Complete Saranggani

Feasibility Study
Infrastructure Support
to the Economic Program of the
Municipality of Sarangani,
Davao del Sur
June 2002
Project Development Assistance Center

Regional Development Council XI
Davao City
ACKNOWLEDGMENT
This pre-investment study was completed with assistance from the Project Development
and Monitoring Fund, a facility established pursuant to Republic Act 8182 (ODA Law)
in furtherance of the latter’s overall goal of achieving equitable growth and development
in the provinces through priority development projects for the improvement of
economic and social service facilities.
The local government and constituency of the Municipality of Sarangani, Davao del Sur,
led by their municipal mayor, the Honorable Amel B. Amierol, gratefully recognize this
assistance, as well as that extended by the Regional Development Council XI’s Project
Development Assistance Center (PDAC) in the conduct of this study.
Also collaborating in this work were the following departments of the municipal
government: Municipal Agriculture Office, Municipal Budget Office, Municipal
Engineering Office, and Municipal Planning and Development Office; as well as the
Municipal Local Government Operations Office of the Department of the Interior and
Local Government.
Acknowledgment i
PROJECT SUMMARY
Project Title : Establishment/Construction of Multi-Purpose Port
Project Cost : P48.88 Million
Proponent : Municipal Government of Sarangani
Location : Mabila, Municipality of Sarangani, Davao del Sur
Project Description : Development of a port complex at Barangay Mabila,

including the reclamation of the foreshore area; extension
and improvement of the existing pier and causeway; and
construction of auxiliary facilities such as administration
building, passenger terminal, food stalls, comfort rooms
and guardhouse. The project also provides for the
establishment of an ice plant by private sector initiative.
Feasibility Indicators : Multi-Purpose Port Component (public sector)
Financial Net Present Value at 12%IR: -P22 million

Financial Internal Rate of Return : 0.55%
Economic Net Present Value at 15% SDR: P139.2 million
Economic Internal Rate of Return: 70%
Although the multi-purpose port component may not be

feasible from the financial viewpoint, due mainly to its
large initial investment cost, it is still recommended for
public sector development, since: (a) it can generate
enough cash inflows to sustain its operational
requirements over its economic life; (b) it exhibits a very
high economic net present value; and (c) it has a very
strong potential for opening up livelihood opportunities
for the local community, starting with the establishment of
a commercial ice plant facility.
Ice Plant Component (private sector)
Net Present Value at 16% IR: P7.1 million

Financial Internal Rate of Return at 16%IR: 25.06%
The ice plant component is financially attractive to private

investment. However, the market analysis indicates that
the viability of its operation hinges substantially on the
development of the existing Mabila Pier into a multi-
purpose port.
Project Summary ii
CONTENTS
Page No.
CHAPTER 1 THE PROJECT
1.1 Rationale/Background 1-1

1.2 Project Goal and Purpose 1-2
1.3 Project Spatial and Sectoral Context 1-2
1.4 The Project Feasibility Study Undertaking
1.4.1 Study Area 1-3
1.4.2 Objectives of the Study 1-3
1.4.3 Study Approach and Methodology 1-4
CHAPTER 2 PROFILE OF SARANGANI MUNICIPALITY
2.1 Physical Profile 2-1

2.1.1 Geographic Location and Political Subdivision 2-1
2.1.2 Topography 2-1
2.1.3 Coastal Area 2-1
2.1.4 Climate 2-2
2.1.5 Water Resources 2-2
2.1.6 Land and Mineral Resources 2-2
2.2 Demographic Profile 2-2
2.3 Infrastructure Profile 2-3
2.4 Economic Sector Profile 2-4
2.5 Social Sector Profile 2-4
CHAPTER 3 MARKETING ASPECT
3.1 General Market Description 3-1

3.1.1 The Multi-Purpose Port Component 3-1
3.1.2 The Ice Plant Component 3-2
3.1.3 The Warehouse Component 3-2
3.2 Demand for the Project 3-2
3.2.1 Availability of Data and Methods Used in 3-2
Data-Gathering
3.2.2 Results of Data-Gathering Activities 3-3
3.2.3 Analyses of Demand and Demand Projections 3-3
for the Project
3.2.3.1 Multi-Purpose Port Component 3-3
3.2.3.2 Ice Plant Component 3-11
3.2.3.3 Warehouse Component 3-11
3.3 Demand and Supply Gaps 3-13
3.3.1 Passenger and Cargo Traffic Pressure on the 3-13
Existing Mabila Port
CONTENTS
Page No.
3.3.2 Mabila Port’s Attractiveness to Fishing Vessels 3-15

3.3.3 Block Ice Supply Deficiency 3-16
3.3.4 Mabila Port’s Warehouse Capacity Requirement 3-18
3.3.5 Other Economic Opportunities 3-21
3.4 Marketing Plan 3-21
3.4.1 Project Outputs 3-21
3.4.2 Product Pricing & Projected Revenues 3-22
3.4.3 Marketing Strategy 3-24
3.4.3.1 The Need for a Two-Stage Marketing 3-24
Strategy
3.4.3.2 A Suggested Pre-Implementation 3-24
Marketing Strategy
3.4.3.3 A Suggested Post-Implementation 3-25
Marketing Strategy
3.5 Summary of Findings and Conclusions 3-25
CHAPTER 4 TECHNICAL ASPECT
4.1 The Project 4-1

4.2 Project’s Location Natural Attributes 4-1
4.2.1 Geographic Location 4-1
4.2.2 Meteorological Condition 4-1
4.2.2.1 Climate/Rainfall 4-1
4.2.2.2 Wind 4-2
4.2.2.3 Temperature 4-2
4.2.3 Oceanological Conditions 4-2
4.2.3.1 Tides 4-3
4.2.3.2 Current 4-3
4.2.3.3 Tsunamis 4-3
4.2.4 Hydrographic Survey and Water Depths 4-4
4.2.5 Topography 4-4
4.2.6 Soil and Sub-soil Classification 4-5
4.3 Description of Existing Port Facilities 4-5
4.4 Proposed Facilities and Improvement Activities 4-6
4.5 Assessment of Alternatives
4-6
4.5.1 Location 4-6
4.5.1.1 Site of the Port 4-6
4.5.1.2 Site of the Ice Plant 4-7
4.5.1.3 Site of the Warehouse 4-7
4.5.2 Size 4-8
4.5.3 Technology and Services 4-9
4.5.3.1 Port Operations 4-9
4.5.3.2 Ice Plant Technology 4-9
CONTENTS
Page No.
4.6 Description of Preferred Alternative 4-10

4.6.1 Reclamation of the Foreshore Area 4-10
4.6.2 Causeway 4-10
4.6.3 Pier Structure 4-10
4.6.4 Port Stalls 4-10
4.6.5 Administration Building 4-11
4.6.6 Toilet/Bathroom 4-11
4.6.7 Passenger Terminal 4-11
4.6.8 Ice Plant 4-11
4.6.9 Warehouse 4-11
4.6.10 Guardhouse 4-12
4.7 Cost Estimates 4-12
4.7.1 Investment Cost 4-12
4.7.2 Operating Cost 4-12
4.8 Machinery and Equipment 4-12
4.8.1 Port 4-12
4.8.2 Ice Plant 4-12
4.9 Timetable of Implementation 4-13
4.9.1 Pre-Implementation Phase 4-13
4.9.2 Implementation Phase 4-13
4.10 Environmental Impact and Mitigating Measures 4-13
CHAPTER 5 FINANCIAL ASPECT
5.1 Project Cost 5-1

5.2 Source of Funds 5-2
5.2.1 Multi-Purpose Port 5-2
5.2.2 Ice Plant Component 5-3
5.3 Basic Financial Projections 5-3
5.4 Financial Viability Criteria 5-4
5.5 Financial Analysis 5-5
5.5.1 Income Statement 5-5
5.4.2 Cash Flow Statement 5-6
5.6 Financial Viability Indicators 5-6
5.6.1 Multi-Purpose Port 5-7
5.6.2 The Ice Plant 5-7
5.7 Sensitivity Analysis 5-7
5.8 Conclusions and Recommendations 5-10
CHAPTER 6 ECONOMIC ASPECT
6.1 Economic Benefits 6-1

6.1.1 Benefits Accruing from Port and Ice Plant 6-1
Operations Direct Benefits to the Stakeholders 6-1
CONTENTS
Page No.
6.1.1.1 Port Revenues and Ice Plant Revenues 6-1

6.1.1.2 Salvage Value 6-1
6.1.1.3 Working Capital 6-1
6.1.2 Direct Benefits as a Result of the Project 6-1
6.1.2.1 Reduction in Fish Spoilage 6-1
6.1.2.2 Time Saving Benefits 6-2
6.1.2.3 Savings in Fuel Costs 6-2
6.1.2.4 Other Benefits 6-2
6.2 Economic Costs 6-2
6.2.1 Capital Costs 6-2
6.2.2 Operating and Maintenance Cost 6-2
6.3 Valuation of Benefits and Costs 6-3
6.4 Results of Economic Analysis 6-4
6.5 Economic Sensitivity 6-4
6.6 Conclusion 6-5
CHAPTER 7 OPERATION AND MANAGEMENT
7.1 Political and Legal Consideration 7-1

7.2 Project Organization and Management 7-2
7.2.1 Existing Port Management and Operations 7-2
7.2.2 Pre-Operating Phase
7.2.2.1 Management and Organization 7-3
7.2.2.2 Manpower Requirements 7-3
7.2.3 Operating Phase 7-4
7.3 Port Management and Operation 7-5
7.4 Socio-Economic and Cultural Implications 7-6
ANNEXES
Chapter 2
Figure.2.1 Map of Davao Region
Figure 2.2 Map of Davao del Sur
Figure 2.3 Map of Sarangani Municipality
Chapter 3
Table 3.1 Berthing Fees
Table 3.2 Passenger Terminal Fee
Table 3.3 Cargo Handling Fee
Table 3.4 Warehouse Storage Fee
Table 3.5 Parking Fee
Table 3.6 Anchorage Fees
Table 3.7 Land Rental-Ice Plant and Stalls
Table 3.8 Public Restrooms
CONTENTS
Page No.
Chapter 4
Figure 4.1 Map of the Philippines
Figure 4.2 Climate Map of the Philippines
Figure 4.3 Normal Path of Tropical Cyclones
Figure 4.4 Earthquake-Induced Tsunamis and Tsunami-
Prone Areas in the Philippines
Figure 4.5 Tsunami Risk Areas in the Philippines
Figure 4.6 Hydrographic Control Survey Plan of the Existing Port
Figure 4.7 Hydrographic Control Survey Plan of the Alternative
Port (Cove Area)
Figure 4.8 Sketch Plan of Existing and Alternative Ports
Figure 4.9 Distribution of Active Faults and Trenches in the
Philippines
Figure 4.10 Significant Earthquake in the Philippines
Figure.4.11 Seismicity Map of Sarangani Island
Figure 4.12 Site Development Plan of the Proposed Port
Figure 4.13 Master Plan of the Proposed Port
Figure 4.14 Perspective of the Proposed Ice Plant
Figure 4.15 Floor Plan of the Proposed Ice Plant
Table 4.1 Total Investment Cost
Table 4.2 Total Operating Cost
Table 4.3 Project Implementation Schedule
Chapter 5
Table 5.1 Replacement Cost of Depreciated Equipment
Table 5.2 Equipment/Facility Depreciation Schedule
Table 5.3 Amortization Schedule-Ice Plant
Table 5.4 Income Statement –Multi-Purpose Port (Scenario 1)
Table 5.5 Income Statement –Multi-Purpose Port (Scenario 2)
Table 5.6 Income Statement –Ice Plant
Table 5.7 Cash Flow Statement-Multi-Purpose Port (Scenario 1)
Table 5.8 Cash Flow Statement-Multi-Purpose Port (Scenario 2)
Table 5.9 Cash Flow Statement-Ice Plant
Table 5.10 Sensitivity Analysis-Multi-Purpose Port
Table 5.11 Sensitivity Analysis-Ice Plant
Chapter 6
Table 6.1 Economic Costs-Benefit Flow

Statement of Assumptions and Costs
Table 6.2 Sensitivity Analysis
Philippines
Chapter 1
THE PROJECT
1.1 Rationale/Background
Sarangani is a fifth class municipality of the province of Davao del Sur located in
the southernmost tip of Davao Region. It is composed of two main islands,
namely: Sarangani and Balut islands. Sea transportation is the only means of
going to and from the island municipality. The municipality is considered a
hard-to-reach area because of the lack of convenient sea transport system.
Economic activities in the municipality remained stagnant for many years

because of inadequate infrastructure that could support the agriculture and
fishing industries in the municipality. The local government found it difficult
attracting investments because of this deficiency.
To become economically progressive the municipality felt the need to have a

good port, a warehouse and ice plant. These projects became their investment
priority and compose the Infrastructure Support to Economic Program of
Sarangani. The conduct of the feasibility study of which was approved for
assistance under the Project Development Monitoring Fund (PDMF).
The project was started in December 2001 through the technical assistance of the
Project Development Assistance Center (PDAC). The project was designed to
develop the capability of the Local Government Unit of the Municipality of
Sarangani in project development, and at the same time, come up with a
feasibility study for the identified proposals of the municipality.
The inception activities on the preparation of the FS commenced last February

2002 with an orientation on Project Development Cycle and FS. The succeeding
months were devoted to preparation of data gathering instruments, actual data
generation, technical surveys, preparation of designs and consultations with line
agencies and experts from the private sector. The drafting of the feasibility study
was conducted last May 27 to June 7, 2002.
The feasibility study for the Infrastructure Support to the Economic Program of
Sarangani is hereby presented as an output of the series of activities undertaken
by the local government unit of Sarangani and the Project PDAC Team in
accordance with the prescribed requirement set forth under the PDMF Project.
1.2 Project Goal and Purpose
The project aims to provide infrastructure facilities that would support the
economic program of the municipality of Sarangani. The provision of port
facilities, warehouse and ice plant is expected to enhance the economic activities
in the area through increased trade, tourism, and livelihood activities. Having a
good port system would also encourage the opening of additional sea transport
The Project 1-1

routes and improve the sea transport system plying in the area. Fishing activity
is expected to gain more from this project being the major industry in the
municipality.
1.3 Project Spatial and Sectoral Context
Since the creation of the municipality in 1978, economic activities remained

stagnant because of the remoteness of the area, risk of travel due to
unpredictable sea condition, and the poor condition of port and other facilities.
Few medium size cargo/passenger boats are providing services to the area on
the alternate basis to cater the needs of the people. More often, small fishing
boats served as the means of transport especially on emergency basis. In the late
nineties, a company based in General Santos City attempted to establish new
route in the area using a fast craft passenger vessel. Because of the difficulty in
berthing and minimal patronage due to high fare, the operation was withdrawn.
The islands of Sarangani served as a regular path of fishing vessels in going to

the fishing grounds at Celebes Sea and other areas near Indonesia and New
Guinea. The Island also served as a haven of fishing boats during typhoons and
the nearest place to shelter for repair or light recreation, either before or after the
fishing trip. As a common experience, the local government of Sarangani sees
this trend as a prospect that could help the municipality improve their economic
activity. Improving the municipal port that can cater to both the fishing and
cargo/passenger vessels requirements as well as the establishment of other
facilities that can produce or supply the basic needs for the fishing trip such as
ice, fuel, food supply and other requirements are potential enterprising activities
that could spur economic development in the area.
The municipality of Sarangani, as it is position near the Philippine-Indonesian

territorial waters and fishing grounds, is a strategic place for emergency relief
and anchorage especially in times of bad weather. The area, being located along
the regular travel path of fishing vessels in going to and from the fishing grounds
could also serve as a station wherein an inventory of fishing supply requirements
can be made, filled up or replenished for the final journey.
As an island municipality, fishing activity in the area is a promising industry.

