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World Bank Document Document of The World Bank FOR OFCLAL USE ONLY Public Disclosure Authorized Report No. 13914 PROJECT COMPLETIONREPORT REPUBLIC OF INDONESIA Public Disclosure Authorized RAILWAY TECHNICALASSISTANCE PROJECT (LOAN 2891-IND) JANUARY 19, 1995 Public Disclosure Authorized InfrastructureDivision Public Disclosure Authorized Country Department III East Asia and Pacific Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of theirofTicial duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (as of May 1994) Currency Unit = Rupiah (Rp) US$1 = Rp 2,150 Rp 1 million US$482 WEIGHTS AND MEASURES 1 meter (m) = 39.37 inches 1 kilometer (kin) = 0.62 miles I hectare (ha) = 2.47 acres FISCAL YEAR OF BORROWER Government of Indonesia and Indonesia State Railway Public Corporation April 1 - March 31 ABBREVIATIONS AND ACRONYMS ERR - Economic Rate of Return GOI - Government of Indonesia ICB - International Competitive Bidding IND - Indonesia MIS - Management Information System MTC - Ministry of Transport and Communications NPV - Net Present Value Perum - Government-owned public corporation PJKA - Indonesian State Railway (Perusahaan Jawatan Kereta Api) PPAR - Project Performance Audit Report RSI - Resident Staff Indonesia (WB office in Indonesia) RTA - Railway Technical Assistance sq km - square kilometer US$ - United States Dollars FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General OperationsEvaluation January 19, 1995 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Republic of Indonesia Railway Technical Assistance Project (Loan 2891-IND1 Attached is the Project Completion Report on Republic of Indonesia - Railway Technical AssistanceProject (Loan 2891-IND),prepared by the East Asia and Pacific Regional Office with Part II contributed by the Borrower. The project, the second to date for Indonesia railways, kad two objectives: to bring measurable and significant improvements in railway traffic operations and (mechanical and track) maintenance with four years of project approval (1987); and to lay the groundwork for a major railwayreorientation which was to result in the railway'sfinancial viabilitywithin seven to eight years. Technical assistance, which lent its name to the project title, represented 20 percent of total project costs; equipment accounted for 60 percent, and training for 20 percent. The project was implemented at estimated costs, with a delay of one year. It achieved most of its major objectives. A major accomplishmentwas the railway'stransformation from a government department into a semi-autonomouscorporation. Trainingyielded good results. Operational changes occurred, most of them positive, but of uncertain import. Unaudited accounts for the last four years suggest that the railway made progress financially. But financial viability remains elusive in an environment of below-cost freight rates, non-economic passenger services and inadequate levels of operational efficiency. The project outcome is rated as marginallysatisfactory, and institutional impact as substantial. Sustainabilityis rated as uncertain because of financial uncertainties affecting railwaysoperations. PCR quality is fair. No audit is planned. Attachment Thia documenthas a restricteddistribution and may be used by recipients only in the performance of their officialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. FOR OFFICIAL USE ONLY INDONESIA PROJECT COMPLETION REPORT RAILWAY TECHNICAL ASSISTANCE PROJECT (Loan 2891-IND) TAJBLEOF CoNTENTrs Page No. Preface .......................................... i Evaluation Summary .................................. ii Part I PROJECT IMPLEMENTATION ASSESSMENT . A. Introduction. 1 B. Performance Judgements and Analysis. 2 (a) Project Objectives. 2 (b) Achievement of Project Objectives. 3 (c) Implementation Record .5 (d) Project Sustainability. 6 (e) Bank's Performance. 7 (f) Borrower's Performance. 7 (g) Assessment of Outcome. 7 (h) Key Lessons Learned. 7 Part II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ... 8 Part III STATISTICAL TABLES ............. ............ 40 Table 1: Summary of Assessments .................. 41 Table 2: Related Bank Loans/Credits ................ 42 Table 3: Project Timetable ...................... 42 Table 4: Loan/Credit Disbursements: Cumulative, Estimated and Actual .......................... 43 Table 5: Project Costs ......................... 43 Table 6: Project Financing ...... ................ 43 Table 7: Status of Legal Covenants ..... ............ 44 Table 8: Bank Resources: Staff Inputs ............... 45 Table 9: Bank Resources: Missions ..... ............ 46 Table 10: List of Training Modules Implemented .... ..... 