Docunent of The World Bank FOR OFFICIAL USE ONLY Report No. 7781 PROJECT COMPLETION REPORT PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) MAY 16, 1989 Europe, Middle East and North Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their oficial duties. Its contents may not otherwise be disclosed without World Bank authorization. COUNTRY EXCHANGE DATA Name of Currency (abbreviation) Rupee (Rs) Year: Appraisal Year Average US$ 1 = Rs 9.90 Intervening Years Average US$ 1 Rs 13.73 Completion Year Average US$ 1 - Rs 16.65 ABBREVIATIONS CDLW - Central Diesel Locomotive Works ERR - Economic Rate of Return GNP - Gross National Product GOP - Government of Pakistan LDP - Lahore Iry Port MIS - Management Information System PCR - Project Completion Report PR - Pakistan Railways SDR - Special Drawing Rights TEU - Twenty-foot Equivalent Unit FISCAL YEAR OF BORROWER July 1 - June 30 FOR OmCIUL UsE ONLY THE WORLD BANK Washington. D.C. 20433 U.S.A. Olhce d OCt,vtGet.wfa Opatmm IwtAgiam May 16, 1989 MFMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Pakistan Eleventh Railway Project (Credit 1278-PAK) Attached, for information, is a copy of a report entitled "Project Completion Report on Pakistan - Eleventh Railway Project (Credit 1278-PAK)" prepared by the Europe, Middle East and North Africa Regional Office. No audit of this project has been made by the Operations Evaluatioa Department at this time, Attachment This document has a restricted distribution and may be used by recipients only in the Pekforme of their official duties. Its contents may not otherwise be disclksed without World Bank authorindon. FOR OFICIAL USE ONLY PROJECT COMPLETION REPORT PAKISTAN ELEVENTH RAILWAY PROJECT CREDIT 1278-PAK Table of Contents Page No. Preface ......................... ................. (i) Basic Data Sheet .............................. (ii) Evaluation Summary . .. .0. ....... ................ . . .. (iv) I. INTRODUCTION.o.............. 1 II. PROJLCT PREPARATION AND APPRAISAL ................. ...2 III. PROJECT IMPLEMENTATION ......................... . ... .5 IV. TRAFFIC AND OPERATIONS ................. 0...... . ..... 11 V. FINANCIAL PERFORMANCE .............. .............. . 13 VI. INSTITUTIONAL PERFORMANCE ..........."........... ...15 VII. ECONOMIC REEVALUATION..** .. . ...................... 17 VIII. ASSOCIATION PERFORMANCE ......t... .... ............ ...18 IX. CONCLUSIONS ................. ............. . ... .20 Annexes 1. Actual and Expected Project Impl_emntation . ............ 21 2. Actual and Appraisal Estimates of Project Costs.............22 3. Actual and Expected Cumulative Disbursements ....... ........ .23 4. Estimated Actual Freight Traffic, 1980-86 ................... 24 5. Estimated Actual Passenger Traffic, 1980-86.o .............. 25 6. Comparison of Certain Operation Targets and Actual Results in 1985-86 ............................... . .26 7. Operating Indicators, 1980-86 ........................ .... . 27 8. Revenue and Expenditures Accounts, 1980-86 .................. 28 9. Summary of PR Performance Under Covenants.***............... 29 10. Ex-Post Economic Costs, Benefits and Rate of Return ......... 31 Chart.,.*.................... .*.................... .*......32 Map This docur.-ent has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - 1 - PROJECT COMPLETION REPORT PAKISTAN ELEVENTH RAILWAY PROJECT CREDIT 1278-PAK Preface An IDA credit in the amount of SDR 44.3 million (US$50 million equivalent) for the Pakistan Eleventh Railway Project was approved on July 1, 1982. The credit was closed on December 31, 1985, the original closing date. Disbursements under the credit totalled US$25.71 million, and the final disbursement was made on July 25, 1986, at which time US$23.28 million was cancelled. The Project Completion Report was prepared by the Europe, Middle East and North Africa Regional Office and is based on the Staff Appraisal Report, the Credit and Project Agreements, supervision reports, transport sector memoranda, and information contained in the project file and provided by the Borrower during project appraisal. A PCR mission was undertaken in May 1987 to obtain additional information on the causes of delay in project implementation, actual costs of the pioject, and other details. This PCR was read by the Operations Evaluation Department (OED). The draft PCR was sent to the Borrower on February 23, 1989, for comments by April 14, 1989, but none were received. - ii - PROJECT COMPLETION REPORT PAKISTAN ELEVENTH RAILWAY PROJECT CREDIT 1278-PAK Basic Data Sheet Appraisal Item Estimate Actual Total Project Cost (US$ million) 132.7 42.2 Credit Amovnt (US3 million equivalent) 49.0 60 0 Disbursed 26.7 Cancelled (7/26/88) 238. Reps d 0 Borrowoers Obligation 80.7 Date Physical Components Completed June 30, 1985 v Proportion Comploted by Original Complotion Date (X) 100 lSX Proportion of Tim. Overrun (X) - Economic Rate of Return (X) t8 negative Cumulative Estimated and Actual Disbursements (US3 million) FY88 FY84 FY85 FY88 FY87 (i) Appraisal 4.5 27.0 48.6 50.0 - (1i) Actual 0.1 0.2 7.8 24.9 26.7 (III) as X of (;) 2 1 10 SO 1/ Credit amount SDR 44.3 million. Because of changing SDR/USS exchange rate, th, USS equivalent for disbursed, cancelled and borrowers obligation do not add up; In SDR million disbursed and cancelled were 23.7, 20.8 respectively. V/ Not completed as of May 16, 1987; at that time, Pakistan Rallways expected to complete the project in mid-1988, but the necessary financing was not arranged. - iII - Other Project Data Appraisal item Estimate Actual First Mention In Filo- August 20, 1950 August 20, 1980 Negotiationa Completed April 12, 1982 May 12, 1982 Board Approval - July 1, 1982 Credit Agreemnt Date - July 18, 1982 Effective Date October 1, 1982 September 13, 1982 Closing Date December 31, 1986 December 81, 1985 Executing Agency Pakistan Railways Pakistan Railways Fiscal Year of Borrower July 1 - June 80 July 1 - June 80 Follow-up Project None None Staff Inputs (staff weeks) FY80 FY81 FY82 FY88 FY84 FY85 FY86 FY87 FY88 TOTAL Preparation 4.6 39.6 20.1 64.0 Appraisal 1.4 65.2 58.6 Negotiations 16.9 16.9 Supervision 14.8 27.5 87.4 80.0 10.6 .2 120.4 Other 4.6 41.2 95.8 16.2 27.7 87.5 30.0 10.6 .2 262.6 Subtotal 4.5 41.2 95.6 15.2 27.7 87.5 80.0 10.6 .2 262.6 Mission Data No. of Date of Iten, Month/Year Persons Manweeks Report Identification 9/80 2 12 11/04/80 Preparation 1/81 1 1 Pre-appraleal 4/81 8 12 Pro-appraisal 7/81 8 1O 07/80/81 Appraisal 11/81 6 24 02/11/82 Supervision 8/83 5 10 07/21/88 Supervision 4/84 1 8 04/80/84 Supervision 7/84 3 6 08/28/84 Supervision 2/86 2 6 04/09/86 Supervision 6/85 2 4 06/20/86 Supervision 9/86 7 11 11/07/85 - iv - PORJECT COMPLETION REPORT PAKISTAN ELEVENTH RAILWAY PROJECT CREDIT 1278-PAK Evaluation Summary Objectives The objectives of the Eleventh Railway Project were to assist the railway to respond to the challenges of road competition. The maajor components of the project aimed to: (a) improve the reliability of locomotives through modernization of maintenance; (b) improve operational and financial performance through the introduction of a management information system; and (c) establish a regular export/import container service between Karachi and the inland terminal at Lahore. Responding to the challenge also required operational and financial measures to be taken and these were included as covenants. Implementation Experience The IDA Credit (1278-PAK) for the project amounted to SDR 44.3 million (US$50 million equivalent) but, as a result of delays in project implementation, only US$25.71 million was disbursed; US$23.28 million was cancelled. The proceeds of the credit were onlent to PR by the Government of Pakistan (GOP) at 11% interest rate for a period of 20 years including a grace period of 4 years. The ileventh Railway Project was appraised in November 1981 and the credit became effective on September 13, 1982. The components of the project (para 2.07) to be financed under the credit consisted of expansion and equipping of locomotive workshops, an initial stock of locomotive components for a unit exchange pool, provision of maintenance spares for locomotives, a management information system, expansion of the Lahore Dry Port and rolling stock and handling equipment for container operations. The project also included: (a) staff training; (b) technical assistance to study the possible expansion of electrification; and (c) a plan of action to improve operational and financial performance. The locomotive maintenance improvement component was modified somewhat (para 3.03) in March 1984 by redirecting some of the project plant and machinery to the Moghalpura workshop. In December 1985, a few weeks before the closing date, some of the funds of the credit were reallocated (para 3.04) resulting in an SDR 8,860,000 reduction in funds for plant and machinery and increased funds for unit exchange components and revenue spare parts. At the disbursement closing date (July 26, 1986), an undisbursed balance of US$23.3 million of the credit was cancelled. Total project cost of US$42.2 million (as of May 1987) was only 32% of appraisal cost (Annex 2), largely because the project was not completed. After the termination of credit disbursements, project implementation was continued on a much reduced scale utilizing GOP's own resources and bilateral credits. Spare parts and unit exchange components were purchased from the original manufacturers of existing equipment; otherwise all the goods financed under the credit were procured through ICB. None of the three principal components of the project was completed. For the locomotive maintenance improvement, two of the shops were constructed but one was only 15% complete; about three quarters of the unit exchange components originally intended to be procured were actually purchased. Procurement of revenue spare parts about equalled the original allocation for this purpose but the additional funds made available under the credit reallocation were not used. No implementation of the MIS component was carried out because the telecommunications installation on which it depended was not completed (para 3.08). The principal cause of delayed implementation of the project (para. 3.02) was that during the initial two years of the scheduled implementaton, the Railway Board gate little urgency to obtaining GOP approval for project components. Once final approval was given implementation proceeded satisfactorily on the locomotive maintenance and containerization components. As the closing date approached, PR/GOP requested extension of the credit but IDA refused the request (para 3.27). The refusal was based on the inordinate delays in implementation caused by late GOP/PR approval of the project and the inadequate compliance with important covenants of the Credit Agreement (8.05). Railway freight traffic (Annex 4), in terms of ton kilometers, increased slowly between FY 1981 and FY 1986, in line with the modest appraisal forecast. Passenger kilometers (Annex 5) in FY 1986 remained at about the same level as in FY 1981, falling 