While the municipal and deep-sea fishing activities are flourishing in the area,
facilities that are needed to support the industry are not made available. The
inability of the municipality to provide enough berthing space on their existing
ports and other necessary facilities such as ice plant, fuel depot, etc. have made
the local fish operators to station their fishing vessels in General Santos City
where these facilities are available. The situation would be different if the
facilities are present and could have been a major factor in economic
development of the area.
The Project 1-2

Based on initial assessment of the study team, the demand for ice by the fishing
operators relying on ice plant facilities in General Santos City, has not been
satisfied yet. Because of lack of supply, oftentimes, the fishing operators have to
queue for about 2 to 3 days before the commodity can be served to them. Given
that there is an unfilled demand for ice, along with other commodities such as
fuel, fishing gears, food supply, etc., the local government of Sarangani sees these
aspects as market potentials. Thus, the coming up of a study for the
improvement of port and establishment of other necessary facilities in the
municipality was made as an initial step to develop the infrastructure facilities to
support the economic program of the municipality.
In view of the existing conditions of the area, the development and/or

improvement of the port facilities in the municipality became imperative to
achieve the economic progress envisioned by the municipality in the long-term.
1.4 The Project Feasibility Study Undertaking

1.4.1 Study Area
The feasibility study for the improvement of the municipal port and
establishment of an ice plant, warehouse and other infrastructure facilities that
would support the economic activities of the municipality of Sarangani is
focused at barangay Mabila, the seat of government of the municipality. The
study, however, considered other potential areas for development within the
municipality such as the existing port at barangay Patuco including the conduct
of a fishing industry profile that covered the areas of General Santos City and
Glan. A quick assessment of the ice plant industry in General Santos City was
also conducted which form part of the basis for the establishment of an ice plant
facility in the municipality.
1.4.2 Objectives of the Study

The general objective of the study is to determine the viability of improving the
municipal port and establishment of other infrastructure related facilities at
barangay Mabila in support to the economic activities of the municipality of
Sarangani. Specifically, the study aims to determine the following:
1. To determine the overall viability of improving the municipal port and the
required new infrastructure support facilities to economic program of the
municipality;
2. To develop the capability of the local government officials of the municipality

of Sarangani in line with project development and preparation of feasibility
study;
The Project 1-3

1.4.3 Study Approach and Methodology
The study was conducted using multi-disciplinary approach in accordance with
the agreement forged between the municipal government of Sarangani and
Project Development Assistance Center (PDAC). As a joint venture project
funded by the Project Development and Monitoring Fund (PDMF), the activity
included training on feasibility study preparation for the local officials of the
municipality, actual field surveys, conduct of technical studies, project site and
agency visits, and packaging of the study. This endeavor approximates all the
required multi-disciplinary approach to planning encompassing the various
expertise required in the study.
The Project 1-4

Chapter 2
PROFILE OF SARANGANI MUNICIPALITY
2.1 Physical Profile

2.1.1 Geographic Location and Political Subdivision
The municipality of Sarangani was created by virtue of Presidential Decree No.
1550 issued by the late President Ferdinand Marcos on June 11, 1978. It is an
island municipality located in southernmost tip of Davao Region below the
province of Davao del Sur and mainland Mindanao (Figures 1 & 2). It lies south
of the equator from 50 22’ 50” to 50 29’ 50” north latitude; and from 1250 16’ 33” to
1250 29’ 52” east longitude. The municipality is composed of 2 main islands, the
Sarangani and Balut Islands separated by Sarangani Straight from Jose Abad
Santos. It is approximately 2-3 hours by boat from Glan and 4-5 hours from
General Santos City or equivalent to 49.84 nautical miles. The municipality has
12 barangays with a total land area of 106.18 square kilometers (Figure 3).
2.1.2 Topography
The municipality of Sarangani is characterized by hilly and mountainous areas

with eleven of its barangay centers are proximately located in coastal area and
only one barangay is considered as landlocked. Barangay Gotamco in the island
of Balut harbors the summit of Mount Balut, a dormant volcano with a height of
800 meters above sea level. In Sarangani Island, mountain ranges starts at
barangay Patuco and ends at sitio Sasapo. It has steep banks and cliffs with
edges having heights ranging from 80 to 120 feet above sea level. Approximately
67 percent of the municipality’s land area is suited for agricultural production
(0-18% slope) while 33 percent is considered mountainous (18% slope and
above). The table below shows the slope classification of the municipality.
Slope Classification Land Area % of Total

(In has.)
0-3% 975 9.18

3-8% 2,450 23.07
8-18% 3,575 33.67
18-30% 2,207 20.79
30% and above 1,411 13.29
2.1.3 Coastal Area
Sarangani as, an island municipality, has a vast coastline covering a total of 94.0
kilometers. The length of coastal line of Balut Island is 57.0 kilometers while
Sarangani Island has 37 kilometers.
Profile of Sarangani Municipality 2-1

2.1.4 Climate
The municipality belonged to type IV Climate with no pronounced dry or wet

season. The rainfall is more or less evenly distributed throughout the year. The
average annual rainfall recorded in the municipality was 123 mm. The months
of December to May and June usually had fair weather condition with prevailing
wind slightly variable and generally coming from northeast to southwest
direction. On the other hand, southwest monsoon wind or known as Habagat
prevails from July to October of the year. The municipality has rarely
experienced typhoons being located outside the typhoon belt. However, the east
to west driven wind locally known as Amihan has been found to be dangerous
for seafarers because during this period sea condition is at its worse. The average
temperature in the municipality ranges from 27 degrees to 29 degrees centigrade.
Warm temperature is experienced from February to September while the coldest
months start from November up to January.
2.1.5 Water Resources:
There are seven known creeks in the municipality. These creeks are
complemented by springs served as tributaries and natural floodway during
heavy rain. Three (3) of the creeks, namely: Torang, Tumanao, and Sukor are
found in Sarangani Island while six (6) namely: Sabang, Tambulos, Sasapuan,
Malambako, Mabila and Tinina are found in Balut Island.
2.1.6 Land and Mineral Resources:
Sulfur-filled crater of Mt. Balut offers a clue to the origin and elements that
composed the Island of Balut. Igneous rocks like basalt, granite, even adobe
stone litter the surrounding landscape of balut land areas are among the mineral
resources abound in the island. San Stone and quartz are abundant in Sarangani
Island. Adobe stones can be extracted in Lipol. Pebbles and red clay can be
mined in Obas-Manabay area of Patuco. Eighty percent of sulfur elements can be
found at the extinct crater of Mount Balut as tested by TEXCAN.
2.2 Demographic Profile
Based on the 2000 Census, Sarangani has a population of 18,382 with an average
annual growth rate of 2.28 percent from 1995 to 2000. The municipality’s
population density is placed at 146 persons per square kilometer of land area .
The population of Sarangani is generally young with 45.21 percent aged 0-14
years. Economically productive population aged 15-64 years constitutes about
52.97 percent of the municipality’s total population. Total dependency ratio
stands at 88 percent for every 100 persons of productive age. The average
household population size is 5. Indigenous people living in the municipality are
B’la-ans and Sangils, which comprised about 60 percent of the total population.

Population, Land Area and Population Density, CY 2000
Population Land Area Population Density
Barangay (2000) (Sq. Kilometer) (Person/sq. Km.)
Batuganding 1,783 11.26 158
Camahual 1,911 13.06 136
Camalig 870 9.02 96
Gomtaco 989 11.37 87
Konel 1,602 6.90 232
Lipol 1,532 7.96 192
Mabila 2,869 5.52 520
Patuco 2,498 9.03 277
Laker 1,372 9.03 152
Tinina 1,698 5.73 296
Tagen 1,201 12.21 84
Tucal 1.034 5.07 204
Total 18,832 106.18 173
2.3 Infrastructure Profile
The road network connecting the barangays in the two islands of the
municipality has not been establish yet and the fastest means of transportation,
aside from riding a horse or walking in going from one barangay to the other, is
by means of a boat. The municipality has two semi-permanent ports located at
Mabila serving the Balut island and Patuco for the Sarangani Island. These ports
have equally important functions that support the economic activities of the
municipality.
The power requirement of the municipality is being supplied by a generator set

operated by the National Power Corporation (NPC) and distributed by Davao
del Sur Electric Cooperative (DASURECO). As of 2000, however, only 2
barangays, namely: Mabila and Batuganding in Balut Island were energized,
with 355 household connections. The means of communication is through a
single side band radio owned by the municipal government and a national
government telegraph station.
In terms of social infrastructure, the municipality has 8 elementary schools and 2

high schools. Facilities for the elementary schools include 102 classrooms, and 1
multi-purpose building while secondary schools has 23 classrooms and 12
buildings. Likewise, the municipality has 1 Rural Health Unit (RHU), 2
Barangay Health Stations (BHS) and a 10 bed capacity primary hospital serving
the entire population. Around 38 percent of the total population has access to
Level II and Level III water system while the remaining 62 percent rely on spring
water sources, shallow wells and open dug wells. As of 2000, the municipality
has the following water system facilities: Level I - 25 units, Level II - 2 units, and
Level III - 2 connections.

2.4 Economic Sector Profile
The municipality is primarily an agriculture area and has a rich fishing grounds.
Its prime agricultural product is coconut wherein 96 percent of agricultural land
is planted to it and only 1.21 percent is planted to corn. Because of mono
cropping, 99 percent of its population gets their staple food from General Santos
City and other neighboring areas. Copra as the main product of the municipality
is sold to General Santos City.
Livestock production is minimal and not sufficient for its population. The
farmers are raising horses, carabaos, cattles for draft purposes while goats,
swines and poultry are raised for human consumption. Aside from livestock and
poultry, people in the area also rely on fishing as their main and/or alternate
source of livelihood. However, majority of the catch are sold to General Santos
City because of the lack of storage facilities. Fishpond operations are also present
in some areas as a form of livelihood.
2.5 Social Sector Profile
In year 1999-2000, the total enrolment in public schools for elementary and
secondary levels reached 3,328 and 1,328, respectively. The classroom-pupil ratio
in public elementary schools is recorded at 1:67 while the classroom-student ratio
in public secondary schools is placed at 1:74. Participation rates in both levels
were pegged at 80.82 percent for the elementary level and 42 percent for
secondary level. Basic literacy rate of the municipality is placed at 86.75 percent.
Health situation in the municipality is critical. In 1999, the recorded infant

mortality was 12.28 percent per 1,000 livebirths while maternal mortality rate is
reported at 4.84 deaths per 1,000 livebirths. The crude birth rate, on the other
hand, stands a 23 livebirths per 1,000 people, while crude death rate was placed
at 38 deaths for every 1,000 population. As shown in the table below, the
leading causes of morbidity and mortality in the area are mostly preventable
diseases:
Malnutrition is also prevalent among children in the municipality. About 3

percent of pre-school children suffered from severe to moderate malnutrition
while 16 percent are mildly malnourished. Among school children, 14 percent
were severely and moderately malnourished.
Ten Leading Causes of Morbidity and Mortality
Leading Causes of Morbidity Leading Causes of Mortality

Acute Respiratory Infection Cardio-Vascular Diseases
Diarrhea Unknown
Pneumonia Accidents
Hypertension Pneumonia
Bronchitis Cancer
Chicken Pox Hypertension
PTB Kidney Diseases

Chapter 3
MARKET ASPECT
This chapter presents and examines the demand for the project’s proposed outputs, the
possible levels that they ought to be produced, if warranted, the prices at which they
may be sold or dispensed to the beneficiaries, and, in general, the distinct characteristics
of the project’s identified markets that could represent needs which the project could
address.
3.1 General Market Description
The market identified for the project’s three components is broken down into
two general groups: (a) the local residents of Sarangani; and (b) the tuna fishing
industry that thrives in the rich fishing grounds of the Celebes Sea just off the
country’s border with the Republic of Indonesia.
To the residents of Sarangani the project represents the realization of a long-felt

need for a port facility that presents less risk to navigation and a hub that would
stir the island-municipality’s sleepy economy to action. To Southern Mindanao’s
thriving tuna industry, the project represents an opportunity to stretch each
fishing venture’s margin of profitability by providing a forward base for
provisioning, or emergency re-provisioning, and shelter.
The market presents both distinct and complementary niches for the project’s
three components. These niches are more particularly described below.
3.1.1 The Multi-Purpose Port Component
The project’s multi-purpose port component aims to serve the broadest spectrum
of the identified market. It will be the basic seaport that will service Sarangani’s
commuting public, the inter-island commuter service being the main means of
transportation to and from the island municipality. The same importance will be
played by the port on the municipality’s agriculture, which is dominated by
copra production. At present, the inter-island commuter service doubles as the
means out to the market for this industry.
The port will also serve the tuna fishing industry as a provisioning depot and as
a rest and recreation haven where fishing vessels may seek refuge in times of bad
weather. The establishment of the ice plant component would be a critical
incentive factor in drawing this sub-market to the port. Finally, in keeping with
the present pier’s utility, the port is expected to continue serving the local
residents in terms of providing a landing facility for their bancas and pump-
boats, which constitute the main means of transportation within the Sarangani
island group.
Marketing Aspect 3-1

3.1.2 The Ice Plant Component
The ice plant component primarily aims to cater to the block ice requirements of
tuna fishing ventures, while mostly based at General Santos City, invariably
traverse the island municipality’s waters enroute to the common fishing ground
in the Celebes Sea. This sector represents a projected 99% of the ice plant’s
market. The establishment of the ice plant at Sarangani will bring significantly
closer to this sub-market its source for the all-essential ice, the main medium for
the preservation of the fish harvest.
The development of the multi-purpose port component is itself vital to the

viability of the ice plant. The present piers at Poblacion Mabila in Sarangani
present a lot of navigational risks for the fishing vessels. Secondarily because of
the meager projected demand, the ice plant facility will also serve the domestic
ice requirements of Sarangani’s local community.
3.1.3 The Warehouse Component
Designed to mainly serve the local economy’s copra industry, the municipality’s
principal agricultural produce, the project’s warehouse component will also
provide transient shelter for the regular bulk procurements of the town’s
business and household communities.
3.2 Demand for the Project
3.2.1 Availability of Data and Methods Used in Data-Gathering
The study examines the project’s identified market according to the specific need
that each project component aims to address. To achieve this, a separate demand
analysis is undertaken for each component.
A check with relevant local government offices revealed that virtually no

database exists concerning the municipality’s trade and commerce and
agriculture and fishery sectors. Moreover, formal warehousing and ice
manufacturing businesses are nonexistent in the municipality. Records on port
operations, on the other hand, are limited to the monthly collections generated
from the facility. For the study to establish some basis for estimating demand for
the project, it was therefore decided that primary surveys, both formal and
informal, would be resorted to.
Three sets of formal survey questionnaires were formulated to generate data for
the study. The first set targeted fishermen respondents and was designed to
generate data and information on the tuna fishing industry that mainly operated
out of General Santos City. The survey, however, was able to reach a few
respondents based in the Municipalities of Sarangani, Davao del Sur, and Glan,
Province of Sarangani.

The second set of questionnaires was developed for fish dealer/vendor
respondents in Sarangani, and was intended to generate information on the local
fishing industry, particularly on the handling and marketing of the fish catch.
The third set of questionnaires was addressed to ice plant operator respondents
and was aimed at generating information on the business.
These questionnaires were administered from March 10 to May 24, 2002. Along
with this formal data-gathering activity, informal interviews and consultations
were conducted in Sarangani and General Santos City to fill in data gaps that the
formal survey questionnaires could not fill.
3.2.2 Results of Data-Gathering Activities
The formal survey among fishermen generated the largest number of

respondents at 31. Out of these, 25 represented those based in General Santos
City; 4 represented those based in the Municipality of Sarangani; and 2
represented those based in Glan.
The survey for fish dealer/vendor respondents was able to cover nine (9)
respondents, all of whom were Sarangani-based. For the ice plant operator-
respondents, on the other hand, three (3) out of the total 18 plant operators in
General Santos City were interviewed in the survey.
The relevant data, information and findings generated by the foregoing surveys,
interviews and consultations will be cited and discussed in the following
presentation of the demand analyses for the project’s three components.
3.2.3 Analyses of Demand and Demand Projections for the Project
3.2.3.1 Multi-Purpose Port Component
As already mentioned, the project’s port component looks to address the needs
of Sarangani’s commuting public, its agricultural produce which constitutes the
bulk cargo market for the commuter services that ply the Sarangani-General
Santos City sea route, and the tuna fishing industry whose players operate out of
the Municipality of Sarangani, General Santos City, and Glan in the Province of
Sarangani. Each of these sub-markets will be examined in the following sections.
(A) Passenger Traffic
Historical data on passenger traffic at the present Mabila Port were available
only up to as far back as 1997. These were generated from the manifest records of
the two cargo-passenger motor launches providing commuter service to the
municipality, and validated by the port docking fee collection records of the
Municipal Treasurer’s Office. These data indicated the following passenger
traffic levels from 1997 to 2001:

Number
Passenger Annual
Year of Ship
Traffic Growth
Calls
1997 292 14,976 -

1998 292 16,416 9.62%
1999 390 22,272 35.67%
2000 342 23,424 5.17%
2001 384 30,720 31.15%
It will be observed that moderate increases in passenger traffic were seen in 1998
and 2000, while substantial jumps were seen in 1999 and 2001, over their
respective previous year’s levels. These fluctuations are attributed to the
traveling pattern of Sarangani’s local residents, who almost exclusively compose
the passenger traffic that move in and out of the existing port. Over the years,
this pattern indicates that these residents tend to travel out of Sarangani more
when copra prices are high, and less when these prices are low. A recollection of
the overall levels of copra prices during the years concerned validates this
conclusion.
Given this irregular pattern of passenger traffic and limited availability of

historical data, the study decided that projections on passenger traffic based on
the given data alone would be unacceptable.
The study thus reexamined the passenger traffic data relative to the
municipality’s population count during the corresponding years. Since census
data on population were available only for the years 1990 and 2000, interpolation
was required to generate the levels for the concerned years, based on the censal
annual average growth rate of 2.62%. The results were then compared with the
passenger traffic data to determine their relativity, thus:
Passenger
Annual
Municipal Passenger Traffic-to-
Year Growth
Population Traffic Population
Rate
Ratio
1990 14,193
1997 17,010 2.62% 14,976 0.88
1998 17,456 2.62% 16,416 0.94
1999 17,913 2.62% 22,272 1.24
2000 18,382 2.62% 23,424 1.27
2001 18,864 2.62% 30,720 1.63
These results indicate a close relationship between the municipality’s passenger

traffic and population levels. It was thus decided that this conclusion supports
the use of passenger traffic-to-population ratio in projecting Sarangani’s
passenger traffic for the duration of the project’s life. For this purpose, the study

used only those years when the ratios were greater than 1. The mean of the
resulting ratios was then adopted as the factor that determines passenger traffic
based on the applicable projected population, thus:
Passenger
Municipal Passenger Traffic-to-
Year
Population Traffic Population
Ratio
1999 17,913 22,272 1.24

2000 18,382 23,424 1.27
2001 18,864 30,720 1.63
Mean 1.38
Applying this to the municipality’s projected population for the life of the
project, the following passenger traffic estimates were generated:
Passenger Projected
Projected
Year Traffic-to- Passenger
Population
Population Ratio Traffic
2003 19,865 1.38 27,414

2004 20,385 1.38 28,131
2005 20,920 1.38 28,870
2006 21,468 1.38 29,626
2007 22,030 1.38 30,401
2008 22,607 1.38 31,198
2009 23,199 1.38 32,015
2010 23,807 1.38 32,854
2011 24,431 1.38 33,715
2012 25,071 1.38 34,598
2013 25,728 1.38 35,505
2014 26,402 1.38 36,435
2015 27,094 1.38 37,390
2016 27,804 1.38 38,370
2017 28,532 1.38 39,374
2018 29,280 1.38 40,406
2019 30,047 1.38 41,465
2020 30,834 1.38 42,551
2021 31,642 1.38 43,666
2022 32,471 1.38 44,810
(B) Cargo Traffic
Coming from the same sources as the data for passenger traffic, data on cargoes
coming in and going out of Sarangani by commuter service were available only

up to 1997. In terms of metric tons, inward and outward cargoes were at the
following levels for the given years:
Number of Cargoes in Metric Tons

