FILE COPY Report No. 1478-WA Ivory Coast/Upper Volta Appraisal of a Regional Railway Project October 11, 1977 Western Africa Projects Department Ports, Railways, and Aviation Division FOR OFFICIAL USE ONLY Document of the World Bank This document 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. CURRENCY EQUIVALENTS Currency Unit - CFA Franc (CFAF) US$1.00 - CFAF 245 CFAF 1 million - US$4,081.63 FISCAL YEAR January 1 - December 31 SYSTEM OF WEIGHTS AND IIEASURES: Metric Metric US Equivalents 1 meter (m) 3 - 3.28 feet (ft) 1 cubic meter (mJ) - 35.29 cubic feet (cu ft) t kilometer (km) 2 - 0.62 mile (mi) 1 square kilometer (km > - 0.386 square mile (sq mi) I hectare (ha) - 2.47 acres (ac) I metric ton (m ton) - 2,204 pounds (lb) ABBREVIATIONS AliD ACRONYMfS CIDA - Canadian International Development Agency EIB - European Investment Bank FED - Fonds Europeen de Developpement GDP - Gross Domestic Product GNP - Gross National Product IDA - International Development Association MP&RS - Motive Power and Rolling Stock Department OP - Operations Department OCAM - Organisation Commune des Etats Africains et Malgache pass-km - Passenger-kilometers PK - Point Kilometrique (distance from Abidjan) RAN - Regie des Chemins de Fer Abidjan-Niger SCA - Societe des Ciments d'Abidjan SWLHT - Sleeping-Cars and Hotels Department S&T - Signalling & Telecommunications Service t-km - Ton-kilometers T&W - Track & Work Department TD - Training Division FOR OFFICIAL USE ONLY IVORY COAST/UPPER VOLTA APPRAISAL OF A REGIONAL RAILWAY PROJECT Table of Contents Page No. SUMM4ARY ............................................. i-iv 1. INTRODUCTION . ................... ........................ 1 2. THE TRANSPORT SECTOR .................................... 1 A. Thé Regional Setting .............................. 1 B. The Regional Transport System ....................... 2 C. Regional Transport Issues ............. ............. 3 3. THE RAN RAILWAY ......................................... 4 A. Organization and Management ....4 .................. 4 B. Staff and Training ................» ............. . 5 C. Accounts, Budgets, Planning and Audit .............. 7 D. Property ..................................................... O.. 8 E. Operations ..................................................... 0. 8 F. Traffic ........et.................... .0.......................... 9 4. THE PLAN AND THE PROJECT ................................ 10 A. RAN's Investment Plan . ............ ..... . .......... . 10 B. The Project ....... ........................... . il C. Financing Plan ........... .......................... 16 D. Project Execution, Procurement, and Disbursement ... 17 5. ECONOMIC EVALUATION ...... ............................... 18 A. General ................. ........................... 18 B. Realignment Bouake-Petionara ..... .................. 19 C. Track Renewal and Rehabilitation in Upper Volta .......... ........................................... 19 D. Track Maintenance Equipment ........................ 20 E. Freight Cars, Tank Cars and Locomotives ...* ...... 20 F. Sensitivity Analysis ............................... 20 G. Total Project ...................................... 21 6. FINANCIAL EVALUATION ...... .............................. 21 A. Past and Present Position ..... ..................... 21 B. Future Financial Position ..... ..................... 24 C. Sensitivity Analysis ...... ......................... 27 7. AGREEMENTS REACHED AND REC0O1MENDATION .................. 28 This report has been prepared by Messrs. H. Apitz (Financial Analyst/Economist), A. Defalque (Railway Engineer), H. Levy (Economist), and C. Morra (Training Officer). This document hu a restricted distribution and may be und by rocipbents only in the performance of their official duties. It contents may not otherwise be disclosed without World Bank authorization. Table of Contents - (Continued) TABLES 1. Summary of Operating Statistics 1970-1976 2. Total Project Cost 3. Training - Cost Estimates 4. Estimated Schedule of Disbursements 5. Summary of Rates of Return 6. Income Accounts 1970-1976 7. Summary Balance Sheets 1970-1975 8. Forecast Income Accounts 1976-1982 9. Forecast Balance Sheets 1976-1982 10. Forecast Sources and Applications of Funds ANNEXES 1. Bank Projects in the Transport Sector 2. Training 3. Railway Property 4. Operational Plan of Action 5. Passenger Traffic 6. Freight Traffic 7. Forecast Disbursement for Investments (1977-1982) 8. Determination of Freight Car Needs, 1977-1985 9. Mainline Locomotive Needs in 1980 10. Terms of Reference for Marshalling Yard Study and Petionara-Tafire Feasibility Study 11. Details of Economic Evaluation 12. Assumptions Used to Forecast RAN's Financial Statements CHARTS 1. RAN Organization Chart 2. RAN Track Characteristics MAPS IBRD 12751R IBRD 12752R IVORY COAST/UPPER VOLTA APPRAISAL OF A REGIONAL RAILWAY PROJECT SUMMARY i. The objective of the railway project appraised in this report is to increase the capacity and efficiency of the Regie des Chemins de Fer Abidjan-Niger (RAN) thereby permitting it to contribute to the economic development of the region it serves, i.e. all of Upper Volta, central and northern Ivory Coast and southeastern Mali. The project, covering the first half of RAN's 1977-1982 investment program, is designed to meet RAN's capacity needs until 1980, to rehabilitate and upgrade existing infrastructure, and to strengthen RAN's operational and managerial effectiveness. ii. The major portion of the region served by RAN belongs te oe of the poorest areas of the world. Per capita incomes in both Mali and Upper Volta were below US$100 in 1975, virtually unchanged from the 1965 level, due in particular to drought on top of a limited resource base. A moderate growth in per capita income of about 2% per annum, corresponding to a 4% growth rate in GNP, is expected for the remainder of the decade. In the more fortunate Ivory Coast, with a 1975 per capita income averaging US$500, growth rates of income and population have been consistently high, the latter partly due to immigration from Sahelian countries. Prospects continue to be good with GNP growth rates in the 6% range being forecast. In the rather poor northern part of the Ivory Coast, per capita income is about US$200, little better than southern Upper Volta. As the Ivorian government is increasing its development efforts in the northern part of the country, a higher than average growth of income and agricultural production may be expected there. Throughout the region, agriculture, and further north, livestock, do and will continue to provide the livelihood for the vast majority of people. Both agriculture and livestock production can grow at satisfactory rates only if they can rely on efficient low-cost transport. iii. The region is connected to the ocean by four transport corridors. The ports and modes of transport are, in decreasing order of importance, Abidjan (rail and road), Dakar (rail only), Tema (road only) and Lome (road only). All of the above five connections are being rehabilitated or upgraded, and the Bank Group is closely associated with four of them namely, the Abidjan- Ouagadougou railway (RAN) through the proposed project, the Abidjan-Ouagadougou road through highway projects in both Ivory Coast and Upper Volta, the Dakar- Bamako railway through projects in both Senegal and Mali, and the Tema- Ouagadougou road through two highway projects in Ghana. Thus, improvement of the main arteries is well underway, and expenditures should now be concentrated on improving maintenance and efficiency and on constructing secondary and tertiary roads. These objectives increasingly dominate the Bank's strategy in t;e r~L^en, including the proposed project, and the respective Governments are rr gisizing their importance tu an ever-greater degree. - ii - iv. The distribution of traffic between different modes and corridors is generally satisfactory. However, due to the inefficient operations of the Dakar-Bamako railway, substantial amounts of Mali international traffic are being diverted to the more costly Abidjan-Bamako corridor. A significant improvement of this distortion is expected from implementation of the Third Mali and proposed Third Senegal railway projects, which have as their main objectives a substantial increase in productivity, capacity and quality of rail service. In the transport corridor extending northward from Abidjan, there is competition between rail and road services. For freight traffic both modes are being subsidized in the order of 5-10% of operating costs, and the Governments have considerable influence on rate setting for both modes. As it is not clear if this is leading to an uneconomie distortion of the modal allocation of traffic, this question will be analyzed in depth by the planning and research unit being set up in the Ivorian Ministry of Transport. Moreover, this and similar units in Upper Volta and Mali, also being established under the auspices of Bank Group-financed highway projects, will be given an impor- tant role in resolving the transport sector issues spelled out above. v. RAN's essential role is to provide low-cost transport of satis- factory quality for passengers and freight between Abidjan and the region served by the railway. The railway's basic organizational structure is ade- quate to enable it to fulfill this role. RAN is a multinational, financially autonomous agency owned by the Governments of the Ivory Coast and Upper Volta. The railway's Articles of Agreement and their application reflect a sound balance between the railway's managerial autonomy and the Governments' in- fluence over major policy matters. RAN's internal organizational structure was adequate during the 1960s. More recently, however, as a function of the growth of the railway's operations and its investment volume, critical problems in RAN's information and planning systems and in its operations and equipment maintenance have become apparent. The proposed project will provide technical assistance and training to help solve these problems. vi. RAN has a permanent staff of about 5,100. Some overstaffing is apparent, and under the project RAN will make every effort to increase staff productivity by maintaining approximately the present overall staff level through the end of 1978 and by accelerating training efforts. vii. In general, RAN's 1975 financial statements are based on sound accounting principles. An ongoing re-organization will further improve asset valuation and cost accounting. Additionally, the project provides for strengthening planning and management and for a more comprehensive audit. The operational and investment budgets annually prepared by RAN will be reviewed by the Bank before their presentation to the railway's Board of Directors. viii. RAN operates a 1,159-km, single-track, meter-gauge line from Abidjan in the Ivory Coast to Ouagadougou in Upper Volta. There is only one short branch line. Infrastructure is generally well maintained, but some sections must soon be renewed, Equally important, a large part of the railway's motive power and rolling stock is approaching the end of its useful life at a time - iii - when additional capacity is needed to carry forecast traffic increases. This results in a need for substantial investment in rolling equipment, even after taking into account improvements in operating efficiency as laid down in an agreed operational plan of action associated with the proposed project. ix. RAN's freight traffic grew historically at rather high rates. In accordance with RAN's marketing strategy, freight traffic operations have focused and will continue to focus on commodities such as cement, petroleum products, fertilizer, sugar, cotton and oil seeds. In concentrating on car- rying these and some other commodities, RAN takes full advantage of its competitive superiority over road transport to carry major commodities over long distances at low cost and at a satisfactory speed. The traffic forecasts make due allowance for strong trucking competition, in particular for short and some medium hauls for commodities such as general cargo, beverages and food. Freight traffic is expected to reach 1.4 million tons and 883 million t-km by 1985, corresponding to an annual growth rate of about 6.5% in both tonnage and t-km. Development of passenger traffic has followed a firm pattern based on regional population growth, Ivorian economic development and travel demand from migrant workers, mostly from Upper Volta. This pat- tern will continue to prevail, and forecasts have been established accord- ingly, resulting in growth rates of 2.8% in number of passengers and 5.7% in passenger-km. x. RAN's 1977-1982 investment program, totalling US$211 million includ- ing contingencies, is designed to meet capacity demands, rehabilitate and upgrade infrastructure and maintain RAN's financial viability. The plan, which will be updated annually in consultation with the Bank, contains four components, totalling US$45 million, the scope and timing of which must still be determined in consultation between the Ivorian Government, RAN and the Bank, based in three cases on studies included in the proposed project. The elements of the proposed project have been selected from the 1978-79 portion of the investment plan to meet RAN's most urgent requirements. They include: (a) rehabilitation and upgrading of infrastructure in both the Ivory Coast and Upper Volta and procurement of track maintenance equipment (US$33.2 million); (b) procurement of locomotives and freight cars (US$26.0 million); (c) a training and technical assistance component (US$4.0 million); and (d) interest during construction (US$3.0 million). Total cost is estimated at US$66.2 million equivalent, net of taxes, including local costs of US$10.0 million equivalent. Financing is assured by credits from CIDA (US$29.2 million), the proposed IDA credit to Upper Volta (US$5.2 million), the proposed Bank loan to RAN (US$23.0 million), and contributions from both Governments and RAN (US$8.8 million). xi. The proposed Bank loan and IDA credit would be used for the infra- structure component, track maintenance equipment, training and technical, assistance and interest during construction. All major Bank- and IDA-financed items will be procured in accordance with Bank Group guidelines. Items to- talling about $20.0 million will be procured by international competitive bidding or, with regard to consulting services, comparable methods. Other items will be procured from Canadian suppliers, by force account, local com- petitive bidding and from traditional suppliers due to the size of contracts and/or the need for standardization. - iv - xii. The project is expected to produce benefits through increasing the transport capacity of RAN, which is the most economic mode of transport, thereby avoiding diversion of present and future rail traffic to road trans- port, and through savings in operating and maintenance costs and avoidance of accidents. The economic rate of return of the entire project is estimated at 23%, and all individual project components are economically justified even under slow traffic-growth assumptions utilized for sensitivity analysis pur- poses. Rates of return are still satisfactory even when the highly improb- able, simultaneous occurance of slow traffic growth, high rail-transport costs and higher than estimated project costs is assumed. xiii. RAN's operating revenue and costs grew rapidly and virtually in parallel during the 1970-1976 period, producing a corresponding cash flow increase of about 200%. The railway's investment volume, however, increased much more rapidly than its cash flow, entailing borrowing on a much larger scale and a drop of the debt service coverage ratio from 9.0 in 1970 to 1.5 in 1976. As investment needs will remain high for several years in order to maintain RAN's competitiveness with road transport and to increase capa- city, there is a need for a massive increase in cash generation from opera- tions. To achieve this objective, RAN and the Bank have agreed on the basic elements of a corporate plan, including implementation of RAN's marketing strategy, its operational plan of action, and measures to increase staff productivity. Additionally, tariff increases exceeding inflationary cost increases by about 18% over the three years 1977-1979 are needed, limited however to about the above percentage in order not to jeopardize RAN's compe- titive position. Implementation of these measures will lead to a satisfactory earning situation by 1979, reflected in expected working ratios of 78% in 1978 and 73% thereafter. RAN agreed to maximum working ratios of 78% in 1978, 75% thereafter. In addition, a debt limitation based on a minimum debt service coverage ratio of 1.5 was agreed upon. xiv. The above ratios do not take into account the substantial payments from both Governments to the railway for maintenance, renewal and construction of infrastructure. Due to RAN's high investment needs, these contributions are necessary for RAN's financial viability in the medium-term; and more timely payment by the Governments is needed and is being provided in order to remedy RAN's present cash shortage. From 1980 onwards, however, a substantial reduction of contribution payments may be possible, and timely consultations on this subject between the Governments, RAN and the Bank have been agreed`. Finally, the project ensures that the Governments will take appropriate measures to protect RAN's cash position should a cash shortfall materialize due to a worse-than-expected development of one or several of the factors on which the financial forecasts depend, mainly a shortfall in traffic volumes and higher-than-expected staff costs. xv. The proposed project with conditions as stipulated is suitable for an IDA credit of US$5.2 million to the Government of Upper Volta and a Bank loan of US$23.0 million to RAN with the Government of the Ivory Coast as guarantor for a period of 17 years, including a grace period of 4 years. The Government of Upper Volta would guarantee jointly and severally with the Ivory Coast a portion of the loan, amounting to about US$6 million and corres- ponding to items which are not exclusively located in the Ivory Coast. IVORY COAST/UPPER VOLTA APPRAISAL OF A REGIONAL RAILWAY PROJECT 1. INTRODUCTION 1.01 The Governments of the Ivory Coast and Upper Volta and the Regie des Chemins de Fer Abidjan-Niger (RAN) have asked the Bank to help finance a regional railway project. The objective is to assist RAN in effec- tively playing its important role in the economic development of the region it serves, i.e., all of Upper Volta, central and northern Ivory Coast and south-eastern Mali. The project is designed to meet RAN's capacity needs until 1980, to rehabilitate and upgrade existing infrastructure and to strengthen RAN's operational and managerial effectiveness. 1.02 Total project cost is estimated at about US$63.2 million equivalent, net of taxes, including foreign costs of about US$53.2 million (84%). To help finance the project and interest during construction (US$3 million), a Bank loan of US$23.0 million to RAN and an IDA credit of US$5.2 million to Upper Volta are proposed; CIDA has agreed in principle to provide about US$29.2 million, and the two Governments and RAN would cover the balance of about US$8.8 million. 1.03 This would be the first Bank Group operation for the benefit of RAN and the ninth for transport in the Ivory Coast and Upper Volta. The eight preceding Bank Group operations include five highway projects in the Ivory Coast and three highway projects in Upper Volta; details of these projects are given in Annex 1. 1.04 This report is based on information provided by RAN and on the findings of an appraisal mission in September/October 1976 composed of Messrs. H. Apitz (Financial Analyst/Economist), C. Buratti (Engineer/Motive Power Specialist), A. Defalque (Engineer), P. Koenig (Loan Officer), G. Morra (Training Officer) and J. Rolfo (Economist). Mr. H. Levy (Economist) also helped to prepare this report. 2. THE TRANSPORT SECTOR A. The Regional Setting 2.01 The landlocked Sahelian countries of West Africa need cheap and reliable access to the Atlantic Ocean. For southeastern Mali, Upper Volta and subsahelian northern Ivory Coast as a region, the Abidjan rail/road cor- ridor is the principal link to the sea. (For Mali alone, the Dakar corridor is equally important.) Within the Abidjan corridor RAN is the most economic mode. The railway carries about 80% of the traffic to and from Upper Volta and the northern Ivory Coast and some traffic of Southern Mali. -2- 2.02 The major portion of this region served by RAN is part of one of the poorest areas of the world. Per capita income in both Mali and Upper Volta, which together have a population of about ll million, was below US$100 in 1975, virtually unchanged from the 1965 level. The lack of growth of per capita income was the result of the recent series of severe droughts in a re- gion which already suffers from several significant developmental constraints. The droughts brought about heavy losses of cattle and crops both for export and domestic consumption, thus necessitating relief food imports totalling about 2 million tons in 1972-75. Developmental constraints include: (i) long transport distances, both to export-import outlets and within the region itself; (ii) a weak agricultural base stemming mainly from low and ill- distributed rainfall; (iii) a serious shortage of skilled manpower; and (iv) the absence of important mineral resources, with the exception of a manganese ore deposit of about 12 million tons near Tambao in northern Upper Volta. Studies on the economic and financial viability of extracting this ore are still inconclusive, high transport costs being a major factor. 2.03 In the more fortunate Ivory Coast, with a 1975 per capita income averaging US$500 and a population of about 6.7 million, growth rates of income and population have been consistently high, the latter partly due to immigration from Sahelian countries. Growth in gross domestic product (GDP) has averaged 6% since 1970, based on assets such as an abundance of fertile land and extensive forestry resources, a climate favorable to agriculture and short transport distances within the southern part of the country. Agricul- tural produce, consisting largely of cocoa, coffee and timber, accounts for 86% of total exports, and Government policy emphasizes increasing the output of these commodities, accompanied by diversification into additional crops including sugar, rice and soybeans. Production of the latter crops will be concentrated in the relatively poor northern part of the country, where per capita income averaged only about $200 in 1975. The longer distance to the sea and the consumption centers in the south of the country accentuate the importance of efficient, low-cost transport for the development of the north. 2.04 Current forecasts for the remainder of the 1970's predict annual GDP growth rates of about 4% for Mali and Upper Volta and about 6% for the Ivory Coast. As the Ivorian Government is increasing its development efforts in the northern part of the country, a higher-than-average growth of income, agricultural production and transport demand may be expected for the north. Throughout the region, agriculture, and further north, livestock, do and will continue to provide the livelihood for the vast majority of people. Both agriculture and livestock can grow at satisfactory rates only if they can count on cheap and reliable transport, thus underlining the importance of the proposed project. B. The Regional Transport System 2.05 The Ivory Coast, Upper Volta and Mali are connected to the ocean by four transport corridors. The corresponding ports and modes of transport -3- are, in decreasing order of importance, Abidjan (rail and road), Dakar (rail only), Tema (road only) and Lome (road only). By far the most important international transport route for Upper Volta is the railway (RAN), which provides the most economic route to the sea for the economically active western and central areas of the country. However, to reduce that country's dependence on the railway connection to Abidjan, the Upper Voltan and Togolese Governments plan to upgrade the road link between Ouagadougou and Lome. This would create a high-standard route to the ocean as an alternative to the existing paved road to Tema in Ghana. However, the routes through Tema (Ghana) and Lome (Togo), although about 15% shorter than the Abidjan- Ouagadougou rail-line, are second-best alternatives so far as transport cost is concerned, except for the southeastern part of Upper Volta where not much traffic is generated. For this part of the country, transport costs of the three different routes are roughly equal. Furthermore, the port of Abidjan has good natural characteristics and is capable of being expanded to accommo- date increased traffic. For Mali, the main connections to the Atlantic Ocean for overseas trade are provided by the Dakar-Bamako railway through Senegal and the road and rail/road routes through the Ivory Coast over which about half of Mali's 1975 international traffic passed. The Senegal route is cheaper for about 70% of Mali's international traffic, but traffic is being diverted to the alternative route through the Ivory Coast because of opera- tional and other difficulties on the Dakar-Bamako line (para. 2.08). 2.06 In the Ivory Coast RAN runs parellel to the road between Abidjan and the Upper Voltan border. For short distances (less than 300 km) the flexibility and rapidity of service weigh strongly in favor of road trans- port in the inter-modal allocation as illustrated by the average road trans- port haul in the Ivory Coast (224 km), three times less than the average rail haul. For traffic north of Bouake (about 80% of total rail traffic on a ton- km basis), there is rail/road competition although the longer distances and a high proportion of bulk commodities give the railway a strong cost advan- \ tage over the road. C. Regional Transport Issues 2.07 It is essential for the region to improve and fully utilize the ex- isting transport infrastructure both within the Sahelian countries and their neighboring transit countries. Reliable access to import-export outlets is vital for the landlocked Sahelian countries. The five connections listed above are presently being upgraded. The Bank Group is closely associated with four of these transport links, namely: the Abidjan-Ouagadougou railway through the proposed project, the Abidjan-Ouagadougou road through highway projects in both Ivory Coast and Upper Volta, upgrading and rehabilitation of the Tema-Ouagadougou road through two highway projects in Ghana and the Dakar-Bamako railway through actual and proposed projects in both Senegal and Mali. Improvement of the main arteries is well underway, and infrastructure expenditures should now be concentrated on the improvement of maintenance, renewal and operational efficiency of the existing sytem and on construction of secondary and feeder roads. These objectives increasingly dominate the Bank's strategy in the region, including the proposed project, and their importance is increasingly recognized by the respective Governments. - 4 -- 2.08 The distribution of traffic among different modes and corridors is in general adequate. Due, however, to the unsatisfactory operational efficiency of the Dakar-Bamako railway, substantial amounts of traffic are being diverted to the more costly Abidjan-Bamako corridor. Correction of this distortion can be expected from implementation of the Third Mali and proposed Senegal railway projects, which have as their main objective an increase in productivity, capacity and quality of service. In the transport corridor extending northward from Abidjan, there is competition between rail and road. In the southern part between Abidjan and Bouake r-oad transport prevails. For longer journeys the railway has a cost advantage, especially for bulk commodities. In both the Ivory Coast and Upper Volta, freight transport is subsidized on both modes of transport: directly for the railway, as each country supports 60% of the cost of infrastructure maintenance on its own territory; indirectly for roads, as the user taxes paid by trucks, partic- ularly heavy ones, are below corresponding user costs. Whether the dual subsidization, combined with the Governments' considerable influence on rate setting for both modes, leads to significant distortions in the allocation of transport is not known, first of all because the amount of subsidization for operational costs is estimated at only 5-10% for both modes (trucking sub- sidies in Upper Volta may be somewhat higher), and secondly because factors other than costs, such as flexibility and time savings, are often more impor- tant in the choice between rail and rcad. However, a study of the present situation is needed to determine if and to what extent uneconomic distortions of the modal allocation of traffic do exist, if they are caused to a signifi- cant extent by the above subsidies and what changes in the subsidy and taxa- tion system would be needed to improve the modal distribution of traffie. The Planning and Research Unit, presently being set up in the Ivorian Ministry of Transport in the context of the Fifth Highway Project, is an appropriate body to undertake this study, with adequate participation by a corresponding unit in the Voltaic Ministry of Transport and by outside consultants. Twenty man-months of consultants' services will be included for this purpose in the proposed Ivory Coast feeder road and highway maintenance project being pre- pared. Both Governments have agreed that the study will be executed and completed by March 1979 and that they will review its conclusions with the Bank. 2.09 Thus, throughout the region served by RAN, there is a considerable need to strengthen transport planning and coordination. To carry out this work, transport planning units are being set up in each of the three countries under the auspices of Bank Group-financed highway projects. These units should be fully staffed with expatriate experts and local counterparts by late 1977 and are expected to make an important contribution to resolv- ing the above issues and to improving regional cooperation. 3. THE RAN RAILWAY A. Organization and Management 3.01 RAN is a multinational, financially and operationally autonomous agency responsible for the maintenance and operation of railway facilities directly or indirectly owned by the Governments of the Ivory Coast and Upper Volta. RAN's Articles of Agreement, laid down in an international agreement between the Governments of the Ivory Coast and Upper Volta dated April 30, 1960, are based on the sound principles of protecting the railway's opera- tional autonomy and financial viability. Construction of new lines has to be financed by the respective Government, and losses in RAN's income accounts, which may result from insufficient tariff increases, have to be covered by Government subsidies. The above principles have in general been success- fully upheld by RAN's 17-member Board of Directors, composed of four Gov- ernment representatives and three representatives of railway users from each country, and of three members representing the railway's staff. Tar- iff increases in particular have been timely and adequate to cope with operating cost increases. 3.02 RAN's general manager is appointed by the Board, subject to the agreement of both Governments. The general manager is in charge of both day- to-day operations and proposals to the Board and the Governments on policy matters. These arrangements have worked well as a safeguard against undue interference in RAN's day-to-day operations; they have worked less satisfac- torily regarding railway and transport sector planning, as both the railway's and the Governments' planning mechanisms need strengthening. This is now underway on the governmental level in the context of the Fifth Highway Project in the Ivory Coast and the Third Highway Project in Upper Volta (cf. paras. 2.08 and 2.09). The railway's planning capacity is expected to be improved through provision of technical assistance for this purpose under the proposed project (para. 3.10). 3.03 RAN's internal organization is shown in Chart 1. This organization is fundamentally sound and worked satisfactorily until about 1970. Since then critical problems in the railway's information and planning systems and its operations and equipment maintenance services have become apparent, as a result of growth of the railway's operations and its investment volume. The proposed project makes provision for consulting services to recommend and assist in implementing improvements in these vital areas through upgrading and strengthening of organizational structures and procedures. B. Staff and Training 3.04 RAN's operations staff at the end of 1976 totaled about 5,100, an in- crease of about 12% since 1973 in spite of only moderate traffic increases in recent years. This figure does not include about 800 temporary staff assigned to investment programs such as the on-going realignment works of the Dimbokro- Bouake section. Overstaffing appears to be critical in the Motive Power and Rolling Stock workshops as a result of a weak organizational and managerial structure. RAN is aware of this problem and is employing consultants to assist in determining and implementing the necessary improvements. The -6- qualifications of the railway's staff is rather uneven in most departments and at most levels, which underlines the importance of the training component of the proposed project. 3.05 To control its manpower problems more efficiently, RAN has agreed on the following: (i) to try to regain quickly the 1973 level of staff produc- tivity by maintaining through the end of 1978 a staff of not more than 5,200 for operations, with necessary additions in some departments being offset by reductions in others; and (ii) to prepare by June 1978 a draft five-year manpower plan (1978 to 1982) to be discussed with the Bank with the objective of agreeing on a specific five-year program. 3.06 RAN's management at the departmental and top levels has been en- tirely Africanized, with the exception of one departmental director. RAN's management personnel is, in general, well qualified but with potential for further development. There are, moreover, about 60 expatriate technical assistants -- a substantial number. They are somewhat unevenly distributed among RAN's departments, filling partly advisory, partly medium-level line positions. RAN is endeavoring to develop the management potential of its staff and to reduce its dependence on expatriate assistance. The proposed project makes adequate provisions for management consulting services (para. 4.16), which will start with the setting up of a plan of action to assist RAN in this task. However, technical assistance will still be needed for a considerable period. RAN will consult with the Bank annually on the railway's expected technical assistance requirements and on specific, appro- priately timed measures. 3.07 Technical training was carried out on an ad hoc basis up to 1973. In 1974, based on recommendations contained in a study made by SOFRERAIL, a Training Division (TD) was established, and a more systematic training program has since been instituted. Because of scarce training facilities, lack of training equipment, poor working relations between the TD and some of the operating departments, and the limited experience of some of the instructors, technical training has so far produced only modest results. During the past three years short retraining courses have been completed for skilled workers and supervisors, and training of an increasing number of new recruits has also been carried out. In spite of the general emphasis on training responsibilities in their terms of reference, the training actu- ally carried out by French technical assistants in RAN's operating departments has been rather limited and needs to be improved in the next several years. Considerable effort is, therefore, now required to strengthen the TD to enable it to meet both present and future technical training needs. Manage- ment training, until now limited to sporadic efforts, will be carried out under the Management and Operations Consulting Services (paras. 4.15 and 4.16). C. Accounts, Budgets. Planning and Audit 3.08 RAN's accounting system is undergoing a major reorganization assisted by qualified expatriate experts. The 1975 financial statements are in general based on sound accounting principles, conforming to procedures recommended by - 7 - the Organisation Commune des Etats Africains et Malgache (OCAM). Details re- garding valuations and depreciation of assets are discussed later in this report (para. 6.04 and 6.07). Additionally, a basically sound and rather sophisticated costing system is being introduced and is expected to be opera- tional by late-1977. The new costing system will facilitate and improve budgeting and cost control, and it will provide an important basis for RAN's tariff policy. However, training of Africans to operate and further develop the new accounting and costing systems is lagging behind schedule. RAN's management is aware of this problem and is making adequate efforts to solve it. The consultants' contracts have already been extended, and extension beyond the presently planned termination in late-1977 may be needed and have been discussed under the arrangements mentioned in para. 3.06. 