10% short o_ the forecast level. Among the factors explaining the stagnant railway traffic is the low availability of locomotives caused in large part by severe problems in locomotive maintenance. Improvements in operating indicators (Annex 6) were few (and some worsened) despite the Plan of Astion incorporated in the project. - vi - The financial performance of PR (Annex 8) fell far short of the objectives of the project. In contrast to an appraisal forecast of net operating revenue of Rs 711 million in FY86, the PR actually incurred a net operating loss of Rs 479 million for that year. The principal reason for the deteriorating financial performapee was the reluctanc of the GOPIPR to raise passenger fares (para 5.05). Only after a long delay was a 15X general passenger fare increase introduced in mid-1985 and this increase fell far short of the need. Compliance with financial covenants was inadequate (Annex 9). While a few uneconomic passenger services were eliminated as required under the plan of action, many more services should, on economic grounds, be terminated; recognizing that, to a large extent, the poor and deteriorating financial condition of PR is attributable to the continuation of uneconomic lines and servizes, there is little hope for achieving major improvement in these results unless either (1) PR reduces many more such services despite possible adve:se public reaction; or (2) GOP grants PR substantial subsidies annually to offset heavy losses incurred by PR where GOP requires that such services be provided (para 5.10). Results and Sustainability The economic benefits of the partially completed project were small and the rate of return negative (Annex 10). If the project is ultimately completed, which is by no means assured, the project will probably yield a low return. Hence, the project is not considered sustainable. Findings and Lessons The main objectives of the Eleventh Railway Project, were not achieved. Nonetheless, the Association has had some favorable influence on the long-term development of the railway through its continued involvement. The overseas training program has had some positive impact on the quality of management. Also, the electrification study completed under the project provides a basis for orderly development of electrification if financing for such a project becomes available. More important, the initiatives undertaken with the main project components are steps that needed to be taken and, if the railway is to continue serving the nation with reasonable efficiency, these developments should be carried forward to completion. Moreover, since the closing of the loan GOP and PR have become more aware of the need for the railway to adjust to the competitive environment. The railway has taken various initiatives of its own and a draft institutional, managerial and financial restructuring order is currently awaiting Cabinet approval. PROJECT COMPLETION REPORT PAKISTAN ELEVENTH RAILWAY PROJECT CREDIT 1278-PAK 1. INTRODUCTION 1.01 Pakistan covers a land area of about 800,000 square kilometers and has a population of about 96 million. The size and configuration of the country and the location of principal population centers are such that much domestic trade involves transport over long distances. A distance of about 1,500 km (1,000 miles) separates Karachi, the main port and industrial center in the south, from the important northern centers of Lahore, Rawalpindi, and Islamabad. Since railways generally are economically best adapted to long-distance transport, the conditions in the country are particularly advantageous for Pakistan Railways. 1.02 The steadily improving economic performance of Pakistan between fiscal years 1977 and 1983 was interrupted in FY1984 as a result of an unexpected decrease in agricultural production and a fall in migrant remittances as well as a carryover of inflationary pressures built up in the previous year. FY1985 was also a difficult year for Pakistan's economy; although economic growth rebounded strongly from the slUrp of FY1984, the balance of payments deteriorated and government finances worsened considerably. The growth rate for gross domestic product averaged 6.7 percent for the period FY1977-1983, slowed to 3.5 percent in FY1984, then returned to about the 6.7 percent level in FY1985. Per capita GNP was US$390 in 1983 compared with US$300 in FY1981-82. 1.03 Pakistan's transport system consists of Pakistan Railway (PR), semi-public Pakistan International Airlines, National Shipping Corporation, privately owned Pan Islamic Steamship Company, four provincially-owned bus companies, numerous private road transporters, National Logistics Cell, Karachi-Mu.tan Pipeline and two ocean ports, Karachi and Qasim, through which virtually all the country's exports and imports are lhandled. 1.04 The principal lines of the 8,775 km PR were built in the 19th century. The system is government-owned and operated and constitutes one of the largest and most important public sector organizations in the country. For many years, PR was the nation's principal mode of modern transport but recently has conceded that dominant position to road transport. A number of railway projects including the Eleventh Railway Project were designed to improve PR's competitive position and reverse this trend. Since 1952, the Bank Group has lent US$213 million for railway projects in Pakistan. -2- 1.05 At the time of appraisal of the Eleventh Railway Project in November 1981, PR had already received eight loans and credits amounting to US$187 million, all with essentialiy the same objectives of rehabilitating the railway infrastructure and improving PR's planning capacity, accounting procedures, management and operations. The first loan to the railways (then Pakistan Western Railway) was made in 1952 and the latest (Credit 684-PAK and Loan 1372-PAK) in 1977. All eight of the loans/credits were fully disbursed; performance however, was mixed with satisfactory results for the earlier projects and less than satisfactory results in the case of the Tenth Railway Project. Under the Eighth and Ninth Railway projects (496-PAK and 621-PAK), progress in physical implementation was slow and during that period (1965-1979) PR experienced significant declines in its overall performance. Because of politicel disturbances in the early 1970s and the severe flood damage in both 1973 and 1976, the Ninth Railway Project (621-PAK) required nine years instead of the estimated three years to be completed. The Tenth Railway Project (Credit 684-PAK, Loan 1372-PAK) was completed in seven and a half years, some two and a half years behind the original completion date. 1.06 Among the major concerns of the Association during implementation of the Eleventh Railway Project was PR's reluctance to prepare an action plan to achieve operational improvements, to curtail uneconomic passenger services and to increase passenger fares inorder to improve the railways' deteriorating financial performance. 1.07 The Eleventh Railway Project has not been completed and the project objectives have not been realized. Implementation has continued at a slow pace following the termination of disbursements in July 1986 and PR intends to complete the project by mid-1988 if sufficient alternative financing can be found. H. PROJECT PREPARATION AND APPRAISAL 2.01 The proposed content of the Eleventh Railway Project was discussed informally among GOP/PR officials and Bank staff as early as 1979. In October 1980, a mission formally identified the project which was to include three main components: (a) locomotive maintenance improvements; (b) development of container handling facilities; and (c) management information system. 2.02 In August 1961, the Secretary of the Railway Board, in a letter to the Ministry of Railways, proposed that the Eleventh Railway Project be approved in principle and requested clearance of the project concept; a copy of the request was sent to the Bank. The project differed in one important respect from preceding Baak Group-financed projects for PR: previous projects had involved gene;.al support of railway development plans, but the new one was directed to a limited number of specific high priority items. 2.03 Preparation of the project was accomplished by the PR and various consultants engaged by PR and the Bank. For improvements in locomotive maintenance, PR itself in 1980 undertook a study aimed at determining the facilities and materials required to establish a plant for remanufacturing locomotive components and assemblies essential to implement a unit exchange system. To assist PR in this work, a team of PR officials visited Railway -3- organizations in the US and Canada and produced a useful report in 1981. The intention was to locate the remanufacturing activity at the Central Diesel Locomotive Workshop in Rawalpindi, but during subsequent project implementation it was decided (April 1984) to concentrate much of this work at the locomntive workshop in Moghalpura. PR/GOP indecision on this issue caused substantial delay in approval of the project by the Railway Board and Planning Commission. 2.04 For preparation of the component concerning '>:ntainer handling facilities, PR was assisted in 1981 by both the Japan International Cooperaton Agency and R. Waheed Associates, Ltd., Consultants. In addition, the Bank employed Anderson Associates (US) to review PR's findings and provide technical assistance to PR in defining facility expansion and equipment requirements for the lahore Dry Port. This work was carried out satisfactorily. 2.05 Preparation of the management information system (MIS) component was carried out by PR, but it was not detailed. A consultant, W.H. Thompson (US), employed by the Association in 1980 prepared a brief report on PR management information needs. The railways intended that the specific characteristics of the system and its hardware requirements would be determined during project implementation by consultants to be engaged by PR. Both PR and the Association recognized that a precondition for implementation of the MIS was the completion of the telecommunications system, under the Tenth Railway Project which, at the time of appraisal was expected to be completed before mid-1983. Later, it became clear that this forecast was much too optimistic: in June 1987, the telecommunications system was still not completed. Consequently, MIS was not begun. 2.06 An additional preparation study for the project was done by Emmay Associates, Ltd. (Pakistan) in 1981. These consultants studied the future role of the railway, determining that PR would continue to have an important role to play in the transport system of Pakistan and that the railway needed strengthening in several important respects. The report was accepted by the Bank as satisfactory. However, the report only confirmed that PR had a potential role, but did not examine the fundamental institutional, management and financial reforms needed for the railway to be able to realize that potential in the face of intensifying road competition. Nevertheless project preparation mission discussed the constraints affecting both PR's ability to carry traffic and its financial performance, and operational and financial covenants were included in the loan agreement. 