World Bank Document

Document of The World Bank

FOR OFFICIAL USE ONLY

Public Disclosure Authorized Report No. 3818-PAK

STAFF APPRAISAL REPORT

PAKISTAN Public Disclosure Authorized

ELEVENTH RAILWAY PROJECT Public Disclosure Authorized

May 25, 1982

Transportation Division Public Disclosure Authorized South Asia Projects Department

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

Currency Unit = Rupees (Rs) US$1.0 = Rs 10.5 US$0.0952 = Rs 1.00 (= Paisa 100) US$95,238 = Rs 1.0 million

WEIGHTS AND MEASURES

Metric British/US System

1 meter (m) = 3.281 feet 1 square meter (m2) = 10.760 square feet 1 ton kilometer (km) = 0.621 ton-mile 1 passenger-km (pass-km) = 0.621 pass-mile

ACRONYMS AND ABBREVIATIONS

AC - Alternating Current BG - Broad Gauge CDLW - Central Diesel Locomotive Works CIDA - Canadian International Development Agency CIF - Cost, Insurance, Freight DF - Development Fund DRF - Depreciation Reserve Fund GOP - Government of Pakistan KPT - Karachi Port Trust LDP - Lahore Dry Port MG - Meter Gauge MIS - Management Information System MOR - Ministry of Railways MTDP - Pakistan Railways' Medium Term Development Plan NG - Narrow Gauge NLC - National Logistics Cell PER - Pakistan Eastern Railways POH - Periodic Overhaul POL - Petroleum, Oil and Lubricants PR - Pakistan Railways PWR - Pakistan Western Railways TEU - Twenty-Foot Equivalent Unit UEMS - Unit Exchange Maintenance System UEP - Unit Exchange Pool

GOVERNMENT OF PAKISTAN Fiscal Year

July 1 - June 30 FOR OFFICIAL USE ONLY

PAKISTAN

APPRAISAL OF AN ELEVENTH RAILWAY PROJECT

STAFF APPRAISAL REPORT

Table of Contents

Page No.

I. THE TRANSPORT SECTOR ...... 1 A. Background ...... 1...... B. The Transport Sector ...... I C. Transport Policy and Investment ...... 5

II. PAKISTAN RAILWAYS ...... 7 A. Organization, Management and Staff ...... 7 B. Railway Infrastructure ...... 8 C. Motive Power and Rolling Stock. 9 D. Operations. 9 E. PR's Role and Prospects .10 F. Railway Investment Plan .11 G. Performance Under Previous Projects .14

III. THE PROJECT ...... 15 A. Background ...... 16 B. Objectives ...... 16 C. Description ...... 16 D. Cost Estimates ...... 24 E . Financing ...... 26 F. Implementation ...... 26 G. Procurement ...... 27 H. Disbursements ...... 27

IV. ECONOMIC EVALUATION ...... 28 A. General ...... 28 B. Locomotive Maintenance Improvements ...... 28 C. Rail Container Operation ...... 31 D. Management Information System, Technical Assistance and Training ...... 33 E. Economic Justification and Sensitivity Analysis 33 F. Risks ...... 34

This report was prepared by Messrs. M. Melrose (Railway Engineer), E. Pogson (Financial Analyst), M. Pulgar-Vidal (Economist) and A. Sabeti (Railway Specialist).

Page No.

V. FINANCE AND EARNINGS ...... 34 A. Introduction ...... 34 B. Recent Changes in Financial Policies ...... 34 C. Past Performance ...... 35 D. The Next Few Years ...... 38 E. Financing Plan .. .40

VI. AGREEMENTS REACHED AND RECOMMENDATIONS ...... 42

ANNEXES

1. Documents Available in Project File ...... 43 2. Plan of Action for Improving the Operational and Financial Performance of Pakistan Railways ...... 44 3. Terms of Reference for a Study of the Future Role of Railway Transport in Pakistan ...... 47 4. The Basis for Financial Forecasts ...... 50

TABLES

1. PR's Freight Traffic by Main Commodities from 1969/70 to 1980/81 ...... 53 2. PR's Passenger Traffic from 1959/60 to 1980/81 ...... 54 3. PR's Staff by Department and Category as of July 1, 1981 ...... 55 4. Inventory of PR Track ...... 56 5. Inventory of Motive Power and Rolling Stock (Actual Numbers) for Broad Gauge, Meter Gauge and Narrow Gauge ...... 57 6. Diesel Locomotive Fleet - Age, Class and Manufacturer ...... 60 7. Selected Operating Statistics (1975/76-1980/81) 61 8. Medium-Term Plan 1981/82-1983/84 and the Project 62 9. Maintenance Modernization - Cost Estimate Details . 64 10. Unit Exchange Pool: List of Components and Cost Estimates ...... 65 11. Cost Estimates for Containerization Component ...... 66 12. Summary of Project Cost Estimates ...... 67 13. Estimated Schedule of Disbursements ...... 68 14. Economic Evaluation: Unit Exchange System, Management Information System, Technical Assistance and Training ...... 69 -iii-

Table of Contents (Cont'd)

15. Economic Evaluation: Container Rail Operation .. 70 16. Revenue and Expenditure for Financial Year to 30 June for 1976/77-1980/81 ...... 71 17. Changes in Relationship of Revenues and Costs 1972-1982 ...... 72 18. Passenger Fares and Costs 1972-1981 ...... 73 19. Forecasts of Revenue and Expenditure: 1980/81-1985/86 ...... 74 20. Forecasts of Source and Application of Funds: 1980/81-1984/85 ...... 75

CHARTS

Chart 1 - Pakistan Railways Organization, February 1982 76 Attach. 1 - Pakistan Railways Organization, May 1982 .77 Chart 2 - Expansion of Dry Port at Moghalpura, Lahore (Key Plan) ...... 78 Chart 3 - Proposed Layout of Remanufacturing Shops in Central Diesel Workshops (Rawalpindi) ...... 79 Chart 4 - Project Implementation Schedule ...... 80

Maps

IBRD 16207R - Pakistan - Eleventh Railway Project

This report is based on information provided by the Government of Pakistan and on the findings of project preparation and appraisal missions in 1980, 1981 and 1982 which consisted of Messrs. D. Bickers (Economist), N. Holcer (Telecommunications Engineer), M. Melrose (Railway Engineer), E. Pogson (Financial Analyst), M. Pulgar-Vidal (Economist), A. Sabeti (Railway Specialist), T. Shima (Railway Engineer), and A. Soto (Economist); and consultants W. Anderson (Container Specialist), D. Burns (Mechanical Engineer) and W. Thompson (Operations and Management Specialist). The main reports and data used are listed in Annex 1. I PAKISTAN

ELEVENTH RAILWAY PROJECT

STAFF APPRAISAL REPORT

I. THE TRANSPORT SECTOR

A. Background

1.01 Pakistan covers a land area of about 800,000 square kilometers. It consists mainly of a flat plain stretching from the foothills of the Himalayas in the northeast to the Arabian Sea in the southwest. It is crossed by five great rivers, the Indus, Jhelum, Chenab, Ravi and Sutlej, which, after their confluence, flow as the Indus towards the sea. These rivers frequently overflow their banks, causing serious interruptions to transport. The country's population, which is growing at about 3% p.a., is estimated at 83 million and is concentrated in the fertile Indus basin. Karachi, the largest city and port, is also Pakistan's main commercial, financial and industrial center.

1.02 Pakistan's gross national product (at market prices) was estimated in 1980/81 at US$30 billion, and per capita GNP in 1980 at about US$300.1/ The largest sector in the economy is agriculture, which generates about 31% of GNP; other important sectors are manufacturing (16%), commerce (14%) and transport, including communications (7%). The balance-of-payments situation has been characterized by persistent current account deficits during the past four years.

B. The Transport Sector

1.03 Pakistan's transport system and traffic densities reflect the concentration of population and economic activity in the Indus basin; the location of the ports of Karachi and Qasim; and the long distances between the location of the few mineral resources currently exploited (gas, coal, oil) and the consumption centers. Because the border with Afghanistan was closed in 1979, and trade with India and Iran is insignificant, practically all imports and exports move through Karachi. Over half the international traffic originates in or is bound to Karachi and its environs; most of the balance goes to or comes from the Punjab, whose capital, Lahore, is 1,200 kilometers north of Karachi. Hence, fairly long transport distances are involved for many traffic flows, especially imports and exports. Because of this and the generally flat terrain along most of the densely trafficked corridors, Pakistan is a country well suited for rail freight transport. As the main railway lines are in the northeast-southwest direction, Pakistan Railways (PR) is in an advantageous position to carry such traffic.

1.04 Freight traffic growth in Pakistan has been faster than GNP growth. While real GNP grew at about 4.5% p.a. in the 1970's, total freight traffic

1/ "Pakistan: Economic Developments and Prospects", Report No. 3802-PAK, April 14, 1982. -2-

(in ton-kilometers) grew approximately at 7.0% p.a. As shown below, rail freight traffic remained roughly constant between 1971/72 and 1980/81, but the rail share of freight traffic decreased from 48% to 26%. During the same period, rail passenger traffic grew by about 70%. but its share declined from 20% to 15%.

1971/72 1980/81

billion billion billion billion ton-kms pass-kms ton-kms pass-kms

Rail 7.8 (48%) 9.5 (20%) 7.9 (26%) 16.3 (15%) Road 8.2 (51%) 36.5 (77%) 22.0 (73%) 86A9 (79%) Air 0.1 (1%) 1.6 (3%) 0.3 (1%) 6.2 (6%)

Total 16.1 (100%) 47.6 (100%) 30.2 (100%) 109.4 (100%)

Despite the increasing importance of the road subsector, the railways still play and will continue to play a major role in Pakistan's economy (para 1.05).

1.05 In recent years (since 1976/77), the volume of revenue-earning traffic carried by the railways has oscillated between 6.8 and 8.5 billion ton-kms, with an average haul in the range of 720 to 930 kms (Table 1). In 1980/81, the railways carried more ton-kms than a decade earlier, and the average haul of revenue earning traffic was significantly longer, which indicates an overall improvement in the use of PR's limited effective carrying capacity. However, various recent studies dealing with public sector commodities, which comprise 75% of PR's present freight traffic, together with an analysis of the sensitivity of rail traffic to major changes in origin-destination flows of these commodities, confirm that it is PR's own inefficient operation, not the lack of rail-suitable traffic, that has resulted in the recent stagnation of rail traffic volumes. This is clearly seen in the fact that the actual rail traffic has consistently been bulk commodities with much longer hauls than what is normally considered to be the threshold of the rail's economic advantage over road transport. The above studies indicate substantial growth in the next ten years in the production and trade of many of the commodities for which the railways would normally be the chosen carrier. The main factors affecting PR's ability to carry are the following: (a) GOP's continued policy that PR should give preference to passenger over freight traffic; (b) the effect of the trucking operation run by the National Logistic Cell (NLC), as detailed in para 1.08; (c) deficien- cies in institutional and managerial aspects of PR; (d) the fact that about 75% of PR's traffic is currently public sector traffic; (e) changes in the pattern and composition of the demand for freight transport, mainly reflecting the reduced long-distance movements of POL; and (f) shifts in modal comparative advantages as perceived by shippers. The future growth of rail -3-

traffic depends on whether the physical and institutional improvements discussed in Chapters II and III can be achieved. While the proposed project is designed to address these problems and assist PR to improve its ability to cope with present and potential traffic demand, prudence in the light of past performance dictates a very conservative approach to traffic forecasting for the purposes of using such forecasts for calculating estimated project benefits. Therefore, PR's total ton-kilometers have been estimated to remain at about their present level during the project period. Any additional traffic which PR is able to carry will further enhance the project benefits and is clearly worth striving for.

1.06 Passenger traffic carried by the railways (Table 2) in the late 1970's hovered around 145 million passengers, reaching an all-time high of 149 million in 1977/78; in 1980/81 ridership declined to 123 million. In terms of passenger kilometers, traffic grew from 13.0 billion in 1975/76 to 17.3 billion in 1979/80 and then dropped to 16.3 billion in 1980/81. The recent decline in passenger traffic probably reflects the cumulative effect of fare increases in 1979 and 1980. 1/ The bulk of ridership on the railways system consists of second class passengers, who account for over 95% of the total volume of passengers and for about 88% of passenger kms. About two-thirds of second class passengers travelled less than 100 kms, and about one-fifth made trips of less than 15 kms on commuter services in the Karachi and Lahore areas. The average travel distance for all passengers, however, has increased steadily in recent years, from 93 kms in 1976/77 to 132 kns in 1980/81.

1.07 Pakistan's road system comprises about 40,000 kms of federal and provincial all-weather roads (of which nearly 24,000 have bituminous surfac- ing), and some 55,000 kms of fair-weather roads. The quality of the network is deficient, much of the paved system is narrow, with a paved width averag- ing only about three meters, and the structural strength of the pavement is often insufficient, leading to failures on major roads under heavy traffic conditions. The present condition of the road system stems from: (a) original highway designs not suitable for current traffic volumes; (b) lack of adequate road maintenance; (c) preference at various levels of Government for building new roads rather than repairing or improving existing ones, a tendency fortunately curtailed in recent years, and (d) considerable overloading of the country's roads by a relatively free and highly competitive road transport industry. A study is being carried out by GOP under the on-going Third Highway Project to determine the extent of vehicle overloading in the country. Preliminary results indicate that about 60% of trucks on main highways are overloaded, i.e., have axle loads greater than 18,000 pounds. Once the study is completed in end-1982, GOP is expected to devise a

1/ However, in 1980/81 the effective fares collected per passenger-kilometer (Rs 0.120 in first class and Rs 0.051 in second class) were not sufficient to cover the costs of providing the service. -4-

strategy to control truck overloading. The range of steps to be taken is likely to include the following: (a) the establishment of roadside weighing stations (not deemed to be very effective in practice); (b) the introduction of suitable changes in GOP's truck import policies; (c) the adoption of additional standards during annual truck inspection to identify those vehicles that have been modified by their owners to carry excessive loads; (d) the revision of the schedule of road user charges to make vehicles pay a sum proportional to the wear and tear they inflict on roads; and (e) the revision of the specifications under which the national highway system is to be constructed or rehabilitated.

1.08 Private trucks operate in a fairly competitive environment, where there is little regulatory control, small firms abound, and a large number of vehicles are owner-operated. Tne role of the private trucking industry, as well as that of PR, has been affected by GOP's creation of the National Logistics Cell (NLC) in 1978. In that year, faced with an emergency need to import and distribute substantial volumes of wheat and fertilizer, GOP established the NLC within the Army, entrusting it with a fleet of 500 new 20-ton trucks and making it responsible for most of the day-to-day operation of the port of Karachi. NLC efficiently handled the crisis situation and, when the crisis subsided, GOP decided that NLC should remain in existence. In 1979/80, NLC acquired additional trucks and tankers, and its current carrying capacity is estimated to be about 820-1,080 million ton kilometers per year. As a result, NLC has become a major competitor to the railways and its effect is mainly felt upon the highly imbalanced north-south freight traffic. According to PR's own assessment, in 1979/80 the railways lost to NLC about 0.6 million tons of fertilizer, 0.2 million tons of cotton and 0.2 million tons of rice. Allocation of traffic to NLC has not always been consistent with economic considerations in that it was assigned public-sector long-haul traffic whose economic cost would have been lower by rail; meanwhile, PR was often required to transport less profitable and operationally more complex cargoes on routes that included mountainous terrain. Since end 1981, however, NLC has modified its traffic allocation policies, and PR has been carrying larger volumes of long-haul traffic. During negotiations, agreement was reached with GOP, that the allocation of public sector freight traffic will be done with due consideration to the relative advantages and capacities of the various modes of transport.