Year
Ship Calls Inward Outward Total Volume
1997 292 40.97 3,223.70 3,264.67

1998 292 45.78 3,233.80 3,279.58
1999 390 49.40 3,284.33 3,333.73
2000 342 54.82 3,250.64 3,305.46
2001 384 52.63 3,326.44 3,383.07
These data show relatively stable and progressively increasing levels, so they
were used as basis for projecting cargo traffic in Sarangani for the duration of the
project’s life. The rates of increase of inward and outward cargoes were
computed separately for the purpose, and then used to project each sector. This
revealed that for the period 1997-2002, inward cargoes grew at an average annual
rate of 8.48%, while outward cargoes increased at the rate of 0.8%. The projected
cargo traffic for Sarangani for the project’s life is thus:
Projected Cargoes in Metric Tons

Year Total
Inward Outward
Volume
2003 65.36 3,395.50 3,460.80

2004 70.90 3,422.66 3,493.56
2005 76.91 3,450.04 3,526.95
2006 83.44 3,477.64 3,561.08
2007 90.51 3,505.47 3,595.98
2008 98.19 3,533.51 3,631.70
2009 106.51 3,561.77 3,668.28
2010 115.55 3,590.27 3,705.82
2011 125.34 3,619.00 3,744.34
2012 135.97 3,647.95 3,783.92
2013 147.50 3,677.13 3,824.63
2014 160.01 3,706.55 3,866.56
2015 173.58 3,736.20 3,909.78
2016 188.30 3,766.09 3,954.39
2017 204.27 3,796.22 4,000.49
2018 221.59 3,826.59 4,048.18
2019 240.38 3,857.20 4,097.58
2020 260.77 3,888.06 4,148.83
2021 282.88 3,919.16 4,202.04
2022 306.87 3,950.51 4,257.38

(C) Ship Calls
The project eyes three categories of sea craft as potential users of the port. These
are the commuter service boats that ply the Sarangani-General Santos City route;
fishing vessels of the “Fuso” type that more substantially make up the fleets
engaged in the tuna fishing industry; and the motorized or non-motorized bancas
that the local residents use for both their municipal fishing activities and for
commuting within the island group.
The commuter service boats have an average length of 17.5 meters and breadth
of 4.5 meters, and average about 70 tons of gross capacity. They generally have a
draft depth of 1.2 meters and require a spacing factor of about 10% of the length
of their hulls.
As in the case of passenger and cargo traffic, historical data on commuter service
ship calls at Mabila Port were available only up to as far back as 1997. These
indicate that the port had identical 292 ship calls in the years 1997 and 1998, 390
in 1999, 342 in 2000, and 384 in 2001. The fluctuation in the number of commuter
ship calls from year to year follows the pattern established by the passenger and
cargo traffic in that it is determined by the general price levels of copra during
the given year. This is because volume-wise, copra is the single biggest cargo
item transported by the commuter service from Sarangani to General Santos
City, and demand for ship calls is determined by the amount of copra, waiting to
be shipped out of Sarangani.
An analysis of the passenger and cargo traffic patterns discussed above

concluded that it will not be necessary for the commuter service to increase its
ship calls at the Mabila Port during the life of the project. The projected cargo
traffic would be peaking on the last year of the project’s life at about 11 tons per
trip; while passenger traffic would peak on the same year at about 59 persons per
trip. These load levels could easily be served by the present commuter service.
The commonly known Fuso type fishing vessels are actually motorized, wooden-
hulled outriggers that are usually propelled by diesel truck engines with 140- to
170-horsepower rating. They have an average length of 15 meters, a breadth of
2.5 meters, and about 30 tons of gross capacity. Their outriggers span an average
of 11 meters from float to float (i.e., katig). They usually have a draft depth of 1
meter and require a spacing factor of about 12% of their outriggers’ wingspan.
These vessels are usually denominated as “fishing boats” or “F/Bs” in their
registration papers with the MARINA.
The study’s survey and separate informal interviews among fishermen

determined that an estimated 2,035 Fuso type fishing vessels were engaged in
Southern Mindanao’s tuna fishing industry in 2001. It was also determined that
an overwhelming majority of these vessels (i.e., 27 out of 31 respondents or 87%)
docked at Sarangani in the course of a fishing trip. The leading reasons given for
such dockings were (a) shelter from bad weather (24 of 27); (b) re-provisioning of
ice supply (20); (c) re-provisioning of food supply (17); and (d) re-provisioning of

fuel supply (16). Barangay Patuco was the main docking point, with 23 of the 27
docking respondents making the cove-encased barangay their regular stopover.
When asked in the same survey whether an improved Mabila Port represents a
strategic importance to their fishing operations, 30 of the 31 respondents replied
in the affirmative. The leading uses they saw for the port were (a) for
provision/re-provisioning of ice supply (30 of 30); (b) shelter from bad weather
(30); (c) for provisioning/re-provisioning of fuel supply (29); and (d) for
provisioning/re-provisioning of food supply (25). They also identified vessel
repair (17) and rest and recreation (16) as possible roles for the port.
Projecting the growth of the Fuso type fishing vessels was a problem for the
study. Historical data on this type of vessel are virtually inexistent because few
operators bother to register their units and the MARINA seems to neglect
enforcing the registration requirement.
While the rate of growth of the Fuso type vessel could not be determined with
certainty, calculations made by the study from observations intimated by
industry players indicate that this has been dramatic. From an estimated 267
units in 1992, this popular craft had ballooned to 2,035 in 2001, for an average
increase of 177 units annually. Since these figures are all estimates, the study did
not use them for projection purposes. It was decided instead that the commercial
fishery production levels of South Cotabato, which is almost entirely represented
by the tuna fishing industry based at General Santos City, be used as proxy
indicator. This assumes that there is direct correspondence between the growth
of the commercial fishery sector and that of the Fuso vessels.
The resulting analysis indicated that the Fuso sector may have grown at the
geometric rate of 27% from 1995 to 2000. Applied to project the growth of the
craft, it was determined that this vessel type would number around 3,007 in 2003
and 8,382 in 2022. Below is the projection for this type of fishing vessel during
the project’s life.
The motorized passenger outrigger bancas are usually driven by 16-horsepower

in-board, gasoline-fueled engines. They have an average length of 8 meters and
breadth of 0.80 meter, and average about 8 gross tons. They usually have a draft
depth of 0.45 meter. They do not require a spacing factor because of their
relative lightness, which does not expose them as a risk to similar vessels.
Smaller motorized as well as non-motorized bancas are used as regular means of

transportation within the island group. They regularly use the present piers at
Poblacion Mabila for docking and parking purposes, and are expected to
continue to avail of these amenities once the project is implemented.

Projected Target Cients
Number of
Year Sarangani- GSC-
Fishing Total
Based Based
Vessels
2003 3,007 3 2,914 2,917

2004 3,601 4 3,489 3,493
2005 4,312 5 4,178 4,183
2006 5,164 6 5,003 5,009
2007 6,183 7 5,991 5,998
2008 6,307 8 6,110 6,118
2009 6,432 10 6,229 6,239
2010 6,561 12 6,352 6,364
2011 6,693 14 6,478 6,492
2012 6,827 17 6,605 6,622
2013 6,963 20 6,734 6,754
2014 7,102 24 6,865 6,889
2015 7,244 29 6,998 7,027
2016 7,389 35 7,132 7,167
2017 7,539 42 7,271 7,313
2018 7,688 50 7,407 7,457
2019 7,844 60 7,549 7,609
2020 7,998 71 7,687 7,758
2021 8,158 86 7,827 7,913
2022 8,382 103 8,028 8,131
Assumption: 97% potential patronage based on primary
survey result.
(D) Past Productivity & Capacity
Berth Gross Productivity of Total Cargo
The following cargo productivity levels were estimated for the Port of Mabila for
the period 1997-2001:
Cargo Service
Productivity
Year Volume Time
(MT/Hr)
(MT) (Hrs)
1997 3,265 1,008 3.24

1998 3,280 1,008 3.25
1999 3,334 1,344 2.48
2000 3,305 826 4.00
2001 3,383 1,344 2.52

Berth Occupancy & Capacity
From past record, the average lengths of the commuter service plying the
Sarangani-General Santos City Route have been 16.25 meters in 1997 and 16.75
meters in 2001. They required a spacing factor of 10% of vessel length. Based on
the approximate berth length of 18 meters, the Port of Mabila had a capacity of
only one berth from 1997 to 2001, as follows:
Average Length
Number of
Year Length of per
Berths
Vessel Berth
1997 16.25 18 1
1998 16.30 18 1
1999 16.10 17 1
2000 16.75 18 1
2001 16.75 18 1
During the same period, the maximum berth time recorded in the port was 2,880
hours sometime in 1999. This corresponded to a berth occupancy rate of 46.67%.
Following is Mabila Port’s highest berth occupancy records for the years 1997 to
2001:
Service Maximum Berth

Year Time Berth Time Occupancy
(Hrs) (Hrs) Rate
1997 1,008 2,304 43.75%

1998 1,008 2,160 46.67%
1999 1,344 2,880 46.67%
2000 826 1,770 46.67%
2001 1,344 2,688 50.00%
Port Capacity
The existing Port of Mabila has 2 berth spaces with a total length of 17 meters,
but sufficient enough to handle 2 vessels at a time, hence, a longer berth time for
another vessel is provided, thus:

Capacity per Berth Total Capacity
Allotted Maximum Allotted
Year Number Total
Berth Time Time Capacity
of Berths Capacity
Occupancy (Hrs) (Hrs)
1997 0.4375 8,760 3,832.50 12,417.30 1 12,417.30

1998 0.4667 8,760 3,832.50 12,455.63 1 12,455.63
1999 0.4667 8,760 3,832.50 9,504.60 1 9,504.60
2000 0.4667 8,760 3,832.50 15,330.00 1 15,330.00
2001 0.5000 8,760 4,380.00 11,037.60 1 11,037.60
3.2.3.2 Ice Plant Component
Based on results of the survey among fishermen respondents, the typical Fuso
type fishing vessel stocks an average of 80 100-kilo (or 8 tons) ice blocks for each
fishing trip that lasts all of 21 days. These fishing vessels average one fishing trip
per month or 12 fishing trips in a year. As discussed above, there were an
estimated 2,035 of these fishing vessels in 2001 that were based in both General
Santos City and Sarangani. This meant that the sub-market demanded a total of
162,800 pieces of the 100-kilo ice blocks per month, or 1,953,600 pieces for the
year.
When the Municipality of Sarangani drafted its Municipal Comprehensive

Development Plan (MCDP) in 1995, its leadership determined that the local
economy, which mainly relied on its copra produce and fishing output, could be
pump-primed with the infusion of a substantial infrastructure project, preferably
one that includes an income-generating or livelihood-enhancing component.
This conclusion was affirmed when the local government went into the
formulation and eventually adopted its Local Poverty Alleviation Plan (LPAP) in
2000. The enormous demand for ice blocks by the tuna fishing industry, coupled
by the strategic location of Sarangani relative to General Santos City, presented
Sarangani’s local government with the ideal economic enterprise option that
could complement the long-envisioned improvement of its port structure.
3.2.3.3 Warehouse Component
Demand for the project’s warehouse component was estimated based on the
present port’s cargo throughput. The above-described cargo turnover, for
instance, translates into a five-year annual average of 7,150 cubic meters of
demand for storage space between 1997 and 2001. For the rest of the project’s
life, the following cargo turnover projections are estimated:

Projected Volume of Cargoes
(Cubic Meters) Total Number
of Sacks
Year Total
Inward Outward @ 0.108 cubic
Unloaded at
Cargoes Cargoes meter/sack
Port
2003 141.18 7,334.28 7,475.46 69,217.22

2004 153.14 7,342.95 7,496.09 69,408.24
2005 166.13 7,452.07 7,618.20 70,538.89
2006 180.23 7,511.70 7,691.93 71,221.57
2007 195.50 7,571.82 7,767.32 71,919.63
2008 212.09 7,632.38 7,844.47 72,633.98
2009 230.06 7,693.42 7,923.48 73,365.56
2010 249.59 7,754.98 8,004.57 74,116.39
2011 270.73 7,817.04 8,087.77 74,886.76
2012 345.62 7,879.57 8,225.19 76,159.17
2013 318.60 7,942.60 8,261.20 76,492.59
2014 345.62 8,006.15 8,351.77 77,331.20
2015 374.93 8,070.19 8,445.12 78,195.56
2016 406.73 8,134.75 8,541.48 79,087.78
2017 441.22 8,199.84 8,641.06 80,009.81
2018 478.63 8,265.43 8,744.06 80,963.52
2019 519.22 8,331.55 8,850.77 81,951.57
2020 563.26 8,398.21 8,961.47 82,976.57
2021 611.02 8,465.39 9,076.41 84,040.83
2022 662.83 8,533.10 9,195.93 85,147.50
For purposes of simplification, the standard 50-kilogram copra sack is adopted as

an alternative unit of measurement, and is assumed as the project’s fee-
chargeable warehouse commodity. Copra is the municipality’s main agricultural
output, which it produces at the rate of about 24,500 metric tons annually.
The foregoing figures, however, do not totally reflect the municipality’s demand
for warehouse space. Interviews with local officials, copra farmers and
businessmen involved in the copra trade, as well as actual observations made by
the study team indicate that the bigger bulk of the town’s copra output is not
shipped out through the Mabila Port. Some copra farmers use large outrigger
pump-boats and similar vessels to ship their copra produce directly to General
Santos City. This practice comes naturally for an island municipality, 11 of a
total 12 of whose barangays are coastal.
Aside from the straight-out transport of their copra, other farmers or

communities enjoy the privilege of special pick-ups for their copra cargo
courtesy of the commuter service during the latter’s outward trip to General
Santos City. This practice makes the normal 8-hour trip a 12-hour agony for
paying passengers in many, many instances. These copra volumes that are

shipped out directly are not accounted for in terms of their demand for
warehouse space at Mabila.
3.3 Demand and Supply Gaps
3.3.1 Passenger and Cargo Traffic Pressure on the Existing Mabila Port
Pressure on a port’s capacity to handle client demand mainly tests (a) its ability
to accommodate docking boats in its berthing space/s, and (b) its ability to
service passenger and cargo movement so that a docking boat’s turnaround time
is constantly held to a minimum. Such pressure, however, is exerted on a port
depending on its attractiveness or importance in terms of drawing ship calls
from client vessels.
For Sarangani without the project, the attractiveness of its port essentially lies in
its passenger and cargo markets’ demand for the commuter service to General
Santos City. But this is not a significant market, altogether averaging no more
than 12 metric tons per ship call during the life of the project, when in fact the
vessels servicing the route could take in an estimated maximum load of up to 40
metric tons apiece.
Clearly then, as far as the commuter service to Sarangani is concerned, it is

unlikely that the number of ship calls at the present port is going to increase over
the life the project, except for seasonal fluctuations attributable to travel and
cargo patterns that are dictated by copra prices, as already discussed above. For
this reason, no capacity improvement or development would be warranted for
the Mabila Port during the life of the project if this were to be based on passenger
and cargo pressure alone.
Presented below is the projected combined passenger and cargo load per ship
call during the project’s life. The outward loads for both passenger and cargo
were used because the more voluminous levels for both factors have been
observed in this traffic direction.

Average Outward Load
Projected Traffic Levels
per Ship Call (MT)
Outward
Year Outward
Outward Ship Passengers
Cargoes Passengers* Cargoes Total
Passengers Calls per Ship
(MT)
Call
2003 3,395.50 5,536 384 14 1.79 8.84 10.63

2004 3,422.66 13,747 384 36 1.84 8.91 10.75
2005 3,450.04 14,106 384 37 1.88 8.98 10.86
2006 3,477.64 14,477 384 38 1.93 9.06 10.99
2007 3,505.47 14,855 384 39 1.99 9.13 11.12
2008 3,533.51 15,245 384 40 2.04 9.20 11.24
2009 3,561.77 15,644 384 41 2.09 9.28 11.37
2010 3,590.27 16,055 384 42 2.15 9.35 11.50
2011 3,619.00 16,475 384 43 2.20 9.42 11.62
2012 3,647.95 16,907 384 44 2.26 9.50 11.76
2013 3,677.13 17,349 384 45 2.32 9.58 11.90
2014 3,706.55 17,804 384 46 2.38 9.65 12.03
2015 3,736.20 18,271 384 48 2.44 9.73 12.17
2016 3,766.09 18,749 384 49 2.50 9.81 12.31
2017 3,796.22 19,201 384 50 2.57 9.89 12.46
2018 3,826.59 19,745 384 51 2.64 9.97 12.61
2019 3,857.20 20,262 384 53 2.71 10.04 12.75
2020 3,888.06 20,793 384 54 2.78 10.13 12.91
2021 3,919.16 21,337 384 56 2.85 10.21 13.06
2022 3,950.51 21,896 384 57 2.93 10.29 13.22
* Assumed at 50 kgs. average per passenger
Having determined that there will be no need for any increase in the number of
ship calls for the commuter service over the project’s life, the study assumes the
same constancy in the number of berths that the Mabila Port must be able to
provide to the commuter service for the next 20 years. Accordingly, since the
present piers at Mabila have been able to provide more than the required
number of berths, there will be no need to increase these over the life of the
project, as follows:
Ship Calls Capacity Number of Berths

Years Per Year Per
Per Day Required Provided
Berth
2001 384 1.33 6 0.22 1

2003 -2022 384 1.33 6 0.22 1

3.3.2 Mabila Port’s Attractiveness to Fishing Vessels
The 2,035 Fuso vessels engaged in the tuna fishing industry represent a huge
clientele just waiting to be served by a port facility that is able to satisfy their
need for certain amenities. Out of the 31 respondents surveyed by the study, 27
said that they regularly docked at certain places in Sarangani in the course of
each fishing trip. These 27 respondents represented operators of 92% of the 242
vessels covered by the survey. Assuming that this proportion is representative
of the whole market, then approximately 1,872 of these vessels dock in Sarangani
each month.
Twenty-three or 85% of those which docked at Sarangani chose Barangay Patuco

as their regular landing point. This barangay’s coastline is located in a deep
indention in the island of Sarangani, thus providing substantial protection to the
vessels. These vessels generally shun the port at Mabila because its waters do
not have favorable draft depth and navigating toward it is therefore a tricky
exercise, especially during low tide.
Curiously, when asked about the usual reason or purpose for their docking at
Sarangani, 20 of the 27 respondents said that it was for re-provisioning of their
ice supply. While nowhere in Sarangani is ice produced, informal interviews
revealed that it has become common practice for these vessels to trade or sell
their excess ice supply among themselves because General Santos City is a long
way back for those vessels short in their ice supply.
Very significantly, 30 or 97% of the aforesaid 31 total respondents indicated their

willingness to make Mabila Port their regular docking station if the same is
developed or improved to make navigation there safer. These respondents were
asked what amenities or functions they preferred this port to play, and the
leading responses were:
(a) shelter from bad weather (30 respondents);

(b) provisioning/re-provisioning station for their ice supply (30);
(c) provisioning/re-provisioning station for their fuel supply (29);
(d) provisioning/re-provisioning station for their food supply (25);
(e) shelter for vessel repairs (17);
(f) haven for rest and recreation (16).
If this market were to be attracted to Mabila Port, parking slots will have to be
provided at the rate of 66 vessels per day at present levels.1 In such case, Mabila
Port must be expanded or improved to accommodate the influx, granting that
the same is also able to provide any or all of the above amenities.
Based on the growth projections for the Fuso type vessel, this sub-market alone
would require about 780 thousand metric tons of block ice annually by 2022. The
rest of the projection results are presented below.
1
That is, 97% of 2,035 is 1,974 or an average of 66 dockings per day.

