1& j I

No. E 50

\'", CONFIDENTIAL

This report is restricted to those members of the staff to whose work it directly relates. Public Disclosure Authorized

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized

PRELIMINARY REPORT ON BELGIAN TRANSPORT PROJECTS

June 28, 1949 Public Disclosure Authorized Public Disclosure Authorized

Economic Department Prepared by Arthur Wubnig TAbLE .0]' COi~TEli!TS

PAGE

Su'}J,iARY AN)) C01~CLUSIOHS i - ii

.AfF ElrDIX A Raih1ay Electrific2tion Project 1 18

APPEi'1DIX.b - Port of Ant"rerp lieequipment Project 19 - 28

APFEl~DIX C - Port of Ghent Reequipment Project 29 - 36

.AFPZi~DIX D - Port of :Brussels Reequipment Project 37 - 42 -i-

SU!vwlARY AIm CONCLUSIONS

1. The Belgian lOl'1n request is concerned with transport alone;' i.e. rf.1ilway electrificetion and port reequipment. It covers civil ",orks flS

"rell ~s m8.teriels flnd equipment. It postulfl.tes 1949-1951 refllization of each project to be financed.

2. The request totals 4810 million fr~ncs ($109 million). Close to helf, or 2215 million frpncs. is for electrifying various double track roein lines of the Belgian li'ational Railways (SiW.ri). Nore than half t or

2595 million fr8ncs, is to modernize, improve. and expand the ports of

Antwerp, Ghent, and Brussels.

). Originally. the Belgians had in mind to borrow 5797 million frpncs

($1)2 million). The original proposal included 4514 million francs for re.ih;ny electrificf'.tion, llJ) million for port reequipment, Bnd 150 million for merchant fleet e~8nsion. They ~~re later modified so as to exclude the merchant fleet project, reduce the electrificB,tion request from 1949-1954 to 1949-1951 realiz8,tion, and ex,~,pnd the :bank's share of p€,:grega.teport investment.

4. The rpilwe.y electrificption project may be deemed to qualify for

Bank finAncing in the sense of eliminpting 'l'1esteful cOB"1 consumption, rationalizing solid fuel use, ~romoting labor mobility, reducing r?il trans­ port costs, and promising I'ldequote investment return. Yet some of the lines to be electrified I"re pnt to yield much grep.ter immediate benefits than would others. Relative traffic density is the decisive test. -ii-

.5. The port reequipment ,)rojects may be deemed to qU81ify for :dank financing so f~r as they aim a.t better technical efficiency in order to reduce ship servicing and cargo-\-Torking costs. Yet they lJre motivpted by another basic aim as "rell; Le. expansion of capacity in the hope of hee.itier traffic to come. This is a doubtful aim, despite Belgium's big foreiGn exchange incClme from her ports, since they fire already over-equhmed "ri th surplus ca.pe.ci ty and have no clear assurance of greptly-increased work-

10ed.

6. Since the request is for a dollar loan to finance local currency investment, only such nrojects seem to be appropriate for Bank financing as meet severe tests ot urgency end essentislity, of productivity and yield.

Any Bank loan for reihTay electrificption might thus be limited to the lines of maximum traffic density in the total 1949-19.51 program. Any :Sank loan for port reequi1)ment might like1,lise be limited to civil \-Jorks and fe.cili ty reneiV'e.ls Biming only to improve operational efficiency.

7. Applying these tests. the :Sank might 1rTell env.isage a lOan of

1860 - 2070 million francs (~42 - 47 million). Both sums measure an irre- ducible minimum of justifiable projects at economic first sight if the bank is at all predisuosed to lend dollars to Belgium for local currency invest- mente The maximum sum assesses project cost per the offiCial belgian request.

The minimum sum assesses project cost on the premise of 10% l01rTer prices.

8. Subject to engineering verifica.tion, a prima facie case Can thus be made for:

(A) 1075 - 119.5 million francs to electrify the Brussels - Louvain.

Drussels - Ghent, and brussels - Ottignies lines of the SNeB.

(D) 785 - 875 million francs to renew cranes and loading bridges, to electrify cargo-working equipment, and to improve basins, Wharves, warehouses, and other port facUi ties e.t AnhTerp, Ghent, and Brussels .. APPENDIX A

Re.ilway Electrification Project

1. The Belgian Government is asking the Bank to advance 2215 million

francs to electrify. 1949-1951. vFrious double track m~in lines of the Societe

NationElle des Chemins de Fer' Belges (Sl~CJ3). About 88l.!. million fr~mcs would. be

used for the electrifice.tion proper of 21.5 route km. of main line. 396 million

fra.ncs to improve. expand. and reequip tracks and yprds. 880 million francs

for electrified rolling stock to replace steam locomotives and passenger

co a.ches •

toen Request for SNC~ Electriflcption. July 1 - 1949 - December 31. _19S1

Brusse1s­ :drusBe1s .... :i:lrussels­ Louvain Ostend Otti€nies lota1 Line Line Line Project (215 km.) (30 kID.) (155 kIn.) ()O km.) Ca,tena.ry lines. tre.nsformer sub­ stations. etc. 75 3)7 90 Signal. current supuly. Bnd te1e­ communicetions equipment 75 247 60 Reequipment, for electric traction, of Louva.in and Liege yards -55. Electrification proper 939 150 150 Track realignmen't alui rela ted ci vll Narks 274 80 85 Exo~nsion and reshaping of Liege and Louvain yards 122 Track and yard improvements 396 109 Electrified rolling stock to repl~ce existing vehicles ..----880 lli.. ill Total 2215 3M 410 19~9 55 20 15 1950 840 ~ 122 160 1951 1230 F 223 235 ~b'l Of which 73 million for louvain end Liege yerds • .::J Of which 104 million for Liege and Louva.in y!?rds. -2-

2. The loan request measures so much of St~ge 2 in ~ wide electrifi-

cetion program by the SnCB as can be completed by the end of 1951. Stage 2

contemplP.tes en a.ggreg~te expenditure through 1953-54 of 4514 million frr.ncs

of 1Irhich 1588 million to electrify 415 km. of main line double treck. 954

million to improve. exnand, end reequip tracks and y~:lrdst and 1972 million

for electrified rolling stock to replace existing vehicles.

Stl"ge 2 of SNOB Electrifice.tlon Frogram. 1949 - 1954

- million .E. fro -

Brussels­ Brussels­ :Drussels­ Liege. Ostend Namur. brenches, and branches Total ~md yards branches end Yl"rds Project (415··1pn. ) (140 1pn.) (155lpn.) (120 19n,) Ca.tenary lines t transformer sub-stl"tions, etc. 915 310 337 268 Signl"l, current supply end telecommunicptions equipment ..ID -Zl! 24Z ill Electrificetion nroper 1588 581 584 423 Track improvements 78 32 26 20 Str-tion and pbtform improve- ments 318 113 55 150 Grade crossing elimination ~ 41 20 16 5 Expansion and reshp~ing of yerds ill Jll 200 Track end yerd improvements 954 482 97 375 Electrified rolling stock to re:l1ece existing v:ehicles 1972 ...251. 51Q 2!±£ Total 4514 1820 1251 144)

Iii SNCB share only, excluding thet of Stete. -3-

3. Stage 2 is the second step in 8 big ~rogram to electrify in the next 10 years about 1500 route km. of the m~:1in double tr~ck lines of the

SNCB network. At present. the only electrified stretch is a 45 kID. pessenger line bet\V'een Anhrerp and Brussels. This is essentielly an inter-urben rapid transi t route ,·rhose electrificetion dates back to 1935. :By lete 1949. the

Ant'trerp - :i:irussels stretch "Jill be sUD:'Jlemented by several other lines '!:Those electrification, Ste.ge 1 of the program, is now in progress. They ere:

(a) a 58 km. freight line bet¥reen :i3russels (Scheerberelt yards) and Ant"rerp

(North Stption); (b) a 68 km. passenger-freight line bet'!tJeen Brussels (South

Station) end Charleroi including a freight link around :Brussels between the

SchaerbelE'k Yrrds (en route to AnhTerp) c>nd the Linkebe·ek Yards (en route to

Charleroi). Simultaneously, the North-South Junction joining the North and

South Stations in Brussels ~~ll elso be comnleted. This is an underground viaduct for the snecific purnose of through runs by electric trpins streight across brussels.