1.09 The bulk of road passenger transport services, i.e., urban and intercity bus services are provided by small firms and owner-operators. There are four large provincial bus corporations which operate urban and intercity services. Registration figures indicate that, from 1969 to 1979, the bus fleet grew more rapidly (9% p.a.) than the automobile (8% p.a.) and truck fleets (6% p.a.). Inter-city bus transport is largely unregulated. The safety record of the bus operation is very poor probably because of, among other things, the absence of periodical mechanical inspection and the generally unruly behavior of bus drivers. The bus safety record and the fact that bus fares, at Rs 0.085 per passenger-kilometer, are about 60% higher -5-

than second class rail fares, may largely explain why passengers normally prefer rail over bus when both services are available.

1.10 Karachi is Pakistan's major port and handles most of its foreign trade. A second one, Port Qasim, has been recently opened but so far has only handled inbound traffic for a new steel mill which is in the commissioning stage. Since 1978, when many aspects of the operations of Karachi Port Trust (KPT) were put under NLC supervision, the traditional congestion at the port, formerly one of the most costly bottlenecks in Pakistan's transport sector, has been removed. Daily throughput has increased from 6,800 to 9,000 tons for general cargo, and from 7,500 to 12,000 tons for bulk commodities. Average ship waiting time at the outer anchorage has decreased from about 20 days to under 2 days.

1.11 After the promulgation of the Pakistan Maritime Shipping Act of 1974, the Government took over the management of various shipping companies. Services are provided by the National Shipping Corporation (NSC) and the recently de-nationalized Pan Islamic Steamship Company. Only a small frac- tion of foreign trade is currently carried by Pakistani vessels, and GOP hopes to increase it. At end-1980, Pakistan's merchant fleet consisted of 48 vessels with a total carrying capacity of about 560,000 DWT. Over half these vessels were more than 15 years old. Inland water transport has not been developed, since most rivers are seasonal or are interrupted by numerous irrigation barrages.

1.12 Air transport accounts for about 1% of domestic passenger- kilometers. Its volume grew rapidly in the years before 1978 but has since remained fairly constant, probably because of increased fare levels. Pakistan International Airlines (PIA) operates domestic and international services. In 1979, domestic passenger traffic carried by PIA amounted to about 1.5 million passengers and 1.1 billion passenger-kilometers; domestic air freight traffic was 14,000 tons and 14.5 million ton-kilometers.

C. Transport Policy and Investment

1.13 When the Fifth Five-Year Plan (FY79-83) was formulated, about Rs 4.5 billion, or 23% of total planned investment, were allocated to the transport sector. Actual expenditures, however, have been lower than anticipated, and stood at only 19% of total development outlays in FY81. Investment priorities have been recently altered by GOP to emphasize agriculture, water, energy and the social sectors. It is estimated that the transport sector will account for 21% of expenditures in FY84. There are no indications that subsectoral allocations have been modified; these were originally planned as 27% for highways and road transport, 20% for the railways, 14% for ports and shipping, 33% for airports and civil aviation and 6% for pipelines. The large size of the civil aviation component reflects PIA's ongoing aircraft modernization and fleet expansion program. A major and welcome feature of the Plan was the exclusion from it of construction of new -6-

railway lines and the Indus Super Highway. Any proposal to revise subsectoral allocations should take into account the need for improved road maintenance throughout the country; and should perhaps reflect a critical review of the aviation component.

1.14 Pricing in the road subsector is acceptable since road passenger and freight transport services are largely unregulated and there is considerable competition in the provision of these services. A revision of the tariff structure at Karachi Port on the basis of replacement cost accounting is under way. The main tariff policy issue in the transport sector is the cross-subsidization of rail passenger services by the rail freight operation. Corrective measures in this regard will be taken under the project (para 5.10).

1.15 The consumption of petroleum products in the transport sector has accelerated since 1972, reflecting a substantial increase in the motor vehicle fleet and road transport services. In 1979, the sector accounted for 57% of all petroleum products consumed in Pakistan. Price increases in 1979 and 1980 set the domestic prices of gasoline and diesel fuel considerably over import parity levels, and a sizeable price differential is maintained between diesel and gasoline to discourage gasoline consumption. Pakistan relies heavily on imports of crude oil for its domestic needs; the rate of domestic crude oil production was disappointingly low in FY81, but some improvement is expected by the end of FY82.

1.16 In the transport sector, the Bank Group's lending aims at assisting Pakistan to better utilize existing capacity by improving the efficiency of operations and strengthening the institutions responsible for these services, while fostering the rehabilitation and improvement of existing facilities. In pursuit of these objectives, the Bank Group has lent a total of US$460 million, net of cancellations, for assistance to Pakistan's transport sector. Beginning in 1952, the Bank Group has financed three highway projects, four port projects, five gas line operations and seven railway projects.l/ It has also extended two technical assistance credits (for highways and ports) and an import credit to assist the commercial road operation. In the railway subsector, the Bank has financed a total of US$187.2 million (net of cancellation) in projects designed mainly to assist PR and its predecessor, the former Pakistan Western Railways, to rehabilitate railway facilities and equipment. These projects have also increasingly focused on improving PR's planning capabilities, accounting practices, management and operations (paras 2.23-2.26).

1/ The number of railway loans/credits exceeds the number of projects financed in Pakistan because the loans/credits include railway operations in the former East Pakistan. -7-

II. PAKISTAN RAILWAYS

A. Organization, Management and Staff

2.01 Pakistan Railways (PR) is owned and managed by the Government of Pakistan (GOP). Its operations are controlled from Lahore by a General Manager that performs the functions of Chief Executive and exercises his power through six zonal divisions which are responsible for day-to-day field operations. Until April 1982 the operating functions of PR were performed by a five-member Railway Board located at Lahore, while the policy and monitoring controls were exercised by Ministry of Railways (MOR), headed by a Secretary, Ministry of Railways, established at Islamabad in 1974. Effective April 4, 1982, the Railway Board and MOR have been merged and the Board has been moved to Islamabad. The Chairman, Railway Board is now the ex-officio Secretary, Ministry of Railways and the other members of the Board have been designated as Additional Secretaries, Ministry of Railways. PR's organization prior to April 1982 is shown in IBRD Chart 23804 and the changes effective April 1982 to the senior management structure are shown in attachment to the Chart.

2.02 For decades, the members of the Board and other senior officers of PR have been senior railwaymen with a deep attachment to tradition and unable to adapt to changing circumstances. Although PR possesses competent and skilled managers, the organization, with its rigid departmentalization has not been conducive to efficient management. The vast gaps between departments and the lack of communication among them makes them act and conduct business as completely separate organizations, with only the Chairman of the Board having authority over them. This type of organization was considered to be not too conducive to good management and has since been changed. PR operations have now been placed under a single authority (the General Manager) which would be accountable to the Railway Board for all aspects of day-to-day operation. In addition, the marketing and costing functions of the railways need to be merged into one single department separate from the transport function. Steps are also needed to completely overhaul PR's purchasing and stores, and establish them as a unified stream- lined department. During negotiations GOP has agreed to continue the implementation of measures aimed at improving PR's organization and management.

2.03 Pakistan Railways, with about 130,000 employees, is the largest public sector employer in Pakistan (Table 3). However, since PR's traffic growth has been slow, and since staff productivity has increased very little, less than full benefits have been obtained from modernization measures such as dieselization. There is need for reductions in staff strength through attrition and improvement in efficiency. Under the ongoing Tenth Railway -8-

Project (para 2.25), GOP agreed that PR would reduce its staff by about 500 per annum in 1977/78 and 1978/79, and by about 1,200 per annum in 1979/80 and 1980/81. PR also agreed to undertake, by December 1977, a study of the possibility of further staff reductions through attrition. PR is in compliance with these agreements and during the negotiations it was agreed that PR will, through attrition, continue to reduce nonprofessional and unskilled staff.

2.04 The wage and salary structure prevailing in PR is the same as that for Government employees, involving a grade system reviewed and adjusted periodically by the Federal Wage Commission. In addition, from time to time the Federal Government grants special national wage increases. Fringe benefits, grading of jobs and crafts, work rules and craft lines are nego- tiated between PR's two labor unions and the Board. For some years now, skilled and semi-skilled staff at all levels have been attracted to more highly paid work in the Middle East.

2.05 The training of PR staff is carried out at either PR's training schools or Government training institutes. Staff training is carried out by the Personnel Department. Many long-service officers are expected to retire from PR in the near future. The problem this will cause will be partly eased by staff training carried out under the ongoing loan/credit in such important areas as locomotive and track maintenance, freight train operations and accounting modernization. This training program is further augmented by various bilateral arrangements.

B. Railway Infrastructure

2.06 The railway network consists of about 8,800 route-kilometers. Details of the track inventory are given in Table 4. Currently overage track structure on the Karachi-Lahore main line has required the imposition of speed restrictions at many locations. Track maintenance procedures were examined by PR, with assistance from SOFRERAIL (France) financed under Loan 621-PAK, and new maintenance procedures have been introduced. There have been shortages of ballast and sleepers; although., PR will soon have the installed capacity to increase the supply of ballast and concrete sleepers, wooden sleepers will have to be imported for some time to come. Some bridges with speed restrictions on broad gauge lines still have to be renewed or strengthened. A new bridge over the Kotri river was completed in February 1980. This provides a second track over the Indus River, thus removing a major bottleneck on the main line. Modernization of telecommunications facilities and signaling is being undertaken under the ongoing Tenth Railway Project (para 3.18). A new marshalling yard at Pipri, designed to remove congestion in the Karachi area, was completed in February 1980, with partial financing under Loan 621-PAK (para 2.26) and has ample capacity for any demands which may be made on it. -9--

C. Motive Power and Rolling Stock

2.07 PR's motive power and rolling stock position at the end of 1980/81 is shown in Table 5. Diesel electric locomotive fleet of 474, however, constitutes PR's primary mode of traction. In 1970/71 a fleet of 29 electric locomotives were introduced to PR working the electrified section of Lahore-Khanewal. PR still has about 400 steam locomotives, of which 90% are over 40 years old. About 32% of coaching vehicles are over 30 years old and in poor condition; their partial replacement is now being made. About 18% of four-wheeler wagons and about 8% of bogie wagons are over 40 years old. Since PR has more than sufficient wagons, not all will be replaced when scrapped. PR manufactures most of its passenger vehicle and freight wagons.

2.08 Low motive power availability and reliability have been a very important factor in PR's lackluster traffic and financial performance (paras 1.05 and 5.04). As mentioned above, PR's diesel electric locomotive fleet is the mainstay of operations and consists of 474 diesel electric units produced by seven manufacturers in five different countries (Table 6). The problem associated with the motive power proliferation is further aggravated by PR's inadequate maintenance facilities and chronic shortages of critical spare parts. The project will provide assistance in improving PR's maintenance organization and facilities.

D. Operations

2.09 The improvement of PR's operations has been a major objective under previous Bank-assisted railway projects in Pakistan. The most recent one, the current Tenth Railways Project, aimed at increasing motive power availability and improving the quality of railway services. To this end, provisions were made under the project for the procurement of urgently needed spare parts for motive power; the improvement of workshops, sheds and depots; and the completion of a backbone microwave network from Karachi to Rawalpindi, including related communications and signalling equipment. Physical progress under the Tenth Railways Project has been generally satisfactory, except for the delayed completion of the telecommunications component. Although a number of large investments included in the five-year plan and assisted by the project have now been completed, PR's operating indicators (Table 7) are not yet in line with the targets envisaged at appraisal. The main areas where progress has fallen short of expectations are those of motive power availability and use, and average wagon turnaround time. At appraisal, it was expected that by 1979/80 available locomotives would produce 576 locomotive-kms per day on passenger trains, and 288 locomotive-kms per day on freight trains; the actual results, however, were 459 and 197, respectively. In a similar vein, system-wide turnaround time for wagons, which was expected to be reduced from 16.7 to 12.5 days, was only brought down to 15.3 days in 1979/80, whereas it should not have been more than 13.8 just taking into account the increased length of haul. -10-

2.10 A major factor contributing to the unsatisfactory operation of the railways is the policy of GOP and PR to give passenger traffic higher priority than freight for the allocation of available motive power and line capacity. This policy has important operational, economic and financial consequences. It prevents PR from carrying the traffic it is best suited to carry, and which would significantly benefit the country's economy. This is a major reason for PR's current financial distress. Some steps were taken under the Tenth Railways Project to increase freight carrying capacity through the implementation of a battery system, which involves the grouping of passenger trains in batches so as to leave more train paths for slower freight trains. This system, however, has now been abandoned by the railways as a result of political pressures to add more passenger train stops.

2.11 Analysis of PR's operational performance reveals that there is much room for improvement in the passenger-train operations. This will be crucial to the release of much-needed train paths and motive power for additional freight-train runs which will enable PR to handle the projected freight traffic. To achieve this objective, poorly patronized trains will be discon- tinued, unnecessary stoppages will be eliminated, and coach and locomotive utilization should be increased by diverting equipment to more remunerative operations.

2.12 PR's freight services are also in need of improvement, as regards both transit time and terminal operations, and transport of major bulk commodities. The through-freight train commercial speed should be increased to achieve improved line-capacity utilization. PR will also have to introduce more unit and block trains for the movement of wheat, rice, cement, fertilizer (raw material and finished products). PR will continue discussing with various agencies and provincial Governments ways of implementing specific measures to improve bulk-commodity transport, with a view to limit- ing destinations and loading points and ensuring adequate loading and unload- ing facilities.

2.13 During negotiations, agreement was reached on specific measures to rationalize further passenger-train operations, to increase the speed of freight trains and to increase unit and block trains for movement of bulk commodities. Specific targets and measures are described in Annex 2.

E. PR's Role and Prospects

2.14 Given the type of terrain, the distances involved and the large amounts of bulk products that make up the majority of transport flows in Pakistan, the railways undoubtedly have an important role to play in the country (para 1.05). Its slow recovery, despite heavy investments in the past five years, has accentuated a feeling of frustration with the railways at various levels in the Government. Nevertheless, the railways remain the backbone of the country's main transport corridor and its most important -11-

import-export carrier. PR is also an important passenger carrier moving almost about one-sixth of all passenger kilometers in the country.