2.07 The proposed Eleventh Railway Project contained three high-priority items and also included a special electrification study, all of which were expected to be completed in mid-1985. The project was estimated to cost about US$132.7 million (Rs 1,393.4 million) with a foreign exchange component of US$76.1 million, and included the following components (ref. to Schedule 2 of the Credit Agreement): (a) Locomotive Maintenance Improvements (i) Expansion, equipping, and modernization of the Rawalpindi Central Diesel Locomotive Works to provide for remanufacture and overhaul -4- of locomotives components for the Borrower's entire diesel electric fleet, including the provision of stock, spare parts, technical assistance, and training. (Iii) Modernization, repair, and improvements of the Karachi Locomotive Shed to allow change over to unit exchange maintenance, including the Drovision of stock, spare parts, technical assistance, and training. (b) Management Information System Development and implementation of a management information system, including the provision of a data network, hardware and software, technical assistance, and traini.ng. (c) Containerization (i) Expansion of Lahore Dry Port, construction of tracks and storage and acquisition of rolling stock and handling equipment for the operations of container service. (ii) Development of a container tariff and information system for Karachi Port Trust. (d) Other Feasibility study of electrification of mainline Khanewal-Karachi. 2.08 Recognizing that the operational and financial performance of the railway had been less than satisfactory immediately prior to the time of appraisal, the project incorporated a Plan of Action, which set forth targets for various operating measures (Annex 7) in the years from 1981/82 to 1984/85, and required elimination of various uneconomic passenger services, staff reductions and other actions. 2.09 At the time of Bank appraisal, the PC-1 documents for various principal components of the Eleventh Railway Project had not been formally approved by the Railway Board and the Planning Commission, nor had approval been given at the time of credit negotiations or indeed effectiveness. This sanction was required by GOP before expenditures could be incurred for any of the components, even after approval of the credit by IDA. 2.10 Du-ing negotiations, in May 1982, a major issue was the Association's insistence that GOP commit itself to increase passenger fares within a specified period of time. This issue had been under discussion between PR/GOP and the Bank for months prior to negotiations. The urgent need for a substantial increase in fares on second class service was clearly required to improve the financial performance of the railways, but the GOP feared a broad p_blic outcry and political reaction. Ultimately, agreement was reached that increases in fares and rates, the amount to be determined by PR/GOP, would be announced no later than June 30, 1983. This requirement was incorporated in a - 5 - Side Letter, which also contained a Plan of Action representing measures to be implemented by PR to achieve various .pecified targets of operational and financial performance. In addition, a number of significant finar.cial covenants were included in the Credit Agreement. HI. PROJECT IMPLEMENTATION Project Start Up 3.01 The credit for the Eleventh Railway Project became effective on September 13, 1982. about 2 1/2 months after Board approval. Little was accomplished in 1982 and 1983 as PR was continuing to prepare the PC-1 documents for the main project components (para 2.09). In the fall of 1982, however, the electrification study was begun. Procurement of revenue spare parts for locomotives could go forward without PC-1 clearance, but-even here the PR was slow to act. In March 1984, a supervision mission found that about US$5 million had been expended on locomotive spare parts. Also, limited tenders had been invited for procurement of some components for the ur.it exchange system and for some container handling equipment, all in anticipation of the clearance of PC-1 documents, since no orders could be placed until obtaining clearance of those documents. 3.02 There are two principal reasons for the long delay in clearing the PC-ls. First, frequent changes in railway management during 1982-84 resulted in lack of leadership and urgency in preparing the PC-ls by the railway staff and in their finalization by the Railway Board. Also during this period the Board was giving priority to aquisition of new locomotives and construction of a railway manufacturing plant. In addition the recommendations of overseas inspection teams for each of the three components resulted in corrections and revisions being made to the PC-ls. The Board also made little effort to have the Planning Commission clear the documents in an expeditious fashion. Second, the Ministry of Finance experienced a shortage of local funds for a number of investment projects under consideration in 1984 and implementation of the Eleventh Railway Project was held up on this account. Proiect Modification 3.03 The locomotive maintenance improvement component was modified somewhat in March 1984. The original intention was to centralize, as much as possible, the heavy maintenance and remanufacture of locomotives and critical components at the Central Diesel Locomotive Workshop in Rawalpindi. On reconsideration early in 1984, it was found that a more productive approach, at least in the short term, would be to utilize the Moghalpura Workshop for remanufacture of engine blocks, turbochargers, expressors, traction motors and traction generators. This approach would also ensure continued work for the staff at Moghalpura which was phasing out its overhaul of steam locomotives. Accordingly, most of the machinery procured under the project would be directed to Moghalpura rather than Rawalpindi facilities. This change was consistent with the PC-1 then approved by the Railway Board. - 6 - Reallocation of Credit 3.04 In early December 1985, a few weeks before the closing date, but after the Association had informed GOP/PR that no extension was possible, GOP and IDA agreed to the following reallocation of the SDR 29,230,000 originally allocated to the Locomotive Maintenance Improvement component: Original New Percent Allocation Allocation Change --------- ( S D R ) ------ (a) Plant and Machinery 12,850,000 3,990,000 - 69 (b) Components 11,950,000 16,390,000 + 37 (c) Spare Part, 4,430,000 8,860,000 + 100 Component fotal 29,230,000 29,230,000 0 The principal reasons for the reallocation were to enable PR to concentrate procurement where the needs were especially critical and to emphasize procurement which could be accomplished most expeditiously in the short remaining time before disbursements were terminated. Also, not all of the funds that had been allocated to plant and machinery were required because actual costs for many items were substantially lower than the cost estimates for those items. Implementation Schedule 3.05 On the planned project completion date of June 30, 1985, the only component that had been virtually fnelly implemented was the electrification study (Annex 1) while some 802 of the revenue spares had been procured. The MIS component had not begun and the rfnaining components were only 15 - 20% completed. 3.06 The locomotive maintenance improvement component was delayed by slow action on the PC-1. Not until November 1984 was formal approval given for the subcomponent on plant and machinery and not until December 1984 was approval obtained on the subcomponent concerning procurements for the unit exchange system. Although PR initiated the procurement process prior to PC-1 approval, the entire procurement schedule was severely affected by the delay. By mid-1985, only about 15% of the component was completed. 3.07 The containerization component was similarly affected by slow GOP processing of the PC-1, which was not approved until October 1984; nevertheless, some tendering was initiated earlier in anticipation of that approval. By mid-1985, the component was only about 152 complete. 3.08 Implementation of the third major component, MIS, was to have begun in January 1984, but was never initiated becatuse of a long delay in complet.on of the telecommunications component of the Tench Railway Project on which it wis dependent. The several causes of delay in execution of the telecommuni- cations component were identified in the Project Completion Report on the Tenth Railway Project.1' -~' South Asia Regional Office "Pro ect Completion Report: Pakistan Tenth Railway Project (Credit 684-PAK and Loan 1372-PAK)" Report No. 5767, June 28, 1985. (Distributed to Executive Directors, President et al on July 30, 1985.) - 7 - 3.09 Procurement of revenu- spares for locomotives was not conditional upon approval of the Planning Commission and therefore orders could be placed earlier than for other components. Ordering began in 1983 and, as of mid 1985, most of the original US$5 million allocated to this component had been procured. Subseqiently, additional funds were allocated for this purpose, but they were not utilized. 3.10 The implementation of the overseas training activity was to have begun in 1982 with completion expected in 1985. In actuality, the training was undertaken in the first half of 1986, after the closing date but before the termination of disbursements. The reasons for the late start relate largely to the causes of delay in implementation of ocher components (para 3.06). In contrast, the feasibility study of electrification on a main line was begun on schedule but completed in September 1985, long after the May 1983 planned completion date, the longer elapsed time being attributable largely to unanticipated difficulties in carrying out the study. 3.11 The Plan of Action called for various measures to be implemented by specified time periods. In particular, the GOP/PR agreed to announce and introduce by June 30, 1983 a general increase of at least 20X in the passenger fares on second class service. This was not done and, a telex in April 1984 from the Associatior to GOP indicated that IDA support could not continue unless various actions were taken including increasing passenger fares by 20% by July 1, 1984. This was not done and the Assoc iation in a letter of September 7, 1984, again emphasized the need for GOP to grant approval by April 30, 1985. An inadequate 152 general fare increase in passenger and freight rates was put into effect by PR on June 6, 1985 (para 5.05). The actions taken with regard to implementation of other measures under the Plan of Action are discussed below (para 4.07). Reporting 3.12 PR provided the Association with quarterly progress reports on implementation of the project and railway operations. The quality and timing of these reports were satisfactory. Procurement and Physical Implementation (a) Locomotive Maintenance Improvement 3.13 The civil works element of the maintenance improvement component was not implemented in its entirety. Fully completed were the cylinder manufacturing shop and the miscellaneous component repair shop at Rawalpindi as well as the extension of a traction motor rewinding shop at Moghalpura and residential accommodations in two locations. At Rawalpindi, the miscellaneous component repair shop was 80% completed, while the store for unit exchange assemblies was only 157 completed, as of May 1987. Before the latter item can be finished, a separate shed needs to be constructed. 