4. La.te this yet"r, "Jith the completion of Stege 1, the electrified portion of the SlfC.D network \.;ill include: (I") passenger lines ra.dieting from i5russels to Ch~rleroi, from .3russels to Ant,,,,erp; (b) a link for through p~ssenger service behreen Cherleroi I'md Anti-rero vie the i\forth-South Junction;

(c) freight lines rt"diating from Brussels to both Anhlerp C'nd Charleroi;

(d) a link for through freight service behTeen Antwerp and Charleroi via the

Scha,erbeek-Linkebeek -bel t.

5. :By la,te 1954, ,~~ th the com!lletion of Stege 2. the electrified net­

ItTork ,-rill have gro1}m to include new lines: (a) jOining.:: russels 'lrli th Liege via

Louvain; (b) joining Anhrern ",1 th ~ie~;e vie e Louvain-Malines link; {c} joining

.crussels 1fTi th Ostend pnd the seacof'st via Ghent end :Bruges; (d) joining -4-

Brussels ~dth Namur via Ottignies.

6. By lete 1958. '\,d th the comnletion of the entire nrogrBm, the electri- fied r~1il net1l1ork 1IJill comorise 1545rc.ute km. r~dipting out of Brussels to

Ant1:'Elrp. to Ostend and the seacoast, to the Luxembourg and French frontiers vie, Namur. to the industrial complex of Oha.rleroi, IJ[ons, and Tournai. Electric trection ,·rill then be operative over ]0;0 of the entire route mileage, 50; of the double tra.ck mileage. Roughly 70-7570 of the SliiCBt s total tre.ffic moves over this network of 1545 km. now electrified (45 kID), under electrificption

(125 kID.) or due for electrification in the next 10 years (1375 km.).

7. The aggregpte cost of the S~O~IS entire program is offici~lly esti- ma.ted as roughly 14.2 billion fnncs as follo",s:

Nillion 13. fro 1. Oi vi! engineering and a,ccessory "forks 3430 2. Fixed electric installetions ]810 J. Electric rolling stock 6260 Equipment C'nd civil 1Ilorks 13500 Interest on cEpital during construction 700 Total 14200

8. Much of this investment is logically chC'r~"eflble to purqoses other than electrificrtion; e.g. rep1e.cement by electric vehicles of obsolete rolling stock C'nd motive 1"lo,"er overdue for scrfl.1;ping; rene \'11" 1 end rebuilding of tr~ck. rOl'd-bed, e.nd structures: construction of overpe.sses ~nd underpeeses, etc. to suppress era,de crossings; terminel exmmsion, track reElignment. junction improvements, etc. Much of the aggrege.te investment \-,ould be largely or entirely e.t Sta.te e},':pense; e.g. gnde crOSSing eliminetion, repair of "Je.r -5- damages~ locomotives for the North-South Junction, etc. Another part would be offset by the rele~,se of funds locked up in inventory (e .g. stocks of locomo- tive fuel), by proceeds from the sflle of materiel (e.g. screpped engines and coaches), e~d by reassignment of displaced vehicles to non-electrified lines.

9. Of 14.2 billion frencs to realize the totel program, only 9.4 billion is logically imputable to electrific~tion es a seuare.te end distinct p1.l:r-oose.

This is investment from the viewpoint of SNCB eccounts elone without ellovdng for some possible exnansion of thermo-electric genare,ting cappci ty by the 6tJtJ h'J/)/;on public utili ties "Thich are to supply the current (roughly ~ilP.l k'lllh. f' yeer). In any cese, the S:rJCb expects a yield of 5-6 uercent a, yep,r on p total investment of 9.4 billion francs for electrificption as such; i.e. 400-450 million francs a yee:r from spvings on fuel, mt'·intenance. and other opereting costs plus 100 million francs et year from t-dded passenger revenues.

10. Counting caromi tmcnts flhead as \'1el1 as exnendi tures to date, the

81W:':: is investing 1528 million francs in Stege 1 electrificetion. As of

April 1, the SNCb has exnended 665 million fr~ncs (net of various Sta,te grants) on Stage 1 and is committed to eXpend 863 million fra.ncs more (to be fina."lced through e. S"dss lopn plus Cerrier revenues). The Tl?ssenger-goods line from brussels to Charleroi is Etbsorbing 981 million frf'ncs; the goods-line from

:Orussels to Antvlerp, 547 million. About 541 million frencs \,.1.11 go for elect- rified rolling stock; about 490 million to improve, realign, and e~rnE"nd tracks, yards, junctions, and stations; and about 497 million frpncs for electrifica.- tion in the strict sense of catenary lines, transformer sub-stations, equipment for ourrent supply, signelling facilities, etc. In the SNOE accounting, pbout

55;b of the .?ggregate investment for Stage 1 is chprgee-ole to electrific;-tion as such. on 'III!hich outlay of 860 million francs the carrier foresees a yield -6- of 62 million frencs e year or 7.2% p.a.; i.e. 47 million francs as operating economies plus 15 million e.S added passenger revenues.

11. Al though the SlJCi; has ell financial means a.t hend or in sight to complete St8ge 1, it lacks a.ssured financing to start Stege 2. Comulete realizE'tion of Stage 2 through 1953-54 \'Tould require 4514 million francs, of

"T11ich only 3045 million for electrifief\.tion uropEr at ~m expected yield of

246 million francs a. year, or 8jb p.a.; Le. 168 million francs from lower costs,

78 million from added revenues. Originally, the SNOB proposed that the 3ank finance all of Stf'ge 2 through 1954. The revised request no,·, before the

~ank is financing only such self-contained projects in Stage 2 DS can be com-pleted by the end of 1951. They total 221.5 million frf'ncs fClr 215 route km. as en intermediate step to",ard 415 route km. for 4514 million francs.

12. A complex of diverse motives underlies the SiTeD electrification program; mtdnly: (a) better passenger haulage: (b) reduced operf'ting costs;

(c) increased operating revenues; (d) various social amenities; (e) use of previous investment. They have to be understood egainst the background of a

State-o\'Jl1ed ct:".rrier '"hich normally, becf'use of State policies, incurs big opereting defiCits "'hich ere made good by big subsidies et State excense.

13. The program aims mrinly to 8.ssure better Dessenger transY)ort to, from, and through ~russels. The idea is to get f2ster, ef'sier service more fre~uent. reliable. and comfortable over what ere essentially suburbe.n and inter-urb8n lines radif'ting out of a big metropolis into a. derlsely ~')opu..,. l.8ted f'rea ",ith ['t grea.t many stations a short distcmce apa.rt. The E;russels

North Station. e.g. services about 40,000 pa.ssengers .8 dey to and from Ant,'rerp

(electrified line), and C'>bout 30 ,000 passengers a day to and from Louva.in -7-

(steam line). The Brussels South Stption services '.' over its stee.m lines about 25,000 passengers a dey to end from Ghent, 16,000 to end from Ch~rleroi.

15,000 to ~nd from Ottignies.

14~ Although the electrification urojects eim pt better freight hpulage as veIl. this is e subordin:::>.te interest for the time being. It is 1311 the more subordinete in Vie", of :Belgium I s first-re.te wetenmy facHi ties for the inland haulage of bulk cargo. AI though heavy freight '!tIill cloubtles s be hauled much better by electric than steam traction over the lines converging on

3russels, the SiJC3 would not be undertaking to electrify 1500 km. here e.nd now if better freight haulage were the only benefi t or even the major benefit in sight.

15. The SlJCll is looking for'''8.rd to big operElting economies from the displacement of steam by electric traction. These I're the inherent economies of electric motive nO\'fer end electrified rolling stock over the hnllage of cOF-ches and "fegons by steam engines. Realizption of tilese economies \'J'ould help to cut the opereting defiei ts of the Sl~C:O; e.g. e deficit of 55 million francs e year, 1937-1939. of 508 million francs a ye~r, 1946-1948. With lower defie! ts, or perhaps net oper(' ting revenues ins teed, there '·,Quld be less need of Stete subsidies: e.g. subsidies of 2.350 million frencs in 1948 before net operpting revenues of only 201 million frencs. .Doth the deficits and the subsidies, it hf'.s to be stressed. Iprgely trace to e St8te policy of hauling workers and other s'Oecial groups at extremely che!:l'O fares.