3.09 RAN annually prepares an operational budget and an investment budget. The operational budget is a detailed and thoroughly prepared document, and RAN plans now to enhance its value as a management and control instrument by in- tegrating it with the new costing system. The annual investment budget was until 1976 limited to those investments which were financed out of the railway's renewal fund and excluded, therefore, all capital investment financed through borrowings. RAN's 1977 investment budget, however, reflects the entire investment program and the proposed financing plan. RAN agreed that, beginning with FY1978, both the operational and the investment budgets will be submitted to the Bank for review at least 30 days before the date scheduled for consideration by RAN's Board but in any event not later than one month before the beginning of the fiscal year covered by the budget. The same would apply, mutatis mutandis, to any amendments to the original investment budgets proposed to be made during the year. 3.10 RAN's planning function needs strengthening, including a clear definition of RAN's long-term role and financial objectives, as planning is limited to the above budgets and to a medium-term investment plan, which are largely established on an ad-hoc basis and do not always adequately reflect economic and financial considerations. Equally important, the data base for systematic planning is too weak and not always reliable. The proposed project makes adequate provisions to meet these needs through the establish- ment of a small corporate planning unit attached to the office of the general manager and a centralized statistical service attached to the planning unit. 3.11 RAN's accounts are audited in compliance with the railway's statutes by two "Commissaires aux Comptes," appointed by the Ministers of Finance of the Ivory Coast and Upper Volta. The provisions of the statutes meet Bank Group standards regarding the audit of borrowers' accounts. The auditors' reports do not, however, reflect the execution of proper checks of RAN's accounts or a thorough analysis of what the auditors consider to be problem areas, in particular with regard to financial management. The railway has agreed that from FY1977 onwards its accounts will be audited by qualified, independent auditors in accordance with generally accepted auditing principles. - 8- D. Property 3.12 RAN operates a 1,159-km single track, meter-gauge rail line from Abidjan (Vridi port) in the Ivory Coast to Ouagadougou in Upper Volta (see Map). There is a 14-km branch line from Azaguie, 42 km north of Abidjan, to Ake-Befiat and also a double-track section of about 16 km between Cechi and Anoumaba, about 130 km north of Abidjan. Track is generally well maintained but some sections need renewal because of the poor condition of old track material due to its age, deteriorated subgrade, severe characteristics of the profile or inadequate track material. A large part of the railway's motive power and a substantial number of freight cars are obsolete and have to be replaced. In addition, new equipment is needed to carry the forecast increase of traffic. The overall signalling system is adequate for present traffic. Communication facilities along the Abidjan-Ouagadougou line are inadequate to provide efficient traffic control. RAN is in the process of improving these facilities by constructing a new radio link which will ena'ole the railway to improve control of train movement. A brief description of railway track, structures, equipment and other property is presented in Chart 2 and Annex 3. E. Operations 3o13 A summary of operating statistics for RAN for 1970-1976 is presented in Table 1. Operating efficiency dropped from 1973 to 1975 as a result of a slump in traffic demand, insufficient management control and an increase in staff. Staff productivity is, however, still higher than for other comparable West African railways. The main areas where drastic improvement should be obtained and which will be covered by various components of the project are: (i) average load per train; (ii) monthly mileage and number of breakdowns of locomotives; (iii) turnaround time of freight cars; (iv) utilization of passenger coaches; and (v) train delays. 3.14 The average load per train can be increased by improving the geo- metric characteristics of the line and by improving the efficiency of opera- tions and maintenance of equipment. The availability of motive power is rather low. However, RAN's newest locomotives are no longer susceptible to --'fficulties stemming from the fact that they were prototype units, and it îs expected that their overall utilization factor will reach 65% to 70% by 1980-1982 (80% of technical availability and 85% of utilization of available motive power). The availability of rolling stock is rather high for freight cars (about 96%). The turnaround time for 1975 is high due to the slump of traffic from the peak of 1973. The utilization of passenger coaches appears to be low, and this should be improved by better scheduling and a more effi- cient organization of the Operations and Motive Power & Rolling Stock Depart- ments. 3.15 The operational plan of action for the period 1977 to 1982 is shown in Annex 4 and has been agreed upon with RAN. The operational targets are demanding but can be achieved during this period. The operational plan of action has been incorporated in the proposed Loan Agreement. -9- F. Traffic Passenger Traffic 3.16 During the period 1960-1975 the number of passengers per year doubled from 1.5 to 3.0 million (Annex 5). The annual increase followed a clear linear trend, corresponding to a growth rate of 2.9% at the end of the period. As average distance travelled more than doubled during 1960-1975, travel demand expressed in passenger kilometers (pass-km) increased rapidly, with a growth rate of 8.5% between 1970 and 1975. Average travel distances increased as interstate traffic, generated predominantly by growing numbers of migrant workers from Upper Volta, grew at a faster pace than Ivorian and Voltaic domestic traffic. Interstate traffic presently generates two-thirds of all passenger-kilometers. There has also been a shift toward longer journeys in Ivorian domestic traffic as more people travel by road for short trips. 3.17 The above trends are expected to continue in the future: moderate growth in the number of passengers, accompanied by a more rapid growth in passenger-kilometers. To quantify the forecast, a linear regression model has been used in which the independent variables are the two major factors responsible for the growth of RAN's passenger traffic, namely the populations of the Ivory Coast and Upper Volta and the Ivorian GDP. The resulting fore- cast predicts somewhat slower growth rates for 1976-1985 than in the past, specifically 2.8% for passengers and 5.7% for pass-km. Freight Traffic 3.18 RAN's freight traffic grew historically at rather high rates. Annual growth rates, expressed in ton-km, averaged 5.8% during the decade 1966 to 1976, although the annual average during the period 1966-1973 was 8.2%, a figure which eliminates the impact of the Sahelian droughts and the general economic recession on railway traffic. Freight traffic, which had grown rapidly from 393 million ton-km in 1970 to 480 million ton-km in 1973, dropped back to 377 million ton-km in 1975. Since late 1975 traffic has been picking up at an annual rate of about 30% and in 1976 slightly exceeded the 1973 peak. The economic recovery in the Ivory Coast and relatively good crops in the Sahel explain this traffic increase. 3.19 RAN achieved its growth of freight traffic in spite of rather strong competition from road transport, particularly for short- and medium-distances and for origins and destinations which necessitate more than one transshipment. During 1970-1975 RAN lost much short- and medium-haul traffic to trucking, and the railway's average haul increased accordingly by 17% to about 700 km. The present structure of RAN's freight traffic well reflects the railway's compe- titive position. RAN's strength lies in carrying major commodities on long hauls; six such commodities dominate its freight traffic: cotton, oil-seeds, - 10 - sugar, petroleum products, cement and fertilizer. Their share of commercial freight tonnage increased from 41% in 1970 to 54% in 1975. On the other hand RAN plays only a small role in the transport of the Ivory Coast's three major export commodities--timber, coffee, and cocoa--which are evacuated over rather short distances almost exclusively by trucks. 3.20 Traffic forecasts are based on RAN's marketing strategy of taking full advantage of its competitive superiority over road transport by focusing on carrying major commodities over long distances at low cost. The forecasts assume that RAN, which has a comparatively efficient marketing and sales department, will be reasonably successful in implementing its marketing strategy. RAN agrees with the forecasts and considers them an essential part of the railway's corporate objectives. They have, accordingly, been incorpo- rated into the draft Loan Agreement. The forecasts, nevertheless, contain an element of risk in that plan implementation may lag behind schedule. There- fore, the sensitivity analyses make the rather severe assumption that only 50% of expected freight traffic growth will materialize. 3.21 RAN is in the process of concluding long-term transport contracts and making other appropriate arrangements with large individual customers. Examples of these arrangements are: branch lines which are being built to new sugar plants, thus ensuring that sugar and molasses will be evacuated by rail to Abidjan; for northbound cement traffic, RAN is assisting the major Ivorian producer in expanding its loading capacity and in constructing depots for regional distribution along the rail line. Regarding petroleum products, the railway will introduce in 1977 the use of block trains to improve tank-car productivity. The petroleum companies have assured RAN that they will procure enough additional rolling stock to cope with expected demand. The share of commercial freight tonnage of these four commodities, plus cotton, oil-seeds and fertilizer where RAN's competitive superiority is equally strong, is expected to increase from 54% in 1975 to 67% in 1980 and 74% in 1985. These rapid increases of traffic volumes are expected to be accompanied by losses to road competition of much of the little short-haul traffic which RAN is still carrying and by a weakening position even for medium and long hauls for general cargo, beverages and food. Thus, freight traffic is expected to reach 1.4 million tons and 880 million ton-km by 1985, corresponding to an annual growth rate of about 6.5% in both tonnage and ton-km. 4. THE PLAN AND THE PROJECT A. RAN's Investment Plan 4.01 RAN's original investment plan 1975-1980 was revised after con- siderable discussion with the Bank focusing on the following objectives: (a) providing sufficient transport capacity to meet expected demand; (b) rehabilitating and upgrading existing infrastructure; and (c) improving - il - the balance between the timing of capital investment and the existing finan- cial resources. The revised investment plan, established by RAN on a commit- ment basis, was transformed into a forecast disbursement schedule for invest- ments, covering the period 1977 to 1982 (Annex 7). Total investment is estimated at US$211 million with contingencies. This includes ongoing proj- ects and two projects for which financing has been secured in principle from other donors (US$45 million), and new works (US$166 million) which can be broken down in five categories: (i) the proposed project ($63.2 million); (ii) routine rehabilitation, renewal of equipment and material, and studies (US$32.5 million); (iii) procurement toward the end of the investment period of additional motive power and rolling stock, subject to review based on the development of actual needs (US$25.1 million); (iv) rail access to the planned expansion of the Abidjan port, which would be subject to port expansion and possible construction of loading facilities for the Tambao manganese ore (US$9 million); and (v) three infrastructure projects totalling US$36.2 million (improvement of marshalling yard and rolling stock maintenance facil- ities mainly in Abidjan, upgrading of the 82-km section from Petionara to Tafire and doubling of track on the 22-km section Azaguie-Yapo) for which satisfactory solutions still need to be determined through feasibility stud- ies included in the proposed project. 4.02 The disbursements during 1977-1982 for the projects in (iv) and (v) above are estimated at $45 million with contingencies. Agreement has been reached with the Ivorian Government and RAN that the solutions to be eventually adopted for these four projects will be determined in consultation with the Bank. To ensure that the findings of the feasibility studies will be adequately reflected in RAN's infrastructure investment, the railway has agreed that it will not begin to implement nor incur any debt for the three projects mentioned in para. 4.01 (v) before the findings of the studies have been discussed with the Bank. 4.03 It will be the task of the corporate planning unit, to be set up as part of the proposed project (para. 3.10), to review and update annually RAN's investment plan and, based on this review, to draw up an annual in- vestment budget to be submitted to the railway's Board of Directors. The updating of RAN's investments plan will be made in consultation with the Bank. B. The Project 4.04 All the items to be provided in the project are needed to meet the railway's most urgent requirements. They have been selected from among the items of the 1978-1979 portion of the railway investment plan mentioned above. Locomotives and freight cars to be ordered at the end of 1977 for delivery by January 1980 are included in the project. The project comprises: (a) the realignment of the 89-km Bouake-Petionara section; (b) the renewal of track material on 4 km near Ouangolodougou and provision of 60 turnouts (two-year program); - 12 (c) track improvement in Upper Volta consisting of: (i) the renewal of sleepers on 40 km (two-year portion of an 11-year program covering the most northerly 222 km of the system); (ii) the reinforcement of eroded fills; and (iii) additional ballasting on 100 km mainly between Bobo-Dioualasso and Bereba; (d) the renewal of track maintenance equipment and the procurement of additional such equipment and spare parts; (e) the procurement of 210 box cars and 18 mainline locomotives; (f) the expansion and construction of physical training facilities, the procurement of furniture and training equipment, and pro- vision of technical assistance to carry out technical training for skilled labor and supervisors; (g) consulting services for the improvement of the railway's manage- ment and operations and for management training; and (h) feasibility studies for: (i) the improvement of RAN's Abidjan marshalling yard and rolling stock maintenance facilities (Annex 10); (ii) the determination of an optimal and economically viable solution for the proposed Petionara-Tafire infrastructure improve- ment (Annex 10); and (iii) an evaluation of RAN's plan to double its track from Abidjan to Agboville and, ultimately, to Bouake. 4.05 The total cost of the project, net of taxes, is estimated at US$63.2 million equivalent, including a foreign exchange cost of US$53.2 million (84%). A tax exemption on the execution of the project and a customs duty exemption on equipment and goods imported for the project will be granted the railway. Project costs in end-1976 prices and the assumptions used to calculate contingencies are shown in Table 2 and summarized below. - 13 - (CFAF 245 = US$1.00) ------CFAF Million ----- -----US$ Million------- Local Foreign Total Local Foreign Total (a) Realignment of the Bouake-Petionara Section 1257 3099 4356 5.2 12.6 17.8 (b) Renewal of track in the Ivory Coast 15 336 351 0.1 1.3 1.4 (c) Track improvement in Upper Volta 398 781 1179 1.6 3.2 4.8 (d) Track maintenance equipment - 369 369 - 1.5 1.5 (e) 210 box cars - 2317 2317 - 9.5 9.5 (f) 18 main-line loco- motives - 3038 3038 - 12.4 12.4 (g) Training 68 260 328 0.3 1.1 1.4 (h) Consulting services 45 251 296 0.2 1.0 1.2 (i) Feasibility studies 13 73 86 - 0.3 0.3 TOTAL BASE COST 1796 10524 12320 7.4 42.9 50.3 Physical contingencies 178 347 525 0.7 1.5 2.2 Total with physical contingencies 1974 10871 12845 8.1 44.4 52.5 Price contingencies 468 2153 2621 1.9 8.8 10.7 Total with all con- tingencies 2442 13024 15466 10.0 53.2 63.2 Improvement of the Bouake-Petionara Section 4.06 By 1978, after completion of the ongoing realignment works of the Dimbokro-Bouake section (EIB-FED financing), nearly the whole system will have uniform standards (500 m minimum-curve radius and 10 mm/m maximum grad- ient) except for the Bouake-Tafire stretch (172 km) which lies between the previously realigned section Abidjan-Bouake and the Tafire-Ouagadougou sec- tion, which was constructed to those standards. On the Bouake-Tafire section the track material is wearing out and must be renewed, and the subgrade must be rehabilitated. The renewal and rehabilitation must take place within the next few years in order to maintain traffic safety and to avoid capacity constraints and high costs which would otherwise arise from derailments and rail breakages. RAN plans to rebuild 162 km of this section on a new align- ment to uniform standards providing substantial savings in operating costs and travel time. The first part of the proposed new route, Bouake-Petionara (89 km), is the optimum solution as determined by extensive studies executed by RAN's civil works department and reviewed by the Bank. Thus, realignment of this section is included in the proposed project. Most of the then remaining 83-km stretch Petionara-Tafire will need track renewal and subgrade reha- bilitation shortly thereafter and should then be upgraded to the otherwise - 14 - uniform standards on about 77 km. The proposed project includes funds for studies to determine a technically and economically satisfactory solution for this stretch. Track Renewal in the Ivory Coast 4.07 In the Ivory Coast the track on section PK 589-593 between Ferkessedougou and Ouangolodougou is affected by heavy corrugation which causes track instability despite frequent maintenance. Train speed has been reduced to avoid accidents, and maintenance and repair costs are high for both track and rolling stock. RAN proposes replacing the track material on this section, and the project includes funds for that purpose. Replacement of worn-out turnouts is urgent in several places, and the 60 turnouts included in the project correspond to a two-year program. RAN's proposals are adequate in the interests of traffic safety, reduced maintenance and repair costs, and increased operating speeds. Track Improvement in Upper Volta 4.08 Several fills are badly eroded in Upper Volta, p5incipally between Banfora and Koudougou. On 13 eroded fills about 180,000 m of earthworks are needed and should be executed by contractors. RAN requested that these works be included in the present project. Since long traffic disruptions may occur in case of fill collapse and traffic safety may be in jeopardy, these works have been included in the proposed project. 4.09 From PK 923, 38 km north of Bereba, to Ouagadougou (PK 1145), the track was raid on concrete sleepers (1500 sleepers/km) at the time of its construction (1950-1954). These sleepers are fragile and show evidence of fatigue, particularly at the fastening holes where cracks occur. RAN is planning to replace these with steel sleepers at a rate of 20 km per year (11-year program). This is a traffic safety problem and should be begun immediately; therefore the project includes 40 km of sleeper renewal (two- year program). 4.10 After ballasting of 34 km of track north of Banfora in Upper 3 Volta, about 100 km of the line will still have the original 0.4 to 0.7 m / meter of sandstone ballast. RAN estimates that 50,000 m of ballast are needed to complete tMe ballasting of the line in Upper Volta to the stan- dard volume of 0.8 m /meter, the minimum needed to avoid the lateral buckling of a welded track. The volume of ballast on the section immediately north of Bobo-Dioulasso was not sufficient for the welded track and was well below the quantity stated on Chart 2. As this may cause track instability, the necessary additional ballasting of this section has been included in the project. Track Maintenance Equipment 4.11 RAN needs to renew track maintenance equipment, namely, four gang cars, six light inspection cars and one heavy inspection car. Spare parts for tamping machines are also provided for in the project. This equipment is required ta replace obsolete equipment which is 10 to 20 years old. - 15 - 4.12 Additional track maintenance equipment will be needed to concentrate the track maintenance staff into larger operational units. This will result in a reduction of 87 men out of a labor force of 657 (13.2%) with better supervision of track labor and, consequently, an increase in productivity. New equipment to be procured under the project consists of 2 gang cars, 2 light inspection cars, 2 heavy inspection cars, 15 trailers, and 2 bull- dozers. Additionally, one sleeper pressing machine is included in the proj- ect for repair of damaged steel sleepers. Rolling Stock 4.13 RAN's need for all types of rolling stock until 1980 has been analyzed. RAN needs 210 new box cars for delivery in 1978 to 1980 in order to meet the expected traffic demand until 1980. This takes into account both the renewal of obsolete rolling stock and the need for capacity increase, with expected improvements of rolling stock productivity. Details are given in Annex 8. Motive Power 4.14 The project includes the procurement of 18 main-line locomotives. The required number has been determined taking into account: (i) the grad- ual withdrawal from long-distance service of 26 old locomotives to be used for shunting and service traffic and the agreed retirement of 5 locomotives which are unreliable and too costly to maintain; (ii) the increase of average train loads made possible by the realignment works and the improvement in operations management; (iii) the improvement in the availability and utiliza- tion factors; and (iv) the traffic forecasts. Training 4.15 The technical training component of the proposed project is vital to the goals and the operational targets agreed upon by RAN and the Bank. Its aim is to improve staff productivity, operational efficiency and quality of service by training, retraining and upgrading about 3,000 skilled workers and supervisors. It includes: (i) the expansion or construction of physical training facilities in Abidjan, Bouake and Bobo-Diolasso; (ii) the purchase of furniture and training equipment for these facilities; and (iii) the recruitment of three expatriate personnel totaling 50 man-months. The latter comprises one senior training specialist to replace the head of the Training Division (TD) who is expected to retire shortly, one chief instructor for the S&T Department, and one specialist to give pedagogical training for six new African instructors whom RAN has agreed to provide. There are three French technical assistants assigned to training on a full-time basis, excluding the head of the TD, and this number should not be reduced until Africans trained under the project can take over. This would be reviewed annually (para. 3.06). A description of the technical training component to be implemented by the TD and cost estimates are given in Table 3 and Annex 2. - 16 - Consulting Services and Management Trainin& 4.16 A total of 177 man-months of consulting services are included in the project for: (i) diagnosis of problems and preparation of a plan of action, 15 man-months; (ii) management training, 10 man-months; (iii) de- velopment of RAN's planning function by establishing a corporate planning unit and a centralized statistical service, 51 man-months (para. 3.10); (iv) establishment of an Organization and Methods division in the Opera- tions Department, 36 man-months; (v) improvement of management and organi- zation of RAN's administrative services, 10 man-months; (vi) 15 man-months for complementary actions, part of which may be used for additional assis- tance to the Motive Pcwer and Rolling Stock Department and for re-organizing and improving management control of the Service des Wagon-Lits et Hotels de Tourisme (SWLHT); and (vii) three feasibility studies, 40 man-months (para. 4.01). C. Financing Plan 4.17 Financing of the project is assured by contributions from the Gov- ernments and RAN to cover most local costs and by grants and long-term loans or credits from Canadian International Development Agency (CIDA), IBRD and IDA. US$1.2 million of the IDA credit would be used to finance local costs in Upper Volta. The following table shows the allocation of funds to individual project components: (US$ million or equivalent) Ivc UPV Component Govt. Govt. RAN CIDA IBRD IDA Total Realignment 4.2 -- 2.8 3.0 13.5 - 23.5 Track renewal in IVC 0.1 -- -- 0.2 1.4 - 1.7 Track rehabilitation in UPV -- 0.6 0.4 -- -- 5.2 6.2 Track maintenance equipment - -- 1.8 - 1.8 Rolling stock -- -- 11.3 - 11.3 Locomotives -- -- -- 14.7 - -- 14.7 Training/consulting -- -- 0.7 -- 3.3 -- 4.0 Interest during construction -- 3,0 - 3.0 Total 4.3 0.6 3.9 29.2 23.0 5.2 66.2 - 17 - 4.18 The Ivorian and Voltaic Governments have agreed that they will promptly provide the funds shown in the preceding table, in accordance with RAN's Articles of Agreement. RAN's contribution of $3.9 million equi- valent is commensurate with the railway's financial position (c.f. Chapter 6). CIDA has agreed to contribute an amount of about $29 million to finance the locomotives, freight cars and rails included in the project. The equivalent of about US$13 million from CIDA's funds will be given as a grant to Upper Volta. The rest, about US$16 million equivalent, will be lent on IDA-type conditions to the Ivory Coast. All CIDA's funds will be on-lent to RAN at about 4% interest with final maturities commensurate with the lifetime of the equipment financed by CIDA. Effectiveness of the CIDA financing agreements and the on-lending agreements are a condition of effectiveness of the proposed Bank loan and IDA credit. 4.19 The proposed Bank loan and IDA credit would be used for the rehabil- itation and upgrading of RAN's infrastructure, including the procurement of track maintenance equipment, for the urgent improvement of RAN's oper- ational and managerial effectiveness through staff training and technical assistance, and for interest during construction. In the application of RAN's Articles of Agreement (cf. para. 6.07) the IDA credit to the Government of Upper Volta will be apportioned as follows: $3.1 million to be given to RAN as a grant, and $2.1 million to be on-lent to RAN on terms and conditions identical to those of the Bank loan to RAN. D. Project Execution, Procurement and Disbursement 4.20 RAN is competent to carry out and supervise the project which is expected to start in the last quarter of 1977 and be completed early in 1980. 4.21 The Bank Group-financed items will be procured by international competitive bidding in accordance with Bank Group guidelines for a total of US-$17.7 million, all contingencies included, with the exception of the specific items listed below. The consulting services, technical assistance and feasibility studies, for which consultants will be selected on terms and conditions acceptable to the Bank, amount to a total of US$2.6 million with all contingencies. 4.22 The following items will be procured through local competitive bidding in the Ivory Coast or Upper Volta, on terms and conditions which are acceptable to the Bank: (i) ballast for Upper Volta (US$1.5 million); (ii) reinforcement of fills in Upper Volta (US$1.8 million); (iii) furni- ture and equipment for training (US$0.7 million) which, because of stan- dardization with existing equipment or the small quantities involved, would not be suitable for ICB; and (iv) construction of training facilities (US$0.7 million) too small to be suitable for ICB. 4.23 The following items will be purchased from the traditional sup- pliers of the railway to maintaîn standardization: (i) spare parts for existing track maintenance equipment (US$0.3 million); and (ii) fastenings for sleepers of the type now in service (US$1.3 million). Negotiated purchases should not increase the cost of these items as compared with ICB. 4.24 CIDA-financed rolling stock, motive power and rails will be pro- cured from Canadian suppliers, who are competitive (US$29.2 million). 4.25 Production of ballast for the Ivory Coast, transport, supervision of the works, track relaying and ballasting will be carried out by RAN's own labor force (US$7.4 million equivalent). 4.26 Disbursements from the Loan account representing the estimated for- eign cost of the various components will be on the following basis: (a) 100% of the c.i.f. cost of imported railway equipment and material; (b) 80% of the cost of the infrastructure, civil works and locally produced sleepers; (c) 60% of the cost of buildings and new ballast; (d) 20% of the cost of track laying and welding; (e) 50% of the transport cost of ballast and track material; (f) 72% of the cost of signalling and telecommunication works; (g) 25% of the geotechnical studies and works supervision costs; (h) 56% of the cost of build- ings for training; (i) 100% of actual c.i.f. cost of imported furniture and equipment for training. If such items are imported but procured through local suppliers, 75% of the total cost will be disbursed from the Loan account; (j) 80% of the total cost of technical assistance for training; and (k) 85% of the total cost of other consulting services. 4.27 Disbursement from the Credit account will represent 84% of the ex- penditures incurred for improvement of infrastructure in Upper Volta. 4.28 The estimated schedule of disbursements from the proposed Loan and Credit is shown in Table 4. Any funds remaining in the Loan and Credit accounts upon completion of the project will be cancelled. 5. ECONOMIC EVALUATION A. General 5.01 RAN's traffic is expected to increase between 1976 and 1980 by about one-third. The project has been designed to enable RAN to efficiently carry the larger volume of traffic by increasing the railway's capacity and reducing its operating cost per unit of traffic. The underlying rationale for the entire project, however, is the fact that RAN is clearly the most economic mode of transport for the region served by the railroad, namely, Upper Volta, southeastern Mali and fast-growing northern Ivory Coast. The lack of relatively cheap rail transport would be an additional severe con- straint on the development of a large part of the poorly endowed Sahel. 5.02 Comparative economie road and rail transport costs, excluding in both cases infrastructure capital costs, are as follows. For the road, they are CFAF 15.4 per ton-km in 1976 prices, determined on the basis of a 1976 consultants' study, whereas the corresponding costs of rail transport for RAN's average transport distance of about 600 km are CFAF 9.6, including transshipment costs of CFAF 0.8 per ton-km. Transporting by road the long- distance cargo typically carried by RAN would, therefore, increase transport - 19 - costs by about CFAF 5.8 per ton-km or about 60%. The relatively inexpensive rail transport has a significant beneficial effect on the development of the region served by the railway. 5.03 All the major physical components of the project have been eval- uated individually, and a large number of different types of benefits has been quantified (Annex 12). Separate analyses have also been conducted to distinguish replacement items from those that will provide additional capacity. Shadow pricing has been used to value savings in labor in those investments whose main justification stems from reduction in railway staff. Shadow pricing has not been applied to construction costs and therefore the rate of return obtained for investments involving civil works are slightly underestimated. B. Realignment Bouake-Petionara 5.04 The evaluation of this investment has been divided in two parts: (a) the merits of rehabilitating the existing line are analyzed, and then (b) the justification of the incremental investment needed to improve the present alignment is evaluated. 5.05 By rehabilitating the track between Bouake and Petionara, RAN would avoid the economic consequences of an increase in the number of derail- ments and broken rails arising from the deteriorating track and a diversion of traffic to roads due to poor quality service. The economic rate of return of a track renewal program is 18% assuming a useful life of 30 years. 5.06 The track realignment is designed to remove slope gradients in excess of 10 mm/m, which will eliminate the need for double heading of heavy trains on the section, and to reduce the curvature of the line on the Bouake- Petionara stretch. The benefits of improving the alignment will be savings in freight and passenger traction costs, reduction in locomotive needs and a decrease in track maintenance costs. The incremental investment, allowing for improving the alignment rather than mere rehabilitation, will yield a 15% economic rate of return over a thirty-year period. The overall rate of return for the realignment component (i.e. comparing costs and benefits of the com- bined rehabilitation and realignment) is 17%. C. Track Renewal and Rehabilitation in Upper Volta 5.07 This component is justified because it will virtually eliminate the risk of major interruptions in traffic caused by derailments and the collapse of the platform due to the poor condition of fills. The track renewal and rehabilitation works will allow removal of speed limitations now in effect and will restore traffic safety. As there is much passenger traffic, safety is a vital element, and the permanent way should be brought back to a level of quality sufficient to avoid casualties. However, considering only the benefits from avoiding the direct cost of derailments and interruptions to traffic, the economic return on the renewal is 13%. - 20 - D. Track Maintenance Equipment 5.08 RAN's plan to concentrate track maintenance works in larger opera- tional units will result in better supervision of workers, improved quality of maintenance and a substantial increase in labor productivity. As the benefits of better maintenance of the permanent way are difficult to quantify, the analysis has been limited to labor cost savings, evaluated at the appropriate shadow wage rate. Separate evaluations have been made for the part of the investment devoted to the renewal of old equipment and the part which will serve to continue RAN's reorganization of maintenance operations. Renewal equipment will permit RAN to sustain the level of staff reductions achieved in track maintenance during the last years. The rate of return of this investment is 53%. Equipment to continue the mechanization plans, while bringing about a comparatively lower savings in staff costs, also yields a satisfactory rate of return of 25%. The rate of return on the whole invest- ment in track maintenance equipment is 39%. E. Freight Cars, Tank Cars and Locomotives 5.09 The 1977-82 investment program includes the acquisition of 340 freight cars. The project incorporates the purchase of 210 freight cars, which will serve to renew obsolete equipment and provide RAN with enough additional capacity to satisfy the incremental forecast demand for rail transport to 1980. Should there be any delays or reductions in the in- vestment program, rail traffic would be reduced and the cargo transported by road, which is less economic. 5.10 The project calls for the acquisition of 18 main-line locomotives covering RAN's needs until 1980. It is estimated that about six of these locomotives will to replace locomotives to be scrapped or withdrawn from long-distance service; the remaining 12 will provide the additional traction capacity needed for the new freight and tank cars. 5.11 The acquisition of locomotives and freight cars plus 40 tank cars to be purchased by the oil companies will permit RAN to provide enough capa- city to satisfy the traffic demand by 1980. If traffic materializes as fore- cast, new equipment can be procured in time to cope with traffie demand for 1981 and beyond. The aggregate rate of return for the rolling stock and motive power investment is estimated at 28%, the rate of return on the freight cars and associated locomotives at 26%, the rate of return on the tank cars and locomotives at 30%, and the rate of return on locomotives purchased to replace existing equipment at 36%. F. Sensitivity Analysis 5.12 All the above components of the project have been separately sub- jected to sensitivity analysis under the following assumptions: (a) freight traffic increase beyond the 1976 level only 50% of forecast; (b) rail transport costs 10% higher than estimated, due to railway inefficiencies; (c) investment costs 10% higher than estimated (in addition to the physical contingencies already included, see para. 4.05). The simultaneous occurrence of these conditions is highly improbable, but in such an event the following rates of - 21 - return would result: 13% on the realignment Bouake-Tafire; 12% on track renewal and rehabilitation in Upper Volta; 35% on track maintenance equip- ment; and 21% on the procurement of locomotives and rolling stock. All the resulting minimum rates of return are satisfactory. The rates of return are given in Table 5. G. Total Proiect 5.13 In addition to the benefits generated by individual project com- ponents as described, the project will produce substantial unquantified benefits. In particular, it is expected that the training and technical assistance components will make a major contribution toward improving the efficiency and quality of RAN's operations and management. On the basis of the quantified benefits, the overall economic return of the project excluding the training and consulting components is 23%. 