World Bank Document

Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized ReportNo. 16149 IMPLEMENTATION COMPLETION REPORT Public Disclosure Authorized INDIA THIRD RAILWAY MODERNIZATION PROJECT (LOAN 2935 - IN) December 2, 1996 Public Disclosure Authorized Energy and Infrastructure Operations Division Public Disclosure Authorized Country Department II South Asia Region 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 = Indian Rupee (Rs) Rs. 1 = Paise 100 Exchange Rate used in StaffAppraisal Report: Rs.13.00 = US$1.00 The following were the exchange rates between the Rupee (Rs) and the US Dollar (US$) during the project's implementation period: Year Rs/US$ Official Market 1987/88 12.97 1988/89 14.48 1989/90 16.66 1990/91 17.95 1991/92 24.52 1992/93 26.41 1993/94 26.20 31.38 1994/95 31.38 December 1995 35.18 Source: IMF, International Financial Statistics (IFS), and Reserve Bank of India. WEIGHTS AND MEASURES I Centimeter (cm) = 0.39 inch (in) 1 Meter (in) 3.28 feet (ft) I Kilometer (km) 0.62 miles I Kilogram (kg) = 2.24 pounds (lb) FISCAL YEAR OF BORROWER April 1 through March 31. ABBREVIATIONS AND ACRONYMS BR British Rail IRR Internal Rate of Return BFR Bogie Flat Wagon IRS/T Indian Railways Specification for Track CIF Cost, Insurance and Freight MGT Million Gross Tons CRIS Centre for Railway Information Systems NTKM Net Ton Kilometers DEA Department of Economic Affairs RDSO Research, Design and Standards Ministry of Finance Organization, Indian Railways GOI Government of India TRC Track Recording Car ICR Implementation Completion Report TMS Track Management System IR Indian Railways, Ministry of Railways UTS Ultimate Tensile Strength (kg/sq.m) Vice President : D. Joseph Wood Director : R. Drysdale Division Chief/Manager : J. F. Bauer Staff Member : H. Hansen, Sr. Transport Economist FOROFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT INDIA THIRD RAILWAY MODERNIZATION PROJECT (LOAN 2935 - IN) Table of Contents Preface ......................................................... i Evaluation Summary........................................................ 1ii Project Objectives........................................................ 1ii Implementation Experience and Results .. ........................................................ i Overall Assessment ........................................................ iv Summary of Findings, Future Operations, and Key Lessons Learned ............... ..................iv PART I: PROJECT IMPLEMENTATION ASSESSMENT A. Project Objectives .. B. Achievement of Project Objectives .. Renewal/Upgrading of Track on Arterial (A Routes) and Other Heavy Density Routes 1 Equipment for Track Laying and Maintenance .. 2 Locomotives and Wagons for Transport of Track Materials . 2 Technical Assistance and Training .. 2 C. Implementation Record and Major Factors Affecting the Project . 3 Project Cost and Financing .. 4 Economic Analysis 5 Indian Railways' Financial and Economic Performance .. 5 D. Project Sustainability .. 5 E. Bank Performance .. 6 F. Borrower/Beneficiary Performance .. 6 G. Assessment of Outcome .. 7 H. Future Operations .. 7 I. Key Lessons Learned .. 8 This document has a restricted distribution and may be used by recipients only in the performance of their officia] duties. Its contents may not otherwise be disclosed wiLhoutWorld Banrkauthorization. l PART II: STATISTICAL TABLES Table 1 Summary of Assessments ........................... 10 Table 2 Related Bank Loans/Credits........................... 11 Table 3 : Project Timetable................... .12 Table 4 : Loan/Credit Disbursements: Cumulative Estimated and Actual .12 Table 5 Key Indicators for Project Implementation .13 Table 6: Project Costs .. 14 Table 7 Status of Legal Covenants .15 Table 8 Compliance with Operational Manual Statements .16 Table 9 Bank Resources: Staff Inputs .16 Table 10: Bank Resources: Missions .. 17 ANNEXES A. ICR Mission's Aide-Memoire .18 B. Borrower/Beneficiary Contribution to the ICR .20 C. Project Results .22 Table 1: Summary of Track Renewal Planned and Actually Carried Out .22 Table 2: Track Equipment .23 Table 3: Traffic Growth by Major Commodity .24 Table 4: Rail Freight Traffic .25 D. Economic Analysis.26 E. Project Implementation Schedule and Actual period of Implementation.30 F. Indian Railways' Financial Statement .31 IMPLEMENTATION COMPLETION REPORT INDIA THIRD RAILWAY MODERNIZATION PROJECT (LOAN 2935 - IN) Preface This is the Implementation Completion Report (ICR) for the Third Railway Modernization Project in India, for which a loan in the amount of US$390 million equivalent was approved on May 5, 1988 to the Government of India with Indian Railways (IR) as the Beneficiary. The loan became effective