16. The lergest economies from electrificl"tion ,

from electrifying 1500 kIn. e.pproxime.tes 650. oeo tons of coel e year at

present tre,ffic. Since, e,g. electric locomotives snd electrified coaches 'i

suffer much lesa '!:!eer-and-tear then the vehicles they rep1e.ce. the S:NC:E 1 s

meinten~mce end renair bills ere ant to drop from 9.0 - 13.8 francs per 10co-

motive km. for existing types of ste2ID engines to 3.9 - 6.3 francs 1jer electric

tr~'tin-km. for the types of 1ocomoti ves and coe,ches in mind. Other economies

of electric tre,ction include reduced expenses for lubric;:>tion and "Ta.ter, re-

duced "leges for trein crew.

17. The S~;C:':' experts foresee totel operFting economies far greater than

the upkeep ~md renewal costs, due to electrifice.tion, for catenarjT lines,

transformer sub-stations, return circuits, end related fa.cilities. liet

s?vings. per the S!JOL estimptes, would enproximete 30-40j~ of the present

operating costs of steam tra.ction over the Stage 1 ~nd Stage 2 lines for

ltrhich a thorough appr1?isal has been ma.de.

E;x;pected 9JJera,ting Ec2nomies from SNCB E1ectrificp..tion of Specified Treckege - million E. fro a year - Future Recent opera­ opere,tlng ex- ting eXpenses nensea (elect­ :Het Line (steam ~rAction) ric trR.c tion) savings :6russels - Charleroi 81 54 27 Brussels - Antwerp (goods) 57 36 21 Brussels - Liege 226 158 68 Brussels - Ostend 49 1J.! ::::'russels - l'Jamur 47 !!I Louvain - l-':a1ines .. .5

!iI PreliminB.ry rough estimates. -9-

18. The SKC:B also envisnges -oigger pflssenger revenues in direct response to electrification; i.e. l5i., more traffic judging b~T Ant\

19. Freight traffic, however, is expected to rema,in much the SflMe FEl a,t present. True, the SNOB experts envisage some addi tionel haulege of {':oods over the newly electrified lines. Yet they e~~ect the entire increment to be drawn from the non-electrified stretches of the neh'Ork.

20. The realization of certain sociE'l amenities is ~mother bpsic motive .. lliioving through heavily congested ~reae C's they do. the steruu locomotives cause smoke, noise, dirt. :rha electric locomotives Hould be qUiet and clean, thus mpk1ng ::Oelgian cities end suburbs more comfort1"ble T)laces for human Electrio tr8ctiQJl living. l:Toulu t:'llso ?ssure cle811er. more comfort~ble rides to the in- dustril'l.l \'lOrkers find s£!Ilaried employees to ~md from their daily jobs ~.'rho

CO~0rise the bulk of the nassenger traffiC.

21. Pinally. electrifice tion of the lines converging on :Erussels \.;ill help to get maximum use out of the big State-SNOB investment tn the Iforth-South

Junction. for underground electric traction across .Brussels. Arguf'oly, the beent BelgiEins may have mistaken to sta.rt this project. Kevertheless, it exists Bud -10-

~nll soon be reeny for service. It cannot operate effIciently if steam loco­ motives re~ain the predominant form of motive power to ~nd from 3russels in

short-haul passenger traffic.

2.2. Electrification of the S~~C.;:;; nehlOrk cannot -De regarded as a vi tpl, urgent investment in the sense of investment tending to exnand nelgium's nro­ ducti ve cana.ci ty, lO;'.ler her costs of production. incree.se her merchandise exnorts, or improve her balance of payments. RPihray electrification not­

~nthstanding, Eelgium1s ,roductive capacity and exnort potential are apt to remain much "that they are B~t present.. OJ:>ereting by electric insteed of steam

traction, the Sj:;Ci;. is ant to ch.:"lrge much the same passenger feres and freight

tariffs as those nO\1 in effect. There pre no perellasi ve reasons to surr90se

that Slife] electrification might tend to incree.se the carrier's net foreign exchange receipts (currently about 355 million fr,.·ncB a yepr) from internatioU8~

traffic. No sho1t,ing pt "II has been !nBde or even suggested that iielgien out­

:put, eXports. or both. pre being held DP.ck by costly tr~nsport.

23. A clesr c~se. nevertheless, exists for regprding the SNCE electrifi­ c~tion as vi tnl, urgent investment in a sense py):r;roT)riate to a via.ble. effluent economy largely exempt from balence of pp.yments pressure. GenUine, substantiel benefi ts are bound to result for the :6elgian natione.! economy from fulfillment of the SilO::; program: (a) more rational use of na.tural resources, narticulr-rly coal; (b) bree.ter occupptionel flnd regional mobility of manp01~jer; (c) higher

technic",l efficiency in a, oasic ~;ublic service, ra11 transport.

24. Re&t'rdl,ess of 1·rhether Belgium should import more COl'll from Euro!Jean sources while shutting do~m some of her o\~ lo~yield, high-cost mines, it -11- is unsound for Belgium or B.ny other European economy to waste coal. ll1Iuch of the present use of coal by the SliCE 1.2 definitely "Ta.steful. in view of the extremely fevoreble setting for electrificetion of the main double track lines; i.e. hes.vy traffic, short hf.uls, suburba.n pnd inter-urbf'ln runs. Since electri­ fication of these lines is ppt to pey its own W

25. Better rail passenger service ,~uld help to promote better use of

:Belgian mpnpollrer. :c.'luch of the labor force is highly specialized 'lf1i th deep local root$. M::ny of the \'rorkers 11 ve in one area, but ,,!()rk in r-nother, commuting bcock l'1nd forth daily. Fa,ster, more frequent. more comfortf'ble rail he.ulage ",ould thus stimule.te higher ll"bor mobility, a, ~ 5!..:!:l2 ~ for' the bulk transfer of manpower from gro\nng to declining indus tries and era,fts.

Ready transferabiU ty is all the mo re impere,ti ve because of the s true tural pressures now beering on certain major Belgian industries such as textile

~nufacturet glass.making, and coal mining.

26. As Cl. major enterprise which employs e. great body of labor, renders a basic publiC service. and draws big subs~dies from the State, the Sl~C:B should -12- be run at top efficiency. Electrification ',!ould hel-o to do so. I t is ~:rt to renay the originE1l investment. in Europeen e.:x:nerience, ",herever there is enough traffic density to cause 400 tons of coal p yepr to be consumed 8S locomotive fuel per route kIn. All the "projects in Stflges 1 l"I.nd 2 meet end surnsss tllis critical limit. Both of Stage 1 lines Carry l'lbout 60~ more ttu:ln the minimum density to support electrification; e.g. on the i3russels-Chl'lrleroi line, e.g. the engines consume 645 tons 8. year per km; on the Brussels-Antwerp line,

665 tons. Consumption of locomotive fuel uer kIn. on the Stege 2 trpckpge rFnges from 535 tons a. year for Brussels-Ostend to 880 tons for Brussels-Liege.

These r~tios ere e~l the more telling in fe.vor of electrification since the

SHO..;;. pays e.oout 777 francs a ton for locomo ti ve fuel (a high pri ce 'O~7 European standar&» but only 0.75 francs 1)er- k't'h for electric current (a. 10\,1 '\')rice. similarly assessed).

27. Apart from inherent merits of SJ.JC..;; electrification. the loan re

(A) \\forld Drices of me.terials and equipment ~re dropping. If present

tendencies persist, the Sl'fCIl ,.. rill be buying steel, cOI'per, motors.

transformers, cable. locomotives, coaches. etc. 2~t much less cost

then the officiel €;::;tim~tes ~ssume.

(:0) ConsiderC).ble unemployment has develoYJed in :Belgien indus tries recently.