6. FINANCIAL EVALUATION A. Past and Present Position 6.01 RAN's operating revenue increased by 170% from 1970 to 1976, cor- responding to an annual growth rate of 18%. About one-third of this growth vas generated by a higher volume of traffic, and about two-thirds by tariff increases. Tariffs, on the average, nearly doubled in this six-year period. Operating expenses, however, kept pace with the rapid growth of revenue, due mostly to inflationary cost increases. Staff costs per employee, for example, growing fairly regularly each year, increased virtually at the same rate as the railway's tariffs. The net result is that RAN's working ratio fluctuated considerably during the period and ended only slightly better than it began (84% vs. 86%). 6.02 RAN's income accounts and balance sheets for the period 1970 to 1976 are given in Tables 6 and 7 and summarized below: -22 - (in CFAF Million) 1970 1973 1976 Income Accounts Operating revenue 4061 6093 10943 Working expenses 3486 4926 9194 Cash generated from operations 575 1167 1749 Depreciation 696 998 1329 Net operating revenue (loss) (121) 169 420 Interest charges 64 198 775 Government subsidies 233 290 809 Net surplus 48 261 454 Working ratio 86% 81% 84% Operating ratio 103% 97% 96% Debt service 64 376 1157 Debt service coverage 9.Ox 3.1x 1.5x Balance Sheets Net fixed assets 15033 19472 30994 Net current assets 673 (303) 1350 Long-term debt 1127 3818 14570 Equity 14575 15521 20924 Current ratio 1.6 0.9 1.3 Liquid ratio 1.1 0.4 1.0 Debt/Equity ratio 7/93 20/80 41/59 6.03 Tariff increases have in general been timely and sufficiently high to cope with inflationary cost increases. The most recent rate increases in January and March 1977, averaging nearly 14% and expected to generate in 1977 additional revenue of about 12%, even exceed inflationary cost increases ex- pected for 1977. Firm conclusions on the adequacy of the tariff structure will be possible once RAN's costing system is operational (paras. 3.08 and 6.04). Present knowledge indicates that the bulk of RAN's cash generation stems from passenger traffic and a few commodities such as petroleum prod- ucts and general cargo. All tariffs appear to cover at least marginal costs. RAN has authority to conclude contracts including special rate arrangements with large customers and generally makes adequate use of this facility. Com- parisons of road vs. rail transport cost (Annex 6) indicate that RAN has a significant coast advantage over road competition for long hauls and even for relatively short hauls when rail transport does not necessitate additional costs for transshipment and on-carriage by road. - 23 - 6.04 Since the railway calculated its depreciation allowances in earlier years as an appropriation to a renewal fund, they have been recalculated for this report on an accrual basis. For the past two years RAN has cal- culated its depreciation accounts on a commercial basis at realistic rates. In 1976 depreciation amounted to 3.7% of the book value of average gross fixed assets in service. Assets, however, are for the most part valued at acquisition cost, and only small items have recently been revalued at replacement cost. RAN's consultants, Etudes et Organisation, France, have proposed using replacement values to be updated annually as a basis for calculating depreciation. The railway agreed with the consultants' proposal limiting the use of replacement values, at least for an initial trial period, in the cost accounting system now being introduced. A revaluation of assets at replacement cost is underway. RAN's proposal is acceptable to the Bank as the forthcoming cost accounting system will be RAN's major management instru- ment for cost control, tariff setting, and to a lesser extent, investment planning. RAN's proposal will be implemented by June 30, 1978, with a view to possibly generalizing at a later stage the use of replacement costs in RAN's accounting system including its balance sheets and income statements. 6.05 RAN's interest and debt service charges were very small until 1971 and grew rapidly thereafter due to an increase of the volume of invest- ment, accompanied by only a small increase in cash generation from operations. Therefore, borrowing increased at a much more rapid pace than before at partly medium-soft and partly rather severe commercial-type terms with final matu- rities after 8 to 10 years. RAN's financial position, which was acceptable until about 1972 in the context of comparatively amall volumes of borrowing and investment, deteriorated thereafter as indicated by a reduction of the debt service coverage ratio from 10.4 in 1972 to 1.5 in 1976. Concurrently, net current assets were drawn down, accompanied by the use of bank overdraft facilities of about CFAF 1.5 billion at the end of 1976. Delayed payments of Government contributions (para. 6.07) and prefinancing of investments on long-term borrowings also strained the railway's liquidity. 6.06 Investment has concentrated on necessary renewal and upgrading of existing infrastructure and on procurement of rolling stock and motive power. Attention has focussed on equipment for passenger service and some- what neglected freight traffic requirements. Since additional infrastructure renewal and upgrading are necessary and substantial amounts of funds are also needed to modernize and increase freight transport capacity, RAN's investment volume will remain high until at least 1979. Financing of RAN's basically sound investment program for 1977-1982 can, however, only remain financially sound if RAN's cash generation from operations is massively increased and if the railway's debt structure is improved through arranging future loans on terms involving longer grace and repayment periods. The analysis of RAN's future financial situation will concentrate on these issues. 6.07 RAN's Articles of Agreement stipulate that the respective Govern- ments will pay the entire cost of additions to infrastructure, such as new lines, and that they will also (Article 12) contribute towards the costs incurred by RAN for maintenance, renewal and reconstruction of track, special works, signalling and telecommunications. The latter contributions amount - 24 - to 60% of the costs incurred by RAN for the above purposes, each country having to contribute only to costs incurred on its territory. That part of the contributions corresponding to 60% of RAN's current maintenance costs for ways and works is considered by the railway as a part of its operating revenue. It is shown in this report as a non-operating subsidy-type revenue to produce a more realistic analysis. The contributions to RAN's cost for capital investment in additional infrastructure, renewal and reconstruction of infrastructure have until recently been considered by the railway as a source of equity capital and the tables on past and forecast balance sheets contained in this report use this procedure, which is adequate. RAN, however, adopted for its 1975 balance sheet a new procedure which eliminates these types of contributions from both net assets and equity through deducting them from gross assets. This divergence in balance-sheet presentation from appropriate accounting principles tends to produce a serious discrepancy between the amounts of assets and equity shown in RAN's books and the amounts actually invested in the railway. RAN agreed to remedy this situation by submitting to the Bank by March 1978 a report prepared by its auditors proposing adequate solutions to the above problem and, thereafter, implementing the auditors' recommendations. B. Future Financial Position 6.08 RAN's future financial position and the scope for management action to improve it are constrained by a number of parameters, including: rather strong road competition, the expected difficulty in achieving rapid productiv- ity increases once some apparent overstaffing is absorbed, the need for rela- tively heavy capital investment to maintain the railway's competitiveness, and the scarcity of concessional funds, leading in the past to an increasing use of commercial borrowing. The Bank and the railway have discussed and agreed upon the basic elements of a corporate plan which maintains RAN's financial viability and deals adequately with the above constraints. 6.09 Road transport competition has been dealt with earlier in the report. Financially, the most relevant fact is that the ability of RAN to increase tariffs in excess of inflationary cost increases is uncertain and may be quite limited. The exact limits are not known and, due to the complex nature of rail/road competition in the region served by the railway, cannot be known with a sufficient degree of reliability. As excessive railway tariff increases might jeopardize the demand for rail transport, a rather prudent approach has been agreed upon. It consists in rate increases to offset inflationary cost increases estimated at 8% p.a. and, additionally, to generate cumulative revenue increases in constant prices of about 18% in three steps of about 4% in 1977 and about 6.5% in each of the years 1978 and 1979. Thereafter, rate increases will suffice to maintain a working ratio of 73% (para. 6.12). Rate increases for 1977 commensurate with the above policy have been implemented. 6.10 RAN's future working expenses are largely a function of staff costs and, more precisely, the total number of staff, as the railway's influence on costs per man employed is presently small due to a well-established system of fairly automatic cost-of-living, merit and seniority increases. Agreements - 25 - reached to limit increases in staff numbers have been spelled out in para. 3.05. Future working expenses are further determined by timely and successful implementation of the operational plan of action discussed earlier in this report. 6.11 There is little scope to reduce further the investment program for the period 1977-1982 without jeopardizing RAN's competiveness and its capacity needs, bearing in mind that implementation of several projects will be subject to the findings of studies included in the proposed project (para. 4.02). There is, however, a need to ensure that the terms and conditions of RAN's borrowing are satisfactory and that its debt service coverage is maintained at an acceptable level. Agreement was therefore reached during negotiations on a debt limitation based on a minimum debt service coverage of 1.5 from 1977 onwards. 6.12 Assuming that the actions outlined above are implemented as planned and traffic materializes as foreseen in Chapter 3, RAN's forecast income accounts and balance sheets should develop as indicated in Tables 8 and 9 and summarized below (cf. Annex 12 for assumptions used). …--------…(in CFAF Million)---------- 1976 1978 1979 1982 Income Accounts Operating revenue 10943 17005 20690 31960 Working expenses 10523 15109 17333 26428 Cash generation from operations 1749 3816 5567 8652 Depreciation 1329 1920 2210 3120 Net operating revenue 420 1896 3357 5532 Interest charges 775 1519 1477 2012 Government subsidies 809 926 1030 523 Net surplus (loss) 454 1303 2910 4043 Working ratio 84% 78% 73% 73% Operating ratio 96% 89% 84% 83% Debt service 1157 2125 2670 4216 Debt service coverage 1.5x 1.8x 2.1x 2.1x Balance Sheets Net fixed assets 30994 48816 53935 67162 Net current assets 1350 2846 5590 6210 Long term debt 14570 27160 29595 31603 Equity 20924 30462 36940 49369 Current ratio 1.3 1.6 2.6 2.3 Liquid ratio 1.0 1.2 1.9 1.6 Debt/equity ratio 41/59 47/53 44/56 39/61 - 26 - 6.13 The above figures indicate a rapid improvement of RAN's financial position by 1978, and achievement of a satisfactory earning situation by 1979. Successful implementation of the strategy outlined in the preceding paragraphs (6.08-6.11) would be reflected in attainment of the working ratios included in the above table. Agreement was reached that RAN will (i) take all measures necessary to ensure that its working ratio will not exceed 78% in 1978 and 75% thereafter; and (ii) use for planning purposes after 1978 a working ratio not exceeding 73%. Achievement of this target would be satisfactory to the Bank, bearing in mind that an in-depth analysis of RAN's long-term goals and financial targets will be conducted during the next few years (para. 6.14). 6.14 The above table assumes, with regard to Government contributions, that: (i) the Governments will pay to RAN, mostly in 1978, the amounts which they owe the railway for maintenance and renewal works executed in earlier years and estimated at CFAF 3.6 billion as of end-1977; (ii) from 1977 on- wards (1978 for Upper Volta) the Governments will pay their contributions for maintenance and renewal by June of the following year; (iii) the cost of additional infrastructure will be reimbursed to RAN pari passu with the expenses incurred by the railway; and (iv) in 1979 the contribution system will be renegotiated between the Governments and RAN with a view to substan- tially reducing or even eliminating contribution payments. A reduction by two-thirds, from 1980 onwards has been assumed (cf. Annex 12). The measures under (i), (ii), and (iii) above are needed to remedy RAN's present cash shortages due inter alia to a lack of sufficiently rigorous control over RAN's financial management by its Board of Directors, regarding in particular the financing of capital investments with short-term borrowings. Their implementation was agreed upon at negotiations. Concerning (iv), it was agreed that discussions between RAN and the Governments on the appropriate level of government contributions will be concluded by the end of 1979, in consultation with the Bank. The financial forecasts show that a reduction of contributions may be possible at that time. Moreover, the reduction may be justified by the findings of the transport user-charge study mentioned in para. 2.08. This study, which will be finalized by March 1979, and the work of RAN's own planning unit implemented under the proposed project will form an adequate basis to determine more precisely RAN's long-term goals and financial targets. 6.15 The debt-service coverage does not drop below 1.8 after 1977, which is satisfactory, and the debt/equity ratio reaches its peak of 48/52 in 1978, which is acceptable. A statement of sources and application of funds for the period 1977-1982 is shown in Table 10, and the assumptions used are spelled out in Annex 12. The following is a summary for the proj- ect period (1977-1980): - 27 - (CFAF billion) (%) Sources: Cash generated from operations 18.1 36 Long-term borrowing 19.6 39 Government contributions 12.6 25 Total Funds Available 50.3 100 Applications: Capital investment 35.0 70 Debt service 10.4 21 Increase of cash minus decrease of receivables from Governments 3.2 6 Increase of other working capital 1.7 3 Total Funds Applied 50.3 100 6.16 During the project period, capital investment is expected to be financed 56% through borrowing, 27% through Government contributions, which will additionally finance RAN's cash increase back to a normal level, and 17% through RAN's cash generation from operation after deducting from the latter interest and debt amortization payments and the increase in working capital. RAN's cash generation will thus be sufficient to ensure that the railway can finance its contribution to the cost of the proposed project and to other investment. C. Sensitivity Analysis 6.17 The above description of RAN's future financial position is con- sidered to be realistic and achievable. There are, however, two major risks, namely: a shortfall in expected freight traffic volumes, caused mainly by RAN's lower than expected efficiency, and increases of operating costs, in particular staff costs, in excess of the forecasts. Assuming in 1980 that for these two parameters the sensitivity assumptions made in the economic analysis (para. 5.12) materialize simultaneously, RAN's cash generation from operations would be reduced by about CFAF 3.6 billion in this year, and the railway would cover only 90% of its debt service through cash generated from operations, thus necessitating subsidies. The above sensitivity assump- tions are, however, rather severe, and there would probably be scope for remedial action to at least partially offset detrimental developments. Such action would be determined in consultation with the Bank. There remains, nevertheless, a risk of a cash shortfall, in particular if contribution payments were severely reduced. The Governments agreed to provide additional subsidies or such other financial support for RAN as may be appropriate to protect the railway's cash position should the need arise. - 28 7. AGREEMENTS REACHED AND RECOMMENDATION 7.01 Agreement has been reached on the following principal items: (i) with the Ivorian and/or Voltaic Governments: (a) the planning and research unit presently being set up in the Ivorian Ministry of Transport and Public Works will undertake a study to be completed by March 1979, on terms satisfactory to the Bank, to: (i) analyze the possible extent of uneconomic distortions of the modal allocation of freight traffic between rail and road due to the Governments' subsidization and rate setting for both modes, and (ii) recommend remedial action; the Voltaic Ministry of Transport will participate in this study (para. 2.08); (b) promptly upon completion of the studies on the projects listed in para. 4.01(v), the Ivorian Government will consult with the Bank and the railway on the solutions to be adopted and their timing (para. 4.02); (c) the Governments will promptly provide their con- tribution to project financing (para. 4.18); (d) the Ivory Coast will pay to RAN: (i) by April 1978 the amounts shown in RAN's 1976 balance sheet as receivable from the Ivory Coast; (ii) from 1977 onwards by June of the following year the Ivory Coast's share of RAN's cost of main- tenance and renewal of ways and works; and (iii) promptly upon their incurrence, RAN's costs for extension of its infrastructure in the Ivory Coast (para. 6.14); (e) Upper Volta will pay to RAN: (i) by December 1979 the amounts shown in RAN's 1977 balance sheet as receivable from Upper Volta; (ii) from 1978 onwards by June of the following year Upper Volta's share of RAN's cost of maintenance and renewal of ways and works; and (iii) promptly upon their incurrence, RAN's costs for extension of its infrastructure in Upper Volta (para. 6.14); - 29 - (f) by December 1979 the Governments and RAN will review with the Bank the present system of contributions with a view to making appropriate adjustments (para. 6.14); and (g) the Governnents will provide subsidies or such other financial support for RAN as may be appropriate to protect the railway's cash position should the need arise (para. 6.16). (ïi) with RAN: (a) the railway will make every effort to maintain through end-1978 a maximum staff, excluding temporary staff for force account works, of 5,200 with necessary additional manpower in somie departments being offset by reduction in others (para. 3.05); (b) RAN will submit by June 1978 a draft five-year manpower plan covering the period 1978 to 1982 (para. 3.05); (c) RAN will consult annually with the Bank on the rail- way's expected technical assistance requirements and on measures necessary to meet them (para. 3.06); (d) RAN's proposed operational and investment budgets will be submitted to the Bank for review at least 30 days before the date scheduled for consideration by RAN's Board, but in any event not later than November 30 of the year preceeding the fiscal year covered by the budgets. The same applies mutatis mutandis to any amendments proposed to be made during the year to the investment budget (para. 3.09); (e) from 1977 onwards RAN's accounts will be audited by qualified, independent auditors in accordance with generally accepted auditing principles (para. 3.11); (f) the operational plan of action including, inter alia, freight traffic targets (Annex 4) has been incor- porated in the proposed Loan Agreement (para. 3.15); (g) promptly upon completion of the respective studies, RAN will consult with the Bank on the solutions to be adopted and their timing for the projects listed in para. 4.01(v); and RAN will not begin to implement nor incur any debt for these projects before such consultations (para. 4.02); (h) RAN's 5-year investment plan will be updated annually and extended by one year. The draft of the updated plan will be submitted for review to the Bank (para. 4.03); - 30 - (i) RAN's existing line between Bouake and Petionara will be abandoned, with reusable material being salvaged, after completion of the new line (para. 4.06); (j) RAN will discontinue using the existing 5 locomo- tives of the type CC2400 in regular main-line operations not later than at final delivery of the locomotives included in the project, except for emergencies (para. 4.14); (k) RAN will make available a sufficient number of ex- perienced African technicians in order to have six trained instructors and will ensure that adequate numbers of personnel are released from operational departments for training (para. 4.15); (1) RAN will determine by June 30, 1978, and thereafter annually update, the replacement values of its assets. The resulting asset valuations will be used in RAN's accounting system, at least for the purpose of cost accounting (para. 6.04); (m) RAN will by March 1978 submit to the Bank a report, prepared by its auditors or other qualified experts, recommending adequate action to maintain appropriate accounting principles in RAN's balance sheet presen- tation; RAN will subsequently implement the auditors' recommendations (para. 6.07); (n) RAN will from 1977 onwards not incur any debt if its debt service coverage ratio does not exceed 1.5, except if the Bank otherwise agrees (para. 6.11); and (o) RAN will (i) take necessary measures, including but not limited to rate increases, to achieve working ratios of not more than 78% in 1978 and 75% there- after; and (ii) use for planning purposes after 1978 a working ratio not exceeding 73% (para. 6.13). 7.02 Section 6.07 of the "Contrat de Financement" dated April 19, 1974 between the European Community, EIB and RAN requires RAN to obtain EIB's agreement before incurring any medium- or long-term debt. EIB has agreed to the Bank loan and IDA credit. - 31 - 7.03 Effectiveness of financing and on-lending agreements to be con- cluded between the Governments, RAN and CIDA will be a condition of effec- tiveness of the proposed loan and credit (para. 4.18). Conclusion of an onlending agreement for the proposed IDA credit between Upper Volta and RAN, on terms and conditions spelled out in para. 4.19, will be an additional condition of effectiveness for the proposed loan and credit. 7.04 The proposed project is suitable for an IDA credit of US$5.2 million to the Government of Upper Volta and a Bank loan of US$23 million to RAN with the Government of the Ivory Coast as a guarantor for a period of 17 years, including a grace period of 4 years. The Government of Upper Volta would guarantee jointly and severally with the Ivory Coast a portion of the loan, amounting to about US$6 million and corresponding to items which are not exclusively located in the Ivory Coast. September 1977 TABLE 1 IVORY COAST - UPPER VOLTA page 1 REGIE ABIDJAN-NIGER (R.A.N.) REGIONAL RAILWAY PROJECT Suismary of OPerating Statistics 1970-1976 1/ 1970 1971, 1972 1973 1974 1975 1976 2/ A. Traffict Number of passengers (1000) 2,564 2,630 2,595 2,827 2,931 3,006 3,254 Passenger-kilometers (Millions) 625 700 777 883 918 945 1,040 Freight tonnage (1000 T) 748 794 866 955 787 717 866 Ton-kilometers (Millions) 402 447 479 552 527 442 558 Traffic units (Tskm + Pass.-km - Millions) 1,027 1,147 1,256 1,435 1,445 1,387 1,598 Gross Ton-kilometers (1000 G.T.km) - Express trains 136,155 163,152 155,302 180,795 191,455 209,622 226,701 - Railcars 196,476 188,572 185,350 187,016 196,644 208,411 251,847 - Freight trains 870,259 914,121 974,692 1,095,168 1,053,455 927,709 1,051,062 - Service trains and others 12.319 15.262 26.920 16 789 17.425 32,302 29,287 Total Gross T.km 1,215,269 1,281,107 1,342,264 1,479,768 1,458,979 1,378,044 1,558,-897 B. Onerations (1) Train-kilometers (1000 km) - Express trains 640 616 757 876 868 869 880 - Railcars 1,678 1,772 1,755 1,930 2,108 2,186 2,429 - Freight trains 1,668 1,744 1,829 2,229 2,234 2,022 2,240 - Service trains and others 142 238 248 136 76 73 77 Total Tr.km 4,128 4,370 4,589 5,171 5,286 5,150 5,626 (2) Motive pover mileage (km) - -Maànliue locomotives CC 1000 1,471,497 1,498,773 1,398,314 1,446,918 1,505,504 1,279,783 798,342 Cc 1500 842,752 903,754 809,973 729,595 592,119 519,994 505,534 CC 2400 465,332 516,273 398,866 447,734 360,448 259,175 145,044 B-BB 1800 - 3.338 562.672 770.812 720.580 887.257 1.733.373 Total mainline locomotives 2,779,491 2,922,138 3,169,825 3,395,059 3,178,651 2,946,209 3,182,293 - Shunters 348,625 407,023 429,167 442,722 488,293 466,207 487,990 - Railcars ZE 130-160 1,677,673 1,771,595 1,755,199 1,930,026 2,108,313 2,180,731 1,719,352 ZE 200 - - - - - 3.585 523.543 Total railcars 1,677,673 1,771,595 1,755,199 1,930,026 2,108,313 2,184,316 2,242,895 (3) Rolling stock mileage (km) - Freight cars Cattle 18,865,697 6,395,366 7,302,607 6,436,248 6,288,397 5,783,231 3,998,787 Box cars 18,65, 13,676,216 13,507,173 14,593,878 14,258,202 13,585,911 13,682,601 Groupage cars 2,570,139 2,157,614 1,848,843 3,375,384 3,576,450 2,583,600 2,392,040 Gondolas 712,052 676,982 1,244,975 2,283,150 2,230,807 1,880,453 3,064,047 Flat cars 3,578,923 2,689,436 4,079,551 3,455,101 3,096,786 2,745,229 3,463,419 Service cars 676,997 758,012 1,397,470 852,005 832,401 1,639,318 1,639,323 Privately owned cars 5.695,636 6.036.098 6,126.144 6.769.934 6.614.200 5.902.864 6.460.806 Total freight cars 32,099,444 32,389,724 35,499,763 37,765,700 36,897,243 34,120,656 34,701,023 Ratio loaded car mileage 0.7 0.7 0,7 0,7 0,7 0.7 total mileage *° - Passenger coaches lIst classa ) 484,368 229,160 362,875 362,875 844,559 824,693 . Sleeping cars ( 1,426,922 572,898 571,980 706,391 839,604 1,313,087 1,413.054 Dining cars ) 355.298 349,844 358,473 - 419,802 617,576 746,697 2nd class 2,132,009 2,472.141 1,091,170 1,778,620 1.394,752 5,335,804 5,748,617 Baggage vans 998,247 1,014,372 941,276 1,373,621 1,674,620 1,321,596 1,434,793 Trailers 7.092.502 7.010.374 8.819.536 8.860,103 9.464.575 7,030,779 7.200.590 Total passenger coaches and Baggage vans 11,649,680 11,909,451 11,993,966 13,440,083 14,156,228 16,463,401 17,368,444 1/ Source: RAN's Operations Department except othervise specified. 2/ Source: RAN's provisional statistics for 1976. TABLE Page 2 1970 1971 1972 1973 1974 1975 1976 (4) Motive power fleet (as of December 31) - Mainline locomotives CC 1000 20 20 20 20 20 18 17 CC 1500 8 8 8 8 8 8 8 Cc 2400 6 6 6 6 5 5 5 B-BB 1800 0 2 6 6 8 10 17 Total 34 36 40 40 41 41 47 - Shonters (Total) 20 23 23 24 29 29 29 - Railcars ZE 130-160 15 18 18 18 17 17 16 ZE 200 0 O 0 O 1 _0 Total 15 18 18 18 17 18 26 (5) Rolling stock (as of December 31; September 30 for 1976) - Freight cars il Cattle ad box cars 634 627 621 689 692 690 673 Groupage cars 8 8 10 10 14 12 G.Gondolas 97 134 188 186 188 209 209 Plat cars 254 254 203 204 187 191 192 . Service cars 47 61 66 63 73 102 96 - Privately owned 74 85 88 93 99 115 115 Passenger vehicles P .. clans 15 15 15 15 13 22 21 2nd class 84 91 94 104 103 103 143 B aaggage vans 8 8 10 10 14 12 12 (6) Productivity - Passenger-km per km (1000) 545 611 677 769 800 824 907 Ton-kilometer per km (1000) 343 381 408 471 449 385 475 Average daily mileage of freight cars 61.5 63.7 78.9 86.5 79.1 59.9 66.9 Average 1oad per Ioaded freight cars 16.1 17.3 18.0 19.1 18.5 19.8 20.8 Annual total number of freight cars loaded 46,569 45,891 47,839 50,001 42,578 35,281 40,951 Net ton-kîlometers per train-km (frelght) 241 256 261 247 235 218 241 Gross ton-kilometers per train-km (freight) 521 524 532 491 471 459 470 Gross ton-kilometers per express train-km 212 264 205 206 220 241 258 - Gross ton-kilometers per railcar-km 117 106 105 96 93 95 104 Average monthly mlleage of the motive power . Cc 1000 6,131 6,245 5,826 6,029 6,272 5,462 3,913 CC 1500 8,779 9,414 8,437 7,600 6,166 5,417 5,265 CC 2400 6,463 7,170 5,540 6,619 6,074 4,320 2,417 B-BB 1800 -- 834 11,483 10,706 7,506 7,394 8,496 Railcars 9,320 8,202 8,126 8,935 9,760 10,689 13,318 - Availabi.ity of motive pover (7.) 2/ cC 1000 90.5 80.2 95.0 78.1 87.0 77.8 65 Cc 1500 84.8 82.9 80.7 76.2 44.4 62.5 75 CC 2400 72.3 76.6 61.3 55.2 68.5 20.0 20 B-BB 1800 -- 86.3 92.3 63.2 79.4 58.8 59 - Availability of rolling stock (%) Freight cars Cattle and nom cars 94 95 97 98 94 93 N.A. Gondolas 98 98 98 96 97 93 N.A. Flatcars 97 96 96 99 98 89 N.A. Service cars 98 97 96 100 98 71.5 N.A. Tank cars 96 98 100 100 97 98 N.A. 1/ Does not include the leased cars (20 tank cars, 5 box cars and 2 flat cars as of the end nf September 1976). 2/ Source: RAN's annual reports for 1970-1974; MT Department for 1975; RAN's provissonal statistics for 1976. TABLE 1 page 3 1970 1971 1972 1973 1974 1975 1976 - Turnaround time f freight cars V . Cattle cars -- -- -- 10.1 13.4 16.2 N.A. . Box cars -- -- -- 10.1 13.9 16.6 N.A. . Tank cars -- -- -- 1.0 14.7 15.2 N.A. - Average train delays ( (h) Consulting services 0.2 1.0 1.2 0.2 1.2 1.4 0.2 1.5 1.7 (i) Feasibility studies - 0.3 0.3 - 0.3 0.3 0.1 0.4 0.5 7.4 42.9 50.3 8.1 44.4 52.5 10.0 53.2 63.2 TABLE 3 IVORY COAST - UPPER VOLTA REGIONAL RAILWAY PROJECT Training - Cost Estimates CFAF Million US$ (000) Local Foreign Total Local Foreign Total (1) Buildings Construction and expansion of physical trainîng facilltiteR at? ta) Abidjan 18.2 22.8 41.0 74.2 93.1 167.3 (b) Bouake 21.4 26.9 48.3 87.5 109.7 197.2 (c) Bobo-Dioulasso 13.3 16.7 30.0 54.3 68.1 122.4 Sub-total civil works 52.9 66.4 119.3 216.0 270.9 486.9 (2) Furniture (a) Abidjan - 4.8 4.8 - 19.6 19.6 (b) Bouake - 5.0 5.0 - 20.4 20.4 (c) Bobo-Dioulasso - 4.6 4.6 - 18.8 18.8 Sub-total furniture - 14.4 14.4 - 58.8 58.8 (3) Training Equipment (a) Abidjan - 113.8 113.8 - 464.5 464.5 (b) Bouake - 2.3 2.3 - 9.4 9.4 (c) Bobo-Dioulasso - 2.3 2.3 - 9.4 9.4 Sub-total equipment - 118.4 118.4 - 483.3 483.3 (4) Technical assistance 15.1 60.8 75.9 62 248 310.0 (50 man-months) Grand Total 68 260 328 278 1061 1339. Physical contingencies (10%) 7 26 33 28 106 134 Total with physical contingencies 75 286 361 306 1167 1473 Price contingencies (24%) 18 69 87 73 280 353 Total with all contingencies 93 355 448 379 1447 1826 TABLE 4 IVORY COAST - UPPER VOLTA REGIONAL RAILWAY PROJECT Estimated Schedule of Disbursements (US$ Million) IBRD/IDA Fiscal Year and Quarter Ending IBRD IDA 1977-1978 December 31, 1977 4.3 March 31, 1978 6.0 1.4 June 30, 1978 8.4 2.8 1978-1979 September 30, 1978 10.6 3.4 December 31, 1978 13.3 4.0 March 31, 1979 15.8 4.2 June 30, 1980 17.3 4.4 1979-1980 September 30, 1979 18.8 4.6 December 31, 1979 19.3 4.8 March 31, 1980 21.1 5.2 June 30, 1980 21.5 1980-1981 September 30, 1980 21.8 December 31, 1980 23.0 Table 5 IVORY COAST/UPPER VOLTA Regional Railway Project Summary Rates of Return (in %) Higher Higher Lower Combination Normal Invest. Rail Freight of Case Costs Operat- Traf- Sensitivity ing fic Analyses Costs Growth (1) Rehabilitation 18 17 17 15 13 (2) Realignment 15 13 15 1/ il 10 (3) Combined Rehabilitation & 17 16 17 14 13 Realignment (4) Line Improvement Upper 13 12 12 13 2/ 12 Volta (5) Maintenance Equipment - 53 49 53 3/ 53 3/ 49 Renewal Only (6) Incremental Maintenance 25 22 25 4/ 25 4/ 22 Equipment (7) Total Maintenance 39 35 39 4/ 39 4/ 35 Equipment (8) Freight Cars & Locomotives 26 24 23 24 20 (9) Tank Cars & Locomotives 30 28 26 19 15 (10) Locomotives 36 33 32 36 3/ 30 (11) Rolling Stock & Locomo- 28 26 26 25 21 tives (8), (9), & (10) (12) Whole Project 23 21 21 20 17 1/ Not sensitive to higher rail operating cost, since no benefits from diversion to road have been assumed. 2/ Not sensitive to lower freight traffic growth, since analysis is based on 1976 traffic volume. 3/ Not sensitive to lower freight traffic growth, because these locomotives, which replace obsolete equipment, are needed to carry 1976 traffic. 4/ Not sensitive. RAN Income Accounts 1970-1976 CFAF Million 1970 1971 1972 1973 1974 1975 1976 Operating Revenue Passengers 1601 1792 2115 2376 2829 3471 4490 Freight 2322 2602 2718 3332 3610 3395 4630 Orher incl. wagons-lit, hotels 138 168 308 385 634 884 1823 Total Operating Revenue 4061 4562 5141 6093 7073 7750 10943 Operating Expenses Staff costs 2357 2575 2735 3094 3751 4373 5136 Fuel 226 298 372 386 573 674 783 Other material 411 713 741 820 1153 1272 1902 Other costs 492 610 640 626 748 1248 1373 Total Cash Outgoing 3486 4196 4488 4926 6225 7567 9194 Cash Generation from Operations 575 366 653 1167 848 183 1749 Depreciation 696 757 810 998 1245 1081 1329 Total Operating Expenses 4182 4953 5298 5924 7470 8648 10523 Net Operating Revenue (loss) (121) (391) (157) 169 (397) (898) 420 Interest Charges 64 64 64 198 261 311 775 Subsidies from Governments 233 231 251 290 1189 673 809 Net Surplus (loss) 48 (224) 30 261 531 (536) 454 Working Ratio 867% 92% 87Z 81% 88% 97% 84% Operating Ratio 103% 109% 103% 97% 104% 113% 96% Times Interest Earned - - 0.9x - - - 0.5 Debt Service 64 64 64 376 474 726 1157 Debt Service 8overage 9.0 5.7 10.4 3.1 1.8 0.3 1.5 Average Net Fixed Assets in Service 13077 13610 15675 18180 20458 22133 24728 Rate of Retura (0.9%) (2.9%) (1.0%) 0.9% (1.9%) (4.1%) 1.7% ' Average Gross Fixed Assets in Service 18415 19670 22520 25930 29266 32169 35985 Depreciating Ratio 3.8% 3.8% 3.6% 3.8% 4.3% 3.4% 3.7% --SourCeL RAN July 1977 TABLE 7 RAN Summary Balance Sheets as of Dec. 31. 1970-1975- (in CFAF Million) 1970 1971 1972 1973 1974 1975 ASSETS Fixed Assets Gross Value 18934 20412 24630 27231 31300 33038 Less Depreciation 5686 6443 7253 8251 9496 10577 Nét Fixed Assets in Use 13248 13969 17377 18980 21804 22461 Work in Progress 1785 2909 439 492 447 2879 Total Fixed Assets 15033 16878 17816 19472 22251 25340 Investments 3 4 26 158 197 208 Other Non-Current Assets -/ 3 3 3 12 832 2495 Net Current Assets Current Assets: Cash 645 564 359 353 254 383 Receivables 710 564 708 754 2431 3920 stores 523 612 790 876 1132 1160 Suspense Items 4 13 98 16 15 13 Sub-Total Current Assets 1882 1753 1955 1999 3832 5476 Less Current Liabilities Bank Overdrafts - - - - 482 2778 Loan Terms 10 5 119 213 239 571 Payables 1199 1730 1753 2089 3615 2776 Sub-Total Current Liabilities 1209 1735 1872 2302 4336 6125 Total Net Current Assets 673 18 83 (303) (504)- (649) Total Assets 15712 16903 17928 19339 22776 27394 LIABILITIES Equity 14575 14627 14896 15521 17950 19746 Long-Term Debt 1137 2276 3032 3818 4826 7648 Total Liabilities 15712 16903 17928 19339 22776 27394 Ratios Current 1.6 1.0 1.0 0.9 0.9 0.9 Liquid 1.1 0.7 0.6 0.4 0.6 0.7 Debt/Equity 7/93 13/87 17/83 20/80 21/79 28/72 1/ Since 1974 mostly Government contributions due after more than one year. RAN Forecast Income Accounts 1976-1982 (in CFAF Million) 1976 4/ 1977 1978 1979 1980 1981 1982 Operating Revenue Passengers 4490 4794 5190 5494 5798 6174 6460 Freight 4630 5448 5953 6376 6922 7416 7838 Miscellaneous 1823 2020 2060 2100 2150 2200 2250 Rate increases - 1471 3802 6720 9230 12010 15412 Total Operating Revenue 10943 13733 17005 20690 24100 27800 31960 Operating Expenses Staff costs 5136 6215 6526 6908 7435 7956 8510 Fuel 783 818 888 948 1022 1088 1147 Other 3275 3668 3897 4146 4463 4749 5030 Inflationary cost increases - 856 1878 3121 4651 6469 8621 Total cash outgoing 9194 11557 13189 15123 17571 20262 23308 Cash generation from operations 1749 2176 3816 5567 6529 7538 8652 Depreciation 1329 1630 1920 2210 2500 2800 3120 Total Operating Expenses 10523 13187 15109 17333 20071 23062 26428 Net Operating Revenue 420 546 1896 3357 4029 4738 5532 Interests: on long-term debt 586 1006 1269 1447 1596 1903 2012 on Bank overdraft 189 270 250 30 - - Total interest charges 775 1276 1519 1477 1596 1903 2012 Government subsidies for current 809 922 926 1030 391 452 523 maintenance Net Surplus 454 192 1303 2910 2824 3287 4043 Ratios: _ Working 84% 84% 78% 73% 73% 73% 73% Operating 96% 96% 89% 84% 83% 83% 83% Times interest earned 0.5 0.4 1.2 2.3 2.5 2.5 2.7 Debt service coverage 1.5 1.2 1.8 2.1 2.0 2.0 2.1 Average net fixed assets in service 24728 30925 38836 45376 50958 56043 62134 Rate of return 1.7% 1.8% 4.9% 7.4% 7.9% 8.5% 8.9% v Average gross fixed assets in service 35985 43677 53363 61968 69905 77640 86691 0 Depreciating ratio 3.7% 3.7% 3.6% 3.6% 3.6% 3.6% 3.6% Source: RAN and Mission estimates August 1977 1/Actual data RAN Forecast Balance Sheets as of December 31, 1976-1982 (in CFAF Million) ASSETS: 19761/ 1977 1978 1979 1980 1981 1982 Fixed Assets Gross Value 38931 48422 58303 65632 74177 81102 92279 Less Depreciation 11937 13567 15487 17697 20197 22997 26117 Net Fixed Assets in Use 26994 34855 42816 47935 53980 58105 66162 Work in Progress 4000 5000 6000 6000 3000 4000 1000 Total Fixed Assets 30994 39855 48816 56980 62105 6-7162 Other Fixed Assets2/ 3150 4720 5960 7010 7360 7680 7600 Net Current Assets Current Assets: Cash 458 620 750 1578 1568 1491 1560 Receivables: Contributions 3128 3596 2316 2242 1964 1434 1200 Others 1470 1850 2400 3100 3600 4100 4800 Stores 1132 1450 1850 2270 2640 3020 3450 Sub-Total Current Assets 6188 7516 7316 9190 9772 10045 11010 Less Current Liabilities: Bank Overdrafts 1533 3907 370 - - - - Payables 3305 4100 4100 3600 3600 4300 4800 Sub-Total Current Liabilities 4838 8007 4470 3600 3600 4300 4800 Total Net Current Assets 1350 (1491) 2846 5590 6172 5745 6210 Total Assets 35494 45066 57622 66535 70512 75530 80972 LIABILITIES: Equity 20924 24577 30462 36940 40862 44800 49369 Long-Term Debt 14570 20489 27160 29595 29650 30707 31603 Total Liabilities 35494 45066 57622 66535 70512 75530 80972 Ratios Current 1.3 0.9 1.6 2.6 2.7 2.3 2.3 ' Liquid 1.0 0.8 1.2 1.9 2.0 1.6 1.6 Debt/Equity 41/59 46/54 47/53 44/56 42/58 41/49 39/61 Source: RAN and mission estimates 1/preliminary data -i/mostly Governments' share of RAN's debt for infrastructure renewal, except for CFAF 208 million of investments. August 1977 RAN Forecast Sources and Application of Funds (in CFAF Millions) SOURCES 1977 1978 1979 1980 1981 1982 Cash generated from operations 2176 3816 5567 6529 7538 8652 Government contributions 2108 4788 3790 1227 1134 1434 IDA(60%) 588 118 59 - - Loans: IBRD 1054 2205 1470 907 - - IDA(40%) - 392 78 39 - - CIDA 2070 2700 1910 450 - - Total proposed project 3124 5297 3458 1396 - - Other loans 3640 2230 200 300 3000 3100 Total loans 6764 7527 3658 1696 3000 3100 Total Sources 11048 16719 13133 9511 11672 13186 APPLICATIONS Capital investment 10606 11007 7689 5692 8253 8505 Debt service: Interest 1006 1269 1447 1596 1903 2012 Amortization 845 856 1223 1641 1943 2204 Total debt service 1851 2125 2670 3237 3846 4216 Interest on Bank overdraft 270 250 30 - - - Increase (decrease) in working capital 371 (330) 1546 592 (350) 396 Total Applications 13098 13052 11935 9521 11749 13117 Cash increase (decrease) in year (2212) 3667 1198 (10) (77) 69 Cash balance brought forward (1075) (3287) 380 1578 1568 1491 Cash at end of year (3287) 380 1578 1568 1491 1560 Source: Ran and Mission estimates August 1977 ANNEX 1 Page 1 IVORY COAST/UPPER VOLTA Regional Railway Project: Bank Projects in the Transport Sector A. Ivory Coast Ln. No. 542 First Highway Project: US$5.8 million Loan of June 21, 1968; Closing Date: December 31. 