Projected
Ice
Number of Target
Year Requirement
Fishing Cients
(MT)
Vessels
2003 3,007 2,917 280,012

2004 3,601 3,493 335,325
2005 4,312 4,183 401,533
2006 5,164 5,009 480,872
2007 6,183 5,998 575,761
2008 6,307 6,118 587,308
2009 6,432 6,239 598,948
2010 6,561 6,364 610,960
2011 6,693 6,492 623,252
2012 6,827 6,622 635,730
2013 6,963 6,754 648,395
2014 7,102 6,889 661,338
2015 7,244 7,027 674,561
2016 7,389 7,167 688,064
2017 7,539 7,313 702,032
2018 7,688 7,457 715,907
2019 7,844 7,609 730,433
2020 7,998 7,758 744,774
2021 8,158 7,913 759,673
2022 8,382 8,131 780,532
Assumptions:
a) 97% potential patronage based on primary survey
result.
b) 96 metric tons average volume of ice required per
fishing vessel annually based on primary survey
result.
c) 0.537 kilo per capita ice requirement for domestic
uses annually.
3.3.3 Block Ice Supply Deficiency
All Fuso type vessels engaged in the tuna fishing industry that operate out of
Sarangani and General Santos City procure their ice supply in the latter because
no alternative source caters to this need. This has caused losses among
fishermen in terms of ice shrinkage because of the long journey. The distance
from General Santos City to the fishing ground ranges from 400 to 600 nautical
miles. On the average, travel time to this fishing ground is 168 hours or 7 days.
According to the fishermen respondents of the study, approximately 10% of their
ice supply is lost during this trip. This is why, as already discussed, the primary
strategic role that these fishermen see for Sarangani, aside from serving as their
shelter in times of bad weather, is that it could bring their ice source nearer to
their fishing ground.

Estimates of current demand and supply of block ice in General Santos City
indicate that there is abundant surplus in terms of annual aggregate levels (see
below). But interviews with the study’s fishermen respondents revealed that
many of the vessels have to queue for about 2-3 days on the average before they
can secure their ice requirements. At least two reasons are given to explain this:
(a) Most of the ice plants have a 48-hour freezing cycle for the 100-kilo block
ice that the tuna fishing industry requires; and
(b) Majority of the ice plant operators are themselves the fishing industry
leaders, and their own vessels, which are considerably larger than the Fuso
type, get priority in the ice queue.
Supply
Demand for Block Ice
Total of Block Surplus
Year
Fishing Domestic Demand Ice (Deficit)
Vessels (Sarangani) (GSC)
1992 2,563 8 2,571 161,280 158,709

1993 3,197 8 3,205 161,280 158,075
1994 3,984 8 3,992 161,280 157,288
1995 4,963 8 4,972 161,280 156,308
1996 6,182 9 6,191 290,304 284,113
1997 7,709 9 7,718 290,304 282,586
1998 9,610 9 9,619 290,304 280,685
1999 11,971 9 11,981 338,688 326,707
2000 14,918 10 14,928 338,688 323,760
2001 18,586 10 18,596 338,688 320,092
2002 19,536 10 19,546 370,944 351,398
Assumptions:
a) 10 units of ice plants with an average capacity of 40 tons are
available in General Santos City from 1992 to 1995; 18 units
from1996 to 1998; 21 units from 1999 to 2001; and 23 units in
2002.
b) 0.537 kilogram per capita ice requirement for domestic uses
annually based on 2002 actual consumption.
Considering the size of the industry, the economic implication of the 2-3-day
queuing period could be colossal. This will be quantified and discussed in the
Economic Analysis in Chapter 6.
The prolific growth of the Fuso vessel market, however, indicates that a
deficiency will be experienced in the block ice supply as far as the General Santos
City sources are concerned, starting in the year 2005 and all through the life of
the project. This will be the scenario even assuming that one 60-ton ice plant will
be constructed in the city every 5 years, as presented below.

Projected Demand for Ice (MT) Projected Projected
Year Sarangani Fishing Supply Surplus
Total
(Domestic) Vessels (GSC) (Deficit)
2003 11 280,012 280,023 370,944 90,921

2004 11 335,325 335,336 370,944 35,608
2005 11 401,533 401,545 370,944 (30,601)
2006 12 480,872 480,883 370,944 (109,939)
2007 12 575,761 575,773 370,944 (204,829)
2008 12 587,308 587,320 387,072 (200,248)
2009 12 598,948 598,960 387,072 (211,888)
2010 13 610,960 610,973 387,072 (223,901)
2011 13 623,252 623,265 387,072 (236,193)
2012 13 635,730 635,744 387,072 (248,672)
2013 14 648,395 648,408 403,200 (245,208)
2014 14 661,338 661,352 403,200 (258,152)
2015 15 674,561 674,576 403,200 (271,376)
2016 15 688,064 688,078 403,200 (284,878)
2017 15 702,032 702,047 403,200 (298,847)
2018 16 715,907 715,922 419,328 (296,594)
2019 16 730,433 730,449 419,328 (311,121)
2020 17 744,774 744,790 419,328 (325,462)
2021 17 759,673 759,690 419,328 (340,362)
2022 17 780,532 780,549 419,328 (361,221)
Assumptions:
a) A total of 23 units 60-ton capacity ice plants will be in place in
General Santos City in 2003.
b) An average of one 60-ton capacity ice plant will be constructed in
General Santos City every 5 years.
In view of the fact that block ice is a market-tradable commodity, and its
profitability as a business prospect is anticipated to be high, the establishment of
the project’s ice plant component should be left to the initiative of the private
sector. Moreover, its tendency to compete with similar businesses in General
Santos City, which are mostly run by private capital, calls on government to
provide for the most level playing field possible, primarily by avoiding direct
involvement in such venture.
3.3.4 Mabila Port’s Warehouse Capacity Requirement
The present piers at Mabila do not offer its clients any warehouse facility. This
service is only provided de facto by copra traders as a necessary function of the
business in which they are engaged. The study had a survey made to account for
all such facilities in Mabila, which were usually just extensions of the traders’
own houses, where they usually conduct their copra-buying businesses. This
revealed the following number and estimated capacities, including the years
when these capacities were established:

Traders’ Warehouses
Cumulative
Year Cumulative
Capacity
Number
(cu.m.)
1993 1 144
1994 1 144
1995 1 144
1996 1 144
1997 4 524
1998 4 524
1999 4 524
2000 4 524
2001 4 524
2002 5 810
Against these warehouse capacities, the study examined the past and present
demand satisfaction levels based on the estimated cargo traffic during the given
years. Since the cargo traffic data represent annual aggregates for the indicated
years, it was assumed that warehouse inventories are cleared out each time the
commuter service makes a ship call.
Past & Present Capacity Demand-Supply for Warehouse

Mabila, Municipality of Sarangani, in square meters
Demand for
Number
Warehouse Total Cargo Capacity Capacity
Year of Ship
Capacity Volume Between Ship Surplus
Calls
Calls
1998 524 7,052 292 24 500

1999 524 7,084 390 18 506
2000 524 7,201 342 21 503
2001 524 7,140 384 19 505
From the foregoing numbers the study determined that warehouses at Mabila
had always exceeded the warehouse space demanded at any given time in the
past, at an average surplus of 504 square meters.
The study then examined the availability of this capacity for the duration of the
project’s life, applying the projected cargo volume and ship calls for the period.
The capacity was projected this time using the actual capacity observed for 2002,
which was 810 square meters.

Demand for
Number
Warehouse Total Cargo Capacity Capacity
Year of Ship
Capacity Volume Between Ship Surplus
Calls
Calls
2003 810 7,475 384 19 791

2004 810 7,496 384 20 790
2005 810 7,618 384 20 790
2006 810 7,692 384 20 790
2007 810 7,767 384 20 790
2008 810 7,844 384 20 790
2009 810 7,923 384 21 789
2010 810 8,005 384 21 789
2011 810 8,088 384 21 789
2012 810 8,225 384 21 789
2013 810 8,261 384 22 788
2014 810 8,352 384 22 788
2015 810 8,445 384 22 788
2016 810 8,541 384 22 788
2017 810 8,641 384 23 787
2018 810 8,744 384 23 787
2019 810 8,851 384 23 787
2020 810 8,961 384 23 787
2021 810 9,076 384 24 786
2022 810 9,196 384 24 786
The same huge margin of surplusage was seen for warehouse capacity during
the project’s life. This would normally indicate the local community’s ability to
provide for their warehousing needs for the duration of the project’s life.
However, local officials and businessmen insist that a substantial portion of the
municipality’s copra output that is directly out-shipped to General Santos City
from the barangays as discussed in section 3.2.3.3 above, would likely be shipped
through Mabila if its port were less tricky to navigate. Because of this
disincentive to commercial navigation, copra traders in Mabila cannot offer a
high buying price relative to that offered at General Santos City, since they have
to pay a high premium for the transport of their copra to the latter.
The strong representation made by local officials and businessmen about a

projected need for warehouse capacity once the Mabila Port is improved may
have to be heeded. The warehouse is a structure that is essential to any port
facility. The structure could be built as an incident of the port development
project.

3.3.5 Other Economic Opportunities
The tremendous clamor by the study’s fishermen respondents for a forward

source for fuel and food provisions in Sarangani presents the local community
with great possibilities for economic and livelihood activities. The average Fuso
vessel consumes about 4,000 liters of diesel fuel per fishing trip. The project’s
development of Mabila Port, on the other hand, would allow it to accommodate
150 parking vessels per month. If each of these 150 projected callers were to
replenish even just 10% of their fuel requirement at Sarangani during each trip,
diesel retailing would be a P13 million-per-annum industry in Sarangani at the
current selling price of P18 per liter!
Other areas with strong client demand based on the study’s surveys are
wholesale and retail of foodstuff, motor parts supply for vessel repairs, and
entertainment houses.
3.4 Marketing Plan
3.4.1 Project Outputs
The project’s development interventions include the development of the existing

port at Mabila so that navigation toward it is made safer and multiple parking
slots are made available for vessels engaged in the tuna fishing industry; and the
establishment of an ice plant within the port complex that will provide for the
block ice requirements of the same industry. The development of the port will be
realized through public appropriation, while the ice plant venture will be offered
for undertaking by private capital.
The project’s client-usable outputs may be classified under two general

categories, namely, (a) port services and (b) ice blocks. The following shall
constitute the port services that will be provided by the project:
(a) passenger terminal facility

(b) warehouse services
(c) berthing spaces for passenger and cargo ships
(d) berthing/parking spaces for fishing vessels
(e) offshore anchorage
(f) cargo handling services
(g) food stall spaces
(h) public toilets
The port is proposed to be operated by the Philippine Ports Authority and user
charges will be collected for most port services. Only non-profit commuter
pump-boats and bancas will be exempt from payment of docking and parking
charges.

The block ice outputs of the project shall cater primarily to the requirements of
the tuna fishing industry and secondarily to the minimal domestic requirements
of Sarangani’s local community.
3.4.2 Product Pricing & Projected Revenues
The project’s proposed revenues come under two classifications, public revenues
and private revenues. All revenues generated from port services accrue to the
government and constitute the project’s public revenues. Income generated by
the ice plant component represents the project’s private revenues and accrue
exclusively to the investor in the ice plant venture.
The ice plant component will produce two product lines, namely: (a) the 100-
kilogram ice block, which is mainly targeted at the fishing vessel market; and (b)
the crushed ice, which will serve the domestic needs of Sarangani’s local
community. These will be uniformly sold at P115 per block.
The public fees and charges will conform to current levels and regulations of the
Philippine Ports Authority, which is the proposed implementing agency and
operator of the multi-purpose port complex facility. The following fee structure
is proposed for the indicated port services:
Assumptions &
Revenue Source Tariff
Applicability
A. Berthing Fee
Passenger Vessels P150.00 – first 5 hours Commuter service plying the

P40.00/hour – succeeding Sarangani- GSC route
hours Average berthing duration –
1 day per ship call
Cargo Vessels P130.00 – first 5 hours All other sea craft that ferry
P35.00/hour – succeeding passengers and cargo for
hours profit
Average berthing duration –
2 days per ship call
B. Passenger Terminal P2.00 All outward passengers

Fee
C. Cargo Handling Fee P0.50/sack Use of port equipment

Assumptions &
Revenue Source Tariff
Applicability
D. Warehouse Storage P1.00/sack 70% of all cargo unloaded at

Fee the port is stored in the
warehouse for an average of 1
day
The 50-kilogram (0.108 cu m)
copra sack is the adopted
charging unit
E. Parking Fee P50.00/day All vessels engaged in

commercial fishing
Average parking duration –
2 days per vessel
F. Anchorage Fee All passenger and cargo

vessels dropping anchor in
Passenger Vessels P50.00/day the channel between Balut &
Cargo Vessels P40.00/day Sarangani Islands
Average anchorage duration
– 1 day per vessel
G. Land Rental - Ice P27,720.00/month Rental for the 792 sq. meter
Plant land occupied by the ice
plant, computed at P35.00 per
sq. meter per month
H. Stall Space Rental P2,000.00/stall/month Stall spaces measuring 3 m x

3 m each will be available for
lease to tenants offering food
& other consumer services
within the port complex
Projected occupancy rates –
40% during the first year of
operations; average of 80%
for the remainder of the
project life
I. Public Restrooms
Urinal P1.00/person/use
Toilet P2.00/person/use
Bath P5.00/person/use
The project’s projected revenues from each of these sources are presented in
Annex 3-A.

3.4.3 Marketing Strategy
3.4.3.1 The Need for a Two-Stage Marketing Strategy
With the project’s emergence as an intervention package that requires private

sector participation, its stakeholder acceptability will be tested long before it is
even implemented. Finding the capable private sector partner for the project’s
ice plant component will be its initial big test. If the project hurdles this and
progresses on to be implemented, it has to come up with a client-attraction
package so that it is able to reach its intended beneficiaries.
In view of this, the project’s marketing strategy should, at the minimum, provide
for distinct action plans for its pre- and post-implementation stages. The pre-
implementation strategy should focus on finding a private sector capitalist-
partner who will be willing to put up the project’s ice plant component. The
post-implementation strategy will center on efforts that will create the
environment that will allow the project to realize its benefit potentials as they
have been identified in this study.
3.4.3.2 A Suggested Pre-Implementation Marketing Strategy
As pointed out above, the singular objective of the project’s pre-implementation

efforts is to identify and attract a private sector investor for its ice plant
component. A couple of critical local issues needs to be initially addressed here,
namely, the municipality’s need for a steady supply of electricity and its lack of a
reliable source for potable water. These utilities happen to be an ice plant’s two
main inputs. Because of these concerns, the responsibility for the project’s pre-
implementation marketing appears to fall heavily on Sarangani’s local officials.
The suggested strategy, therefore, is for the local government to form a team of
local officials, preferably led at the very least by a member of the Sangguniang
Bayan. It will be tasked to sell the idea of investing in an ice plant project in
Sarangani. A list of candidates will be drawn up for this purpose. This list may
give priority to Sarangani locals who have a stake in the fishing industry. Failing
in this, the invitation may then be extended to General Santos City-based fishing
industry stakeholders, particularly those who are already into the ice plant
business, and so on.
The prospects may then be visited by the team of local officials and offered the
opportunity to be the LGU’s partner-investor. They will be shown a copy of this
feasibility study report and given a presentation that will highlight the project
component’s favorable feasibility indicators. Preferably, the local team will also
show them a certification from the PPA (or the final implementing agency), to
the effect that the other component of the project has been funded and indicating
the timetable for its implementation. This personal call approach may be
employed until a private investor is finally secured for the project.

