foreigncurre ncy cos ts for the provision of facilitles at the Port of Salaverry,amounting to approzimately i:K5.5 million out of a total cost of 'j7 millionequivalent .

ii. Tne Port of Salaverry is not operated by an autonomous portauthority but by the Directorate of Port Administration which operatessome tienty smaller ports alon- the Peruvian coast. Tne Directorate isunder the 1inistry of Finance but has its own budget. It is felt thatthe present organization is satisfactory.

iii. Tfhe project is sound from an engineering point of view. Pre-limiinary design has been done by competent Consultants well-experiencedin such work. Final design and supervision of construction would be en-trusted to the same Consultants. IHlost of the work should be carried outby contracts awarded after the invitation of international tenders.

iv. Sufficient funds would be available from charges nowq levied ortraffic passing through Peruvian ports to pay the local currency costs ofthe project and to meet the debt service of the requested loan. However,the available revenue from Salaverry alone would be insufficient. Thefinancing of the project and its debt service must thus depend on theavai:Lability of revenue from other Peruvian ports.

va On the basis of the vol-ume of traffic in sight for 1963, theproject does not promise to induce sufficient economic benefits to jus-tify its cost. Po-tentially enough traffic could develop by 1968 to pro--vide benefits commensurate with the investment. However, such trafficgrowth depends on various eventualities, some of -them quite probable andothers less definite, the occurrence and timing of which are uncertain.

vil Consequently, it is recommended that the Peruvian Government beinformed that the Bank does not consider the economic benefits of the proj-ect to be sufficient to justify a Bank loan. The Government should con-sider the advisability of postponing the project urntil there is more cer-tainty about development of other potentials in the area.

vii. In the meantime, the Peruvian Government might wish to considerthe construction of the coastal shipping pier and the improvement of an-cillary facilities of the lighterage port, the costos of which could be :netby the Government from its own financial resources.

T T TTP nPTTTr.TTnlN

1. The Bank has been asked by the Peruvian Government for a loan to

Port cf Salaverry, amounting to approximately USDf5.5 million out of a totalc cf US$7 f i"1,Lon equ valen.u

Cs i~ille 'overn elitUlP 1|d l b UCll tJ G IIIp U > U l vti UUII1Du 9t US u I 1 U'4UWU

water at the port, the cost of which was financed independently of the Bank.The project before the anII consilsts princlpally of dredging, reclamation,newi piers for ocean-going vessels and coastal craft, a new transit shed,niew warehouwses and cargo-handling equipment 0

3. The foliowing report is an appraisai oIf tne project. It is main-ly based on the findings of a Bank mission which v-isited Peru in I'ay 1959,and on technical and economic reports prepared by Livesey and Henderson,consulting engineers., in April and June 1959.

I. tEriETRAL

lhe Existing Coastal Ports of Peru (See MIap 1).

4. Geographically Peru comprises three cistinct natural regions.Along the Pacific seaboard there is a narrow coastal plain out of whichthe mountain chain of the Andes rises abruptly. Lack of rainfall makesthis plain a naturaL desert, but in the river valleys and wjhere irrigationcan be provided the land is fertile. The Sierra of the AIndes on the otherhand contains rich mineral deposits but has limited agricultural possibil-ities, To the east of the Andes there is a large area of potentially pro-ductive country, which at present is largely undeveloped and without ade--quate conmrnicationsa

5. The two-thousand-mile coastline of Peru lacks natural harborsand in the past seaborne goods were loaded and discharged on the moresheltered beaches near the mouths of the cultivated valleys crossing thecoastal plain. Towards the end of the nLneteenth century more effectivefacilities were provided at a number of these sites, in most cases by theconstruction of a shallow water pier, connected to the railway whichserved the particular valley, from which pier cargo was lightered to andfrom vessels lying at anchor some distance from the shore.

6. Since that time only Callao has been developed into a major portshaving full modern facilities and an annual cargo tonnage of the order ofthree million tons. The other ports, about twenty in number, have remainedsecondary or minor in character, and in none of them does the annual ton.-nage handled exceed r,iore than the order of 300,000 tons. Only in the casesof Ilatarani in the extreme south, where three deep-water berths, warehouses,etc. were constructed about 1951, and Chimbote. north of Callao. wihere adeep-water pier was built in 1942, has any appreciable development taken

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place. The remaining secondary and minor ports remain lighterage ports,equipped only with the facilities of fifty or more years ago, obsoleteand in marry cases di.La.pidated beyond economic repair.

7. The Government ha.s long felt that it should complete themodernization of the facilities of the lesser ports .s.nd in 1957 com-missioned t.he Tudor Engineering Company of San Francisco to make acomprehensive study of the question. The ensuing report recommendedthe supersession of the existing inefficient lighterage ports by asmaller number of modtern deep-water ports where ships can go alongsidepiers to transfer cargo. It recommended Paita., Salaverry, Matarani, andPisco as the ports at which these deep-water facilities should be provide!d,giving priority to 1t0ie work at Paita and Salaverry.

III. PORT OF SALAVERRY

8. Salaverry, a town of about 7,000 inhabitants, is situated 310mnles north of Lima on th nP.w Pan America n Highwyv (Man 2)= Tt is theseaward terminus of the Trujillo Railway, owned by the Peruvian Corpora-f.i nn Tifir-ih i-7rwrrA (:hi -h;onm qnei sZnohp Ifo7lloir nqrpnq~z Trtil;ln onn7it-q

of the prov:ince of la Libertad and having a population of about 140l,000,lies 10 miles to the north of Salaverry, on the Trujillo Ri1WaYla y n.d thePan American Highway.

9. The nearest port south of Salaverry is Chimnbote, already men-+.oe in ---,rap ) abu 60 r-4 n-;iles di-start. ik.,u+ t0 r) e to the_ L11 F" '± ~ i.CJP.I _Jj ) .U.)Ju. U '.J IIJ--LL "I.J UW±U. rL. v. U J~ 1 1 -I V±±

north of Salaverry is the privately owned port of Puerto Chicama andbDeyoncl 4that.4 Pait-a abJ-ut'On- 280 - 4-lle from Slvr-- Olmos th startir,g4 --- 4. I L 1 UILW C . 9 10011.15A Cu u 110IIL~~± 111 VJL_ V;.LY * 1J.L1lILJO, Uli, D UCIA kL-IC,

point of a proposed trans-Andean penetration road to Yurimagua.s is about

minor lighterage ports of Pacasmayo, Eten, and Pimentel. The Governmentinltends at a later latle t.o const1rua ct dJeep-water - d.ci:.is at 4P a-;ta b ut

does not plan to develop Pacasmayo, Eten or Pimentel, wahich, it is fore-seen, will - cn.ir, to be- used -- 1 ---- A,--4---------4 I- 4 as at, -rsel -Ati evnta abardor4-

when the condition oi the existing facilities becomes such that mainte-rnarnce Ls no longer justifiable.

lV. alUa-verU.yla-bw- wld.s Uuidinay Util - a.Un opt rodstad, sZi 3 tlU±y JI-L

tectedi by a headland to the south (NvIap 3). In 1956 the Government. engagedthe contracting f1irm of G. Wimpey ay and UQmpany to constrcuc a Ub'fav',WaUer toprovidle protection for the harbor. The work was carried out on a cost plusfixed fee basis and as completea au thne eunu o 1958 anlu was clarU-ge.ly li-

nancecl by a medium term sterling suppliersI credit. The cost of the brealk-water was approximately S/110 million (UIS" miilion equivalent). Up tofive sea-going vessels can lie within the shelter of the breakwater, thedepth of water being from 8 to 10 meters at low water. Wave action on thispart of the coast is such that before the breakwater was built lighterageoperations were frecluently interrupted, but now the working of ships isseldom affected. The tidal range varies from about two feet at neap tidesto fouir feet at spring tides.