1974. This project has been satisfactorily completed. Ln. No. 761 Second Highway Project: US$20.5 million Loan of June 22, 1971; Closing Date: November 30. 1975. This project was satisfactorily completed in September 1975. The funds remaining under the loan are being used to finance the supplementary urban studies for Abidjan, initiated under the Third Highway Project. Ln, No. 837 Third Highway Project: US$17.5 million Loan of June 23, 1972; Closing Date: September 30. 1977. The project includes (i) a four-year maintenance program; (ii) the realignment and strengthening of about 110 km of existing paved highways; (iii) consulting services to supervise these works; and (iv) a feasibility study and detailed engineering of an Abidjan urban deelopment project. The maintenance and betterment programs are progressing satisfactorily. Construction work for the pavement strengthening program started in March 1975; contract amount is about 120 percent over appraisal estimates due to inflation and modification of de- sign standards. The Government has agreed to finance all overruns. Construc- tion of the bridge and the urban development study for Abidjan have been satisfactorily completed. Cr. No. 406 Fourth Hiphway Project: US$7.5 million Credit of June 28, 1973; Closing Date: June 30, 1978. The project provides for (i) construction of the Yabago-Gagnoa road (79 km); (ii) reconstruction of the N'zi River bridge; and (iii) a feeder road study in cotton growing areas. Construction works on the road started about one year behind schedule due to delays in contract awarding and contractors' failure to mobilize equipment in time; progress during the last six months has been satisfactory. Project costs are about 70 percent above appraisal estimates ANNEX 1 Page 2 due to inflation and adoption of higher construction standards than originally envisaged. The Government will assume financing of all cost overruns. Con- struction of the N'zi River bridge and the feeder road study have been satis- factorily completed. Ln. No. 1161 Fifth Highway Project: US$43 million Loan of September 5, 1975; Closing Date: June 30, 1979. The project includes (i) continuation of the pavement strengthening program (about 200 km) initiated under the Third Highway Project; (ii) realignment of a 27-km section of the Azaguie-Adzope road and construction of the Anyama- Agboville road (45 km); (iii) equipment for traffic counting, vehicle weight control and pavement surveys; (iv) technical assistance to establish a plann- ing and research unit in MPWT, to train local staff and to reorganize the Public Works Laboratory; and (v) feasibility studies and detailed engineering for the Mankono-Tenigbone road (66 km) and for about 300 km of other secondary roads to be identified and a study of feeder roads requirements. Construction of the Anyama-Agboville road and the pavement strengthening program started at the beginning of 1976. Consultants have started the engineering studies provided for under the project. The terms of reference for the planning and research unit within MTPT are being finalized in consultation with the Bank. UNDP was originally to finance the updating of the transport survey but cannot do so due to lack of funds. The Government has agreed to amend the Loan Agreement to include financing of the survey in this loan. B. Upper Volta Credit 316: Road Project. US$4.15 Million Credit of June 26, 1972 (As amended on March 25, 1974); Effective Date: December 31, 1974; Closing Date: December 31, 1977. The project originally comprised: (a) the reconstruction of the Solenzo- Koudougou (70 km) and Hounde-Bereba (27 km) roads, and (b) feasibility studies for about 400 km of primary roads, and engineering of those sec- tions found to have the highest priority. Construction of the Solenzo- Koudougou road began in March 1974 and is now completed. Construction of the Hounde-Bereba road was deleted from the project as justification for the road disappeared when construction of a ginnery at Hounde was deemed unnecessary. Resulting funds were transferred to a drainage works construc- tion component. Of the four roads proposed under part (b), only two (Bobo- Dioulasso to Hounde and Bobo-Dioulasso to Banfora, a total of 190 km) were selected for feasibility studies on the basis of satisfactory rates of re- turn. Due to currency realignment and cost overruns on the road construc- tion component, the dollar cost of the project increased. To enable project completion, the Association approved, on March 25, 1974, an increase in credit amount from US$2.8 million to US$4.15 million. ANNEX 1 Page 3 Credit 579: Rural Roads Project. US$7.5 Million-Credit of August 13, 1975; Effective Date: February 11, 1976; Closing Date: December 31, 1979. The project, to be carried out over four years, provides for (a) improve- ment and subsequent maintenance of about 1,200 km of rural roads and main- tenance of about 2,100 km of existing roads; (b) strengthening of the Service d'Entretien des Routes Secondaires (SERS) through technical assis- tance to the Ministry of Public Works; and (c) implementation of the above road program and procurement of highway equipment. Bids for equipment for feeder road improvement and maintenance works have been received, all equip- ment is expected to be delivered on schedule and recruitment of local per- sonnel is advancing effectively. Credit 653: Third Highway Prolect. US$20 Million Credit of July 15, 1976; Effective Date: December 15, 1976; Closing Date: June 30, 1980. The project consists of (a) reconstruction to paved standard of the 182 km Banfora-Bobo-Dioulasso-Hounde road (the most important transportation link in the high potential agricultural region of the Southwest); (b) procurement of equipment for vehicle weight control, including provision of fixed facili- ties for installation and traffic counting equipment; (c) consulting services for a study of road maintenance and pre-investment studies for about 150 km of roads; (d) technical assistance for strengthening the Directorate of Trans- port (DOT) and assisting the Office de Promotion de l'Entreprise Voltaique (OPEV) in the promotion of domestic civil works industry. As a result of the feasibility and engineering studies completed under the Road Project (Cr. 316) construction on part (a) is about to begin. ANNEX 2 Page 1 IVORY COAST/UPPER VOLTA REGIONAL FIRST RAILWAY PROJECT TECENICAL TRAINING Background 1. RAN operates a 1,159 km single track lune running from the Port of Abidjan in the Ivory Coast to Ouagadougou in Upper Volta, with principal operational centers in Abidjan (main station for freight and passengers), Bouake and Bobo-Dioulasso (freight car workshops). These three centers also serve as headquarters for RAN's operating districts and branches into which the railway line is divided. The extent of the area covered by the line, and the fact that it runs through two countries have a bearing on the recruit- ment and training of personnel. 2. Training activities have been carried out by RAN since 1973, but more systematic training has been conducted only since the Training Division (TD) (Service de la Formation Professionnelle) was established in 1974. A. Current Trainins Activities 3. Based on recommendations contained in a 1973 study made by SOFRERAIL, RAN recruited a training adviser from OFERMAT in early 1974 to assist in pre- paring and carrying out a comprehensive training program. The objectives of this program are the retraining and upgrading of about 2,000 current employees and the training of some 1,000 new recruits during the next five years (1978- 82). Because of a scarcity of training facilities , training equipment and experienced instructors and poor worklng relations betveen TD and some of the operating departments, training has produced only modest results so far in relation to the relatively large number of available instructors. Between 1974, when TD was organized, and the end of 1976, some 700 RAN personnel were trained, mainly through short classroom courses. Table 1 of this annex gives a breakdown of training activities, most of which reportedly took place in 1976. 4. TD has concentrated on the training of skilled labor and supervisors from Motive Power & Rolling Stock (MP&RS) and Tracks & Works (T&W) Departments to meet the most urgent needs of the railway. Courses to upgrade certain categories of personnel and special programs to train some African instructors have also been carried out. Many of the training programs have been too theoretical due in part to lack of training equipment. Although a few specific courses have been conducted for middle-level supervisors, their training has consisted mainly of programs abroad provided either by the Douala Training Center or SNCF-France. The results of these programs have not always been very satisfactory. ANNEX 2 Page 2 5. Presently, fifteen classrooms are available for training, as follows: (a) Abidjan Main Center Capacity Operations (OP) : 2 classrooms each for 20 trainees - 40 Motive Pover & (MP&RS) : 4 classrooms each Rolling Stock for 20 trainees - 80 3 classrooms each - 60 for 20 trainees 1 design-room for 20 trainees - 20 Tracks & Works (T&W) 2 classrooms each for 15 trainees - 30 Signalling & Telecom. (S&T) : 1 classroom for 20 trainees - 20 250 (b) Bouake Secondary Center Training facilities, which were extremely limited, have been used by RAN for other purposes. (c) Bobo-Dioulasso Secondary Center OP, MP&RS, S&T : 1 classroom, for 15 trainees - 15 : 1 technology room for 12 trainees - 12 27 GRAND TOTAL 277 6. The percentage of training equipment and materials currently available is estimated as follows: OP 100%, MP&RS 35%, T&W 90%, S&T 20%. Most of this equipment is out-dated and inadequate. On the other hand, except for the T&W and S&T Departments, where several courses have not yet been prepared, manuals for the training of OP and especially MP&RS personnel are mostly available. 7. Excluding the Chief of TD, the teaching staff currently numbers 32, as follows: ANNEX 2 Page 3 (a) Full-time Instructors (i) Expatriates 3 Chief Instructors, OP, MP&RS, T&W (French technical assistants) 1/ 10 "Contingent Personnel" 2/ 13 (ii) Africans 4 Instructors - OP 5 Instructors - MP&RS 9 (b) Part-Time Instructors 5 Instructors - Financial Department 3 Instructors - Commercial Department - Instructors - Data Processing 3/ - Instructors - Police 4/ 2 Instructors - Stores & Supply - Instructors - Personnel, Administrative and General Divisions 5/ 8. The training capability of the instructors varies; some have either limited technical knowledge or pedagogical experience or both. Efforts to improve and strengthen middle-level staff by requiring technical assistants attached to RAN to train counterparts or to conduct training courses and seminars (as part of their OFERMAT terms-of-reference) have been limited 1/ The T&W Chief Instructor was recently recruited (OFERMAT) and has had no previous experience in training. The OP Chief Instructor may be transferred to other duties shortly. 2/ French nationals serving for periods of up to two years to substitute for military service. 3/ Training is expected to be carried out abroad. 4/ Personnel to be trained at the National School of Police. 5/ Personnel to be trained at the Ivorian Center for Management of Enterprises. ANNEX 2 Page 4 because the training function has been subordinate to the expatriates' other duties or because they lacked training experience. Only by setting up or- ganized, planned and continuous courses and seminars can the objectives be met. This requires expertise on the part of technical assistance staff when identifying training needs and preparing specially-tailored programs. 9. A technical assistant has headed the TD since 1974. Although he seems to be a dedicated person, he has been unable to establish effective working relations with RAN's department heads. An African counterpart or deputy to the Chief of the TD has not yet been recruited. 10. Although RAN has taken positive steps to establish TD, the opera- tional effectiveness of this relatively new division has been modest because of: (a) shortage of both human and physical training resources; (b) lack of a sound training methodology; (c) failure to allow TD to be responsible for the training of middle-level staff; and (d) lack of an evaluation system. The Bank has discussed these problems with RAN's management and has made specific recommendations in writing on how to remedy this situation. The recommendations have been agreed to in principle by RAN. B. Future Training Activities 11. The study of RAN's training needs carried out by SOFRERAIL indicated, inter alia, that a long-term training plan would be required along the follow- ing lines: (a) training of newly recruited personnel to enable them to be assigned to positions requiring rapid adaptation; (b) training of existing personnel to qualify them for promotion; (c) specific courses for supervisor candidates to be trained in a variety of activities which they will eventually be asked to supervise; (d) refresher courses for existing personnel in order to improve their knowledge and skills; and (e) management seminars for medium- and high-level personnel. The program, divided into four integrated phases, envisioned (i) the setting up of a TD with overall responsibilities for training, retraining and up- grading RAN personnel; (ii) the collection and/or preparation of courses, curricula and teaching materials; (iii) a crash program to retrain some 550 priority personnel occupying low/medium supervisory grades; and (iv) the upgrading of medium/high level management. ANNEX 2 Page 5 12. To implement this program SOFRERAIL proposed the construction of an elaborate main training center in Abidjan (Abobo) and two secondary centers at Bouake and Bobo-Dioulasso. It also included (i) a teaching staff consisting of a director and some 20 instructors, (ii) the purchase of con- siderable training equipment and materials, and (iii) the recruitment of nine expatriates experienced in training railway personnel. 13. Based on these recommendations, RAN formulated a program for retrain- ing, upgrading and training most of its staff. However, following a Bank Group recommendation, RAN's management agreed, that although the solution of long-term training needs should be considered in due course, RAN should concentrate in the next few years on a program which would meet the most urgent training priorities. This could be accomplished by retraining and training the key personnel of each operating department who have specific supervisory responsibilities and who, in turn, would be able to train their subordinates. 14. The plan which will eventually enable the training and retraining of about 500 skilled workers and low-level supervisors each year involves the f ollowing: (a) only minor improvements and expansion of existing physical training facilities in Abidjan; (b) the construction of limited facilities at Bouake and Bobo Dioulasso; (c) the purchase of training equipment and mate- rials; (d) the strengthening of the TD; and (e) continuation and expansion of technical assistance. Details are as follows: ANNEX 2 Page 6 CFAF '000 US$ (a) Abidjan - Main Center (i) One Dormitory and related ) facilities (50 trainees) ) 41,000 167,347 (ii) One Storeroom ) (iii) One Technology Room ) (iv) Furniture/Equipment 4,770 19,470 (v) Training Equipment and 113,865 464,755 Materials Sub-total 159,635 651,572 (b) Bouake - Secondary Center (i) Four Dormitories ) (each 10 trainees) ) (ii) Three Classrooms ) (each 15 trainees) ) (iii) One Technology Room ) 48,300 197,143 (iv) One Signalization Room ) (v) One Storeroom ) (vi) Two Offices ) (vii) Furniture/Equipment 4,950 20,204 (viii) Training Equipment and Materials 2,280 9,306 Sub-Total 55,530 226,653 (c) Bobo-Dioulasso - Secondary Center (i) Two Dormitories ) (each 20 trainees) ) (ii) Two classrooms ) 30,000 122,449 (each 15 trainees) ) (iii) One Signalization Room ) (iv) One Storeroom ) ANNEX 2 Page 7 CFAF'000 US$ (v) Furniture/Equipment 4,650 18,980 (vi) Training Equipment and Materials 2,280 9.306 Sub-Total 36,930 150,735 TOTAL 252 095 1.028.960 15. The implementation of the expanded program will require: (a) an ex- perienced and active head of the TD (the present head is reportedly expected to retire shortly); (b) one expatriate chief instructor for the S&T Depart- ment; and (c) one short-term expatriate specialist to provide pedagogical training for new and existing African instructors. Funds have been included in the project to finance this staff. In addition, RAN would provide six African technicians to be trained as instructors as soon as possible. There are presently three French technical assistants acting as chief instructors, on a full-time basis, for OP, MP&RS and T&W. This number should not be reduced until Africans trained under the project can take over. Alterna- tively, if any of them should be considered unsuitable or should be trans- ferred elsewhere, experienced replacements should be provided by FAC. The breakdown of new instructors required is as follows: MP&RS - Two African instructors to train locomotive drivers and electrical and mechanical personnel, respectively. OP - One expatriate chief instructor, if the present one is transferred elsewhere, and four African instructors to conduct courses in tariffs, bookkeeping, security, movement, litigation, etc., S&T - One expatriate chief instructor. T&W - One expatriate chief instructor, if it is agreed that the present one should be replaced. 16. Regardless of their capability, the duration of the African instructors' assignments should not last more than five years. At the end of their assignments they should return to their respective units for prac- tical experience and learn any new technology. By the time they are trans- ferred back to the departments, replacements with equal training capability should be in position. Instructors would be selected from among experienced personnel fully versed in their respective fields, but, in addition, they should demonstrate patience, the ability to communicate, and the desire to teach for a few years. They should not be permanently assigned to TD, but rotated on a regular basis. Their main tasks, especially those expected to train MP&RS and T&W personnel, will be to arrange classroom programs, prepare specific courses, conduct classroom and workshop training and then, in close collaboration with the workshop foremen and superintendents, supervise pro- duction training. ANNEX 2 Page 8 17. Similary, the assignments of expatriate instructors should not be more than four to five years. Their recruitment should be based not only on their knowledge of railway operations but also on their experience in training personnel in developed as well as developing countries. RAN agreed that all TD's expatriate staff will select, as early as possible, suitable African instructors to be trained to take over their responsibilities. 180 RAN relies also on 10 to 12 "econtingent" personnel to assist with training. They are young Frenchmen who are serving overseas in lieu of military service. The concept is basically good, but, apart from a few who are specialized in some technical field directly or indirectly connected with railway work and some who have had some years of experience with SNCF, the remaining ones are generalists. There seems to be some disagreement among RAN officials as to their usefulness. Some believe that even though they are not specialized in any specific discipline, they are adequate to conduct general pre-training courses for new recruits whose scholastic back- ground is low. Others believe that only those specialized in fields of immediate use to RAN should be accepted. 19. Since there appears to be some need for general pre-training, RAN could retain a few "contingent" personnel for this purpose, but should make sure that the others have real practical experience with either SNCF or other technical agencies/institutions. 20. There is a need to recruit, as soon as possible, an African deputy to the director of TD. This deputy would initially fill a number of positions of increasing responsibility leading to the position of director of TD. An engineer with three to five years responsible operational experience with RAN should be selected. In addition to good technical knowledge of railway activities, he should demonstrate a keen interest in manpower development, ability to organize and communicate, and patience. Alternatively, a good administrator (generalist) with training potential should be assigned or recruited, who, in time, could gain sufficient experience in the various railways activities. Once the approved candidate has carried out the respon- sibilities stated earlier, he would be sent to various institutes and rail- ways in Europe and Canada to attend training courses. In addition, he should also carry out some practical work in the field of training before completing his program. On his return, assuming satisfactory completion of his own training program, he should be nominated director of the TD. To ensure a smooth transition from one administration to the other, the expatriate director of TD in office at that time should be requested to remain for a reasonable period as an adviser to the new director. ANNEX 2 Page 9 21. The funds allocated for training under the project will enable the TD to carry out a two-year priority program including: (a) orientation and training of new recruits; (b) training of existing skilled laborers and supervisors to bring their performance up to standard; and (c) upgrading of personnel to provide selected staff with career development opportunities. Moreover, in addition to theoretical courses the TD would carry out, in collaboration with the operating departments, practical training in the centers using the equipment to be financed under the loan. This would be followed by adequate periods of on-the-job training at the main workshop through actual repair and maintenance work under the direct supervision of the TD instructors. Training of middle and high-level managerial staff will be carried out by the consultant in charge of the improvement of the railway's management and operations (para. 4.18). 22. On the basis of the comprehensive training plan, the following programs were agreed with RAN's Department Heads: (a) a short-term interim program, capable of being carried out with the training resources presently available, during 1977; (b) a two-year priority program (1978-1979) to start as soon as Bank funds can be utilized; and (c) a three-year program (1980-1982) which would follow and consolidate action taken during the priority program. Information on this program is not yet available. Details of programs (a) and (b) above are given in Table 2 and 3 of this annex. C. Financing of Training 23. The cost of strengthening TD and implementing an expanded training program is estimated at US$1.4 million plus US$0.4 million for contingencies. The project will, as indicated in para. 4.05 of the cost estimate, provide for: ANNEX 2 Page 10 CFAF million US$'000 (a) construction and expansion of physical training facilities in Abidjan, Bouake and Bobo- Dioulasso (Table 4); 119.3 486.9 (b) furniture and equipment for the three centers; 14.4 58.8 (c) didactic materials and training equipment for the three centers (Table 5); 118.4 483.3 (d) technical assistance (one senior expatriate training expert for 24 months; one chief instructor (S&T) for 24 months; one expatriate instructor for 2 months). 75.9 310.0 328.0 1,339.0 1/ _/ This amount includes both local and foreign costs vithout contingencies. . ~~~~~~~~~~~Table 1 o r t tat°tit ^ou e < t.4 O c r 'al@@ | j N r l c~Io tO '4. C aXu r- t_ _ .r c r t4 Ot *t t t t r -4- 4 M 4 4 N ti I Itt I I t ll | a z - r - -, t _t_ ;0 W r° ç | ^°t S | @ R S ' '.~~~~~~~~ °o ' l+ t- t 44 _ Kt t t tr, t ta O t r- t tttt,t ,, , ,. t t . e~~~~~~~ tc _ o e~~~~~~ ct---. r°.t-- 4 c ~ ~ ~ ~ ~ ~ t Ottttt r-t-tll' lll' w ~ ~ ~~~ O r. O t.. t--t. t. Xs 'lZ r e~~ ~~~~ _0 _--t tt. ô z 2 r ' e "tOtO O tt-ta. 0 4. _~~~~ _ _.t.t.t....t C. _t ___.C t_ C t____ t . v4 t C C 4,w a a-va_ e | t-'cl» r- C o 00 w1 iÉ~ ~ ~~~~O Ol cEOt O c a. c 1i 9! W 01 ~~~~~~~~~~~~~~~~~ à G 8~~~~~~~~~~~~~ = X X .Y Kn O é c _ § S K~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~oC. .t O t t-t Ct. K 4 _ ,X. O, ;< >0 2 = t a. C; cz« ANNEX 2 Tabl EST24ATED INTERIIM PROGRAM - 1977 ) CATEOORY U1 il 13 77 10 11 OPEURT TON Station Attendants _74 2 _ Station Masters - 26 _ IN0TIVE POWER & ROLLING STOCK Workshops Skilled Workers _ _ 9h _ _ Assistant Foremen _ _ 15 - Locomotives Loco Drivers _ _ _. 0 o _ TRACKS & WORKS Trackmen 2 _ 12 Foremen 6 Linemen _ 6 _ Bobo -DioulasSO Trackmien 51 l 99 6 _ _ 252 105 a2i 398 ANNEX 2 Table 3 Pag=e1 ESTIMATED 2-YEAR PRIORITY PROGRAM (1978-1979) DEPARTMENT RETRAINING TRAINING CATEGORY/GRADE 1/4 5/7 7Il 1 1713 1/4 1 5/7 O0 I1/-L3 OPERATION (EX) Station Attendants 240 _ _ _ 64 _ _ _ Switchmen _ - 52 - - 2 Station Masters 160 _ 23 Assistant Station , Mast'ers 4 IO<__ S.T. 240 O160 45 116 23 10 MOTIVE POWER & ROLLING STOCK (MT) A. Loco Drivers I j Loco Drivers _ - 60 - _ _ Senior Loco Drivers 51 - - - Assistant Chief v - - Loco Drivers _ - 15 6 t i Chief Loco Drivers _ I 6 B. Workshops $ I Electrical Skilled Workers _ i _ _ 157 _ Assistant Foremen - _ - - 15 f Senior Foremen 3 19- - - - Thermal . ,Assistant Foremen 5- ' -I _ b _ _ Foremen - -i 15 - _ _ Senior Foremen 9- -' - I g - _ ' _ Mechanical iAssistant Foremen -I - -I - - i _ tForemen 5- - 52 - - - 8 j Senior Foremen 9 S.T. 106 82 43 217 8 ; TRACKS & WORKS 1. Trackmen 6 -- 8 - t Assistant Chief of: Districts _ _ 8 - - ! Eouipment Operators; Operators/Drivers - 5 - - - - - S.T. - il 8 - - 8 - ANNEX 2 Table 3 Page 2 DEPARTMENT RETRAINING TRAININïG 11113 C,TERY/GRADDE 17/4 5/7 7/10 11/13 1 7/4X 5/7 7/10 11/13 TELECOMMUNICATION & SIGNALIZATION Foremen _ 7 _ _ _ 4 - Assistant Inspectors - _ _ - - _ 5 Inspectors _ - 5 _ - _ S.T _ 7 _ 5 _ 4 5 ADMINISTRATION Finance Division Employees _ - _ - _ 10 _ Senior Employees _ _ - _ _ - il -_ Chiefs of Group 7 _ _ _ i S.T. - -i 7 Administration Division Being Reorganized _ _ _ _ _ _ _ Commercial Division Commercial Staff 2 _ j _ _ _ 25 t St To _ _ - _ i_ 2 5 I ~ ~~~~~~~~~~~~~~~ . _ t X .--....! 240 284 135 48 333 60 t 36 12 x . _ S _ _ _ _ _ _ _ _ T_ |_ . _i_ _ TOTALS 707 + 441 G.T. 1,1>48 ANNEX 2 Table 4 Physical Training Facilities to be Constructed Cost in CFAF ('000) Remarks Length Width Surface per m 2 Total (m)- (m) (m2) ABIDJAN: Dormitory (50 beds) 62 6 372 75 28,000 Sanitary facilities (80 persons) 7.5 8 60 85 5,000 Tool shed 5 4 20 75 1,500 Technology room (20 trainees) 8.7 10 87 75 6,500 539 41,000 BOUAKE 3 classrooms (each 20 traïnees) 7 7 147 2 offices (instructors) 7 5 70 Technology room (12 trainees) 7 7 49 Signalling room (20 trainees) 7 7 49 Tool shed 7 3 21 4 dormitories (each 10 trainees) 7 12 336 672 72 48,300 BOBO-DIOULASSO 2 classrooms (each 20 trainees) 7 7 98 Technology room (12 trainees) 7 7 49 Tool shed 7 3 21 2 dormitories (each 20 trainees) 7 22 308 476 63 30,000 TOTAL 1687 m2 119,300 ANNEX 2 Table 5 Page 1 ESTIMATED COST OF TRAINING EQUIPMENT Abidjan Main Center CFAF ('000) 1 Bus for Trainees 3,000 3 Epidiascopes 660 3 Slide Projectors 180 2 Oscilloscopes 2,500 2 Power Packs 100 7 Metrix Electro Pliers 210 5 Megohmeters 350 7 Metrix Controllers 250 9 Metrix Table Mîcroammeters 900 8 Metrix Ammeters 1,120 8 Voltmeters 320 8 Universal Sets of Electric Meters with Case 800 5 Wattmeters 1,000 5 Wheatstone Bridges 650 Miscellaneous Parts (cords, plugs, etc.) 2,500 1 Electronic Reproducer 465 1 Duplicator 160 1 Offset Machine with Photocopier 2,700 1 SADIN 220 Photocopier 320 4 ISOP 230 DP 1000 Vernier Lathes 20,000 4 Gambin Milling Machines with Tools 44,000 1 Drill, 13 Adam 300 1 Drill, 22 Adam 600 ANNEX 2 Table 5 Page 2 Abidjan Main Center (continued) CFAF ('000) 3 Shaping Machines, 450 Vernier 2,600 1 Grinder 80 1 Universal Sharpener 2,200 1 Machine for hardness tests 4,000 5 Stationary Welding Sets, 220 A 1,500 4 Revolving Welding Machines, 220 A 3,200 5 Field Welding Sets 400 Pneumatic and Vacuum Equipment (braking), for model B-BB 1800 Locomotive 3,800 Miscellaneous Tools 13,000 Sub-total 113,865 Bouake Secondary Center 1 Signalling Model 1,OOO Hand Tools for T&W 1,000 1 Epidiascope 220 1 Slide Projector 60 Sub-total 2,280 Bobo-Dioulasso Secondary Center 1 Signalling Model 1,000 Hand Tools for T&W 1,000 1 Epidiascope 220 1 Slide Projector 60 Sub-total 2,280 TOTAL 118,425 ANNEX 3 Page 1 IVORY COAST/UPPER VOLTA REGIONAL RAILWAY PROJECT Railway Property A. Track (See Chart 2) 1. The construction of the RAN railway can be divided into two distinct periods. During the first one, 1904-1927, the line was built fromn Abidjan to Tafire (487 km). It had low standard characteristics: - minimum curve radius: 170 m; - maximum gradient: 27.5 mm/m; - 25-26 kg rails: 6 to 8 m long; - axle load limit: 10 tons; and - maximum speed: 40-60 kph for freight trains, and 50-80 kph for passenger trains. During the second period, 1927-1954, the Tafire-Ouagadougou section was built with improved characteristics: - minimum curve radius: 500 m; - maximum gradient: 10 mm/m; - 30 kg rails: 10 to 12 m long; - axle load limit: 15 tons; and - maximum speed: 80 kph. 2. To correct the severe characteristics of the profile of the first section, some realignment works with the latter standards were executed before 1969 (Abidjan-Agboville: 80 km in 25 years). Since 1969, the realign- ment projects have been undertaken by the present management at a rate which is expected to be approximately 50 km per year. These projects are: ANNEX 3 Page 2 1970-1972 Agboville-Dimbokro (105 km) with FED financing (CFAF 2,830 million); and 1974-1977 Dimbokro-Bouake (130 km) with a FED-EIB Loan (CFAF 6,280 million). 3. When this latter project is completed, nearly the whole system will have the uniform new standards (mainly 500-m minimum curve radius and 10 mm/m maximum gradient) except for the Bouake-Tafire stretch which lies between the previously realigned section Abidjan-Bouake and the Tafire-Ouagadougou section. However, between Abidjan and Le Banco (14 km from Treichville, the main Abidjan station for freight and passengers) there are still very sharp curves (140 to 175 m radius) and steep slopes (17.5 mm/m). This requires double-headed trains for loads above 500-700 tons (depending on the type of locomotive). In addition, there are numerous curves between Le Banco and Agboville with radii shorter than 500 m (mostly 300-m radius curves). 4. All lines are meter-gauge and single-track, except for a section of about 16 km between Chechi and Anoumaba which is double-track (see Chart 2). 5. 3 The whole line is now ballasted with hard stone with an average of 0.8 m of ballast per meter of track, except on 34 km near Banfora in Upper Volta where balllsting is presently underway to complete the volume of ballast to 0.8 m and on about 100 km ngrthwards from Bobo-Dioulasso in Upper Volta where there is 0.4 to 0.7 m /m of sandstone standing. 6. The infrastructure of the track is generally stable. There were some problems of track stability between Azaguie (PK 42) and Yapo (PK 63) which appear to have been solved. The present major concern about track subgrade stability lies in the numerous eroded fills which need reinforce- ment in Upper-Volta, mainly between Banfora (PK 699) and Koudougou (PK 1052). 7. The track material is in rather good condition except on the following sections: (i) Azaguie-Yapo in the Ivory Coast, where 22 km of rails and sleepers are to be renewed because of heavy corrugation which results in track instability causing frequent repairs and train speed limitations. This is not to be included in the proposed project because it is RAN's intention to rebuild the line on another alignment with a double-track formation, a project for which the Bank estimates that a more satisfactory solution still needs to be worked out (para. 4.01). (ii) Bouake-(PK 315) - PK 476 near Tafire (PK 488) where 25 and 26 kg rails more than 50-year old have to be replaced due to corrugation, lateral wear and laminated railhead in the curves. There is no more 25 or 26-kg spare rails available for track repair; ANNEX 3 Page 3 (iii) PK 589-593, section located between Ferkessedougou and Ouango- lodougou, in the Ivory Coast, where the 30-kg rails had to be replaced a few years ago, following a derailment, by spare rails from the store and the quality of the metal appears to be defective. The track lining and surfacing have to be corrected frequently due to corrugation wear and the track condition will never be satisfactory until the rails are replaced; (iv) PK 854-PK 905, section located between Bobo-Dioulasso (PK 795) and Koudougou (PK 1052) in Upper Volta, where second-hand 33-kg rails were laid down in 1949-1950. These rails, manufactured in 1917 in the United States, are still in fairly good shape and can be kept in service for at least another 5 to 6 years under the traffic conditions prevailing in Upper Volta; (v) PK 923-Ouagadougou (PK 1145) where 330,000 pre-stressed concrete sleepers were installed at the construction. These concrete sleepers are fragile and present frequent cracks at the fastening holes. These sleepers will gradually be replaced during an 11-year program in order to avoid the sudden need for a huge, crash renewal program. This is a serious safety matter. 8. The specifications for the track material laid down during construc- tion provided for rails of unit weight which was successively of 25, 26 and 30 kg per meter. Presently, RAN's specifications for new track laying provide for: (i) 36-kg per meter rail; (ii) concrete sleepers with a density of 1,357 sleepers per km or steel sleepers with a density of 1,500 sleepers per km; and (iii) 1.0 to 1.2 m3 of stone ballast per meter. These new specifications are reasonable for welded track with an axle load of about 15 tons (locomotives) and traffic conditions prevailing in the Ivory Coast during the next decade. Note: Ran is now considering the possibility of adopting wooden sleepers for the future track relaying in the Ivory Coast. (In Upper Volta, RAN is reluctant to do so because of the existence of numerous termites in this area). Wooden sleepers would be either procured locally or imported from neighboring countries if not available in the Ivory Coast. 9. 