FILZCQI Z-4 Public Disclosure Authorized

This report is restricted to use within the Bank.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized

SYRIA Public Disclosure Authorized REPORT OF THE TECHNICAL MISSION ON THE PROPOSAL

FOR A RAILWAY LINK BETWEEN AND

May 1953 Public Disclosure Authorized

Department of Technical Operations REPORTOF THE TECHNICIL iJISSION ON THE PROPOSALFOR

A RAILAY LINK BEDT`3INALEPPO AND IATAKiA

I. Sumary and Conclusions

1. The Lissionts analysis of the project for a raili.-1aybetween Aleppo and Latakia disclosesthat:

(a) If the Syrian Governme.nit acts promptly and vigorously to promote agricultural development in the Jezirah and provinces, the total volume of traffic, both imports and exports, bet-ween Aleppo and Latakia may reaoh about 860,ooo tons in 1960.

(b) If a railway is not constructed,widening and some realign- ment of the existing asphalt road between Aleppo and Latakia will be desirable wtithincreasing traffic.

(c) About 60%! of the traffic on the rail line is cs+;imated in the period July-October with 25% in tne peak month of August. About 90% of the traffic -would move from Aleppo to Latakia.

(d) In order to capture sufficienit traffic, rail freight rates would probably have to be below operating costs for trucks. b'reight rates of S 7.75per ton for cereals and WS 10*00 per ton foa other goods, beihg lese than 70,% of current truek rates, would probably achieve this purpose.

(e) The project appears to be technically feasible, although 81 km. of the proposed total line of 186 km passes through difficult terrain.

(f) The total investmentrequired in constructionand equipment is estimated at S 113.8 million, including a foreign exchange requirement equivalentto LS 81.0 million.

(g) Estimated operating costs assume sound managementand opera- tion of the railway. The types of material and equipment vwhichare con- sidered would minimize operating costs. Lost of the traffic would be car- load freight and this would also help to keep costs down. Because of the seasonalityof traffic, a large part of tlheequipment would be unavoidably idle during nine months of the year.

(h) Annual revenue is calculatedto amount to about ES 8 million on the basis of traffic which might be reached in 1960.

(i) The estimated net return on the total investmentafter depreciationbut before financial charges, amounts to 5.1%,w..hich is con- sidered quite low for capital investmentin .

2. The principalconclusions of the mission are as follows:

(a) The justificationof a rail line between Aleppo and Latakia depends upon a substantialincrease in agriculturalproduction in northern Syria. This il"l require an agressive policy on the part of the government in the establishmentof a permanent system of settlementand cultivationof the area. (b) The rail line should not be considered as a necessity for handling the future traffic betwreen Aleppo and Latakia, but rather as an alternativeto road transportwhich can be provided vritha low-Tertotal investmentbut with higher operatingcosts,

(c) The highly seasonal nature of the traffic on the proposed line is detrimentalto efficientoperation. Assuming this situationto continue,a substantialinvestment in storage facilitiesvill be required for the effectivehandling of the estimatedtraffic.

II. Purpose and Scope of This Report

3. A llssion consisting of Lessrs. P.F. Craig-Martin(Agricultural Economist), C. Blac1man (Railroad Consultant), and T. Finsaas (Transport Economist),conducted 2ts investigationsin Syria between November 24 and December 14, 1952.

4. The terms of reference of the lission included a preliminary investigation of the merits of a project for a railway betwieen Latakia and Aleppo, to assist the Syrian Government in deciding whether or not to pro- ceed vritha detailed engineering survey oi the project.

5. The Mission ocnsidered that the projectcould be examined in correct perspective only against the background of the agriculturaland transport development of northern Sy-ria as a whole. For this reason, the Mission made extensivefield trios by car, rail and air throughout the provinces of LatakiaiAleppo, Euphrates and Jezirah.

ITI. History of the Project

6. In 1947, Sir Alexander Gibb and Partners of London recomaitended that:

I"Vhilst we do not consider that the Aleppo-Latalvia railway should be constracted at an early date, we believe that it will be an economic need as the Northern regions develop, and that therefore, surveys and detailed investigations should be made for its alignment and design. If the Government s1dould decide to construct a deep wTater port at Litakia we should recommend that these investigations be carried out at once."

The Syrian Government is at present proceeding with the development of the port of Latakia.