2.15 The overall future possible role of PR in Pakistan has been discussed at length by Emmay Associates (Pakistan) in a recent study prepared for the Bank (Terms of Reference are found in Annex 3.) In the medium term, the future of the railways depends on its management's ability to complete promptly and efficiently the ongoing five-year plan, including the Tenth Railway Project, and to improve operations substantially. The arrival of spare parts and the completion of the telecommunications and signalling components will do a great deal in this direction. But, more than physical items, it is competent management and appropriate organization that are required to improve operations (para 2.02).

2.16 The future size and role of the railways are closely linked to:

(a) PR's ability to adapt to the overall changes in the demand for rail freight transport resulting from inevitable losses of freight to other modes (e.g., increasing amounts of POL, which is PR's main revenue earner, will be carried by pipeline, although there will be some offsetting movement of refined products), increasing competition from the road subsector (NLC and private truckers), and shifts in the total demand and patterns for transport in the country (as Pakistan approaches the point where it will cease to be a net foodgrain importer); and

(b) PR's ability to make a case before GOP for an efficient allocation of available motive power and line capacity between freight and passenger services (para 2.11).

2.17 After many years of concentrating on long distance import/export traffic in the public sector, PR finds itself in a situation where its marketing, planning and costing functions are inadequate to meet the current challenges. Paramount to PR's future role is the improvement of its organization and management (para 2.02).

F. Railway Investment Plan

2.18 Under the ongoing Tenth Railway Project, an investment plan for 1976/77-1980/81 was developed and its implementation was agreed upon. The basic objective of the Investment Plan was to improve PR's operational performance on the main line by eliminating various physical bottlenecks. Sub- sequently, the severe floods of 1976 and political unrest resulted in implementation delays and the Investment Plan, almost in its entirety, was included in Pakistan's Fifth Five-Year Plan (1978-1983). Track rehabilitation, line capacity work, rolling stock and motive power rehabilitation and installation of a backbone microwave telecommunication system were the major -12-

components of the Plan (for details see Table 12, Report No. 1283a-PAK). The economic rate of return of the plan as a whole was estimated at about 24%.

2.19 GOP's internal procedure for techno-economic analysis of development projects involves the preparation of PC-1 proformas, which are project appraisal documents used as the basis for project selection at the outset and for re-evaluation during project execution. There is also provision, under the on-going Tenth Railway Project agreement, for annual monitoring of the Investment Plan and its implementation. During the implementation of the on-going project and the preparation of the proposed project, some parts of the agreed upon Plan and various newly proposed schemes were dropped, post- poned, or slowed down in the light of traffic and operational developments. The most notable of these schemes was a plan for electrification of 117 km section (Khanewal-Samasata) of the Karachi-Lahore main line for which bilateral financing was under active discussions, the conversion of about 3,700 four-wheeler wagons into bogie wagons, the construction of Karachi Cantonment Terminal, new line construction and line conversion, and the rehabilitation of air conditioned coaches. The pace of motive power acquisiton was also slowed down.

2.20 The most recent review of Pakistan's Fifth Five-Year Plan (1978-83) and PR's operational and financial requirements have resulted in the Rail- ways' Medium Term Development Plan (MTDP), covering FY81/82-FY83/84. The basic objectives of the MTDP are:

(a) to improve PR's operations and reduce costs given the presently available and some additional plant and equipment; and

(b) to provide PR with the opportunity to explore potential for carrying new and additional traffic where it should represent the most economic transport solution compared with alternative modes.

The first objective, improved operational efficiency and reduced costs, has become increasingly important. Its effect on PR's investment requirements was taken into account by restricting the near future investment in additional capacity to the containerization scheme.

2.21 PR's Medium Term Development Plan (MTDP) has been reduced to a minimum need base and revised to include the allocations required for this project. It is detailed in Table 8 and a summary is provided below: -13-

Item Rs Million %

Gauge Conversion 5 Track Rehabilitation 1,008 21.0 Bridge Works 75 1.5 Line Capacity and Pipri Yard 117 2.5 Telecommunications and Signalling 668 14.0 Motive Power and Rolling Stock 2,268 47.5 Plant and Machinery 443 9.5 MIS 85 2.0 Technical Assistance, Brake Improvement and Electrical Projects 95 2.0

TOTAL 4,764 /a 100.0

/a Includes Rs 264 million over and above the original MTDP allocation, as required for the full implementation of project components.

The Plan consists of high priority items and the major ones fall in the following categories:

(a) continued implementation of ongoing schemes (about 26%) of the Tenth Railway Project whose implementation was slowed or delayed; the major items are track rehabilitation on the main line and installation of the telecommunication network, rehabilitation (re-engining) of overaged diesel electric locomotives, and construction of concrete sleeper factories;

(b) purchase and rehabilitation of motive power and rolling stock (about 42%) for replacement; the main items in this category are acquisition of up to 68 diesel electric locomotives 1/ (orders for 38 were placed in October 1980 and orders for the other 30 will await the results of the electrification study under the proposed project), rehabilitation of about 42 overaged diesel

1/ PR's motive power requirement (without further electrification) was the subject of a study under the Tenth Railway Project which was completed in 1979 with assistance from Bank Group consultants. -14-

electric locomotives, and manufacture of about 410 passenger coaches; and

2.22 With one major exception, the economic justification of all items in MTDP has been established by GOP (PC-is for all major items are available in Project File listed in Annex 1). Under bilateral financing, consideration has been given to the establishment of a plant to progressively assemble and then manufacture diesel electric locomotives; the economic justification of this investment, however, is not evident and, since PR's management is already thinly spread over many concerns, it would be unwise to further divert managerial resources onto additional activities. GOP has recently decided that the proposed locomotive factory will not be undertaken by PR. Understanding was reached with GOP during negotiations on the content of the MTDP.

G. Performance Under Previous Projects

2.23 The first loan to PR, formerly Pakistan Western Railway (PWR), was made in 1952. Since then six other loans and credits have been made, and this project would be the Bank Group's eighth operation. 1/ Up to 1959/60, three loans were made with the main objective of rehabilitating railway facilities and equipment. The implementation of the projects under these loans was satisfactory. Operational efficiency was good; PR's financial position appeared sound; passenger-kms increased by 5% and freight ton-kms by 6% per annum during 1955/56-1959/60. The inadequacy of PR's accounting system was recognized and consultants were engaged to help in modernizing the accounting system. During the next five years, from 1960/61 to 1964/65, PR was still catching up with increasing traffic demand and a loan and a credit were made with substantially the same objectives as before. During this period, a significant change in the administrative arrangement took place in that the control of the Railways was transferred from the Central Government to the Province of West Pakistan. This change affected the Railways' performance, particularly in planning. Operational performance also deteriorated. Although improvement in PR's accounting system was still an objective, the recommendations of the previous studies had not been implemented and new consultants were appointed to assist in the establishment of a commercial accounting system.

2.24 Two other loans (Loan 496-PAK and Loan 621-PAK) were made between 1965/66 and 1975/76. Over this period, there was a significant decline in

1/ The numbering of railway projects in Pakistan also includes the Bank Group operations with former East Pakistan Railway (PER), now Bangladesh Railways. -15-

PR's overall performance. The separation of Bangladesh, hostilities with India in 1971 and severe flood damage in 1973 and 1976 all contributed to such decline. Although consultants were engaged under Loan 621-PAK to assist in carrying out operational improvements, progress was slow; and PR continued to give operational priority to passenger over freight services and PR's financial position deteriorated.

2.25 The Tenth Railway Project (Credit 684/Loan 1372-PAK) was approved in March 1977. The physical execution of the project has made satisfactory progress. PR has made considerable efforts to meet the covenants and under- takings with the principal exception of financial targets which were mainly dependent on GOP's actions on rates and fare increases (paras 5.04). The Railway operations and financial results have not however, as discussed above, been satisfactory.

2.26 A Project Completion Report (PCR) for the Ninth Railway Project (Loan 621-PAK) was prepared in 1979 and a draft Project Performance Audit Report (PPAR) has been recently circulated. Both the PCR and the draft PPAR give the impression of a rather disappointing project. The protracted disbursement period, about 10 years instead of three, an eventful political period in Pakistan during the project implementation, and PR's managerial shortcomings contributed to this situation. The main findings and recommendations of the PCR and PPAR pertain to subjects which have been either addressed under the ongoing Tenth Railway Project or are the main objectives of the proposed project.

III. THE PROJECT

A. Background

3.01 The main objective of the Bank Group assistance to PR through the first six operations (excluding Credit 684/Loan 1372-PAK) consisted of the rehabilitation of existing railway infrastructure and, to a limited degree, modernization of motive power, rolling stock and maintenance facilities. These loans and credits were based on about two-year slices of PR's investment programs and mainly covered the foreign exchange requirement for the acquisition of material and machinery for improvement works.

3.02 With a growing number of diesel electric locomotives in need of major overhaul, recently introduced electric traction and modern design rolling stock in need of modern maintenance methods, and stagnation of operational efficiency, PR has acknowledged the need for a shift in investment -16-

priorities in order to remove major bottlenecks and to modernize the maintenance facilities and procedures. In support of PR's move in this direction, the Bank Group approved the Tenth Railway Project (Credit 684/Loan 1372-PAK) in March 1977 for US$60 million.

3.03 Under the Tenth Railway Project, PR began tackling the following issues: (i) long overdue investments to improve telecommunication and signaling; (ii) the re-engineering of the older mainline diesel electric locomotives; (iii) the completion of the Kotri bridge and the Pipri marshalling yard complex; and (iv) the setting up of three concrete sleeper factories. In monitoring the progress of the ongoing project, the Association has also been involved in the work required to ensure the optimum utilization and benefit from completed and ongoing investments. The Bank Group's missions have been supplemented by consultants in such fields as motive power technology and maintenance, telecommunications, management information systems, and intermodal transport. Also, arrangements were made at various times for PR officers to visit railway and industrial organizations outside Pakistan. The findings of Bank staff, consultants and PR officials on the various subjects have been extensively discussed with GOP/PR and form the basis for the for- mulation of the proposed project. All parties agree that the IDA Credit should be directed to a limited number of high priority items, instead of being used as a general support of PR's Medium Term Development Plan.

B. Objectives

3.04 The objectives of the proposed project are:

(a) modernization of maintenance facilities and improved reliability of diesel electric locomotives;

(b) improvement of PR's operational and financial performance through the introduction of a real-time management information system; and

C. Description

3.05 The project includes:

(a) improvements to locomotive maintenance, consisting of (paras. 3.06-3.17):

(i) expansion and equipping of the Rawalpindi Central Diesel Locomotive Works (CDLW) to remanufacture a number of critical components and assemblies (paras 3.11-3.12); -17-

(ii) provision of critical machinery and layout changes at Karachi Locomotive Shed to enable this shed to change over to the unit exchange maintenance system (UEMS) (para 3.13);

(iii) provision of components and assemblies as an initial stock to introduce a unit exchange pool (UEP) (paras 3.15-3.17).

(b) acquisition and installation of a data network and hardware, development of software, and implementation of a management information system (paras 3.18-3.20);

(c) expansion of Lahore Dry Port (LDP), construction of tracks and storage, acquisition of rolling stock and handling equipment for the operation of international container services (paras 3.21-3.22);

(d) provision of test equipment, technical advisory services and staff training in support of and to achieve the project objectives (paras 3.23-3.27); and

(e) provision of maintenance spares (revenue spares) for locomotives (paras 3.28-3.31).

Locomotive Maintenance Improvements

3.06 The economic first life of a diesel electric locomotive is generally considered to be 15 to 20 years. At this age, the mechanical components - bogies, engine, pumps, controls, etc. - are either in need of major overhaul or are obsolete. The electric traction and control system also deteriorates with age and service. Both of these conditions result in costly in-train failures which inflict a heavy toll on the railway's operating efficiency. Generally, one of two schemes for heavy maintenance to deal with these problems is used - one is triggered by failure of major components, or by the condition of major components as judged by inspection; the other is characterized by a predetermined schedule of repairs and periodic overhauls (POH). Pakistan Railways practices the latter.

3.07 In either maintenance approach, some basic requirements must be met. High standards of workmanship and materials must be maintained, an adequate supply of spare parts is necessary, and additional work must be performed at the third (Class I) cycle repair (15 to 20 years) if the unit is expected to perform satisfactorily beyond that point. -18-

3.08 The work done over and above replacement and repair of parts at POH is usually referred to as "remanufacturing" and involves renewal of moving parts and those components which deteriorate with age, heat, oil or other contamination. The application of latest technological developments as a part of the remanufacturing provides additional efficiency and reliability. Remanufacture of diesel electric locomotives is feasible and in many cases can be an economical alternative to purchasing new ones.

3.09 In PR's case, POH work (the three-year Class II and six-year Class I) is for the most part carried out at the Central Diesel Locomotive Workshop (CDLW) at Rawalpindi with overflow and odd brands of locomotives being assigned to the Karachi shed. In addition, re-engining of a limited number of units has been assigned to the Moghalpura Workshop in Lahore. Inspections and running repairs are carried out at the base sheds - Karachi, Rohri, Lahore and Kundian and at the advanced sheds at Quetta, Sibi, Samasata and Rawalpindi.

3.10 The locomotive fleet of 474 units is a mixture of types from seven manufacturers from five countries and yet another type is being added from Japan this year. Table 6 lists the number of locomotives by type, manufacturer and age. The variety of manufacturers in itself creates a cumbersome maintenance situation. In view of the fleet's age and problems associated with importing spare parts, the maintenance plans must be comprehensive and well laid and remanufacture becomes more attractive if the fleet of locomotives is expected to perform reliably. No such provision has been adopted by PR up to now, with resultant high on line failure rates, poor availability and reduced tractive effort. Unless this is changed, low availability and reliability will continue and early replacement of a large number of units will be required. This project will provide facilities for remanufacture which can be expected to improve reliability and increase locomotive life.

3.11 A keystone of this plan is the centralization of much of the heavy maintenance and locomotive remanufacture at one workshop, along with the remanufacture of critical components. When the requirement for skilled manpower, specialized facilities and quality control are coupled with the need to run locomotives over the entire system as opposed to local assignment, the decision to centralize heavy maintenance is clear. Under the project, the Central Diesel Locomotive Works (CDLW) at Rawalpindi will be equipped to accommodate the remanufacture and heavy overhaul of locomotives for the entire railway. Because of the late start in setting up such facilities and supply systems, it will be necessary to maintain and even improve some of the existing outlying sheds. These include some heavy repair at Karachi shed and the remanufacture of some electric components at Moghalpura Workshop where the necessary facility is almost completed. Once the fleet has been brought up to acceptable standards of reliability, these activities could be moved to CDLW. For this reason, modernization investments at Karachi and Moghalpura have been limited to the minimum requirement -19-

to take advantage of the unit exchange maintenance system and to supplement CDLW in the catch-up period.

3.12 CDLW modernizationwill include addition of buildings to house an electric traction shop, machine shop, central components shop, a crankshaft shop, and a cylinder liner chrome plating and reconditioningshop. In addition to the new buildings, the existing works will be refitted to provide these specialized remanufacturingactivities:

(a) engine block shop;

(b) air compressorshop;

(d) turbo superchargershop;

(e) fuel injector and governor room; and

(f) Power assembly reconditioningline.

