Japanese ODA Loan

Ex-Ante Evaluation
1. Project:
Country: Kingdom of Cambodia
Name of the Project: Sihanoukville Port New Container Terminal Development Project
Loan Agreement: August 7, 2017
Loan amount: 23.502 billion yen
Borrower: The Royal Government of Cambodia
2. Background and Necessity of the Project(1) Present State of Development and Problems of the Ports and Harbors Sector inCambodia
The Kingdom of Cambodia has two major international ports, the Sihanoukville portthat faces the Gulf of Thailand (“this port”) and the Phnom Penh port located on thebanks of the Mekong River. Due to restrictions in water depth and the width of thesailing channel, the cargo handling capacity of Phnom Penh port is limited (themaximum size of vessels that can enter is 100-200 TEU). Although the port is the only
deepwater port in Cambodia (2,100-2,500 TEU), it handles virtually all cargo carriedby container and other large vessels. The purpose of the Sihanoukville Port New
Container Terminal Development Project (“this project”) is to construct new container
terminal buildings and introduce equipment to enhance container cargo handlingcapacity.
Based on the country’s solid economic growth, fueled by a growing garment
industry and others, the volume of container cargo handled at this port has increased
by 13% every year for the five years since 2011. The speed of growth is increasing,
too—in 2015, the rate was 17% higher than the previous year. The port’s container
cargo handling volume is getting closer and closer to maximum capacity these days
(handling capacity: 500,000 TEU, actual volume handled in 2015: 390,000 TEU). The
Port Authority of Sihanoukville (PAS) takes charge of port operation plans toimplement short-term measures (e.g. increasing the number of cranes, improving
off-dock yards, and using multi-purpose terminal buildings to handle container cargo).
Japan helped to rehabilitate and increase the port’s capacity for handling container
cargo through ODA loan projects implemented in the past. However, the volume ofcontainer cargo handled by the port is expected to further grow in the future due tosolid economic growth. The capacity of the existing container terminal is predicted toreach its limit by 2023. For this reason, the container cargo terminal needs to expandand improve its capacity to ensure smooth logistics in Cambodia. Today, the size ofinternational cargo vessels tends to be larger. For Asian marine routes, the number of
4,000-TEU container vessels is increasing. As a river port, the Phnom Penh port has
difficulty handling large vessels. Thanks to its great depth, however, the port is ideallysuited to receive them. Additionally, if the port becomes able to handle large vessels,
maritime transportation and logistics costs are likely to go down.
(2) Development Policies for the Ports and Harbors Sector in Cambodia and thePriority of the ProjectThis port plays an important role as a critical distribution hub for boosting theCambodian economy and contributing to the economic development of the ASEAN
member states as a whole, by improving the connectivity of the East-West axis
(Southern Economic Corridor) that Japan intensively supports. Expansion of this port
is defined as one of the initiatives in the top priority action plan to achievetransportation infrastructure development under the 2014–2018 National Strategic
Development Plan (NSDP).
(3) Japan and JICA’s Aid Policy/Actual Performance for Ports and Harbors SectorAn analysis under the JICA Country Analytical Work for the Kingdom of Cambodia(2014) revealed that the priority issue was economic infrastructure development forthis priority area to improve logistic functions through improvement of the port. Japan
also defines as a priority area the “development of the Sihanoukville port andsurrounding area as a base of economic activities due to its high economiceffectiveness” under “economic infrastructure development”, a key factor in Japan’sCountry Assistance Policy for the Kingdom of Cambodia (2012). Therefore, theProject is highly relevant to these analyses and policies. This project is also defined
as a priority project under the Japan-Mekong Connectivity Initiative (2016).
So far, Japan has continuously provided assistance to the port in order to improve its
infrastructure and operation capacity through Technical Cooperation, Loan assistance,and Grant Aid projects, given the port’s role in supporting the development ofCambodia as a whole. Specifically, Japan implemented a development study titled theSihanoukville Port Development Plan Investigation (1997) and the Study on
Strengthening Competitiveness and the Development of Sihanoukville Port Project(2012) to formulate a port improvement plan. Japan also implemented the following
projects to further improve port facilities: the ODA loan Sihanoukville Port Urgent
Rehabilitation Project (approved in 1999), the Sihanoukville Port Urgent Expansion
Project (approved in 2004), and the Project for Sihanoukville Port Special Economic
Zone Development (approved in 2007). Japan supported streamlining operation
under the Technical Cooperation Project for the Study on Strengthening
Competitiveness and Development of Sihanoukville Port (2007-2009) and the Project
for Capacity Development in Container Terminal Management and Operation atSihanoukville Port (2013-2016). Further, Japan implemented a grant aid project titledthe Project for the Improvement of Security Facilities and Equipment in Main
International Ports (2006) to improve security-related facilities and equipment.
Through these assistance projects, JICA has become the most critical partner inboosting the enterprise value of the PAS. Meanwhile, the port has become a symbol