65% of the track is continuously welded and the welding program is going on at a rate which is expected to be about 40 km per year. It should be noted that the welding of old rails, while it improves momentarily the track condition by removing the bad joints, can cause an epidemic of rail breakages as has been experienced on a 30-km section in Upper Volta between the border and Banfora. It is most likely to occur on sections like Bouake- Tafire where, on some stretches, rails have been welded to reduce the main- tenance and repair burden. ANNEX 3 Page 4 10. A program is being considered to increase the capacity of the bridges in Upper Volta with FED financing (CFAF 500 million or US$2.0 mil- lion). This program will give all the bridges of the system the same standards (test load: 20-ton axle). Such reinforcement has already been completed on the bridges in the Ivory Coast. B. Signalling and Telecommunications 11. RAN ensures safety of operations by the classical telephone block system. This causes delays due to the exchange of telephone messages between the stations and the train dispatcher, messages which have to be delivered against receipt to the train or railcar driver. As long as traffic is at a low level this system is safe and works properly. On the busiest sections of the line, however, additional delays are encountered because of the frequent meetings of trains. The open-wire telephone lines, with their well-known limitations and shortcomings despite the utilization of a frequency carrier system, supplemented by point-by-point radio links between Ouagadougou, Bobo-Dioulasso and Abidjan, is presently RAN's basic communication system. RAN is considering a new radio link which will enable the dispatcher to talk directly to the drivers and has called for bids for such equipment to be financed out of its own budget. 12. The elementary signalling system is appropriate to present traffic level. C. Motive Power and Rolling Stock 13. The main-line locomotive fleet is fully dieselized and totals 53 units. The overall situation of the motive power is not satisfactory. The two old classes of locomotives, types CC 1000 and CC 1500 (21 and 15 years old respectively), still provide good service but at large expenditures of man- power due to the lack of available spare parts which are no longer manufac- tured. The CC 2400 class (8 to Il years old) is ill-designed, highly un- reliable and costly to maintain. The newer BB-B 1800 class, after an initial period of trouble, appears to have almost overcome the prototype stage, following numerous modifications particularly of the diesel engine. 14. The fleet of diesel motor-units for railcars consists of 25 units, including eight new ZE 200 class units out of an order of 13 units presently being delivered. Eight units of classes ZE 130-ZE 140 are more than 14 years old and the six units of the ZE 150 class are more than 10 years old. These 14 units of limited traction capacity (450-550 HP) will be written off grad- ually between 1977 and 1982 and replaced by ZE 200 motor-units (925 HP). RAN recently ordered an additional series of six such units (CFAF 1,500 million or US$6.1 million) to be delivered in 1977-1978. 15. Shunters. RAN uses 29 shunters, among which 18 are low-power engines 13 to 21 years old. These latter are expected to be written off by 1981- 1982. The Il others, 400-HP engines, were put into service in the years 1970-1974. RAN's investment plan provides for the purchase of three 750-HP ANNEX 3 Page 5 and 20 450-HP shunters to replace the obsolete units. Old main-line locomo- tives will provide shunting service and service train hauling after withdrawal from mainline, long distance service. RAN intends to postpone this investment beyond 1980, if possible. 16. The fleet of passenger coaches is composed of 127 vehicles of which 109 are 2nd class coaches. Four first class and five second class coaches were recently scrapped (October 1976). It is expected that Il additional second class passenger coaches will be withdrawn from long distance service during the period 1979-1985. 17. The total number of freight cars in RAN's fleet was 1,216 at the end of September 1976. The breakdown per category with the forecasts of writing off are given below: (i) Cattle traffic: 119 out of a total of 135 cars are more than 34 years old and will be gradually written off during the period 1977-1979; (ii) Mixed traffic (cattle and general cargo): 70 cars are new (1973); (iii) Box cars for general cargo: 456 box cars are presently in service. Among them, 143 cars are more than 26 years old, and it is expected that they will be gradually written off during the period 1979-1982; (iv) Gondolas: 209 existing gondolas, of which 82 are more than 30 years old and will be withdrawn from commercial service before 1980-1981; (v) Flat cars: 19 cars of which 49% have 30 years of service; (vi) Leased cars: 27 cars are leased to commercial firms (5 box cars, 2 flat cars and 20 tank-cars). Two flat cars are over-aged; (vii) Hopper cars and service freight cars: The hopper car and service car fleets are composed of 128 vehicles (61 ballast hopper cars and 16 fuel tank cars are used for rather regular traffic). Seventeen service cars are overaged and will be replaced by commercial freight cars withdrawn from active commercial service if and when needed. 18. There are 13 service coaches in the fleet. The utilization of these vehicles is rather low and no writing-off is expected within the next few years. In addition there are 114 tank-cars owned by the petroleum companies and, except for 17 vehicles which are 22-24 years old, these tank-cars are relatively recent. ANNEX 3 Page 6 19. The composition of RAN's fleet is shown in the table attached to this Annex together with the units on order. Delivery of five additional BB-B 1800 mainline locomotives (EIB financing) was due at the end of 1976 or early in 1977. Out of a total of 15 motor-units for diesel railcars of the new class ZE 200, eight have been delivered and seven will be delivered in 1977. Twenty-eight passenger coaches, two dining cars and two baggage vans procured under an ADB loan will be delivered from end 1976 till early 1978. Thirty stainless steel passenger coaches and five dining cars for express railcars (RGL) are being delivered. No freight cars are on order. ANNEX 3 Table 1 Page 1 IVORY COAST - UPPER VOLTA REGIONAL RAILWAY PROJECT RAN Motive Power and Rolling Stock 1. Motive Power 1.1 Locomotives Existing (Delivery) On order (Expected delivery) CC 1000 18 (1956) CC 1500 8 (1962) CC 2400 5 (1966-1968) BB 1800 1/ 22 (1971-1977) Total 53 1.2 Rail Cars (motor units) ZE 130- ZE 140 8 (1958-1963) ZE 150 6 (1964-1966) ZE 160 3 (1971) ZE 200 8 (1975-1976) ZE 200 (still to be delivered) il (1977-1979) Total 25 1.3 Shunters AA 40-50 18 (1956-1963) (Poyaud-Diesel Hydraulic - 150 HP) AA 90 3 (1970-1972) (CEM - Diesel Electric - 400 HP) AM lC00 8 (1973-1974) (Henshel - Diesel Hydraulic - 400 HP) Total 29 1/ The figure includes 5 locomotives of which the delivery was expected by end-1976 or early 1977. ANNEX 3 làble 1 page 2 2. Rolling Stock (as of September 30, 1976) 2.1 Passenger Coaches Existing (delivery) Recent order (delivery) / 2.1.1 Sleeping cars 3 (1952) 2 (1963) (RGL) 5 (1977) 4 (1974) (ADB) 4 (1978) Total sleeping cars 9 2.1.2 lst Class 2 (1952) (RGL) 5 (1976-1977) 1 (1963) (ADB) 4 (1977) 'Total lst Class 3 2.1.3 2nd Class - For express trains 6 (1952) 4 (1963) - For express trains and railcars 2 (1952) (ADB) 20 (1977) 20 (1966-1969) 12 (1971-1972) 24 (1973-1975) - For railcars only il (1954-1959) (RGL) 20 (1976-1977) 18 (1961-1963) Total 2nd Class 97 2.1.4 Passenger coaches for sururban trains 2nd Class 12 (1924-1949) 2.1.5 Dining cars 1 (1946) (RGL) 5 (1977) (ADB) 2 (1978) 2 (1963) 3 (1974) Total Dining Cars 6 2.2 Baggage Vans 4 (1969) (ADB) 2 (1977) 8 (1974) Total Baggage Vans 12 1/ (ADB): African Development Bank Loan (RGL): Express Railcars - Stainless Steel type. ANNEX 3 Table 1 page 3 Existing (delivery) 2.3 Service Coaches 12 2.4 Freight Cars (as of October 1, 1976) 2.4.1 Cattle and Multipurpose Wagons - 12-ton 1 (1925) - 15-ton 2 (1931) - 20-ton 116 (1931-1942) - 30-ton 16 (1963) - 35-ton 70 (1973) (multipurpose freight cars) Total cattle and multipurpose wagons 205 2.4.2 Box Cars - 30-ton 8 (1946) - 30-ton 135 (1950) - 30-ton 65 (1956) - 35-ton 65 (1961) - 35-ton 109 (1963-1966) - 35-ton 85 (1969) Total Box Cars 467 1/ 2.4.3 Gondolas - 10-ton 1 (1949) - 20-ton 75 (1924-1940) - 30-ton 6 (1946) - 35-ton 57 (1963-1970) - 35-ton 40 (1971) - 35-ton 30 (1974) Total Gondolas 209 2.3.4 Flat Cars and Automobile Carriers 95 ( < 1947) 96 (1948-1975) 191 2.3.5 Hopper cars and Service Freight Cars 128 (1917-1971) 2.3.6 Leased Cars 27 TOTAL: 1227 1/ YJ 1/ Some of the box-cars damaged by fire in Ouagadougou are expected to be written off, réducing the number of box cars to 456 and the total number of freight cars to 1,216. 2/ Privately owned tank cars (114, 1952-1975) are not included. ANNEX 4 Page 1 IVORY COAST/UPPER VOLTA REGIONAL RAILWAY PROJECT Operational Plan of Action 1. A draft operational plan of action was established by the mission and discussed in detail with RAN's management during the appraisal mission. This plan of action was translated into operational targets incorporated in a table handed over to the railway management who agreed on the proposed targets. 2. The target figures presented in the attached tables have been reviewed and/or completed in light of subsequent information received or analyses made by the mission. Final agreement on these targets has been reached during negotiations. These targets are demanding but considered as achievable. They cannot be achieved, however, without considerable effort by RAN's top management and departmental managerial staff, supported by the Consulting.Services, Training and Technical Assistance programs included in the project. 3. In brief, the .operational plan of action is aimed at: (i) 'obtaining the best possible output from RAN's equipment, mainly motive power and rolling stock in terms of: locomotive, passenger coach and freight car . availability; average net load per freight car; - average gross load per train or locomotive; - turnaround time of rolling stock; and - average daily mileage of motive power and. freight cars; (ii) minimizing the maintenance and repair costs of equipment by both improving productivity in the workshops and reducing the number of accidents; and (iii) improving the overall productivity of the railway staff. If improvement can be achieved in these areas, they will provide savings which can improve substantially the financial position of the railway. 4. The first phase of the studies to be executed by the consultants in charge of the Management and Operations Consulting Services will be the identification of problems, the formulation of recommendations, and the preparation of a plan of action for the implementation of these recommenda- tions. The final goal being to improve the quality of service, particular attention has to be devoted to balanced operational plans for carrying both ANNEX 4 Page 2 passenger traffic and the major commodities transported by the railway (cement, petroleum and sugar traffic), where the largest growth is expected, with the object of having services with attractive characteristics. The elaboration of these balanced plans of transport is, therefore, a critical part of the study phase of the Management and Operations Consulting Services, because good transport plans will have a direct impact on the efficiency of the whole system. It has been agreed that these transport plans will be established and furnished to the Bank for its review and comments, not later than September 30, 1978. IVORY COAST - UPPER VOLTA REGIE ABIDJAN-NIGER FREIGHT TRAFFIC AND OPERATIONAL TARGETS Ob je ct ives Description of Factors 1970 1971 1972 1973 1974 1975 1976 1978 1979 1980 1981 1982 Remarks A. FREIGHT TRAFFIC TARGETS (million net ton-km) 560 610 660 710 750 Excluding service traffic and transportation of empty B. OPERATIONAL TARGETS containers and tank cars. 1. Number of mainline locomotives performing long-distance service (as of December 31) CC1o0o 20 20 20 20 20 18 18 18 12 (4) (2) 0 CC1500 8 8 8 8 8 8 8 8 8 (4) (2) 0 CC2400 1/ 3/ 6 6 6 6 5 5 5 (3) 0 0 0 0 B-BB 1800 -/3 _ 2 6 6 8 10 22 22 31 40 43 46 Total 34 36 40 40 41 41 53 51 51 48 47 46 2. Availability of mainline locomotives (%) 2/ CC1000 90.5 80.2 95.0 78.1 87.0 77.8 73 75 75 -- -- -- CC1500 84.8 82.9 80.7 76.2 44.4 62.5 63.5 65 70 -- -- -- CC2400 72.3 76.6 61.3 55.2 68.5 20.0 28.8 -- -- -- -- -- B-BB 1800 -- 86.3 92.3 63.2 79.4 58.8 65.1 75 77 80 81 82 3. Average gross load per All trains except express locomotive 4/ 521 524 532 491 471 458 (419) 500 550 600 600 600 trains. 4. Average monthly mileage of the B-BB 1800 locomotives (or equivalent future loco- motives) (km) 5/ -- N.A. 11483 10706 7506 7394 7767 7600 7800 7900 8000 8000 1972-73, express trains only 5. Total annual mileage of Only 1978-82 figures mainline locomotives enmt 98 fges (1000 km) 6/ 2779 2922 3170 3395 3179 2946 (3200) 4200 4000 3950 4200 4400 oeftrmafic fonecasts. >4 Objectives Description of Factors 1970 1971 1972 1973 1974 1975 1976 1978 1979 1980 1981 1982 6. Average mileage per mainline locomotive breakdown (km) B-BB 1800 -- N.A. N.A. N.A. N.A. 19000 21748 30000 40000 50000- 60000 65000 All locomotives N.A. N.A. N.A. N.A. N.A. 12650 12564 -- -- -- -- 7. Rolling stock availability (%) Freight cars (average) 96 96 96 98 97 90 94 96 96 96 96 96 Passenger coaches (2nd class) 90 90 95 80 90 83 81 95 95 95 95 95 8. Turnaround time of freight cars (days) 7/ Cattle wagons 10.1 13.4 16.2 il 10 9 9 9 Multi-purpose wagons 17 16 15 15 15 Box cars (ordinary) 10.1 13.9 16.6 il 10 9.5 9 9 Gondolas il 6 6 6 6 6 Tank cars 15 14.7 15.2 il il 10 9 9 9. Average daily mileage of freight cars (km) 61.5 63.7 78.9 86.5 79.1 59.9 81.4 82 82 85 87 90 10. Average load of freight cars (ton) Cattle wagons N.A. N.A. N.A. 5.97 6.86 6.86 N.A. 9 9 9 9 9.5 Box cars (northbound) N.A. N.A. N.A. 19.79 22.04 20.21 N.A. 21 21.8 22.4 22.4 22.4 Box cars (southbound) N.A. N.A. N.A. 16.45 19.78 15.34 16.5 16.5 17 17 17 All freight cars 16.1 17.3 18 19.1 18.5 19.8 20.2 20.5 21 21 21 21.5 11. Average daily mileage (km) 2nd class passenger coaches and railcar trailers 301 285 289 283 289 329 N.A. 335 350 375 390 400 2nd class passenger coaches included in the express trains 8/ N.A. N.A. N.A. N.A. N.A. 248 N.A. 300 400 500 550 600 12. Staff 9/ 4143 4230 4429 4547 4572 4892 5039 5200 5240 5240 5340 5440 M1 a-x ANNEX 4 Page 5 Notes The figures between brackets are either tentative or subject to further correction. 1/ B-BB 1,800 or future equivalent locomotives. 2/ Sources: RAN's Annual Reports for 1970-1974; MP&RS Department for 1975; Sampling made by Bank's Mission for 1976 The availability factor referred to is the Technical Availability Factor (100-Immobilization percentage). 3/ 5 Locomotives scheduled for delivery end-1976 or early 1977 included in the 1976 figure. 4/ 1970-1976 = Source: RAN's Operations Department. 1978-1979 = Overall objectives for the ratio (Total Annual Gross Ton Kilometers/Total Annual Freight and Service Train Kilometers). The objectives for long distance freight trains should be 1,000 Gross Tons/Locomotive for northbound traffic and 700 Gross Tons/Locomotive for southbound traffic providing an average gross load of the order of magnitude of 850 tons. 5/ 1972-1973 High figures that can be explained by the fact that the B-BB 1,800 locomotives were utilized only for express trains (passenger trains). 6/ 1970-1975 = Source: RAN's Annual Reports--Table A--MP&RS Department Section of the Annual Report. 7/ Figures evaluated by Bank's mission--statistics and most of data needed for this particular point are not maintained by RAN. Turnaround time defined as time elapsed between two consecutive loadings (predominant traffic). 8/ Target determined assuming (i) one daily express train with 12 second class coaches in each express train; (ii) 25% of additional vehicles as reserve; and (iii) time allocated for current maintenance between round trips Abidjan-Ouagadougou-Abidjan: 7 hours (new maintenance facilities). 9/ - The figures include technical assistance and both permanent and temporary staff for the operations but exclude temporary staff assigned to investment programs (about 800 workers in 1976). ANNEX 4 Page 6 - Staff of SWLHT is included from 1971, when RAN took over this service previously managed by CIWL (Compagnie Internationale des Wagons Lits). From 1976, the figures also include permanent staff of SEGI (RAN's quarry producing stone ballast in the Ivory Coast) with about 70 workers. - 1970-1975 figures represent staff as of December 31 (RAN's annual reports). - 1976: actual number of staff as of September 30, 1976 (Source: RAN's Finance Department). - From 1971 to 1976, the breakdown of staff numbers was the following: 1971 1972 1973 1974 1975 1976 (Sept.30) Operations Department 816 820 869 916 956 1050 Motive Power and Rolling Stock Department 1535 1632 1661 1612 1787 1750 Track and Works Department and Telecom-Signalling 1375 1298 1287 1250 1246 1350 Civil Works Department 48 58 72 72 87 218 Administration 271 389 430 431 534 460 SWLHT 105 153 219 219 211 272 Technical Assistance 80 79 75 72 71 64 Total 4230 4429 4547 4572 4892 5164 ANNEX 5 Page 1 IVORY COAST/UPPER VOLTA REGIONAL RAILWAY PROJECT Passenger Traffic Past Traffic 1. Table I gives the historical traffic volumes for the period 1960- 1975. The time series for the number of passengers presents a clear linear trend with an average annual increase of 86,795 passengers (least squares estimate). It represents an increase of 2.9% from the 1975 traffic level. Passenger traffic volumes expressed in passenger-km increased much more rapidly. The growth of pass-km corresponds to an increasing share of long- distance traffic generated predominantly by migrant workers from Upper Volta. The economic recession in the Ivory Coast in 1974/75 apparently interrupted the otherwise continuous increase of migrating labor. 2. The 1960-1975 period was characterized by an increase in average travel distance from 144 km in 1960 to 315 km in 1975. The interstate traffic has grown at a faster pace than Ivorian domestic traffic. Simultaneously, there has been a shift toward longer journeys in the latter traffie as the share of road transport increased for short trips following improvements in road infrastructure. 3. Table II distinguishes three components in RAN's passenger traffie: domestic traffic of the Ivory Coast, domestic traffic of Upper Volta and in- terstate traffic. These statistics, provided by RAN's computer center, do not exist for the years preceeding 1973. They cover only journeys for which tickets are purchased in railway stations (i.e. 93.7% on average of total traffic). They show that almost two thirds of RAN's passenger traffic volume (64.7% between 1973 and 1976) are generated by interstate traffic. As the percentage of first-class passengers in interstate traffic is low (2.6%), the second-class interstate traffic accounts for 63% of RAN's total passenger traffic expressed in pass-km the period 1973-1976 and for 67% at the end of this period. 4. On the average 96.2% of the passenger traffic volume in passenger- km took place in second class during the period 1970-1975 (94.2% in number of passengers). Thus, the distinction between first and second classes is not significant for traffie analysis and revenue calculation. Future Traffic 5. The population growth of the Ivory Coast and Upper Volta and the fast pace of the Ivorian economic development are the two major factors ANNEX 5 Page 2 responsible for the growth of RAN's passenger traffic. The rapid economic growth of the Ivory Coast has created an important demand for labor, mostly unskilled. It has generated both domestic traffic within the Ivory Coast and, to an even larger extent, interstate traffic. About two-thirds of RAN's traffic volume in pass-km is presently due to Upper Voltan migrant workers seeking employment in the Ivory Coast and visiting or returning to their home country. 6. To capture these two effects, a linear regression model using as independent variables the combined populations of the Ivory Coast and Upper Volta ("POP") and the Ivorian Gross Domestic Product ("GDP") in 1973 constant prices has been applied; it established the following relationships (least square estimates) with P-KM as the traffic volume in pass-km and P, the number of passengers: 2 P-KM (million) = 614.5 + 1.07 GDP + .075 POP (R = .94) 2 P ('000) = 542.1 + 1.16 GDP + .144 POP (R = .94) The preceeding regressions are a good representation of the forces at play and incorporate the major causalities which are known to generate the traffic demand. 7. For forecasting purposes, a rate of growth of 6% is assumed for the Ivorian GDP until 1980 and a rather conservative rate of 4% there- after. Increases in resident population are based on the trend of recent years: 3% for the Ivory Coast and 1.2% for Upper Volta. These estimates assume continuing emigration from Upper Volta to the Ivory Coast. Based on these assumptions and the above equations, the following results have been obtained for the forecast period: 1977 1978 1979 1980 1981 1982 1983 1984 1985 Pass-km (million) 1090 1142 1213 1288 1348 1411 1476 1543 1612 Passengers ('000) 3169 3243 3340 3441 3527 3616 3707 3802 3899 8. The above figures must be complemented by accounting for the impact of faster and more comfortable additional service on the Abidjan-Ouagadougou and Abidjan-Bouake routes. RAN is presently introducing this service using new rolling stock and intends to attract a wealthier clientele looking for comfort, safety and time-savings when choosing a mode of transport. This new service, for which RAN will probably charge a surtax of about 20%, is expected to reduce travel times between Abidjan and Ouagadougou from 27 to 21 hours and ANNEX 5 Page 3 between Abidjan and Bouake from seven to five hours. The impact of this new service is difficult to estimate as no market survey has been made. There are, however, a number of factors which tend to reduce its impact, including the increased level of competition from road and air transport when catering for middle- and high-income customers and the RAN's difficulty to consistently provide the high quality of service necessary to attract and retain such customers. Given these uncertainties, the expected incremental traffic due to the new service has been kept at a conservative level: 1977 1978 1979 1980 onwards Incremental p-km (million) 25 25 30 36 9. The passenger traffic forecast given in Table III consists of the aggregate of the figures in the two above tables. It corresponds to an average increase of 70 million pass-km/year (or 5.7% p.a.) and 94,400 passengers/year (or 2.8% p.a.). Even though the forecasts are derived from expected Ivorian economic and regional population growth and not from extrapolation of past trends, they appear consistent with the historical trend (6.7% and 2.9% respectively at 1975 levels). 10. During the last three years 28% of RAN passengers have used the stretch Bouake-Petionara which will be realigned under the proposed project. There is a long-term tendency for this percentage to increase since long- distance traffic prevails on this section and since this type of traffic will continue to increase its share of total traffic. For the present analysis it has nevertheless been assumed that the 28% ratio will remain constant over the period 1976-85. RAN First Railway Project Passenger Traffic 1960-1975 1960 1964 1966 1967 1968 1969 197u 1971 1972 1973 1974 1975 Passenger-km (mil.) 219 469 517 478 541 522 626 701 777 883 918 946 Passengers ('000) 1,524 2,202 2,370 2,236 2,509 2,478 2,565 2,630 2,595 2,827 2,931 3,006 Mean distance (km) 143.7 213 218.1 213.8 215.6 210.7 244.1 266.5 299.4 312.3 313.2 314.7 M t ŒCw fD X< F- vn ANNEX 5 Table 2 DOMESTIC AND INTERSTATE COMPONENTS OF RAN PASSENGER TRAFFIC 1/ 1976 1973 1974 1975 (Jan-May) Average Ivory Coast: Number of passengers 1,657,298 1,686,785 1,754,730 751,110 Mean distance (km) 140 146 154 143 Passenger-km ('000s) 233,560 247,755 270,362 108,016 Upper Volta: Number of passengers 308,189 394,078 398,400 191,192 Mean distance (km) 177 174 172 170 Passenger-km ('000s) 54,840 68,951 68,551 32,532 Interstate: Number of passengers 689,204 697,474 678,493 375,853 Mean distance (km) 781 789 801 808 Passenger-km ('000s) 538,936 550,423 543,877 303,763 TOTAL: Number of passengers 2,654,691 2,778,337 2,831,623 1,318,155 Mean distance (km) 311 311 311 337 Passenger-km ('000S) 827,337 865,129 882,792 444,311 Interstate p-km/Total p-km 65.1% 63.6% 61.6% 68.4% 64.7% Total passenger-km (million) 883 918 946 n.a. % of p-km covered by this statistic 93.7% 94.2% 93.3% n.a. 93.7% 2nd class interstate p-km ('000s) 525,823 536,006 527,011 297,353 2nd class interstate p-km/Total p-km 63.6% 62% 59.7% 66.9%` 63% Interstate lst class p-km/lnterstate p-km 2.4% 2.7% 3.1% 2.1% 2.6% 1/ Including only trips for which tickets have been sold in the railway stations, rather than in the train. RAN First Railway Project Passenger Traffic Forecasts 1976-1985 1975 19761/ 1977 1978 1979 1980 1981 1982 1983 1984 1985 A. Total Traffic Pass-km (million) 946 1040 1115 1168 1244 1324 1384 -1447 1511 1578 1647 Passengers ('000) 3006 3123 3241 3279 3383 3492 3578 3666 3758 3853 3950 Mean distance (km) 315 333 344 356 368 379 387 395 402 410 417 B. Bouaké-Pétionara Traffic Passengers ('000) 842 864 892 918 943 967 989 1011 1052 1079 1106 1/ Based on actual traffic January to November 1976. Ft3 PM > ANNEX 6 Page 1 IVORY COAST/UPPER VOLTA APPRAISAL OF A REGIONAL RAILWAY PROJECT Freight Traffic Forecast 1. The forecasts focus on the individual projections of the goods and commodities responsible for the bulk of the railway freight traffic. These forecasts assume a reasonable level of operational efficiency in rail service. They are the result of a dynamic interaction between RAN's market- ing strategy and the demand for transport by potential customers, taking into account keen competition with road transport. 2. The RAN's comparative advantage lies in carrying at relatively low costs major commodities and general cargo (possibily containerized) on long hauls between Abidjan and northern Ivory Coast, Upper Volta and southeastern Mali. The average haul between 1970 and 1975 increased by 17% (to 700 km), reflecting the loss of much short and medium-haul traffic to road competition. This trend is not expected to continue as the railway has already lost the traffic most vulnerable to competition. 3. Six commodities form the backbone of RAN freight traffic: cotton, oil-seeds, sugar, petroleum products, cement and fertilizers; their aggregate share increased from 42% of RAN commercial freight in 1970 to 56% in 1975. RAN plays a secondary role in the transport of the three major Ivorian export commodities--timber, coffee and cocoa--due to the roads' comparative advan- tage (good network, short-haul, geographic dispersion). Since the decision on the Tambao Manganese Project is pending, the forecasts do not include transporting the corresponding ore. 4. RAN's freight traffic dropped 22% between 1973 to 1975. Poor crops in the Sahel reduced transport demand, and priority given by RAN to transport- ing food relief gave rise to a deterioration of service for other customers which caused traffic to be diverted to the road. Road competition became even more acute with an upsurge in the over-capacity of the trucking industry due to a drop in Ivorian timber exports. The economic recovery and a relative improvement in the Sahel situation explain the increase in traffic in 1976. Road Transport Competition 5. The road system in the region served by RAN is comparatively well developed, particularly in the Ivory Coast. An efficient trucking industry has been successfully competing for short- and medium-haul cargo. Some additional road construction in the railway's zone of influence is under- way or being planned. ANNEX 6 Page 2 The Road Links Lome-Ouagadougou and Tema-Ouagadougou 6. The Lome-Ouagadougou road is expected to be asphalted by about 1983 (with FED financing). Upper Volta and Togo have taken the necessary steps to make the 1,000 km Ouagadougou-Lome road a viable although more costly alternative to the 150-km longer Abidjan-Ouagadougou corridor: (i) An agreement dated July 1974 allocates two-thirds of the interstate freight tonnage to Upper Voltan truckers and one-third to the Togolese; (ii) a freight agency for international trucking has been established in Lome; and (iii) a 5,000 m2 warehouse for Upper Volta freight has been financed by a US$0.9 million grant from KfW in the port of Lome. 7. Official tariffs for transport between Upper Volta and Togo do not presently exist. Freight rates were about at CFAF 15 per ton-km for large trucks in 1976. This is 13% or US$7.60 per ton above Abidjan-Ouagadougou rail transport costs for general cargo and 27% or US$14 per ton above rail costs for imported cereals and foodstuff, based on RAN's 1976 tariff and assuming in both cases that rail transport necessitates an additional transshipment costing US$3.5 per ton. A 1976 transport sector study for Upper Volta, pre- pared by French Consultants BCEOM, analyzes total transport costs for general cargo from f.o.b. Rotterdam or Le Havre to delivery in Ouagadougou on differ- ent routes. The study concludes that, due to higher sea-freight rates among other things, shipping through Lome would cost at least $25/ton more than through Abidjan. The cost differential would be substantially higher for most other commodities and origins and destinations in Upper Volta (other than Ouagadougou), particularly for the Bobo-Dioulasso region, the origin of about half of Upper Volta's exports and the final destination of a large part of its imports. Only for shipments to and from southeastern Upper Volta, close to the Togolese border, would costs through Abidjan or Lome be roughly equal. However, not much traffic is generated in this part of the country. 8. Future upgrading of the Lome-Ouagadougou link is expected to reduce vehicle operating costs and, accordingly, freight rates by about 10%. In the meantime, railway operating costs will be reduced by about the same percentage due to expected productivity increases. The existing substantial cost advan- tage of RAN is, therefore, expected to continue to exist. 9. The cost situation as described above has until now virtually ex- cluded a commercial use of the Lome-Ouagadougou connection. In 1974, the only year for which data are available, only about 1,000 tons of general cargo and about 4,000 tons of relief food was transported from Togo to Upper Volta. In the same year exports from Upper Volta to Togo were limited to some ANNEX 6 Page 3 cattle, about 500 tons of sheep carried by truck and about 1,000 tons of bovines being driven to Togo. Any major increase in the above transport volumes would be subject to one or several of the following conditions to materialize: (i) an allocation of traffic to the Lome route by the Government of Upper Volta. The Voltaic Ministry of Public Works and Transport indicated, however, that it intends to let the different routes compete with each other instead of allocating traffic; (ii) increased traffic generation in southwestern Upper Volta; there are, however, no projects under preparation or implementation which would generate substantial amounts of traffic; or (iii) congestion and/or a severe deterioration of quality of service in the port of Abidjan and/or on RAN; this, however, would be unexpected in view of the investment programs of both the port and the railway. Capacity pro- blems, in particular on the railway, and corresponding diversion of traffic are expected in the case of massive food-relief transports. Future traffic on the Lome-Ouagadougou road is, therefore, expected to be largely limited to some local and regional trade and to possible relief food transports. 10. The Tema-Ouagadougou road is asphalted on its entire length, and the deteriorated section between Kumasi and Accra is being reconstructed or rehabilitated, partly with Bank assistance (First and Second Highway Projects). This connection is of about the same length as the Lome-Ouagadougou road, but virtually no Upper Volta traffic is carried through the port of Tema due to administrative and currency difficulties, the difference in language, and high costs. Trucking costs from Tema to Ouagadougou are somewhat cheaper than from Lome, but handling charges in Tema are substantially higher than in Lome, thus making total transport costs through Tema about $15/ton more expensive than through Lome. No diversion from Abidjan to Tema is, therefore, expectèd, with the possible exception of relief food transports. 11. There is some regional trade between Ghana and Upper Volta, the latter importing mainly salt and timber and the former vegetables and cattle, the latter being driven. The total volume, excluding cattle, amounted to about 30,000 tons in 1974 and should continue to grow at a moderate pace. ANNEX 6 Page 4 The Abidjan-Ouagadougou Road Link and Road Transport Prices 12. There are three major projects to upgrade the Abidjan-Ouagadougou road system which parallels the railway: (a) construction of the 105 km Abidjan-Ndouci expressway, now expected to be completed as far as Sikensi (71 km) by 1978; (b) paving of the 185-km Katiola-Ferkessedougou road by 1978; and (c) reconstruction to paved standards of the 183-km Banfora-Bobo Dioulasso-Hounde road in Upper Volta by 1978. By 1978 this will reduce the non-paved sections of the Abidjan-Oua6adougou road to 309 km out of a total 1,150 km. It appears realîstic to expect that these 309 km will also be paved by 1985 or earlier. 13. The above road construction program will further increase roa' competition for RAN and entail some loss of the railway's share of traffic for those commodities and transport distances where the railway does not have a considerable cost advantage. 14. Official Ivorian road tariffs are mostly within the range CFAF 13 to 19 per ton-km (cf. Table VII), but they do not seem to be strictly applied due to overcapacity in the trucking industry, the high seasonal fluctuation of the demand for transport and the laxity of government controls. The trucking industry is composed of small truckers and well-organized truck companies with fleets of 4 to 40 trucks; the share of the small truckers is about 80% of the freight volume. Organized trucking companies specialize in regular-scheduled transport, and the former work more often "a la demande" and try to undercut their competitors during the low season. They may have agreements with the clients who helped to finance their trucks. It is likely that organized trucking companies charge more than the official tariff because they advance cost-figures of CFAF 20-21 per ton-km. Organized trucking companies reduce their operations during the four months of the low season when they are in direct competition with the independent ones. 15. No systematic and reliable information on actually charged trucking prices does exist, and even extensive field research would probably not pro- duce reliable data because the parties concerned may not wish to communicate correct information. There is, however, some indication that during the season of high transport demand trucking prices are in the range of official tariffs, but during the low season they are below official tariffs. The Ivorian Government is now limiting the access of the trucking industry with the objective of eliminating existing overcapacity by 1979. Actually charged trucking prices may thus somewhat increase during the next three years and may possibly, from about 1980 on, remain throughout each year within the range of official tariffs. ANNEX 6 Page 5 16. Based on RAN's present tariff, the railway's average revenue per ton-km is CFAF 8.96 which is substantially below official road tariffs and, probably even in the low season, below actually charged trucking prices. Thus, RAN has a clear cost advantage for long hauls and even for relatively short hauls where rail transport does not necessitate additional costs for transshipment and on-carriage. This is confirmed by the 1974 data for road transport between Upper Volta and the Ivory Coast. About half of the total road transport of 35,000 tons is generated by traders-transporters who carry their own goods: cola nuts northbound and sheep southbound. In addition trucking is used for some imports of construction material2 and some exports of oil seeds. Abidjan-Mali Traffic 17. About one half of Mali's import and export traffic passes through Abidjan, and it is expected that the volume of traffic will, with the ex- ception of petroleum products, continue to grow albeit at a much slower rate than in the past thus ensuring that in the future the majority of Mali's international traffic will be shipped through Dakar. RAN carried about one- third of this traffic (see Table V) until 1974. The sudden drop in 1975 is due to the tapering off of relief food transports and the virtual closure of the Mali-Upper Volta border due to political troubles. 18. Past traffic statistics are not likely to provide sound grounds for extrapolation because of the impact of structural changes in the rail/road competition and in the transport of petroleum products; furthermore, the closure of the Mali-Upper Volta border brought to an end combined road/rail transports to and from Mali via Bobo-Dioulasso. It is presently not known when and if the Mali-Upper Volta border will reopen for commercial traffic. 19. RAN plans substantial expansion of its terminal capacity in Ouangalodougou (northern Ivory Coast) for warehousing and transshipment of Mali freight. The Ivorian Ministry of Public Works is seriously concerned about the damage being done to Ivorian roads by the heavy and often over- loaded Malian trucks going to and from Abidjan, and some limitation of the use of Ivorian roads by Malian trucks may be imposed. RAN's Mali traffic may, therefore, increase in the future much more rapidly than forecast in this report should the above developments materialize. 20. The official and generally applied trucking tariff for Mali traffic was in 1975 CFAF 13.5 per ton-km for most northbound traffic and CFAF 6.6 to 9.2 per ton-km for southbound traffic. This makes combined road/rail transport via Ouangolodougou more expensive than road transport for southbound traffic and cheaper for most northbound traffic (see Table VI). 