The main shop buildings will also be expanded so that the additional space for locomotive remanufacture(especially engine assembly) can be accom- modated.

3.13 The proposed improvementsat Karachi shed consist of completionof the already planned expansion of the roof over the main track and changes in machinery and layout to take advantage of the unit exchange maintenance system. This shed will be the key point for heavy running repair for many years to come, thus the investmentswill not be lost after catch-up is complete.

3.14 This project component (including CDLW, Karachi shed, quality control equipment and component transport equipment)is estimated to cost about Rs 344.6 million (US$32.8 million equivalent)with a foreign exchange componentof Rs 151.4 million (US$14.4million equivalent). A summary of costs is shown in Table 9.

3.15 In addition to a capacity to remanufacture,any good heavy maintenance scheme (especiallyfor an older fleet) must include a unit exchange componentssupply system. The components can be supplied as new or remanufacturedby the railway in its workshops. PR made an attempt at unit exchange maintenanceseveral years ago but allowed it to collapse when make-up spares were not imported in adequate quantitiesand no remanufacturing capability existed. The proposed project would provide the needed pool of spare parts for a unit exchange system of maintenance. -20-

3.16 The unit exchange maintenance system (UEMS) has important advantages over the remove-repair-replace approach now practiced by PR. Some of them are:

(a) parts can be salvaged which would otherwise be scrapped;

(b) a smaller inventory of parts is required because the remanufacture and assembly process is centralized;

(c) the reliability and longevity of parts (and ultimately of locomotives) are improved because high quality is maintainable at a central workshop where manpower and machines are specialized,

(d) technical improvements can be incorporated uniformly by the centralized work program; and

(e) locomotive utilization is greatly enhanced because worn out components are quickly replaced with ones from the unit exchange pool.

3.17 A list of critical components for the unit exchange pool is shown in Table 10. This project component is estimated to cost about Rs 198.9 million (US$18.9 million equivalent) with a foreign exchange component of Rs 142 million (US$13.5 million equivalent). It is important that as the pool of components is scrapped (as worn or damaged beyond repair), it be maintained and expanded as fleet size increases or other changes take place. During negotiations, assurances were obtained from GOP that PR will maintain, and expand as necessary, the unit exchange pool of components as required by maintenance needs and as agreed from time to time with the Association.

Management Information System

3.18 As described in paras 2.08-2.18 above, PR has been experiencing growing problems in rolling stock and motive power utilization and maintenance, adjustment to changing freight traffic patterns and control over day-to-day operations and costs as shown by disappointing operational and financial results of recent years. Recognizing PR's difficulty in control- ling an increasingly complex transport system, provision was made under the ongoing Tenth Railway Project for installation of a modern telecommunication network on PR. Implementation of this component began in late 1980 and completion is expected before mid-1983. The completion of the telecommunication network will provide PR with the opportunity to overcome the lack of management tools to exploit the potential for operational and financial improvements.

3.19 Under the project, support will be provided for PR to acquire and install a data network, acquire hardware and software, technical assistance -21-

and staff training, and for development and implementation of a modern real- time management information system (MIS). This project component is estimated to cost Rs 129.8 million (US$12.3 million equivalent) with a foreign exchange component of Rs 63.4 million (US$6.0 million equivalent).

3.20 There is no doubt that completion of the telecommunication network and introduction of the MIS will bring about great potential for improvements in PR's operating, and consequently, financial performance. However, the implementation of this management tool will need to be supported by changes in the management structure and operations, described in Chapter II-above, in order to realize full benefits of GOP's investments in PR and to enable the Railways to play an efficient economic role.

Containerization

3.21 There has been a sharp increase in international container traffic to Pakistan in recent years. Until recently containers were broken at the Karachi Port. The establishment of a regular container service between Karachi and Lahore, with custom formalities performed at Lahore Dry Port (LDP), which is owned and operated by PR, would facilitate international traffic including exports; generate important savings in cargo handling time, pilferage and spoilage; and reduce transport costs. This project component will assist PR and the Pakistan transport system to properly move the expected and promising container traffic.

3.22 This component will include the procurement of mobile cranes, forklifts, the modification of 60 existing rail flat wagons, and the procurement of 100 additional ones especially designed for container handling. Ancillary facilities at LDP required to handle of unit container trains will also be provided. In addition, assistance will be given to Karachi Port Trust the development of a container information system and the design of a new tariff structure. As shown in Table 11, this project component is estimated to cost about Rs 149.0 million (US$14.2 million equivalent) with a foreign exchange component of about Rs 47.6 million (US$4.6 million equivalent).

Technical Assistance and Training

3.23 Technical advisory service for CDLW under the project will include assistance during the preparation of specifications, construction, commissioning and start up, amounting to an estimated 12 man-months at about US$11,000 per man-month, including transportation and subsistence. In addition, training of CDLW staff and work force in respect of specialized tech- nologies required for operation and maintenance of the facility, would be carried out by the machinery suppliers and foreign railways with similar facilities. The training requirement is estimated at 42 man months of over- seas training and 800 man months of local training. -22-

3.24 Under the ongoing Tenth Railway Project, PR carried out a comprehensive traffic costing exercise with the assistance of consultants SOFRERAIL (France). The intent of this study was to provide PR with the basis for its fares and tariff structure and to strengthen its marketing activity. Under this project, it is envisaged that additional technical advisory services and training will be provided for improving and strengthening of the Costing Cell. The scope and composition of this project component was agreed upon during the negotiations.

3.25 A part of PR's mainline (the 288-km Lahore-Khanewal section) was electrified a decade ago. The original intention was to continue electrification of the mainline to Karachi, another 925 kms from Khanewal. Because of resource constraints and investment priorities, electrification has not been extended past Khanewal. The limited electrified section has not brought the potential benefits associated with electrification since it has created additional operating and maintenance burdens on the system. There is a theoretical advantage in completing electrification, particularly as the cost of imported oil increases and PR has to make decisions concerning the replacement of its Diesel Electric and steam locomotives. Operating problems, replacement needs and staggering increases in imported fuel and investment needs for maintenance facilities related to replacement of steam traction, have warranted a study to determine the feasibility of further extension of electrification. Under the project, support will be provided for a feasibility study of electrification of mainline Khanewal-Karachi. This study is estimated to cost Rs 10.5 million (US$1.0 million equivalent).

3.26 In order to assist PR in detailing plans of actior for removing bottlenecks in train operation, mechanical maintenance and optimal utilization of carrying capacity, the mission suggested, and PR agreed to, the provision under the project for employment of 15 man months of appropriate experts. This project component is estimated to cost about Rs 2.7 million with (US$0.25 million equivalent) at about US$11,000 per man month including subsistence and transportation.

3.27 Under the project, support will be provided for PR to acquire software expertise for developing of adapting and modifying and implementing a management information system. In addition the project will support staff training required for developing or modifying and implementing the MIS. Also under the project, support will be provided to Karachi Port Trust (KPT) to acquire the software needed for proper handling of containers at Karachi. This project component is estimated to cost Rs 16.8 million equivalent (US$1.6 million equivalent).

Revenue Spares

3.28 The unit exchange maintenance system, in addition to components and subassemblies described above (so-called capital spares), requires other parts and spares, many of which are not reclaimable (revenue spares), which -23-

are as critical for proper maintenance. PR has had extreme difficulty in parts acquisition, which for some time was considered purely a problem caused by shortage of foreign exchange, and this difficulty became more severe as the size, age and variety of the fleet increased. Under the ongoing Tenth Railway Project, the Bank Group provided US$5.0 million to help purchase critical spares for three years, and GOP actually allocated more than the agreed amount in counterpart funds. The result, however, was disappointing. After almost three years of research and review, it became evident that the complexity of spare parts requirement, the procurement and usage cycle, and the extent to which it is affected by various factors, had not been fully recognized.

3.29 Low amounts and, more importantly, erratic allocation of foreign exchange by GOP was found to be one of the major factors contributing to the problem of spare parts on PR. In addition, the Railways and the Bank Group's close review of the spare parts problem indicated a number of other equally important bottlenecks among which are:

(a) complicated and sometimes impractical procurement procedures not conducive to ever changing needs of the users and inflexible production and supply sources;

(b) slowness of banking procedures for the processing of financial documents in both Pakistan and the supplying countries;

(c) frequent price changes, which increase the difficulty of control- ling and processing such large number of transactions; and last but not least

(d) lack of attention and follow-up at the appropriate levels of PR's management.

3.30 As part of preparation of the proposed project, an in depth study of the spare parts problem was made by PR. The findings and the recommendations of the study have been reviewed by GOP and IDA. In addition to improvements to be effected in PR's purchasing and stores (para 2.02) for improving the spare parts situation, a number of other steps have been identified for implementation such as:

(a) foreign exchange should be lined up well before the beginning of financial year so that the placement of orders and opening of the letters of credit could be done in an orderly and timely fashion;

(b) untied or cash foreign exchange should be provided for the procurement of locomotive spares; if financing is arranged through aids, credits, loans, etc., the operating conditions of such funds should be carefully studied to ensure they meet the needs of the intended purpose; -24-

(c) a simplified procedure should be adopted by the banks in Pakistan and the suppliers' banks to ensure prompt and accurate processing of the commercial papers;

(d) arrangements to be made for a forwarding agent;

(e) utilization of published price books; and

(f) close monitoring of the spare parts inventory requirements and procurement.

3.31 The proposed project includes PR's locomotive spares needs for the next three years. This component is estimated to cost Rs 445 million (US$42.4 million equivalent) with a foreign exchange component of Rs 318 million (US$30 million equivalent). During the negotiations, agreements were reached aimed at removing the remaining institutional and financial obstacles for a smooth functioning of the spare parts system. To ensure coverage of immediate needs and make a timely start in implementing the agreed upon program, under the project a provision of US$5.0 million equivalent will be made to assist GOP/PR in a program to eliminate bottlenecks in spare parts acquisition.

D. Cost Estimates

3.32 Items included in the project were chosen from PR's Medium Term Development Plan. Details of the principal items included in the project are shown in Table 12. In addition, the project includes estimated provision for a three-year slice of PR's motive power spare parts requirement. The project is estimated to cost Rs 1,393.0 million (US$ 132.7 million equivalent with a foreign exchange component of Rs 799.0 million (US$76.1 million equivalent).

3.33 The cost estimates are based on prices of April 1982. They are based on ex-factory prices for similar items manufactured in Pakistan and on recent prices of imported equipment. A physical contingency allowance of 10% has been incorporated in the cost of civil works for CDLW and LDP. This is satisfactory, since very little earthwork is required; architectural designs are for relatively simple buildings; and industrial engineering is complete. A physical contingency of 7.5% for limited items of machinery and equipment is included for CDLW, which is reasonable. Price contingencies for all project items have been included to cover expected price increases until contracts are awarded as well as price escalation during implementation and commissioning of CDLW and LDP. The price contingencies for all items in the project are based on expected local cost increase of 12% in 1982, 12% in 1983 and 11% in 1984; and foreign cost increases of 8.0% in 1982, 8.0% in 1983 and 7.5% in 1984. The foreign exchange rate was assumed to be US$1.00 = Rs 10.5. During negotiations, the cost estimates were discussed and confirmed. The cost estimates are summarized below: -25-

US$ Million Rs Million US$ Million Proposed Project Item Local Foreign Total Local Foreign Total Credit a. Maintenance Improvements (i) Central Diesel and other Shops 193.4 150.6 344.0 18.4 14.4 32.8 14.4 (ii) Unit Exchange Components 56.9 142.0 198.9 5.4 13.5 18.9 13.5 250.3 292.6 542.9 23.8 27.9 51.7 27.9 b. Management Information System (i) Data Network 12.1 12.5 24.6 1.2 1.2 2.4 1.2 (ii) Hardware 41.8 39.6 81.4 3.9 3.7 7.6 3.7 (iii) Software 12.5 11.3 23.8 1.2 1.1 2.3 1.1 66.4 63.4 129.8 6.3 6.0 12.3 6.0 c. Containerization 101.4 47.6 149.0 9.6 4.6 14.2 4.6 d. Technical Assistance and Staff Training 1/ (i) Technical Advisory and Training 8.4 16.8 25.2 0.8 1.6 2.4 2.2 (ii) Electrification Study 7.3 3.2 10.5 0.7 0.3 1.0 1.0 15.7 20.0 35.7 1.5 1.9 3.4 3.2

Base Cost Estimate 2/ 433.8 423.6 857.4 41.2 40.4 81.6 41.7

Contingencies (i) Physical 13.2 - 13.2 1.3 - 1.3 - (ii) Price 20.0 57.3 77.3 1.9 5.4 7.3 3.3 33.2 57.3 90.5 3.2 5.4 8.6 3.3 e. Revenue Spares 127.3 318.2 445.5 12.2 30.3 42.5 5.0

GRAND TOTAL 3/ 594.3 799.1 1,393.4 56.6 76.1 132.7 50.0

1/ Includes all technical assistance and training to be provided under the project. 2/ Includes Rs 187 million in taxes and duties. 3/ Includes Rs 314 million in taxes and duties. -26-

E. Financing

3.34 Total foreign exchange component of the project amounts to US$76.1 million equivalent. The Association will finance the foreign exchange component of all items except the cost of revenue spare parts, of which US$5.0 million (about 15%) is to be provided. The credit of US$50 million equivalent represents about 49% of the project costs excluding taxes and duties. During negotiations, GOP agreed to finance the remaining US$82.7 million equivalent including US$25.0 foreign exchange for revenue spares and a commitment to release funds in a timely manner and in accordance with the implementation schedule. An amount of up to US$1.25 million is to be retroactively financed under the Credit for expenditure after February 1, 1982 to meet the foreign exchange costs of data network and software selection for the PR's MIS and KPT's container marshalling program.

F. Implementation

3.35 PR will be responsible for the implementation of the project as part of its ongoing works program, except for the port container yard information system which will be handled by KPT. It has the necessary capability and competence to carry out the project. A time-phased implementation schedule is shown in Chart IBRD 23803. This schedule, as well as progress reporting arrangements (including the preparation of a final report upon completion of the project) was discussed and agreed to during negotiations.

3.36 CDLW. Detailed engineering and design of the project is completed. Construction of the shop expansion is to start by October 1982 and be completed by December 1984. Tendering of plant and machinery for CDLW will begin by January 1983 and will be completed by July 1983. During the negotiations, assurance was obtained that PR will receive such budget allocations as will be sufficient to allow employment of consultant services as and when required, including technical support services from suppliers of plant technology to assist in installation of equipment, start-up and monitoring of operations.

3.37 Also, PR will prepare by December 1982 and forward to the Associa- tion for review a comprehensive training program for the CDLW. At the time of negotiations assurance was obtained from PR that CDLW will be adequately staffed at all times with competent managerial and technical personnel and that changes in management staff will be nominal and not detrimental to implementation and operation.