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11. The principal existing shore structure is a screw-piled timber-decked lighterage pier, built in 1886, on which are railway tracks con-nected to the Trujillo Railway. The pier is in a deteriorated conditioninvolving a limitation in the weight of rail cars using it, and cannot beused by road transport. It urgently needs repair and improvement if itis to continue in effective operation. Dry cargo is hancled at thepier by lighters serving vessels anchored within the harbor, steam cranesof obsolete types being employed. Petroleum is discharged at a sub-marine oil berth within the harbor.

12. In the present port there is virtually no traffic area orwarehouse accommodation. anport cargo is for the greater part lodgedin '-arehouses in Trujillo or Salaverry towm before being brought to thepier by, rail. A small shed exists for import cargo, b-ut this is inade-quate for even the present level of traffic, so that most of Custom ex-amination must be carried out on the rail car clear of the pier or at -theimporters' warehouses in Salaverry or Trujillo. iHecharnical handlingequipment is limited to the obsolete pier cranes already described, asin view of the condition of the pier and the lack of roads and workingspace on shore it would be difficult to employ additional up-to-dateequ ipment.

13. Salaverry is connected to the Pan American Highway by a six-met;er wide paved road four and one-half mile s long, which is in poorcondition and barely adequate for the small volume of road transport atpresent moving to and from the port. It will therefore be necessary towiden and improve this moad to provide for any increase in the volumeof traffic to and from the port.

IV. THE PIROJECT

General (See J/lap 4)

14. The purpose of the project would be to modernize the port byrproviding piers wahere ships can load and discharge directlv. togetherwith adeauate working areas and warehouse accommodation on shore. Theproject would comprise dredging in the harbor, a pier for deep-seavessels and another for coastal craft, a petroleum pier, a reclaimedtraffic area with warehouses. Daved stacking areas, roads. rnil]wav sid-ings, etc. Construction would begin during 1960 and be completed with-in two vears= The proposals are hase.d on nrPlimirnary desi gns pre-pared by -impey aid Company, contractors for the breakwater, and sub-sc-tnintnlv PYnmintc!d ardn am.ndedci bh T.ivep.R andv Hpr Prsnr'n ron-nm1 ting

erngineers, at the request of the Government.

Dredging

l5. Dredginlg in the harbor would provide access to the new piersanld oil berth and a tuvrning circle as shoMn onM)ap h, i or the the time beingthe general dredged depth would be limited to 10 meters below low water,the existing depth at the head of th.e breakwater. The occasions on whaichships requiring greater draught would need to enter fully laden wouldcl beinre, innd,-nA for' a, n,,nm.r o'f ,rc,n - he anr. al cost of f lo+p v, te loa

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of ouLward bound vessels of this kind eisewhere or by lihtering -wouldbe simall. Nevertheless it can be expected that these additional costswill eventually be such as to warrant the deepening and maintenance ofthe harbor and approach clhannel at this increased depth. Because oft'nis likelihood the structures in the harbor would be designed so as toperniT.t dredging to 12 meters. At the petroleum berth dredging would beto a depth of 8 meters, this being adequate for the class of tankerlikely to use the berth during the foreseeable future.

Piers

16. The pier for deep-sea vessels would be capable of accommodatinngtwo of the longest vessels likely to call at the port. lThe smaller pier ismainly intended for' use by the considerable number of coastal vesselsusing the harbor, but if necessary wuould accommodate the shorter deep-seavessels, a useful facility, as frequently up to four such ships call onthe same day. Both piers would be provided with railway sidings and suit-ably decked for use by road transport. The petroleium discharging pierwoul(d be a light st;ructure clear of the turning circle since the presenceof the submarine oil berth is an obstruction to the handling of othervessels in the relatively restricted deep-water area of the harbor.

Traffic Area, Warehouses, etc.

17. The reclamnation to be carried out would provide a total traffi.carea of about 40 acres. On this area a transit shed for dutiable importcargo would be provided adjoining the two piers. Three warehouses wouldbe built, mainly for export sugar awaiting shipment, but partly for thebonded storage of imports. Covered storage would also be provided forexport rinerals, and( paved open storage areas for guano and general carg'o.

Miscellaneous

18. Ancillary buildings such as adidnistrative offices. gear stores,a power house, etc., iwould be provided, together writh access roads and rail-way sidings to the various piers and warehouses.

Possible utiture Extension

19. The proposed layout provides for future extension of the trafficarea, additional p:iers and warehouses, and the installation of a bulk sugarloading installation, should these items be made necessary by the futuregrowith of traffic.

Operating Advantages Resulting from the Project

20. The operating advantages of the improved port as compared withthe existing primitive facilities wnu1ud he many Risk of Ceollision be-tween ships moving in the harbor would be diminished. The inconvenience

and cost of lightering would be eliminated. It would be possible to loadliquid molasses direct to ship instead of by means of tank barges, an ex-pensive process for which the number of baraes now available is in any caseinsufficient. Increased loading and discharge rates would be possible wTiththe ships alongside the piers, particularly in the case of coastal craft,

which have less effective handling gear than the larger ships, and the turn-round of all vessels would thus be improved. The increased warehouse ac.-commodation would make it possible to bring all export sugar actually intothe port to awJait shipping, instead of storing it in scattered distant ware-houses. The present accommodation for general cargo imports is inadequate,and the availability of the new transit shed and warehouse together with theelimination of lighterage would undoubtedly stimulate imports through Sa:La-verry. The availability of an adequate traffic area and of up-to-date p:ierswiould. make possible the use of modern cargo handling appliances and would inconsequence speed up and reduce the cost of operations generally.

Estimated Cost of the Project

21. The estimated cost of the project is about S/192 million (US$7 mil-lion equivalent) approximately, of which foreign currency costs would amountto about S/15o million (uSgr555 million equivalent). These figures includethe cost of engineering and of interest on the requested loan during con-struction. The estimate is considered satisfactory. To a large extentit is based. on costs actually recorded during the construction of the break-water. Normal provision has been made for construction contingencies as wellas an allowance from an expected increase in local costs during the construc-tion period. Unless serious inflation occurs the estimate of total costshould therefore not be exceeded. The following is a summary of the esti-mate, details of which are given in Appendix 1:

Million Soles

Dredging 32.3Reel amation 21L2Deep sea and coastal piers 51.0Cargo sheds and warehouses 12.6Petroleum. pier 3.8Mi s.Ilanrerms buiil dings 1 9Roads and railway sidings 7.4Se.-rtri afPq _nd fen nacCargo handling equipment 116

Interest during construction 9.1

Total S/191.7

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T ne Carrying Out of the Project

22. The detailed design and supervision of the construction of theproject would be entrusted to consulting engineers experienced in maritimnework. The Directorate of Port Administration, on the recommendation ofLivesey and Henderson, propose that the work should be carried out byWiimpey & Company, contractors for the breakwater, under a negotiatedcontract. The proposal is made principally on the grounds that this firmof contractors still have staff and plant at the site, are experiencedin local conditions, and that a substantial delay would be involved if in-ternational tenders were to be invited. These arguments are not consideredto have as much weight as is attributed to them by the consultants; it isfelt that if the project is carried out international bidding should beheld for all of the work except reclamation, the carrying out of which bythe present contractor would offer advantage in respect of both cost andsaving in time.