7. In 1949, Dr. Teissel, Professorof Engineeringat the University of Syria, examined the technicalaspects of the project at the request of the Government, No engineering survey was made but a proposed route was traced out on a map of 1:60,000 with contours at 10 meters and presented with his report.

8. Since no engineering survey of the route to be traversed by the proposed railwiay wzas possible during the short stay of the Mission in Syria, -3 - the route and technical recommendationspresented in Dr. iWeissel'sreport have been used as the starting point for the detailed examinationof the technical aspects of the project.

IV. The Current and Future Volume of Traffic

a) The service area of the railway line

9. The four provinces of Latakia, Aleppo, Euphrates and Jezlrah should be considered together in making an appraisal of the proposed railway between Aleppo and Latakia. The reason for this is that almost all of the produce of the Jezirah and the Euphratesmoves to the city of Aleppo for further distribution, wrihile the produce of the two other provinces makes use of the transportfacilities betvween the two cities.

10. Central and southern Syria are largely self-sufficient, altlhough they have only 30% of the cultivatedarea and 42% of the population. Thus about 70% of the cultivated area of Syria is located in the four northern provinces,wihere production is concentratedon basic foods and export crops. Prospectsfor increasing agriculturalproduction in the center and south are much more limited than in the north, so that any appreciableincrease in the volume of agriculturalexports must come from the four northern provinces. All sea-borne exports from these provinces are at present shipped through the port of Latakia. Latakia is also the natural inlet for their sea-borne imports.

b) The present volumieof traffic between AlepDo and Latakia

11. The volume of traffic through the port of Latakia has been steadily increasing over the last few years, from negligible amounts in the imaediate postwar years to some 251,000 tons in 1951.

12. Statistics for the first ten months of 1952 indicate that traffic was probably close to 435,000 tons for the vrholeyear, i.e. 260,000 tons of exports and 175,000 tons of imports. More than 220,000 tons of the exports (85%) and more than 105,000 tons of the imports (60%) were hauled by truck over the Aleppo-Latakiaroad, Aleppo city being the main trading center for both exports and imports. The rest of the Latakia traffic, i.e. some 40,000 tons of exports and some 70,000 tons of imports, followvfedthe coastal road to the south with and as main terminal centers.

13. Cereals and cotton formed the main part of the exports. Imports were very mixed, the main items being iron and steel, timber and cement.

c) The probable volume of traffic in 1960

14. A sizeableincrease in exports, almost entirely of agricultural products,may occur from northern Syria. Additional productionmay be obtained from improved farming methods and from new land brought under cul- tivation. Irrigation schemes are at present being executed or planned. O- 4 -

15. kost of the increase in productionwould come fron the Jezirah and Euphrates, and these supplieswould account for the bullkof the pros- pective growth in traffic over the Aleppo-Latakiaroute and thlroughthe port of Latakia. Realizing this, the Mission studied particularlythe future prospects for agriculturalproduction and trade in those provinces,

16. No very large increase in the cultivated area can be expected. Extension of the d^Vrfarmed area in the Jezirah can only bring into pro- duction land where rainfall is often inadequate and the soil is relatively poor; any large increase in the irrigated area will depend on the develop- ment of gravity irrigation. In the Euphrates the area under cultivation can be expanded orly by extension of irrigation. Increased mechanical irrigation on the Euphrates is unlikely to add more than 50,000 hectares. If the full use of the waters of the river could be obtained for gravity irrigationsome 500,000 hectares producing some 775,000 tons of crops might be added to the cultivatedarea; thiis,if possible,wrould require heavy investment.

17. On the other hand, the productivityof farmed land in the Jezirah could be greatly increasedand for this the necessary governmentinvestment would be relativelysmall but initiativeand organizationwfould be required. The speculator-farmerhas been responsiblefor the recent rapid expansion of this cultivatedarea but opportunitiesfor further speculativeexpansion are now much more lim.ited. The establishmentof permanent and more diversi- fied agricultureis needed for further development,and some medium and long term private investmentby farmers will be required.

18. Uncertain land titles not only provide no inducement for such investmentbut also make credit difficult to obtain, even at interest rates betw-een 20% and 60O. Even if conditions for permanent agriculture existed, there is very little practical experience of suitable farm organization or techniques. L;uchof the machinery used is not the most suitable or economi- cal. Empty canals can be seen leading from misplaced pumps. Cotton seed often fails to germinatebecause of incorrectplanting methods and faulty irrigation. Indeed it seems probable that climatic conditionsin the Jezirah are not really suitable for cotton, and substitutecrops must be founid. Plantationsof trees for fruit, fuel, and for building should be profitable, Fundamentalagricul- tural research and experimentationare required. The extensiveuse of an early maturing variety of wheat would save losses of 25% to 35% in most years. Productiveuse of the large fallow area could be made through fodder crops for livestock.