of the amicable relationship between Japan and Cambodia.
(4) Other Donor Activities
Railways between Phnom Penh and Sihanoukville were constructed under arailway rehabilitation project supported by the Asian Development Bank. Note that thePAS has established an MOU for strengthening the partnership between the Port of
Kobe General Agency, while establishing another amicable agreement for ports withthe Qingdao Port Company, Limited.
(5) Necessity of the Project
Sihanoukville port plays an important role in providing assistance to Cambodia andthe country’s National Development Plan, since it is a key distribution hub for boosting
Cambodia’s economic development. In addition to furthering Cambodia’sdevelopment, the port contributes to economic development of the ASEAN member
states as a whole by improving the connectivity of the Southern Economic Corridor,
where Japan has provided intensive support. As stated above, the volume ofcontainer cargo loaded and unloaded at the Sihanoukville port is expected to exceed
its handling capacity in the near future, due to increasing cargo handling volume inrecent years. To ensure smooth logistics in Cambodia and its economic development,
there is a pressing need to improve logistics and enhance international
competitiveness through the expansion of the port. This project contributes toimproved logistic functions. Therefore, the project is in line with the development
issues and development policies of Cambodia, Japan, and JICA’s assistance policies
and analysis results. This project is considered to be contributory to SDG 9, thus thesignificance of supporting this project is high.
3. Project Description(1) Project Objectives
This project aims to strengthen logistic functions through improving cargo handling
capacity of the Sihanoukville port, Cambodia’s only deep-water port, by constructing a
new container terminal, thereby helping to promote trade and the country’ssocioeconomic development.
(2) Project Site/Target Area: Sihanoukville Province(3) Project Components
1) Civil engineering work (international competitive bidding)
Improvement of the container terminal (container cargo handling capacity:
450,000 TEU, total area: 17.5 ha, quay water depth: 14.5 m), improvement ofaccess roads: 2.2 km, dredging of sailing routes and berths (water depth:13.5 m),
construction of control towers, etc., and development of land for customs
inspections2) Procurement of cargo handling equipment (international competitive bidding)
Quay gantry cranes: 3, RTG cranes: 9, reach stackers: 2, tractor chassis: 16, andterminal operation system: 1, etc.

3) Consulting service: shortlist
Basic design (cargo handling equipment part), detailed design (civil engineeringwork part), bidding support, supervision of construction work, and management ofdesign and transferring technology and the like of design and contract
management as well as supervision of construction work(4) Estimated Project Cost
28,146 million yen (Loan Amount: 23,502 million yen)
(5) Project Implementation Schedule
Planned between August 2017 and September 2024 (total of 86 months). Projectcompletion is defined as the commencement of the service of the facilities (October2023).
(6) Project Implementation Structure1) Borrower: The Government of the Kingdom of Cambodia2) Guarantor: N/A
3) Executing Agency: Port Authority of Sihanoukville (PAS)
4) Operation and Maintenance System: PAS shall take charge of operation
management and maintenance. PAS has an experience in operation andmaintenance of existing container terminals, thus no major technical problems
are expected. Although maintenance expenses are covered by PAS’sbusiness income, no particular problems are expected at this moment in its
financial structure The Public Works and Transport Agency of Sihanoukville
Province will take charge of the maintenance of access roads.
(7) Environmental and Social Considerations/Poverty Reduction/Social Development
1) Environmental and Social Considerationi.
Category: Bii.
Reason for Categorization: This project will not have substantial undesirable
impact on the environment given the characteristics of the sector, project, andarea under the JICA Environmental and Social Guidelines (established in April2010).
iii.
Environmental Permit: An Environmental Impact Assessment (EIA) report forthis project was submitted to the Ministry of Environment in December 2016 tobe approved in August 2017.
iv.
Anti-Pollution Measures: Measures will be taken such as maintenance ofconstruction vehicles and the like, water sprinkling, use of silt protectors, andputting limitations on construction hours to help ensure air quality and waterquality while reducing noise, vibration, and the like during construction.
After the handover, measures will be taken such as maintenance of machines
and equipment to ensure air quality and the like. Therefore, no material
negative impacts are expected.
v.
Natural Environment: The project site is not located in or around sensitiveareas such as national parks, and adverse impact on the natural environmentis assumed to be minimal.
vi.
Social Environment: The Project requires no land acquisition or resettlement,
since it will take place within the existing port facilities. Fishery families areliving at the existing port, and they may be influenced by the navigation ofconstruction vessels. Measures, including notifying fishery families ofconstruction hours and vessel navigation hours and supporting the safe
navigation of vessels arriving/departing the port using a tugboat, will be taken.
vii.
Other / Monitoring During the construction period, the contractor and executing
agency will monitor air quality, water quality, noise, vibration and the like. Afterthe handover, the executing agency will monitor air quality.
2) Promotion of Poverty Reduction: N/A
3) Promotion of Social Development: The project will include HIV/AIDS
preventative measures in the bidding documents. The contractor plans toprovide HIV/AIDS preventative programs.
(8) Collaboration with Other Donors: N/A(9) Other Important Issues: The supporting layer of the project site is located in deep
water, thus a Japanese technology panel point strut construction method is very
likely to be adopted. Because of this, Japanese corporations are expected toparticipate in this project.
4. Targeted Outcomes(1) Quantitative Effects
1) Outcomes (Operation and Effect Indicator)