21. The Bank proposes that the financing of the Third Mali Railway Project will not become effective until the Malian government has taken the requisite steps to ensure that a portion of Mali petroleum product imports ANNEX 6 Page 6 which it controls are transferred from the Abidjan to the Dakar route, thus giving some basic assurance that the Ilali Railway will remain solvent. The planned diversion from the Abidjan to the Dakar route is estimated at 30,000 tons p.a., distributed over 2 to 3 years. This diversion corresponds to about 20% of the average annual growth of road transport of petroleum pro- ducts from Abidjan. Thus, the diversion would only slightly slow down the growth of road transport of petroleum products and would not have a mea- surable effect on RAN. RAN's Marketing Strategy 22. To successfully cope with road competition and maintain its financial viability, RAN needs to implement an adequate marketing strategy, an outline of which follows: (i) acquire and maintain a large share of transport volume for those commodities and destinations for which the railway has a substantial cost advantage and can offer a competitive quality of service. To transport other commdodities, the railway should maintain a good working relation with the major forwarding companies serving the region; (ii) maintain RAN's leading role in the transport of Upper Volta's international traffic through efficient service and competitive tariffs; (iii) regain at least RAN's 1974 share of the Mali traffic going through Abidjan, which since then has been diverted to trucks, by appropriate arrangements with the Malian authorities and, if necessary, by adequately equipping RAN's facilities in Ouangolodougou; and (iv) gain a major share of the growing container traffic, mostly being carried by road, between Abidjan, Upper Volta, Mali and northern Ivory Coast by eliminating inefficiencies through procurement of adequate terminal equipment and setting up a separate organization, possibly as a joint venture with for- warders to provide competitive door-to-door service. The Societe Africaine de Groupage (SAG), in which RAN's 30% parti- cipation is expected to be increased to a majority, is a likely partner. 23. The traffic forecasts assume that the implementation of (i), which is already underway, will be reasonably successful, and that the implementa- tion of (ii) will be equally successful with the exception of commodities such as metal products, foodstuffs, beverages and various products where the share of the railway did, or is expected to, decrease due to road competition. Regaining Mali's traffic is still uncertain, and RAN's future role in con- tainer traffic is at an early study phase. Realization of (iii) and (iv) would add some 100,000 tons to RAN's 1980 traffic volume in addition to the forecast. ANNEX 6 Page 7 24. Bovines from Upper Volta to the Ivory Coast are being exclusively carried by rail due to their high casualty rate during road transport. Since the cattle population decreased during the drought, both Malian and Upper Voltan authorities are determined to limit their exports till a satisfactory replenishment level is reached, which could take several years. Should the restrictions be ineffective, the demand for transport would return sooner to pre-drought levels. 25. According to the Bank's economic reports, the prospects for cotton and oil seed production are considered to be quite good, with growth rates averaging 7% for northern Ivory Coast, Upper Volta and Mali. With an estimated 120,000 tons, 1976 would set a record for the volume of oil seeds transported by rail; this results from the exceptional karite crop and a recent demand for rail transport of cattle cake, which should remain high. Oil seed previsions start in 1977 at a conservative level of 102,000 tons and grow at an average geometric rate of 2.6% till 1985. Karite and groundnuts yields are highly volatile but have been countercyclical to each other: in 1975 groundnut production was 24,000 tons while karite production was neglig- ible; in 1976 karite production was 35,000 tons while groundnut production was negligible. Sugar and Molasses 26. Sugar projections include only Ivorian domestic production, in which the Ivory Coast government plans to invest heavily during the next ten years with a production target of 600,000 tons in 1985. A first sugar plant (Ferke I) came on stream in Ferkessedougou in 1975. Forecasts are based on a substantially slower implementation of the Ivory Coast's sugar plan, as expected by the Bank's economic mission, and on the Government's decision to transport the sugar by rail through construction of industrial sidings to those sugar plants which will be located in the vicinity of the railway, as it has been done for Ferke I. Production and Transport of Sugar 1975 - 1985 (in '000 tons) 1975 1976 1977 1978 1979 1980 1981 1982 1985 Ferke I 5 15 30 40 45 50 55 55 55 Ferke II 10 20 30 40 55 Silue 10 20 40 Total 5 15 30 40 55 70 95 115 150 Rail transport to Abidjan 5 12 24 32 44 56 76 92 120 ANNEX 6 Page 8 Sugar production generates a transport demand for molasses which will reach one-third of the sugar volume once the modalities of transport are decided on and put into operation. Discussions between RAN and companies concerned are underway. Logs 27. Exploitation of secondary species of Sile began in 1976 and will generate for the next ten years a steady shipment of logs to Abidjan which will reach 30,000 t/year from 1978 onwards. Petroleum Products 28. Transport tariffs for petroleum products in the Ivory Coast and Upper Volta are presently CFAF 28 per ton-km by road and about CFAF 12.2 by rail, the latter including CFAF 1 per ton-km for maintenance and depreciation of tank cars owned by the oil companies. The difference of about CFAF 16 per ton-km, which probably exceeds the economic cost differential, gives a strong incentive to the oil companies to use the railway. There are four depots along the railway: at Bouake, Ferke, Bobo and Ouagadougou. As these depots are located adjacent to the railway stations, rail transport does not neces- sitate additional transshipment. Almost all traffic to depots north of Bouake goes by rail, and this should remain unchanged. Transport to Bouake is by road when there is insufficient tank car capacity. Moreover, the Ivorian "Caisse de Perequation" reimburses the oil companies for road tran- sport costs to Bouake but not beyond this point, where only RAN's tariff is reimbursed. During negotiations the Ivory Coast Government was asked to analyze the policy of reimbursing for transport to Bouake more than RAN's tariffs and its possible consequences on an uneconomic allocation of traffic. 29. Recently, the Ivorian and Upper Voltan goveraments reached an agree- ment under which Upper Volta will become a minority shareholder of the govern- ment-owned Societe Ivoirienne de Raffinage (SIR), the refining company in Abidjan. SIR's capacity, presently 2 million tons, is planned to be ex-panded to 3 million tons by 1980 and beyond that thereafter. It is therefore realis- tic to assume that all Upper Volta's imports of petroleum products will continue to come from Abidjan and will be carried by RAN. The same has been assumed for the Ferkessedougou area. Transports to Bouake will probably continue to be partly carried by road, and the conservative assumption was made that rail transports for this destination will not increase beyond the moderate 1975 level. 30. Growth of demand is based on the Bank's economic forecasts and agreed upon by representatives of the major oil companies. ANNEX 6 Page 9 Cement 31. RAN's present cement tariff is about CFAF 7.9 per ton-km, about 15% above marginal costs and about the same percentage below the railway's total costs for carrying this commodity. Road transport prices for cement fluctuate sharply between CFAF 7 and 13 per ton-km as a function of variations of seasonal transport demand and occasional price competition for return loads between truckers. All cement is transported in bags. 32. The Ivorian cement manufacturers consider this unstable situation unsatisfactory and are reorganizing their distribution system. Specifically, the Societe des Ciments d'Abidjan (SCA), with a current output of 800,000 tons of cement, 60% of the Ivorian production, constructs warehouses as regional distribution centers on railway terrain in Dimbokro, Bouake, Ferkessedougou and Ouangolodougou. Also SCA plans to modernize and extend its wagon loading facilities in Abidjan. Negotiations are currently underway with SCA for a transport contract between RAN and SCA bypassing the forwarders. An acceptable transport contract including adequate arrangements for future increases of RAN's cement traffic should be presented to the Bank for review by Septembert 30, 1977. 33. The forecasts assume that the railway's share of cement transport will increase considerably following implementation of these arrangements. Conclusion of a similar agreement with the second Ivorian cement producer would increase RAN's transport volume over the present forecast. In line with SCA's and the Bank's forecasts, an annual increase of demand of transport for cement of 10% in the Ivory Coast and 8% in Upper Volta is expected. Provisions cement transport to Mali are highly tentative given the structural uncertainty of the Malian traffic. Thus, no significant increase has been assumed. Metal Products 34. The 1976 estimates are based on a high tonnage actually transported during the first eight months. Thereafter, it is assumed that it will parallel the total transport volume as rail is the cheapest mode of transport for this cargo which is equally sensitive to transport costs and quality of service. Fertilizers 35. Fertilizers are a potential growth market for RAN since demand in northern Ivory Coast, Upper Volta and Mali continues to increase rapidly and since RAN has a substantial cost advantage over road transport. This is confirmed by past increases of railway traffic and SIVENG, the distribution company of the fertilizer plant. Because the buyer has the choice of the mode of transport, both the quality of the service and transport costs are important factors. Food and Beverages 36. Forecasts of food imports by Upper Volta and Mali are based on the Bank's expectation that they will remain more or less at their current level. ANNEX 6 Page 10 The International Food Policy Research Institute, however, foresees a food deficit of 4 million tons for the Sahel region in 1985. The impact on the demand for rail transport may be minimal because, after experiencing the in flexibility of the railway in the early 1970's and delays in shipping urgent cargo, food relief organizations may downplay the importance of cost in the choice of a mode of transport. For instance, USAID food shipments to Upper Volta will use the Lome-Ouagadougou road link rather than the railway at about twice the cost. Miscellaneous 37. Southbound and northbound transport of miscellaneous commodities appears sensitive to road competition. This is due to the perceived higher quality of service of road transport and to the comparatively small cost advantage of rail transport. The railway's share of transports will therefore drop further, rather rapidly until 1980 and somewhat slower thereafter. The losses will be heavier for the southbound traffic due to the imbalance of overall traffic volumes to and from northern Ivory Coast and Upper Volta, which makes southound cargo particularly attractive for competing truckers. Conclusion 38. Table I presents the traffic volumes (t and t-km) realized during the period 1970-1975. Tables II and III forecast the traffic volumes (t and t-km) until 1985 as analyzed above. A freight traffic of 883 million t-km and 1.4 million tons is expected for 1985. It corresponds to a growth rate of 6.5% based on the 1976 traffic of 504 million t-km. Figures for 1976 are pre- liminary actual data. 39. Table VI details the traffic expected on the stretch Bouake-Tafire until 1985. This forecast is based on origin/destination analyses for indi- vidual commodities included in the forecast for RAN's total freight traffic. IVORY COAST/UPPER VOLTA Appraisal of a Regional Railway Project Ran Freight Traffic 1970-1975 1970 1971 1972 1973 1974 1975 Tons T-Km Tons T-Km Tons T-Km Tons T-Km Tons T-Km Tons T-Km Southbound Livestock 32.2 24.3 34.7 28.2 35.5 30 34.6 27.7 34.7 27.8 31.9 27.8 Cotton 39.9 25.1 39.8 23.8 45.1 26.5 35.8 25.4 36 23.2 31 17.5 Oil seeds 74.9 62.5 55.5 42.8 62.6 46.1 64.8 48.9 56.5 48.9 43.1 31.4 Sugar Miscellaneous 122.9 33.8 85.6 28 72.5 24.8 53 26.5 43.6 27.2 61.3 34.7 Total South- 269.9 145.7 215.6 122.8 215.7 127.4 188.2 128.5 170.8 127.1 167.3 111.4 bound Northbound Petroleum 113.3 84.5 112.5 87.3 116.6 96.1 98.9 81.1 107 97 109.8 95.2 products Cement 30.9 25.1 55.3 41.3 59.8 42.8 66.3 55.6 66.8 59.7 80.1 62.1 Metal pro- 8.1 8.8 7.5 6.7 6.6 6.3 36.7 38.7 26.7 20.2 10.7 8.4 ducts Fertilizers 4.3 3.0 11.1 7.6 17.6 11.0 20.1 12.3 18.8 11.7 28.3 16.4 Food and 105.1 63.6 123 92.5 176.8 108.8 162.5 101.3 177.1 113.7 91 57.6 beverages Miscellan- 108.3 62.1 119.5 68.8 116.2 64.5 119.4 62.1 62.5 34.6 48.5 25.6 eous Total North- 370 247.1 428.9 304.2 493.6 329.5 503.9 351.1 458.9 336.9 368.4 265.3 bound 4 GRAND TOTAL 639.9 392.8 644.5 427 709.3 456.9 692.1 479.6 629.7 464 535.7 376.7 Service 108.6 9.1 149.9 13.5 156.8 15.5 193.4 16.7 94.6 12 125 15.5 traffie and ballast Tons expressed in '000s T-Km expressed in Millions ANNEX 6 Table 2 IVORY COAST/UPPER VOLTA APPRAISAL OF A REGIONAL RAILWAY PROJECT Freight Traffic Forecasts Tons ('000) 1976 1977 1978 1979 1980 1981 1982 1985 Southbound Livestock 23 25 27 30 35 37 39 44 Cotton 40 45 50 54 58 62 66 77 Oil seeds 120 102 105 107 110 112 115 125 Sugar 14 24 32 44 56 76 92 120 Timber (Logs) 10 20 30 30 30 30 30 30 Molasses 3 4 6 10 19 25 30 40 Miscellaneous 24 26 25 25 25 25 25 25 Total 234 246 275 300 333 367 397 461 Northbound Petroleum products 118 130 143 157 170 181 193 233 Cement 80 110 140 160 180 200 220 280 Metal products 28.5 30 32 34 35 36 37 40 Fertilizer 40 43 47 52 57 62 65 75 Food and beverage 123 125 125 120 120 120 120 120 Miscellaneous 64 66 68 70 72 74 76 83 Total northbound 453.5 504 555 593 634 673 711 831 Total southbound and northbound 687.5 750 830 893 967 1040 1108 1292 Service & ballast 108 110 150 152 152 155 106 110 Total including service & ballast 795.5 860 980 1045 1119 1195 1214 1402 1/ Preliminary actual figures. ANNEX 6 Table 3 IVORY COAST/UPPER VOLTA APPRAISAL OF A REGIONAL RAILWAY PROJECT Freight Traffic Forecasts Ton-km (millions) 1976 - 1977 1978 1979 1980 1981 1982 1985 Southbound Livestock 20.0 21.0 22.7 25.2 29.4 31.1 32.8 37.0 Cotton 19.6 22.8 25.0 25.7 29.5 32.0 35.0 41.0 Oil seeds 97.2 82.2 84.3 84.4 86.6 86.8 89.0 94.4 Sugar 7.8 13.4 17.9 24.6 31.4 41.4 49.2 62.6 Timber 1.3 2.5 3.75 3.75 3.75 3.75 3.75 3.75 Molasses 1.7 2.2 3.4 5.6 10.6 13.6 16.1 20.9 Miscellaneous 8.9 11.2 11.0 11.5 12.0 12.25 12.75 13.0 Total 156.5 155.3 168.0 180.8 203.2 220.9 238.5 272.6 Northbound Petroleum products 101.7 111.8 123.8 135.5 147.1 158.0 167.9 204.1 Cement 58.2 72.8 87.6 99.8 112.1 124.0 136.0 171.0 Metal products 21.7 24.0 25.6 27.2 28.0 28.8 29.6 32.0 Fertilizer 23.8 25.8 28.7 32.2 35.9 39.1 41.0 47.3 Food and beverage 86.2 82.5 82.5 79.2 79.2 79.2 79.2 79.2 Miscellaneous 44.0 45.6 47.6 49.7 51.8 54.0 55.5 62.25 Total northbound 335.6 362.5 395.8 423.6 454.1 483.1 509.2 595.9 Total southbound and northbound 492.1 517.8 563.8 604.4 657.3 704.0 747.7 868.5 Service & ballast 12.0 11.0 14.0 15.0 15.0 16.0 13.0 14.0 Total including service & ballast 504.1 528.8 577.8 619.4 672.3 720.0 760.7 882.5 1/ Preliminary actual data. ANNEX 6 Table 4 IVORY COAST/UPPER VOLTA APPRAISAL OF A REGIONAL RAILWAY PROJECT bouaxé-1etionara-Tafiré Traffic Previsions …----------------…Freight Traffic (Tons '000) ------------------- 1976 1977 1978 1979 1980 1981 1982 1985 Southbound Livestock 23.0 25.0 27.0 30.0 35.0 37.0 39.0 44.0 Cotton 30.0 34.0 37.5 41.0 44.0 47.0 51.0 60.0 Oil seeds 120.0 102.0 105.0 107.0 110.0 112.0 115.0 125.0 Sugar 14.0 24.0 32.0 44.0 56.0 76.0 92.0 120.0 Logs - - - - - - - Molasses 3.0 4.0 6.0 10.0 19.0 25.0 30.0 40.0 Miscellaneous 13.4 15.0 14.5 14.3 14.3 14.6 14.9 15.6 Total 203.4 204.0 222.0 246.3 278.3 311.6 341.9 404.6 Northbound Petroleum products 108.0 120.0 133.0 147.0 160.0 171.0 183.0 223.0 Cement 60.6 77.9 95.0 108.5 121.9 134.7 147.5 184.8 Metal products 23.5 25.0 27.0 29.0 30.0 31.0 32.0 35.0 Fertilizer 30.0 32.2 35.2 39.0 42.8 46.5 48.7 56.25 Food and beverage 91.0 89.0 89.0 89.0 89.0 89.0 89.0 89.0 Miscellaneous 55.0 57.0 58.0 61.0 63.0 65.0 67.0 74.0 Total 368.2 401.1 437.2 473.5 506.7 537.2 567.2 662.1 GRAND TOTAL 571.6 605.1 659.2 719.8 785.0 848.8 909.1 1,066.7 ANNEX 6 Table 5 RAN First Railway Project Mali Traffic Carried by RAN ('000 tons) 1973 1974 1975 Northbound: via Ouangalodougou Foodstuff 20.0 32.1 7.9 Cement 2.4 - 6.0 Other 11.2 0.7 1.2 Total 33.6 32.8 15.1 via Bobo-Dioulasso Petroleum products 4.0 7.8 1.1 Foodstuff 11.4 9.2 - Other - 1.2 - Total 15.4 18.2 1.1 Total Northbound 49.0 51.0 16.2 Southbound (cotton): via Ouangalodougou 4.5 4.0 4.7 via Bobo-Dioulasso 21.0 21.0 - Total Southbound 25.5 25.0 4.7 Grand Total Total Mali Traffic through Abidjan 205 239 242 RAN's Share of Total Traffic 36% 32% 9% ANNEX 6 Table 6 RAN First Railway Project Comparison of Transport Tariffs - Road vs. Rail (in CFAF) Abidjan-Ouangolodougou Transhipment RAN .Cost 1/ Road Difference Cement 5205 557.5 8181 2418.5 Cereals northbound 6610 557.5 8181 1013.5 Miscellaneous commodities 8088 557.5 8181 _(464.5) Fertilizer 6124 557.5 8181 1499.5 Cotton fibers 6128 557.5 5575 (1110.5) Groundnuts 4780 557.5 3400 (1937.5) 1/ "Office National des Transports", Mali, July 1976 ANNEX 6 Table 7 OFFICIAL ROAD TRANSPORT TARIFFS IN THE IVORY COAST (10/23/76) Units Minimum Tariff Maximum Tariff (CFAF) (CFAF) Category A Cement t-km 10 13 C-.egory B Coffee, cocoa t-km 17 Cargo (volume) m3-km 7 12 Cargo (weight) t-km 16 19 M5iscellaneous t-km 19 22 Empty containers/cartons t-km 12 15 Category C Chemicals & explosives t-km 30 37 Category D Tariff Petroleum products: - first 300 km 100 liter-km 2.4 1/ - above 300 km 100 liter-km 2.16?! - city delivery 100 liter 81 Category E Timber for export: - first 200 km t-km 19.2 - between 200 and 500 km t-km 16 - above 500 km t-km 14.5 Timber for local industry t-km 90% of above tariffs 1/ Approximately CFAF 30/ton-km. 2/ Approximately CFAF 27/ton-km. ANNEX 7 Page 1 REGIE ABIDJAN-NIGER Forecast Disbursements for Investment (including contingencies) 1977-1982 (CFAF Million) Government Investment Categories 1977 1978 1979 1980 1981 1982 Total contribution for financing (%) A. Infrastructure-Civil Works 1. General studies 180 160 170 60 60 60 690 - 2. Feasibility studies 1/ 32 34 47 113 - 3. Re-arrangement and extension of railway maintenance facilities and marshalling yards 2/ 200 600 600 600 2000 app. 30 4. Rail access to Locodjo port extension 3/ 36 344 344 688 688 2100 100 5. Abidjan-Anyama double track 4/ 25 1130 1130 2285 100 6. Other track doubling between Anyama and Bouake 2/ 750 750 1500 3000 100 7. Realignment Dimbokro-Bouake 5/ 1334 1334 60 8. Double subgrade Dimbokro- Bouake 5/ 600 150 1860 750 100 9. Realignment Bouake-Petionara 1/ 1200 2260 1865 430 5755 60 10. Re-alignment Petionara-Tafire 2/ 1930 1930 3860 60 11. Infrastructure and superstruc- ture rehabilitation (i) works in Upper Volta 1/ 387 714 279 150 - - 1530 60 (îi) track material renewal in the Ivory Coast 1/ 110 117 135 44 - - 406 60 (iii) replacement of 22 bridges in Upper Volta 4/ 200 200 100 500 60 (iv) renewal of 50 km of track in Upper Volta 675 675 1350 60 12. Routine renewal and rehabilita- tion works - Miscellaneous 6/ 465 435 410 480 580 580 2950 60 Sub-total A 4569 5544 4680 3202 5283 5345 28623 ANN»X 7 Page 2 Government Investment Categories 1977 1978 1979 1980 1981 1982 Total contribution for financing(%> B. Management - Consulting Services Training 1/ 90 520 205 42 857 C. Fixed Installations - Buildings- Houses 1. Telecommunications - Signalling 470 110 110 110 60 50 910 60 2. Buildings 250 300 300 300 300 300 1750 Sub-total C 720 410 410 410 360 350 2660 D. Equipment - Tools - Road Vehicles 1. Track maintenance equipment 1/ 123 130 181 434 60 2. Tools & Other equipment 120 120 120 150 150 150 810 Sub-total D 243 250 301 150 150 150 1244 E. Motive Power 1. Mainline locomotives 1.1 5 locomotives 5/ 7/ 914 914 1.2 18 locomotives 1/ 660 1530 858 566 3614 1.3 Others 440 440 880 2. Railcars 2.1 6 railcars 5/ 822 682 1504 2.2 Others - RGL 5/ 7/ 268 268 - Renewal 400 400 800 3. Shunters 700 500 1200 Sub-total E 2664 2212 858 966 1140 1340 9180 F. Rolling Stock 1. Passenger coaches and baggage vans 1.1 On order 5/ 7/ 1610 1311 2921 1.2 Others - - 200 400 200 200 1000 ANNEX 7 Page 3 Government Investment Categories 1977 1978 1979 1980 1981 1982 Total contribution for financ:n&1(% 2. Box-Cars 2.1 First phase (210) 1/ 710 730 915 402 2757 2.2 Second phase (130) 1000 1000 2000 3. Others 30 120 120 120 120 510 Sub-total F 2320 2071 1235 922 1320 1320 9188 S U M M A R Y A. Infrastructure 4569 5544 4680 3202 5283 5°45 28623 B. Management - Consulting Services Training 90 520 205 42 857 C. Fixed Installations - Buildings Bouses 720 410 410 410 360 350 2660 D. Equipment - Tools - Road Vehieles 243 250 301 150 150 150 1244 E. Motive Power 2664 2212 858 966 1140 1340 9180 F. Rolling Stock 2320 2071 1235 922 1320 1320 9188 TOTAL 10606 11007 7689 5692 8253 8505 51752 1/ Items included in the Regional Railway Project. 2/ Subject to the findings of feasibility Studies included in the Project. 3/ Subject to implementation of port extension and Tambao Manganese Project. 4/ Subject to the expected availability of financing from the German Government (Item 5) or from FED (Item 11 - iii). 5/ Contracts already awarded, works underway or equipment being manufactured or partly delivered. 6/ This item includes routine renewal and rehabilitation works such as: (i) annual replacement of 30 turnouts; (ii) annual renewal of 5 km of track with reballasting; (iii) annual complementary ballasting; (iv) heavy bridge repairs; (v) annual renewal of sleepers on 20 km in Upper Volta. 7/ Remainder to be paid in the years shown. ANNEX 8 Page 1 IVORY COAST/UPPER VOLTA REGIONAL RAILWAY PROJECT Determination of Freight Car Needs, 1977-1985 1. The determination of the need for additional freight cars is detailed in the attached tables and is based on the following assumptions: (1) gradual scrapping of the obsolete freight cars, namely, -- 119 cattle wagons; and -- 143 box cars; (2) slight attrition due to accidents or obsolescence of some remaining cars; (3) average payload, a function of the size of the freight cars and based on actual average loads recorded; (4) availability factor constant (96% for not-too-old cars, 92% for old cars); (5) turnaround time, a function of the utilization and calculated from actual figures for one-way traffic (time elapsed between two successive northbound or southbound loadings); (6) slight improvement of the turnaround time as a result of improvement of the operational efficiency; and (7) traffic demand forecasts deduced from the general traffic forecasts made by the mission, by allocating to the freight cars of each type, the volume of the commo- dities they usually carry according to RAN's data. 2. The mission analyzed the possible need for additional gondolas and flat cars. The conclusion was that, provided there is an improvement in their utilization, which has been agreed upon by RAN's management as quite feasible, there is no need for new freight cars of these types. This is subject to review in case of unexpected development of the traffic. Therefore, only the need for cattle wagons, box cars and tank cars is assessed in the attached tables. ANNEX 8 Page 2 Methodology 3. The following methodology has been applied for the determination of the needs. Box Cars (i) Determination of the needs of cattle wagons first, since the multipurpose wagons, which are used for both cattle traffic and general cargo, have a different turnaround time according to their utilization (either general cargo only or mixed traffic--southbound cattle and northbound cargo), Table 1; (ii) determination of the additional box-cars needed taking into account the volume carried by the multipurpose wagons used for southbound cattle traffic, on the northbound return trip to the cattle loading areas. It must be noted that all the new box-cars are supposed to be of the multipurpose type, Table 2; (iii) verification of the capacity of the fleet for the southbound traffic, Table 3; and (iv) calculation of the productivity of the new freight cars in terms of ton-km, Table 4 gives a summary of the utilization of the new box cars (or multipurpose wagons). Tank Cars 4. The calculation of the total number of additional tank cars needed is shown in Table 5. It must be pointed out that the assumed turnaround times represent a substantial improvement as compared with actual turnaround times of the recent past. This improvement can be achieved by both the in- crease of the RAN's operational efficiency (block trains) and a better orga- nization of the loading and unloading facilities by the petroleum companies. However for the evaluation of the needs, conservative figures have been retained for this factor (see footnote 1). Conclusions 5. The following conclusions can be drawn from the attached tables: (i) There is an urgent need for 60 box cars to be delivered, if possible, early in 1978; and (ii) in spite of the fact that scrapping of old box cars has been delayed till 1979, there will probably be a lack of transport capacity in 1977 (28,000 tons), if all factors ANNEX 8 Page 3 remain constant. If the traffic forecasts made materialize in 1978, the additional capacity requirement will be covered by the 60 new box cars referred to above. (iii) the number of the tank-cars needed is in accordance with the planned procurement of new tank-cars by the petroleum companies (10 in 1977; 14 in 1978; 8 in 1979; and 9 in 1980 - total: 41 in four years). ANNEX b Table 1 IVORY COAST - UPPER VCLTA - REGIONAL RAILJ:AY PROJECT CATTLE WAGONS Needs and Utilization 1977 1978 1979 1980 1981 1982 1985 1) Traffic Forecast (1000 T) 25 27 30 35 37 39 44 Transport Capacity of Existing Cattle Wagons (i) 30-ton wagons a) number 16 16 16 16 16 15 14 b) turnaround time (days) 12 il 10 9 9 9 9 c) availability (%) 96 96 96 96 96 96 96 d) average payload (T) 8 8 8 8 8 8 8 2) Transport Capacity 1/ (1000 T) 3.7 4.1 4.5 5.0 5.0 4.7 4.4 (ii) 35-ton multipurpose wagons a) number 70 70 70 70 70 68 66 b) turnaround time (days) 18 17 16 15 15 15 15 c) availability (%) 96 96 96 96 96 96 96 d) average payload (T) 9.5 9.5 9.5 9.5 9.5 9.5 9.5 3) Transport Capacity 1/ (1000 T) 12.9 13.7 14.6 15.5 15.5 15.1 14.6 (iii) 20-ton wagons (to be written off) a) number 80 60 30 0 b) turnaround time (days) 12 il 10 c) availability (%) 92 92 92 d) average payload (T) 5.3 5.3 5.3 4) Transport capacity 1/ (1000 T) 11.9 9.7 5.3 0 5) Total transport capacity of existing wagons 2/ (1000 T) 28.5 27.5 24.4 20.5 20.5 19.8 19.0 6) Excess (lack) of capacity of existing wagons (1000 T) 3.5 0.5 (5.6) (14.5) (16.5) (19.2) (25) 7) Additional 35-ton multipurpose wagons needed 3/ - - 27 65 74 87 113 8) Ton-kilometers produced by the new wagons (million) 5/ - - 4.7 9.9 13.9 16.1 21.0 9) Existing 35-ton multipurpose wagons utilized for cattle traffic 4/ 51 67 70 70 70 68 66 1/ (a) x 365 x (c) x (d) x i 1000 (b) 100 2/ (5) = (2) + (3) + (4) 3/ - (6) x 1000 x (b) x 100 if (6) < 0 365 (c) x (d) 4/ [(3) - (6) x 1000 x (b) x 100 if (6) 0; (a), if (6) < O 365 (c) x(d) 5/ - (6) x 840 (average distance), if (6) < 0 1000 ANNEX 8 Table 2 page 1 IVORY COAST - UPPER VOLTA - REGIONAL RAILWAY PROJECT BOX CARS Needs and Utilization Northbound Traffic 1977 1978 1979 1980 1981 1982 1985 1) Traffic Forecast (1000 T) 3441/ 380 402 429 456 481 558 Existing Ordinary Box Cars 2) Number of ordinary cars 456 452 432 368 328 310 302 3) Total capacity (T) 14893 14773 14173 12253 10933 10473 10233 4) Turnaround time (days) 2/ 12 il 10 9.5 9.5 9 9 5) Availability (%) 96 96 96 96 96 96 96 6) Transport capacity of existing box cars (1000 T) 278 301 318 289 258 261 255 (3) x 22.4 x 365 x (5) 1000 35 (4) 100 7) Excess (Lack) of capacity (66) (79) (84) (140) (198) (220) (303) (7) -= (6) - (1) (1000 T) Existing Multipurpose Wagons 8) Number of cars 70 70 70 70 70 68 66 9) Total capacity (T) 2450 2450 2450 2450 2450 2380 2310 10) Turnaround time (days) 2/ 16 17 16 15 15 15 15 11) Availability (%) 96 96 96 96 96 96 96 12) Transport capacity of existing multipurpose wagons (1000 T) 38 36 38 41 41 40 39 (9) x 25 x 365 x Ç 1000 35 (10) 100 New Multipurpose Wagons Utilized for Mixed Transport (Cattle and various Northbound Traffic) 13) Number of cars - - 27 65 74 87 113 14) Turnaround time (days) 2/ _ _ 16 15 15 15 15 15) Availability (%) - - 96 96 96 96 96 1/ Forecast based on demand; realized traffic expected to be somewhat lower due to box cars capacity constraint. 2/ Turnaround time defined as time elansed between 2 conrecutive northboun' loadings. ANNEX 8 Table 2 Page 2 1977 1978 1979 1980 1981 1982 1985 16) Average payload (T) - - 25 25 25 25 25 17) Transport capacity of new multipurpose wagons (1000 T) - - 15 38 43 51 66 (13) x 365 x (15) x (16) 1000 (14) 100 18) Net excess (Lack) of capacity for new ordinary box cars (28) (43) (31) (61) (114) (129) (198) (7) +(12) +(17) (1000 T) 19) Additional new box cars needed -(18) x 1000 x (4) x 100 43 60 39 74 138 148 227 365 (5) x 22.4 if (18) < O 20) Total new box cars needed (13) + (19) 43 60 66 139 212 235 340 21) Average distance (km) 650 650 650 650 650 650 650 22) Tonnage (to be carried) carried by New wagons (1000 T) (28) 43 46 99 157 180 264 (17) - (18) if (18) < 0 23) Ton-kilometers (to be produced) produced by the new wagons (million) (22) x (21) (18.2) 28.0 29.9 64.3 102.1 117 171.6 1000 ANNEX 8 Table 3 IVORY COAST - UPPER VOLTA - REGIONAL RAILWAY PROJECT BOX CARS Needs and Utilization Southbound Traffic 1977 1978 1979 1980 1981 1982 1985 General Cargo 1) Traffic Forecast (1000 T) 217 232 250 269 295 318 367 Existing Ordinary Box Cars 2) Number of cars 456 452 432 368 328 310 302 3) Total capacity (T) 14893 14773 14173 12253 10933 10473 10233 4) Turnaround time (days) 12 il 10 9.5 9.5 9 9 5) Availability (%) 96 96 96 96 96 96 96 6) Transport capacity of the existing ordinary box cars (1000 T) 220 238 251 228 204 206 201 (3) x 16.45 x 365 x (5) 1000 32.65 (4) 100 7) Excess (lack) of capacity (1000 T) 3 6 1 (41) (91) (112) (166) (6) - (1) New box cars available for south- bound general cargo 8) Number of new box cars available for southbound traffic - 60 39 74 138 148 227 9) Transport capacity (1000 T) (8) x 35 x 365 x (5) x 16.45 - 34 24 48 90 102 156 1000 32.55 (4) 100 10) Net excess (lack) of capacity (1000 T) 3 40 25 7 (1) (10) (10) (7) + (9) 11) Utilized capacity (%) (1) if (10) >. O 99 85 91 97 100 100 100 (6) + (9) 100% if (10) 1 12) Average distance (km) 671 665 648 651 637 633 621 13) Utilized capacity in ton-kilometers (million) (9) x (11) x (12) x 1 - 19.2 14.2 30.3 57.3 64.6 96.9 100 1000 ANNEX 8 Table 4 IVORY COAST - UPPER VOLTA - REGIONAL RAILWAY PROJECT Summary of Utilization of the New Freight Cars 1977 1978 1979 1980 1981 1982 1985 1) New freight cars - average available number for the year shown 60 66 139 212 235 340 2) Number to be ordered in year 60 150 - 130 - - shown (early 77) 3) Expected delivery 60 80 70 25 75 30 (1983) 4) Ton-kilometers produced by new cars included in the project 1/ (i) a) cattle traffic - - 4.7 9.9 13.8 14.4 13.0 b) return traffic (N) of cattle wagons - - 9.8 24.7 27.8 29.7 26.5 (ii) General cargo (N) - 28.0 20.1 39.6 73.3 74.9 79.5 (S) - 19.2 14.2 30.3 56.8 57.7 59.9 5) Ton-lilometers produced by the additional freight cars (130) 1/ (i) a) cattle traffic - - - - 0.1 1.7 8.0 b) return traffic (N) of cattle wagons - - - - 0.2 3.5 16.4 (ii) General cargo (N) - - - - 0.8 8.9 49.2 (S) - - - - 0.5 6.9 37.0 1/ Million of Ton-Kilometers Table 5 IVORY COAST - UPPER VOLTA - REGIONAL RAILWAY PROJECT TANK CARS Needs and Utilization 1977 1978 1979 1980 1981 1982 1985 1) Traffic Forecast (1000 T) 130 143 157 170 181 193 233 Existing tank cars a) Number 134 134 134 133 132 131 130 b) Turnaround time (days) 1/ 12 12 12 11.5 il 10 9 c) Load factor: 0.93 d) Availability: 0.96 d) Average unit capacity (T) 33.3 33.3 33.3 33.3 33.3 33.4 33.4 2) Transport capacity of existing cars (1000 T) 121 121 121 126 130 143 157 (a) x 365 x (c) x (d) x (e) 1000 (b) 3) Excess (Lack) of capacity (2) - (1) (1000 T) (9) (22) (36) (46) (51) (60) (76) 4) New tank cars needed 2/ - (3) x 1000 x (b) x 1 8 20 33 41 43 46 52 365 (c)x(d)x 40 if (3)< 0 5) Ton-kilometers (million) produced by 41 new tank-cars to be delivered between 1977-1980 Average distance: 865 km 7.8 19.0 31.1 39,8 42.1 46.3 51.8 1/ The figures utilized for the assessement of the needs are different from the figures given in the operational plan of action as targets for the turnaround time of tank-cars. These latter figures reflect the forecast turnaround time as expected by RAN's Operations Departirent following the planned transport scheme for petroleum products between Abidjan and Ouagadougou (block trains). As the results are highly sensitive to the turnaround time, which applies to the whole fleet, it is advisable to take a less optimistic approach in the evaluation of the needs. 2/ 40-ton tank-cars. ANNEX 9 Page 1 IVORY COAST/UPPER VOLTA REGIONAL RAILWAY PROJECT Mainline Locomotive Needs in 1980 1. The evaluation of the number of new locomotives needed in RAN's mainline locomotive fleet is based on the following assumptions: (i) The recommendations of the mission regarding the scrapping of the 5 CC 2400 locomotives and the gradual withdrawal from long distance service of the 26 CC 1000 and CC 1500 locomotives by 1980 will be implemented; (ii) the profile characteristics are assumed uniform and the average maximum load of the mainline locomotives in service in 1980 will be 1,000 gross tons. A correction will be applied to take into account the necessary double-headings where the line will not present the uniform characteristics in 1980 (presumably ABIDJAN- LE BANCO and PETIONARA-TAFIRE sections); (iii) for the present calculation, an average practical load per locomotive of 750 gross tons will be taken (75% of the average maximum load) which is probably a rather conservative hypothesis; (iv) the ratio gross tonnage/net tonnage for the freight traffic is kept at its present average value of 2.20; (v) an overall utilization factor of 67%, which combines an 80% technical availability of the locomotives with an 85% utilization factor of the available motive power by the Operations Department, has been estimated as achieveable; (vi) the service traffic will be hauled by old mainline loco- motives withdrawn from long distance service; (vii) all mainline locomotives will have a net power output that is superior or equal to the actual net power output of the existing B-BB 1800 locomotive; and (viii) a tentative traffic pattern appropriate to the traffic demand of 1980 has been set-up, the present time table being taken as a model. This pattern includes the following daily freight trains: ANNEX 9 Page 2 1 block train ABIDJAN-OUAGADOUGOU-ABIDJAN: 1 train ABIDJAN-BOBO DIOULASSO-OUAGADOUGOU and return; 1 train ABIDJAN-BOUAKE-DIMBOKRO; 1 train DIMBOKRO-FERKESSEDOUGOU; -- 1 train FERKESSEDOUGOU-ABIDJAN; -- 1 train ABIDJAN-FERKESSEDOUGOU and return; and -- 2 mixed trains ABIDJAN-DIMBOKRO and return (300 gross tons of commercial freight). 2. On the basis of the freight traffic pattern defined above, allowing some time for the routine maintenance to be performed at the ABIDJAN running shed and adding to the freight traffic pattern one daily express train ABIDJAN-OUAGADOUGOU-ABIDJAN, it is estimated that 21 active mainline loco- motives are necessary to haul the trains included in the pattern. Additionally, 3 locomotives are necessary for the double-headings needed where the profile characteristics will still exceed the traction capacity of one single loco- motive. It makes a total of 24 active locomotives needed by 1980. 3. To these 24 active locomotives, 3 locomotives must be added as stand-by locomotives in the running sheds of the line. This is needed be- cause of the long distance between ABIDJAN, where the main running shed is located, and the other end of the system (OUAGADOUGOU), and because, in case of accident or breakdown, spare locomotives must be stationed in well selected places along the line. 4. The total number of mainline locomotives needed can, therefore, be estimated at: 1 x (21+3+3) = 40 locomotives. 0.67 As RAN's fleet will count in 1977, 22 B-BB 1800 locomotives, the number of additional locomotives to be procured is 18. 5. The total theoretical annual capacity for freight traffic, in terms of ton-kilometers, on the basis of the traffic pattern described above and with an average load of 750 gross tons per locomotives, is of the order of magnitude of 2 billion gross ton-kilometers or about 910 million net ton- kilometers. 