3.4.3.3 A Suggested Post-Implementation Marketing Strategy
Once the project is implemented and all of its components are in place, the
project will be marketed generally through a word-of-mouth strategy. The
demand for the facilities and services that it offers gives good reason for a
minimalist approach to marketing the project. The following marketing tools are
nonetheless recommended:
(a) Flyers and leaflets – The formal surveys conducted by the study gave the
project a database starter especially on its fishing vessel market. This
market information (e.g., respondents’ names and addresses) could be used
for sending out personal notices, flyers, leaflets and handbills to the ice
pant component’s potential customers.
(b) High-frequency radio service – The project’s distance from the bulk of its
targeted market requires it to put up and maintain a dependable
communication system by which clients can reach the project. At present
Sarangani is beyond the reach of the conventional telephone. As the
project’s principal draw and provider of a critical industry commodity, the
ice plant component should invest in a suitable communication equipment
or service. Project site conditions indicate that at the minimum, this should
include a high-frequency radio equipment. Most Fuso type fishing vessels
are equipped with this type of equipment and through this, clients can
place and pre-validate orders without compromising their fishing venture
plans.
3.5 Summary of Findings & Conclusions
The foregoing analyses have given the study sufficient basis for the following
findings and conclusions:
3.5.1 Most vessels engaged in the tuna fishing industry, especially those operating out
of General Santos City and Glan in the Province of Sarangani, traverse the waters
of the Sarangani island group on their way to the common fishing grounds in the
Celebes Sea just off the country’s border with the Republic of Indonesia.
3.5.2 Passenger and cargo projections for the Mabila Port indicate that there is no need
for any capacity development for the port during the proposed life of the project.
However, the Fuso vessel sub-market, estimated to number about 2,035 in 2001
and constituting a very substantial portion of all vessels engaged in the tuna
fishing industry, has overwhelmingly indicated a willingness to patronize an
improved Mabila Port, provided that it is able to cater to their needs for block ice,
fuel, food supply, and entertainment. When combined with an ice plant
component, therefore, the improvement of the port exhibits bright promise of a
multiplier result for the local economy.

3.5.3 Any port improvement project at Mabila should address the vessel operators’
foremost concern for navigational safety. The development should also provide
for adequate berthing/parking facilities especially for the Fuso type fishing
vessel.
3.5.4 If the Mabila Port is developed, public revenues may be generated from the
following sources:
(a) Berthing fee

(b) Passenger terminal fee
(c) Cargo handling fee
(d) Warehouse storage fee
(e) Parking fee
(f) Anchorage fee
(g) Land rental (ice plant site)
(h) Stall space rental
(i) Public restrooms
3.5.5 If an ice plant is established in Mabila and produces 100-kilogram ice blocks, 97%
of the Fuso vessel sub-market is willing to regularly patronize it, even if it sells
ice at a 20% premium over the prevailing prices in General Santos City.
However, in view of the fact that block ice is a market-tradable commodity, and
its profit prospects are bright, the establishment of the project’s ice plant
component should be left to the initiative of the private sector. Moreover, its
tendency to compete with similar businesses in General Santos City, which are
mostly run by private capital, calls on government to provide for the most level
playing field possible, primarily by avoiding direct involvement is such venture.
3.5.6 Cargo volume projections indicate that there is a prevailing surplus in

warehouse capacity at Mabila which is likely to continue throughout the
proposed life of the project. This normally indicates the local community’s
ability to provide for their warehousing needs for the duration of the project’s
life. However, local officials and businessmen have pointed out that much of the
municipality’s copra output that is directly out-shipped to General Santos City
from the barangays would likely be shipped through Mabila if its port were less
tricky to navigate. Because of this disincentive to commercial navigation, copra
traders in Mabila cannot offer a high buying price relative to that offered at
General Santos City, since they have to pay a high premium for the transport of
their copra to the latter. It is emphasized that this rather huge portion of the
municipality’s copra output is unaccounted for in the study’s demand-supply
analysis for warehouse capacity.
The strong representation made by local officials and businessmen about a

projected need for warehouse capacity once the Mabila Port is improved may
have to be heeded. The warehouse is a structure that is essential to any port
facility. The structure could be built as an incident of the port development
project.

3.5.7 The attractiveness of a developed Mabila Port among fishing vessels would
depend on the amenities it can offer or fishermen’s needs it can satisfy. Foremost
among these needs are ice, fuel and food supply. On the other hand, the
project’s ice plant component may not, by itself, be attractive to the same fishing
vessels if the navigational hazards posed by an unimproved Mabila Port are not
eliminated or significantly reduced. Within this limited context, it may be
concluded that the exclusive pursuit of either the multi-purpose port component
alone or the ice plant component alone, would be an untenable proposition.
3.5.8 If the project is realized, the anticipated influx of fishing vessels will bring about
a parallel demand for other fishing industry incidentals, such as diesel fuel
supply, the wholesale and retail of foodstuff, motor parts for vessel repairs, and
entertainment houses that could provide relief to fishermen seeking shelter from
bad weather in the island. Some of these economic undertakings have potential
as multi-million-peso-per-annum industries for Sarangani. The others, at the
minimum, represent continuing livelihood opportunities.

Chapter 4
TECHNICAL ASPECT
4.1 The Project
The proposed infrastructure support to the economic program of Sarangani

project has two major components, namely: a) development of the port; and, b)
construction of ice plant.
The development of the port will include the extension and improvement of the
two existing causeways adjoining each other to accommodate more number and
bigger cargo and fishing vessels. It will require reclamation of approximately
3,590.5 square meters of the foreshore situated between the two existing
causeways. Pier and wharf structures will be constructed to separate the
berthing area for cargo/passenger and fishing vessels as shown in the site
development plan Figure 4.14
Other port facilities will also be put up to provide full port services to the public
such as a warehouse for storing the outgoing and incoming cargoes, stalls,
administration building, passenger terminal and toilets.
The second component is the construction of 40-ton capacity ice plant to provide
ice requirements of the fishermen, which at present buy their ice in Gen. Santos
City. The proposed ice plant can produce 320 blocks of ice daily with an average
weight of 100 kilograms per block.
4.2 Project’s Location Natural Physical Attributes
4.2.1 Geographic Location
The proposed project will be located in Mabila, Balut Island, Sarangani, Davao
del Sur, approximately 4 to 5 hours by boat from General Santos City or an
equivalent distance of 49.84 nautical miles. (Figure 4.1)
4.2.2 Meteorological Condition
4.2.2.1 Climate/Rainfall
The municipality of Sarangani belonged to Type IV climate wherein there is no

pronounced dry or wet season. Rainfall is evenly distributed throughout the
year. The weather is relatively fair from December to June and while good
weather prevails in the months of July to October. The average recorded annual
rainfall was 123 mm. Figure 4.2 shows the climate map of the Philippines.
Technical Aspect 4-1

4.2.2.2 Wind
The winds in South Cotabato-Sarangani-General Santos and Sarangani Bay areas

recorded by PAGASA generally blows from the south with a mean velocity of 2
meters per second occurring from the April to November. Wind direction that
blows from the north occurs in the months of December to March, as shown in
the table below.
CLIMATOLOGICAL NORMALS
STATION : 851 – GENERAL SANTOS CITY

LATITUDE : 06”07’ N
LONGITUDE : 125* 11* E
PERIOD : 1961-1995
MONTH RAINFALL TEMPERATURE DEG. C WIND

(MM) MAX MIN MEAN DIR SPD/MPS
JANUARY 72.4 32.9 21.9 27.4 N 2
FEBRUARY 67.2 33.1 22.1 27.6 N 2
MARCH 43.8 33.9 22.2 28.1 N 2
APRIL 52.4 34.1 22.7 28.4 S 2
MAY 73.6 33.0 23.0 28.0 S 2
JUNE 118.3 31.8 22.5 27.1 S 2
JULY 102.2 31.3 22.2 26.7 S 2
AUGUST 82.1 31.5 22.1 26.8 S 2
SEPTEMBER 89.8 31.8 22.1 27.0 S 2
OCTOBER 104.0 32.2 22.3 27.3 S 2
NOVEMBER 83.8 32.9 22.2 27.5 S 2
DECEMBER 70.0 33.0 22.0 27.5 N 2
ANNUAL 959.6 32.6 22.3 27.4 S 2
Source: PAGASA
While the area is located outside the typhoon belt, it occasionally experienced
relatively rough seas due to the east-west driven wind locally known as
“Amihan”. The highest recorded wind velocity was 31 meters per second that
occurred in 1976. Maximum average wind velocity, however, was recorded at 20
meter per second. The project site being part of Mindanao has a recorded 10
percent probability of typhoon occurrence for every 20 typhoons passing the
Philippine territory yearly for the period of 50 years. Figure 4.3 shows the normal
path of typhoons in the Philippines.
4.2.3 Temperature
The monthly temperature in Sarangani varies from 22 to 340C with an annual

mean of 27-290 C. The mean temperature, however, slightly vary from the lowest
of 26.40C in April to 28.10C in March. The lowest recorded temperature in the
project area was 16.90C while the highest was 380C.

4.2.3 Oceanological Conditions
4.2.3.1 Tides
The tide condition in the municipality of Sarangani was roughly determined

during the conduct of hydrographic survey in the project area last May 14-15,
2002. The result of the survey revealed that the Mean Sea/Tide Level (MS/TL) in
the area was 1.86 meters. The Mean High Tide Level (MHTL) recorded was 2.86
meters while the Mean Low Tide Level (MLTL) was 0.86 meter. The highest tide
was 2.92 meters while the lowest was 0.82 meters as shown below.
Tide Observation Results:
May 14, 2002
Highest Tide Level (HTL) - 2.80 meters

Lowest Tide Level (LTL) - 0.82 meters
Mean Tide Level (MTL) - 1.81 meters
May 15, 2002
Highest Tide Level (HTL) - 2.92 meters

Lowest Tide Level (LTL) - 0.90 meters
Mean Tide Level (MTL) - 1.91 meters
Average Mean High Tide Level - 2.86 meters

Average Mean Low Tide Level - 0.86 meters
Average Mean Tide/Sea Level - 1.86 meters
4.2.3.2 Current
Based on records presented in the study made for the expansion of Makar Wharf
in General Santos City, the determined current outside Sarangani Bay was
clockwise. In a close observation at the project site, the flow of current was also
clockwise, originating from north (Sarangani Straight) flowing to the south
towards Celebes Sea. As the current flows parallel to East side of Balut Island, is
it of little concern to navigation.
4.2.3.3 Tsunamis
The location of islands of the municipality is prone to Tsunamis since

tsunamiganic earthquakes often originates under the bottom of Celebes Sea. The
project site, at is strategically located at the east side of Balut Island, is being
protected by natural geographic barriers such as the Islet of Marorong (Villalobos
Island) and the Catingan Point. Figures 4.4 & 4.5 show the distribution of
Tsunami hit and risks areas in the Philippines.

4.2.4 Hydrographic Survey and Water Depths
A private survey firm commissioned by the project conducted a hydrographic

Survey to determine the water level and depths on the two proposed sites for
port development last May 14-15, 2002. As shown in the survey plan (Figures 4.6
& 4.7), Stations A and B (Site 1) has a total area of 4.8 hectares while Stations E, F
and G (Site 2) have a total area of 5.44 hectares. The two existing pier/causeway
structures are located in Site 1 while Site 2 is an alternative site identified for new
construction.
As determined in the survey, the length of causeway in Station A is 56 meters

while the length of the causeway located in Station B is 26 meters. Distance
between the two piers (Sta. A to Sta. B) is 91.60 meters (Figure 4.8). Shown below
are the location and distances of the two sites.
STATION LOCATION DISTANCE

(Meters)
Sta. A to Sta. B (Existing Piers) N 5*02 421.40

Sta. A to Sta. D S 11 19 E 222.00
Sta. D to Sta. E S 1 21 W 202.00
Sta. E to Sta. F (Cover) S 82 36 W 220.00
Sta. A to Sta. F S 21 49 W 482.54
Sta. F to Sta. G S 21 32 E 212.00
Source: Hydrographic Survey
There are two sites identified as mangrove areas within the vicinity of Site 1.
West side in between Station A and Station B, a total of 445 square meters of
mangrove areas exist while 548 square meters of mangrove areas grown in the
southern part of Station A.
Water depths at the project site vary because of the irregular coral reef formation.
From the mean sea level of 1.86 meters, draft depths at Site 1 fronting the two
piers ranges from a highest of –0.5 meters to a lowest of –4.5 meters (Figure 4.6).
4.2.5 Topography
The municipality of Sarangani is characterized by hilly and mountainous areas

with its cost line surrounded with coral reefs. In Balut Island, slope abruptly rise
by 3 to 5 degrees starting 0.5 to 1.0 kilometers inland from the shoreline. At the
project site, elevation immediately rises from the shoreline starting at +0.9 meters
in Station A, and +2.3 meters in Station B above the Mean Tide Level of 1.86
meters.

4.2.6 Soil and Subsoil classification
The soil condition in the area is volcanic in nature such that minerals such as
igneous rocks like basalt, granite, and adobe stone are abundant. Being rich in
volcanic elements, the area is suitable for agricultural purposes.
The subsoil condition at the project site is not yet determined since soil
exploration will have to be conducted during the detailed engineering stage of
project development.
4.2.6.1 Seismicity
The municipality of Sarangani is situated along the Circum-Pacific Seismic Belt

where more than 80 percent of the world’s earthquakes occur. Based on the
Seismic Zones (Figures 4.9, 4.10 & 4.11), the municipality of Sarangani falls
within Zone IV which is related to the Philippine Trench Subduction Zone,
dipping west, wherein most earthquake occurrences recorded ranges from
shallow to intermediate focus earthquakes. The project site, however, is located
near the boundary of Zones IV and V wherein earthquakes intensities are
diffused due to concurrent earthquake occurrences in Cotabato Trench.
4.3 Description of Existing Port facility
There are two (2) existing permanent causeway/pier structures at the project site
in Mabila. The old causeway described in hydrographic survey as Station B was
constructed in 1986. It has a total length of 26 meters and a width of 3.5 meters.
The new causeway marked as Station A was constructed in 1995 at a cost of P 1.0
million. It has a total length of 56 meters and a width of 3 meters. There were no
permanent vertical structures exist in the port area, except for the temporary
structure owned by the Coast Guard located at rear right side end of the old
causeway, as shown in the picture below. The foundation of the old causeway is
in deteriorating condition as portions of the riprap already washed out.
Station B

The condition of the new causeway, on the hand, is as bad as the new pier as its
frontage already collapsed as shown in the picture below.
Station A
4.4 Proposed Facilities and Improvement Activities
The development of the port complex in Mabila will include the improvement of
the port and auxiliary facilities including the establishment of an ice plant. The
following facilities and major activities of the project are shown below.
1. Reclamation of foreshore Area

2. Extension of the existing causeway
3. Construction of pier structure
4. Construction of Port Stalls
5. Construction of Administration Building
6. Construction of Toilet/Bathroom
7. Construction of Passenger and Cargo Terminal
8. Construction of Ice Plant
9. Construction of Warehouse
4.5 Assessment of Alternatives
4.5.1 Location
4.5.1.1 Site of the Port
Prior to the final selection of the proposed site, an initial investigation was
conducted by the project team to determine the appropriateness of each
alternative location identified in the study in terms of accessibility, development
cost, marketability, and preference of the local populace.

Two possible sites were identified for the project. The first identified area (Site 1)
to be developed was the site where the existing port is located. This area is
marked as Stations A and B reflected in the hydrographic survey. The second
alternative site (Site 2) is an area 422 meters away from Station A. This area is
marked as Stations E, F and G in the hydrographic survey.
Initial investigation revealed that water current and wave are relatively calm in
Site 2 being located in a cove. Variations on the draft depth in different locations
surveyed are minimal and relatively ideal for medium size vessels. Total usable
water area is 5.44 hectares. Offshore, enough area is available for the
development of port facilities. However, the land is privately owned and has no
existing access road. The site, using the land contour, is approximately 1.0
kilometer away from the poblacion. Selecting this site will require opening of an
all weather road and acquisition of land covering a total area of more or less not
less than 5,000 square meters.
Site 1, on the other hand is fronting the urban center of the municipality. The
people in the area currently use the two existing piers. The development of the
site would be possible through reclamation of approximately 3,500 square meters
of the shoreline area in between the two piers. However, the draft depth in this
site varies due to coral reef formation. Reclamation likewise would affect 445
square meters of mangrove area.
In consideration that the local government of Sarangani cannot fund the

acquisition of the private land in Site 2 and the immediate construction of access
road, it was decided by the Study Team and the local officials of Sarangani to
consider Site 1 as preferred site for the project.
4.5.1.2 Site of the Ice Plant
The study identified three alternative sites where the ice plant facility could
possibly be located. The first option was to locate the facility within the port area.
The second option was to utilize the vacant lot owned by the municipality 400
meters away rear of Station A (New Port). The third option was to situate the
facility in a vacant lot also owned by the municipality located on the northwest
side of the poblacion, 600 meters away from the port.
Eventually, the first option to locate the ice plant facility within the port area,
was selected as the most suitable alternative considering that this type of
business could efficiently serve its clients, save handling cost and spoilage when
located within the port area.
4.5.1.3 Site of the Warehouse
As an integral component of the port, the site of the warehouse facility will be
located within the port complex, as preferred location where the port complex
will be developed.

4.5.2 Size
The proposed lay out for the development of the port complex has two options
which will include the following components and dimensions:
Option 1 Option 2
Reclaimed Area 3,590.5 sq. m. 10,500 sq.m.
Causeway Structure 1,498.4 sq. m. 4,380.0 sq.m.
Pier Structure 872.0 sq. m. 872.0 sq.m.
Sub-Total Area 5,960.9 sq. m. 15,752 sq. m.
Component Facilities:
Port Stalls 243.00 sq. m. 243.00 sq. m.
Administration Bldg. 55.25 sq. m. 55.25 sq. m.
Toilet/Bathroom 31.50 sq. m. 31.50 sq. m.
Passenger Terminal 22.00 sq. m. 22.00 sq. m.
Ice Plant 792.00 sq.m. 580.00 sq. m.
Warehouse 100.00 sq.m. 100.00 sq. m.
Sub-Total Area 1,243.75 sq. m. 1,243.75 sq. m.
In comparison, the components of Option 1 and Option 2 are the same except for
the design and dimensions of the following components:
Component Option 1 Option 2
Reclaimed area = 3,590.5 sq. m. 10,500.0 sq. m.