3.38 Management Information System. PR will complete the study for choice of software and timetable for implementation of the MIS by end December 1982. During the negotiations the schedule worked out at appraisal for implementation of this component was confirmed. -27-

3.39 LDP. Plans for paving, construction of unit train tracks and warehouses have been completed. Construction began in January 1982 and tendering for container handling equipment will start no later than October 1982. This timetable was confirmed during the negotiations.

3.40 Technical Assistance and Training. During negotiations, the technical advisory services need for CDLW, details of the training program, the timetable for feasibility study of electrification of Khanewal-Karachi, and the technical advisory services to assist PR management in operating improvements as worked out during the appraisal, were discussed and confirmed.

G. Procurement

3.41 Items financed by the Association will be procured under international competitive bidding in accordance with Bank/IDA guidelines except for: (a) proprietary items which PR procures from particular sources because of the need for procurement under license or for continued standardization of equipment; and (b) contracts of US$50,000 equivalent or less, where the advantage of ICB would be clearly outweighed by the administrative burden thereof. The proprietary items to be financed under the project are estimated to cost about US$5 million equivalent or about 10% of the proposed credit. These items will be used for a unit exchange maintenance system for existing locomotives. During negotiations, the final list of proprietary items to be financed under the project was discussed and agreed to with PR. The total amount of contracts less than US$50,000 equivalent not covered by ICB is estimated to represent a very small portion (less than US$1 million equivalent) of the proposed credit.

H. Disbursements

3.42 Subject to review and agreement with the Association, savings in any category of the proceeds will be available to cover increases in any other category except proprietary items. Disbursements are expected to be completed by December 31, 1985. Disbursements under the project would be made against: (a) 100% of the foreign exchange cost of imported items; (b) 100% of foreign exchange cost of training, technical advisory services and installation and inspection of equipment; and (c) 70% of local costs of technical advisory services. The estimated disbursement schedule (Table 13) is based on Bank-wide disbursement profiles in the transport sector, on our experience under the on-going Tenth Railways Project in Pakistan (Credit 684/Loan 1372-PAK), and on the nature of the items proposed for financing under this credit. The disbursement period for this project is estimated to be shorter than the Bank-wide transport sector average because: (a) about 72% of the credit funds will finance the Locomotive Maintenance Improvement component, which consists largely of machinery and spare parts; (b) the civil works involved are already past the planning stage and are, anyway, a relatively small part of the credit (19%); (c) the Containerization component is mainly equipment and rolling stock for which no abnormal delays are expected; -28-

and (d) the remainder of the project, i.e. management information system, technical assistance and training, will not have a great impact on the disbursement schedule. During negotiations, the disbursement schedule was discussed and agreed with GOP and PR.

IV. ECONOMIC EVALUATION

A. General

4.01 In broad terms, the justification of this project is predicated on the fuller utilization of PR's existing assets, which will be possible by:

(a) the introduction of locomotive maintenance improvements, including the establishment and operation of a Unit Exchange Maintenance System (UEMS) that will increase the availability of motive power by reducing the amount of locomotive downtime required for repair and maintenance; under the proposed system, locomotives will not have to remain idle while their worn-out components are repaired; instead they will be able to leave the workshops and sheds as quickly as the worn-out components are removed and new or remanufactured ones are installed and tested; in addition, quality control and testing equipment to be provided under the project will result in improved quality of remanufactured components, which will increase locomotive reliability;

(b) the creation of a Management Information System that will utilize the telecommunications infrastructure financed under the Tenth Railway Project; and

(c) the development of container rail services between Karachi and Lahore, which will attract to the railways a significant share of inland container traffic between these cities.

B. Locomotive Maintenance Improvements

4.02 The main benefits of this component (paras 3.06-3.17 and Table 14) will be the following:

(a) a reduction in locomotive downtime during scheduled heavy and light repairs; this reduction would be equivalent to an increase in the -29-

fleet size by about five "additional" locomotives; 1/

(b) an increase in the availability of remanufactured components, which will be reflected in a 2 % increase in locomotive availability or 9.5 "additional" locomotives;

(c) a reduction in the number of locomotives currently out of service for want of spares from about 20 to about 10; this reduction would result from the transfusion of new spares and the continued supply of remanufactured components; on these grounds, about 10 "additional" locomotives may be attributed to the project; and

(d) the currently low tractive effort of the diesel locomotive fleet (about 10% of the electric motors aboard locomotives are not working) will be increased by replacing unserviceable motors with new or remanufactured ones; 2/ since the 10% increase in tractive effort is not likely to be fully utilized, it is estimated that the actual benefit associated with this item will be equivalent to only a 5% increase in fleet size, say 23.5 "additional" locomotives.

The combined impact of (a), (b) and (c) would result in improved availability of the diesel locomotive fleet, which is currently estimated at 83% and is expected to grow to 88% at the end of the project implementation period.

4.03 As described above, the total benefits to be derived from the Unit Exchange Maintenance System, once fully operational, will be equivalent to a fleet size "increase" of 48 locomotives. These benefits, which are supported by conservative assumptions and yet per se provide grounds for economic

1/ The diesel locomotive fleet, which consists of 474 locomotives, under- goes two types of scheduled heavy repairs: Class I repairs are carried out every six years (their duration will be reduced by seven days) and Class II repairs every three years (their duration will be reduced by four days). In addition, light scheduled repairs are performed annually on all locomotives (their current duration of seven days will be reduced by about 20%).

2/ The diesel locomotive fl~eet is operated by 2,542 electric motors, of which about 250 are not worhing; PR also has 65 unserviceable electric motors not currently aboard iccomotives. Under the project, it is expected that 66 electric motors will be imported, which will act as an emergency input and will become the basis of improved maintenance of the electrical systems. -30-

justification, will be supplemented by the following additional benefits, which have not been included in the economic evaluation:

(a) the reliability 1/ of train services will improve, thus reducing t-affic disruptions and increasing the carrying capacity of the railways; and

(b) the Unit Exchange Maintenance System will result in a longer life of diesel locomotives and remanufactured components 2/ which will reduce PR's import requirements.

4.04 The "additional" motive power generated by the Unit Exchange Main- tenance System will be used to carry freight traffic, which would otherwise be carried by truck 3/ at a higher economic cost. It is reasonable to assume that PR will use its increased motive power to carry freight (instead of passengers) because:

(a) in compliance with covenants agreed under the Tenth Railway Project and under the proposed project (para 6.01), PR will give greater priority to freight traffic in the allocation of motive power;

1/ As opposed to "availability", which reflects the proportion of locomotives in working condition at a given point in time, the concept of ?Ireliability" indicates the locomotive's ability to perform adequately over a period of time according to a planned assignment, i.e., to do the job it was intended to do.

2/ The expected life of diesel locomotives (costing about US$1 million apiece) will be doubled from 18 to 36 years. The life of major components to be remanufactured under the project (now being imported at a rate of about US$15,000 per locomotive per year) will be increased by about 25%.

3/ As of December 1981, the average long-run economic cost (fixed and variable) of rail transport for a typical haul (such as the 1200 km Karachi-Lahore stretch) was estimated at Rs 0.15 per ton-km. The average economic cost (including investment in vehicle and operating costs but excluding investment in right-of-way) of road transport was estimated at Rs 0.23 per ton-km. Because the above road transport cost excludes road construction and maintenance, project benefits are being underestimated and the economic rate of return will be conservative. The above costs have been computed on the basis of data provided by consultants Sofrerail (Annex 1). -31-

(b) macroeconomic analyses suggest that long-haul, rail-suitable freight traffic in Pakistan is significantlygreater than the amounts currently carried by PR, and this traffic is likely to grow in the future;

(c) while in recent years, PR's poor performancewas a major reason for the stagnation of rail freight traffic, it is expected that its improved performanceunder the project will put PR in a better position to attract freight traffic; and

(d) GOP and NLC are aware that long-haul freight traffic should, ceteris paribus, be allocated to the railways.

C. Rail Container Operation

4.05 The introduction and continued operation of efficient and reliable container rail services between Karachi and Lahore are likely to have a significant long-term impact on the composition and volume of Pakistan's import and export trade. On the export side, the country will particularly benefit from accelerated growth of containerizeable goods such as bagged rice and light manufactures (including carpets, cotton, yarn, cloth and sporting goods), which already account for about 40% of total exports. The growth rate of rail container traffic will not be constrained by total demand but rather by PR's own ability to attract cargo away from the trucking industry. As an indication of potential traffic, it is estimated that about 40,000 TEUs will be handled at the Port of Karachi in 1981/82, of which 30% contain freight coming from or going to Lahore and points north of Lahore. If Pakistan'sinternational trade follows worldwide container growth patterns, it would not be unreasonableto forecast, as does Karachi Port Trust, that the number of TEUs to be handled at the port will reach the 80,000 mark in 1985/86. The economic justification of the rail container operations is predicated on rail container traffic gradually building up to 30% of containers handled at the port (Table 15). Critical to the success of this component is PR's ability to:

(a) increase the frequency of its container service from one train a week at project start-up to one train a day by 1988/89; 1/

(b) provide a service that competes favorably with the trucking industry, i.e., with transit times between Karachi and Lahore under 30-36 hours and freight rates not above the Rs 5,000-6,000 per TEU range; and

1/ Each container train will consist of 25 bogie wagons carrying 50 TEUs, and will have a turnaround time of 5 days. The proposed investment will be sufficient to sustain comfortably the proposed target frequency. -32-

(c) provide a service with a degree of reliability and punctuality similar to that currently enjoyed only by passenger trains and the super-parcel express.

4.06 The actual impact of a technological change such as the introduction of container services is not easy to quantify because it includes, among other things, project-related increases in trade volumes, export shifts towards goods with higher value added, and reduced costs of cargo handling at ports. For the purpose of the economic analysis, the above benefits have been disregarded and only those listed below have been quantified: 1/

(a) the proposed container operation will be one of the means at PR's disposal to attract a larger share of long-haul rail-suitable traffic in Pakistan; in the absence of rail container services, the bulk of such traffic would be carried by road; therefore, each ton-kilometer of container traffic to be carried by rail involves a benefit to the economy, equivalent to the difference in transport cost between rail and road (para 4.04);

(b) containerization normally leads to reduced cargo pilferage and damage, which is estimated at 5% of cargo value;

(c) another advantage of containerization is quicker cargo handling at ports, which in turn leads to shorter ship turnaround times; as shipping lines benefit from such time savings, they encourage containerization by reducing freight rates anywhere from 5 to 12-1/2%; it has been conservatively assumed that a 5% reduction in shipping rates will be a benefit attributable to the component; and

(d) containerization permits a reduction in packaging costs, as certain goods will need less packaging while others will be packed in Pakistan instead of a nation with higher unit costs; it is estimated that the relevant

1/ Among the assumptions made in the economic analysis are the following: the average load of loaded container is about 12 tons; about 25% of containers are empty; the average value of container cargo is US$250 per ton; the distance between Karachi and Lahore is 1,200 kilometers; the average shipping freight rate paid on Pakistani imports and exports is US$40 per ton; and the average tax and duty incidence on capital costs is 25%, while that on operating costs is 20%. -33-

savings will amount to one-third of packaging costs, i.e., about 2.5% of cargo value.

D. Management Information System, Technical Assistance and Training

4.07 The benefits stemming from these components will appear in the shape of improved operations throughout the entire railway system. Though difficult to quantify, such benefits are likely to be greater in relative terms (per unit of investment) than those of the other two project components. For the purpose of economic evaluation, the costs of the MIS, technical assistance and training have been added to the cost of the Unit Exchange System, as they will help its successful operation.

E. Economic Justification and Sensitivity Analysis

4.08 In carrying out the economic analysis, taxes and duties included in capital and operating expenditures have been disregarded. The official foreign exchange rate has been taken as a good proxy for the relevant shadow rate. Shadow wages lower than market wages have been used where labor inputs will be partly supplied by currently under-utilized PR staff.

4.09 The rate of return of the Unit Exchange Maintenance System (Table 14), including the Management Information System as well as technical assistance and training, has been estimated at 17% on the basis of conservative assumptions indicated elsewhere in this report. The rate of return of rail container services (Table 15) has been estimated at 29%. The overall rate of return for the entire project is 18%. Sensitivity analyses have been carried out to assess the impact on the rate of return of departures from base case assumptions:

Base case 18%

If benefits are 15% less than expected 14%

If costs are 15% higher than expected 14%

If benefits materialize two years later 10%

In sum, a 15% reduction in benefits or a 15% increase in costs would bring about a 4-point drop in the rate of return. A two-year delay in project implementation would result in a drop twice as great. -34-

F. Risks

4.10 This project does not involve greater risks than those found in similar projects in the region. However, since the proposed systems and services are new to PR (the Unit Exchange Maintenance System, the Management Information System and the container rail services), it will be necessary to keep close supervision during project implementation; to this end, the project is likely to require higher than usual supervision input on the part of Bank staff. As has been indicated elsewhere, the project's success and justification very much depend on GOP's and PR's commitment to give priority to freight traffic in the allocation of motive power, and on PR's ability to run reliable and efficient rail container services.

V. FINANCE AND EARNINGS

A. Introduction

5.01 GOP's stated policy is that PR should earn revenues sufficient to cover all operating expenses (including a depreciation charge), debt service and should pay a dividend to the government. As GOP determines the level of fares and the costs of most of PR inputs (e.g., fuel and labor), the attain- ment of the policy objective is frequently frustrated by the effects of other government policies.

5.02 Financial arrangements between PR and GOP, accounting procedures and arrangements for audit are, with some improvements, the same as when the 10th Railway Project was appraised in 1976. Reporting has been improved and the Accounts Department now produces timely monthly management and annual accounts. In 1979, PR completed an inventory of its fixed assets and valued them at replacement cost, which is now the basis of depreciation. A Costing Cell has been established and is to be expanded. The introduction of a Management Information System (MIS), as envisaged by the proposed project, will enable the Costing Cell to provide information other than historical accounts, particularly detailed data on the costs of different types of traffic. PR's annual accounts are audited by the Auditor-General (AG) of Pakistan. PR has caught up on earlier arrears of work and the AG completed his report for 1979/80 in June 1981. Agreement was reached at negotiations that future audited accounts will be available no later than nine months after the end of each fiscal year.

B. Recent Changes in Financial Policies

5.03 In 1979, GOP set up an "Experts Committee on the Railways" to examine the financial arrangements between the Railways and GOP. The Commit- tee reported at the end of 1980, and GOP has implemented almost all of its recommendations. The major changes are: -35-

(a) Payment of a Dividend on Capital at Charge: Previously PR was required to pay a dividend to GOP even if its earnings were insufficient to generate sufficient cash. The payment was financed by PR taking up an interest bearing loan from the Treasury or commercial banks. This practice has been changed and the dividend will be paid to GOP only when the cash to do so is available after meeting operating costs, appropriation to funds and debt service.

(b) Interest on Loans from GOP: Interest payments were treated in the same way as dividends. If a shortfall of revenues left PR with insufficient cash to meet its obligations to the Government, it borrowed from GOP to meet the payments. Should similar circumstances arise in the future, 1/ sums unpaid will be recorded in PR's accounts as liabilities to be met from future surplus.