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V O OPERATION[S ANM 1RUAGRENT

Present

23. The existing port facilities at Salaverry are maintained andopenraned b 'y J.he D:.rectvorat.e of. 'DPor AAm, n J. str U- J, a de J.4teI1 o 4.he

Ministry of Finance and Cormerce. This department, which has its head--

eration at all Government secondary and minor ports except Chimbote,operated b U y the: _3 Lt. -orpora rL±, and th L_J'o por- -f C _pra

by an autonomous port authority. The revenues and. expenditures of theDirectorate of ort AI dmin istratiOn are 0shwn undeseparate heauLigrs iLn

the National Budget.

24. At Salaverry the activities of the Directorate are mainly liJn-lted to constructing and maintainin, the port structures, and operatingand maintaining cargo handling equipment on shore. Stevedoring and light-erage are entirely in the hands Of privale enlerprlse, labor ior cargohandling on shore being either dealt with in the same way, or, if suppliedby the Directorate, engaged on a casual basis. Pilotage and the controlof shipping is the responsibility of the Port Captain, the local represent-ative of the Minister of YMarine.

25. The Directorate's operating revenues arise principally fromwharfage charges paid by the importer/exporter on the tonnage of goodsharndled, charges on petroleum and other liquid cargo, charges for stor-age, and charges for overtime debited to shipping when overtime is work-ed at the latter's request. The wharfage charges are not based on theact;ual cost of handling, but are set at such a level that the Direct-orate's total annual operating revenue from all the ports approximatelyba].ances the depa rtmentts total annual operating expenditure as showrnin the National B3udget. Surpluses of this revenue do not accrue to theDirectorate, but are transferred to other departmental accounts, deficitsbeing similarly adjusted. Appendix 2 gives extracts from the NationalBudget for 1959 dealing with these revenues and expenditures.

26. In addition to the wharfage, etc. referred to in the last para-graph, the importer/exporter pays a series of imposts levied in mostcases per ton of goods handled. All of them are levied at the ports op-erated by the Directorate and some at other, including Callao. The wholeof these receipts together with a small fraction of certain ad valoremnimport duties are credited to a budget account entitled "Salaverry andOt'ner Port 1!Jorks", under decrees which stipulate that these funds can beused for port works only. The fund thus accumulated is at the disposalof the Directorate for capital improvements and related debt service atthe ports under its control. Receipts not spent in a particular yearcan be carried forward. Details of the estimated proceeds of these im-ports and duties during 1959 as shown in the National Budget are givenin Appendix 3.

27. Apart froi: negligible charges made by the Port Captain for theservices referred to in paragraph 24. minor dues paid by coastal vessels,

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and tne overtiime cnarges described in paragrapn 25, wnicn are aJl-so srall,,shipping makes no payment towards the cost of the ports. The chargesapplied to the cost of operation and development as described above arethus met almost entirely by the importer/exporter. Averaged over the wholeof the ports concernect, the charges for both operation and developmenttotal about S/30 per ton of dry cargo and S/5 per ton of petroleum andmolasses.

28. Stevedoring, lightering and other casual labor in the port isunder the control of the "Control Commission for Maritime Labour", a pub-lic agency which has its headquarters in Callao and is represented local-ly by the Port Captain. The productivity of the labor is at present highand stevedoring and other costs are low. However many of the circumstanceswhich have lead to the present unsatisfactory labor si-tuation in Callao,such as the multiplicity of unions and excessive overtime differentials,exist also in Salaverry, where the existing satisfactory condition in thisrespect may therefore tend to deteriorate.

29. In spite of the unsatisfactory facilities for inspection alreadydescribed, Customs procedures in Salaverry appear to be efficiently car->ried out, no undue delay in the clearance of cargo being involved.

30. The functioning of the Directorate of Port Administration sufiersfrom the defects iniherent in the control of port operations from a central-ized office many m-iles distant. Apart from this, however, the departmentcarries out its duties effectivelv. bearine in mind the obsolete and dilap-idated condition of many of the installations under its control. Its rela-tions with users &i" the ports are aood. the ereat majority of the latterexpressing satisfaction with the service received. In general the rate andcost of cargo handling at the various norts are satisfactorvr in relation tothe nature of the facilities available.

Future

31. The Directorate proposes to operate the improved port as a sub-division under the control of a Port Administrator directly resnonsibleto the Director in Lima. As at present, the permanent staff at the portwould include cargo handling nnnliance operators and maintenanne qtnf'f'-but in addition, the Administration may also provide labor for cargo han-dling On the ni ers nnrl in the- traffic area, -ie. it may assume responsibil-ity for all handling of cargo from the quayside until it leaves the porta-rea. a-nd v nce versar

32.A Qfter- duei study, it is not considered advisable to form an auton-omous Port Authority to operate the Port of Salaverry at the present time.It i,ll be some years before the traffic reaches the level required to makethe overhead costs of such an Authority justifiable. In the meantime theDir,+ctor-te+ of 4 P-rt+ Al i l; Irdi S-rt c, Aemons +,rae thltitC1 he+- a ports

of this kind reasonably efficiently, to the satisfaction of the users,a.d at costs v '. 7hic 'Lh cO. 1 not hi& h tE-ren..L alfter due all.LOwar,ne is made f oLUr

expenditures not borne by the Directorate. The proposals of the Directo-rat±e,; fLor Juftut e macnagement are t LherefLore tUlLoguL±UL to be reasonablue. Huw-ever, the Government would be well advised to make specific provisions

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in the National Budget for adequate funds and personnel for the operationand maintenance of Salaverry. The post of Administrator of the Port shouldbe given adequate status, say, not lower than that of' Official Class I. inany new organization.

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VI. PUERTC CHICAMA

33. Puerto Chicama, 50 miles north of Salaverry, belongs tD and isoperaredby thke Casa Gran.deSugarrCon, The faciliies of the port+compr.ise a lighterage pier to which sugar is brought by rail from the

-y -e-ir-y andJ" e by .LigUhte iLntUo shlps anch. II the bay,

warehousing for export sugar, and housing for the company's staff. The;~~~4 4 ; _ A -- ' I 4. - f A -4 4 -

JL.. U _L.L4 c.LU1JD di L £1 av ,UUU UiUE UsLUI d±IU WY:L.±1 UUd Ucu UUu U1 XL dJ1i U.V

is exposed and the working of ships is more liable to interruption becauseJ. weathLer 'U'Lan else wLBere iLn Peru. iabuo folr cargU LIdUlU. iL QUYsJuLp.plU Uy

the i.nhabitants of a village adjoining the pier, who supplement their earningsfrom. this source b-y fishing. T.he rai"lway between the lier anLd the Casa GrandeCompany's sugar refinery, also owned and operated by that company, is somewhatshorter than the TrRj illo Railway route iinking the refinery to Sala-verry,33 miles against 40.

34. In 1958, Chicama handled about 200,000 tons of cargo, of ,Yhich9070 consisted of sugar shipments. This included 129,u00 tons sugar exportsand 9,OOO tons sugar loaded for coastal trade. Traffic which thereforevaries directly with the sugar trade, has showTn no definite trend aver recentyears, having fluctuated from 235,000 tons in 1953 to a maximum of 2b1,OCOtons in 1955 and 202,000 tons in 1958. Details for the period 19y-58are given in Appendix 6.