Causeway = 1,498.4 sq. m. 4,380.0 sq. m.
Ice Plant = 792.0 sq. m. 580.0 sq. m.
Warehouse = 100.0 sq. m. 800.0 sq. m.
Under option 2, the proposed area to be reclaimed is 1.5 hectares. Reclaiming this
size of the foreshore area will require the development of 4,380 square meters of
causeway. Under this scenario, a total of 17 fishing vessels and 4 cargo vessels
can be accommodated at any given time. Based on projections, the berthing
capacity of the port still cannot cope with the projected number of fishing boats
that will patronize the port.
The production level of the ice plant facility using even the 100-ton capacity
output per day can still be absorbed by the market. However, investment cost
will become prohibitive when applied in Sarangani given that this component
will be bidded out for private sector investment. Operating a 30 ton capacity ice
plant as proposed in option 2 would be less economical than running a 40 ton
capacity. Beyond 40 ton capacity is not recommended because of investment and
other considerations such as limitation in water supply and increase in power
requirements.
For warehouse requirement, the proposed area of 800 square meters proposed
under option 2 is large enough compared to the demand requirements for the

incoming and outgoing cargoes. Constructing a structure using a conventional
design of a typical warehouse, (enclosed with high ceilings) at this size is found
to be uneconomical. Aside from incurring high investment cost, the existing
practice of cargo storage in the area does not allow longer period of storage time.
Most often, cargoes particularly copra are delivered and stocked at the port site
during the day or the day before the departure of the vessel. A 100 square meters
floor area for the warehouse was found to be the appropriate size.
In general, alternative components presented under option 1 are found to be the

most desirable combination as it provides optimum utilization of production
inputs, satisfaction of demand variables and provision of desired services.
4.5.3 Technology and Services
4.5.3.1 Port Operations
Two options were considered in handling port operations. Option 1 is for the
local government unit (LGU) of Sarangani, who will construct and handle the
operations of all the facilities that will be installed within the port area, except for
the ice plant facility, which was considered to be a private undertaking. Option 2
would require the construction and management of operations of all the
facilities, which is assume to be handled by the Philippine Ports Authority (PPA).
4.5.3.2 Ice Plant Technology
The process of ice making adopted in the local industry is generally the same.
However, the technology, equipment and system of operations used often vary
depending on the size and capacity of the ice plant facility.
The conventional method of making ice consists of immersing cans filled with
water in a bath of low temperature brine. The brine circulates by means of
agitators through an ice generator tank and is cooled by a submersion type
evaporator. The temperature of the brine (-10 degrees Centigrade) causes the
water in the ice cans to freeze into solid blocks. After the freezing process, the ice
cans are lifted from the generator tank by means of a crane and immersed in a
thawing tank filled with warm water to release the ice from the ice cans. A
tipping device unloads the blocks on to an ice chute or a conveyor for transport
to the ice storage room. The cans are refilled with water from a filling device and
are carried back to the generator tank to start the freezing cycle again.
The technology presented by the leading manufacturer of ice plant equipment

and machineries in the country will be adopted by the project. Specifically, the
method of using an ammonia as a medium used in processing of ice was
recommended by the supplier since it is lower in cost.

4.6 Description of Preferred Alternative
The development of the port complex in Mabila will include the improvement of
the port and auxiliary facilities including the establishment of an ice plant. The
project layout is shown in Figure 4.14. The description of the basic activities and
components of the port complex are as follows:
4.6.1 Reclamation of the Foreshore Area
Since the development of the existing port site was chosen, reclamation of the
foreshore area situated between the two existing causeways is necessary.
Reclamation activity would involve soil exploration, to determine the
stratigraphy and physical properties of the soils underlying the site, particularly
their strength and deformation characteristics when subjected to future loads.
The soil investigation results shall be the bases for the preliminary foundation
design of various port facilities, likewise determine the filling materials needed
in the reclamation of the foreshore area. Subsequent activities will follow like the
identification of the quarry site, hauling, dumping, compacting and others. The
total area to be reclaimed is 3,590.5 square meters as shown in Figure 4.14, the
project layout.
4.6.2 Causeway
Part of the port improvement is the extension and improvement of the causeway
with a total length 187.3 lineal meters. The extension will start from the
shoreline of Station A (New Pier) and ends at the shoreline of Station B (Old Pier)
covering the north, east and south boundaries of the reclaimed area. The type of
structure and the foundation to be used for the causeway will depend on the soil
investigation results. The total area that will be covered is 1,498.4 square meters.
(Figure 4.15)
4.6.3 Pier Structure
Pier structure covering an area of 872.0 square meters will be constructed starting
from the end point of new causeway marked as Station A. The construction
activities will include pile casting, pile driving, form works, steel works,
scaffolding and slab concreting (Figure 4.15).
4.6.4 Port Stalls
The construction of port stalls will require an area of 243.0 square meters. This
structure will be located at the rear end of the port spanning 81.0 meters parallel
from Station A to Station B with a width of 3.0 meters. The stalls will be opened
for enterprising ventures such as eatery, general merchandise i.e. selling of
fishing gears, among other businesses. The layout of the port stall is shown in
Figure 4.14.

4.6.5 Administration Building
As a necessary component of a port complex, a permanent administration

building will be constructed at the middle of the port area beside the ice plant.
The building will occupy an area of 55.25 square meters. The building will house
all the port personnel including the office of the port manager. The building was
provided with toilet/bathroom for personnel use. The design and layout of the
administration building is shown in Figure 4.14.
4.6.6 Toilet/Bathroom
A common toilet/bathroom will be constructed at the port site for the use of the
passengers and crews of the fishing vessel operators. The structure will be placed
at the back of the warehouse near the front gate of Station A. It has an area of
31.5 square meters. The design and layout of the toilet/bathroom is shown in
Figure 4.14.
4.6.7 Passenger Terminal
The passenger terminal will be located mid front of the lateral causeway. It will
cover an area of 22.0 square meters and can accommodate 36 persons at a time.
This structure is important since the arrival and departure of cargo and fishing
vessels are variable depending on sea condition at Sarangani Straight and
Celebes Sea, respectively. The design and layout of the Terminal is shown in
Figure 4.14.
4.6.8 Ice Plant
The ice plant facility will cover an area of 792 square meters. The structure will
be located at the southern portion of the reclaimed area beside Station A. A
storage water tank and 2 generators sets will be installed in the vicinity of the
plant as a necessary facility/equipment that will be used for production
purposes. This venture is open for private investment since its operation is
financially and economically viable. The design and lay out of the ice plant is
presented in Figure 4.16.
4.6.9 Warehouse
The warehouse will be located at the north side of the port beside Station B. The
facility will cover an area of 100.0 square meters. This structure will be used for
temporary storage of crops and commodities while waiting for transport. The
design of the warehouse is shown in Figure 4.14.

4.6.10 Guard House
At the initial operation of the port, a Guard House will be constructed beside the
gate of Station B. The design of the guardhouse is shown in Figure 4.14.
4.7 Cost Estimates
4.7.1 Investment Cost
The total investment cost of the proposed project amounts to P 48.88 Million,
broken down as follows:
Multi-Purpose Port */= P32,028,696.00

Ice Plant = P16,849,779.00
*/ Includes the Warehouse, Administration Building,

Passenger Terminal, Toilet/Bathroom and Guard House
Details of the project cost is shown in Table 4.1.
4.7.2 Operating Cost
The total annual cost for the operation of the port and ice plant amounts to
P6.515 Million, broken down as follows:
Multi-Purpose Port = P1,246,410.00

Ice Plant = P5,268,524.00
Details of the project cost is shown in Table 4.2.
4.8 Machinery and Equipment
4.8.1 Port
The port will employ labor-intensive operation. Equipments needed are

weighing scale, computer, tables, chairs, and other office facilities.
4.8.2 Ice Plant
Equipment needed in the operation of the ice plant are the following: compressor
and running crane, crusher, ice tools and gravity conveyor. A delivery boat is
also needed by the project to be used in the delivery of ice products to the
neighboring barangays. The project will also have a water tank for storage
purposes. The water requirement of the ice plant will be provided by a water
system that will be constructed purposely for the operation of the plant. Two

units of generator set will also be installed to sustain the power requirement of
the ice plant. Office equipment needed by the project are computer, table and
cabinets for storing of supplies and materials and records of the office.
4.9 Timetable of Implementation
4.9.1 Pre-Implementation Phase
The pre-implementation stage would require a total of 4 months after the

approval of the project. Activities that will be undertaken during this stage
include the conduct of detailed engineering, consultations with the community
that will be affected by the project, conduct of information campaign and
information dissemination, pre-qualification of bids, bidding and awarding of
bids and other standard operating procedures required from the government
considering that the Philippine Ports Authority (PPA) is identified as the
implementing agency of the project. (Table 4.3)
4.9.2 Implementation Phase
A total of 16 months is required to realize the proposed port and its auxiliary
facilities including the construction of an ice plant within the port area. The
activities to be done are shown in Table 4.3.
4.10 Environmental Impact and Mitigating Measures
The implementation of the project will have both positive and negative effects to
environment and community of the entire populace of Sarangani. Effects on the
environment would include destruction of the mangrove area and vegetation at
the identified quarry sites, noise disturbance during construction stage and
operation stage particularly on ice plant operation.
At the construction site, a total of 445 square meters of mangrove area will be
converted into port area and access road. Although the cost is minimal, cleaning
up the area and converting such into port area will still have an impact, although
found to be negligible, to the marine ecosystem. Planting of mangroves in the
nearby site should be required from the project contractor to replenish the
destroyed mangroves.
On the other hand, and an estimated volume of 1,500 cubic meter will be
excavated at the quarry site. Vegetation in this area will be destroyed due to
extraction of quarry materials. Since the area will become barren after extraction,
replanting of trees and other similar vegetation should be done at the quarry site.
Noise disturbance during the construction stage cannot be avoided. However,

the contractor must observe the proper working hours to avoid further
disturbance especially during nighttime.

During operation stage, the influx of fishing and cargo vessels would contribute
to the garbage and water pollution problem in the area. Fuel emission through
leakage and spoilage and human feces and indiscriminate dumping of garbage at
the sea could be contributing factor to water pollution. To minimize this
problem, the municipal government should, from to time, inform and educate
the fishermen and vessel crews not to dump their material and human waste to
the sea. Garbage receptacles and toilets must be provided at the port area so that
there will no reason for these people to dump their garbage anywhere.

Chapter 5
FINANCIAL ASPECT
The alternative scenarios for the three components of the project, which were identified
during the course of this study, are verified from a financial point of view to assess its
viability. During the process, each scenario with the least viability is eliminated. The
focus of discussion in this chapter dwells on the alternative scenario that projects the
most viability on the financial point of view. All costs related to the three components of
the project such as project development cost, pre-operating and operating cost,
acquisition of equipment, provision for depreciation and payment of interest, as well as
alternative sources of funds and replacement cost of machines and equipment, are
considered in the financial analysis.
5.1 Project Cost
Total project cost is estimated at P48.878 million. The development of the multi-
purpose port accounted for P32.028 million or 66%of the total project cost. The
remaining P16.849 million or 34% constitute the cost of the ice plant component
of the project.
The cost of developing the multi-purpose port includes the reclamation cost of
some 3,590.50 square meters area within the project site, land development cost
for more or less 1,000 square meters allocated to the ice plant and warehouse
areas; and, construction cost of warehouse as well as the capital requirements
equivalent to one month operation. Details of this are shown in Table 4.1.
On the other hand, the cost of the ice plant component covers the investments on
building construction and acquisition of equipment as well as the working
capital and pre-operating financial requirements for one month. Details of this
amount are shown in Table 4.1. Replacement cost is also provided for ice
machine and all other equipments after its respective estimated economic lives
have lapsed.
As mentioned in the foregoing, the multi-purpose port includes the warehouse

component. Initially, however, its financial viability was analyzed separately.
The main reason behind the integration is the non-viability of the warehouse
project to generate substantial revenue when operated independently from the
other components of the project.
The warehouse component may not also be offered to prospective private

investor because such alternative is not financially feasible based on the analysis
of its financial statements. Accordingly, this alternative will only result to
substantial cash flow problems and losses in operations throughout its project
life.
Financial Aspect 5-1

Since the warehouse is recognized as very important services that should be
provided along with the port, it was found best to integrate it into the multi-
purpose port project because the overall financial effect on such integration will
still be favorable as far as profitability and cash flow are concerned.
5.2 Source of Funds
Different financing schemes were evaluated for each component of the project.
These schemes are the major consideration in coming up with the following
alternative scenarios for the entire project:
Scenario 1
The Local Government Unit (LGU) of the Municipality of Sarangani will develop
the Multi-Purpose Port and manage its operation including that of the
warehouse. The development The Ice Plant component of the project will be
developed and operated by a private investor who will pay land rental to the
LGU.
Scenario 2
The Philippine Port Authority will develop the Multi-Purpose Port and manage
its operation including that of the warehouse. The Ice Plant component of the
project will be developed and operated by a private investor who will pay land
rental to the LGU.
5.2.1 Multi-Purpose Port.
The Local Government Unit, under scenario 2, intends to submit the integrated
development plan of the proposed multi-purpose port complex to the Philippine
Port Authority (PPA) for possible financing. The proposed multi-purpose port
qualifies in one of the criteria set forth by PPA for port financing and
management operations under its port system. One of the PPA qualifications
under the port system requires that there should be no existing major port or
proposed major port development project public or private within 100 kilometers
in the next five years. This qualification is easily meet by the project considering
that there are no other ports or proposed port for that matter within the vicinity
of the island.
The other alternative source of financing, under scenario 1, is for the LGU is to
obtain a long-term loan from a bank equivalent to 70% of the total development
cost of the multi-purpose port and provide for the remaining 30% of the cost as its
equity contribution. However, this was no longer considered because per
evaluation the LGU will not be able to raise the 30% equity portion of the loan
which will be required by the creditor bank. In addition, it was determined that it
will not generate sufficient income from operation to pay out the required annual
amortization.

5.2.2 Ice Plant Component.
Given the financial profitability of this component, it is expected that many

investors would be willing to invest on this project. The proposed financing
scheme for this component is for the private investor to avail of long-term loan
from the bank at sixteen percent (16%) interest payable in fifteen years with three
years grace period.
The possibility of the LGU taking over the development and operation of the ice
plant was also considered however, just like in the case of the multi-purpose port
complex, the LGU is not capable of raising the equity contribution required in
obtaining the proposed loan from the bank. The LGU also acknowledges its lack
of technical knowledge and skills to manage its operations.
5.3 BASIC FINANCIAL PROJECTIONS
The project has adopted certain assumptions in its financial projections, as

follows:
a) All costs pertaining to construction and acquisition of depreciable assets are

depreciated using the straight-line method. Economic life of these assets
varies from five (5) years to twenty (20) years. Schedule of depreciation
expense is presented in Table 5.1. Replacement of machines and equipment is
also provided for after its respective economic lives have lapsed.
Replacement cost for all machines and equipment is assumed to be the same
as the original purchase cost at the time of replacement. Salvage value, if any,
of the replaced machines and equipment is assumed to be realized at the time
of replacement and is deducted to the cost of the replacement. Details for the
replacement of these assets are presented in Table 5.2
b) Loanable amount is amortized for fifteen (15) years at sixteen percent (16%)
interest with a 3 years grace period on payment of the principal amount
(Please refer to the amortization schedule on Table 5.3).
c) The Multi-purpose Port is projected to derive revenues from the following

sources:
Anchorage fee
Berthing fee
Passenger terminal fee
Public restroom fee
Cargo handling fee
Parking fee
Stall rental
Land space rental

Increases in total revenues are due to assumed increases in volume of
demand rather than increase in the revenue rates. Revenue rate are assumed
to be the same throughout the project life.
d) Revenues and operating cost in the ice plant operations are assumed to
remain constant throughout the project life. Likewise, volumes of ice
production as well as its selling price are also assumed to remain constant
5.4 Financial Viability Criteria
The financial viability of the components of the project are evaluated based on
the following criteria:
a. Net Present Value
The net present value (NPV) is the major criterion at which the financial viability
of the project is evaluated to. This criterion requires that each component of the
project should have a positive NPV to become financially viable since only at this
point (when NPV is at least equal to zero) that the project can expect not only to
recover the initial capital investment and to earn a rate of return equal to the
discount rate, but also to receive an addition to the real net worth equal to the
positive amount of the NPV.
The discount rates (or hurdle rate) at which the NPV is computed are 12% and
16% for the multi-purpose port and ice plant, respectively. Basically, different
hurdle rates are used because each component of the project will have a separate
financing scheme. The 12% is the standard hurdle rate required for government
projects while the 16% is based on the assumed interest rate of which the
proposed bank loan shall be obtained.
b. Financial Internal Rate of Return
The financial internal rate of return (FIRR) criterion is best stated in the form of a
decision rule, to wit: “Accept any project when its FIRR is greater than the
opportunity cost of capital”. Hence, each component of the project is subjected to
FIRR the results of which serve as one of the basis for determining the financial
viability of the said components. The FIRR takes into consideration the initial
investments, working capital and cash inflows generated throughout the project
life.
c. Profitability
Projected Income Statement serves as the basis for evaluating the profitability of
each component of the project. Profitability would mean as the ability of the
project to generate revenues in excess of its operating costs including payment of
interest and income taxes.

d. Net Cash Flow
This criterion pertains to the capacity of the project to generate substantial cash
from its operation to defray all the cash operating expenses and to pay for
maturing debt obligations and income taxes. A positive cash flow means that
total cash inflows exceeded all cash operating costs incurred during the year.
5.5 Financial Analysis
The financial analysis is based on a twenty (20) year period. The Cash Flow and
Income statements are prepared for each component of the project to evaluate
individually its financial viability. A balance sheet is deemed insignificant for
this particular project.
The following sections present the summary descriptions of the aforementioned

statements:
5.5.1 Income Statement
The Income Statement shows the projected revenues and the corresponding
expenses necessary to operate the proposed projects. This statement also shows
the profitability of the project as well as the ability to sustain its operation and
meet maturing debt obligation. Income Statement for the Multi-Purpose Port
under scenarios 1 and 2; and Ice Plant is shown on Tables 5.4, 5.5 and 5.6,
respectively.
The integrated multi-purpose port under the management of the PPA is expected
to generate a net income beginning on the fifth year of its operation. The gross
revenue is expected to increase only by at least 1% every year. As mentioned in
Section 5.3 (c) above, the increase is due to increase in demand rather than
increase in the revenue rates. The net effect on the net operating income over the
gross revenue is expected to increase steadily from 6.24% in the fifth year to more
than 23% in the twentieth year.
This scenario will not be duplicated when the multi-purpose port is developed
and operated by the LGU. This is mainly because the income from its operation
will not be substantial to cover for the interest expenses it will incur for the long-
term loan. Therefore, when payment of interest expense is applied to the
operating income the same will turn into substantial losses.
The ice plant component of the project is expected to generate substantial

revenues all throughout the project’s life which are huge enough to defray all the
necessary operating expenses including payment of interest and taxes. Projected
net income is expected to increase from eleven and a half percent (11.5%) in the
first year of operation to twenty-five (25%) in the twentieth year of its operation.
These increases are attributed mainly to the declining interest charges.