(c) Depreciation of Fixed Assets: The charge for depreciation, which is termed an Appropriation to the Depreciation Reserve Fund (DRF), was previously determined annually at about 12% of total revenues. It is now based on the depreciation of the fixed assets valued at replacement cost.

C. Past Performance

5.04 PR's revenue and expenditure accounts for the five years 1976/77 to 1980/81 are shown in Table 16 and summarized below:

1/ e.g., in FY81/82 -36-

Summary of Revenue and Expenditure 1976/77 - 1980/81 (in Rs million)

1976/77 1977/78 1978/79 1979/80 1980/81

Operating Revenues 1728.5 2197.7 2273.6 2678.8 2931.7

Working Expenses 1536.4 1748.5 1929.1 2483.6 2778.0 Appropriation to Depreciation Reserve Fund 207.4 263.7 272.8 370.0 420.0

Net Operating Revenue (Loss) (15.3) 185.5 71.7 (174.8) (266.3)

Interest on Loans 143.7 154.6 175.7 305.8 135.5 Appropriation to Improvement Fund 25.1 35.2 39.4 54.9 60.0 Dividend 34.3 154.1 171.9 - -

Net Operating Surplus/Loss (218.4) (158.4) (315.3) (535.5) (461.8)

Operating Ratio 101 92 97 107 109

Passenger/Km Million 13,198 15,375 16,712 17,316 16,311

Freight Ton/Km Million 6,793 7,580 8,455 7,555 7,910

Note 1. The policy changes which resulted from the Expert Committee's Report (para 5.03) are reflected as follows:

(a) Appropriation to DRF: figures for 1979/80 and 1980/81 are calculated on assets valued at replacement cost. On the previous basis, the charges would have been 321 million and 352 million.

(b) Dividends were paid by PR taking up loans from GOP.

(c) Interest on Loans: the lower costs for 1980/81 resulted from the cancellation of earlier loans taken up to finance dividends and other payments to GOP.

Note 2. Figures of Freight Ton-kms carried are for Revenue Earning Traffic and exclude PR's own departmental traffic.

Agreements made in Credit 684-PAK envisaged that PR's finances would improve so that from FY77/78 revenues would be sufficient to cover operating expenses and debt service and, from FY78/79, they would also be sufficient to earn an increasing percentage of the dividend until 100% is reached by FY81/82. -37-

Although dividends were paid up to FY79, the earnings were not adequate enough to provide the cash. There are four underlying reasons for the decline in PR's financial health:

(a) costs have risen faster than anticipated. Fuel prices have increased sharply, partly as a result of GOP's policy on energy prices. Between 1976 and 1981 total revenues increased by 170% while total working expenses went up by 185%. The cost of labor shows the lowest percentage increase due to action by PR to reduce staff numbers. An analysis of changes in costs and revenues is given in Table 17;

(b) the low rates charged for passenger services which do not cover the variable costs of operation;

(d) the shortcomings in management (described in Section II).

5.05 PR's operating expenses include costs which would not normally be borne by a commercial organization. By tradition PR provides its employees with medical, welfare and educational services and was a pioneer in doing so before facilities were generally available. The facilities include 60 schools with an enrollment of over 40,000; 75 dispensaries and hospitals with 1,300 beds. The annual expenditure on these services for 1980/81 was about Rs 113 million (equivalent to 9% of passenger fares or 4% of working expenses). PR has a Police Department with a strength of 7800 (or 6% of the total employees) which costs Rs 48 million a year; the Department is considerably in excess of PR's needs for security. The decision by GOP that PR should provide these non-commercial services is not in question, but it is felt that the costs should be separately identified in PR's accounts and agreement to this effect was reached at negotiations. In viewing PR's operating costs it also should be noted that the railways contribute to the general revenue of GOP. In 1980/81 PR paid, as part of working expenses, an estimated Rs 330 million in duties and taxes (about 12% of its working expenses). These two items were equivalent to PR's operating loss in 1980/81.

5.06 The DCA for Credit 684-PAK includes a further agreement that from FY79/80 the revenues of each service, passenger and freight, would be at least sufficient to cover its variable costs. This was also recommended by the Experts Committee. The extent of losses on passenger services was revealed in 1978 by a costing and traffic study done by consultants as part of the 10th Project. Passenger fares were increased by 20% in July 1979 and by 30% in January 1980 to a level where revenues exceeded the variable costs of services. However, because of subsequent increases in costs, for the whole of FY80/81 revenues from passenger service were estimated to cover only 86% of the variable costs and 60% of total costs. In that same year freight -38-

revenues exceeded variable costs by 68% and total costs by 18%. The net operating deficit of Rs 462 million in that year was made up of a deficit of Rs 750 million deficit on passenger services and a surplus of Rs 288 million from freight. Passenger fares have not been increased since January 1980. The level of passenger fares is low, particularly for second class which accounts for 88% of passenger kms. The present charge for distances between 41 and 500 km is 5 paisa per km - (equivalent to half a U.S. cent). A passenger can travel 100 kms for the same cost as a pack of cigarettes. The fare level today is in real terms about 75% of that charged in 1972 (see Table 18). The largest loss, in percentage terms, is on the provision of air conditioned sleeping coaches - for which no justification is evident; the current fares are estimated to cover only 50% of total costs, and additional increases in charges for this service are justified (see para 5.10).

5.07 As a means of reducing its losses, PR has identified 62 passenger trains, of the 450 operated daily, whose variable costs exceed revenues by Rs 95 million. These trains have three characteristics viz., (a) their ridership is on average less than 50% of capacity; (b) they are on lines where there is at least one other train a day; and (c) there is an alternative bus transport service. PR has begun a program of cancelling trains at a rate of 2 or 3 a month and at negotiations agreed to continue this until the revenues from all passenger trains adequately cover variable costs.

5.08 The costing and tariff study also recommended a large number of changes in the tariffs for freight traffic designed to simplify the charging system, the majority of which were implemented in 1980.

D. The Next Few Years

5.09 The financial results will be largely determined by the achieve- ments of PR's new management in carrying more freight and by GOP in permit- ting increases in passenger fares. The Emmay Report shows that there is no shortage of freight traffic and that rail haulage is more economical than road for distances over 250 kms at rates which are profitable to PR. The financial forecasts have been prepared on the assumption that the decline in the volume of freight carried will continue in FY81/82 and this trend will be reversed slowly as the benefits of the 10th and 11th projects begin to show and freight services are given due priority. The estimates assume that PR will carry 8,250 million tons/kms in FY85/86 - a lower level than in FY78/79 which was the best of recent years. Changes in passenger train services and fares are sensitive political issues in Pakistan. There is a strong public demand for more seats, particularly on the long distance trains which are chronically overcrowded, partly because there are no comparable road coach services. GOP is attempting to meet the increasing demand and to do this at low prices. While decisions on passenger services and prices have a wider effect than PR's profitability, it is felt that the extent of the -39-

losses should be constrainedso that at a minimum revenues should cover variable costs.

5.10 During negotiationsit was agreed that GOP would take measures to ensure that:

(a) from FY82/83 the total revenues from passenger and freight services be sufficient to cover the costs of operation (including depreciation)debt service, the appropriationto the ImprovementFund and a prescribed percentageof the dividend on Capital-at-Charge,which shall be 100% not later than 1985/86;

(b) from FY83/84, revenues from passenger services be at least sufficientto meet the variable costs of services;

5.11 Financial forecasts, based on these assumptionsand covenants, are given in Table 19 and a summary follows. While any increases in costs over those assumed would have to be met by additional user charges the estimates do not take account of any cost reductionsdue to better management. The benefit of the proposed capital investmentis reflected in the availability of locomotivesto haul freight trains and thus higher freight revenues. The net operating revenue estimated for 1985/86 represents a Rate of Return on revalued assets of about 3%. The estimates, though conservative,are pru- dent. -40-

Summary of Revenue and Expenditure Forecasts 1980/81 - 1985/86 (in Rs million)

Actual Forecast Estimates 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86

Operating Revenues 2,932.0 3,055.0 4,140.0 4,820.0 5,500.0 6,320.0

Working Expenses 2,777.0 3,100.0 3,438.0 3,845.0 4,393.0 4,989.0 Appropriation to Depreciation Reserve Fund 420.0 440.0 470.0 541.0 601.0 620.0

Net Operating Revenue (Loss) (265.0) (485.0) 232.0 434.0 506.0 711.0

Interest on Loans 135.0 130.0 146.0 220.0 260.0 280.0 Appropriation to Improvement Fund 60.0 67.4 73.7 97.4 112.8 135..9 Dividend - - - - -

Net Operating Surplus/Loss (462.0) (682.4) 12.3 116.6 133.3 295.1

Operating Ratio 109.0 115.9 94.4 91.0 90.8 88.8

Passenger/Km Million 16,310 16,800 17,200 17,700 18,200 18,700

Freight Tons/Km Million 7,900 7,500 7,900 8,000 8,100 8,250

E. Financing Plan

5.12 Table 20 gives estimates of the Sources and Application of Funds for 1981 to 1985. The following summary shows the financing plan for the period of the Mid-Term Development Plan 1981-84. -41-

SUMMARY

Financing Plan 1981-1984

Rs Million US$ Million _

Funds Required

A. For Mid-Term Development Plan Additional Investment 1,943 185.0 31 Replacement 2,557 244.0 41 4,500 429.0 72

B. For Other Purposes Operating Loss 552 53.0 9 Debt Service 926 88.0 15 Improvements 1/ 193 18.0 3 Dividend 129 12.0 2 1800 171.0 29

Total 6,300 600.0 100

C. Sources of Funds PR Internal Cash Generation 1,870 178.0 26 Government Funds as Capital 2,524 240.0 40 Government as Loans 1,354 130.0 22 Government as Grant 552 53.0 8

Total 6,300 600.0 100

Based on US$1 = Rupees 10.5

1/ Minor Capital works not included in the investment plan.

5.13 In addition to the proceeds of the proposed IDA credit of US$50 million equivalent, GOP has secured bilateral finance from a number of countries of which the principal donors are Canada, Japan, Sweden, West Germany and the United Kingdom. The Medium Term Investment Plan includes the proposed project. The proceeds of the IDA Credit will be onlent to PR in accordance with GOP's practice for Government departments, with the additional requirement that sums equivalent to the Rupee value of the loan repay- ment are added to PR's Capital-at-Charge on which a dividend is paid to GOP in perpetuity. (See Annex 4 for details) PR pays the local currency equivalent of interest charges and bears the risk of fluctuations in foreign exchange rates. About 5 million U.S. dollars equivalent will be provided to -42-

PR's Replacement Capital Account on which the current interest rate of interest is 11%, compared with the forecast CPI changes of 12% for 1982, 11% for 1983 and 10% thereafter.

VI. AGREEMENTSREACHED AND RECOMMENDATIONS

6.01 During the negotiations, agreement was reached on the following principal matters:

(a) Completion of plan of reorganization of PR's management (para 2.02);

(b) A timetable for improving locomotive maintenance and train operations in accordance with targets set forth in Annex 2 (paras 2.08 and 2.13);

(d) PR's Investment Plan and limitation of changes to it (para 2.22);

(e) The provision by PR of Pro Forma accounts and reports showing separately the costs and revenues of passenger and freight services and the costs of those activities not directly related to its railroad operations (para 5.05); and

(f) Financial targets for PR (para 5.10).

6.02 The proposed project provides a suitable basis for an IDA credit of SDR 44.3 million equivalent to GOP. -43- ANNEX 1

PAKISTAN

ELEVENTH RAILWAY PROJECT

Documents Available in the Project File

1. The Future Role of Railway Transport in Pakistan. EMMAY Associates Ltd., August, 1981.

2. Master Plan for Movement of Indigenous Fertilizer (1979/80-1982/83). The Fertilizer Task Force, April 1979. Working Paper (up-date), September 1981.

3. The Feasibility Study on the Introduction of Containerization in the Islamic Republic of Pakistan, Interim Report. Japan International Cooperation Agency (JICA), March 1981.

4. Pakistan, Electrifizierung der Eisenbaham Streke Khanewal - Samasata. Kreditanstalt fur Wiederaufbau, September 1980.

5. Pakistan Railways, Management Information Needs, Identification Mission. W.H. Thompson, December 1980.

6. Report of Experts Committee on Railways, GOP, September 1980.

7. Modernization of Locomotive Facilities. Pakistan Railways, September 1981.

8. Pakistan Railways, Traffic Costing Study, Final Report. Sofrerail, July 1979.

9. Pakistan Railways, Dry Port Authority, A Case Study (Interim Report). R. Waheed Associates Ltd., October 1981.

10. Supply Management of D.E. Loco Spares (A Study Based on Visit to US and Canada, October-November, 1981). M.I. Hasan, CCS, Pakistan Railways, February 1982.

11. Locomotive Study. Pakistan Railways, April 1979

12. PC-1 Proformas: - Rehabilitation and Improvement of Track (1977-1983) - Passenger Carriages for Pakistan Railways (April 1976) - Procurement of 38 Diesel Electric Locomotives (December 1980) - Rehabilitation of 42 ALPW-18 D.E. Locos (March 1981) - Setting Up a Locomotive Factory, Phase-i (February 1981) - Improved Signaling, Revised PC-1 (October 1981) Annex 2 Page 1 of 3

PAKISTAN

ELEVENTH RAILWAY PROJECT

Plan of Action For Improving the Operational and Financial Performance of PR

1. PR shall develop and implement measures to achieve the targets set forth below:

1981/82 1982/83 1983/84 1984/85

(a) Locomotive Maintenance Improvement

Availability of diesel locomotive as a % of total fleet 83 84 86 88

Number of diesel locomotives out of service for want of spares as a % of total fleet 4.0 4.0 3.0 2.0

Diesel locomotive downtime during scheduled heavy repairs

Class I (days) 32 30 28 25

Class II (days) 18 17 16 14

Number of traction motors aboard locomotives not working 250 150 100 25

(b) Freight Train Operations

Diesel locomotive-km per day per locomotive in use* 310 345 365 385

Average net-tons** per freight train* 570 625 675 725

Total daily number of wagons to be dispatched out of Karachi 750 780 845 910

Minimum weekly frequency of container trains in each direction (Karachi-Lahore) 1 2 3 4

* Excluding shunting and departmental trains ** Metric tons

May 12, 1982 -45- Annex 2 Page 2 of 3

2. PR shall not increase the number of passenger trains per day on the Karachi-Peshawar line to exceed the level as shown in the timetable dated April 15, 1982.

3. PR shall institute a program to eliminate uneconomic passenger trains at the rate of 2-3 trains per month beginning July 1, 1982 until such time as the condition of Section 4.04 of the Development Credit Agreement is satisfied.