35. For a number of reasons the Casa Grande Company are not pepared,to promise in advance that they will transfer their Chicama operat.ons tcSalaverry if the project is carried out. The exact cost of shippiig theirsugar through the latter port cannot be predicted. Their present iperationshave the advantage of being entirely under their own control, theydoubt therealiability of the Trujillo Railway, and that it would provide adquaterolling stock for the traffic involved, etc.

36. The above facts however do not preclude the} possibility tht atsome future date, the Casa Grande Company may find it expedient to :ransfertheir operations from Chicama to Salaverry if modern facilities are providedat that port. The reduced cost of handling at Salaverry may offsetthe ad-ditional cost of the longer haul, and the disadvantage for Casa Grarie ofnot using their own property. The probable development of truck traisportin replacement of the railway would eliminate reliance on the Trujil-o Rail-way. Furthermore, in international trade there is a tendency to develop theshipping of sugar in bulk rather than in bags; if and when the Company d>cideto follow this tend.ency, they may at some future date consider it economicallyadvantageous to transfer their activities to Salaverry.

VII. TRAFFIC THIROUGH TIM PORT OF S.ILAVERRY

Port Service Area

37e The nresent service area of Salaverry comprises the Chicama and.Moche valley districts (Maps 1 and 2) except in tlffo respects. As alreadydescribed; exports by the Casa Grande Companr pass through Puerto Chicama.Seco:ndly, very little machinery, vehicles and general merchandise are im-nnrt.re thruiirgh S1:arvrrr bht-ause of the inconvenience and liabilitv to

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pilfering associatecd with lightering and because of the absence of ware-house accormodation. Cargo of this nature is therefore discharged at Callaoand carried by road transport not only to the Salaverry area but to thegreater nart of the eoastal region to the north. When the proposed trans-Andean penetration road from Olmos is constructed, it is probable that theextensive service area thus formed would be shared in resnect of all classesof traffic by Salaverry and Paita.

Present Traffic

38. In 1957, 301 ships (other than oil tankers) called at Salaverry;of n 220 were ocean-going ships with an average Salaverry cargo of 816tons, and 81 were coastal vessels with an average cargo of 217 tons. In1958, Salaver y handled a trffic of 0,000 ton- (in"l" p.tr1le,ir.) ofwhich 173,000 represented foreign traffic and 147,000 coastal. Export

wsugar (103,000 tons) molass (28-000 tons) andiminerals (28,000 tors). Import discharges amounted to 12,000 tons and in-cluded artificial fertilizers, sacks, tbnier, etc., the volume of generalmerchandise being, as stated above, small. Coastal cargo loaded amountedto 5, to, ofV which ,000 t was su_ r Pa_l the -- l of +h-.e

122,000 tons of coastal discharges consisted of petroleum handled by pipe-line.

CrrtTr"affic Trendr._

39. ~ Q4 Statistcs of 4traffic t'hroughl S'alaveri-y Por the- years r 195-5laU aU..Ld L,- 04. LradL .L .Lt UI.LJ Wit4 111 JU

are given in Appendices 4 and 5. Traffic other than petroleum has increas-eu fromL sor e 13U5l tonUs in lthe ear.ly years- V.4 UfU vul^.JeJW UVL10,

in 1958, an average increase of about 4% a year. Since one-half to two-thir'ds of this tralfic has consisted of sugar, the main product oI theregion served by the port, traffic has fluctuated widely with the worlddemand for sugar. Sugar shipments reached a peak oI 131,000 tons in 1957and then declined to 105,000 tons in 1958.

40. Petroleum traffic has increased steadily from 57,000 tons inn ,i ir _ % i -^ A> I -t A n

1975U to 139,000 tons in 19P5.

!4I1. I'I the traffic trend of the period 1950-58 is maintained traificother than petroleum should reach the level of 224,000 tons by 1963 asshoqn in the detailed forecast of Appendix 7. Petroleum products dis-charged would then amount to 186,000 tons.

42. Sugar shipments from Salaverry are apt to recover by 1963 the1957 peak volume of about 130,000 tons. Peru has recently joined theWorld Sugar Agreement; its basic export quota, 490,000 tons a year, isgeared to 1957 performance and the reduced present quota of some 1450,000tons is a temporary measure reflecting weakness in world sugar markets.However, world market conditions for sugar do not afford much reason forexpecting materially larger shipments from Salaverry (or Chicama) in 1963than 1957.

42. Petroleum traffic through Salaverry has been growing rapidlysince the war because of the increasing use of motor vehicles and trac-t#rs. This growth should continue for some time at an average rate,

- 12 -

through 1963, of close to 10,000 tons annually. It should be stated, how-ever, that the growt+Ih of petroleuim traffitc isof little import2nce to theproposed project.

44. There are no present reasono to expect a materially larger move-ment of ou,+t-bon,,rd molrals scs and concentrates bny, 1°63 or ofC u-0nA n. -nd

chemical fertilizer. On the other hand, imports of machinery, vehicles arid1 ~ ~ 4 ~ ~ -~4- 0 flflCnn .4- 11. 4-general cargo CouIld increase from a recernt (, 000ons annuaL(ly tUo a future

20,000 as soon as the planned new port is in full operation.

45. Like the rest of northern Peru, the Salaverry-Chicama servicearea gets alm!ost all its machinery, vehicles and general mer-chandise im--ports via Callao after a truck haul of upward of 500 km. Part of thistraffic would be diverted to Salaverry when deep-sea ships can berth therealongside a pier, although this diversion is apt to occur slowly becauseof Callaots distributive advantages as an established commerclal center.

.r.46. According to rough estimates by Bank staff, about 10W,0-150,000tons a year of machinery, vehicles and general merchandise are now being im-ported through Callao for distribution to an area with a population of1,500,000,growing at the rate of 2 to 3% a year, which could be convenientlyserved by a deep-sea port at Salaverry. It seems conservative to supposethat a minor fraction -- say 25,000 tons in all -- would be divertible inthe next 10-year period, of which about half by 1963 and the remainder by 1968.

Traffic Growth after 1963

4/. In other respects the traffic outlook beyond 1963 is difficult toassess. This is because of several eventualities; some quite probable andothers less definite, the occurrence and timing of which over the next 10years is uncertain. The main uncertainties are (a) whether, and if sowhen, the Casa Grande management would abandon Chicama port in favor ofSalaverry in order to benefit from direct loading and. discharg:e, more ef-ficient cargo handling, and the possibility of installing facili-ties forthe bulk loading of supar; and (b) whether and when a public agency orprivate group.-uld undertake to build a grain silo and flour mill at Sala-verry in order to import, more economically than via Callao, wheat for con3-sumption in northern Peru.

48. As explained earlier, there is a possibility that Casa Grandemay at some future date decide to abandon Chicama in favor of Salaverryif modern facilities are provided at that port. Salaverry would then re-ceive the 215,000 tons annually of non-petroleum goods forecast for Chicamain 1963, plus all ensuing traffic growth thereon.

49. Lengthy truck hauls would be eliminated by locating additionalgrain silo and mill capacity to serve northern Peru at the new port rathe:rthan Callao. The potential demand for grain in northern Peru would justifya nlant suiteble for an anniunl traffie of 6-0000 tons hy 1968- Tnquiries

from a U.S. firm regarding the possible construction of grain and flourfaeilities at Salaverry heve recently been reported= Huover; no relfiniteproject has yet been shaped.