19-. ljostof these problems are capable of solution in timae. Firstly, confirmationof title to land should be accelerated. Secondly, farm work should be organizedin economic units through cooperatives,machinery pools or other means. Thirdly, an agricultural station to study the complex problems of farming in the Jezirah ne4e~s to be established. Fourthly, a simple local plant for removing weed seed_l and for handling grain in bulk needs to be established. Finally, a good road between Quamichliye,Hassetche, Point 47 and should be constructed. This would requirea sizeable investment.

1/ Possibly 5% of the volume of "cereals" transported at present. - 5 -

20. Should action be taken along these lines the production of the Jezirah would be increased greatly. Some of these measures wrilltake many years to bear frult, and prompt action will be required if there is to be a considerable increase in production by 1960. The prospects may be summarizedas follows:

EstimatedAgricultural Production and Trade of the Four Northern Provincesin 1960 (thousandtons)

Jezirah Aleppo and and Euphrates Latakia

-Current productiona) 675 825 -Estimated increase 235 70 -Estimated production 910 895 -Local utilization 200 8 9 5 b) -Local trade 710 $ 7100) -Foreign exports: X.ebanon 120 Other 590

a) On basis 1952 area and normal yields in good years. b) Includes quantities for central and southern Syria. c) From Jezirah and Euphrates.

21. It should be emphasizedthat unless prompt and vigorous action is taken to foster conditionsfor improved agriculturalpractices in this area the foregoing estimate of production will not be reached oy 1960.

22. If no action is taken and at the same time prices for wheat and cotton should decline, productionmay not increase but actually decrease. Successive booms in rice, wheat and cotton have brought about the recent increase in the cultivated area through the speculatorfarmer, with no greater tie to the land than his trac4or or pump provides. To maintain his interest while conditions for permanentagriculture are established,high returns on his oapital investmentare required. Costs of productionand marketingmust be reducedwhile yields are increased.

23. If these conditionsare met, the probable volume of agricultural products requiringtransport to the city of Aleppo in 1960 will be around 710,000 tons and a similar amount will move to export points. In addition to these crop products, 20,000 tons of livestock products,mainly wtooland skins, should become availablefor export. If allowranceis made for the requirementsof the being e)ported over land, the quantity available for export from Aleppo through the port of Latakia would amount to around 610,000 tons by 1960, made up as follows: -6-

thousand tons

-Cereals 380 -Cotton, ginned 37 -Cotton cake 28 -iviiscellaneous crops 145 -Livestock products 20 61o

24. An export volume of 610,000 tons in 1960 will require considerable efforts to attain but by no means represents the maximumthat can be envisaged in the more distant future. A sizeable increase in imports may also be expected.

25. The population of the four provinces in 1960 may be put at 2.4 million, an increaseof approxiaately20% over the present population. The town of Aleppo is a rapidly expanding center of trade and processing for agricultural produce. The town of Quamichliyeand others in the Jezirah should also grow. Local consumption vill tend to increase. The import of agriculturalmachinery and other equipment and of building materials such as iron and steel is also likely to expand. 26. At present more than 100,000 tons a year of imports follow the Latakia-Aloppo route. The idissionconsiders that an increase in these imports through Latakia to 250,000 tons in 1960 should be a fairly conservative estimate.

27. Assuming these estimates of imports and exports and disregarding local traffic, the total volume of traffic moving between aleppo and Latakia would be as follovis;

Tons

-E.ports 610,000 -Imports 250,000

Total 86o,ooo

28. It may be assumed that the main part of tne cereals (approdmately 380,000 tons) wvrill be exported during July-October, with the peak in August, vihereas the rest of the exports and imports will move in equal quantities throughout the year. The following figures indicate seasonal variations in the estimated1960 traffic: -7-

(thousandtons)

January- November- June* July August September October December*

-Cereals 19 171 114 38 19 -Cotton, livestock products and mis- cellaneous 20 20 20 20 20 15

Total exports 20 39 191 134 58 34 Total imports 20 20 20 20 20 25

Total traffic 40 59 211 154 78 59

*Monthly average

V. TechnicalAspects of the Project

a) The route and terrain

29. The route proposed by Dr. ;eissel is probably the best one available. It leaves the D.H.P. railway line at Oudeih, 14 ku. south of Aleppo, runs west- ward to the Roudj Valley, then due south to avoid the hills between the Roudj and the Orontes River. It then crosses the mountains between the Orontes and Latakia by going up the valley of the Nehr-el-Abiadand doan the Nahr Kebir. This last stretch, traversing a very difficult mountain range, will require careful study and surveying in the field to select the best possible route.