6. As a check, with the figures of the freight traffic forecasts (Annex 6), the capacity needed for 1980 would be 657 million net ton-kilometers, of ANNEX 9 Page 3 which 454 million of northbound traffic. The northbound transport annual capacity, assuming a 75% load of the locomotives would be: Gross ton-km (Million) -- 2 Daily Trains Abidjan-Ouagadougou 2 x 750 x 1145 x 365 = 626.9 -- 1 Daily Train Abidjan-Bouake 1 x 750 x 315 x 365 = 86.2 1 Daily Train Dimbokro-Ferkessedougou 1 x 750 x 376 x 365 = 102.9 1 Daily Train Abidjan-Ferkessedougou 1 x 750 x 558 x 365 = 152.8 2 Daily Trains Abidjan-Dimbokro 2 x 300 x 182 x 365 = 39.9 Total 1,008.7 or 1,008.7: 2.20 = 458.5 million ton-kilometers net. This meets the capacity needs quoted above. 7. The total mileage of the mainline locomotives to be travelled to haul the passenger and freight trains in 1980 will be of the order of magnitude of 3,950,000 km, double-headed trains included. This represents about 95,000 km per B-BB 1800 locomotive-year in the fleet or 7,900 km per B-BB 1800 loco- motive-month in the fleet. These figures are quite reasonable and are neither too demanding nor too low. ANNEX 10 Page 1 IVORY COAST - UPPER VOLTA Regional Railway Project I. Marshalling Yard Study FEASIBILITY STUDY FOR THE MODIFICATIONS OF THE TREICHVILLE MARSHALLING YARD AND ROLLING STOCK MAINTENANCE FACILITIES Terms of Reference A. General Information 1. RAN's rolling stock maintenance facilities located in the Treich- ville marshalling yard must be transferred as soon as possible. The dust coming from the cement grinding plants located southwest in the immediate vicinity of these maintenance facilities is harmful to the rolling stock and creates inappropriate working conditions for the personnel assigned to this maintenance unit. 2. The transfer of these maintenance facilities to the northwestern part of the Treichville marshalling yard had been envisaged to correct this situation, while keeping them close to the starting station of the trains. This solution would deprive the RAN of marshalling facilities which are needed to serve the port zone of Abidjan and the existing industrial and transit areas, where substantial traffic and commercial development is expected within the next few years. Furthermore, this would make the use of these facilities for expected suburban passenger traffic rather difficult or even impossible. 3. In the long run, a large railway complex is planned for Abobo. This complex will include a marshalling yard appropriate to the future traffic and will fit into the plans for the extension of the port of Abidjan and its industrial areas. 4. However, in the short and medium term, the marhsalling yard of Treichville will continue to serve existing port facilities, which will be extended, and the industrial and commercial areas which are connected to the port and the railway. 5. Even when the new marshalling facilities are completed at Abobo, for practical operational reasons RAN will still need, in the Treichville area, marshalling facilities to sort or make up the passenger and freight trains. For this latter traffic, specifically, it would be inappropriate and rather expensive to marshal completely the freight cars carrying cargo which is bound for or coming from the existing port and industrial areas, which will stand in the future, in the sole marshalling yard of Abobo located at about 16 km from the center of those activities. ANNEX 10 Page 2 6. To conclude, a master plan needs to be established for a new arrangement of the rolling stock maintenance facilities and the marshalling facilities of the Abidjan area, taking into account the present constraints, the short- and medium-term needs and the planned, long-term development. This master plan, of which the re-arrangement and possible extension of the Treichville marshalling yard is the main part, is the subject of a feasibility study for which the following terms of reference provide guidelines. B. Objectives 7. The objectives of the feasibility study are: (i) determine the capacity of the rolling stock main- tenance facilities necessary to meet the expected needs in 1990 for passenger and freight vehicles; (ii) determine the most suitable location for the recon- struction of the rolling stock maintenance facili- ties, as a function of the areas that could possibly be freed to establish these facilities and of the condition of their utilization in relation with the train starting points and the workshops of the rail- way; (iii) draft a general lay-out for these new maintenance facilities; (iv) determine the capacity for the railway terminal and transit facilities of the Treichville station needed to accommodate the expected traffic increase in 1980 and 1990, bound to or coming from the port and industrial areas, taking into account the planned extension of the latter facilities, and to accommo- date the passenger traffic expected for 1980 and 1990; (v) draft a general lay-out for the re-arrangement and possible extension of the tracks at Treichville marshalling yard and passenger station, in order to obtain the needed capacity in these facilities; (vi) establish a tentative schedule for the works; (vii) prepare draft terms of reference for the final engi- neering studies, with a time table and cost estimates for these studies; (viii) prepare cost estimates (without taxes) for the works, quoting separately the foreign exchange costs and local costs; and ANNEX 10 Page 3 (ix) evaluate the project in both economic and finan- cial terms. C. Scope of the Work 8. The consultant shall perform all technical studies, economic and financial analyses, field investigations and related work as herein described to achieve the objectives set forth in Part B above and produce all the infor- mation required to justify the proposed project. The consultants shall base their work mainly on information supplied by the railway. They shall, how- ever, be solely responsible for the verification, analysis and interpretation *of all data received and for their findings and recommendations. Technical Studies (a) Capacity of the Rolling Stock Maintenance Facilities 9. On the basis of the traffic forecasts for 1990, which will be pro- vided by RAN, and of the definition and frequency of the maintenance opera- tions, the daily volume in terms of numbers of vehicles to be treated in the various parts of the maintenance facilities will be determined. These -data will be the major input for the evaluation of the capacity needed for the new technical facilities. (b) Geographical Location 10. The places where the new maintenance facilities could possibly be rebuilt will be thoroughly inspected and their respective merits and disad- vantages evaluated in regard to: (i) the areas that could possibly be freed in the railway premises; (ii) the urban development plans for the city of Abidjan and adjacent areas; (iii) the rail connections between the new facilities, the starting points of the trains and the railway workshops and the railway operations on these con- nections; (iv) the likely passenger train schedule devised to cope with the expected traffic in 1990 and the volume of freight rolling stock to be treated in these facili- ties by 1990; and (v) the volume of works needed to restore a sufficient capacity for the facilities that have been removed or modified in order to provide space for the new rolling stock maintenance facilities. ANNEX 10 Page 4 (c) Draft General Lay-out of the New Rolling Stock Maintenance Facilities il. The proposed draft general lay-out will be established taking into consideration: (i) the available space, with room for future expansion, without drafting this extension however; (ii) the necessity of maintaining a sufficient operational capacity for the Treichville station, specifically for what concerns the reception, marshalling and dis- patching of freight trains coming from or bound to the line and the areas presently served by this Treichville station, in the short- and medium-term; (iii) the possible extension of the activities in the Treichville station for what concerns the passenger traffic; and (iv) the necessary equilibrium to be maintained between the capital outlay for constructions, the needs and RAN's financial possibilities. 12. The draft general lay-out will include a description of the works, as detailed as possible, a situation map (Scale: 1/10,000) and a general drawing of the proposed new maintenance facilities (Scale: 1/1,000). (d) Draft General Lay-out for the Re-arrangement of the Existing Facilities 13. The draft general lay-out for the re-arrangement of the existing facilities to provide space for the new rolling stock maintenance facilities will determine the works to be executed for: (i) restoring a sufficient capacity for the modified facilities at the forecast level of activity in the short-term (1980) and, (ii) providing room for a possible extension of the said facilities to meet the medium-term needs (1990). If the place selected is, for example, the site presently allocated to the "Parc VB," the works planned for the re-arrangement of the railway facilities will include the restoration of the VB facilities with a sufficient operational capacity and the re-arrangement and extension of the passenger station tracks and of the sets of sidings of the marshalling yard of Treichville, taking over the space becoming available after removal of the existing roll- ing stock maintenance facilities. Note: The remark of paragraph 11 (iv) is also applicable for the study of this general lay-out. 14. In all cases, the consultants will prepare a description of the works, as detailed as possible, with a general drawing of the re-arrangement (Scale: 1/1,000) and of the possible extension of existing facilities. ANNEX 10 Page 5 15. Finally, the capacity of the marshalling facilities will be deter- mined in accordance with the guidelines spelled out in the note attached to the present Terms of Reference. (e) Tentative Execution Schedule 16. The feasibility study will comprise a tentative execution sched- ule for the construction of the new maintenance facilities and for the re- arrangement and the possible extension of the existing facilities. This schedule will detail the successive phases of the works as to: (i) allow the continuity of efficient railway operations during the modifications in the traffic conditions prevailing at the time of execution; and (ii) provide room for the necessary extensions to cope with the increased volumes of activity as forecast in the short- and medium-term. (f) Final Engineering Studies 17. The consultants will establish draft terms of reference for the final engineering studies which will include the preparation of the bidding documents for the execution of the proposqd project with cost estimates for the works (without taxes) quoting separately the foreign exchange costs and the local costs. These terms of reference will allow a possible divi- sion of the final engineering studies into several parts which could be awarded to different organizations or specialized services. 18. The consultants will establish detailed cost estimates of the final engineering studies and a time-table for their execution. The final engineering studies which will follow the feasibility study will deal with: (i) the earthworks and drainage works; (ii) the buildings, technical facilities and util- ities both for the Treichville marshalling yard and the rolling stock maintenance facilities; (iii) the equipment and machinery for the passenger coach cleaning; (iv) the facilities for routine maintenance and diesel oil and sand distribution for the shunting engines; (v) the water supply and fire protection network; (vi) the telephone network; (vii) the electric power supply and distribution network; ANNEX 10 Page 6 (viii) the sewerage network; (ix) the lighting in the workshops and work areas; (x) the rail connections of the rolling stock mainte- nance facilities; (xi) the sets of tracks for the storage of stand-by passenger rolling stock; (xii) the service roads serving the various facilities and their connection to the general public road system; (xiii) the track sets of the passenger station and of the marshalling yard of Treichville; (xiv) the modifications to be executed to the electric power, lighting, water supply, sewerage, compressed air and vacuum networks in the Treichville station; (xv) the signalling; and (xvi) the fixed installations (weigh-bridge, cranes, areas and machinery for conteiner handling, end-loading platforms, etc.). The final engineering studies will include all the bidding documents, except for the supplies or works to be provided by RAN (track material and stone ballast, etc.). (g) Economic and Financial Analysis 19. For each variant solution envisaged, the consultants will calculate the total construction cost and will establish a disbursement schedule detail- ing the disbursements relating to each phase of execution. For the economic and financial evaluation of the project, the following elements will be taken into consideration: (i) the estimated operating costs by traffic unit as compared with the present operating costs; (ii) the savings on the passenger coach maintenance costs, including the estimated cost of immobili- zation of the vehicles; (iii) the additional costs to the Ivorian and Upper Voltan economies which would result from the diversion of rail traffic to road, if the capac- ity of the Treichville marshalling facilities ANNEX 10 Page 7 were insufficient to cope with the traffic demand, assuming that the re-arrangement and/or the exten- sion of these facilities would not be executed. 20. The consultants will, for the year following immediately the com- pletion of the project and for the year 1985, evaluate the impact of the proposed project on RAN's financial situation as it appears in its Income Accounts and Balance Sheets, comparing the situation "with" and "without" re-arrangement and extension of the Treichville marshalling facilities. All the assumptions made will be explicitly stated. D. Information and Services Provided by RAN 21. RAN will provide to the consultant all the available data relating to the project. This information will include, inter alia: - updated traffic forecasts; - the origin/destination and volume of the different categories of present traffic, separately by area connected to the Treichville station; - the peak period for e4ch category of present traffic, with indication of the volume, the time period and the variations; - the length and the actual composition of the trains, with the characteristics of the utilized vehicles per category of traffic and train type (railcars, express trains, mixed trains, general cargo freight trains, block trains, service trains, etc.); - the average load of the freight cars for each category of cargo; - the turnaround time of the vehicles, for each type and by utilization; - by type and utilization of the vehicles the average number of vehicles staying in the various facilities, with the average number of daily entries and the aver- age stay in the said facilities, and indication of the variations of these parameters; - the description of the signalling system in the stations; ANNEX 10 Page 8 the auxiliary facilities required according to RAN's opinion and their forecast utilization in terms of quantities, space needed, number of elements treated daily, etc.; the possible urban constraints; and - the conclusion of previous studies concerning the rolling stock maintenance facilities and the planned railway complex of Abobo. 22. During their stay in Ivory Coast, RAN will provide the con- sultants: (a) the needed administrative and secretarial services; (b) the required offices with furniture and equipment; (c) the necessary transport means (rail transport). In their proposals, the consultants will determine exactly the required .facilities and services referred to in paragraphs (a) and (b) above. E. Reports - Timing 23. The consultants will prepare and submit the reports described below in the said time limits: (i) a draft final report three months after the starting date of the feasibility study, describing briefly the methodology applied for determination of the capacity of the various facilities envisaged and summarizing all the work performed, the conclusions and recommenda- tions of the consultants, including the maps, drawings, estimates and diagrams concerning the proposed construc- tion programs; and (ii) a final report thirty days after reception by the consultants of all the comments and remarks made concerning the draft fiial report, the final report including all amendments and appropriate corrections. 24. All these reports will comprise a summary of the conclusions and recommendations of the consultants. The draft final report will be sub- mitted in _ copies in French and _ copies in English. The final report will be submitted in - copies in French and copies in English. ANNEX 10 Page 9 Attachment CAPACITY OF TREICHVILLE MARSHALLING FACILITIES. 1980 AND 1990 1. The marshalling yard capacity to be provided for in the Treichville station for the years 1980 and 1990 will be determined as a function of the following factors: (i) the traffic volumes in terms of average number of vehicles per day coming in and going out the mar- shalling facilities, with evaluation of the peak variation; (ii) the present average stay of the vehicles in the sets of tracks and on the loading and unloading sidings and the parking tracks; (iii) the operational targets concerning the turnaround of the vehicles and their average stay in the various facilities, which would be.considered as achievable by the consultants and would be agreed upon by RAN's management; (iv) the operating scheme to be proposed by the consul- tants for the marshalling yard, taking into account (a) the frequency, the optimal time spread between and the length of the incoming and out-going trains from and to the line; (b) the practical duration of the marshalling operations and of the sorting of the vehicles by origin or destination; and (c) the number of sidings to be allocated at this sorting or at spe- cial utilizations; (v) the frequency, the optimal spreading in time and the length of the trains serving the port and industrial zone; (vi) the circuit, the frequency, the optimal spreading in time and the length of the trains coming from or going to the rolling stock maintenance facilities or the workshops; and (vii) the availability and the optimal number of shunters for the marshalling operations in the Treichville station and its auxiliary facilities and for the transfer of the rolling stock to and from the main- tenance and repair facilities. ANNEX 10 Page 10 Attachment 2. The calculation of the required capacity will be based on and justified by: (i) the detailed description of the proposed operating scheme and of the recommended allocation of the tracks and sidings to the various utilizations; (ii) the complete and explicit set of data and basic assumptions used by the consultants; (iii) the description of the methods used for the calcula- tion; and (iv) the brief description of the computer models possibly used by the consultants for the execution of research or calculations, (with an indication of the required input data, the results to be obtained, and of the limitations of these models). ANNEX 10 Page 11 II. PETIONARA-TAFIRE FEASIBILITY STUDY Abidjan Niger (RAN) Petionara-Tafire Feasibility Study Terms of Reference A. BACKGROUND 1. The construction of the RAN railway can be divided into two distinct periods. During the first one, 1904-1927, the line was built from Abidjan to Tafire (488 km). It had low standard characteristics: - minimum curve radius: 170 m; - maximum gradient: 27.5 mm/m; - 25-26 kg rails: 6 to 8 m long; - axle load limit; 10 tons; and - maximum speed: 40-50 kph for freight trains, and 50-80 kph for passenger trains. During the second period, 1927-1954, the Tafire-Ouagadougou section was built with improved characteristics: - minimum curve radius: 500 m; - maximum gradient: 10 mm/m; - 30 kg rails; 10 to 12 m long; - axle load limit: 15 tons; and - maximum speed: 80 kph. 2. To correct the severe characteristics of the profile of the first section, some realignment works with the latter standards were executed before 1969 (Abidjan-Agboville: 80 km). Since 1969 the realignment projects have been undertaken at a rate which is expected to be approximately 35 km per year. These projects are: 1970-1972 Agboville-Dimbokro (105 km); and 1974-1977 Dimbokro-Bouake (new route = 134 km). ANNEX 10 Page 12 3. When this latter project is completed, nearly the whole system will have the uniform new standards (mainly 500-m minimum curve radius and 10 mm/m maximum gradient compensated for curves) except for the Bouake-Tafire stretch which lies between the previously realigned section Abidjan-Bouake and the Tafire-Ouagadougou section. However, between Abidjan and Le Banco there are still very sharp curves and steep slopes. This requires double-headed trains for loads above 500-700 tons. In addition, there are numerous curves between Le Banco and Agboville with radii shorter than 500 m. Widening works of the track subgrade with a view of track doubling are contemplated between Abidjan and Anyama, start- ing in October 1977, and thereafter, between Anyama and Agboville, the gradient and curve characteristics of these sections being corrected at the same time to meet RAN's standard characteristics. Only a slope of 13 mm/m gradient and a 400-m radius curve will remain on the 6 km section linking Abidjan (Lagune) and Agban. 4. All lines are meter-gauge and single-track, except for a section of about 16 km between Cechi and Anoumaba which is double-track. Also, the track subgrade of the Dimbokro-Bouake section, where realignment works are presently ongoing, is capable of a double track. 5. RAN's specifications for new track laying provide for: (i) 36-kg per meter rail; (ii) concrete sleepers with a density of 1,357 sleepers per km or steel sleepers with a density of 1,500 sleepers per km; and (iii) 1.0 to 1.2 m3 of stone ballast per meter. These new specifications are reasonable for welded track with an axle load of about 15 tons (locomotives) and traffic conditions prevailing in the Ivory Coast during the next decade. RAN is now considering the possibility of adopting wooden sleepers for the future track relaying in the Ivory Coast. B. OBJECTIVE 6. By 1978 the on-going realignment works of the Dimbokro-Bouake section will be completed. On the Bouake-Tafire section (172 km) the track material needs renewal and the subgrade needs rehabilitation, all within the next few years. RAN planned initially to rebuild 162 km of this section on a new alignment with the uniform standards which provide substantial savings in operating costs and travel time. The first part of the proposed new route, Bouake-Petionara (89 km), is the optimum solution as determined by extensive studies executed by RAN's civil works department. Thus, realign- ment of this section is included in a project presently under consideration and is expected to be completed by end-1979. Most of the then remaining ANNEX 10 Page 13 83-km stretch Petionara-Tafire may need track renewal and subgrade rehabili- tation shortly thereafter, and upgrading to the otherwise uniform standards is being considered. Determination of a technically and economically optimal solution for this stretch is the objective of this study. C. SCOPE OF WORK 7. The consultants shall perform all technical studies, economic and financial analyses, field investigations and related work as herein des- cribed, and not already done by RAN, to achieve the objective set forth above, including preparation of such provisional designs, drawings, con- struction programs, cost estimates, notes on recommended operational pro- cedures and all other information required to justify the recommended project. The consultants shall base their work mainly on information received from RAN. They will, however, be solely responsible for the veri- fication and interpretation of all data received and for their findings and recommendations. In their reports the consultants shall spell out clearly all assumptions and hypotheses made. In case a computer model is used, all model hypotheses shall be specified. 8. In order to determine a technically and economically optimal solu- tion for the proposed reconstruction of the Petionara-Tafire section, the consultants shall analyze and compare several alternative alignments or variants, the basis of the comparison being the reference case described in para. 10 below. The alternative alignments or variants are quoted in paras. 11 through 13 below. Technical Studies 9. The cost estimates prepared by the consultants shall be based on 1977 prices excluding taxes and including, but spelling out separately, adequate physical and price contingencies. Local and foreign costs shall be shown separately. 10. Reference case: The consultants shall estimate the work needed, its optimal timing and the costs to rehabilitate the existing alignment from Petionara to Tafire. This rehabilitation shall not include any modification of the geometric characteristics of the line. It shall include all works, such as track renewal, reballasting, repair of subgrade, signal- ling and telecommunications, needed to ensure satisfactory traffic safety and sufficient transport capacity on Petionara-Tafire for the next ten years. il. New alignment: RAN has engineered a new alignment for the Petionara-Tafire section, which would bring the line closer to the town of Niakaramandougou. The consultants shall review RAN's engineering, in particular the technical appropriateness of the proposed design versus the ANNEX 10 Page 14 needs of the area served by the railway and the adequacy of RAN's cost estimates. Should the consultants disagree with RAN's proposed design route and characteristics, and cost estimates, they shall produce adequate revisions. 12. Upgrading of existing line: The consultants shall determine and estimate the costs of the least-cost solution to upgrade the line on or close to the present alignment to RAN's new standards, i.e. a minimum curve radius of 500 m and maximum gradients of 10 mm/m compensated. In doing so the consultants may adopt geometrical characteristics below the above standards on short stretches and/or a limited number of curves if this would entail substantial savings in project costs and would not produce any significant constraint for RAN's operations, regarding in particular the maximum weight and length of trains permitted on the newer sections of the line. 13. Other alternatives: The consultants shall identify, analyze and estimate the costs of any alternative alignment or variant that: (i) would be compatible with RAN's present design characteristics, and (ii) promises to be less expensive than the alignments described in paras. 11 and 12. Traffic 14. The consultants shall use the freight traffic forecasts for Bouake- Petionara-Tafire for 1977-1985 given in the attached table. After 1985 the consultants shall assume an annual increase of freight traffie of 2%. The average transport distance for this traffic is estimated at 700 km and is expected to remain unchanged. 15. The number of passengers on Petionara-Tafire, estimated at 840,000 in 1975, shall be assumed by the consultants to increase at an annual rate of 2.8% until 1985 and at 1.5% thereafter. The average distance traveled by these passengers shall be determined by the consultants and shall be assumed to remain constant if there is no clear evidence to the contrary. Cost-Benefit Analysis 16. Costs and benefits, to determine internal economic rates of return, shall be expressed in 1977 prices. Project costs shall include physical contingencies and exclude taxes. The consultants shall make appropriate use of shadow prices. The shadow wage rate for unskilled or semi-skilled labor in the Ivory Coast is estimated at 0.83. 17. The consultants shall do analyses of four types: (a) the rate of return of each solution as determined by the technical studies shall be determined separately, comparing each solution with the present situation; (b) after classifying those of the above solutions which show a rate of return of more than 10% in an order of increasing project costs, an incre- mental analysis shall be done, showing the rate of return on the portion ANNEX 10 Page 15 of the solution's cost that is incremental to the cost of the proceeding solution. In any event, an incremental analysis shall be done for the solution recommended by the consultants as an increment to the reference case (para. 10). Care shall be taken to avoid double-counting of benefits; (c) the optimal timing of the different solutions shall be determined by means of a net present value analysis, using a discount rate of 12%; and (d) a sensitivity analysis shall show the sensitivity of the f indings under (a) to (c) above to the following assumptions, taken separately and together: (i) freight traffic increase beyond the 1976 level only 50% of that spelled out in para. 14; (ii) rail transport cost 10% higher than initially esti- mated by the consultants, due to railway inefficiencies; and (iii) investment costs 15% higher than initially estimated (in addition to the physical con- tingencies already included in costs). An additional analysis, to be done both separately and together with the aggregate of the above sensitivity analyses, shall test the sensitivity of the results to an inclusion of manganese ore transport from Tambao to Abidjan. 18. In estimating cost streams, in particular for the alignment men- tioned in para. 11, the consultants shall inter alia take into account the economic costs generated by the selection of a new alignment in the form of: (i) a need to maintain all or part of the existing line to link actual or future customers (e.g., a sugar plant) to the railway; and/or (ii) an expected loss of actual or future rail traffic. Expected gains of rail traffic, linked to a specific alignment, should correspondingly be considered as a benefit. 19. The consultants shall consider, whenever appropriate, the follow- ing types of benefits, consisting in the avoidance of costs for: (i) derailments; (ii) broken rails; (iii) track maintenance; (iv) track super- vision and emergency staff; (v) diversion of rail traffic to road; (vi) traction costs for passenger and freight trains; and (vii) procure- ment of locomotives. The consultants shall endeavor to identify and quantify additional types of benefits. Financial Analysis 20. The consultants shall determine the internal financial rates of return for the solution identified by the consultants as the optimal one and for the second-best alternative. For this purpose the consultants shall: (i) use constant 1977 prices; (ii) take into account inter alia the costs and benefits mentioned in para. 18; (iii) analyze and estimate those costs which they cannot obtain from RAN's cost accounting system; and (iv) take into account RAN's plans for tariff increases over and above inflationary cost increases. 21. The consultants shall determine the influence of the optimal solution and the second-best alternative on RAN's cash flow. For this purpose the consultants shall assume: (i) an annual cost inflation of 5%; ANNEX 10 Page 16 (ii) corresponding offsetting tariff increases, in addition to those mentioned in para. 20; (iii) financing by RAN of the local costs of the project; and (iv) financing by long-term borrowing of the foreign costs of the project. The assumed terms of this financing shall be an interest rate of 9% and repayment in 16 annuities after 4 years of grace. 22. The cash flow analysis shall cover the period from the begin- ning of project implementation until 10 years after completion of the project. The probable impact of the project on the expected amount of Government contributions shall be analyzed separately. D. REPORTS AND TIMING 23. The consultants shall submit: (i) an interim report at the end of the second month following the starting date of their works; (ii) a Draft Final Reprt within 4 months of the starting date summarizing all work performed, the findings and recommendations of the consultants, including maps, plans, estimates and diagrams of the proposed construction program and of what the consultants consider to be the second-best solu- tion; and (ii) a Final Report within 30 days of the receipt of all comments on the Draft, incorporating all appropriate revisions. 24. All reports shall include a summary of the consultants' findings and recommendations. The interim report shall be submitted in 8 copies in French. The Draft Final Report shall be submitted in 50 copies in French and 30 copies in English. The Final Report shall be submitted in 50 copies in French and 30 copies in English. E. INFORMATION AND SERVICES PROVIDED BY RAN 25. RAN will: (i) provide the consultants will all available informa- tion on the railway, its organization, administration and operations; and (ii) assist the consultants in obtaining necessary information from the Governments and other organizations. 26. In the Ivory Coast, RAN will provide for the consultants: (i) administrative and secretarial services; (ii) offices with furniture and equipment; and (iii) rail transport. The consultants will determine in their proposals the services and facilities needed under (i) and (ii) above. ANNEX 10 Page 17 IVORY COAST/UPPER VOLTA APPRAISAL OF A REGIONAL RAILWAY PROJECT Bouake-Petionara-Tafire Traffic Provisions --------------------- Freight Traffic (Tons '000) ------------------------- 1976 1977 1978 1979 1980 1981 1982 1985 Southbound Livestock 23.0 25.0 27.0 30.0 35.0 37.0 39.0 44.0 Cotton 30.0 34.0 37.5 41.0 44.0 47.0 51.0 60.0 Oil seeds 120.0 102.0 105.0 107.0 110.0 112.0 115.0 125.0 Sugar 14.0 24.0 32.0 44.0 56.0 76.0 92.0 120.0 Logs - - - - - - - Molasses 3.0 4.0 6.0 10.0 19.0 25.0 30.0 40.0 Miscellaneous 13.4 15.0 14.5 14.3 14.3 14.6 14.9 15.6 Total 203.4 204.0 222.0 246.3 278.3 311.6 341.9 404.6 Northbound Petroleum products 108.0 120.0 133.0 147.0 160.0 171.0 183.0 223.0 Cement 60.6 77.9 95.0 108.5 121.9 134.7 147.5 184.8 Metal products 23.5 25.0 27.0 29.0 30.0 31.0 32.0 35.0 Fertilizer 30.0 32.2 35.2 39.0 42.8 46.5 48.7 56.25 Food and beverage 91.0 89.0 89.0 89.0 89.0 89.0 89.0 89.0 Miscellaneous 55.0 57.0 58.0 61.0 63.0 65.0 67.0 74.0 Total 368.2 401.1 437.2 473.5 506.7 537.2 567.2 662.1 GRAND TOTAL 571.6 605.1 659.2 719.8 785.0 848.8 909.1 12066.7 ANNEX 11 Page 1 DETAILS OF ECONOMIC EVALUATION General 1. The economic evaluation consists of an itemized cost-benefit analysis providing economic rates of return for each project component and for the project as a whole. A sensitivity analysis identifies how variations of the main parameters affect the economic rate of return. 2. All costs and benefits are expressed in constant 1976 CFA francs. Investment costs are net of taxes and include physical contingencies. The fixed parity between the French franc and CFA franc is given by CFAF 100 = FF 2. The exchange rate with the dollar, whenever applicable, is US$1 = CFAF 245. Shadow pricing is applied to the value of labor in the evalua- tion of investments resulting in savings in labor costs; it has not been applied, however, to local costs of civil works; therefore, the rates of return obtained are somewhat underestimated. The shadow price is taken at .83 of market wage rates. Road and Rail Operating Costs - 3. An important benefit of the proposed investments is avoiding diver- sion of existing and future railway freight traffic to road transport. As shown by the data below, economic _osts of road transport are substantially higher than the railway's for the kind of traffie and distance involved. 4. The operating cost of road transport is based on estimates prepared by the consulting firm SETEC in October 1976. They correspond to the oper- ating cost of 18-ton trucks for stretches of homogeneous characteristies between Abidjan and Upper Volta. The following succession of stretches establishes a continuous way from Abidjan to the Upper Voltan border. ANNEX 11 Page 2 Operating Cost Estimates Stretch: 1 2 3 4 5 6 7 8 9 10 Length (km) 6 6.1 1.4 60.8 27.9 21.5 16.4 55 45 41 SETEC Cost Figure (CFAF) 1047.8 971.5 223 9683.5 4443.6 3424.3 2612 8759.2 7166.6 6529.6 Stretch: il 12 13 14 15 16 17 18 19 20 Length (km) 5.8 50.7 7.4 51 65 15 48 47 44.4 30.5 SETEC Cost Figure (CFAF) 923.7 8074.4 1178.5 8122.2 10253.2 2388.9 7571.8 7414.1 8763.6 6228.7 The SETEC transport cost per vehicle, excluding tax, is therefore CFAF 105,800.5 for 645.9 km, or CFAF 163.8/km. It is expressed in 1975 CFAF and includes vehicle running cost, insurance, amortization and overheads. It does not incorporate road maintenance costs. SETEC's estimate takes into account the structure and the condition of the road, including improvements expected to be made by 1979-1980. It applies to a small enterprise (one or two trucks), and it assumes good maintenance standards. 5. The estimated operating cost of road transport in 1976 CFAF is reached by deducting CFAF 39.3 from the SETEC cost figure which includes amortization and debt service and inflating to 1976 by a factor of 1.08. The 1976 cost is thus CFAF 134.45/18 t-truck-km. For load factors in the range of .5 to .7, it can be established 1/ that the road maintenance cost is CFAF 6.45/18 t-truck-km. Therefore, the economic cost of road transport including vehicle operating costs and road maintenance is estimated at CFAF 140.9/18 t-truck-km. Assuming a 65% utilization factor, a cost of CFAF 12.0/ton-km is obtained. With an estimated purchase price (tax free) of CFAF 10.6 million 2/ for a 18 ton-truck and economic life of 7 years, the operating cost, including depreciation of the truck, is CFAF 15.4/ton-km. 3/ 1/ SETEC "Etude de la Fiscalite Routiere en Cote d'Ivoire", August 1974. 2/ SETEC Study on Ivory Coast's transport sector, 1976. 