50. Apart from the possible capture of goods now moving throughChica ra nnd CAllao, thI e no?ml econoemc growth of the Salaverry serviceareawnuld generate additional traffic for the new port after 1963. Theamount.:ni cna=A nf+hic "?*"^.r+h lni-mmlir rlmomrnA on 7o+rc .7kth;l <7s in. 6k w - -.- -- F~ .- .. - - _-.determinate for the present. They include the construction of various

within g years and others such as Chao-Viru-Mloche, which may take longer.It 4 s not ye4t ]n--- --e -hes pr4c ildveo h--4 ful- otntat u £~14%JWJI.A WIIVLI Ulit-O D L J-''' VVL W..J.L Ut~Vt;.Luy ILje±.ua .L U±± UIJ:IIU.Ld..L.

nor the proportion of their output which will be routed through Salaverry.ILow ever, assuM,ng favorable mra rket- 4odiios the Tinaoe -"Iec co ', C~UIIL11~ L~VI± dU.~ i LI~.,LUVIIULkL IaULID, WAit JIdJLt:jJU~. %'LAJL_L

generate as much as 20,000 tons of traffic for Salaverry by 1968. Otheruncerta 4 -. -ies include the cosr-cio atle of4 Jthe t %a-sine roa -from-A-P-LI 1- J. i.'.lade u41u couI1 UJ . L L ~uL ui L~ U i UL1Z Ul i .IO IIUt~llI . CLUdU i± I IIL

Olmos to Yurimaguas, the amount of production it would induce and the pro-portion of th.e traffic -which would be routed via Paita.

51. Although the specific sources of additional tralfic over theperiod 1963-68 are not yet known, it appears reasonable to suppose thatover this period, 1) the trafLic of dry goods and molasses now directedthrough Salaverry could increase by 20%, about half of which would comefrom the Tinajones project, 2) the amounts of dry goods and molassesdivertible from Chicama would increase by about 10% and 3) petroleumtraffic would increase by about 30;%, this percentage being applied to thetraffic now going through both ports.

52. On the basis of the above assumptions and if the port of Chicamais closed by 1968, the potential traffic of the new port in 1968 wouldamount to 577,000 tons of dry goods and molasses and 251,000 tons of petro-leum products as shown in Appendix 7. Excluding petroleum, traffic wouldinclude 268,000 tons from the development of traffic presently going throughSalaverry, 237,000 tons diverted goods from Chicama and 72,000 tons diver.-ted goods from Callao.

53. It is therefore conceivable that a new port would be handlingby 196%, about 2.5 times the present traffic. This is not a definite fore-cast but an assessment of the traffic growth that could result from thetimely realization of certain eventualities.

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VIII. FINANCIAL ASPECTS OF THE PROJECT

54. It has been proposed that the Government be the borrower, thatthe Ba nk lesnd the iull foreign exchange costs, that the local currencycosts be paid from the earmarked revenues available to the Directoratefor port works, and that these same revenues be used to reimburse theGovernment for the debt service. Such arrangements would be acceptable,if a Toan were made., in view of the status of the Directorate and itssources of revenue.

55. The revenues assigned to port works are currently aubject toa fir<t charge of about S/74 million in the form of suppliersf creditson account of the Salaverry breakwater and recent port works at Hataraniand Pucalpa (Appendix 9). The entire amount is to be repaid in thenext -three years as follows:

Year MillionSoles

L959 2?701960 24.o1961 22=6

T)t.nl 7R-k

56. There are sufficipnt. means to rpanv this debt, since thecharges assigned to port works should bring in S/124 million from 1959through 'O1,a' olos

YearSoles

1959 39.3

1961 43.4

Total 124.0

57. Apart from the S/74 million now owed to foreign suppliers,+he Dwre_+or-+_ is deb+ - Tre + has no plans to incu,r new deb+ in +lheV±IV IJ Z..L"±aV .O ¼C)' .I -L.L IA i) j.aI S. .UIL-'-tJ- L ..Z AUJL i W±L

next few years apart from the Bank loan it is requesting.

58. A statement of sources and application of capital funds isvenJ. LU lij4)eILULA JLe ~ L4LL UUILO LA Uu. t.LUJI o Lon.± bI t nU eaAl-±Jy 1976'0,j

the new port might be completed about mid-1962. Over the periodJan n4rl- T90- _J, 1962n boutS/n5rwll sho'd accrue froml hreUUUcd.LU,±y _L;;7UL - U.LI _;FC .L1U L, )UU U O/ J-L2 IIUI.L-LJL.Lul1 I)UU±LU ±Lt L.UL[VI I ±g

assigned to port works. Of this, S/h7 million would be needed to re-4.-' -- -.- A ---- 4-~~~~~ -T-~~- c f h !n - -tire debt anld pay interest thereon. If another S/12JLIV.5 L±UU l'tiowere

allowed for emergency works, there would remain a balance of S/55 millionto finance the local curreuLUy ost of the project, estimated at S/42million.

59. 'Sufficient local currency would therefore be available providedthe Directorate refrains from executing other major projects concurrentwith that at Salaverry. The cash balance might nevertheless be drawndown below a safe minimum for a short period in 1961/62. The Directo-

rate should therefore make arrangements for maintaining the cash balanceat a satisfactorv level and shomild not uindertake other lare nnprt. worksduring the construction period.

60. It would be pointless to try to express, by means of a conven-tional income statement, the ports ability to serce a Bank loan or toearn an investment return. As explained earlier, the Directorate's rev-nur,o< S+ C-n1 Salrer 'vd r,+hlvo ,rnn+e' -1-Ih h -r nrch-e no. A4tly to_

lated. to the value or cost of services rendered to port users. For policyreasons Dort4 chiarges are more or l W.ess unifor, atLl all ports operatd y 4tVe

Directorate, which does not propose at present to modify them at Salaverry4L1kin- A order to- py ay fPo r the-" -e wor7-.

r±U.J ULiCLd. uclu U vl ltkJIL 441 Wite U±.UL;UW_UIUb bdJ1L.A J-) UV UV1J L ,4U U vI- Lv-

enues accruing to the Directorate at the new port with the out-of-pocketexpenses chargeabue ag- d9t3b uLn r. In orUer to uUmpliue reven-ue, tue pr*esetUcharges, averaging S/30 a ton for dry cargo and S/5 a ton for petroleum andmolasses (see paragraph 27) are applied to future traffic as forecast byBank staff. Cash expenditure on operations and maintenance is then sub-tracted to obtain a rough measure of the balance available to amortize theproject costs and earn an investment return.

62. For the traffic volume in sight as of 1963, the balance would ap-proximate S/3 million as shoam in Appendix 11. It could rise to S/1l.o mil-lion by 1968 if Chicama is closed and the port realizes its full trafficpotential. In comparison, a return of 6% on the investment of /1j92 millionand the amortization in h0 years of this investment wolild amount to S/16.3million a year. Debt service of the requested loan of Sjl50 million (equiva-lent $5.5 million), assuming a 6% interest and a term of 25 years includinga two-year grace period, would amount to S/12.2 million.

63. The above estimates assume that apart from increased revenue pro-portionate to the additional traffic, all the economic benefits from theproject would be allowed to accrue to the benefit of the port users only.Part, of course, could be recaptured by the Directorate as additional rev-enue and income by increasing the present port charges. Therefore, it wouldbe advisable for the Directorate to consider an increase of the charges atSalaverry so far as this would be justified by the provision of deep-waterfacilities rather than only lighterage facilities. Any increases at thenew port would have to be selective and could not exceed narrow limits;otherwise traffic growth might be retarded because of diversion of cargcto other ports.

64. The poor financial returns from Salaverry itself do not mean thatthere would be any difficulties in servicing a loan from resources availableto the Directorate from all the ports it controls. As of 1963, such revenuefrom Salaverry and other ports would approximate S/48 million a year againstonly S/12.2 million for interest and araortization of the requested loan.