3.14 A total of 73 items of plant and machinery were to be procured under - .le maintenance improvement component. As of May 1987, 45 of these items had been received at a total cost of US$5.1 million, of which US$3.6 million was foreign cost. Following the termination of disbursements in July 1986, the railway used a small amount of alternative financing to carry out commitments made under some of the then outstanding purchase orders. Notwithstanding this effort, over half of the 73 items in the original procurement plan had not been purchased as of May 1987. Under the project, procurements of plant and machinery were based on international competitive bidding. 3.15 Components and assemblies for the maintenance improvement category of the project had been procured as of May 1987, to the extent of US$20.9 million, of which US$13.2 million represented foreign cost. To carry on the procurement after disbursements from the IDA credit terminated, .lternative financing was again utilized. Virtually all of the components were purchased on the basis of quotations from original manufacturers based on lists approved by IDA. 3.16 Revenue spare parts were similarly purchased on the basis of quotations from original manufacturers. As in the case of components, not all of the spare parts on order when credit disbursements were terminated could be delivered, although some of these parts were financed with alternative financing. As of May 1987, expenditures on spare parts totalled US$6.8 million, of which US$4.9 million was foreign cost. Thus, the procurement fell far short of the US$8.9 million revised allocation of the credit for this category. (b) Railway Container Operation Component 3.17 The civil works for expansion of the Lahore Dry Port have been virtually (892) completed. The earth work, track rearrangements, drainage, fire-fighting facilities, watchtower, and offices were finished but some work, as of May 1987, remained to be done on the construction of import and export sheds and a link road. Only 12% the 100 special wagons for transporting containers had been built in May 1987; the materials for all 100 wagons had been procured and the remaining 88 were to be completed by mid-1988. About 80. of the container handling equipment had been procured at that time. The latter equipment was procured on the basis of ICB while the civil works were undertaken by the PR and the materials for container wagons were procured locally for use in PR manufacture. (c) Management Information System 3.18 This component of the project was deleted because of delay in completion of :he telecommunications system, a prerequisite for the MIS (para 3.08). Electrification Feasibility Study 3.19 The feasibility study for the possible electrification of the Khanewal-Karachi railway line was initiated in October 1982 and the consultants, Transmark (UK) and Saigols (PAKISTAN), submitted a draft final report in mid-1983. Certain shortcomings were found in the report and a supplemental study was required, particularly to analyze the economic implications of incremental development of electrification. The supplemental study was begun in July 1985 and the final report was submitted in November - 9 - 1985. This report was acceptable to the Association and PR/GOP. Its principal finding was that it would be economically feasible to develop electrification of the 160 Km Khanewal-Samasatta line, and the PR plans to initiate construction of that work, subject to availability of funds and GOP approval. Training 3.20 Not until the latter half of 1985 were significant steps taken toward implementation of the training component. In September of that year PR sent to the Association the first of a series of lists of proposed candidates for overseas training. In December 1985, the Railway Board forwarded to the Association training proposals from various organizations in the United Kingdom, Canada, and the United States. The Association approved both a list of candidates and the proposed training program in British Railway and Canadian Pacific; the overseas training began in.J'anuary 1986 with middle and upper level management staff attending programs appropriate to individual specialties. Sixty two persons were accommodated, each participating for periods varying from two to four months. About 120 man-months of training were involved which was approximately three times the 42 man-months planned. Management staff consider the program to have been beneficial and expressed interest in having more opportunities of this type. While the program was originally intended, at least by the Bank, for middle level management staff, a considerable number of the participants were high level staff, some approaching retirement. 3.21 The overseas training was not begun until after the closing of the credit. It was carried out between January and July 1986, a period during which IDA continued to make disbursements from the credit. The principal reason for the long delay in execution of this project element is that it was designed essentially as part of the locomotive maintenance improvement component and thus its implementation was affected by the problem of PC-1 approval already discussed (para 3.02). 3.22 In the technical assistance area, Transmark, consultants (UK), undertook two studies in addition to the electrification study reviewed above. One of the studies analyzed track machinery maintenance and the other explored the stores and inventory control system; both reports made recommendations for improvement in procedures and the reports were satisfactory. The two studies did not begin until January 1986, i.e., after the credit closing date, and were completed in June 1986. Another study undertaken by consultants under the project assisted PR in planning a management information system. Initiated early in 1986 by Canadian Pacific Consulting Services, this study was completed in June 1986 and the report was found to be satisfactory. Proiect Cost 3.23 The total project e'ost estimated at appraisal was US$132.7 million but because of the non- or under-implementation of most of the project components, actual costs, as stiown in Annex 2 were much lower. Actual costs as of May 1987 were US$42.2 million and included some costs incurred since the termination of disbursements in July 1986. The difference between the appraisal estimate and the actual cost is due to the shortfall in project completion. - 10 - 3.24 The MIS component, which was not implemented at all, accounted during appraisal for US$13.4 million or ten percent of the total cost estimate. For other components, the percentages of actual cost to appraisal cost, shown in Annex 2, vary widely and indicate the extent of completion of the particular components. Only in the case of unit exchange components for maintenance improvements are the actual and appraisal costs approximately the same. Expenditures on training was lower than the appraisal estimate mainly because of the absence of local training costs. The electrification study cost little more than a third of the estimate for that item. 3.25 Modification of the project, as indicated in para 3.03, shifted the use of funds as between workshop installations at Rawalpindi and Moghalpura, but did not have a significant effect on project costs. The reallocation of credit funds among categories, as described in para 3.04, recognized that appraisal estimates for plant and machinery items were high in relation to actual costs. While the funds available,for revenue spare parts were doubled in the reallocation, which occurred ixmediately prior to the closing of the credit, the increase did not result in larger foreign expenditures for spare parts. Financial Sources and Disbursement 3.26 Under the original IDA credit, the amount available to GOP/PR was US$50 million but only US$25.7 million was actually disbursed. Of the US$42.2 million total project cost (to May 1987), the IDA creut of US$25.7 mullion covered 61%. The remaining cost of US$16.5 million was provided by GOP. 3.27 Extremely small disbursements of the credit were made prior to June 30, 1984, as shown in Annex 3. Under the appraisal plan, US$27 million was to have been disbursed at that time, but only US$200,000 had actually been disbursed. At the planned project completion date, June 30, 1985, US$7.8 million had been disbursed, and when the credit was closed on December 31, 1985 the amount was US$13.0 million, about one-quarter of the total credit. IDA denied a request for extension of the credit, but subsequently agreed to honor applications for withdrawals from the credit for approximately six months after closing. PR accelerated its procurement efforts in 1985 with a view to withdrawing as much of the funds available as possible before termination of disbursements. The final disbursement was made on July 25, 1986, raising the cumulative disbursements to US$25.7 million. Some US$23.3 million, or 47 percent of the US$50 million credit, was cancelled. 3.28 The causes of slow disbursements are because of tAe delays in obtaining GOP/PR approval of the main project components (para 3.02). Although there were some difficulties with PR/GOP processing of withdrawal applications, due to insufficient experienced staff in the Railway Board, those problems were a relatively minor cause of disbursement delays. Performance of Consultants, Suppliers and Borrower 3.29 The consultants employed to carry out the electrification study, Transmark (UK) and Saigols (Pakistan), were required to undertake a supplementary study following their draft final report; the results in the end were found acceptable. The quality of training provided to PR staff by British Railways and Canadian Pacific Railway was found to be satisfactory to the Bank and considered beneficial by PR management. No substantial problems - 11 - were experienced in dealings with suppliers although a large and costly machine shipped from Italy was severely damaged in shipment requiring replacement with much consequent delay; responsibility for the damage had not been assigned but insurance covered the loss. 3.30 Performance of the Borrower in the physical implementation of project components was less than satisfactory. GOP/PR should have either processed the PC-1 documents more expeditiously (para 3.02) so as to permit timely project implementation or should not have negotiated and signed the credit agreement. IV. TRAFFIC AND OPERATIONS Freight Traffic 4.01 At the time of appraisal, freight traffic was expected to increase slightly at about 1% p.a. between FY 1981, when it was 7.9 billion TKM, and FY 1986 when it rose slightly to 8.3 billion TKM. The actual TKM for FY 1986 was almost exactly as forecast but, as indicated in Annex 4, followed an erratic path in the interim, falling sharply in FY 1982 and rising almost as dramatically in FY 1986. In terms of tons of freight loaded, the pattern was much the same. The average length of haul was the same in FY 1986 as in FY 1981. The lack of significant growth in railway freight traffic does not mean that the economy was stagnant during recent years but rather that the railway was losing ground to competing transport in the haulage of the nation's freight. 