on August 10, 1988. The loan amount was later revised at the request of the Borrower to US$248.94 million. The final disbursement was made on June 20, 1995 and the loan was closed on December 31, 1995, compared with the original closing date of December 31, 1993. The Special Account balance was refunded on June 11, 1996 and the loan uncommitted balance was canceled on the same date, reducing the loan amount to US$245.40 million. The ICR was prepared by Harald Hansen (Task Manager) of the Energy and Infrastructure Operations Division (SA2EI) of South Asia Country Department II, with the assistance of Jitendra Sondhi and J.S. Mundrey, independent consultants retained by the Bank. It was reviewed by Francois Bauer, Division Chief, SA2EI, and Kazuko Uchimura, Project Adviser, SA2DR. The preparation of this ICR was begun in December 1995 and carried through the Bank's final supervision mission in February 1996. It is based on project files, field visits and analysis carried out by independent consultants and data furnished by the Borrower and Beneficiary. The Beneficiary contributed by preparing its own evaluation and commenting on the draft ICR. The borrower provided comments that are included as appendixes to the ICR. -ii - IMPLEMENTATION COMPLETION REPORT INDIA THIRD RAILWAY MODERNIZATION PROJECT (LOAN 2935 - IN) Evaluation Summary Project Objectives 1. The project focused on track renewal and modernization with the objective of improving the planning and execution of Indian Railways' (IR) track renewal/upgrading and maintenance program, enhancing the quality and capacity of track and thus promoting efficient train operation and improving IR's financial performance. The above project objectives were pursued by: (i) renewal/upgrading of track on arterial (A routes) and other heavy density routes; (ii) acquiring equipment for track relaying and maintenance; (iii) acquiring locomotives and wagons for transport of track material; and (iv) technical assistance and training. Implementation Experience and Results 2. By September 1995, 3,881 km out of 4,000 km of track had been renewed. The remaining 119 km oftrack renewal were completed by March 31, 1996. Indian Railways' main heavy density routes, covering 16,568 km, were included in this project. At project closing, 1,052 km of track renewal on these routes were overdue (6.3 percent). One hundred thirty-seven track machines were purchased and have been received and commissioned. 3. The Beneficiary was to fund procurement of Hopper and BFR wagons and locomotives but did not procure any for the exclusive use of track renewal or maintenance. The training sub- component was successfully completed, and in all, about 275 man months of training was arranged. However, there has been considerable delay in the development and implementation of the computer-based, track maintenance planning system and it has so far been implemented only on a pilot section. 4. The total cost of the project was estimated at US$1,206 million (Rs. 16,875 million). The actual cost of the project is estimated at US$1,050 million (Rs. 23,503 million) with a foreign exchange component of US$247 million and local component of Rs. 18,481 million. The Bank financed the full foreign cost of the project and local costs were financed by IR. 5. Post-project economic evaluation shows that for the track relay, the revised IRR is 14, 17 and 25 percent, respectively, for the three typical initial traffic levels, as against the original SAR estimates which had an IRR of 16, 20 and 29 percent for traffic levels of 13, 20 and 35 million gross tonnes, respectively. The investment evaluation of track machines for maintenance shows an IRR of 25 percent. A sensitivity analysis showed that the return on investment for track - ijj - machines is very sensitive to a reduction in maintenance cost and this should therefore be monitored closely. 6. The project was planned for full implementationby the middle of 1993. However, due to long delays in procurement as well as installation, the track relay component was only completed by March 1996, almost three years behind schedule. Track machines, which were planned for delivery and commissioningby March 1992, were actually commissioned in the last quarter of 1995, resulting in a delay of over 30 months. The delays were caused mainly by the lengthy interval between bid opening and award recommendations to the Bank. Some delay to project implementation was also due to resource pressures resulting from external factors such as a change in GOI policy, which reduced the budgetary support to IR in the post economic reform period. 7. The annual traffic growth, in terms of net

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