Still more unemnloyment seems to lie ahead considering the present

olltlook for the iron ~nd steel ~nd metal-1tTorking industries. Easing

of demand pressure is disengaging labor for civil ",arks PS ",ell as

facilities to manufacture electrification equipment. -1)-

28. Despite the pbusi bili ty of the Sl.~Cil electrificetion program and i ts cyclic~.l timeliness. none of it should be deemed eligible for L3P.D

financing ~rhich feils to meet strict, rigid criteria of "0roducti vi ty t essen- tieli ty, end yield. :Belgium is asking for 8. dollar loen to fimmce locf'l

currency exnenditures prima.rily t i.e. the "rages of :belgian labor, the purchase of Belgian-mv.de mfiterials and equipment. She '1!ill be incurring dollar debt to improve her use of coal, labor, and rail transnort 'Idthout, ho\"ever, materially increa.sing her potential to earn and spve foreign ex­ cna.nge. Nor is the possibility to be excluded thpt some fraction of the

S~CB project might be financed from unta~ped internal means of the Belgian economy. -Ill-

29. Certain technical factors also argue for restricting any B~k loans in support of Sl\l'CB electrification to the most productive, highest yield1x:g projects alone. Subject to engineering verification of these vital issues, it appears at economic first sight that: A. Prompt, complete realization of the SnCB program might impose a serious peak-load burden on Belgian central electric stations. The

heaviest rail traffic is bett\feen 7 and 9 AM and between 5 and 7 PM, so that the bulk of the electric pOltTer will be dra\'ffi during periods which partly overlap those of peak industrial demand. B. Much of the benefits of electrification might be had for much less

investment on the lighter traffic stretches of stage 2 by replacing steam engines with Diesel-electric locomotives. Recent U.S.

experience, e.g. arguesin favor of using Diesel~lectric traction

instead of stra~ght electrification on lines which are not super- saturated with shorthaul, inter-urban traffic. C. The SlQCJ3' s anxiety to electrify 1500 km. as fast as possible partly traces to the csrrierls concern with forestalling competition from bus and truck haulage. On certain routes of lighter traffic density,

however, the Belgian economy might oe better advised to eA~end motor

transport facilities than to invest in railw~ electrification.

BELGIAlT RAIL, HIGHt-I.ll.Y. MID I. l:J. T. TRAFFIC. l22Z-l 248 1927-192q 1937-1939 Me~sure Average Av~raf!.e l24Z 1948 P~sse~er transport, mi1lio~ :gassengers p.a. By rail, SUOB 6930 6110 7210 7090 By bus, inter-urban only 1250 2280 2110 2780 Freight trans~ort, million tons p.a. :By rail, SNCB 8760 6070 5870 6160 :By I " ~,rn _ T • river & canals 2160 3040 2020 2210 By truck, inter-urban only 350 830 1510 1790

j f, I -1.5-

30. Since Belgium is here requesting a dollar loan to finance local currency investment, the Mission recommends favorable consideration by the Bank of only those SNOB projects for which a clear cut prima facie case can be made. These would be the lines of densest traffic in Stage 2 which (a) can be completely electrified by the end of 1951 at the latest; (b) are intermediate steps in the high-yield electrication of longer, heavy-traffic stretches; and (c) carry a sub­ stantial load of freight as well as passenger traffic. 31. Applying these tests:

A. Electrification from Brussels to Louva~n. Ghent, and Ottignies might

\~ell qualify for. prompt ::Sank financing;

B. Immediate electrification beyond Ghent all the way to Oatend is a

more d<;lu·btful project on which the :Bank needs expert engineering advice;

C. The e:xpansion, reshaping, and reequipment of the Louvain and Liege

yards is also a project whose financing by the Bank \'lOuld be pre­ mature pending a thorough analysis by technicians.

32. If Stage 2 warrants Bank financing at all, the Lonvain, Ghent, and Ottignies lines seem to be irreducible minimum for which a dollar loan would be justified. They carry the densest traffic of the various Stage 2 lines for 1949-51 realization. They have Sizable workloads of freight as well as passenger traffic. Each is an intermediate step in the eventually desirable electrification of longer stretches; Louvain, en route to Liege; Ghent, en route to Oatend; Ottignies, en route to Namur. -16-

) ) Neasur9s of Umency of rAectrification on Various Stage 2 linea

Haulage per annum. Ratio of freight gros!'! ton-kIll per to passenger Line route-kIn,. traffic For proIDpt Bank financing Brussels- Louvain 12.9 million 0.29 :x: Brussels ... Ghent 11.8 0.38 Brussels - Ottlgnies 11.0 0 .. 33 Bank financing doubtful Ghent - Obstend 0.44

No loan request @§ 1952"1954 projects Louvain - Liege 21.2 0.87 Louvain - Nalines 12.0 5.23 Ottignies - Gemblous 20.2 1.83 Gemblou:x: - Namur 8.7 0.25 Gemblou:x: - Ronet 9.7 10.60 Louvain - Ottignies 9·9 5.43 All Stage 2 lines ( 0.84 x) Entire sno:s network (1.52 )

--"!:'"======iIl!5======::;::======:::::Iii*lt;i;;lrt!::======;;::;:::: 33. Despite the appeal of the Brussels ... Ghent project, the :Sank might be well

advised to defer consideration of ~·1949-5l loan to electrify, the entire line. passing from Ghent from Brussels to Ostend. True, the SNOB are eager to do the

whole job at once. presumably because they envi~age an immediate big increase of domestic and international tourist travel to, frOID. and through Ostend during the

summer season rush. Yet their b~81c premise is doubtful in view of (a) grO\'1ing competition from motor vehicles internationally and from airlines internationally; (b) the unavoidable need for a long spell ahead to change engines at intermediate points on the SlIDB network; (c) the extreme unlikelihOOd of electrification in the descernible future of the French and German line joining the SNOB net'-lork. In any

case. traffic denSity is much lighter between Brussels and Ostend (535 tons of

locomotive coal a year per route kIn) than between Erussels and Liege (880 tons) or between Brussels and Namur line (750 tons). It is lightest of all. compared -17-

with ot~er Stage 2 projects for 1949-51 realization, on the Ghent - Ostend

stretch; i.e. 65% of Brussels - Ottignies performance; 605~ of Brussels - Ghent; 50% of Brussels - Louvain. Finally, much of the annual return on the necessary investment would have to be gathered in a few summer months, thus passing the inherent uncertainties of seasonal traffic. 34. Likewise questionable for 1949-51 finanCing by the Bank is the SNOB

proj ect to enlarge, reshape, and reequip the Louvain and Liege yards. ~'!batever the resulting benefits for electrified traction might be, they could not be fully realized before 1953-54, the scheduled date for completing electrification all

the ''ffiY to Liege. The main idea, moreover if seems to be ,capoo'i ty wexpansion in the h>]Je of larger traffic ahead. Arguably, the :Brussels - Liege line might be electrified to service;..·all the existing traffic efficiently ,'11th much less outlay on the Louvain and Liege yards than the SNO:B has in mind. 35. There may well be operational reasons, as the Belgians argue, for

electrifying from Ghent to Ostend simultaneously ~nth electrifying from Brussels to Ghent. This i$ a question for engineering, not economic analysis. If the engineering analysis confirms the inseparability of the projects, even the B~~ssels - Ghent proposal might have to be excluded from 1949 - 1951 financing by the Bank as an integral phase of a much larger proposal, :Brussels - Oatend, of obscure productivity, essontuality, and yield. 36. There may also be technical reasons why the Liege, yards, the Louvain yards, or both, should be e~anded, reshaped, and reequipped at once. Oonceivably, e.g., the Louvain yards require prompt improvement as an aid to prompt electrifl- cation bet"leen Brussels and Louvain line. Here again, the :Bank t'lould have to be guided by engineering advice. The resulting decision might be to reinstate much or most of a project here excluded. - 18 - :17. Out of a loan request of 2215 million francs. the Mission thus finds only

1195 million francs worth of projects 1I1bich are suffioiently urgent t essential t

and productive at economic first sight to warrant prompt Ea~~ f;nancing; i.e.

about 365 million francs for Erussels - Leuvain electrification; 420 million for Erusse1s - Ghent electrification; and 410 million for Erussels - Ottignies electrification. This is to be understood as a minimum estimate, pending analysis and appraisal by engineers, of such SNOE projects as presently seem urgent, .. essential., and productive enough to justify a dollar loan v"here no dollar imports are needed and no dollar income is likely. It measures, the Hission believes,

the irreducLble minimum of such projects in the S~roB request ..