4. PR shall:

(a) undertake the following studies on a division-by-division basis in order to increase the utilization of the motive power and rolling stock:

1) Volume of traffic at each freight station with a view to reducing the number of goods booking points by consolida- tion. The study should be completed by March 3, 1983; and

2) Economics of passenger services on the main line (Karachi- Peshawar) with a view to (i) elimination of unnecessary stoppages, in particular the elimination and 4 a.m.; (ii) methods of increasing coach and locomotive utilization by diverting equipment from poorly patronized trains or sections to more remunerative sections. This study should be completed by December 31, 1982 and the first changes are expected to be made in the subsequent timetables.

(b) develop quarterly movement plans aimed at increasing unit and block trains in order to increase the utlization of available carrying capacity, taking into account revenue-earning potential and the specific needs of traffic for which alternative modes are not available.

(c) work more closely with the appropriate concerns, particularly the National Fertilizer Corporation, to produce an orderly movement plan and improve wagon allocation for transportation of fertilizer.

(d) reduce the number of non-professional and unskilled staff through attrition.

(e) implement measures to increase average commercial speed of freight trains to attain 25 km/h by no later than September 30, 1983.

(f) carry out tests to ascertain the feasibility of application of the MATE locomotive operation on the line from Sibi to Quetta. -46- Page 3 of 3

(g) study the use of Pipri shed for running repair and servicing of main line train diesel locomotives.

(h) increase the number of coaches per passenger train on the main line Karachi-Rawalpindi.

(i) promptly implement recommendations, to be agreed with the Association, resulting from Supply Management of Diesel Electric Locomotive Spares Study.

May 12, 1982 -47- ANNEX 3 Page 1 of 3 TERMS OF REFERENCE

STUDY OF THE FUTURE ROLE OF RAILWAY TRANSPORT IN PAKISTAN I/

I. BACKGROUND

1. Similar to the experience in many other countries, the railroads in Pakistan have been losing freight traffic in recent years due mainly to road transport competition. This trend will be accelerated by the completion of the Karachi-Multan pipeline, currently scheduled to start operations in 1981. Nevertheless, rail transport is a very important means of communication in Pakistan; if moved around 17.3 billion passenger-kilometers and 8.4 billion ton-kilometers in 1979/80.

2. The Government of Pakistan (GOP) has been investing, with World Bank assistance, in the rehabilitation of infrastructure, motive power and rolling stock and in the improvement of operations and finances of the Government-owned Pakistan Railways (PR). Important improvements have been obtained under the ongoing Tenth Railway Project (Loan 1372/Credit 684-PAK of March 1977) which have helped increase PRs capacity. Further improvements will be obtained through the purchase of urgently needed spare parts for locomotives and the provision of a backbone microwave network including related communications and signalling equipment. These crucial elements of the ongoing project should be completed within the next two years and should allow PR to improve the quality and dependability of its transport services.

3. The structure and pattern of traffic flows have changed recently. Further changes are expected after the completion of ongoing fertilizer, cement and steel mill projects. These changes will further affect PRs operations and role by modifying the relative weight of imports/exports and internal distribution flows in the country.

4. PR is currently preparing a three-year railroad development plan including a manufacturing plant for rebuilding components and assemblies for locomotives in a new management information system and container transport facilities.

1/ This study was completed in 1981. -48- ANNEX 3 Page 2 of 3

II. OBJECTIVES AND SCOPE OF CONSULTING SERVICES

5. The objective of the technical assistance to be provided under this contract is to ascertain the future economic role of railroad transport services in Pakistan in sufficient detail for appraisal of a proposed Eleventh Railway Project by a Bank Mission in August 1981.

6. To this end, the consultant shall review, check and appropriately amend whatever work and data collection has been done by GOP/PR in connection with road and rail transport demand in Pakistan and shall produce estimates of future demand for inter-urban passenger and freight movements in the country. In the case of freight traffic, the consultant shall study the behavior of the major commodities now moved by PR or which could constitute a potential source of new traffic. These commodities should include wheat, rice, paddy, petroleum products, cement, fertilizer, containers and any other commodity or group of commodities which the consultant deems appropriate. For each commodity, the consultant will establish:

(a) Origin and destination and total annual traffic volumes, indicating, when required, seasonal fluctuations. These data shall be compiled for 1975-1980, indicating the modal distribution (road, rail or air transport). Major points need only be considered. Similarly, the cargo with origin and/or destination abroad shall be classified only in four groups (Afghanistan, Iran, India and other countries) indicating for each group the port of entry or exit into or out of Pakistan.

(b) For the 1979/80 series, the consultant shall, in addition, estimate the approximate travel times, tariffs and overall door-to-door transport costs based on a review of existing costs and tariffs and on detailed interviews with shippers, freight forwarders and other users of freight transport services. In this case, the consultant shall also identify other major reasons for user's preference of any mode (dependability, financial expedience, availability of storage facilities, marketing convenience, easier transfer to other modes, etc.).

7. The consultant shall review the ongoing or proposed developments in Pakistan's economy, particularly in the agricultural, industrial and mining sectors which may bring about substantial changes in existing traffic patterns or produce new transport demand, within the next five years (1981-86). -49- ANNEX 3 Page 3 of 3

8. Based on the findings under 2.02 and 2.03 above; the consultant shall estimate two possible scenarios of future freight traffic demand in Pakistan. The first would assume a growth in the country's gross domestic product (GDP) of 4% per annum in real terms between 1981 and 1986; and the second would assume a growth of 6% per annum. In establishing an elasticity of transport demand to GDP growth, the consultant may take into consideration that between 1971/72 and 1978/79 the country's GDP grew at about 5.2% per annum in real terms, while freight traffic in ton-kilometes increased by approximately 7.0% annually. These two hypotheses of future GDP growth are to serve only as a general framework of analysis in building up the two scenarios. The consultant may modify them as he sees fit. Specifically, he should incorporate into the scenarios specific assumptions regarding the likely completion of ongoing projects (e.g. the Karachi Steel Mill) which would materially affect transport demand.

9. In addition to the two scenarios mentioned above, the consultant shall estimate two scenarios of cargo modal split between road and rail transport, in line with his assumptions regarding future development of road and rail transport infrastructure, services and technology in the coming years.

10. The consultant shall carry out a similar exercise to the one requested above for rail passenger transport demand in the future. It is suggested that, as a basis for developing future transport demand, he bears in mind that gross national product per capita increased by about 3 percent annually in real terms in the early seventies, reach US$200 in 1977. Pas- senger transport demand in Pakistan (in passenger-kilometers) apparently increased by about 10% between 1971/72 and 1978/79. In developing the last two rail transport scenarios, the consultant shall assume in one case that passenger rail tariffs would be adjusted in line with inflation (alternative one) and that in addition to adjusting increases in real terms would be added to the present level of tariffs in order to at least cover relevant variable costs (alternative two). Although the modal split among rail, bus and all transport should be based on plausible scenarios regarding future passenger fares for each mode, the consultant shall establish present transport costs for passengers via each mode and the difference between such costs and existing fares. He should then assess the changes in modal split that would occur, should the tariffs reflect the relevant costs. This comparative analysis needs to be done only for the base year chosen for the demand analysis (ideally 1980).

11. Based on the findings and studies under the previous paragraphs, the consultant shall establish PR's future role in the movement of inter-city passengers and goods in Pakistan. -50- -50- ~~~~PageANNEX 41 of 3

PAKISTAN

ELEVENTH RAILWAYS PROJECT

The Basis for Financial Forecasts

1.0 In 1961 the Railway was "separated" from the Government and prepared its own budget and accounts but in recent years PR has been treated as a Government department in all matters except its liability to pay a dividend on Capital-at-Charge. PR's accounts are kept on the basis of annual receipts and expenditures though there is a slow change towards keeping commercial accounts. Since 1977, PR's budget has been merged into the Federal Budget.

2.0 Funds for Capital Investment

A. Replacements are provided as follows:

Local Currency

(i) Provided by PR from the Depreciation Reserve Fund.

(ii) A shortfall in any one year is provided by GOP as "grant in aid" and added to the Capital-at-Charge.

Foreign Currency

Provided by GOP. From the DRF, PR pays to GOP the local currency equivalent of debt service. The onlending terms are arranged so that GOP retains the benefit of any concessional financing. Current terms of on-lending are 20 years including four years of grace, interest is 11%.

B. Additional Capital Investment

Local Currency

Provided by GOP and added to Capital-at-Charge.

Foreign Currency

Provided by GOP. PR pays the local currency equivalent of interest. Then, as the principal is repaid, an equivalent sum is added to PR's Capital-at-Charge attracting a liability to dividend in perpetuity.

Fixed Assets

3.0 Fixed assets registers were made for assets as at July 1, 1973 and updated at July 1, 1976 and again in 1979 and valued at current replacement -51-

ANNEX 4 Page 2 of 3

costs. The exercise was done according to methods designed by consultants, Booz Hamilton and Co. in 1968. The work was reviewed in 1978 by consultants SOFRERAIL as part of the Costing and Tariff Study. Between the years when assets are methodically revalued, the charge for depreciation is increased annually by indexing.

The Improvement Fund

4.0 The Fund is used to finance minor capital works on Public and Passenger Amenities, Staff Welfare, Unremunerative Projects Research and Development. The Fund is financed by an appropriation of 5.5% from the earnings from passenger fares.

Assumptions for Future Years

5.0 Revised estimates for FY81/82 are used as the base year. Passenger traffic measured in passenger/kms is assumed to increase at 2.75% annually. This is lower than the actual growth rate of the last ten years but is pru- dent in view of the measures proposed to reduce some unpopular passenger services and to maintain fares at levels at least sufficient to cover the variable costs of operation.

Freight Revenues

6.0 1978/79 was PR's best year, with 8,455 million ton/kms of revenue earning freight. Traffic is assumed to fall to 7,500 in FY81/82, and to increase slowly to 8,250 million ton/kms in 1985/86.

Costs

7.0 Operating expenses are based on the price levels of 1981, increased by 10% per annum for estimated inflation. Fuel consumption is assumed to be directly variable with tons/kms and passenger/kms. Labor costs assume no increase in staff strengths.

Net Operating Surplus/Loss

8.0 Any loss will be met by payments from GOP. A surplus in a future year will be applied to repaying any amounts of unpaid debt service and then to either a dividend on Capital-at-Charge or a contribution to Replacement Capital Expenditure.

Dividend on Capital-at-Charge

9.0 At July 1981, the Capital-at-Charge was Rupees 4,369 million; the full amount of dividend for 1981/82 is Rs 225 million. -52-

ANNEX 4 Page 3 of 3

Changes in Costs and Revenue

10.0 The year-by-year changes and the relative importance of cost items are shown in Table 15. The ratios between the 4 main elements of cost are:

Actual for 1980/81 Estimated for 1985/86

Fuel 27% 28 Labor 42% 40 Material 19% 21 Other 11% 11

Balance Statements

11.0 As PR maintains its accounts on a Revenue and Expenditure Basis, balance statements of the normal commercial type are not prepared.

Proportions of Fixed and Variable Costs

12.0 For 1980/81, PR estimates the proportions of expenses for passenger and freight service to be:

Total Expenses Attributable to Passenger Services Freight Services

100 59% 41% of which Variable Costs 70% Fixed Costs 30%

The passenger share of total expenses is assumed to decline to 53% in FY86 due to the diversion of resources to freight. ElF.VCENTHRAIlWAY PROJECT

PR's F:reight 'raffic hR Commoodities from 1969/70 to 1980/81

1969/70 1_196/77 191//78 - 198/78 1929/80 1980/81 T TK AD T TK AR T TK AT) T TK AD TK AR T TK AD

Wheat 1,305 724.2 555 1,128 610.3 541 1,423 1,347.2 Rice and 947 2,069 2,376.1 1,146 1,149 1,012.5 881 Paddy 706 505.9 716 625 509.4 815 329 809 583.1 721 794.1 958 1,005 996.6 992 754 722,2 958 Other Grains 162 121.9 751 539 529.4 982 54 38.6 715 20 13.7 635 15 10.1 Sugar and SRgarnano I00 673 11 8.4 764 10 10.4 991 48.4 486 268 100.1 374 178 67.0 376 196 Timber and Firewood 91.0 669 211 202.7 961 171 143.9 842 609 221.0 364 438 160.5 366 406 156.4 385 Coal and 351 139.7 398 414 169.7 410 434 Coke 984 894.6 911 471 486.3 1,033 172.7 398 390 425.1 1,090 333 371.1 1,114 328 380.6 P.O.L. 759 803.2 1,057 1,629 1,157 361 432.6 1,199 1,686.7 1.035 1,613 i,.'84.5 1,106 1,514 1,752.8 1,156 Ce-ent 1.113 1,680 1,880.4 1,119 1,561 1,675.5 1,073 333.3 299 958 485.4 423 9Z2 231.6 3.36 F-rtilizer 472 230.0 487 792 526.4 664 784 561.4 988 709.8 719 856 633.3 740 709 716 596.5 841 691 668.8 968 977 785.5 847 Iron and Steel 228 257.8 1,133 104 36.1 1,081 875.5 810 347 94 84.2 896 71 53.9 759 38 Other Co-mdities 3,974 2,248.4 43 1,132 34 42.0 1,235 5 566 2,955 2,126.6 720 2,846 2,020.3 713 2,417 1,765.1 Total Reseoue Earning Traffic 1, 928 730 2,471 1,824.2 738 3,369 2,884.0 856 6,870.5 629 9,486 6,793.3 716 9,428 7,570.f 883 9,074 8,455.2 932 8,775 7,555.6 861 9,153 PR Traffi 1,598 769.3 505 4,882 1,063.4 7,910.5 864 218 3,916 976.6 249 884 919.5 319 3,078 Total Traffic 12,526 7,639.8 1,042.9 339 3,041 891.2 30? 651 14,368 7,856.7 547 13,344 8,547.2 640 11,958 9,374.7 784 11,853 8,598.5 725 12,194 8.801.7 722

Notes: T= Metric Tons (000) TK- Metric Ton Kil.oeters (000,000) ADS Average Distaner (khs)

Source: Pakistan Railways and Appraisal Mission

March 1982 PAKISTAN

ELEVENTHRAILWAY PROJECT

PR's Passenger Traffic from 1959/60-1980/81

1959/60 1969/70 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 I. Passengers (millions)

Upper Class - n.a. 0.5 0.5 0.4 0.2 0.2 0.2 0.2 First Class - n.a. 5.7 6.1 4.9 5.0 5.4 4.6 3.8 Second Class - n.a. 125.7 140.7 137.2 143.8 140.4 138.9 119.2 Total 121.1 131.9 147.3 142.6 149.0 146.0 143.7 123.2

II. Passenger - Kms (millions)

Upper Class -/ n.a. n.a. 265 265 122 107 161 205 First Class n.a. n.a. 1,265 1,137 1,434 1,868 1,747 1,637 Second Class - n.a. n.a. 11,426 11,797 13,819 14,737 15,407 14,469 Total 8,894 9,842 12,956 13,199 15,375 16,712 17,315 16,311 JII. Average Travel Distance (Kms) I/ Upper Class - n.a. n.a. 542 602 626 634 765 823 First Class n.a. n.a. 206 230 290 349 380 435 Second Class - n.a. n.a. 81 86 96 105 111 121 All Passengers 73 75 88 93 103 114 121 132

1/ As of 1978/79, "upper class" includes both ACC and upper class services. Up to and including 1977/78, "upper class" includes ACC, upper class and the old first class services; "first class" is the old second class; and "second class" is the old third class.