30. Dr. Weissel used a maximum grade of 1% in each direction, but showed an alternateline using a 2% grade opposed to eastbound traffic. He did not attempt to show the cut and fill that would be necessaryo

31. In an effort to improve the proposed alignment, an alternative alignment has been worked out, together vwth a profile based on using a 1% grade opposed to westbound and 1.15% opposed to eastbound traffic, both not compensatedfor curvature. The grades used would probably be equivalentto about 1.1% and 1.25%o w.henthe resistancedue to curvature is taken into con- sideration. This difference in rate of grade should be justified by the differencein traffic in each direction. It is agreed with Dr. W[eisselthat a grade of as much as 2% should not be considered.

32. The suggested alignment enables a shortening of the line from 203 km. to about 186 km. of new construction, without increasing the total length of tunnels. F-urther study should improve the line in the vicinity of the junction of the Oudi Iafchoun with the Nahr Zeiniye.

b) Rail and ties

33. The D.H.P. line from Aleppo to Homs and the Lebanon is laid with 60 lb. rail and the Baghdad line from Aleppo to the Jezirah and Baghdad with 75 lb. rail. Dr. .eiseel proposed 90 lb rail for the Aleppo-Latakia line. - 8 -

Considering that a relatively small increase in the construction costs would enable considerablesavings in maintenanceto be made, the use of 115 lb. rail, similar to the rail dimension on the AaiericanRailvvay EngineeringAssociation 115 lb. section, has been assumed for estimatingpurposes.

34. The experience with wooden cross-tiesor sleepers is stated to be most unsatisfactory in Syria, and steel ties are generally used. The cost estimate of this report is based on the use of steel ties, although the new line could be laid with 6 "x8'iW 6 $'(15m x 20 cm. x 2. 6 m) pressure creosoted oak or black gum ties at a saving of approximately 1S 11 million or 1O5 of the total investment.

c) Stations

35. Passenger traffic and small parcel freight business is generally found unprofitable. This would no doubt apply also in the case of a new railway line. An effort should be made to avoid this unprofitable business as far as possible, and leave this type of traffic to highway transportation. Freight trains should be operated in both directions between Aleppo and Latakia wi-thout a stop except in the vicinity of Zier-ech-Chourhour (Ghab Valley) and possibly at some point in the Roudj Valley, but only to pick up cars that have been loaded by the shipper. Elaborate station buildingsshould be avoided.

d) Passenger equipment

36. At present most passengers on the D.H.P. line between Aleppo, Homrsand are carried in dieeel cars. This is a popular and fairly efficient service, although the cars are 17 years old and need replacement.

37. Two diesel cars, similar to the R.D.I. type of the Budd !iWanu- facturingCo., U.S.A., should be used on the Aleppo-Latakialine, provided that operationof such cars with a crew of two men only is practicableunder current labor union agreemerts (i.e. one driver and one comb_ned conductor and ticket collector). One of the cars should be held in reserve, or coupled to the ot%hercar for dual operationin periods of heavy business. Based on two round trips per day between the two terminalsand on handling of one-class passengers only, such operationsshould return aDproximately30% on the cost of the two cars. This revenue is relatively small compared to the revenuaes from freight haulage. No other passenger service should be considered,and only the most inexpensivestation facilities should be furnished. This profit should of course be reduced by a proper share of overhead expense and roadway maintenancecost and supervisoryand agency expense, all of which have been charged entirely to the freight traffic.

e) Freight equipment

38. The proposed railway should be equippedwith diesel-electric locomotives. The experience of the last few years is that such locomotives offer great advantages over steam locomotives. Purchasesof the latter type have been practicallydiscontinued in some countries,and those in service-- some of them almost new--are rapidly being discarded, e.g. during 1951 the Class I railroads in the U.S.A.placed 3,446 new diesel units in service and -. 9 "

discarded3,893 steam locomotives. The diesel is considerablymore economical in operation,in maintenanceand in the consumptionof fuel and water than the steam locomotive. Loreover, if the workload is too heavy for one locomotive unit, additional units can be added without increasingthe number of employees on the train.