65. Sufficient funds would therefore be in sight to service the proj-ect debt provided that future capital expenditure on the Peruvian ports isapprcpriately controlled. The Directorate has plans for major works atPaita., Pisco, and Matarani, which might call for a total outlay three timesthat of the Salaverry project and therefore require careful consideraticnof their inmact on the Directorate's financial position.

- 16 -

TYI EFlr)xThTJ-T TI.\TFPTTq FRnM TIF. PRn.JFr,nT

66. The project would produce savings by 1) eliminating the light-erag'a ofP Adrry cno an.A molasses, 9) ir.pNv%rovng thei efficiencyre ofn crgo

handling ashore, 3) reducing vessel turnaround time and 4) eliminatingthe ro,ad haulage of ---rt.a r, n goods no-r.Aported drn4 Ca llao. MIhe break=

down of possible savings is given in Appendix 8.

6'?. All dry cargo and molasses moving through the present portIlave to. -I_ lig4eread at costs `-angir fro S/lu to S/6 a to 1depenuirlg- -.-.L uobe L.LgIL1_U L, Ub I±ur-LIroii 0/.LU U'O ZOf U a 1OL)L U~uI1UiAILll

on commodity. The cost of lightering sugar, for example is S/22, ofmiolasses S/10, gua-no /23, concentrates S/32 ind macninery a-nd vehiclesS/50. At the new port freight would be loaded and discharged directlyat a pier. The cost of lighterage would thereby be eliminated on goodssuch as now are handled by Salaverry and also on any goods diverted fromnChicama if this port were to be closed.

)68. Cargo handling ashore would be more efficient than at presentbecause of a better layout and the use of mechanical appliances. Anestimated S/5 a ton would thereby be saved on the sugar, fertilizer,concentrates, and other dry cargo presently handled at Salaverry. Therewould be similar savings of S/2.5 a ton on goods diverted from Chicama.

69. Freighters calling at the new port wlould be able to turn aroundfaster because of direct loading and discharging at deep-sea and coastalberths. The estimated average saving for a typical freighter loading ordischarging 800 tons would be three to four hours. This works out toabout $175 per vessel call.

70. There would be large savings on each ton of import goods un-loaded directly at Salaverry instead of being trucked into the areafrom Callao. It costs about s/o.60 per ton-km to operate a 5-ton truckon the Peruvian main roads at a 75% load factor. Assuming that the av-erage distance to terminal towns in the Salaverry service area is 550lm longer from Callao than from SalaverrY itself, each ton of goods thatcan be diverted represents a potential savings of S/330 or the equivalentof 612 a ton.

71. Some extra costs should be subtracted from the unit savingsdescribed above. In particular, goods diverted from Chicama to Sala-verrv wnuld have tn nay additinnal rail trqnqnnrt rharges of aboutS/3.50 a ton for the slightly longer haul to and from the Casa Grandere finery.

72. Applying the above unit savings to 221 ),000 tons of dry cargoand molasses in sight by 1963 and on 13,000 tons of cargo diverted fromCalla on hn- roa,+ be tsf /ll0.9 ilio-n per ,.rnnA .od

gained by 1963 as shown in Appendix 8.

- 17 -

CZ 114ng byP elir-nation- of Lighte--e ¢v8

Reduction in shore handling costs 930

Reduction of road transport costs L290

Total 10,926

73. Although not negligible, these benefits would not justify acapit-al expend'tue totaling o/1y2 itLlion equu fVlent of which 75%to 80% is foreign exchange. It would require about S/16.3 millionper annum to amortize tnis investment in ou years aLd earn a 6%return. P).rthermore, the direct foreign exchange savings would besmall, although, the project might strengthen the competiti-veposi-tion of the sugar export industry.

74. As showJn earlier, the dry goods and molasses trafficof the new port could increase to 577,000 tons annually by 1968provided that the Casa Grande management decides to shut dowiTnChicamna, a grain silo and flour mill are installed at Salaverry, thetraffic potential of its service area grows in response to certainirrigation and road works, and an appreciable part of this trafficis shipped via Salaverry.

75. If traffic develop by 1968 to the maximum potentialitiesdescribed above, the resulting economic benefits wiould approximateS/142 million a year as shown in Appendix 8. This would give areturn of 19.4,S after amnortization on a 40-year basis.

76. The project is thus potentially capable of producing benefitscoTmmensurate with its cost. They are conditional, however, on anunber of uncertainties affecting traffic diversion and regionaldevelopment. Eventually there should b- sufficient traffic towarrant the planned capital expenditure, 'Whether it will developwithin the next 10 years is arguable.

- 18 -

X. FUTUREi J AC 1-j.T AT ThA PORT OF SALA7tA'IRi±UY

77. As brought out in Section IX, the cost of the project is notjus-tified by the economTic benefits that can be expected to be engenderedin -the near future. However, the plans of the project could be used asthe basis for future development of the port. Thus, at this juncture,the Peruvian Government might find that the condition of the existinglighterage pier is such that its replacement may soon be necessary andinst-ead of actually reconstructing this pier, the Government might fincdit advisable to construct the coastal shipping pier outlined in the proj-ect., together with reclaiming part of the shore area to make room for agradual improvement of warehouse and yard facilities. Considerationmight also be given to the need for including the new oil pier in thisfirst stage of whha-t may be looked upon as a phased development of theport. Tle financial resources earmarked for work at Salaverry could pre-sumably be applied to the carrying out of such a development scheme, wlhichcould be expanded as, and when, future traffic trends become rmore defirlite.

XI. CONCLUSIONS AND RECOCIiENDATIONS

766 The present organization is satisfactory.

79. The pro:ject is sound from an engineering point of view. Prelim-inary design has been done by corgpetent Consultants well-experienced insuch work. Final design and supervision of construction would be entrust-ed -to the same Consultants. -Host of the work should be carried out by con-tracts awarded af-ter the invitation of international tenders.

8Bo. Sufficient funds would be available from charges now levied ontraffic passing through Peruvian ports to pay the local currency costs ofthe project and to meet the debt service of the requested loan providedtha-t the Government arranges for the Directorate to retain its presentsources of revenue; that none of this revenue would be diverted to non-port uses, and that the Directorate appropriately controls its futurecanpital expendit3re on other norts.

R1l On t.hp bn.is of the voliwmn of traffin in siaht, for i963. theproject does not promise to induce sufficient economic benefits to jus--tifr lit;s cost. Po+enti211yr enough trnff llc cori direvep1n bh 1968e to pro-

vide benefits commxensurate with the investment. However such trafficgrowth depends on various eventualities, some of them quiter probable !n

others less definite, the occurrence and timing of wthich are uncertain.

82s Consequently, it is reconnended that the Peruvian Government bei-nforr.ed -th-at the B-an-k does not consideor _at present the ecnmi eInefits

of the project to be sufficient to justify the proposed Bank loan, TheG-overnt.en-t- shlonlUJd consid ler Ut11e advantV a ges o±U PC J JjJL'tI15 UIIpon the pJJeLc, U.

- 19 -

(J 0 u Uitihls -nc ure, Uite rLiar LL UUvaneOv n ,lgt f in Eind it L U avi

able instead of reconstructing the old pier to construct the coastal sl-hip-ping and oll pier-; along wizlth recl_ ation. work needed for e-pansion of stor -age facilities, as a first stage of the phased development of the Port ofSalaverry. This work, if undertaken, cou7ld preswUably- be flnalced from theresources already earmarked for wrork at Salaverry.