Suggested minimum :Sank financing of S.n.D.B. electrification, 3.949 - 1951 - million E. fr. - Erusse1s- ErUssels- 3russels- Project Total Louvain Ghent !}:./ ottignES ~118 km.l 'JO Itm·l 'J8 km.l (~O km.l Electrified rolling stook 500 135 190 175 Oatemary lines, transformer stations, etc. 277 75 112 90 Signal, current supply, and telecommunications eq:u.ipment 217 75 82 60 Track realignment and civil works 201 80 :26 82 Total 1195 365 420 410

1949 42 20 7 15 1950 440 122 158 160 1951 713 223 255 235

~I Arbitrarily assumed as one-third of cost of Brussels-Ghent project. - 19 -

APPElIDIX B,

Port of Antwerp Reeguinment Proj~

1. The Belgian Government is a~~ing the Bank to advance 1600 million francs for various 1949-1951 projects to expand, reequip, and modernize the port facilities of Antwerp. Half, or 800 million francs. is to Cuild and equip a new maritime lock, doubling the present capacity of the main Kruisschans Lock. Almost as much, or 700 million francs, is to replace hydraulic by electric cranes along the ScheIdt docks (500 million francs) and the inner basins (200 million). The remainder, or 100 million francs, is for a new dredge. 2. Over and above 1600 million francs from the Bank, 1949-1951, the Antwerp port authorities mean to invest 850 million francs from non-Bank sources. The non-Bank projects are reconstruction of the ScheIdt docks (250 million francs), reequipping the Eanea Basin docks (250 million), de­ veloping a new inner basin (200 million francs), and civil works to complete .,a-,e new petroleum port now in progress ,,,here Petrofina-Anglo-Iranian \'1ill set up a big refinery. The necessary funds would be raised mainly out of Port Administration revenues and/or the municipal budget (since the Oity of

Antwerp o~ns and manages the por~\ supplemented by State grants and credits. 3. Both the Bank and the non-Bank projects are additive to ordinary main­ tenance and repairs· at Port Administration expense out of internal revenues

plus extraordinary repairs of war-damage at State e~nse out of the State

budget. In 1949, e~g. ordinary maintenance will require 220 million francs, repair of war damage, 130 million francs. 4. The Bank is thus being asked to finance two-thirds of all planned investment other than maintenance and repairs through 1951; i.e. 1,600 million out of 2,4.50 million francs. These 1949-51 outlays w111 have to be - 20 - supplemented by 650 million francs more in 1952-54 to complete all the pro- jects now definitely booked. Vie",ed in this wider ~l"''Spect1ve, the loan request covers half the aggregate investment in the next 5 years to e~1'and, modernize, and improve Antwerpts port facilities.

Port of Antwerp Official Investment Program, except Ma1nteQaPce and R@pair§. 1949=1954. - million B. fr. Total Project 1942=1951 1949 1250 1951 1952 - 1954 For fin&ncing bX Bank Const~ction of new Krui sschans Lock 800 50 300 450 Replacement of hydraulic by electric cranes, ScheIdt docks 500 100 200 200 Replacement of hydraulic by electric cranes, inner basins 200 25 75 100 250 Purchase of new dredge lQ.Q. -,..JQ..1Q. - Total, above 1600 175 605 820 -250 For financing from non­ Bank sources· Purchase of land, new petroleum port 150 10 70 70 Construction of new basin 200 100 100 100 Reequipment of docks, Ransa Basin 250 50 100 100 Construction work, Scheidt docks .a2Q. ~ -Z1. 1S0 300 Total. above 850 85 345 420 400

GRAND TOTAL """24..:-5'-'=0'--__2=6o.;;;,.,_....,...... ,9~5.;:..0 _...,;l;:.o.2....,4Q ...... -_~6"-"5=O Ordinary maintenance and repairs n.a. (220) n.a. n.a. n.a. Repairs of w~ damages n.a. (130) n.a. n.a. n.a. 5. If additional funds can be raised, the port authorities intend to invest 5046 million francs in all from 1948 through 1953; or, excluding

1948 charges, 4733 million francs in the next five years. This is ",hat might be called the ultimate investment budget conditional on funds not yet in sight as well as funds definitely earmarked or requested. This budget - 21 -

is the sum of: (a) a 1948-53 investment budget as offioially worked up in Maroh 1948; (b) the oonstruotion of a duplioate Kruissohans Lock to cost 800 million francs as later proposed for IBRD and/or ECA financing. It stresses, apart from additional lock capacity, investment in oranes, re_ equipment of docks and locks, expansion of basins, berths and docks, con- struction of warehouses and sheds. Port of Antwern Ultimate Investment Program, 1948-1953. - million B. fro -

Project Total 1948 1949 1950 1951 1952 1953

Harbor expansion 665 100 115 150 100 100 100 Dock and wharf equipment 723 23 100 150 150 150 150 Locks 16 8 4 3 1 Loading bridge facilities 152 58 57 37 Sheds 174 25 28 31 30 30 30 Dock walls and piers 31 9 6 10 .; 0.2 0.2 Floating equipment 269 24 9 21 60 65 90 Petroleum installation 17 3 6 :3 :3 1 1 Electric illumination 22 10 4 4 :3 1 Crane tracks 6 2 1 1 1 1 Cranes 1181 4 81 120 280 280 416 Bridges and floating bridges 128 4 2 36 36 26 25 Mechanical and electri- cal installations 47 18 20 10 ..... Sanitary installations 11 5 4 2 '~arehouses and store- - houses' 554 0.5 23 65 65 200 200 Service buildings and workshops 31 8 15 6 2 0.3 0.2 Dry docks 73 10 22 10 10 10 10 Miscellaneous 12 1 3 :3 2 2 2 North Castle improvements 14 4 5 5 North ground improvements 121 4 10 32 25 25 26 Total, above eJ 4246 313 513 697 779 892 1051 Construotion of ne]J Kruisschans Lock b , 800 50 300 450 .,..

Total 5046 313 563 997 1229 892 1051 Official investment budget. pre-loan request. ~ Not included in pre-loan request budget. - 22 -

6. Although a dollar loan is requested, practically the entire amo~t would be expended in local currency. Belgium can and does manufacture all types of port equipment not only for her O~nl use but also for export. Bel­ gium is a big manufacturer of steel, cement, and other materials needed for civil works to improve and expand port facilities. All the construction labor for the Antwerp project. all the manpower to install the equipment will be Belgian •.

7. By expanding and reequipping the port of Antwerp, however, Eelgia~ would be investing to maintain and increase a major source of foreign ex­ change income. Antwerp's main function is to serve as the primary port of Belgium's foreign trade. It handles. year in and year out, close to 85% of all Belgium's ocean-borne imports and exports. Antwerp is also a great transit port for Northwest and Central Europe. primarily Western Germany,

~~t also France, Switzerland, Czechoslovakia, etc. Although Rotterdam is

Continental Europe's primary port for loading and discharging coal, ore, graint and other bulk cargo, Antwerp is Oontinental Eurone's primary port for loading and discharging liner freight of every kind. - 23 -

Ocean-borne cargo traffic through Ant",erp, Rotterdam, and HamJmrg. prewar and po~twN. - million cargo tons a year -

Measure 1937-38 1948

Inbound nlua outbound Rotterdam 42 12 15 Antwerp 24 22 21 Hamburg 25 6 8 Inbound only Rotterdam 25 9 10 Antwerp 12 16 14 ··~Ha.mburg 17 4 6 Outbound onlY Rotterdam 17 3 5 Antwerp 12 6 7 Hamburg 8 2 2

Tran~i t in=and.,..out Rotterdam 32 4 6 Antwerp 9 4 5 Bulk freight Rotterda:l 'S 8 10 Antwerp 9 9 9 Liner freight Rotterdam 7 4 5 Antwerp 15 13 12

8. Antwerp is thus a precious source of foreign exchange to the entire Belgian economy. The yield comes not only from the port dues paid by foreign ships but also from loading and ~loading charges,puTchases of fuel ~~d supplies, fees to :Belgian agents, dry-dock repairs, etc. (a) In 1948, judging by official estimates sent in to ECA, Belgium may have collected $90-100 million worth of foreign exchange on port account. The great bulk presumably came from Antwerp. (b) In 1949-50, according to National :Bank estimates, Belgium ex- - 24 -

pects to get $100 million worth of foreign exchange from port expenditure by foreign ships. Most of it is apt to be spent at Antwerp.