39. Seven 1,500 H.P. general purpose diesel locomotiveunits will be required to cover all operations includingswitching. One type will also minimize maintenanceproblems and the stocking of spares.

4o. In order to reduce the haulage of deadweighttonnage, 4-axle, fifty-toncapacity cars similar to the U.S. type, are assumed instead of the 2-axle, fifteen-toncapacity cars now in use in Syria. If the shipments offeredare less than 50 tons per lot, two or more shipmentscan be placed in one car, or the car can go lightly loaded. 6hen the cars must move over other lines where lower load limits are required, the loads of the cars Gan be restricted accordingly. On the Northern line the useful loading would be restricted to 48 tons and on the D.H.P. to 34 tons. All these are common practices in the U.S.A. where through them considerablesavings in opera- tional costs have been achieved.

41. The cars should be equippedwifth coupling devices which can be coupledwith cars now in use in the area. They should also be fitted with air brakes. Vihen used with non-air brake cars, these would be placed ir the rear and air brake cars next to the locomotive.

42. Grain haulage would form a great part of the traffic on the new line and should be based on bulk handling. The railroad cars used for this purpose miay be either box cars or covered hopper cars from which the grain wiould be dumped to conveyors.

f) Overhead, maintenance, and depreciation

43. The government-owned Nlorthern Railways system has established offices and management forces at Aleppo and for the purpose of this study, it is assumed that it should be able to take over the additionaloperations without increase in personnel other than accountingforce.

L4. The management of the North has 687 men exclusive of shop forces for 263 kmn.of line, as against the D.H.P. in Syria of 585 men for 307 km. of line. They would probably charge a proportion of their General Administration expenses (which amounted to LS 296.219 in 1951) in proportion to length of line, and in addition a proportion of maintenance and deprecia- tion on general offices, stores, and shop buildings. The allo-ance for Genera1 Administration included in Operating Expenses (Appendix A) isconsidered suf- ficient. This would beco=e a credit to the present operating cost of the North Syrian Railways.

45. There are suitable workshop buildings at Aleppo for maintenance of equipment. However, some modern machinery and additional labor would be required. In the estimate for operational costs, allowance for maintenance of equipmenthas been made in line with actual costs in the U.S.A. - 10

46. Depreciationis figuredon all items in accordancewith U.S4 InterstateCommerce Commission rates and practices. The I.C.C. does not require depreciation on track, as it is assumed that parts vwill be renewed as needed and the cost charged to maintenance. The maintenance figures in this estimate are high enough to cover renewal as needed.

g) Transportation

47. It is assumedthat grainvwll move in bulk from storage elevators in Aleppoto elevatorat the dock at Latakiain fully loadedcars, and that all otherfreight will load to an averageof 25 tons per car (USAaverage is 36.7 tons). Trainswould be operated25 days per month. In the peak month of August, five diesel units would be needed to make two round trips per day with 85 cars. In September, three units would maaketvwo round trips per day wvith 62 cars, and in October, three units would make one round trip per day with 64 cars. November and July, incl.,two units would make one round trip per day with 34 cars. On the average, this traffic is equivalent to one loadedtrain per day of 82 cars, 300 days per year, which would return to Aleppo wlith 34 cars loaded.

488. A large part of the men and equipment would be idle for nine months in the year. Although an efficient management would find wvork for the men duringthis time, the estimatescover theirpay for 12 months.

VI. The FinancialAspects of the Project

a) Probable expenditures

49. An accurateestimate of the cost of the projectcan only be cal- culated on the basisof an engineeringsurvey. An approximateestimate is given in Appendix A.

1. Investment costs

50. The main heads of expenditure are estimated as follows:

Local Total Currency Foreign Exchange hillion :2.llion lillion Idillion U.S.$ T Syrian L Syrian , Syrian Equivalentl/

-Permanent vay 88.7 28.7 60.0 16.8 -Equipment 15.5 - 15.5 5.5 -Interest during construction 7.6 2.1 5.5 1.5 -working capital 1.9 1.9 - -

Total expenditure 113.7 32.7 81.0 23.8

1/ On rate of OS 3.57 - U.S.$l 5l. The costs of the permanentway are heavy because of the difficult terrain betreen the Orontes and the coast over a distance of 81 kmn.out of the total line of 186 km. The bridge over the Orontes will cost around.1S6.4 million, 5 tunnels OS 12.4 million, while the cost of grading and drains is nearly three times the cost per ka. over the rest of the line.