4.02 A number of factors explain the lack of steady growth in railway freight traffic. One of these causal factors has been the failure of the railway staff .o adapt its policies and practices to the developing competitive situation in which PR's competitors, especially truck operators, aggressively pursue the available traffic. The railway's organization and management system has not been conducive to either efficient operations or the provision of high quality services that are responsive to shipper needs and desires. Severe problems with locomotive maintenance have been particularly damaging to reliable, high quality freight services. Failure to implement fully, as planned, the Eleventh Railway Project limited the alleviation of some of PR's major constraints on traffic growth. 4.03 The railway which once strongly dominated modern transport in Pakistan, has seen its role shrink to the point where it handles less freight traffic than highway transport. Yet the role of the railway continues to be fundamentally important to the economy. PR has substantial potential for increasing its participation in the total movement of freight. Realization of that potential, however, will require reorganization of the railway and an improved management system. Also, the PR must gear itself to handle containers expeditiously and on competitive terms. Moreover, much improvement will be needed in locomotive maintenance to improve operations and the reliability of freight services. - 12 - Passenger Traffic 4.04 Appraisal forecasts of passenger traffic were somewhat more optimistic than forecasts of freight traffic. Passenger kilometers (PKM) were expected to increase at 2 to 3% p.a. from 16.4 billion in FY 1981 to 18.7 billion in FY 1986, as shown in Annex 5. Actual PKM in FY 1986 were 16.9 billion, or about 10% lower than forecast and at virtually the same level as in FY 1981. Traffic has subsequently increased to 18.0 billion PKM in FY88. The number of passengers carried by PR fell by 422 between 1981 and 1986, as the railway lost substantial numbers of short-haul passengers to highway transport. Accordingly, the average distance travelled by rail passengers increased from 133 km to 203 km between FY 1981 and FY 1986. 4.05 The reason for the loss of much short-haul passenger traffic is that branch line and stopping train services are uncompetitive with modern road transport. Another cause of the low passenger traffic in FY 1986 was the' elimination of some uneconomic passenger services. also an action required for improvement of financial performance. 4.06 Rail passenger service is a major part of the PR's business and will undoubtedly continue to be so. In fact, the railways have given undue preference to passenger services over freight services in the use of locomotives and in other ways. In any caze, PR has an important role to play in the movement of passengers although it is likely to experience competitive problems similar to those in other countries, namely, that bus operators capture much of the short-haul traffic while airlines increase their participation in the movement of long-distance passenger transport. Operating Performance 4.07 A key element in the Plan of Action included in the Eleventh Railway Project was the establishment of a set of operational targets to be achieved during project implementation. Annex 6 shows the appraisal targets for the years 1982 through 1985 and certain revisions of the 1985 targets proposed during a Bank supervision mission in July 1984, to allow for the lack of progress in the project components. For most indicators, the revised targets were liberalized at that time in the sense that the new objectives were more easily attainable than the original targets. For example, the overall availablity of diesel locomotives as a percentage of the total fleet of such locomotives was originally to increase gradually from 83% in 1982 to 882 in 1985. In July 1984, the target for 1985 was reduced to 85X. In 1986, the actual 84.4% level achieved was still short of both the original and the revised targets set for 1985. 4.08 Problems in locomotive maintenance have been particularly severe in recent years with adverse consequences for operational performance and reliability of service. One of the few positive indications, as shown in Anrax 6, is that in 1986 the percentage of diesel locomotives out of service soecifically because of lack of spares had been reduced to 2.26X, a figure better than the revised 1985 target. On the negative side, the number of traction motorL aboard locomotives not working was 300, or double the number in the revised 1985 target and many times larger than the original target for that year. The diesel locomotive downtime during scheduled heavy repairs remained above both the original and revised targets for 1985. - 13 - 4.09 With regard to freight train operations, all three revised 1985 targets were achieved ir. 1986 but the original targets had not been attained. 4.10 Various operating indicators are presented in Annex 7 with the results shown for the fiscal years 1981-1986. Average freight train speeds show no improvement. Wagons per train rose sightly and net load per freight train increased 9% in the period. Turnaround time for wagons rose from 15 to 18 days. 4.11 One of the requirements of the Plan of Action was that PR eliminate uneconomical passenger trains at the rate of 2 to 3 per month beginning in July 1982. The PR cancelled 18 passenger services in 1982, 4 each in 1983 and 1984, 8 in 1985 and 27 in 1986. Other suburban passenger services were eliminated and trains were dropped on various days for certain additional services. Some 143.passenger train stops had been eliminated by Apri.l 1986. Locomotives have been diverted from poorly patronized trains or sections to more remunerative sections. 4.12 Had the Eleventh Railway Project been fully implemented as scheduled, the operational performance of PR would no doubt have been better than the actual result. A completed locomotive maintenance improvement component would have been a particularly helpful in view of the critical problem of poor maintenance of the locomotive fleet. V. FINANCIAL PERFORMANCE Net Operating Revenue 5.01 Appraisal forecasts of net operating income anticipated a loss of Rs 485 million in FY 1982 followed by a surplus Rs 232 million in FY 1983 and growing surpluses in subsequent years, as inl1icated in Annex 8. In FY 1986, the surplus was expected to reach Rs 711 million. Realization of these optimistic financial forecasts, according to the Staff Appraisal Report, would depend largely on significant increases in railway freight traffic and sizeable increases in passenger fares. 5.02 Actual financial results during the 1983-1986 period were far short of the forecasts. Large net operating losses were incurred *n each fiscal year 1982-1986, growing rapidly from Rs 224 million FY 1982 to an unprecedented Rs 817 million in FY 1985, then moderating somewhat to a loss of Rs 479 million in 1986. Between FY 1982 and FY 1985, operating expenses increased by 362 while operating revenue rose only 212 as PR postponed needed passenger fare increases. 5.03 The primary reason that the financial results fell so far short of the forecast was that the PR failed to act quickly and adequately in raising passenger fares on reducing costs of providing passenger services. In FY 1986, the loss reduction from the preceeding year occurred mainly because of a sizeable increase in freight traffic in FY 1986 and the introduction of a 15% general fare increase on June 6, 1985. Operating losses were also influenced to some extent by increases in appropriations to the depreciation reserve which rose more than had been anticipated in the forecasts. - 14 - 5.04 Appraisal forecasts show a relatively poor operating ratio of 1162 in FY 1982, then falling sharply to 94% ia FY 1983 and to still more satisfactory levels in subsequent years. The actual operating ratio rose from 1072 in FY 1982 to 122% in FY 1985, then fell to 111% in the following year. The reasons for the adverse trend in the actual operating ratios experienced by PR are to be found mainly in the failure of the PR to take timely steps to increase revenue, as noted above (para 5.04). Rates and Fares 5.05 Financial covenants 2n the Credit Agreement, summarized in Annex 9, required GOP/PD, inter-alia, Li take measures satisfactory to the Association, to enable PR to earn revenues sufficient to cover operating expenses and debt service requirements. In carrying out this measure, GOP agreed in the Plan of Action to announce increases in rates/fares no later than June 30, 1983.. One action required was a substantial general increase in passenger fares but GOP/PR failed to act in 1983. Bank missions and communications reminded GOP/PR frequently of the urgency of action on this issue. Not until June 1985 did the PR introduce a general passenger fare increase, two years later than had been originally agreed. Moreover, only a 15% fare increase was introduced at that time despite the Association's repeated insistence that PR needed at least a 20% increase on second class passenger service, the class of service yielding by far the largest amount of passenger revenue. 5.06 The basic reason for GOP's reluctance to raise passenger fares has been the fear of widespread public criticism of such action and consequent political reaction. GOP successfully opposed general fare increases during the period from 1980 to 1985 even though PR's financial condition was deteriorating sharply9 as noted above. Regrettably, the longer fare increases are postponed the more difficult it becomes during inflationary times to make the necessary fare adjustments, because the size of the increase required rises while the travelling public comes to believe that stable fares are a permanent feature of railway policy. 5.07 The insufficient action on fare increases meant that the borrower did not comply with the financial covenant of Section 4.03. If PR continues to have difficulty obtaining GOP permission to charge compensatory fares for passenger services, the railways would be well advised to concentrate more of their resources on freight transport because the financial potential of freight traffic on PR is generally greater than that for passenger traffic and because it is generally easier to adjust freight tariffs for cost increases. 