(c) Currently, according to deta~led estimates by the port author­

ities, Antwerpt s foreign exc~ange income totals $78 million a year, of ,·rh:1ch $41 million in pound starling, $21 million in Scandinavian currency, and $16 million in U. S. dOllars. Port dues proper bring in roughly $17 million a year; loading, discharging, and related accounts, $27 million; warehousing and kindred services, $34 million. 9. Reequipping the port of Antwerp for better cargo-working, prompter ship dispatch, and lower operating costs, seems to meet the rigid criteria of essentiality, productivity. and yield which ought to govern dollar loans for local currency investment. Antwerp:1s vital to the effective function­ ing of the entire Belgian eConomy as a main conduit of foreign trade and as a major source of foreign exchange. Viewed more broadly, the port is a basic transport facility for production and trade in the regional economy of Western Europe as a whole. Both as a Belgian and as a European port en- meshed in ,.,orld commerce, Antwerp competes vigorously ",i th Dutch ports such as Rotterdam and Amsterdam, ",1 th German ports such as Hamburg, Bremen, and Emden, "lith French ports suoh as Le Havre. Rouen, and Dunkirk. For certain purposes, it even competes with Mediterranean ports such'as Marseilles and Genoa; with Atlantic ports such as Bordeaux; with Baltio ports such as

Steczin, Gdynia. and Gdansk. ~o compete successfully, Antwerp h8$ to be

equipped to \'1ork at top efficiency. Only by ",orking at top efficiency,

thus retaining its status as the world's fastest port for loading and dis­ charging liner freight, can Antwerp realize all its natural advantages for

the benefit of Western Europe no less than that of Belgium; i.e. the co~

vergence of a network of waterwS¥s, rail lines, and highways ta.pping a great ... 25 -

industrial. agricultural. and commercial hinterland. 10. Investment to maintain and improve Antwerpts technical efficiency

is thus investment to maintain and improve the transport facilities of all

Western Europe. It may also be interpreted as investment to ~afeguard and strengthen a major source of Belgium's foreign exchange income. On either hypothesis, the funds would be well applied. The Nission is not here argUing that Antwerp alone ought to be equipped for efficient working. So too should every competing port on the North Seat the Atlantic, the Baltic, and the Mediterranean. Competition through technical efficiency is the best of all means to assure that Europe's ocean ports handle her foreign trade at minimum real costs.

11. Expansion of port capacity at Ant\lTerp is a doubtful venture "'hieb might preclude Bank financing for the present even if there were no question of dollar loans for local currency investment. It seems highly questionable to invest for increasing Antwerp's present facilities to service ships and work cargo since:

(A) The port is already seriously overequipped with excess capacity for existing traffic; e.g. unemployment of perhaps half the technical facili­ ties, of perhaps a third of the lahor force. (n) Antwerp may well have enough capacity to handle considerably more than the present traffic with a substantial margin of spare facilities and manpower; e.g., her prompt dispatch of ships at the peak of the great traffio rush in 1947.

(C) r~eb of the swollen traffic through Antwerp in the last few years

stems from extraordinary, no~recurring factors; above all, i.e., huge Euro­ pean relief imports of U. S.coal. grain, and other bulk cargo coinciding with the temporary paralysis, because of war damage, of much of Rotterdam's - 26 - capacity.

(n) A permanent ups"ling of Ant",erp traffic to prewar or higher is mainly contingent on broad, obscure issues such as a great, continuing re­ vival of German production and trade~ the willingness of the German economic authorities to channel the bulk of the Bi~onets foreign trade through Benelux ports instead of Hamburg, Bremen, and Emden; the easing of various foreign exchange strains which have been diverting French as well as German traffic away from Antwerp: and a II/ide revival of trade bet'l',een "'estern and Eastern Europe as bearing on Czechoslovak traffic particularly. 12. Half the loan request seems to be motivated by considerations of im­ proved technical efficiency such as might qualifY, at economic first sight, for prompt Bank financing, A large body of hydraulic cranes e~ong the ScheIdt docks and some of the inner basins are overage and obsolete, thus raising the costs to load, discharge, and tranship cargo. They need to be replaced over the next few years by electric cranes. The necessary replacements are esti­ mated at 400 million francs; 1.e. 300 million for cranes to equip the ScheIdt docks, 100 million for cranes to equip the inner basins. Since big civil works have to go forward at all times in a port the size of Ant1lTerp - current­ ly, e.g. construction of an entire petroleum ~ort - the purchase of a big new dredge, as proposed. might also be worthwhile as tending to reduce costs of construction, maintenance, and upkeep. Its purchase price is estimated as 100 million francs. 13. Half the loan request mSf well be motivated by purposes which the Bank could not now undertake to finance; i.e., expansion of capacity in the hope of s''lollen traffic ahead. Such seems to be the main idea .underlying the proposal to build a ne'f,'l maritime lock near the existing Krulsschans Lock. wh:).ch would double the latterts capacity for the passage of big freighters, tankers, and - 27 -

Rhine barges.

14. The Antwerp authorities have advanced several different arguments from time to time in support of the new lock. They have explained its necessity as arising, e.g. from: (a) The usefulness of a reserve lock if the present Kruisschans Lock should be damaged;

(b) The usefulness of a new, modern lock to speed the passage of bigger ships and barges;

(c) MulUpUed tanker traffic to follo'll1 completion of the ne,'IT re­ finery in the new petroleum port; (d) Congestion at the existing lock in the sense of batched ship arr!vale and ship departures owing to ScheIdt tides f 80 that overtime ,.,ages have to be paid to Antwerp dock workers. 15. It would take a thorough inquiry by expert port engineers to validate or invalidate the Antwerp brief in support of the new Kruisschans Lock. Pending such inquiry, there is good reason to suspect that expansion of capacity is the baeic end in mind. Like other port facilities at Antwerp, the Kruisschans Lock is currently working far below capacity. It worl~ed effiCiently without excessive delay or congestion, so far as the Mission can learn, when Antwerp was functioning as a great mil! tary base for the U. S. and U. K. Armies. It worked no less effiCiently with no more delay and con­ gestion at the 1946-47 peak of relief imports of U. s. bulk cargo" Although

Xruisschans is the only maritime lock through which big freighters, taru{ers t and barges can enter and leave the inner basins, Ant"lerp is now working close t( full prewar efficiency as the world's port of promptest dispatch for liner cargo, Despite potential port paralysis if the Kruisschans Lock should be seriOUsly damaged, the question arises whether 800 million f~ancs for a new - 28 - lock is too 'big a premium to pay for a risk '''hich has never yet materialized. 16. Since the exact purpose of the Kruisschans project is obscure in any

case, the Mission recommends that the Bank defer consideration until and ~ less there is a thorough analysis by competent engineers. It is not only the ~ission which doubts the economic plausibility of another big maritime lock for Ant"rerp. All the European transport eXpert s seem to agree that a second such lock is understandable only on premise of a great, permanent increase of Antwerp traffic; partly through a great revival of Bizone exports an4 imports; partly through implementation at long last of the abortive 1948 agreement on transit traffic between the Benelux ports and the Bizone author- ities; partly through an easing of the foreign exchange pressure to divert European traffic along the routes of least currency resistance; partly,as well, through the capture of traffic from Dutch and Frenc~ ports.

17~ ~cluding the Kruisschans project for the present, there remains

800 million francs 'I.'lorth of proposed investment \-lhich the Mission regard as qualifying ~rima facie for 1949-1951 realisation through a Bank loan.

There are the projects to replace r~draulic by electric cranes, and to buy a new dredge. Each, in the Mission's view. subject to engineering verifi- cation, is a project which aims mainly or entirely at better technical efficiency. Suggested minimum Bank financing of Port of Antwerp reeQuiwe;nt '. 1949-1951 • Project Total 1949 1950-51 Replacement of hYdraulic bI electric cranes ScheIdt docks 300 100 200 Inner basins J.OO -ZS. -25. Total t above 400 125 275 Purchase of new dredge 100 - 100 Total 500 -125 375

I. - 29 - APPENDIX C Port of Ghent Reequipment Project

1. The Belgian Government is asking the Bank to advance 753 million francs for various 1949-51 projects to improve, modernize, and expand the port of Ghent. About 40%, or 303 million, is for the purchase of cranes, loading bridges, and like facilities; partly to renew old equipment in the existing basins but mainly as added capacity to equip a new basin novlT under

construction. About 36%, or 270 million francs, is for ci~~l works to complete

that new basin as an additional big facility for 10adL~g and discharging bulk " cargo. The remainder, or 180 million francs, would be spread over a variety of equipment and civil works to improve the port's operational efficiency. Belgian loan request to modernize and e)..'"-pood the Port of Ghent, 19ti9~5l

~million B. fr.- Project 1949 1920 12$1 IQtal Cranes, loading bridges, and related equipment 37 127 139 303 Electric equipment, port lighting, transformer sub-station, cable 29 5 5 39 Construction and equipment of ware­ houses, sheds, and workshops 3 29 32 Reconstruction of wharves for me- chanical handling of cargo 14 18 12 44 Deepening present basins andwiden-· ,ing· their entries 24 28 12 64 Tanker ship for harbor water supply 1 1 Construction work to complete new Siffer Basin 30 120 120 270 Total 135 301 317 753

2. Over and above 753 million francs from the Bank for various 19u9-1951 projects, the Ghent port authorities mean to invest 530 milli.on francs out of in- - ]0 -

ternal revenues and/or the municipal budget supplemented by State grants and credits. Such non-Bank financing would concentrate on strengthening dock walls (215 million francs), expropriation of land to double the width of the Ship Canal between Ghent in Belgium and Terneuzen in the Netherlands (200 million francs), and ordinary maintenance, repairs, and renewals (120 million franr.::s). Port of Ghent's planned investment from non-Bank sources, . . t9U9 ...1951·· .