2. Annual operatingcosts

52. Annual operatingcosts are estimated as follows:

Thousand ;; Sy-rian

-Roadway maintenance (personnel and materials) 236 -Transportation personnel 151 -haintenance of equipment 484 -Fuel and supplies 266 -Administrative expenses 235

Total 1,372

b) Freight rates and probable revenues

53. The entire traffic between Aleppo and Latakia is at present based on truck haulage. Trucks in use are 6 ton gasoline powered which are claimed to be more economicalthan heavier diesel units due to the lower investment required.

r4. In the absence of rail competition,freight charges on this route are subject to marked variations. Considerabloincreases are normal during the season of grain shipments,i.e. - July - December. Some changes in rates are comron even in the off-season,depending on activitiesin the port of Latakia. The average charge in the season for haulage o-'grain is WC12-15 per ton (i.e. 6-8 piastres per ton-kn) and for cotton in oales, ES 16-18 per ton (i.e. 8-10 piastres per ton-km).

55. On the basis of information obtained in Syria, operatingcosts (includingdriver's salary) for a standard 6-ton truck on the asphalt roads in the Aleppo area are approximatelyhO piastres per km. (AppendixB). This is equal to approximately:

i) for cereals, 4.5 piastres per ton-kim.,or ES 8.65 per ton from Aleppo to Latakia, with an actual overloadingto 9 tons;

ii) for cotton and other light weight goods, 5.8 piastres per ton- km, or LS 11.10 ner ton from Aleppo to Latakia, with an actual overloading to 7 tons.

56. The freight rates at which the railway could obtain a favorable competitive position are determined by the operatingcosts for trucks, i.e. 1S 8.65 per ton for cereals and LS 11.10 per ton for cotton and other light weight goods. Such a position would probably be obtained if rail freight rates were fixed as low as 1S7.75 and LS 10 respectivelyfor the two categories of goG - 12 -

57. Assuming that the raillwaycan obtain traffic to the extent of 860,000 tons by the adoption of rates of LS 7.75 for cereals and -S 10 for other goods, the revenues would be:

...1 lion B 5yrian

Ezports: 380,000 tons cereals s ; 7.75/ton 2.95 230,000 tons cotton and miscellane- our Q L 10 per ton 2.30

Imports: 250,000 tons miscellaneous@ 10/ton 2.50

Passenger: Net return on 2 diesel cars 0.30

8.05

58. The average ton-Imnrate on this basis rrouldbe 4.7 piastres, as cor.paredto present charges o$'7.7 piastres per ton-km on the Government- owned Northern Railway system and 5.8 piastres per ton-!= on the French- owned D.H.P. system. On a U.S. ton-mile basis it is equivalentto 1.9 U.S. cents or rather high, but compares favorablywith charges for rail freight in many other countries in the world.

59. On the other hand, if the rail freight rates on the proposed line should be reduced by only about 20% below the present truck rates, or to LS 10 per ton for cereals and LS 14 per ton for cotton and other goods it would probably not be economic for trucks to remain in busiress without return freight. On this basis it would not be unreasonableto expect that the export by rail would anount to around 510,000 tons and that by truck to around 100,000 tons; the main part of the exports are cereals and are parti- cularly suited to haulage by rail. Alloving for a lOO,OC0 ton return freight for trucks, the probable movement by rail and road in 1960 vtould be:

(1,000 tons) Rail Road

-Exports 510 100 -Lmports 150 100

66o 200

60. On this basis the probable revenues of the proposed line would be OS 8.02 million, equal to an average charge of 6.0 piastres per ton-km.

61. The above calculations are necessarily theoretical, and there is no clear-cut definition by which the revenues of the proposed line can be determined. Even if rail freight rates were fixed lower than TS 7.75 for cereals and E 10 for other goods, the possibility of scme truck haulage would still exist. On the other hand, if rail freight rates were increased slightly over that le'vel, it might be expected that up to a certain limit, the addi- tional rail income per ton-km. would more or less offset the losses of rail revenues caused by increased truck competition, All in all, therefore,a total rail revenue of 8.0 million S seems a reasonable assumption. - 13 -

62. A great number of trucks would be put out of business on this particularroute if the railwayvras constructed. However, a far greater volume of mediumand long-distancetraffic is conveyedby tr.'czkselsewhere in Northernand CentralSyria, and it may be assumedthat the extranumber of availabletrucks could be absorbedon other routesin the courseofr a certainadjustment period. This would tend to reducecharges for truck haulagein the areas concerned,

c) F'inancialresults

63. The financialresults are estimatedas follows; Thousand 1S -Grossrevenue from transportation 8,050 -Operatingcosts includingmaintenance 1,370 -Revenuebefore depreciation 6,680 -Depreciation 880 -Net operatingincome 5,800

-Totalinvested capital 113,800 -Returnon totalinvestment 5.1%

In terms of returnon investmentin Syria,5.1% is low.