47 Table 11: Equipment Purchases for Training Modules ...... 48 Table 12: Operational and Financial Targets/Actuals ... .... 49 Appendix: Map No. 25852.53.-------............... This documenthas a restricteddistribution and maybe used by recipientsonly in the performanceof their officialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. l I PROJECT COMPLETION REPORT INDONESIA RAILWAYTECHNICAL ASSISTANCE PROJECT (Loan 2891-IND) PREFACE This is the Completion Report for the Railway Technical Assistance Project in Indonesia, for which Loan 2891-IND in the amount of US$28 million equivalent was approved by the Board on December 8, 1987 and made effective on January 7, 1988. There was no Staff Appraisal Report, only a Memorandum and Recommendation of the President for this technical assistance project. The loan was closed on June 30, 1993. The original closing date was June 30, 1992. Final disbursements took place on July 15, 1993. A balance of US$413,222.18 was cancelled on November 2, 1993, effective July 15, 1993. The project was financed by the Bank and the Government of Indonesia only. This Completion Report was prepared by Adhemar Byl of the Infrastructure Division of Country Department III in the East Asia and Pacific Regional Office and reviewed by Anupam Khanna, Division Chief, EA3IN, David Hawes, transport sector specialist at RSI, Joris Van der Ven, task manager for highway sector and port projects in Indonesia, as well as Izzet Zincir, Project Advisor of EA3 and M.S. Parthasarathi, task manager for the project, both now retired. Preparation of this Completion Report was begun during a combined supervision and project preparation mission of December 1993. It is based on material in the project file. The Borrower contributed to preparation of the Completion Report by preparing its own evaluation of the project (Part II of this report) and by commenting on the draft of this Completion Report. - ii - PROJECT COMPLETION REPORT INDONESIA RAILWAY TECHNICAL ASSISTANCE PROJECT (Loan 2891-IND) EVALUATIONSUMMARY Introduction i. The island of Java in Indonesia is one of the most densely populated areas in the world, making it a good candidate for modal mix in land transport. As a result, there is an extensive road and rail network on the island. There is also some rail activity on the larger, but less densely populated island of Sumatra. Altogether, the Indonesian railway system is the largest in Southeast Asia (para. 9). ii. The Bank's association with the transport sector in Indonesia has been very extensive (21 projects) but with the rail system it has been limited (2 projects, including this one). There have been thirteen road projects and two each in support of shipping, port and fertilizer distribution. The PPAR for the First Railway Project in Indonesia was issued in June 1981 (Report No. 3511). iii. The First Railway Project, Loan 1005-IND, was implementedin the second half of the 1970s, with disbursements stretching until January 1980. The purpose of the project was to assist Indonesia in arresting the decline in the railroad's share of the land transport market and in increasing the railroad's capacity and efficiency through a program of rehabilitation and modernization, including a large amount of technical assistance and practical training. Some progress was made and some targets were met, particularly regarding passenger transport. As far as freight was concerned, little change was achieved. iv. Not until early 1985 did the Government request that the Bank undertake a new evaluation of the State's railway problems. The Bank again concluded that institutional arrangements and operational and maintenance practices should and could be modernized and efficiency improved substantially with relatively small inputs of technical assistance and training and selected investments, mainly in office, workshop and goods handling equipment. This was the origin of the Railway Technical Assistance Project (RTA) which is reviewed here. ProjectDescription v. The project consisted of strengthening management information, costing, procurement, inventory control, train scheduling and rationalization of mechanical and track maintenance by inter alia providing technical assistance, training of staff, (especially on subjects such as train operations, marketing and sales, computer hardware and software), and handling equipment and by making physical improvements to facilitate container and intermodal traffic (para. 14). - iii - Project Objectives vi. The principal objective of the project was to assist the State Railway [then a unit of the Ministry of Transport and Communications(MTC)] in efforts to bring about improvements
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