Performance Indicators

Containercargo

Baseline(Existing facilities andmachines)(Actual Value in 2015)

Target (2025)[Two years after projectcompletion]

handling

volume (Twenty-foot Equivalent392,000

870,000

4565

30,00050,000

Units, TEU)
Berth occupancy rate (%)
Maximum tonnage to be loaded
onvessels

enteringport(Deadweight Tonnage, DWT)

Note: The target value for container cargo handling volume is the mean of the sum
total of existing and new terminals, while the target value for berth occupancy rate is
the mean of these two.
2) Impact
Increase in trade volume(2) Qualitative Effects

Facilitation of logistics through improving cargo handling capacity, promotion of tradeand socioeconomic development in Cambodia(3) Internal Rate of Return (IRR)
Based on the conditions below, the Economic Internal Rate of Return (EIRR) of thisproject was calculated as 15.8%, while Financial Internal Rate of Return (FIRR) was7.4%.
EIRR
Cost: Project cost (excluding tax), operation and maintenance expensesBenefit: Reduction in alternative transportation costs, reduction in maritime
transportation costs by using larger vessels, and reduction in incidental costs
through reducing terminal congestion
Project Life: 35 years
FIRR
Cost: Project cost, operation and maintenance expenses
Benefit: Cargo handling charge, fee to use port
Project Life: 35 years
5. External Factors and Risk Control
The Royal Government of Cambodia shall hold the management rights of the PAS.
6. Lessons Learned from Past Projects(1) Lessons learned from similar projects:
One lesson learned from the results of Thailand’s ex-post monitoring of an ODA
loan project titled Laem Chabang Port Commercial Port Construction Project was that
active support for investigations, planning, and formulations contributing to improve
operation efficiency (e.g. studying models of port terminal operation) are critical.
Another lesson from the results of the Philippines’ ex-post monitoring of an ODA loan
project titled the Batangas Port Development Project (II) was that target setting should
consider not only a macro perspective such as expected GDP, but also reviewing
industrial structure from a medium- to long-term perspective and requests from
customer corporations, as actual cargo movement is determined by a variety offactors.
(2) Lessons for the Project:
Based on the lessons learned from the ODA loan project provided to Thailand titledthe Laem Chabang Port Commercial Port Construction Project, the project will also
provide assistance to improve operation efficiency through future technical assistanceand the like. Based on the lessons learned from the ODA loan project provided to thePhilippines titled the Batangas Port Development Project (II), the project estimated thetotal volume of cargo, after implementing (1) a future prediction of cargo volume formajor items based on interviews with industry groups and involved institutions as a
micro-perspective method, and (2) a macro-perspective method for demandprediction carried out as a part of preparatory survey of this project. The project thenverified consistency with these two estimated values and development programs for acompetitor port (Phnom Penh port) to set target values. When implementing future
prediction of cargo volumes by item, the project took account of a change in industrial
structure by considering analyses carried out by other international institutions as areference.
7. Plans for Future Evaluation(1) Indicators for Future Evaluation:
1) Container cargo handling volume (Twenty-foot Equivalent Units, TEU)
2) Berth occupancy rate (%)3) Maximum tonnage to be loaded on vessels entering port (DeadweightTonnage, DWT)
(2) Timing of Next Evaluation: Two years after completion