64. On the basis of road transportof 860,000tons a year,widening and improvementof the existingroad to a 7-meterasphalt highw.ray and a fleet of 500 standardpetrol trucks would be required, Comparisonof the costs withnthose for the proposedrailway show: i) Totalinvestments in the railwayand in road facilitiesand fleetare as follows: InvestmentCosts (ES million) R o A D R A I L Local Foreign Loca Foreigil Total Currency Currency Total Currency Currency -Public 16.07 7.14 8.93 113.76 32.74 81.02 -Private 13.45 6.15 7.30 - - -

Total 29.52 13.29 16.23 113.76 32.74 81.02

The rail programrequires about four times the amount of invest- ment in road facilities and fleet and about five times the amount of foreignexchange. All of the railwayinvestment is assumedto be publicfinance whereas nearly half of the total amountfor road is privateinvestment. - 14 -

ii) The annmal cost to users for rail transport of 860,000tons would be artund OS 8 million, compared with around IS 13 million for road transport.

iii) Income to the Syrian Government from road transport in the form of taxes and import duties would be around ZS 2.8 million at present rates. The annual expenditure for road maintenance is estimated to be around E 3 million.

MaY7, 1953 APPENDIX A

a) Estimated Investment Costs of the Proposed Railway

Right of way - 3 hectares per km. 558 hectares Station ground and yards 1)42 hectares

700

100 hectares @ i 7000 X 3 700,000 100 hectares @ h 5000 - E 500,000 500 hectares C h 600 E 300,000

E 1,500,000 IS l,500,OOo

105 km. grading and drains BE 70,600 7,413,000 81 km. grading and drains r6 E 200,000 16,200,000 Bridge over Orontes 6,441,000 Bridgeover Nahr Kebir and highway 587,000 5 tunnels, 9.2 km. @ E l,3%,000 12,420,000 186 km. track in place @ i 160,000 29,760,000 8 Sidings and ,ye at Oudehi 1,572,000 3 Small Offices for stations 22,500 Telephone line 1,000,000 Fencing 350,000 Surveys and Preliminary Engineering,4% 3,041,660 Designs of structures and supervisionof construction,6% 4,562,490 Organizationand legal expenses, about3% 2,284,350 Add cost of relaying rail Oudehi to Aleppo 1,570,000 Total Cost of Road is 88,7224,000

Foreign Exchange: L;s 60,000,000 Local Currency : iS 28,724,000

iS 88,724,000 Equipment

325 freightcars* at averageof LS 24,000 BS 7,800,000 7 1,500-HPGeneral Purpose Diesel Locomotives units@ ES 600,000 4,200,000 2 DieselPassenger Carrying Cars 1,000,000 3 Caboosesfor train crews (EiS 40,000 120,000 AdditionalMachinery in Alepposhops 1,000,000 Tools and equipmentfor 4 track gangs,and 1 crane similar to U.S.Burro Crane 90,000 1 150-ton diesel wrecking crane 1,000,000 Training employees overseas 64,000 Storesstock 225,000

Total Equipmenit ES 15,499,000

* Number of cars figured to give 25% surplus dur4ng four weeks of peak movementin August.

Summary of Estimate Roadway iS 88,724,000 Equipment 15,499,000 Interest during construction @ 4--7/8%: On foreign exchange 5,521,600 On local currency 2,100,400 7,622,000 Working capital 1,920,000 Total Investment Es 113,765,000

ForeignExchange : ES 81,020,600 Local Currency : ES 32,744,400

ES 113,765,000 b) Operating Expenses (If handling 860,000 tons per annum)

Roadway Maintenance:

1 Track Supervisor 4 ES 500 per month BS 500 14 Section Foremen i 250 1,000 16 Section Laborers b 150 2,400 1 Supervisor's Helper 150 1 Crane Operator 175 a) 13~~S4,,225 x 12 ES 50,700 .laintenance of Way Materialsa) 180,600 14,700 236,000 Transportation: 1 Train Master '-O)3sS 600 >er month E;S 600 2 Dispatchers 1400 800 4 Agent Operators @ 175 700 1 Assistant Agent 1 1 Porter 100 ES 2,350 x 12 = ES 28,200

3 LocomotiveEnginemen - 3S6450 ES 1,350 3 Assi stant Enginemen @ 300 900 3 Conductors ! 350 1,050 3 Trainmen . 250 750 ES 4050 x 12 = ,S 48,600

2 Yard Masters iEP 350 13 700 14Yard Foremen 4 325 1,300 4 Yard Enginemen @ 400 1,600 8 Switchmen t 250 2,000 3 Special Policemen i 200 600 ES 6o200 x 12 = S 74,1400 151,400

1,565 ton§ diesel fuel oilb) TS 184,670 Suppliesc) 80,810 26 51C

Maintenanceof Epu4ment: Locomotives,365,000 unit km. @ 0 ,32d) 1S 116,800 Cars 6,560,000unit km. 4 o.56d) 367,360 484,160

General Administration: Proportion of Northern Line overheads ES 155,600 8 Additionalclerks in Aleppo Office c-150 14,400 Insurance against loss of all kinds 65,000 235,000

Total AnniualOperating Expenses exclusiveof depreciation BS 1,371,870

Depreciation:e) Roadway iS 394,930 Equipment 488,200 883,130

Total Annual Operating Cost, including Depreciation iS 2,255,000 a) On the basis of average purchases of U.S.Class I Railroads1951, i.e. 0.1 piastre mer revenue metric ton handled per km. of track. b) Diesel fuel figured at rate consumedby USA Class I railroads,first five monthsof 1952,8.42 lbs. per grossmetric ton-km., plus extra for switching on USA basis of 1.77 km. for each 100 loaded car km. c) Supplieson USA 1951 experienceof 0.047piastres per revenue-tonkn. d) On the basisof averagecosts on L & NRRfirst 10 monthsof 1952. e) On the basis of U.S. InterstateCommerce Commission rates and practices. c) Estimated Operational Result of Diesel

(Two Round Trips per Day Aleppo-Latakia)

3 Enginemen 'C ES 1450per month 3 Conductors @ 350 3 Trainmen 250 ES 1, x 3 x 12 ES 37,800 Fuel, 0.758 liters per km. @ 10.55 P.S. per liter ES 16 per 200 km,.x 4 x 365 = 23,360 Supplies 25,000 Maintenance @ 18 p.s. per km. 52,560 Depreciation l,00,000 @ 3.67% 36,700

Out-of-pocket Operating Cost - per year ES 175,420

Estimated Revenue- Fare ES 11 per trip * ES 481,800

Profit - per year ES 3065380

* 5.5 piastre per passenger-km., equal to average charges, with the D.h.P.-diesel oars. AppEDIX B

Estimate of Operating Costs for Trucks in the Aleppo Area

Tye: Dodge Loading capacity : 6 tons Purchase price in Syria on usual credit terms LS 23,000 Price per set of tires and tubes: Front (2 - 900 x 20) 1,012 Rear (4 - 1100 x 20) 3,548 ES l, 56o Petrol price (per liter) ES 0.32 Driverts salary (per month) 300 Fuel consumption (liter per 10 km.) 4.0 Average distance per set of tires (km.) 65,ooo Total average amortization distance per vehicle(km.) 350,000 Average distance per vehicle per year (km.) 58,ooo Average amortization period per vehicle (years) 6

OperatingCosts: Piastres per km.

Fuel 12.8 Oil and lubrication t 15o of normal fuel consumption 1.3 Amortization of truck 6.6 Tires and tubes 7.0 Maintenance,repairs and spare parts @ 10% of total operating costs 4.0 Driver's salary 6.2 Insurance,taxes, etc. 2.4

4O0.3

Average OperatingCosts per ton-km. on a One-Way Basis

Piastres per ton-km.

Cereals (9-ton useful loading) 4.5* Cotton and other high paying goods (7-tonuseful loading) 5.8`<

* Equal to ES 8.64 per ton from Aleppo to Latakia for goods stowing 9 tons. *@ Equal to RS 11.11 per ton from Aleppo to Latakia for goods stowing 7 tons. SYIRIA: TRANSPORTATION <.... .IAg . ..

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