- million B. fr - Project 1949 1950 1951 Total

Strengthenin~ dock walls Port Arthur 20 120 60 200 Timber dock 5 5 5 15 Expropriation of land to Widen Ship Canal 100 100 200 Maintenance, repairs, and renewals 20 50 .50 120 Total 45 275 215 535

3. The loan request thus contemplates that the Bank shall finance about three-fifths of all planned investment through 1951; i.e. 753 million out of 1288 million francs as follows:

Total inves~ment program, 1949-1951

Year Loan Request Other Financing Total 1949 135 45 180 1950 301 275 576 1951 317 215 --532 Total 753 535 1288 - 31 -

4. Having invested 1288 million francs through 1951, the Ghent port authorities mean to invest at least 1150 million francs more (apart from maintenance, repairs, and renewals) in three years thereafter. The bulk, or 900 million francs, would be concentrated on the Ship Canal; i.e. 600 million francs for civil works to double its width, 300 million francs for further ex- propriation of lIw3d.. The remainder, or 340 million francs, would be used for further reconstruction of dock walls and wharves (150 million francs), further reequipment of warehouses, sheds, repair sheds (60 million), and further civil works on the new Siffer Basin (30 million). 5. Through 1954, the Ghent authorities are thus planning to invest about 2570 million francs, of which 30%, or 753 million from a Bank loan for 1949-51 projects only. Aggregate investment program, port of Ghent, '1949-1954 - million B. fr. - Project 1949-51 1952-54 Total Bank financinl} Cranes, loading bridges 303 303 Civil works, Siffer Basin 270 270 All other civil works 108 108 All other equipment 72 - 72 Total above ill - 7>3 Non-Bank Financing Widening Ship Canal 200 900 1100 Reconstruction, docks walls and wharves 215 150 36$ Maintenance, repairs, and renewals 120 142!y 262 Warehouses, sheds, repair shops 60 60 Civil works, Siffer Basin 30 30 Total, above -)J> 1282 1817 Grand Total 1288 1152 2570 !I Rough estimate to fill gap in official schedule. , , - 32 -

6. Improved efficiency and capacity expansion. are the mixed motives behind the Ghent investment program. They stem partly from a desire to maintain existing traffic, partly from a hope of developing new traffic., They have to be under­ stood against a broad background as follows: (a) Ghent's specialization as a port for bulk cargo such as coal, ore, pyrites, steel, fibers, fertilizer, heavy chemicals, building materials, etc. (b) Ghent's multiple functions as a local port for a heavily-industrialized area, as a trans-shipment port for Belgian internal and foreign trade, as a trans­ shipment port for transit traffic on account of Northern France and 'ifestern

Germany. (c) Ghent's total dependence as an ocean port on her Ship Canal across Dutch as well as Belgian territory joining the Western Sche1dt at Terneuzen in t\le Netherlands. 7. Ghent's specialization on bulk cargo calls for mechanized, electrified loading and discharging equipment; for appropriate warehouses and sheds; for docks and wharves, basins and entries fit to service big ships and barges. All of these have to be efficient, well-maintained, low-cost facilities. Othervnse, the heavily industrialized area in and near Ghent and along the Ship Canal would incur excessive transport charges, much of the internal and foreign trade of Belgium would be hauled less efficiently, and a sizable tonnage of European transit traffic would be diverted to other more costly routes. Commercially, also, the port of Ghent might tend to lose a large fraction of both her PIT and ocean traffic to competing ports inside and outside Belgium working at better efficiency.

S. Certain specific circumstances of Ghent's industrial hinterland have long brought the port under acute pressure to safeguard, strengthen, and vaden - JJ -

her normal sources of traffic by modern, efficient facilities which can work

cargo and service ships at low cost. Since Ghent:r..;DJ'ldle~bllk freight for heavy industries mainly, traffic is subject to wide cyclical fluctuations. Since textile manufacturing, coal mining, and certain other stagnant industries comprise much of Ghent's industrial clientele, traffic is subject to structural compression. Since French and German transit traffic bulks large in Ghent's normal workload, traffic has been exceptionally hard-hit by the currency maladjustments of the past few years. Cargo traffic through Ghent, selected years - 000 cargo tons - Period Inbound Outbound 'fotal 1925 2692 1803 4495 1929 5919 2778 8696 1930 6879 3061 9940 1933 3768 2102 5870 1934 3715 2325 6039 1937 5463 3355 8818 1938 4323 2571 6894 1946 1914 423 2236 1947 2820 1221 4041

9. The Ghent authorities are intent to multiply the portts traffic potential through a program, with the support of the Belgian Government, to double the width of the present Ship Canal to Terneuzen and to build a new, modern lock at Terneuzen as a replacement for the old, obsolete facility now in service. The - 34 - program requires joint Benelux action, i.e. formal approval by the Dutch as well as the Belgian Governments, and joint Benelux financing, i.e. defL~ite budget commitments by the Belgian Treasury, by the Dutch TreasUFff, and by the munici­ pality of Ghent. Its realization is expected to stimulate the grovrth of a new industrial area along the right bank of the Ship Canal, now an agricultural region. Contingent on doubling the 1lddth of the canal and installing a new lock, various industrial enterprises (e.g. iron and steel plants, chemical works) are reported to be planning to build new factories along the right bank. 10. The bulk of the Ghent investment program through 1954 directly or in­ directly assumes realization of the Ship Canal - Terneuzen Lock project. j;x­ plicitly, 1100 million francs out of 2570 million have been earmarked out of port revenues, the municipal budget and State financing to expropriate the necessary land and to realize the necessary civil ljlTorks. Implicitly, the bulk of 300 million francs for civil works to complete the nevi/' Siffer ::)asin might be regarded as investment in added port capacity to accommodate a heavier workload foreseen to develop later on from a nmv industrial complex, not yet started, along the Ship Canal. Implicitly, again, much of )00 million francs for cranes, loading bridges, and kindred facilities is to equip the Siffer Basin for the eventual job ahead if traffic does double with doubling the vddth of the canal. 11. Considering the obscure, uncertain outlook for multiplied traffic through Ghent as contingent on prompt, full realization of the Ship Canal -

Terneuzen Lock project, the ~lission believes that the Bank might bewell adv.ised to refrain for the present from undertaking to finance civil works for the new Siffer Basin, or cranes, loading bridges, and other facilities to equip it. Later, perhaps, it might be plausible to envisage Bank financing; if, as and - 35 - when, i.e., widening the canal and building the new lock become firm, binding commitments of both the Belgian and Dutch Governments. 12. Apart from expansion of capacity as implicit in the Siffer Basin and its equipment, the loan request aims mainly at higher technical efficiency, prompter ship dispatch, faster cargo-worldng, lower costs for ships and their freight. These are essential, urgent purposes in view of Ghent's specific setup, functions, and problems. They may reasonably be deemed to justify a dollar loan for local currency investment considering the usefulness of the port of Ghent to local industries, to Belgian economy, and to European transit traffic. 13. Subject to engineering verification, the Mission believes that the Bank might justifiably finance renewals of cranes, floating cranes, and loading bridges; improved warehouses, sheds, and wharves; deeper basins and wider entries; trans­ former sub-stations; better lighting; a repair shop for cranes; a tanker ship for water supply_ The recommended projects total 223 million francs. They eannot be compressed further, the 1iiission believes, if the Bank is 1J\r111ing to lend at all for improved efficiency alone. - 36 -

Sugsested minimum Bank financing of Ghent requirement, 1949-1951 - Billion B. fr. -

Project 1949 1950/51 Total Cranes for existing docks 8 8 New floating cranes 15 15 Loading bridges for f;txisting docks 48 48

Deepening present b~sins 24 16 40 Warehouses and sheds, Port Arthur 29 29

Sub-station for transforming current 11 11

Reservoir tanks for water supply 1 1 Renewal of underground cables, Port Arthur 2 2 Enlarging entry, Port Arthur 24 24

Repair shop for cranes 3 3 Port lighting 10 10 Repaving wharves -14 18 ...E Total 60 163 223 - 37 -

Port of Brus~els Reeguipment Project

1. The Belgian Government is asking the Bank to advance 242 million francs for certain civil works and equipment to modernize, improve and slightly expand, 1949-1951, the port facilities of Brussels. About 93 million francs is to buy cranes and accessories; ie: for crane renewals in the Vergote Basin servicing canal barges and for added cranes in the Outer Port servicing ocean ships and Rhine barges. About 60 million francs is to reshape the existing rail linkage between the Outer Port and the Schaerbeck Yards of the SNCB. The remainder, or 89 million francs, is mainly for warehouse construction in the Vergote Basin, electrification of locks along the }laritime Canal, and the purchase of Diesel-tugs to replace steam tugs.