5.08 In addition to the financial covenant of Section 4.03 relating to PR's overall pricing structure, Section 4.04(a) required that revenues from passenger services as a minimum cover the variable costs of such services. As cf mid-1986, while mail/express trains met this test, other passenger services did not. Section 4.04(D) required that steps be taken to assure that fares of air conditioned sleeping coach services at least cover the total cost of such services; the 15% general increase of July 1985 which was applicable to this class of service as well as others was not sufficient to cover total cost of the service, ind the railway concluded that any further increase would reduce patronage, t' ss reducing rather than increasing revenue. - 15 - Elimination of Uneconomic Services 5.09 Under Section 3.09 of the Credit Agreement, the borrower was to cause PR to carry out a Plan of Action, the details of which were agreed between the Association and PR. Among the various actions required was the elimination of uneconomic and underused passenger trains. In response, PR eliminated a few of these services but, according to PR, pressure from politicians made it necessary early in 1987 to discontinue, for a time, the cancellation of further uneconomic services. 5.10 A railway costing study undertaken in the latter part of 1985 has permitted an analysis of the costs and revenues of different types of passenger services for FY86: Revenue X of Type of Passenger as X. Pass. Service Cost Revenue of Cost Train (Rs/PKM) (Rs/PKM) KM Express 0.085 0.097 114 46 Ordinary 0.592 0.080 14 51 Commuter 0.226 0.030 13 3 Thus while revenues from express services more than cover the cost of such services, revenues from ordinary and commuter passenger service cover only a small fraction of the related costs. Had such an analysis been available earlier, the Plan of Action (provided for under Section 3.09 of the Credit Agreement) requiring at least a 202 increase in passenger fares, and the elimination of uneconomic passenger trains could have been modified. In view of road competitior., it would be inefficient to expect express passengers to subsidize ordinary and commuter passengers. On the other, raising ordinary and commuter fares the seven to eight fold needed to cover their costs was hardly practical. Thus, whereas the fares for express services should be required to cover costs, for other services the options are to either undertake a phased program of withdrawal or for GOP to directly reimburse PR for losses incurred on those non-commercial unprofitable services that GOP wished to continue for political or social reasons. Discussions with PR/GOP during 1987/88 in context of a possible Transport Sector Adjustment Loan, have generated a better understanding of such an approach and this is now likely to be adopted. VI. INSTTUTIONAL PERFORMANCE Organization and Management 6.01 Among the strengths of the Pakistan Railways organization are the many highly experienced staff who have developed their skills over long periods of service with the railways. The system is large and complex requiring diverse technical specialists as well as managers capable of integrating the activities of a wide variety of operating units. Highly experienced staff are indispensable for efficient operation of such an elaborate system. Wl.ile spr-e staff undoubtedly have substandard capabilities, many are very competent in their jobs and they constitute an invaluable resource on whict, to build a belter and more efficient organization. - 16 - 6.02 The effectiveness of a workforce depends heavily on how it is organized and there is no doubt that PR needs much improvement in this regard. For example, there are too many managers reporting directly to the General Manager. Also, the Railway Board does not confine itself to broad policy matters but involves itself unduly in activities such as procurement that should be the responsibility of the General Manager. The entire outmoded organizational structure needs to be substantially modified and management needs to be assisted by a computer-based management information system. PR management should have more authority over such vital matters as adjustment of rates and fares. Also, there is need for mote commercial orientation of managerial and operational personnel, particularly of those staff who deal directly with the shipping and travelling publLic. 6.03 A study of the PR's organization and management was completed in early 1987 by the Canadian Pacific Consultants Service. Many recommendations for improvement were presented in the report. Subsequently the Bank, at GOP's request, in April 1988 examined the need for institutional, managerial and financial restructuring. The Bank's report was well received and a draft Presidential Order which adopted most of the key measures identified in the Bank's report, is awaiting Cabinet approval. 6.04 Institutional problems of major importance were evident in carrying out the Eleventh Railway Project. After agreeing to the project appraisal and signing the Credit Agreement, the Railway Board and the Planning Commission spent two years reviewing project components and approving the PC-1 documents (para. 3.02). Staff Development 6.05 In mid-1986. PR had a total staff of 128,047, and thus was the largest public sector employer in Pakistan. Among the measures that were to be taken by PR under the Plan of Action for the project was that of reducing the number of non-professional and unskilled staff through attrition. During the period from FY 1982 to FY 1986, traffic increased somewhat while the staff size declined as follows: FY 1982 FY 1986 Change Ton-kilometers (billion) 7.1 8.3 +172 Passenger-kilometers (billion) 16.5 16.8 + 2% Total Staff (thousand) 130.0 128.0 - 2Z Thus some progress was achieved in reducng staff despite a rise in traffic. Nonetheless, substantial overstaffing remains. 6.06 The Directorate of Research and Training, Pakistan Railway, was established in May 1983 by integrating four independent training institutions. In 1986, technical training was provided to 1,489 personnel at the Walton facility in Lahore; artisan and supervisory training was given in Karachi and at the workshops in Lahore and Rawalpindi. Under the project, overseas training of 62 managerial and technical staff was undertaken in British Railway and Canadian Pacific Railway (para 3.20). - 17 - VII. ECONOMIC REEVALUATION 7.01 The locomotive maintenance improvement component of the project was expected to result in a substantial increase in the availability of diesel locomotives. Specifically, the 83% availability of such locomotives at the time of appraisal was expected to rise to 88% upon completion of the project which wiuld be equivalent to adding 24 diesel locomotives to the fleet. Approximately the same amount of benefits was expected from increasing the tractive effort of existing locomotives. 7.02 In actuality, the availablity of diesel locomotives, according to 1986 data, increased only marginally to 84% and therefore only a fraction of the antic4pated benefits based on this factor were realized. With regard to the tractive effort of locomotives, the situation actually deteriorated since the number of electric motors not working increased from 250 at time of appraisal to 300 in 1986. The fact that this component has not been fully implemented accounts in large part for the minor benefits realized. Benefits from plant and machinery procured but not yet fully operational will increase somewhat in the near future. 7.03 The railway container operations component was designed to enable the PR to handle a large number of containers be -en Karachi and Lahore, sufficient to operate one container train a week beginning in 1985 and rising gradually to one such train a day four years later. In FY 1986, some 12,000 TEU of containers were expected to be handled on the railway, or 15% of the total container traffic then forecast to be available. Benefits for the rail haul were expected to be derived from savings in rail transport costs compared with trucking costs, reduced pilferage ind damage to freight, reduced shipping rates and lower packaging costs. 7.04 Actual benefits from railway container operations have been much less than planned. The number of TEUs transported by the railways in FY 1986 was only 2,174, and less than 1% of the total TEUs available. Assuming the savings factors for particular types of benefits are realistic, the small volume of container traffic on the railways indicates that the overall benefits from this component were only a small proportion of the benefits forecast. Implementation of this component, of course, was incomplete; the failure to build 88% of the planned container wagons limited the growth of container traffic on PR but an even greater constraint was PR's lack of rigorous marketing of container services in Karachi port. 7.05 Whether the partially implemented locomotive maintenance improvement and railway container operation components will be completed or not is uncertain. PR management in May 1987 expressed its intention to do so but its ability to carry out remaining activities depends on the availability of financing. Even if full project implementation is achieved over the next year or two, the long delay will probably result in a low overall economic rate of return. According to the Staff Appraisal Report, a two year delay in project implementation would result in a 10% ERR and a three or four year delay would reduce the ERR substantially below that level. 7.06 Economic rates of return were calculated in the Staff Appraisal Report for two elements of the project: (i) 172 for the combination of the locomotive maintenance improvement, MIS and technical assistance and training; - 18 - and (ii) 29% for the railway container component. Annex 10 shows that, in view of the low benefits actually realized, neither of these project elements has an adequate ERR. As previously pointed out, the MIS component was not implemented. The locomotive maintenance improvement component has a negative ERR while the railway container component has a low of 4.42 ERR. Overall, given that the components as appraised were either not implemented or only partially completed the project yields a negative ERR. VIII. ASSOCIATION PERFORMANCE 8.01 During project preparation in 1980-82, the need for the railway management to respond to the challenge of road competition was identified. The Association felt that further project assistance would provide an opportunity to have a continuing dialogue with railway management on how they were to adjust to this challenge. Adjustment would require increased efficiency of operations through operating improvements, through improving locomotive reliability and utilization, and through adopting modern management techniques. The railway also needed to develop new services including moving containers between Karachi and Lahore. These items were discussed during preparation and the project components carefully prepared over a two year period together with the needed operation improvements and financial changes. 