3/ In a study of Upper Volta's Transport Sector prepared by BCEOM in June 1976 under FAC financing, road transport costs are estimated to vary from CFAF 13.0/ton-km to CFAF 20.7/ton-km, depending on the annual distance travelled, the type of truck and the utilization factor. The figure of CFAF 15.4/ton-km adopted for the analysis may therefore slightly underestimate average truck operating costs. ANNEX 11 Page 3 6. Railway operating costs (excluding depreciation) have been derived from RAN's marginal expenses, without taxes, during the period 1970-1976, presented in Table 1 to this Annex. 1/ Railway marginal costs are calculated at CFAF 7.3 per ton-km. Adding the costs of transshipment to make the service comparable to road transport, estimated on average at CFAF 0.8/ton-km, total railway operating costs are CFAF 8.1 ton-km. Evaluation of Project Components Improvement of the 89-km Bouake-Petionara section 7. The project includes the realignment of the 89-km stretch Bouake- Petionara. To show that realignment is economically superior to rehabilita- tion, it is demonstrated first that rehabilitation is economically justified, and second that the economic return of the incremental investment in realign- ment (over rehabilitation) is satisfactory. Track rehabilitation 8. By renewing the track between Bouake and Petionara, RAN avoids the economic consequences of an increasing number of derailments and broken rails arising from the deteriorating condition of the track. Derailments provoke passenger injuries and casualties, damages to locomotives and rolling stock, reduction of line capacity and an increased turnaround time of crews and equipment. The welding of existing old rails (which are about 50 years old) on some stretches of this section, which presently attempts to prevent derailments due to the poor condition of the track and to reduce maintenance burdens, cannot prevent broken rails due to track wear and cannot consequently avoid delays in operations and possible derailments. A solution without re- newal would require more frequent maintenance, an additional labor force nec- essary for track inspection and repair of broken rails and a diversion of traffic to the road due to the poor service. 9. The cost of one derailment is estimated at CFAF 8.39 million: CFAF 3.53 million for locomotive and rolling stock repairs; CFAF 3.40 million for track repair, CFAF 0.99 million for the immobilization of equipment; CFAF 0.33 million for increase in turnaround time, CFAF 141,120 for crew costs. In addition, the poor condition of worn track requires supplementary tamping estimated to cost CFAF 36.5 million/year and additional track supervision maintenance and emergency gangs according to the forecast number of derail- ments shown in the next paragraph, with annual costs as follows: 1979-81: CFAF 12.86 million; 1982-84 CFAF 25.73 million; 1985-2000 CFAF 45.03 million. The cost of one occurence of broken rails is estimated at CFAF 195,000 in- cluding CFAF 70,070 for the increase in turnaround time, CFAF 30,135 for the additional working time of the crews, CFAF 65,415 for the repairs and welding and CFAF 29,400 for the utilization of a gang car. For the broken rail prob- lem, the additional labor cost represents CFAF 7.65 million/year for inspec- tion, CFAF 6.81 million/year for a stand-by gang, and CFAF 36.51 million/year for the additional mechanical maintenance (tamping). 1/ Table numbers, except as otherwise noted, refer to tables of this Annex. ANNEX 11 Page 4 10. Under normal conditions, disruptions of the section Bouake-Petionara would be limited to three derailments in a four-year period and one occurrence of broken rails per year. The following table shows the additional number of derailments and broken rail occurrences expected without renewal (Bank's esti- mates), over and above those that would take place with renewal: 1990 No. of 1979 1980 1981 1982 1982 1984 1985 onwards Derailments 7 8 il 12 15 17 20 55 Broken rails 14 17 21 27 35 44 59 196 11. Without rehabilitation, the progressive deterioration of RAN's qual- ity of service due to the increase in derailments and broken rails is expected to divert freight traffic to more expensive road transport. The economic cost of road transport, as mentioned in para. 5, is estimated at CFAF 15.4/ton-km, including depreciation of the truck (but excluding capital costs of the road). The economic cost of rail is CFAF 9.6/ton-km (para. 6), including depreciation of locomotives and roliing stock (CFAF 1.5/ton-km), and transshipment costs. Most of present railway traffic is long distance and the new traffic to be generated in future years will also be long distance; the present, limited short- and medium-distance railway traffic is mostly from siding to siding, and there are no transshipment costs. It is estimated, therefore, that only a very marginal part of the traffic to be diverted to the road would be subject to a road-rail cost differential lower than the one mentioned above. ANNEX 11 Page 5 Percentage of Traffic Expected I/ Annual 2/ Cumultive Increase Diverted Increase Diversion Diversion to Road ('000 tons) (million t-km) (million t-km) 1981 10 63.8 4.5 4.5 1982 10 60.3 4.2 8.7 1983 15 52.5 5.5 14.2 1984 20 52.5 7.4 21.6 1985 25 52.5 9.2 30.8 1986 30 40.0 8.4 39.2 1987 35 40.0 9.8 49.0 1988 40 40.0 11.2 60.2 1989 50 40.0 14.0 74.2 1990 60 40.0 16.8 91,0 1991 70 40.0 19.6 110.6 1992 85 40.0 23.8 134.4 1993 100 40.0 28.0 162.4 1994 100 40.0 28.0 190.4 1/ Total traffic through Bouake-Petionara in 1985 is forecast at 1.07 mil- lion tons, and therefore traffic increases of 40,000 ton/year beyond 1985 represents less than 4% annual growth and should be considered as a conservative estimate. 2/ Estimated average total distance haul for traffie passing through Bouake-Petionara section: 700 km. 12. The economic rate of return of track rehabilitation is 18%. (See costs and benefits stream in Table 2). The rate of return would fall to 17%, if investment costs were 10% higher than expected; also to 17% with 10% higher rail operating costs; to 15%, if rail traffic increased only 50% of the forecast from 1975, and to 13%, in the case of a combination of these three events. These results are satisfactory. ANNEX 11 Page 6 Trackrealignment 13. The track realignment is intended to remove slope gradients in excess of 10 mm/m and reduce the curvature of the line on the Bouake- Petionara section. On the present route the gross tonnage per B-BB 1800 loco- motive averages 400 tons with a load factor of 62%. The analysis considers net tonnage per locomotive of 223 ton with present alignment and 341 tons with realignment, which would underestimate the benefits of the realignment, as the first figure is likely to be higher and the second lower than the actual values. A conversion factor net ton-km to gross ton-km of 2.2 is assumed. The benefits of the realignment are quantified as follows: (i) savings in freight traction costs are estimated on the basis of a difference of CFAF 1.1/net ton-km 1/ in direct operating costs of locomotives "with" and "with- out" realignment; (ii) savings in passenger traction costs are estimated on the same basis, and in the assumption of 1.5 pass-km per ton-km; (iii) savings in locomotive investments on the basis of 100,000 km/ year per locomotive and renewal every two million km; initially 3 locomotives - 2 stand-by and 1 in reserve - would need to be bought in late 1977, to be available by end-1979 if the realignment is not carried out, to provide traction capacity for double heading along the Bouake-Petionara section (additional locomotives would be needed for double heading in the Petionara-Tafire section); and (iv) savings in track maintenance, estimated at CFAF 11.6 million/year. The costs and benefit streams are presented in Table 3. 14. The yield on the incremental investment allowing for realignment instead of rehabilitation is 15%. The rate of return would fall to 13% if investment costs were 10% higher than estimated, to 11%, if traffic growth were only 50% of the forecast, and to 10%, in the case of these two events, occuring simultaneously. These results are satisfactory. Since no road diversion benefits have been assumed for the realignment alone, the rate of return would not be affected by a possible increase in railway operating costs. 15. Complete realignment project. The complete realignment investment, including track rehabilitation and track realignment, would yield a return of 17%. The return would remain at 17% with 10% higher rail operating costs, fall to 16% with 10% higher investment costs, fall to 14% with traffic growth limited to 50% of the forecast, and fall to 13% in the case of all three of these events combined. The project yields therefore a satisfactory economic return. 16. Freight cars, tank cars and locomotives. The analysis considers packages of freight cars and locomotives, and tank cars (to be purchased by the oil companies) and locomotives; locomotives which are to replace wornout or obsolete equipment are evaluated separately. 1/ With the present load factor of 62%, operating costs Bouake-Petionara are CFAF 222/ton on the present line and would be CFAF 118/ton with the realignment, or a difference of about CFAF 104/ton. For the 90 km section, this represents about CFAF 1.15/ton-km. ANNEX 11 Page 7 17. Freight cars (and associated locomotives). This project component comprises the purchase of 210 freight cars (and the locomotives required to haul them) to satisfy the excess demand for rail transport as calculated in Annex 8. Net ton-km provided by the new freight wagons are estimated as shown below. It has been assumed a substantial increase in 1981 and slight thereafter, as a result of higher traffic and increased utilization of the cars. Years: 1978 1979 1980 1981 1982 1983 1984 1985 to 2002 Millions of net-t-km 47.2 48.8 104.5 171.7 177.6 177.4 178.2 178.9 Freight cars available: 60 140 210 210 210 210 210 210 It is estimated that one new locomotive is needed for every 20.3 million net ton-km. Some 8.8 locomotives would then be needed to haul the new freight cars. 18. If the new freight wagons (and locomotives) are not purchased, the traffic they would have carried would be diverted to road transport at a higher cost. Based on the savings from the avoided diversion (See table 4), the rate of return for this component is 26%. The return would fall to 24% with 10% higher investment costs, to 23% with 10% higher rail operating costs, to 24% with traffic growth 50% of the forecast, and to 20% with a simultaneous combination of these three events. 19. Tank Cars (and associated locomotives). While the project does not include purchase of tank wagons, 40 such wagons will be bought by the petroleum companies operating in Ivory Coast to transport the forecast petroleum traffic. RAN will have to provide the required motive power. The 40 wagons will provide the following ton-km (see Annex 8). 1979 1980 1981 1982 1983 1984 1985 to 2002 Millions of t-km: 31.1 39.8 42.1 46.3 48.1 49.9 51.8 20. The economic evaluation of the investment in tank cars and required locomotives is made using the same methodology applied to freight wagons and locomotives, i.e. benefits are quantified on the basis of avoided diversion to road transport. The equivalent of three locomotives is needed to pull the tank wagons purchased under the project. Cost and benefit streams are pre- sented in Table 5. The rate of return for this investment is 30%, and it falls to 28% with 10% higher investment costs, 26% with 10% higher rail oper- ating costs, to 19% with traffic growth reduced by 50%, and 15% with all three events combined. ANNEX 11 Page 8 21. Locomotives (for renewal). The evaluation of the locomotives to be substituted for existing equipment is based on the benefits and costs of: i) replacement of 5CC-2400 locomotives which are very costly to operate and which is justified based on savings in locomotive operating costs, and ii) replacement of 26 CC-1000 and CC-1500 locomotives which are too old and cannot continue to haul long distance service (see Annex 3) and which is justified based on the diversion of freight to road transport if the traction capacity needed to replace the old locomotives is not available. Based on the kilo- metrage of the existing locomotives and their traction capacity and assuming that the new locomotives were to perform the same as the existing B-BB 1800 (see Table 1 of main text), it is estimated that five CC-2400s would be replaced by 1.3 new locomotives and the 26 CC-1000 and 1500 by 4.9 locomotives (8.8 locomotives for the freight wagons and 3.0 locomotives for the 40 tank cars provided by the oil companies complete the total of 18 new locomotives to be purchased under the project). 22. The rate of return for the locomotives to be used for renewal purposes is 36% (See Table 6). This rate would fall to 33% if locomotives cost were 10% higher than expected, to 32% with 10% higher rail operating costs, and to 30% in the combination of these two events. There is no sensitivity to reduced traffic growth since these locomotives are needed to haul existing traffic. Track improvement in Upper Volta 23. The project includes improvement of the track in Upper Volta consisting in the ballasting of about 100 km, renewal of 40 km of sleepers and repairing several fills which are badly eroded. The improvement of the track will restore safety standards to the line and generate savings in main- tenance costs and derailment costs: i) Maintenance cost savings due to re-ballasting are estimated at 54 man-years, of which 4 man-years stemming from reduction in maintenance staff of 0.04 man-km and avoiding the additional staff that would be required for supplementary inspection and emergency repairs (0.5 m/km). The economic cost of the 54 man-years is estimated at CFAF 46.3 million, based on salaries of CFAP 857,500/year and a shadow price for labor of 0.83; 1/ ii) Derailment costs are estimated on the basis of a unit cost of a derailment of CFAF 8.39 million (excluding additional tamping and inspection that may be needed) and the following forecast of derailments "without" the project: 1/ This is the shadow wage rate for the Ivory Coast; the rate for Upper Volta is not available. Assuming a shadow price of 0.5 for Upper Volta, the rate of return would be reduced by about one percentage point. ANNEX 11 Page 9 Years 1977-79 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 No. 2 2.3 2.6 3.0 3.4 3.9 4.4 5.0 5.7 6.5 7.4 iii) The cost of interruption of traffic due to collapse of earth fills is estimated on the basis of two weeks' interruption per year, causing 50% of this traffic or 2% of annual freight traffic to be diverted to road transport. 24. All benefits of tnis investment are based on 1976 traffic levels. The rate of return obtained is 13% and is somewhat underestimated for the above reason. With 10% higher investment cost the return would fall to 12%, and also to 12% with 10% higher rail costs. With a combination of these two events, the return remains at 12% (see Table 7 for cost and benefit streams). Track maintenance equipment 25. The evaluation of track maintenance equipment has been divided into equipment for renewal and equipment to continue RAN's track mainte- nance mechanization plans. 26. Equipment for renewal. The equipment for renewal consists of four gang cars, six light inspection cars, one heavy inspection car and spare parts for tamping machines. The estimated invesm-n"'ix cost is CFAF 173 million. Due to mechanization, the labc - ` nas been reduced by about 200 people from 1970 to 1976, and the total reduction since the beginning of the mechani- zation program is estimated at 250 workers. These staff would have to be re-hired if the worn-out maintenance equipment, which is 10 to 20 years old, is not replaced. Estimating the savings at only 150 people, and applying shadow price of labor, the annual benefits from this investment would be CFAF 106.8 million. Operating costs of this equipment are estimated at CFAF 490/day per car (US$0.10/ km and 20 km per day). The rate of return for this component would be 53%, which falls to 49% with 10% higher investment costs. The evaluation is based on existing requirements of track equipment and is therefore independent of future traffic levels (see table 8). 27. Equipment for further mechanization. The equipment to continue the mechanization plans consists of 2 gang cars, 2 light inspection cars, 2 heavy inspection cars, 15 trailers, 2 bulldozers and 1 sleeper pressing machine. Their estimated investment cost is CFAF 196 million. The continua- tion of the mechanization will result in savings of an estimated 87 workers. Average operating costs of this equipment are estimated at CFAF 490/day per car or other items. The economic evaluation for this component, carried out in the same form as for the renewal equipment, ylelds a rate of return of 25% which would fall to 22% if investment costs were 10% higher than expected (see table 9). ANNEX 11 Page 10 Evaluation of the Whole Proiect 28. The whole project has been evaluated by consolidating Costs and benefits from the individual investments. Care has been taken to avoid potential double counting of benefits, and for this reason the benefits from avoided diversion in the rehabilitation of Bouake-Petionara have not been in- cluded in the analysis of the consolidated project, as they could duplicate the benefits stemming from rolling stock and locomotive investment. The rate of return is 23%. This rate would fall to 21% with higher investment costs, 21% with higher rail costs, 20% with lower traffic and to 17% with a combina- tion of these three events. RAN: Long-term Marginal Working Expenses Without Taxes (in 1976 prices) 1970 1975 1976 1980 1982 Pass-km (millions) 626 946 1021 1324 1447 Ton-km (millions) 402 392 504 672 761 Traffic units (millions) (t.u.: t/km+pjjm f ) 611 707 844 1133 1243 3 Working expenses (CFAF million) 6797 2/ 7567 8934 11050 12417 Taxes and transfer payments 3/ (CFAF million) 1393 1550 1831 2265 2545 Net working expenses (CFAF million) 5404 6017 7103 8785 9872 Working expenses/t.u. (CFAF) 11.1 10.7 10.6 9.8 10.0 Net working expenses/t.u. (CFAF) 8.8 8.5 8.4 7.8 7.9 MARGTNA. ANAIÀYSTS: 1970-1976 1976-1982 Increment t.u. (millions) 233 536 Increment net working expenses (CFAF million) 1699 3855 Marginal net working expenses/t.u. (CFAF) 7.3 7.2 1/ This ratio reflects closely the relationship between the actual cost incurred by RAN for 1 pass-km and 1 t-km. 2/ In 1976 prices; index: 1970 = 100; 1976 =195. 3/ 20.5% of working expenses. ANNEX 11 REHABILITATION OF BOUAKE - PETIONARA Table 2 COSTS AND BENEFITS (CFAF million) Ci B1 B2 B3 B4 B5 Derailment Broken Addil Broken Rail Savings in Investment Derailment Staffing Rail Add'l Avoided Diversion Year Costs Costs & Tamping Costs Staffing to Road 1977 4tO 1978 1500 1979 810 29.3 24.7 1.3 7.2 1980 67.1 49.5 3.3 14.4 1981 92.3 49.5 4.1 14.4 25.8 1982 100.6 49.5 5.3 14.4 50.4 1983 125.8 62.2 6.8 14.4 82.3 1984 142.6 62.2 8.6 21.2 125.3 1985 167.7 62.2 11.5 21.2 178.6 1986 241.1 62.2 20.7 21.2 227.4 1987 314.5 81.5 29.9 28.1 284.2 1988 387.9 81.5 39.1 28.1 349.2 1989 461.4 81.5 48.3 28.1 430.4 1990 461.4 81.5 57.7 28.1 527.8 1991 461.4 81.5 57.7 28.1 641.5 1992 461.4 81.5 57.7 28.1 779.5 1993 461.4 81.5 57.7 28.1 941.9 1994 461.4 81.5 57.7 28.1 1,104.4 1995 461.4 81.5 57.7 28.1 1,104.4 1996 461.4 81.5 57.7 28.1 1,104.4 1997 461.4 81.5 57.7 28.1 1,104.4 1998 461.4 81.5 57.7 28.1 1,104.4 1999 461.4 81.5 57.7 28.1 1,104.4 2000 461.4 81.5 57.7 .28.1 1,104.4 2001 461.4 81.5 57.7 28.1 1,104.4 2002 461.4 81.5 57.7 28.1 1,104.4 2003 461.4 81.5 57.7 28.1 1,104.4 2004 461.4 81.5 57.7 28.1 1,104.4 2005 461.4 81.5 57.7 28.1 1,104.4 2006 461.4 81.5 57.7 28.1 1,104.4 2007 461.4 81.5 57.7 28.1 1,104.4 2008 461.4 81.5 57.7 28.1 1,104.4 2009 461.4 81.5 57.7 28.1 1,104.4 B1: includes locomotive and rolling stock repairs, track repair, immobilization of equipment, increase in turnaround time and crew costs B2: includes additional staff needed for maintenance, track supervision and emer- gency gangs. B3: includes increased turnaround time, crews (repairs, welding, utilization of gang cars) B4: includes additional staff needed for inspection and stand-by gangs B5: costs include depreciation of trucks and rail motive power & rolling stock ANNEX Il Table 3 1/ REALIGNMENT OF BOUAKE - PETIONARA- COSTS AND BENEFITS (CFAF million) 4/ 2/ B3-- 5 Ci B1 B2-/ Savings in B4 Investment Savings in Savings in Passenger Savings in Cost Freight Traction Locomotive Traction Track Year Realignment Costs Purchases Costs Maintenance 1977 520 1978 360 507 1979 680 1980 340 77.0 169 63.0 11.6 1981 83.1 65.0 11.6 1982 89.0 66.0 11,6 1983 94.2 68.0 11.6 1984 99.2 68.0 11.6 1985 104.4 70.0 11.6 1986 109.0 70.0 11.6 1987 113.4 70.0 11.6 1988 117.9 70.0 11.6 1989 122.6 70.0 11.6 1990 127.5 70.0 11.6 1991 132.6 70.0 11.6 1992 138.0 70,0 11.6 1993 143.4 169 70,0 11.6 1994 149.2 169 70.0 11.6 1995 155.1 70.0 11.6 1996 161.3 70.0 11.6 1997 167.8 70.0 11.6 1998 174.5 70.0 11.6 1999 181.5 70.0 11.6 2000 188.7 70.0 11.6 2001 196.2 70.0 11.6 2002 204.1 70.0 11.6 2003 212.3 70.0 11.6 2004 220.8 169 70.0 11.6 2005 229.6 70.0 11.6 2006 238.8 70.0 11.6 2007 248.3 70.0 11.6 2008 258.2 70.0 11.6 2009 268.5 -118 70.0 11.6 1/ Costs and benefits are incremental over rehabilitation. 2/ Freight traction cost savings calculated on basis of differential costs with and without project of CFAF 1.1/loco-km. Pulling capacity assumed 341 net ton/loco with project and 223 net ton/loco without project. 3/ 1 locomotive purchase saved for every 100,000 annual loco-km difference between "without" and "with" realignment; renewal every 2,000,000 loco-km. 4/ Calculated assuming equivalence 1.5 pass-km = 1.0 ton-km, estimated to be the relatronsaip for traction costs only. 5/ Bank estimate. Savings based on reduced number of loco-kilometers over the section. ANNEX 11 Table 4 1/ FREIGHT CARS AND LOCOMOTIVES- COSTS AND BENEFITS (CFAF million) Ci C2 B1 Investment Investment Savings in Costs Costs Avoided Diversion Year Freight Cars Locomotives to Road 1977 695 470 1978 695 710 1979 695 318 356 1980 232 80 763 1981 1253 1982 1289 1983 1295 1984 1300 1985 1300 1986 1300 1987 1300 1988 1300 1989 1300 1990 1300 1991 1300 1992 1300 1993 1300 1994 1300 1995 1300 1996 1300 1997 1300 1998 1300 1999 1300 1/ This analysis refers to freight cars (excepting tank cars which are analyzed separately) and to the locomotives needed to haul them. Locomotives purchased to replace obsolete or worn-out equipment are evaluated separately. ANNEX 11 Table 5 TANK CARS AND LOCOMOTIVES-/ COSTS AND BENEFITS (CFAF million) Ci C2 B1 Investment Investment Savings in Costs Costs Avoided Diversion Year Tank Wagons Locomotives to Road 1977 196 270 1978 196 270 1979 227.0 1980 290.5 1981 307.3 1982 338.0 1983 350.4 1984 364.3 1985 378.1 1986 378.1 1987 378.1 1988 378.1 1989 378.1 1990 378.1 1991 378.1 1992 378.1 1993 378.1 1994 378.1 1995 378.1 1996 378.1 1997 378.1 1998 378.1 1999 378.1 1/ The economic evaluation considers the investment in tank cars (to be made by the oil companies) and in the locomotives needed to pull them as a package. ANNEX 11 Table 6 'I LOCOMOTIVES- COSTS AND BENEFITS (CFAF million) C2' Bi 41 C1- B1- B2- Investment Savings in Savings in Costs Operating Avoided Diversion Year Locomotives Costs to Road 1977 1978 460 1979 460 1980 46.4 125 1981 46.4 188 1982 46.4 313 1983 46.4 439 1984 46.4 564 1985 46.4 627 1986 46.4 627 1987 46.4 627 1988 46.4 627 1989 46.4 627 1990 46.4 627 1991 46.4 627 1992 46.4 627 1993 46.4 627 1994 46.4 627 1995 46.4 627 1996 46.4 627 1997 46.4 627 1998 46.4 627 1999 46.4 627 1/ This analysis refers to locomotives which will replace obsolete and worn-out equipment. Locomotives needed to pull the new freight and tank cars are evaluated in a package with the cars. 2/ 6.2 locomotives are needed for renewal. 3/ Difference in operating costs between the new 1800-2000 hp locomotives and the existing CC-2400's estimated at CFAF 386.8/ loco-km. 4/ Assuming that the obsolete CC-1000 and CC-1500 could continue to carry traffic until 1985, but gradually decreasing their transport capacities. ANNEX 1 1 Table 7 LINE IMPROVEMENT IN UPP ER VOLTA Costs and tenefits (CFAF million) ci nI7 B2-~-' B3nz Savggs Savings i Savings in Investment Track Derailment Avoided Year Costs Maintenance Costs Divers-ion 1978 523.5 1979 523.5 1980 38.4 19.3 1981 38..4 21.8 1982 38.4 25.2 1983 38.4 28.5 64.U 1984 38.4 32.7 64.0 1985 38.4 36.9 64.0 1986 38.4 42.0 64.0 1987 38.4 47.8 64.0 1988 38.4 54.5 64.0 1989 38.4 62.5 64.0 1990 38.4 70.8 64.0 1991 38.4 80.7 64.0 1992 38.4 92.0 64.0 1993 38.4 104.9 64.0 1994 38.4 119.6 64.0 1995 38,4 136.3 64.0 1996 38.4 155.4 64.0 1997 38.4 177.2 64.0 1998 38.4 201.9 64.0 1999 38.4 230.2 64.0 2000 38.4 262.4 64.0 2001 38.4 299.2 64.0 2002 38.4 341.1 64.0 2003 38.4 388.8 64.0 2004 38.4 443.3 64.0 1/ Estimated at 54 man/years (4 man/years for regular maintenance and 50 man/years due to additional needs for track inspection) obtained by re-ballasting and new sleepers. Labor savings are assessed at its shadow price, 0.83. 2/ Derailmentsoriginated by lack of ballast, 2 during 1977-1979 and increasing 10% p.a. thereafter, and by bad sleepers, producing an additional 4% annual increase in derailments. 3/ Assuming traffic interruptions of 2 weeks/year causing 2% of rail- way traffie to divert to road transport. ANNEX 11 Table 8 TRACK MAINTENANCE EQUIPMENT - RENEWAL Costs and Benefits (CFAF Million) C2 Bl 2/ Ci i/ Operating Costs Year Investment Costs ot E4urpmênt Savings in Labor 1977 52 1978 103 1979 18 2.0 106.8 1980 2.0 106.8 1.981 2.0 106.8 1982 2.0 106.8 1983 2.0 106.8 1984 2.0 106.8 1985 2.0 106.8 1986 2.0 106.8 1987 2.0 106.8 1988 2.0 106.8 1/ Economic life of equipment assumed to be 10 years. 2/ Labor saved valued at shadow price. ANNEX il Table 9 TRACK MAINTENANCE EQUIPMENT FOR FURTHER MECHANIZATION Costs and Benefits (CFAF Million) C2 Cl 1/ Operating Costs Bl 2/ Year Investment Costs of Equipment Savings in Labor 1977 59 1978 188 1979 19 4.3 61.9 1980 4.3 61.9 1981 4.3 61.9 1982 4.3 61.9 1983 4.3 61.9 1984 4.3 61.9 1985 4.3 61.9 1986 4.3 61.9 1987 4.3 61.9 1988 4.3 61.9 1/ Economic life of equipment assumed to be 10 years. 2/ Labor saved valued at shadow price. ANNEX 12 Page 1 IVORY COAST/UPPER VOLTA REGIONAL RAILWAY PROJECT Assumptions Used to Forecast RAN's Financial Statements 1. Income Accounts 1.1 Revenue from freight and passenger traffic is based on traffic forecasts in Annexes 5 and 6. Revenue per ton-km is kept constant at the end-1976 level, as both the average transport distance for freight and the mixture of high- and low-rated commodities are expected to remain virtually unchanged. Revenue per pass-km is expected to increase in 1978-1980 by 1.5% beyond the end-1976 level and by an additional 1.5% thereafter, due to the introduction of a new rapid train service in 1977 for which a tariff surcharge is planned. Revenue per pass-km will not be influenced by the share of first-class passenger traffic which will remain virtually unchanged below 5%, nor by the increased average distance of passenger traffic because there is virtually no taper in the tariff for the range of distances under consideration. 1.2 Miscellaneous revenue includes mostly the Service des Wagons-lits et des Hotels du Tourisme and works executed by force account. The rapid increase from 1975 to 1977 is caused by a more complete inclusion of revenue from force account works. Only moderate increases are expected thereafter. 1.3 According to agreements reached with RAN, rate increases until 1979 will help to produce a working ratio of less than 75% in that year, excluding Government contributions. Hence, they are expected to offset inflationary cost increases and, additionally, to generate cumulative revenue increases in constant prices of about 17.5%, divided into three steps of 4% in 1977 and 6.5% in each of the years 1978 and 1979. Rate increases during the remainder of the forecast period are expected to suffice to maintain the 1979 working ratio of 73%. The resulting average revenue increases generated by rate increases are as follows, the 1977 figure being based on actually implemented increases: 1977 1978 1979 1980 1981 1982 12% 15% 15% 9.5% 8.6% 9.7% 1.4 Staff costs are based on RAN's 1977 budget and on the following staff numbers which were agreed upon at negotiations: ANNEX 12 Page 2 RAN: Staff Numbers as of December 1976 to 1982 Motive Power Ways Studies and and and Departmental Adminis- Operations Rolling Stock Works Forces SWLHT tration Total 1976 1/ 1050 1750 1350 218 272 460 5100 1977 1120 1770 1250 218 272 470 5200 1978 1130 1742 1350 218 280 480 5200 1979 1190 1740 1310 220 280 500 5240 1980 1210 1740 1280 220 280 510 5240 1981 1240 1780 1300 220 280 520 5340 1982 1260 1820 1330 220 280 530 5440 1/ There are, in addition, about 800 temporary staff for works executed by force account. Their number is expected to remain constant during the forecast period. Cost per staff member is expected to increase in constant prices by 5% p.a. due to merit and seniority increases and employment of higher qualified staff. Social security charges and other staff benefits are expected to remain at the present level of about 23% of total staff costs through 1979 and to increase thereafter to about 25%, corresponding to an additional increase in total staff costs in 1980 of 2.5%. The rapid increase of staff costs in 1977 compared to 1976 is being caused, additionally, by a 3 percentage point increase in the portion of social security charges, and by the inclusion, for the first time, of the cost of temporary staff for force account work. 1.5 Fuel costs will grow in proportion to gross ton-km, the latter being 2.2 x freight ton-km+0.4x pass-km. 60% of other costs are a function of gross ton-km, and 40% are a function of staff costs. Interest on Bank overdrafts is shown separately. 1.6 Depreciation is based on (i) the rates used by RAN, which are satisfactory, and (ii) RAN's historic asset valuation. RAN is now reval- uating its assets at replacement values, which will allow calculation of more realistic depreciation allowances. 1.7 Government contributions to subsidize RAN's operating costs are calculated until 1977 according to RAN's Articles of Agreement, i.e. 60% of the costs of maintenance of ways and works which are expected to increase ANNEX 12 Page 3 proportionally to the corresponding staff costs. The amounts shown for 1980 and later correspond to one-third of the amounts due under the present arrangement. 1.8 Future inflation in the Ivory Coast is expected, according to the Bank's economic report, to be on the order of 7 to 8.4%. This report uses an annual inflationary increase of working expenses of 8%. 2. Sources and Applications of Funds and Balance Sheets 2.1 Government contributions for maintenance and renewal, including the Government's share of RAN's debt service, are expected to be paid after 1977 with about one year's delay on the expenses incurred by RAN. The Governments pay to RAN 60% of the service for the debt incurred by RAN for partly reim- bursable expenses. Additional infrastructure (line extensions and track doubling) is to be paid promptly and entirely by the Governments, and it is assumed that RAN will not incur any debt for these works. It is additionally assumed that: (i) the Governments will pay in 1978/79 the amounts due for earlier years, and (ii) in 1979 the subsidy scheme will be rearranged in such a way that from 1980 onwards contributions will amount to only one-third of what they would be under present arrangements (cf. Table 1). A simple across- the-board reduction has been assumed, which is, evdiently, only one of many possibilities. 2.2 Debt service is calculated for existing debt on actual terms and for additional loans, excluding those for the proposed project, on assumed terms, including an interest rate of 8% and repayment in 13 annuities after 2 years of grace. This reflects the average terms of borrowing which RAN should be able to obtain. Expected CIDA on-lending conditions are, based on indications given by CIDA: 4% interest, 7 years of grace, thereafter 23 annuities. For Bank and IDA terms cf. para. 4.19 and 7.04 of the main report. 2.3 Receivables (excluding the Government's short-term debts to RAN and expected disbursements on long-term loans, which are included in RAN's 1975 figure) increased from 13% of operating revenue in 1973 to 18% in 1975. An average figure of 15% is expected for 1977 and thereafter. Expected disbursements on long-term loans have been excluded from the forecasts. 2.4 Stores are presently at an acceptable level. They are being maintained at 15% of annual working expenses. 2.5 Payables are expected to be reduced to the previous level of about 13% of working expenses plus capital investment, once present liquidity problems have been solved. 2.6 Cash on hand is kept at a minimum of 10% of payroll, the shortfall until 1978 being covered through Bank overdrafts. RAN Government Contributions l/ (CFAF million) 1976 1977 1978 1979 1980 1981 1982 Amounts due for FY for: Maintenance 922 926 1030 1173 1357 1569 Renewal 745 735 770 155 590 660 Additional infrastructure (100% of cost) 661 1624 1474 1438 1438 1500 Debt service: Existing debt 249 223 289 356 355 355 New debt - - 153 280 500 650 Total due for FY 2577 3508 3716 3402 4240 4734 Amounts paid in FY for: Maintenance, renewal, debt service 1639 1716 1889 2242 1964 2802 Additional infrastructure 2285 1474 1438 1438 1500 Balances due 469 787 432 - - - Total paid in FY 2108 4788 3790 3680 3402 4302 Receivable as of Dec. 31 3127 3596 2316 2242 1964 2802 3234 Source: RAN and Mission estimates August 1977 -/amounts calculated according to agreements reached at negotiations. Reductions which are expected after 1979 and are otherwise reflected in this report have not been made in this table. ~t1j '-.1X IVORY COAST/UPPER VOLTA REGIONAL RAILWAY PROJECT RAN ORGANIZATION BOARD OF DIRECTORS L GENERAL MANAGER ASSISTANT GENERAL MANAGER GENERAL INSPECTOR FOR R EPR RESENTATIVE MANAGER IN UPPER VOLTA ADMINISTATIVE FI NCIAL OERATIONSSTUDIES & COMRIL MOTIVE POWER TRACK & OPERATIONS CIVIL WORKS COMRIL & ROLLING STOCK WORKS ADINSTATV FIANIA rr r MANAGER, MANAGER MA AGER MANAGER MANAGER MAAEMANAGER MANAGER SUPPLIES & SLEEPING CARS TEL ECOMMUNI- TRAINING PERSONNEL MEDICAL SPECIAL S ES SLEEPIN CARS COMPUTING CATIONS & SIG- DOCUMENTATION DIVISION DEPARTMENT SERVICE POLICE STORES DEPATELS SERVICES NALLING SERVICE DEPARTMENT DEPARTMENT SERVICE World Bank-17222 RAN TRACK & WORKS DEPARTMENT TRACK CHARACTERISTICS - Ù ô . > 0 4 MAISTN STTIN -J -IL ~ ~ WIGI 33 0 v°. T| YEAR OF TRACK LAYING U 96 9 1 9, 517117 17 9, 9416611-925,92912-12 St 12 ZZ~~~~~~~~9,-93 9 W9... 11-1. 2 LENGTH OF THE RAILS 12 ,,12 14 16. 1. _ 14- _ E WEL.EO RAILS 3 _ _I O _ > CNE 13G7 15 _ Z~~~ ~~ IENDCCNRT _J 3 __ _ _ ______.___________ ._____.________ EI GRAN ITEOE 1000 LIRE or oj lES/M E1 0 LIRE LE INSTATI0F STHE ORAIOS 2 36333 = "RAEIGORC3CONC.ETEI s-o S GRANITE 1009 LITRES WELDED RIS L_IT 100 LITR° O 500 LITR > SANTS TON 0 |03 LITRES EUNE 1976 Oorid E6 o_1722o O O 2 ~ ~~ ~~ ~~~ ~~~~~~ t 5 30 33~~~~~~~~ .AILWEIGIIT 3 0- 2S9 YEA. OF TRAC~~~ -AY-19291-93-1933 93 4 1040-915019-55 LENGTIl OF TUS RAILS 1 011_ 1 WELDEO RAILS Ou0 *à 2 17-01700 E~~~E 16095 41 o w ~~~~~ ~~~~~~1104 11 E> N 1-500 2 CONCRETS 1533 5 GRANITES 1000 LITRES 8000 I 0001 " 0001 .AR. SANI3TONE 00 O 00 LITRES100 > ~~~~~700 LITRES 590 LITRES 0- SANOSTONE 4- L0T0E ,UNE5 1970 WOEId 6nE-11 7223 I B R D 12751R A 1 Œ 9t ] ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~MEDiTENNAEAJ i I * f T IS~~~~~~~~~~~~~~~~~LE IA LIBA UAHIG0UYA Ba hoIA f e N MEY LHAD k. , » ><_ =- ÉGOU t 5>\ r _<4_) \sa& 7 YAKC NIGERIA S H.' ALGERIN ) w jZ ; EFKESSE-i fGEF\,>XN (1) PROPOSEVD"REMLLGNMENT WG u > 0@e~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~BSA GUINWAAS '| ""> -9DMAKO N l1 Na JR '\ I'IVO - - AH D CA.E. Y,, D o u é k o la Boussebli T |- * AIRPORTS eréba ,/ \uyo - - 12'un > t ABo,;.9rJAaknoouUoc¢ \.> \\ t gS3 - ' - IN TER N A TIO N A L B O U N D A RIES tvi Ct , g~~~)"o'a Sdu3doéY 0 L N g /"~~~~~~~~~~~~~~~~~~~~~~~~~1 G |; R , A IVORY COAST- UPPER VOLTA ,'Be4t ango/odoo5o <~/4 ' t imply dREGIONAL RAI[W AY PROJECT DIEN 0 (D~ ~~~~~~~~~~~~~~~~~~~~ PROPOSED REALIGNMENT ) 0UNgI L ; - : \ WoKkl8HTRACK RENEWAL ATZ K.si 03 ofREPAIR 0F ERODED FILLS G U 1 N.EÀ-) l'a GHANA ~~~~~~~~~~~~~~~~~~~~~~~~~O SLEEPER RENEVIAL (1 1 year program) ADDITIONAL BALLASTING T~~~~ K-si ~~~~~~~~~PAVED ROADS . Kurnasi ~ ~ ~ ~ ~ ~ ~ ~ ~ ____ GRAVEL ROADS N L - - - - ~~~~~~~~~~~~~~~~~~EARTH ROADS + AIR/PORTS - INTERNATIONAL BOUNDARIES o 100 200 300 ANDRA~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' b /L /,',darie.7 Lho-v 0777/iS -70 /0' -7 rd7VST m/ endorsement 77 QCCC//t-777' b/r 7/L Gulf f -Guinea kù0 - ~~~~~~~~~~~~~~MAY ~19771 I B R D 12846R jeL 16 t-<>^ 12° r ! 4t | -4r MAY 1977 -16° I/ `'-'_ |1. : 4 MA U R ITANIA Diourbel OAKAR,Thit S N GA _ DAK\ S E N E G AL .- Kaolack(_ ,*f~~~~~~~~Kvaes `e ; \ M A L I ltMoptl J- I X NIGER EIANJULe ' \ Tambacoundai GAMB I ` .i - ( U P P E R P E RNIAMEY -12° ' GUINEA '- hkqn K OUAGADOUGOU j *'- o RESER VO'4 jÀ.> B E N N r AIJRI FREETOWN SIERRA LEONE IV O R Fc OedA S T Sko kJ arakod E ' 'LBERÉI A/ I" /T~z i" ; WEST AFRICA 'kMONROVIA ,' .-, , ~ Tumdi> I -S- i REGIONAL RAILWAY PROJECT `" -- I`. AghovlyIe \ Koforida CTOONQU LAGOS .---.--- RAN - _- dîo MAJOR ROADS GubIkf fi W NATIONAL CAPITALS _. - INTERNATIONAL BOUNOARIES ha,I,~~ono h ,pd o O 100 200 300 400 bO00( nopo ndanremssown on ail repaaeb the,s I KILOMETERS IVorid f3wnkai1d ir.rarJfharcL 12° 8 40 4 REIOA RALA PRJCT RA