Cai Mep Port

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	25455
Company name	SP-SSA International Container Services Joint Venture Company
Country	Vietnam
Sector	Transportation and Warehousing
Environmental category	B
Department	Infrastructure
Status	Pending Signing

Date SPI disclosed	September 19, 2007
Projected board date	November 1, 2007
Previous Events	Approved: November 1, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

SP-SSA International Container Services Joint Venture Company (SSIT or the Company) is developing a greenfield container terminal on the Cai Mep River in Ba Ria-Vung Tau province (the Terminal) to serve the Ho Chi Minh City (HCMC) area in Vietnam. Container volumes in the HCMC area have increased significantly in recent years, causing congestion at the region’s ports and within HCMC. The Terminal will help address this situation by providing much needed container handling capacity to relieve existing congestion. It will also be well positioned to capitalize on the region’s projected growth in container volumes. Located approximately 85 kilometers southeast of HCMC, the Terminal will have a draft of 14 meters and the latest container handling equipment, enabling it to serve today’s large containerships which cannot call at existing HCMC ports due to draft and LOA (turning) restrictions.

Anticipated development impact of the project

The project will strengthen the Vietnamese port sector by helping develop a much-needed modern, efficient, deepwater container handling facility to serve the HCMC area. This will help address Vietnam’s shortage of port capacity and increase trade by helping ensure the efficient and timely export of containerized cargo. In addition, the project will help to reduce the cost of transportation by easing the current supply constraints and thereby benefit shippers, shipping lines, and consumers alike. Finally, the Terminal will create approximately 340 jobs upon completion and generate direct economic benefits for the Government of Vietnam through land lease payments.

IFC's expected development contribution

IFC will be providing long-term financing at a maturity necessary for the project’s completion but unavailable in the commercial market. The financing will be structured to help the company better manage the startup risk inherent in a greenfield project. IFC’s involvement will also help raise additional financing through IFC B Loans. In addition, the project will have an important demonstration effect for the Vietnamese port privatization effort. As such, the project’s success will encourage foreign investments and further private sector participation in other ports and infrastructure sectors such as roads and airports.

Environmental and social issues - Category B

This is a Category B project because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The Terminal is one of several container terminals being developed to serve the Ho Chi Minh City area, and is part of the Detailed Master Plan of Group No. 5 Seaports in the HCMC area approved by the Prime Minister of Vietnam in 2005. The site for the SSIT container terminal was selected for its minimal environmental and social impact, as well as its favorable economic costs and benefits. Specifically, a very small number (3) of local farmers were affected and subsequently compensated for their losses, and mangroves cleared from the site will be reforested nearby under a government-managed program. Because SSIT is located within an existing industrial development zone, there are no communities or indigenous peoples adversely affected by the terminal development, nor is this in an area where cultural heritage is expected to be found. Owing to existing road capacity, increase in truck traffic along local highways will not significantly increase traffic problems and accidents.

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