Loan request to reequip port of ,Brussels 1949-1951

- million B. fro -

Project 1949 1950 1951 Total

Purchase of cranes and accessories 48 22 23 93 Civil works to correct layout of rail linkage 60 60 Diesel tugs to replace steam tugs 6 12 5 23 ~'!arehouse, Vergote Basin 10 10 20 Electrification of locks, Maritime canal 19 19 Hisce1laneous equipment ... 27 27

Total 54 150 38 242 - ,38 -

2. The loan request is half of a 1949-51 investment program totalling 495 million francs apart from ordinary maintenance and repairs. Most of the non-Bank investment, aggregating 243 million francs, would be at state expense, out of the State budget, for equipment and civil Harks to repair war damages. A small remainder, or 9 million francs, would be at Port Authority expense out of port revenues for the purchase of miscellaneous equipment. Port of Brussels investment program except, ordinary main­ tenance ~nd repairs, 1949-19~1 - million B. fro -

Project 1949 1950 1951 Total

For Bank Financing

Equipment 54 90 38 182 Civil works -- --60 -- 60 Total 54 150 38 242 For State Fipancing

Equipment 16 8 24 Civil works 28 103 88 219 Total 28 119 96 243 For Port Authority Financing

Equipment ~ - - .....2 -2 TOTAL 85 269 140 494

3. The 1949-51 program is part of a wider plan to expend 692 million francs on civil works and equipment through late 1954. Most of the post-1951 investment would be state-financed (134 million francs); the balance at Port Authority expense (64 million). The Bank is thus meant - 39 - to assume 35% of the total investment load through 1954 to reequip the port of Brussels.

Port of Brussels investment prQgram except ordinary repair§ and maiptenance '1949-1954 - million B. fr. -

Project 1949-51 1952-54 Total • For Bank financing 242 242 For State financing 243 134 377 For Port Authority financing -2 --Yz _71. Total 294 198 692

4. Improved efficiency is the primary motive of the loan request sep- arately, of the investment program as a whole. A. The bulk of the loan request is concerned ,.,i th renewals and modernization for lower workings costs. New cranes are needed, e.g. to replace overage, obsolete units in the Vergote Basin and to shorten the working radius of existing cranes in the Outer Port. Certain locks along the Haritime Canal linking Brussels with the ScheIdt need to be electrified to speed the passage of ocean freighters and big barges. The existing rail linkage between the Outer Port and the Schaerbeek yards needs to be reshaped to forestall imminent traffic congestion and to avert a serious traffic hazard. The old steam tugs nm{ in service need to be replaced by new Diesel tugs for more effective haulage at cheaper cost. B. The state fraction of the investment budget is concerned pre- dominantly with the repair of war damages. Certain bridges and locks ... 40-

remain to be re buil t f:or permanent service. Various arrears of mainten­ ance remain to be made good. 5. The port of Brussels performs highly essential functions. It is not only a huge inland port, thanks to the convergence of a dense network of TIlT routes, but also a sizeable oogan portt thanks to its location on a t1aritime Canal to the ScheIdt. It is not only an industrial port for many plants and works along its basins and banks, but also a public port for the Brussels industrial complex mainly. Its chief job is working bulk cargo for the heavily industrialized area in and around Brussels, on or near the various basins, along the Maritime Canal. Its other big job is to trans-ship a sizeable tonnage of inland freight (e.g. to and from Charleroi) Belgian imports and exports, and some international transit cargo as well. 6. The port of Brussels is a vital transport facility for a major, growing industrial area; i.e. the Brussels complex. Most of the work load is solid fuel, building materials, heavy chemicals, industrial oils, etc. to and from local installations. Thanks to the continuing growth of the immediate economic hinterland, traffic has been growing wi thout break or pause except as interrupted by \.lorld viars and their

aftermath. It expanded steadily during the inter-war period, e.g. from roughly 2.5 million cargo tons in 1925 to roughly 3.5 million in 1929, roughly 7.8 million in 1937. It is currently only 6.2 million cargo tons a year but would be much higher except for war damages, not yet repaired, which blocked the full use of the r1aritime Canal by ocean freighters and big barges. - 41 -

Comparison of pre-war and pos~war traffic through port of ::Brussels " million cargo tons -

Pre-war Post.,.war Measure 1'2 7 I 19J? 1938 i; 4 4 194ft Loadings and discharges 5.9 4.9 4.0 4.3 Freight in transit 1·9 1.. 6 1.8 1.9 Total 7.8 6.j 5.8 6.2 Hauled by inland barges 6.9 5.9 5.7 6.1 Hauled by ocean ships 0.9 0.6 0.1 0.1

7. Investment to modernize and ~mprove the port of ::Brussels is thus essentially investment in better, cheaper transport for the basic industries of a big, flourishing industrial complex. Good. cheap transport is one of the primary factors underlying the steaqyexpansion of the Brussels industrial area to date, It is also a necessary condition for the proper functioning and further growth of the area. In this sense, Bank financing to re-equip the port of ::Brussels wou~d be essential and productive onough to justify dollar loans for local currency investment promising little or no foreign exchange yield. 8. CommerCially, the port of Brussels is under more direct pressure to operate at low costs than any other Belgian port. Where the ports of both Antwerp and Ghent. e.g. are oi'lned and managed by the muniOipal administration, that of Brussels is owned and managed by an autonomous public corporation, S.A. du Canal at des Installations ?IIari times de ]rllXelles.

Although the shares are held by the State, the city of Brussels, the province of Brabant, and various municipalities, th~ Port Authority is finanCially all on its O\'1n. It has to tun its affairs on strict profit-and...... 42 ..

loss principles w1th~t ~bsidies of any kind. It rannot regain its pre­ war status &s a highly flourishing. highly solvent enterprise rendering a

ba.sic public service at lo~" cost unless both the port and the Ylari time Canal are re-equiped as first-rate, modern facilities. 9. Despite the appeal of the Brussels re-equipment project as a whole, certain phases might well be excluded from immediate consideratlonforBank

financing. Originally, the port authorities them~elves asked the Bank to advance only 127 million francs for 1949-59 alone. This request,was later

amplified to 242 million francs on 1949-51, the pr~sent proposal, by the

Ministry of Economic ~oordination and Re-equipment. There is reason

to believe that th~ expanded official request stems from budgetary

considerations wh~re tbe smaller original request expresses project urgency for the most part.

VIII. The Mission believes that the most urgent, most essential needs of modernization are those set forth in the Port Authority1 s own proposals plus the replacement of steam by diesel tugs as in the official requesto Together, these projects aggregate 152 million francs, The Mission regards them. subject to engineering verifioation, as aiming at higher efficiency alone. They are here recommended, therefore, as an irreducible minimum

for jUstifiable 1949-1951 financing by the ]auk.

Suggested J)liin1l1lWl1 :Bank Fina.ncing of Port of :Brussels re-equlpment, 1949.. 1951

- million :B. fr. ~

W:CS;. Cit 'i... :,¥ w¥ * := Wi Mew, ••' _ H. • ... I I i . PrO,ject Total 1249 1950£21 New cranes 48 24 24 Modernization of cranes 5 5 Electrification of locks , Construction of rail viaduct ~6 ...- kg Diesel-tugs 18. 6 12 Transformer for sub-station 1 1 Feed cable for power supply 0.5 0.5 ... Machine tools for repair shop o. O!j .,.. Total 7 1