APPENDIX 1

PORT OF S.IA\TERRY PROJECTEstimate of Cost*

Item Description Foreign Currency Cost Local Currencv Cost Total Clost

(000 S/ (000 us$ (000 S/ (000 S,/(equivalent) ___ _

2. Reclamation 14,702 ( 534) 6,555 21,2573. Deep sea and

coastal piers 35,862 (1,304) 15,089 50,9,514. Cargo sneds and

warehouses 7,340 ( 267) 5,244 12,5845. Petroleum pier 3,290 ( 120) 560 3,8506. Miscellaneous

buaildings 1,994 ( 72) 2,907 4,9017. Roads and rail-

Way sidings 4,350 ( 158) 3,052 7,4028. Ser-vices and

fencing 4,159 ( 151) 1,123 5,2829. Cargo handling

eouipment 11,404 ( 415) 179 11,58310. Miscellaneous,

including engi-neering, designand supervision 26,616 ( 968) 5,874 32,490

11. Interest on Bankloan duringconstruction 9,150 ( 333) _ 9,1,50

Total 149,380 (5,432) 42,350 191,730

ooC) US$ equivalerit (rounded 5,4A50 1,550 7 ,000figures)

-* S. 27.5 = US% 1

A;PLENDIX 2tnLD'1 r2' CZ' T A NWD-; T'Pr3P

11~, 1_ : 4. - . _ __ _ - - - 4_-0-LU; 'J.I . AL LJttl .LJLL.L 2. I ±AJU LJ',JJ.all

Directorate of Port Administration as shown in

Operating levenues

Char-es on petroleum products andother liquid car;os 4,500

Wharfage fees, etc.: >Iatarani 3X000Salav-erry 1,200Other ports 3,630

Demurra-e char-es 300Storage of explosives, cerealsand fla.qmables 1,250

Total Re-venues 13,800

Operating Expenditure s

Administrative cost: Lima 1,5171.atarani 626Salaverry 125Other 630

Permanent labor 4,0`oDay labor 2,hooFuel, materials, spare parts, etc 2z,uuuVarious other 198

Total Exoenses 11,55h

Balance 2,326

Note:The estimates cover all ports under the controlof the Directorate.

AiLPPENDIX 3PDRT OF SAIAVERRY ?ROJECT

Estimated Revenues of Directorate of Port AdministrationA-ssl np t., Port. Lorks and Debt Service as shov.n in 19q9

National Bud,et.

(oco S/)

Per ton dues on liqid cargos 4,(,61.336, ad valorem on certain

imp,orts 2,308Per ton charges on traffic

throu-h ports ),615Per ton charges on exports and

cabotage 6,154Per ton charges on exports and

imports 17,846Per ton charges on grain in

Totz' as s1--n in National Budget 36,9

I I. UOL -.0 011J1 SI L flO. - - 6-a ..AJ jJ, L.'

Carried forvrard from 1958 2,400

Total available in 1959 39,323

Note:Above receipts comprise thaccount entitl&"Salaverry and Other Port 1i'orks".

A PPE4jIIx 4

PORT OF SALAVERRY PROJECT

Traffic by Class of Trade: 1950 - 1958

(000 t o n s)

Di.s- Coast- I Dry Ilolas- P'etro-Year Total Loaded charged |Exporta/ Import b/ wise c/| Cargo ses leum d/

1950 19i7 113 82 110 8 77 I 138 - 571951 194L l 18 86 106 10 78 123 12 591952 203i 113 90 105 10 88 131 4 681953 2bLt j.42 102 139 10 95 151 16 771954 295 186 109 182 7 lc10, 172 35 881955 263. 146 117 I 142 8 113 I 154 14 951956 26L I 138 126 1 133 10 121 1 150 11 1031957 321. 182 1.39 179 1 131 188 19 ilL1958 320 1.66 15L 161 12 1L7 153 28 139

a/ Sugar. concentrates. other drv cargo and molasses.b/ Guano, artificial fertilizer and other dry cargo.cl Mainlv petroleum.d/ All coastwise inbound.

APPEDI): 5

r% A\M nl r,'C A 'r A ATTTIT tI¶r -Th T- ,MrP1u Ur 1V Rni rxnUdrCUI

Traffic by Class of Commodity : 1950-1958(000 tons)

1950 1951 1952 1953 1954 1955 1956 1957 15'58

LoadedSuga ;:

Export 91 66 71 95 118 94 90 130 103Coastwise 3 (a) 6 2 2 1 3 1 2

Total sugar 94 67 77 97 120 95 93 131 105

Molasses - 12 4 16 35 14 11 19 28C-"ertra+es '17 027 °9 °37 27 2-1 24 OR OR

Other 2 3 3 3 4 17 10 4 5

Total 113 109 113 142 186 146 138 182 166

Discharged(excludingpetroleum)

Guano 11 11 9 10 9 12 11 11 3Chermicalfertilizer 1 1 - - - 1 - - 4Other 13 15 13 15 12 9 12 14 8

Total 25 27 22 25 21 22 23 25 15

Total loadedand discharged(excludingpetro1eun) 138 136 135 167 207 168 161 207 181

Petroleumdis;cn arg 57 59 68 77 88 9 10 3r 11k 13Q

Grand total 19q 19! 203 2kk 295 263 26L 321 320

Of uvwhich coast-wise other than

(a) Less than 500 tons.

APPENDI, 6

T^~lT.'~ C' A T A 7TVT1T7 "A ~ T r'rm

Port of ChicamaTraffic by Class of Trade and Coamnodity: 1953-1958

CYOJ tons)

195 1954 1955 1.956 1957 19585_8

Loaded

Sugar:Coa,s+;wxI se 4° 51 44+ 49 54 49.Export 170 129 165 139 141 129

Total 210 18!0 ZU0 188 l9y 1o

Discharged (excludingpetrrleum)

Guano:Coastwise 13 18 16 20 12 4

Other:Coastwise and import 6 7 8 7 8 13

Total 19 25 24 27 20 17

Total loaded and dis-charged (other thanpetroleum) 229 205 233 215 215 195

Petrol.eumt p'O&Ut'-tS:

Coastwise 6 7 8 7 8 7

Grand total 235 212 241 222 223 202

APPENDIX 6

PORT OF SALAOERRY PROJECT

EIxpected and Potential Economica Benefits 1963-1968(000 s/.)

Traffic of PresentService Area Traffic Divert- PotE!ntial

Unit In sight iuormal ible fromr Chicama TotalSavings Growth and Callao a/ Bene!fits

Economy (>/. per ton) 1963 1963-1968 1963-1960 _168

I. Elimilation oflighterageMolasses 10 250 30 - 280Sugar 22 2,860 286 4,598 7,7144Guat1o 23 230 46 391 667Miscellaneous

ou-bbound cargo 25 175 25 - 200Artificialfertilizer 30 120 - 210 :330

Concentrates 32 896 96 - 992Inbound machinery,velicles andgeneral cargo 50 b/ 350 C/ 100 200 6 650

Var:ious fromTi]1ajones 22 - 440 - 440

Sub-total 4,881 1,023 5,399 11,303Subtract: extrarail haul cost3.50 - 829 d/ 829Total I. 4,881 1,023 4,570 1OV,474

II. Reduction in carRohandling costs ashoreDry cargo now movingthrough Salaverry 5 930 95 - 1,025

Dry cargo now movingthrough Chicama 2.50 -592 92

Total II. 930 95 592 L1l7III. Reduction in vessel $1200./

turn-round time ship day 825 e/ 166 908 1,B99a. * ¼AU ., ..L..U . _ gIA

rv. P2duction of roadtransport costs f/Grain now movingvia Callao S/0.60/tkm - - 19,800 19,800

Generall cargo nowmoving viaUct±.LaJ /0. 60/. X L 4 Lc7. n _ 3,96

2 5 0Total IV. h,290 - 23,760 0_ 0Grand Total i0,926 i,28 29,830 h210-0

a/ Including allowance for normal growth.b Specific rates range from s/40 to S/60 per ton.c/ Excluding goods now moving through Callao.d/ Applies only to goods divertible from Chicama.i Savin.g of 25 ship-d.ays.fl Assumes an average haul of 550 Ion from Callao to Salaverry service area.