5.5.2 Cash Flow Statement
The Statement of Cash Flows details the annual movements of cash and its
allocation to the various disbursements of the project. The cash inflows on this
project come mainly from the revenues generated from each component of the
project while uses of cash are distributed to operating expenses, replacement cost
for machineries and equipment, amortization of loan and payment of taxes. This
statement also includes the working capital requirements during the first year of
operation as well as any salvage values of all properties and equipment that may
be recovered at the end of the project’s life. The Cash Flow Statement for the
Multi-Purpose Port under scenarios 1 and 2; and Ice Plant is shown on Tables 5.7,
5.8 and 5.9, respectively.
Under scenario 2, the integrated multi-purpose port is projected to generate a net

cash inflow right from the start of its operations up to the twentieth year in spite
of the losses during the first four years of operations. This is mainly because of
the depreciation expense which is a non-cash expense. The net cash inflows mean
that the cash receipts realized from its revenues has exceeded the cash operating
expenses including replacement cost of some facilities and equipment and
payments of taxes. It is expected to increase by at least 6.38% annually.
Substantial increase in the net cash flow is likewise expected in the twentieth
year due to recovery of salvage value of depreciable assets which is estimated at
least ten percent of the acquisition cost of said assets. The port itself is assumed
to have a salvage value of sixty percent (60%) since it will be used only for 20
years out of its estimated economic life of 50 years.
In comparison with the Statement of Cash Flow under scenario 1, the only major
difference is the payment of the annual amortization of the loan. However, such
difference will have a very substantial impact on the cash flow since the net cash
generated from operations will not be sufficient to cover the payment of the loan
amortization. Hence, its cash flow becomes negative.
On the other hand, the ice plant operation is expected to generate huge amount
of cash inflows throughout the project life except for in the years twelfth and
sixteenth, where the project will incur a negative cash flows. This is mainly
because of the costs incurred for the projected replacement of major depreciable
assets. However, the cash earned in the years prior to the said expenditures ably
provides for the cost for such replacements. The net cash inflows are expected to
be at least twelve percent (12%) of the revenue receipts throughout the project’s
life except during the twelfth and sixteenth years.
5.6 Financial Viability Indicators
The financial viability of the project is ascertained based on the financial viability
criteria set forth in Section 5.4 above. The results of the financial analysis show
the following observations:

5.6.1 Multi-Purpose Port
Under both scenarios, the multi-purpose port will generate the same net cash
inflow from operations when payment of loan amortization and taxes are not
considered. The said cash inflows are the basis for computing the NPV; hence, it
will have a similar NPV of negative P22.027 million, at an assumed hurdle rate of
twelve percent (12%) and a FIRR of 0.55%.
The main reason behind the negative NPV is that the discounted value of the
total net cash flow of P33.637 million generated from the first year to the
twentieth year is not sufficient to recover the investment cost of more than P32
million. Therefore, the initial investment poured on this project cannot be
recovered within the project’s life.
5.6.2 The Ice Plant
The ice plant component generates a very high NPV of P7.102 million and a FIRR
of 25.06 percent. The hurdle rate used for this component is pegged at 16 percent.
Furthermore, it is also noteworthy to present the results of the break-even

analysis applied to the ice plant component. This will further verify the financial
soundness of its operation.
Selling Price per Block of No of Ice

Ice Blocks
(Base on demand) (Per annum)
Break Even Sales P 72.04 20,772
Projected Sales P 114.00 84,560
Projected Profit Margin P 41.96 63,788
As presented above, the ice plant operation indicates a very high leverage in
terms of achieving break-even in sales as far as the selling price and sales volume
are concerned. This means that this component demonstrates high flexibility to
changes in the selling price and sales volume. The results of the sensitivity
analysis following this section confirmed this observation.
5.7 Sensitivity Analysis
The sensitivity analysis is undertaken to determine the effect of changes of

important variables in the financial projections. The following hypotheses were
considered:
a. For Multi-Purpose Port Component

• Projected revenues increased by 30 and 50 percent.
• Projected costs decreased by 30 and 50 percent.
• Estimated interest rate reduced to 6 percent.
As discussed earlier, the port operation is expected to generate positive cash

flows over its project life. However, when such cash inflows are discounted at
12% to obtain its NPV it will result to a negative NPV of P22.027 million. The
FIRR for this is 0.55%. Results of the sensitivity analysis are summarized below.
Projected Increase
Assumptions NPV FIRR
Peso Value % of % of
(In million) increase Rate increase
a. Projected revenues P (18.003) 18% 2.87% 522%

increased by 30%
b. Projected revenues (15.321) 30% 4.34% 789%

increased by 50%
c. Projected costs decreased (19.469) 12% 1.98% 360%

by 30%.
d. Projected costs decreased (17.763) 19% 2.92% 531%

by 50%.
e. Estimated interest rate (16.401) 26% 0.55% -

reduced to 6%
As shown above, the overall results of the sensitivity analysis for this component
is still the same. That is, the NPV is still negative and the FIRR is also lower than
the estimated hurdle rate. However, at the most optimistic situation, i.e. a 50%
increase in revenue with a corresponding 50% decrease in costs, the NPV will
significantly increase to positive P1.741 million and its FIRR increased to 6.55%.
Results of the sensitivity analysis under both scenarios are all the same. Details of
which are presented in Table 5.10.
b. For Ice Plant Component
• Projected revenues decreased by 10 and 20 percent.

• Projected costs increased by 10 and 20 percent.
• Estimated interest rate increased 20 and 30 percent.

Sensitivity Analysis
Based on the results of the sensitivity analysis on the ice plant component, it can
be observed that its operation is more volatile to reduction in revenue rates
rather than increases in cash operating expenses. Results of the sensitivity
analysis are summarized below.
Projected Decrease
Assumptions NPV FIRR
Peso Value % of % of
(In million) decrease Rate decrease
a. Projected revenues P 2.175 69% 18.86% 25%

decreased by 10%
b. Projected revenues (2.751) 139% 12.22% 51%

decreased by 20%
c. Projected costs increased 4.318 39% 21.62% 14%

by 10%.
d. Projected costs increased 1.535 78% 18.05% 28%

by 20%.
e. Estimated interest rate 3.205 55% 25.06% -

increased to 20%
f. Estimated interest rate (2.020) 128% 25.06% -

increased to 30%
This mean that at 20% reduction in revenue rates, the NPV will be reduced from
P7.102 million to negative P2.751 million and the FIRR will decrease from 25.06%
to 12.22% which falls below the hurdle rate of 16%. Likewise, an increase in cash
operating expenses by 20% will only reduced the NPV by P5.567 million and the
FIRR by 7.01%, respectively. Hence, the NPV is still positive at P1.535 million
and the FIRR is 18.05% which remains higher than the assumed hurdle rate of
16%.
It is further noted that the NPV is also sensitive to increases in interest rates. A
mere increase in the interest rate from 16% to 20% will drastically decrease the
NPV to P3.205 or 55% of the estimated NPV of P7.102. Increasing the interest rate
further to 30% would result to a negative NPV of P2.020 million. At these
assumptions, the FIRR remains unchanged.
The NPV and FIRR is also at risk when there is a reduction in the revenue price
by 10% coupled with a 10% increase in cash operating expenses. At this point,

the NPV will be reduced to negative P.608 million and the FIRR will fall below
the hurdle rate at 15.18%.
Break-Even Analysis
It can be observed that the Ice Plant component performs very well as far as
achieving break-even sales is concerned at all the assumed changes of rates in
revenues and operating expenses. Results on this analysis are summarized as
follows:
Selling Price per Block of Ice No of Ice Blocks

(Base on demand) (Per annum)
Assumptions Assumptions
(a) (b) (c) (d) (a) (b) (c) (d)
Break Even P72.04 P72.04 P78.27 P84.50 28,677 39,991 25,416 29,452
Sales
Projected 102.60 91.20 114.00 114.00 84,560 84,560 84,560 84,560

Sales
Projected
Profit P30.56 P19.60 P35.73 P29.50 55,883 44,569 59,144 55,108
Margin at
Break-Even
Sales
Even at worst scenario, i.e. 20% reduction in revenue rates and a corresponding
20% increase in cash operating expenses, it will still achieve a break-even. In fact,
at this point break-even in selling price is P84.50; projected selling price based on
the volume of demand is P91.20; and break even sales in volume is 70,314 blocks
of ice. Hence, projected profit margin at break-even sales will still be positive at
P6.70 per block of ice and 14,246 blocks of ice.
5.8 Conclusions and Recommendations
The following conclusions and recommendations are presented based on the

foregoing financial analysis:
a. The multi-purpose port component of the project is found not viable on a

financial point of view. This is mainly because the streams of project cash
flows over twenty-year period are not sufficient enough to recover the initial
investment cost. However, under scenario 2, the port can be operated during
the twenty-year period because it can generate enough cash inflows to
sustain the estimated cash requirements of its operation each year.

b. The ice plant component of the project is found to be highly viable and is
financially attractive to private investors. This is mainly attributed to its
huge NPV at P7.102 million and high FIRR at 25.06%. It is also expected that
the initial investment will be recovered within the projected life.
c. The warehouse is considered not financially viable when operated

independently. However, since it is identified as very important services
that should be provided along with the port, it is recommended that its
development cost be integrated into the multi-purpose port component of
the project. The financial impact on such integration is considered
insignificant to the overall financial viability of the latter.

Chapter 6
ECONOMIC ASPECT
An economic analysis was done to determine the project’s desirability in terms of its net
economic contribution to the society. Data from the market, technical and financial
aspects of the project study were utilized to project the economic costs and benefits of
the project. Among the items considered were the resource flows emanating from the
project, the externalities and other intangible effects of the project.
6.1 ECONOMIC BENEFITS
The identified economic benefits of the project came from and can be classified
according to two major sources, namely: (1) benefits accruing from the operation
of the Multi-Purpose Port, such as revenue from the port and ice plant, salvage
value of the investments and working capital; and (2) benefits as a result of the
project, such as reduction in fish spoilage, reduction in fuel costs, time saving
benefits and other intangible benefits. The net present value of these economic
benefits over the 20-year operating period of the project is P249,048,376.
6.1.1 Benefits Accruing from Port and Ice Plant Operations
6.1.1.1 Port Revenues and Ice Plant Revenues
All sources of port and ice plant revenues are considered in the economic
analysis. Included also are income from land and space rentals.
6.1.1.2 Salvage Value
The assets of the project are expected to be serviceable even after the end of its
project life. The port complex is assumed to have a remaining economic value
equivalent to sixty percent of its development cost. The ice plant on the other
hand is expected to be serviceable even after its economic life of 20 years; hence a
10% salvage value is allocated as its book value after the project has ceased.
6.1.1.3 Working Capital
The amount of 562.6 Thousand Pesos allocated as working capital is assumed to

be plowed back to the project at the end of its project life.
6.1.2 Direct Benefits as a Result of the Project
6.1.2.1 Reduction in Fish Spoilage
It is expected that because of the presence of an ice plant in Sarangani, losses of

fisherman due to fish spoilage will be significantly reduced.
Economic Aspect 6-1

6.1.2.2 Time Saving Benefits
The presence of an ice plant in Sarangani would enable the local fishermen based
in Sarangani to save four days which otherwise would have been spent to travel
and queue for ice in General Santos City. The study placed value on the four
days saved by the Sarangani Fishermen considering them as extra days for
fishing.
6.1.2.3 Savings in Fuel Costs
Sarangani fishermen are also expected to save in fuel costs because they no
longer have to go to General Santos City to buy their ice requirements.
6.1.2.4 Other Benefits
Secondary benefits are also identified in this study, such as increased comfort
and convenience, improved port service, reduced travel time and land
improvement, all of which are not easy to quantify but still give intangible
benefits to the stakeholders.
6.2 ECONOMIC COSTS
The economic costs identified in this project are those that involve the use of real
resources, classified into: Capital Costs, and Operating and Maintenance Costs.
6.2.1 Capital Costs
This includes developmental cost, building and equipment cost, engineering and
administrative cost and other pre-operating cost of the project;
6.2.2 Operating and Maintenance Cost
This includes the costs of materials, labor and overhead which are incurred in
operating the project. It also includes environmental cost but excludes provisions
for depreciation, taxes and interest.
The Environmental Costs identified in the project are:
(1) Cost of the destroyed corals in the project area. A total of 436 square
meters are expected to be affected. Per CRMP Guidebook, Vol. 6, 1
square meter of coral can produce 20 tons of fish per year; and
(2) Cost of sea grasses destroyed due to the project. There are also 5,524
square meters of sea grasses that would be destroyed which is valued
at P10.00 per square meter.
Economic Aspect 6-2

6.3 VALUATION OF BENEFITS AND COSTS
The financial costs and benefits of the Multi-Purpose Port are adjusted to
conform to economic concepts. Conversion factors are applied using as reference
the standard set by NEDA as provided for in its Project Development and
Evaluation Manual.
A. Conversion Factors for Project Operating Items
PROJECT ITEMS CONVERSION FACTORS

Revenue
Port Operations 0.989
Ice Plant Operations 0.989
Salvage Value 0.953
Costs
Salaries 0.865
Supplies and Materials 0.982
Travelling Expenses 1.041
Gasoline, Oil and Lubricants 1.041
Maintenance Costs 1.041
Overhead Expenses 1.041
Pre-operating Expenses 1.041
Utilities 1.041
B. Conversion Factors for Investment Costs (per item)
PROJECT CONVERSION ECONOMIC

FACILITIES/WORK ITEMS
COST FACTOR COST
1) Economic Cost of Investment

a) Detailed Engineering & Adm. Cost 876,000 0.922 807,672
Civil and Building Works and Basic Port
b) Facilities 4,167,360 0.953 3,971,494
Equipment 10,339,600 1.030 10,649,788
Materials 13,936,540 0.903 12,584,696
Skilled labor 1,606,337 0.865 1,389,482
Unskilled labor 736,163 0.947 697,146
c) Port Functional Facilities
Ice Plant 150,735 0.857 129,180
Equipment 10,902,500 1.030 11,229,575
Materials 3,855,500 0.903 3,481,517
Skilled labor 534,113 0.865 462,008
Unskilled labor 947,887 0.947 897,649
d) Freight and Handling 242,828 1.000 242,828
e) Recurrent Costs
Materials 322,199 0.982 316,399
Manpower 133,250 0.865 115,261
Other administrative costs 127,462 1.000 127,462
Total Investment Cost 48,878,475 47,102,157
Economic Aspect 6-3

6.4 RESULTS OF ECONOMIC ANALYSIS
The economic costs and benefits of the project as well as its net incremental
benefits are shown in the Economic Cost-Benefit Flow (see Table 6.1). The results
of the projections show that the project would give economic benefits to the
beneficiaries throughout its 20-year project life.
The project’s Economic Net Present Value (ENPV), evaluated at 15% economic
discount rate, is P139, 178,171. On the other hand, the project’s Economic Internal
Rate of Return also showed an impressive result of 70%, which is more than 4
times the Social Discount Rate (SDR) of 15%.
This would mean that from the economic point of view the project would
provide economic benefit to the beneficiaries especially the fishermen and the
fish traders. Likewise, this would also mean that the Municipality of Sarangani,
and the Philippine economy stand to gain from the development of the multi-
purpose port, as it will spur economic activities in the area.
6.5 ECONOMIC SENSITIVITY
The project was also tested for its responsiveness to changes in the values of
certain project variables. Four hypotheses were considered and applied, and the
results are as follows:
Result of the Sensitivity Analysis
CASES ENPV (SDR 13%) EIRR

No. 1 - Benefits reduced by 25% P 85,130,239 48.97%
No. 2 - Benefits reduced by 50% P 30,958,282 27.8%
No. 3 – Benefits reduced by 25% and P 76,023,430 45.50%
Costs increased by 25%
No. 4 – Benefits reduced by 50% and P 12,744,664 20.46%
Costs increased by 50%
The different scenarios are applied to allow adjustments to some unforeseen

events or circumstances, namely: (1) uncertainty of the rate of collection of the
projected revenue; (2) adverse climatic conditions that would result in decrease
fishing activities and consequently would have an effect on the income
projections; and (3) delays in implementation which would result in cost
overruns.
Compared with the base scenario in the Cost and Benefit Analysis Flow and
taking into consideration all the factors that might have an effect to the
projections presented, all cases still posted positive ENPV (see Table 6.2).
Likewise, all cases resulted to EIRRs which are much higher than the Social
Discount Rate of 15%.
Economic Aspect 6-4