8.02 The selection of high-priority components for inclusion in the effort were sound. Locomotive maintenance was, at the time of appraisal and remains a critical problem area and the project approach to alleviating the maintenance constraints on locomotive availability was appropriate. Also container operations represent a traffic growth opportunity of major proportions for PR and it was reasonable to assist the railway in gearing up for that trxffic. Similarly, the introduction of a management information system is o:xe of the best possible measures for improving railway management and thus warranted inclusion in the project. In addition the project included covenants covering financial and operational measures needed for the railway to make adjustment to a competitive transport environment. 8.03 Project implementation suffered from various factors. Perhaps the most important is that, despite the Pakistan's Fitth Development Plan (1983/84 - 1987/88) proposing a change in the railways role, it was only in 1985 that the Railway Board's perception of PR's role began to change from their earlier view that it was a public carrier whose primary duty was to provide inexpensive passenger transport. Also during 1982-84 railway management was in a state of flux with frequent personnel changes in senior positions. Thus, during the critical start up period for the project in 1982 and 1983, railway management did not g4ve priority to the project either to meeting the financial or operati1onal covenants or to expeditiously processing the PC-l's. Indeed the Railway Board gave priority during 1982-84 to acquisition of locomotives and construction of a locomotive manufacturing plant. With regard to the MIS component, neither the Association nor anyone else could have foreseen the difficulties and delays that developed in installing the telcommunications facilities which were a prerequisite for the MIS. 8.04 Credit covenants, including side letters, focussed on the operational and financial measures needed for the railway to begin adjusting to the competitive transport environment. The two year delay in revising tariffs or to obtain direct GOP payments for those non-commercial services that could not - 19 - be withdrawn, was thus a major failure to address PR's deteriorating financial performance, a critical element in the adjustment. Similarly PR's failure to address seriously the need for operating improvements and modification of services meant that the project's objectives could not be met. 8.05 Beginning in April 1984 the Association alerted PR and GOP to the above failures in a series of communications, which stated that continued IDA support was only possible if financial and operating improvement actions were taken. Following an April 1984 supervision mission, the South Asia Director informed GOP that IDA support for the project could not continue unless the following corrective measures were taken: (i) By July 1, 1984 passenger fare increase of 20%; (ii) By August 15, 1984 acceptable program to meet operational targets; (iii) By July 1, 1984 approval of all PC-ls except MIS component. In a June 1984 internal Association review, senior management (SVPOP) strongly indicated that cancellation would be fully justified if an acceptable plan of action for improving railway operations and finances were not put forward by PR/GOP. 8.06 The July 1984 supervision mission noted that little progress had been made and the South Asia VP wrote to the Secretary of Finance reiterating the Association's concerns, and stating that for IDA support to continue, action was needed by November 1984 on: (i) Approval of PC-l's except MIS component; and (ii) ?repar-tion of an acceptable list of dated action covenants required to meet objectives of the Action Plan and the revised operational targets. By the end of November 1984, the PC-l's were approved but no progress was made on the other matters and GOP was informed of the need for progress on them. Correspondence continued in early 1985 asking for the list of dated actions. The May/June 1985 supervision mission informed GOP that any consideration of a request for an extension of the project would focus on operational improvements. Also although GOP had proposed a 23% fare increase with effect from June 1985, th* increase was reduced to only 152. After many years of inaction such an increase was considered inadequate. The Association again as'ed for an Action Plan to be received by July 31, 1985 and one was finally sei.. on August 11, 1985. 8.07 The September 1985 supervision mission found that financial performance was inadequate, and that although there was some improvement in operations, there were deficiencies in certain key areas. The mission recommended, that based on non-compliance and PR/GOP's inability to provide a satisfactory Action Plan, the closing date remain at December 31, 1985. The Association thus had no option but to decline to extend the closing date since it had become quite clear that the overall project objectives of assisting PR to adjust to road competition were not being met. - 20 - 8.08 Officials of PR and the Ministry of Railways as well as other interested agencies of GOP were disappointed that IDA did not extend the Credit beyond the December 31, 1985 closing date. These officials felt that such an extension was warranted and in the best interests of all the concerned parties. They noted that extensions had been granted in preceding projects and that such action had permitted completion of those projects. Nevertheless, the Bank's decision not to extend the credit, despite half the funds being undisbursed, has subsequently had a powerful effect in getting the message acrnss to GOP and PR that unless the railway begins a serious attempt to adjust to the competitive transport environment, it would have little place in Pakistan's future transport system and that investments in the railway would be futile without such adjustment. During 1986-88 the Bank has had an extensive dialogue with PR and GOP on railway restructuring in the context of a possible Transport Sector Adjustment Loan, and there is now a greater awareness within both PR and GOP of the need for the railway to adjust. IX. CONCLUSIONS 9.01 The project was well-conceived, concentrating on high priority needs of PR, but suffered on account of factors which had nothing to do with its design or objectives. In retrospect the Association was over-optimistic about how quickly the railway management could begin to respond to the challenge of road competition. As such, it might have been better to delay appraisal until it was clear that the Railway Board understood the need for adjustment and was willing to take appropriate measures. Indeed the latter is now occurring and the project components will, belatedly, play an important role in assisting the railway to make the adjustment. 9.02 As regards implementation of the major project components, had the necessary PC-1 documents been approved before project effectiveness the results would have been more satisfactory. The principal lesson learned from this experience is that such approval should be a prerequisite for project effectiveness. This lesson was taken into account during preparations for the FY87 Fourth Highway Project. 9.03 Compliance with certain covenants in the Credit Agreement was too little and too late. Some of the requirements of the covenants and the Plan of Action called for measures, such as increasing fares and eliminating uneconomic passenger services, that invited reaction from local politicians. These measures were essential, however, given the rapidly growing deficit and need for financial discipline. PAKISTA ELEVENTH RAILWAY PROJECT (CREDIT 1276-PAKI PODJEC COT PLETION REPORT Actual and Exoectod Pro1ect Imlementation Completed Consultant by ExV. Contractor Tenderino Contract Award Bepinnina of Work Csmletion nf work Completion Pro1ect Comoonent (Nationality) Actual LxARMe. Actuil £ZagKIM Actuil EU*&1SA Aluam kU_SOate Malntenance Improvements 11 Shops 85 1/83-6/83 12/85 6/83-11/83 /85 11/82 not compl 12/84 is 1'fl Unit Exchange Components 8b 11/ 2-6/83 12/85 1/83-11/83 /85 10/83 not compl 12/84 IS 'v.agement Information System None -- None 6/83-8/83 not begun 1/84 -- 10/84 0 Data Network None 10/82-12/82 None 3/83-9/83 not begun 1/84 -- 6/85 0 '' Hardware None -- None 8/83-9183 not begun -- 0 i) Software c. Lahore Ory Port 83 11/82-4/83 /83 5/83-8/83 8/83 8/83 not comp 6/85 iS d. Eouiient & Rollino Stock 84 12/52-4/13 /84 6/83-10/83 8/85 11/83 not compl 10/8% 1S e. Tech, Assist, b Trainina (i) =. Adz & British Railway; 2/86 10/82 6/86 S/85 10 Train rg Canadian Pacific (1i) Electrificati1n Transmark (UK); 82 -- 9/82 9/82 10/82 10/82 9/85 S/83 95 StfWI Saigols (PAK) f. Revenue Sares 83 11/82-3/84 12/84 1/83-12/83 /84 10/83 not camp 6/85 80 Snurce: Pakistan Railways and Staff Appraisal Report June. 1987 PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) PROJECT COMPLETInN RUPMR Actual and Aooraisal Estimates of Prolect Costs Million Actual Total Actual Costs Appraisal Estimates Cost as X of Local Foreign Total Local Foreign Total Appraisal Cost _ Prolect Component ,R _USt USt Eautv -R- us3 Us3 Eauiv Estimate 2/ a. Maintenance Imorovements (i) Shops 20.5 3.6 5.1 211.2 16.3 36.6 14 (ii) Unit Exchange Components 106.0 13.2 20.9 59.5 15.3 20.6 101 b. Manaaement Info System (i) Data Network 0 0 0 12.7 1.4 2.6 - (ii) Hardware 0 0 0 43.7 4.2 8.3 (OMi) Software 0 0 0 13.1 1.3 2.5 - c. Containerization (i) Civil Works 42.2 0 3.1 72.0 .2 6.7 46 (it) Wagons 30.4 1.3 3.5 34.0 3.2 6.7 52 (iii) Handling Equipment 0 1.1 1.1 4.4' 1.8 2.5 44 d. Tech. Assist. & Trainina (i) Tech. Advise & Training 0 1.4 1.4 8.8 1.8 2.6 54 (ii) Electrification Study 4.5 0.1 0.4 7.6 .3 1.1 36 e. Revenue SDares 26.8 4.9 6.8 127.3 3l0. 42.5 16 l'otal Cost 230.4 25.5 1/ 42.2 594.3 76.1 132.7 32 1 This amount is USfO.2 million below the amount of the credit disbursed due to use of average exchange rate that may differ slightly from actual. 