APPENMTX Q

PORT OF SLAVF,;l xiiY:'OJECT

IJr±etora te of 0 U1 LP intUILLLLJ ,. oai oI

Rep!wment of Supolier Credits by Directorate: 1959-1961

Outstanding debt, start of period

Sterling credits 67.8 45.2 22.6Dollar credits 1.6 - -

Swiss franc credits 4.2 1.4 -

Total 73.6 46.6 22.6

Revenues assigned to Directoratecapital budget; 39.3 41.3 43.4

Subtract : allowance for emergencyworks 5.0 5.0

Available for debt service 34.3 36.3 38.4Debt repayable in period 27.0 _24.0 22.6

Balance for capital] expenditureon project 7.3 12.3 15.8

Outstanding de bl nd of period

Sterling credits 45.2 22.6 -Dollar credits -Swiss franc credits 1.4 -

Total 46.6 22.6 -

-- 'T~TTY 'I

PORvD 0- Sh!~T , 1,rV ,r msD,DT ,TT(P

1J-L. UU %AJI CL UC 'J.L J1 Lu U tIiU.IEL i.Lj U.L l U-LUI±

Sources and Application of Caoital Funds: 1960-1963

uonstruction- reriod £ 01 uumpar±Jan.June Jan.1960- July-Dec.

i960 19O1 i92 june 1962 i.- .OZ

Sources

Balance availablestart of period 7.3 9.2 4.9 7.3 13.4 27.6

Revenues assigned toDirectorate capitalbudget 41.3 43 .4, 22 8 107.5 22.8 i47.9

Proceeds of I13RD loan 37_oa/ 70 L.

Total 85.6 123.4 69.3 264.2 36.2 75.5

ApRlication

Repayment of suppliers'credits outstandingin 1959 24.0 22.6 - 46.6 - -

Emergency work byDirectorate 5.0 5.0 2.5 12.5 2.5 5.0

Cost of Salaverryproject: Foreign / .exchange 37.02' 70.8 41.6 149.4 -

Local currency 10.4 20.1 11.8 42.3 -Debt service, IBRD loan b/ _b/ b/ __b 6.1 :12.2

Total 76.4 118.5 55.9 250.8 8.6 :L7.2

Balance available end ofperiod 9.2 4.9 13.4 13.4 27.6 58.3

a/ Tncludina interest during construction.b/ Interest during construction would be capitalized.

PORT OF SALAVERRY PROJECT AIE: I 11

Comarison of Directorate Revenue atNew Port iath Cash Operating Lxpenses, 1963 and 1968

On Basis On Basisof Traf-ic of Potenti_

Unit Charges Traffic in Sight TrafficRevenue :Y S/ton 000 tons 1963 I1968Dry Cargo 5 000 Soles)

Present traffic plus growth to 1963 30 186 5,580 5,580Growt,h 1963-1968 30 41 -_ :L,230Divertible from Chicama by 1968 30 237 - 7,110

f if Callao by 1963 30 13 390 390t i " " 1963-1968 30 12 - 360

Grain 15 60 - 900

Sub-total 5,970 15,570

Liquid Cargo

Molasses :1963 5 25 125 125Growth molasses 1961-1968 5 3 - 15Petroleum plus growth to 1963 5 1& 930 930Grorwt.h petroleulm 1963-1968 5 56 _ 280Petroleum divertible from Chicama

Sub=to-tal1,5!39

To+a1 7 1!Cv oA OK

Out-of-Pocket Expenses

Salaries and wages 1,500 2,100Directorate overhead ch,arges 500 500Repairs, maintenance and stores 1,000 1550Maintenance dredging 1,000 1,000

Total 4,000 _150

Excess of Revenue over Expenses 3,025 11 81$

a/ Includes revenues for both operations andport works as explained in paragraphs 27 and 73.

Excludes cargo handling ashore assumed tocontinue as a private operation.

MAP I

r, 11 nN [~ F IJAlA - -. A * ,* R

S E L V A AMON

1d~~~~~$ ~~IQUITOS(

(I g c illl 1IIIn-j-~ | tARA K <.ill0m1iIiIr o-PAAT

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I PERU ~~~~~~~~~SAN JUANtt< % POR'T OF SALAVERRY PROJECT SANr UA q l

MAP OF PERU SHOWING PORTS AREQUIPA KAND COnMMUNAICATIONSrc 1q

00 0 100 200

SCALE IN MILES PRESENT SERVICE AREA MATARANi I.

FUTURE SERVIr7 AREA MOLLENDOFOR IMPORTS ILOCtr

[1II1] POTENTIAL SERVICE AREA| _________ ____________ SHARED WITH PAITA

SEPTEMBER 1959 I1RD-597R

-PIMENTEL ICLAYO ) j t

PUERM~~~~~~~~~~~~~~~~~-° PACASIAYOAH !-.M,

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SALAVERRY -

PERU' * i'I *,_--- -

PORT OF SALAVERRY PROJECT ** i -

SALAVERRY AND PUERTO CHICAMA 1

SCALE OF NILE FT R, 0 10 G I0G' 2. o C 40 D

SNTA '

CHIMBO,_

JULY 1959 18o0 598

MAP 3

d4,

A77~~~~~~~~~~~~~~~R

*/EXISTING SU8BMARINEOIL BERTH Y S V

PE RU <4

EXISTING PORT ? ,'5,

0~~~~~~~~~~~~~~~~

.. 100O 200 30104000\

SCALE -METERS

MAP 4

ICOASTER BERTH /'.UU NCGII UER¶4 N

4 OCEAN GOING BERTH AND FUTUREBULK SUGAR BERTH

5 OIL BERTH D

TA FUTURE OCEAH BERTHS 10~~~~~~~~~~~~~~~~~~~~~~

A UWAREHOUSE

WAREHOUSES tt\\O FUTURF WARFHOCIISF , \ -E FUTURE BULK SUGAR STOREF MOLASSESG MINERALSH GUANO FUTURE

JTRANS IT SHEU 'LSAAERK GEAR STORE ALAVERL NORER HOUSE ,'MOFFICES /N. WEIGHERIOGE (ROAD VEHICLES)O FUTURE CONVEYORS FOR BULK SUGARa CUSTOMS WAREHOJSEO EX STING SIDINGS ANO RAIL ACCESS irlR. EXISTING OIL LINES OPEN STORAGETOIL LI NEU EXISTING RAILWAY ,------,---HV FEN CEL- - - - - - - -

* s w w-9 jajx li \ 0\S A C/~El

/ / K:.JiQ A EDGED`T .0!/ TURNING CIRCLE ( r

BO I St

DREDGED TO

PERU

PORT OF SALAVERRY PROJECT \ 2PROPOSED NEW FACILITIES -

o 10 S 200 300 00 s_0'

SCALE -METER S .V\<

.,,A ' j , ,;