6.6 CONCLUSION
The integrated economic analysis of the two components of the Multi-Purpose

Port of Sarangani showed its viability from the economic point of view. It would
redound to an incremental benefit to the Philippine society in terms of increased
income and to the Philippine Government in the form of revenue from taxes,
which in turn would be plowed back to the people by way of other
developmental projects.
Economic Aspect 6-5

Chapter 7
OPERATION AND MANAGEMENT
7.1 Political and Legal Considerations
During the formulation of the 1995-2005 Municipal Comprehensive

Development Plan (MCDP) of the municipality in 1995, the infrastructure
support facilities to the municipality’s economic program was envisioned by the
local government as a catalyst for progress in the area. These facilities include the
improvement of the existing port, establishment of a warehouse and ice plant
within the port area. The municipal leadership again acknowledged this thrust
when the Local Poverty Alleviation Plan (LPAP) was prepared in 2000. The
formulation of the LPAP is a joint undertaking of the Philippine Government
and United Nations Development Program (UNDP) through the National
Economic and Development Authority (NEDA). This endeavor is a manifestation
that the local leadership is committed to support the development of the
municipality.
The provision of infrastructure facilities in Poblacion Mabila will enable the local
government to fulfill its tasks as mandated in Rule V of the Local Government
Code of 1991 (R.A. 7160), that is, to provide basic services to its constituents. The
same provision stipulates that the Local Chief Executive (LCE) must ensure the
delivery of basic services and the provision of adequate infrastructure facilities.
Moreover, Republic Act 8425 otherwise known as the Social Reform and Poverty
Alleviation Act encourages local government units to work and coordinate
closely with other lead agencies to ensure the timely delivery of the basic reform
commitments, infrastructure among other development concerns.
The necessity of having a good port facility will have a valuable impact to the
economy of the area being a fifth class municipality. For the past years, basic
services and other infrastructure facilities can hardly reach or implemented in
the municipality because of physical difficulty in reaching the area. This time, the
provincial government of Davao del Sur and the national government should
therefore provide full support to the project to uplift the general welfare of the
people in this municipality. The assistance extended to the municipality in the
preparation of the Feasibility for the above-cited facilities through the Project
Development and Monitoring Fund (PDMF) is an expression of support from the
national government as a profound action towards solving the erring problems
of the municipality.
The Philippine Ports Authority (PPA) being identified as the implementing

agency of the port facility project has the mandate to implement such
undertaking in accordance to its Charter, provided however, that the
requirements and conditions to qualify for such undertaking area complied with
by the proponent-LGU. These requirements and conditions are met based on the
results of the market and technical study of the project.
Operation and Management 7-1

Other succeeding development plans such as the Community Resource
Management and Tourism programs shall anchor on this project as a basic
facility requirement that can pump-prime the social and economic development
of municipality.
One of the major considerations of implementing the project is the presence of

Indigenous Peoples (IPs) in the area. Majority of the local populace are
comprised mainly of B’laans and the Sangils tribes wherein until now are still
observing the traditional system of governance. The presence of Chieftains in the
ruling tribes influences the decisions of the majority. Taking this aspect for
granted could derail the implementation and execution of the project. Therefore,
it became an inherent policy of the local government of Sarangani to consult the
chieftains of ruling tribes and involved them before and during the
implementation of any development projects to ensure full support of the IPs.
The project will likewise assure its compliance to Indigenous People’s Rights Act
(IPRA) Law and Environmental Impact Statement (EIS) when required to the
project. The Local Project Coordinating Committee (LPCC), in support to the
PPA and private entrepreneur who will be engaged in the ice plant venture, will
be organized to act as facilitating body to ensure that all the necessary
requirements and support needed by the project are provided and complied
with.
7.2 Project Organization and Management
7.2.1 Existing Port Management and Operations
The local government of Sarangani currently handles the management and

operations of the municipal port. However, no formal structure has been formed
to manage the port activities. A personnel from the Municipal Treasurer’s Office
(MTO) was assigned to collect berthing fees from cargo vessels that docks at the
port and remit the same to the MTO on a daily basis. A fixed berthing fee in the
amount of P 150.00 per cargo vessel is collected upon berth in the port area.
Fishing boats, on the other hand, are not charged of docking fee for utilizing the
pier at any given time. Cargo vessels, however, are given priority upon its arrival
to the port.
In the past years, a fee was charged for every cargo particularly copra that goes
out of the port. However, because of the persistent request of the farmers, the
local government removed the cargo fee for humanitarian reasons in
consideration to the economic difficulty experienced in the area.
At present, the municipal government is experiencing difficulty in maintaining

the existing municipal port due to budget constraints. This prompted the local
officials to find ways and means to improve the facility to provide better services
to the port users, practically the general populace being an island municipality.
The project, as envisioned, would provide development opportunities to the

municipality through the improvement of port and establishment of necessary
facilities. Improving the port, however, could only become viable if certain fees
are collected as payment for the use of such facility.
7.2.2 Pre-Operating Phase
7.2.2.1 Management and Organization
Among the several options considered on who will undertake the project, the
study points out that the most possible option was for the Philippine Ports
Authority (PPA) to finance and handle the management and operations of the
port facility. This is in consideration that the local government unit of Sarangani
cannot afford to raise the equity required if the project opts to avail a loan
through Official Development Assistance (ODA).
Given the option that the PPA will handle the implementation of the project, the
agency’s existing standard operating procedures and schemes of implementing
projects shall be considered in this operation. In support to the PPA’s effort, the
local government of Sarangani will create a Local Project Coordinating
Committee (LPCC), a body that will specifically assist the PPA in accomplishing
the activities related to port development that will require local intervention. The
Municipal Mayor will chair the LPCC with the heads of its local offices, a
representative of an NGO operating in the area, representative of the IPs, and a
prominent citizen as members of the committee.
Moreover, any private individual who is interested to engage in the ice business
shall directly coordinate and negotiate with the PPA for the construction of ice
plant facility within the port area to synchronize the activities during the
construction stage. The nature of transaction, whether lease or rental, shall be
agreed upon by the PPA and the interested private sector. The amount that will
be involved in the transaction shall be based on the price suggested in the study.
7.2.2.2 Manpower Requirements
The manpower requirements during the construction phase of the port will be
determined on the basis of actual need of the project. Selection for employment,
however, will consider the local residents in the municipality as potential source
of manpower for unskilled labor particularly the IPs considering that they
comprised 60 percent of the population of the municipality, The local
government will encourage the PPA to observe a 70 percent unskilled to 30
percent skilled labor ratio giving preference the local populace in hiring for
unskilled labor requirements of the project.

7.2.3 Operating Phase
The Philippine Ports Authority (PPA) shall be responsible for the overall
management and operations of the port and warehouse/shed facility. The ice
plant facility, which shall operate within the port compound, shall be governed
by standard rules, regulations and operating procedures prescribed by the PPA
with regards to the use of common space and other facilities available at the port.
On the basis of usual operations, the PPA allows other port operations such as
the warehouse, cargo handling operations to be undertaken by the private firms.
On this particular situation, it is suggested that the management of operations of
the warehouse/shed will be handled by the agency given the smallness of
undertaking.
The PPA, upon completion of the project, shall establish a Sub Port Office that
will handle the overall management and operations of the port in Sarangani. The
Port Manager shall handle four (4) units which shall compose of five (11)
permanent personnel as shown in Figure 7.1.
Figure 7.1
PPA Port Sub Office

Municipality of Sarangani
Organizational Structure
Port Manager
(1)
AU PSU ESU
(4) (4) (2)
Legend:
PM - Port Manager
PSU - Port Services Unit
AD - Administrative Unit
ESU - Engineering Services Unit

The functions and responsibilities of each personnel of the PPA Sub Port Office
shall be as follows:
PM - Oversee the whole operation of the project.
AU - Take charge of administrative services of the port.
PSU - Take charge all services in the port such as berthing,

cargo arrangement, warehouse and other related services.
ESU - Take charge of all repairs & maintenance of the port.
Hiring of personnel for the PPA Sub Port Office shall be based on the standard
qualification required by the agency. The corresponding qualification standards
and salaries for all positions to be filled up in the Sub Office are shown in Table
7.1. Salaries and wages of the casuals and contractuals that will be hired by the
project will be derived from the port revenues in the amount corresponding to
the minimum wage prescribed by the Regional Tri-Partite, Wage and
Productivity Board (RTWPB) in the region.
Table 7.1. Qualification Standards and Salary Requirements of Personnel for

the PPA Sub Port Office in Sarangani.
POSITION QUALIFICATION SALARY/Annum
Port Manager BS degree holder, preferably license Civil P168,000.00/annum

Engineer with at least 2 yrs experience in port
operations
Port Service College level, with at least 1 yr experience in P 90,000.00/annum

Unit In-charge port operations
Resource Mgt. BS degree holder preferably BS in Public P102,000.00/annum

Unit In-charge Administration
Engineering At least 3rd yr in college but preferably a P 90,000.00/annum

Service In-Charge graduate of Civil Engineering Course
Port Police At least 2 yrs in the College of Criminology P 90,000.00/annum
7.3 Port Management and Operation
The Philippine Ports Authority (PPA) as the operator of the project shall have the
following responsibilities:

a. Provide all the required services need for berthing, deberthing and mooring
of vessels;
b. Provide all service for the handling of the port passenger and cargo traffic;
c. Provide other services needed by the port client particularly the ice plant
operating within the port facility; and
d. Provide all the required manpower and equipment needed in the provision
of the above-cited services, maintenance of the surrounding environment and
port facilities.
7.4 Socio-Economic and Cultural Implications
The social desirability of the project is a more pressing concern of the local
government. The local planners insinuate that the political dynamics in the area
will not in anyway diminish the primary objective of the project as the
establishment of this facility was considered priority in the hierarchy of LGU’s
development needs.
The project conforms to the land use plan of the municipality considering that it
will be placed in the same site where the existing piers are located. The existing
site is consistent with the Municipal Comprehensive Development cum Land
Use Plan of the municipality. Likewise, residents and property owners in the
nearby coastal area will not be affected since the proposed
expansion/improvement is confined within the existing port area extending
towards the sea.
Household income in the municipality is expected to increase with the presence

of the port and ice plant facilities. Because of accessibility and convenience the
project will provide, people in the area will be motivated to engage in backyard
projects such as poultry and livestock raising and even cottage industry type
businesses as an offshoot of the increased market activity in the urban center of
the municipality and access to agricultural inputs. Other businesses like food
stalls and fast food type business, ambulant or vending activities will emerge
because of the increasing economic activity in the port area.
Income of the fishermen will also be improved since fish spoilage will be
reduced to the minimum given that ice will be readily available in the area at a
desired price and required volume at any given time. The availability of
handling equipment, affordable labor and storage facility in the port area will
provide easy loading and handling and elimination of spoilage of the farm
produce like copra.
The establishment of a credit-lending facility is necessary to provide the farmers

and fishermen opportunity to improve their livelihood should they intend to
avail funding support, either from the government or private entity. Absence of

this facility is considered a problem at this point in time. However, the
alternative choice is to encourage the Non-Government Organizations (NGOs)
and/or the local government to assist the farmers and fishermen in the formation
of cooperative/associations to be able for them to become bankable. From the
point of view of the NGOs, this endeavor could be an opportunity and a
compelling choice as a development partner to encourage the farmers and
fishermen to form cooperative or association to attain self sufficiency with the
LGUs, hand in hand with the NGOs, to pursue socio-economic, cultural and
gender development activities.
The presence of a good port facility will provide safety for the passengers
embarking and disembarking in the vessels. It will also save time for loading and
unloading of cargoes compared to the existing port condition. Having the safety
features and time saving benefits will reduce accidents and risks in spoilage,
thereby promoting social and economic efficiency. The project will also enhance
the community’s access to food supply with projected regularity of ship calls.
Price stability of basic commodities is expected to prevail in the affected area
(poblacion) as supply will be readily available.
The project will give utmost consideration to the Indigenous Peoples (IPs) to
correct some negative impressions they gained in the implementation of
government projects. The involvement and participation of IPs to government-
initiated activities such as this project must be encouraged to gain support from
them instead of resistance. Making the IPs priority in the employment for this
project could be a reasonable and negotiable undertaking.
The spatial uses in Mabila, the capital town of the municipality where the project
is located, was already delineated and considered in the MCDP. Therefore, the
residents are assured that their properties will not be affected especially the IPs
wherein neighborhood misunderstanding often arises because of property
conflicts. Nonetheless, it is observed that the IPs and migrants are in harmony
because of inter-marriages. Merging the cultural and value differences has
resulted to fairly acceptable traits transforming the once-hostile IPs into the
mainstream society.
Sanitation and hygiene within the project area and its vicinity will have to be
maintained and considered part of the port operations in order not to affect the
health conditions of the residents in the nearby area. The project shall ensure that
the environmental considerations identified in the study must be observed.
Communication and advocacy program must be continuously pursued by the
project to raise the level of people’s awareness about the project’s limitations to
minimize the advent of resistance and complaints from their own constituents.
As a requirement in port and ice plant operations, water supply could be a

problem since the project will compete with the community’s source of water. As

planned, a deep well will be constructed to supply the water requirements of the
port and ice plant operations. Given the volume of water requirements of the
project, the ground water source might be affected. As inventoried, the residents
at the poblacion area rely on 12 deep wells and 2 units level 2 waterworks
system. This apprehension, however, could still not be ascertained in the absence
of a study on ground water resource and characteristics in the area.
On the other hand, power supply in the municipality will not be affected since
NPC’s Diesel Powered Plant has more than enough power generating capacity to
provide the electricity requirements of the island and the project’s power
requirement on a day-to-day basis. Power consumption could also be minimized
since the power requirements of the Ice Plant will be complemented by a standby
Generator Set, which will be utilized when the NPC’s power plant is at rest. At
present, NAPOCOR operates on a six-hour basis (from 5:30 to 11:00 P.M. daily)
since only two barangays were energized. DASURECO, the power distributor of
the NPC power plant facility in Sarangani is currently extending its power lines
to the other two barangays, namely: Batuganding and Tucal.
Increased competition is expected in the local market. The municipal

government, however, is deliberating its fiscal management policy in fairness to
all local small and medium size entrepreneurs. However, with a good supply of
ice, local fish dealer would opt to sell their catch in General Santos City to earn
higher margin of profit.
Employment that will be generated by the project in the construction and

operation phases will be a major contributing factor to the increased economic
activity in the area. Benefits could be further enhanced if the employment
scenario will give favor to local residents. As noted, giving preference to local
residents particularly the IPs in employment generation was already practiced in
the municipality. As emphasized in the previous discussion, the local
government, this time would encourage the PPA to adopt a 70:30 proportion in
hiring unskilled and skilled workers, respectively, giving preference to
workforce available in the locality for the unskilled labor requirement of the
project.

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Feasibility Study

Project Development Assistance Center

Project Title : Establishment/Construction of Multi-Purpose Port

Project Cost : P48.88 Million

Proponent : Municipal Government of Sarangani

Location : Mabila, Municipality of Sarangani, Davao del Sur

Project Description : Development of a port complex at Barangay Mabila,

Feasibility Indicators : Multi-Purpose Port Component (public sector)

Financial Net Present Value at 12%IR: -P22 million

Although the multi-purpose port component may not be

Ice Plant Component (private sector)

Net Present Value at 16% IR: P7.1 million

The ice plant component is financially attractive to private

CHAPTER 1 THE PROJECT

1.1 Rationale/Background 1-1

CHAPTER 2 PROFILE OF SARANGANI MUNICIPALITY

2.1 Physical Profile 2-1

CHAPTER 3 MARKETING ASPECT

3.1 General Market Description 3-1

3.3.2 Mabila Port’s Attractiveness to Fishing Vessels 3-15

CHAPTER 4 TECHNICAL ASPECT

4.1 The Project 4-1

4.6 Description of Preferred Alternative 4-10

CHAPTER 5 FINANCIAL ASPECT

5.1 Project Cost 5-1

CHAPTER 6 ECONOMIC ASPECT

6.1 Economic Benefits 6-1

6.1.1.1 Port Revenues and Ice Plant Revenues 6-1

CHAPTER 7 OPERATION AND MANAGEMENT

7.1 Political and Legal Consideration 7-1

Table 6.1 Economic Costs-Benefit Flow

Economic activities in the municipality remained stagnant for many years

To become economically progressive the municipality felt the need to have a

The inception activities on the preparation of the FS commenced last February

1.2 Project Goal and Purpose

The Project 1-1

1.3 Project Spatial and Sectoral Context

Since the creation of the municipality in 1978, economic activities remained

The islands of Sarangani served as a regular path of fishing vessels in going to

The municipality of Sarangani, as it is position near the Philippine-Indonesian

As an island municipality, fishing activity in the area is a promising industry.

The Project 1-2

In view of the existing conditions of the area, the development and/or

1.4 The Project Feasibility Study Undertaking

1.4.2 Objectives of the Study

2. To develop the capability of the local government officials of the municipality

The Project 1-3

The Project 1-4

2.1 Physical Profile

The municipality of Sarangani is characterized by hilly and mountainous areas

Slope Classification Land Area % of Total

0-3% 975 9.18

2.1.3 Coastal Area

Profile of Sarangani Municipality 2-1

The municipality belonged to type IV Climate with no pronounced dry or wet

2.1.5 Water Resources:

2.1.6 Land and Mineral Resources:

2.2 Demographic Profile

Profile of Sarangani Municipality 2-2

Total 18,832 106.18 173

2.3 Infrastructure Profile

The power requirement of the municipality is being supplied by a generator set

In terms of social infrastructure, the municipality has 8 elementary schools and 2