2/ It is important to note that these percentages indicate mainly the extent of completion of the components. Source: Pakistan Railways and Staff Appraisal Report May 1987 - 23 - Annex 3 PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) PROJECT COMPLETION REPORT Actual and Expected Cumulative Disbursements (US$ Million) IDA Fiscal Appraisal Actual as a 2 Year & Quarter Actual Estimate of Approx. Est. 1982/83 Sep 30 Dec 31 0.0 1.3 Mar 31 0.0 2.3 - Jun 30 0.1 4.52 2 1983/84 Sep 30 0.1 8.5 1 Dec 31 0.2 13.0 2 Mar 31 0.2 19.0 1 Jun 30 0.2 27.0 1 1984/85 Sep 30 2.7 33.5 8 Dec 31 3.8 40.0 10 Mar 31 4.5 44.0 10 Jun 30 7.8 46.5 17 1985/86 Sep 30 10.3 48.5 21 Dec 31 13.0 50.0 26 Mar 31 13.7 Jun 30 24.9 1986/87 Sep 30 25.7 Note: The final disbursement was made on July 25, 1986 at which time US$ 23.3 million was cancelled. Source: Staff Appraisal Report and IDA. June 1987 - 24 - Annex 4 PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) PROJECT COMPLETION REPORT Estimated Actual Freight Traffic, 1980-86 Actual Average Ton Kilometers (million) tons of Haul Forecast Actual (million) (Km) 1979/80 - 8,598 11,853 733 1980/81 - 7,918 11,371 705 1981/82 7,500 7,067 11,446 624 1982/83 7,900 7,323 11,836 622 1983/84 8,000 7,385 10,753 691 1984/85 8,100 7,203 10,520 690 1985/86 8,250 8,270 11,805 705 Source: Forecast from Staff Appraisal. Other data from Pakistan Railways. June 1987 - 25 - Annex 5 PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) PROJECT COMPLETION REPORT Estimated Actual Passenger Traffic, 1980-86 Actual Average Length Passenger Km (million) Passenger of trip Forecast Actual (million) (Km) 1979/80 - 17,316 .44 121 1980/81 - 16,387 123 133 1981/82 16,800 16,502 120 138 1982/83 17,200 18,031 123 147 i983/84 17,700 18,287 107 171 1984/85 18,200 17,807 95 188 1985/86 18,700 16,850 83 203 Source: Forecast from Staff Appraisal Report. Other data from Pakistan Railways. June 1987 - 26 - Annex 6 PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) PROJECT COMPLETION REPORT Comparison of Certain Operation Targets and Actual Results in 1985/86 (Fiscal Year) Revised* Actual 1982 1983 1984 1985 1985 1986 Locomotive Maintenance Availability of diesel locos as S of total fleet 83 84 86 88 85 84.4 No. of diesel locos out of service for want of spares as % of total fleet 4.0 4.0 3.0 2.0 3.75 2.26 Diesel loco downtime during scheduled heavy repairs Class I (days) 32 30 28 25 25 26.9 Class II (days) 18 17 16 14 17 19.8 No. of Traction motors aboard locos not working 250 150 100 250 150 300 Freight Train Operations Diesel loco-Km per day per loco in use 310 345 365 385 200 342 Average net tons per freight train 570 625 675 725 550 637 Total daily No. of wagons to be dispatched out of Karachi 750 780 845 910 600 607 */ Revised July 1984 Source: Forecast from Staff Appraisal Report and Supervision Report. Actual from PR. June 1987 - 27 - Annex 7 PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) PROJECT COMPLETION REPORT Operating Indicators, 1980-86 Fiscal Year Indicator 1981 1982 1983 1984 1985 1986 Speed of thru freights trains (Km/hr) 19 19 19 19 19 19 Speed of all freight trains (Km/hr) 18 18 18 18 18 18 Wagons per train 52 52 52 54 55 56 Net Load per freight train (tons) 582 578 556 586 589 637 Turn around time of wagon (days) 15 15 17 19 20 18 Wagon Km per day per wagon on line 54 47 46 48 50 53 Pass vehicle Km per vehicle on line 342 343 323 333 344 324 % diesel locos under repair 15 15 15 16 17 16 Engine Km per day per diesel on line 256 255 251 244 249 249 Engine Km per day per diesel in use 306 301 298 293 300 295 Persons employed (thousand) 130 130 128 125 12s 128 Source: Pakistan Railways June 1987 - 28 - Annex 8 PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) PROJECT COMPLETION REPORT Revenue and Expenditures Accounts, 1980-86 (Rs Million) 1982 1983 1984 1985 1986 Actual Operating Revenue: Passenger 1,114 1,231 1,428 1,425 1,562 Luggage, Parcels, Mail 167 174 213 168 212 Freight 1,727 1,929 1,989 1,973 2,494 Miscellaneous 37 60 51 115 100 Total 3,044 3,395 3,680 3,681 4,368 Operating Expenses: Reparis and Maintenance 1,181 1,350 1,394 1,627 1,675 operation Fuel 871 996 1,079 1,098 1,107 Operation Staff 331 369 460 463 503 Other Operation 132 172 171 175 186 Administration 323 410 483 484 518 Miscellaneous 10 11 16 21 12 Total 2,848 3,308 3,604 3,868 4,002 Appropr. to Depr. Reserve 420 485 630 630 845 Net Operating Revenue* (224) (398) (554) (817) (479) Operating Ratio (2) 107 112 115 122 111 Forecast Operating Revenue 3,055 4,140 4,820 5,500 6,320 Working Expenses 3,100 3,438 3,845 4,393 4,989 Appropr. to Depr. Revenue 440 470 541 601 620 Net Operating Revenue* (485) 232 434 506 711 Operating Ratio (%) 116 94 91 91 89 */ Operating Revenue less Operating Expenses and appropri.tion to depreciation reserve. Source: Forecast from Staff Appraisal Report. Other date from PR. June 1987 - 29- Annex 9 Page 1 of 2 PAKISTAN ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK) PROJECT COMPLETION REPORT Summary of PR Performance Under Covenants Sections of Credit Agreement Covenants Ccmpliance 3.06 Comprehensive training program for the A revised training program was final- CDLW to be furnished to the Association ized and submitted to IDA with the for review and comment by December 31, quarterly report for the period end- 1982. ing March 1985. The list of staff for training was submitted to IDA in stages in late 1985. 3.07 Feasibility study of electrification of Completed. Khanewal-Karachi mainline to be carried out in accordance with timetable and Terms of Reference. 3.08 PR's unit exchange pool to be maintain- The size and composition of the pool ed and expanded; the size and composi- was determined in consultation with tion of such pool shall be satisfactory the Bank. Procurement was not to the Association. completed. 3.09 To carry out the Plan of Action, review See Annex 6. its progress, and decide the action to be taken. 3.10 In allocating public sector freight A Computer study on modal split was traffic, due consideration is to be carried out and the split based on given to the relative economic advan- a National Logistic Model was found tages and capacities of various modes to be reflective of relative economics of transport. of modes. 3.11 No change is to be made in the Invest- Complied. ment Plan except for changes amounting to less than Rs 50 million annually. 4.01 (b) Audited financial statements to be Complied. submitted not later than nine months after the end of each fiscal year. - 30- Annex 9 Page 2 of 2 4.01 (c) Annual budget and accounts to show Ccmplied. proforma accounts that reflect non- railway costs. 4.01 (d) Sums transferred by GOP to PR to cover Complied operating deficits shall not be added to the capital-at-chaige. 4.03 Revenues to cover operating expenses While revenues are meetingthe act- and debt service requirements in ual operating expenses of Railways 1982/83 and dividend on capital-at- (i.e., the ordinary working expenses), charge by 1985/86. they are Pot fully meeting "other revenue expenses" (such as health and welfare services, educational faci- lities and staff training, etc.) and appropriations to funds and debt services charge. The resultant resource gap is being picked up by GOP as an outright grant. As regards dividend due on GOP's capital-at- charge in the Railways, GOP is fore- going recovery of this amount in view of the above resource gap. 4.04 (a) Revenues from passenger services to The mail/express trains are not only cover at 'east the variable costs in meeting their variable cost of oper- 1983/84 and thereafter. ation, but also covering the fixed cost. In the cast of other passenger services, however, their variable costs are not met in full. 4.04 (b) Increases in the fares of air-condi- While passenger fares were increased tioned sleeping coach services to by 15Z effective June 1985, it is cover at least total cost by 1984/85 considered that any future increase in the area of air-conditioned sleeper coach services would be counter-pro- ductive of revenue as it immediately leads to diversion of traffic either to lower classes of rail service or to other modes of transport. Annex 10 - 31 -- PROJECT COMPLETION REPORT PAKISTAN ELEVENTH RAILWAY PROJECT - CREDIT 1278-PAK Ex-Post Economic Costs, Benefits and Rate of Return Capital and Operating Costs Benefits Net Loco M.I. Cont. Total Loco M.I. 1/ Cont. 2/ Total Benefits 1984 2.3 0.2 2.5 0.0 0.0 0.0 - 2.5 1985 14.6 2.3 16.9 0.0 0.6 0.6 -16.3 1986 17.2 4.4 21.6 0.5 0.6 1.1 -20.5 1987 3.9 0.7 4.6 1.0 0.7 1.7 - 2.9 1988 3.9 0.8 4.7 3.0 1.1 4.1 - 0.6 1989 3.9 1.0 4.9 5.0 2.7 7.7 2.8 1990 3.9 1.5 5.4 5.5 1.4 6.9 1.5 1991 3.9 2.0 5.9 7.5 2.7 10.2 4.3 1992 3.9 2.0 5.9 7.5 2.7 10.2 4.3 19Q3 3.9 2.0 5.9 7.5 2.7 10.2 4.3 1994 3.9 2.0 5.9 7.5 2.7 10.2 4.3 1995 3.9 2.0 5.9 7.5 2.7 10.2 4.3 1996 3.9 2.0 5.9 7.5 2.7 10.2 4.3 1997 3.9 2.0 5.9 7.5 2.7 10.2 4.3 1998 3.9 2.0 5.9 7.5 2.7 10.2 4.3 Economic Rate of Return: Locomotive Maintenance Improvement -2.0% Containerization 4.4% Overall -1.22 1/ Maximum annual benefits to be reached in 1991 would be about one-third the appraisal forecast level. 2/ Maximum annual benefits to be reached in 1991 would be about 25% of the appraisal forecast level. Source: PR data and Staff Appraisal Report June 1987 ELIVENT1 DAXUdAV PRiDJEtT ECEOITI 27a-PAKI PODIECT £OH^PtETWU RE PCI? Pakistan R,il.v Orpafluat taI Ftdoral Ministry of Ra11 - ys Secretary, 4inistry of Railways Cha1noan, ftallay Board G neral Iamtaner | Secretarr, General tanager, Operations ja Mwar nufactunger j -y Doard Deputy General Manager ___ - _ r, Civil _ _ -_ Eng1ineer Chief Engineer | InspeCtor General Olvision SWrin Division Suwerin- _ _er. Mchanicel _ tendent, lUarachi tmndent, Quetta Engineer j N Chief. Sigals and _ Chief, Personnel Telecom. Engineer j Officer Oiviston Superin- _ _ Division Superin- __ Ner. Traffic I tendent, Lahore tendent, Rawalpindi Chief. Electrical | Chief, Operating I i - I Hwir. finance Engineer Superintendent Division Superin- I Division Superin- eand Sdeet l | ~~~~~~~~~~teneent . Sulikur terient. Peshawar | Chief. ttechanical | _ Chief. Coercial | i Engineer fanager j Oivision Suoerin- Oivision Suerin-I I I tende.st, 1ult n tendent. Workshops Chief, Engineer | _ Chief. Traffic Planning j Hanager | Chief. Controller I _ Chief, Medical of Stores a and Health I Chief. Controller | Director, LOad | of Purchasing j Managemnt |Flnanthal dvisor &| _ Chief Officer 1_Chief Accountant Dry Port Director, Rest. I IDirector. Mtnaement and Training Inforation System MAP SECTION IBRD 16207R1 S F 8 7 't '~ | U.S.S.R. IRAG (- 5 AFGHANISTANj.- ISLAMICREP. OP IRAN ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ C IN '. V!L -2/ J HN "-.1_XS /-.--.PAKISTAN/ AFGHANISTAN AFGHANISTAN ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~360- Zo H"A 4 9 INDIA SAUDI ARABIA -2°ARAB EPIRATES I OMA A,5A' PAKISTAN D, Lin o Conbo) ELEVENTH RAILWAY PROJECT ....... O LAHORE DRY PORT KoAH ER-WALPINDI DIESEL LOCOMOTIVE WORKSHOP (DLCWI RAILWAYS II BROAD GAUGE, DOUBLE TRACK Kh.1 I-4I-I-I-t4BROAD GAUGE, SINGLE TRACK 2° *-w--" METER GAUGE l ta 320 ~~~~~~~~OTHER GAUGE A.320. |- i_, MS.4ELECTRIPIED SECTION * NATIONAL CAPITAL lh. FWd ) 0 a CITIES. TOWNS. AND RAILWAY STATIONS -*- INTERNATIONAL BOUNDARIES R.: Xs~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ift map~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i ha boo Ben rqzre by Fo.t AM~~~~~~~~~~~~/ ~~~f NWe cownval of ane bfu !m sorno . wAUe 2--'-'- <; 52l) -tft~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~awt Tt 1,0 ItAnun 5>; wOAhmR \ / # SlPw // t~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~eru (el heNMBv R.I.O d t Telao HV / Fort AbbS j tadW dBT~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~uo O 6 -< ,, / g ;9 ,. 0<_ / I N D I A _ - jh. ofWVkt /h.da. N . W_ ISLAMIC REP. Mile, 190 2 2 OF IRAN , 10 b 1 2 t 3 4 0 0 3~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~760 in'T.' . ARCIAE -240 A R A8 A I SEA 24 640 .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~L MAK~H 1989