Source: Pakistan Railways and Appraisal Mission

March 1982 PAKISTAN

ELEVENTH RAILWAY PROJECT

PR's Staff by Department and Category as of July 1, 1981

Civil Mech. Trans- Head All Eneg. Engg. ort ation Commercial Stores Medical Electrical Police Accounts Quarters Other Total

D. S. Lahore 4,818 6,257 3,395 2,030 - 559 1,301 - - - 609 18,969

D. S. Multan 5,704 3,394 2,957 1,586 - 418 632 - - - 69 14,760 D. S. Sukkur 5,444 2,913 2,616 1,184 - 386 557 - - - 139 13,239

D. S. Karachi 4,568 6,657 3,632 2,105 - 756 838 - - - 295 18,851

D. S. Rawalpindi 5,003 7,464 4,242 1,661 - 606 1,082 - - - - 20,058

D. S. Ouetta 2,889 2,011 1,080 260 - 345 299 - - - 6 6,889 D. S. Workshops 306 14,153 - - - 228 2,624 - - - - 17,311

D. C. 0. S. (Main Depot) MGPR - - - - 1,992 ------1,992

D. C. 0. S. (Shop Depot) MGPR - - - - 1,135 ------1,135

D. C. 0. S. Karachi Cantt. - - - - 1,544 ------1,544

A. W. M. Signal Shop 70 ------70

A. W. M. (Bridge) Jhelum 47 - - - _ - - - 47 F,A. & C.A.O. (GB) - - - - - 2,619 - - 2,619

Principal Walton Training School - - 100 - - - - - 100

X.E.N. Water Supply Lahore 191 ------191

X.E.N. Bridge Lahore - 301 ------301

Track Supply Officer Lahore 42 ------42

S.A.O./ADMN-II (E-III) 507 126 351 505 496 28 31 - - 1,196 100 3,340

S.P.O.I. (Officers only) ------

Supdts. W&W Walton ------118 - - - 118

M.S. Cairns Hospital - - - - - 31-6 - - - - - 316

X.E.N. (Track Field) 42 - - - _ - - - - - 42

X.E.N.(CSF) Sukkut 14 ------14

ADMN/ET ------12 - - - - 12 ADMN/Elec. Division ------6 - - - - 6

ADMN/Div. Engg. ------I.G.Police ------7,738 - - - 7,738

TOTAL 29,645 43.276 13,373 9,331 5,167 3,647 7,361 7,856 2,619 1,196 1,218 129,704

Source: Pakistan Railways

March 1982 -56- Table 4

PAKISTAN

ELEVENTH RAILWAY PROJECT

Inventory of PR Track

Double Track Electrified Route-Kms Route Kms_ Route Kms

Broad Gauge 7,766 1,018 283 Meter Gauge 446 -

Narrow Gauge 611 _-

Total 8,823 1,018 283

Transportation Commercial Running Track Siding Siding Total

Broad Gauge 8,917 2,260 148 11,325 Meter Gauge 445 98 10 553 Narrow Gauge 642 77 10 729

Total 10,004 2,435 168 12,607

Notes:

1. Route-Kms represents the kilometerage centre to centre of stations. It does not include the kilometerage of multiple lines, yards, sidings etc.

2. Track-Kms include all tracks in multiple lines, yards, sidings etc.

Source: Pakistan Railways

May 1982 PAKTISTAl

ELEVENTH RAILWAY PROJECf

Tetory o lotl-e Power and Rolling Stock (Actual N-labcrs)

Inumbers an oP June 30, 1081

Ceachiger Stean Lorunntives Diesel Eiectrig Electric DIe-el______Tralleed______Enohiug Othe Enechieg Freight We u _ocootives Lacumntisves Reilcats Vehicles Vehcles 4 Wheelers nge

T81 474 29 46 124 2,061 691 31,643 3,097

Mule Lice Branch Line Shunter Main Line Branch Line ihunter

Lens than 20 yearn - - - Stean Bet. 21 end 40 year 67 - Over 41 years - 159 155

Le.s than 10 years T19 85 6 Diesel Bet. 11 aed 20 yearn 103 53 5 33 88 3et. 21 and 30 yearn 62 25 13 10 36 Over 31 yearn 3 3

Leoo thae 10 ypoem Electric Bet. 11 and 20 years 29 Bet. 21 and 30 years Suer 31 years AGE ACE . h- 1 7 - 2h5~L6 39 h38 554 Lges thee 10 yearn 567 13 25,535 2,299 passenger Bet. 11 aud 40 years 485 117 1 330 - Carriern Bvet 45 yendA 241 352 4,140 244

Less than 10 yearn Freight Bet. 11 and 40 years WSains Bet. 41 and 45 years Over 45 yearn

l-ea thee 10 t-ne Carrying Bet. 11 and 15 tens Capacity Bet. Ih and 20 tans uf Bet. 21 and 25 tens Freight Bet. 26 and 30 tonsn1,643 Waguns Bet. 31 aad 35 tons Bet. 36 eed 40 toan 103 See. 41 dand 45 tensI,7 BRt. 46 and 50 tnns 368 Over 51 tans

I/ Figures te arrived at by recokning each vehicle an one nnhur, lrmespective of the nine af diese- 1ailcars 2/ EncIuding brake oaua, deperteenstl wagons, special wagone _nd privately-owned -agons 3/ Inclndes 40 re-engRoed anita 4/ Includes 2 re-engined -nits -5g-

taibleS Page 2 of 3

el | , en jt t ~0,-'Rt ' N'O J

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04 al. gtN a. N o . a . o-a NO 4 0 40 O N N O ON N N 0 Na=V -aa Nt -aa ~ o 0 N o a a, a a a a a , o t a a a a 0 aw C , w N a , t o . a o o e a -

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o~~~~C I -Ir PAKISTAN

FLEVENTH RAILWAY PROJECT

levee' cry of Motive Power cod Roiling Stock (Actoal Nuombrs)

Narrow Gauge Lines

Nohbers as_of Jone 30, 1981

Other Freight Wagons Steam Locomotives Etese Eletriange Electric iesel Coahin Coaching h4hees Bge Locomotives Locomotives Railcars Vehirles Vehicles

100 419 Total in fleet 381 474 107 45

Main l.ine Brsnch Lice hoter M.iv ice r Le hcter

Less then 20 years Steam Bet. 21 and 40 years Over 41 yeace

Less than 10 years Diesel Bet. 11 and 20 years Bet. 21 and 30 years Over 31 years

Less than 10 years Electric Bet. 11 and 20 years Bet. 21 and 30 years Over 31 years AGE Less than 10 years Parsenger Bet. 11 and 40 years Coach Bet. 41 and 45 years 3 Over 46 years 104 45

- Lens thee 10 year.s - 25 Freight Bet. 11 sod 40 years Wagons Bet. 41 and 45 years 394 Over 45 years 95

Carrying Less thee 10 tons Capacity Bet. 11 and 25 tons of Freight Wagons

Source: Fakistan Railways and Appraisal Mission

March 1982 PAKISTAN

ELEVENTH RAILWAY PROJECT

Diesel Locomotive Fleet - Age Class and Manufacturer

TOTAL COUNTRY ON OF 1970 1975 1976 _1977 1979 1980 1981 LINE CLASSES MANUFACTURERS 1947 1954 1955 1956 1957 1958 1959 1961 1962 1963 1964 1965 1966 1967 3 ADE-36 U.S.A., 3 ALU-14 U.S.A. 7 _____7 10 GEU-61 U.S.A. 10 _____ 3 FAU-66 FRANCE 3_ _ _ _ 9 CLP-15 AUSTRALIA 8 1 ______ALPW-16 U.S.A. 2 ______2 ALPIq-18 U.S.A. 4 ___ _3 2525___ ATRU-95 U.S.A. ____ 16 9 30 ALU-18 I.S.A. 30 __ ALU-12 U.S.A. 11 4 2 -- -- ___53_ 52 ALU-20 U.S.A. 12 30 10 __ GEU-64 U.S.A. ______I_ ALU-26 U.S.A. _ __ 2__20 ALU-24 U.S.A. ______20 _ _30 __ 42 GEU-20 U.S.A. 42 _6 23,1_ _ I 3 _0 _ 23 GEU-15 U.S.A. _ 3 __30 73_ 15 23 ____36 GM10-30 U.S.A. ______36

______32 Gm115-15 U.S.A. ______32 ___- 2 19 - 2 2___23 *ARP-20 U.S.A. ______-

I__ ___ 11 6 19 *ARU-20 U.S.A. _____ 1 __ _ 2 *FRU.75 FRANCE ______1

___ 0 GMCU-15 CANADA ______30 44 qAUl--I JAPAN

3 50 18 6 47 TLOTAL_ 3 10 15 3 3 59 9 30 23 72 10 5 1 20 65 68 1

* Re-engined Utnits - Canadian MU1W engines.

Source: Pakistan Railways

March 1982 -61-

Table 7

PAKISTAN

ELEVENTH RAILWAY PROJECT

Selected Operating Statistics (1975/76-1980/81)

1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 System

Total route (km) 8,311 8,815 8,815 8,815 8,323 8,823 Total staff (000) 137.5 140.0 139.8 139.3 132.3 130.3

Traffic

Passengers -total (million) 147 143 149 146 144 123 Metropolitan 42 41 44 46 43 38 Non-metropolitan 105 102 105 100 101 85 Pass-km-total (million) 12,957 13,199 15,375 16,713 17,316 16,311 Average journey (km) 87.9 92.6 103.2 114.0 120.0 132.4 Net paying tons (million 10.1 9.49 9.43 9.08 8.78 9.15 Net paying ton-km (million) 7,890 6,794 7,581 8,455 7,556 7,911 Average haul (km) 594 547 640 784 725 722 Total gross ton-km (million) B.C. 33,264 28,999 32,381 33,434 32,572 31,681 Loaded freight car-km (million) 453.4 385.7 425.4 473.1 421.4 384.8 Empty freight car-km (million) 273.6 223.3 284.6 293.3 301.3 295.9

Traffic Density

Pass.km/route km (thousand) 1,471 1,497 1,744 1,896 1,964 1,849 Freight-net ton-km/route km (thousand) 1,056 891 971 1,063 976 897

Operations

Train-km-passengers (million) 33.6 33.7 34.9 34.7 34.9 35.5 Train-km-freight (million) 14.5 12.3 14.0 14.8 14.1 13.5 Train-km-total (million) 48.1 46.0 48.9 49.5 49.0 49.0 Loco-km-steam (million) 15.2 13.6 14.3 14.0 13.7 13.0 Loco-km-diesel (million) 41.0 42.7 42.7 48.6 43.3 44.2 Loco-km-electric (million) 3.52 3.54 3.87 3.64 3.65 3.45

Operating Efficiency (Freight)

Gross ton-km/train km (B.G.) 1,297.6 1,307.4 1,200.0 1,304.4 1,269.5 1,252.5 Net ton-km/train km (B.G.) 618 647 616 647 604 591 Net ton-km/loaded car km (B.G.) 19.4 20.1 19.9 20.0 19.8 20.0 Car turnaround time (days) 16.1 17.2 15.6 15.5 14.9 14.7 Average speed (km/h) 18.3 17.7 17.5 17.5 17.6 18.2 Traffic units/employee (thousand) 254.7 241.6 278.9 307.2 326.7 311.1

Availability

Steam locomotives (X) 83.3 80.5 85.1 84.0 82.7 83.4 Diesel locomotives (%) l/ 84.2 88.1 82.4 83.6 84.7 84.7 Electric locomotives (X) 91.3 88.7 88.4 86.3 82.6 81.7 Freight cars (%) 94.7 94.4 94.2 95.2 94.6 92.8 Passenger cars (1) 80.4 81.0 73.3 76.7 78.7 79.2

1/ These figures do not reflect reliability and overstate actual availability by not reflecting such factors as about 250 traction motors being inoperative on the available units.

Source: Pakistan Railways

March 1982 IA'K l I \.U

ELEVENTlHRArLW PROJECT

Medin-Term lan 1981/82-1983-84 and the Pro-,ct I/ (Rn Million)

Serial Total 1911 82 1982 83 1_983-34 _ __ 1984-85 No. Descripilao 1it Qu.aniltr Loc.al I .1. Tota1l O>uanoto I .otai ''.i. o1°L_ Ooti- l,oc-l, F.C. l. oIa loa-i local P.E. Total O tL Local FE. Tota

1. Socvronstruct_no

Coo--rsio-o f Mari lodoas-BansolSoc. - - 5.88 5 .00 4.87 - 4.5 .13 .13

Sobtotal I 5.88 - 5.36 - 4.87 - 4. e- 13 .13

71. Tr.ack RahbiLltatLon

(a) Conploto Track -- l lHR-KYC MiIs 180 389.40 185.(8 574.40 60 129.40 3S.00 184.4' 60 125.00 68.00 185.00 60 135.00 70.00 205.00

(b) Cooplote Track oooooal Ll.M-PSC Miles 30 154.20 28.60 182.80 10 49.20 3.60 57.8' 10 50.80 10.00 60.00 10 55.00 10.00 65.00

(r) Rall e-a MIlos 60 40.41 . 12.55 52.96 20 10.41 2.55 12.9t 20 15.80 5.00 20.00 20 1.80 5.80 20.T00

(dl Sloopeor renewal Maie l.ioi MIles 60 28.70 21.60 50.30 20 8.70 11.60 20.30 20 10.00 5.88 15,80 20 10.08 8.88 13.00

In) Sleeper resnealI Soccodary Lino Mil-s 180 39.69 41.69 31.38 60 5.69 13.69 19.3' 60 13.00 14.80 27.00 60 21.00 14.00 35.00

(I) Pointr & XiRgs -ad Rail Anchors Varlo-s - 01.20 24.58 _65.78 V-rio_s 18.20 11.58 3 V..,RirLos 9.00 _ 6.00 15.00 - 14 .8 £00 7,20, 0

Sabtotal II 693.60 314.02 1007.62 - 221.62 104.02 325.6 - 222.00 100.00 322.00 2750.00 110.80 360.00

III. Brdidoe Work k Cioil _ngieengcl Works

(a) Bridge works - - 13.00 - 23.800 6.75 - 6.75 - 8.00 - 8.00 - 8.25 8.25

(b) Cioil EsRi-oooiog Works - 52.00 - 52.00 - 18.00 - 18.0'. - 17.00 - 17.00 - 17.00 - 17.00

SObtotal III 79.00 75.08 24.75 - 24.75 25.00 - 25.00 25.25 - 25.25

IV. Marskalling Ya-d at Pipri No. 1 4.75 5.00 9.75 - 0.75 0.00 9.7. - - -

V. 1.ine Capacity Works Te-r-nal FPolLitis

(a) Isc doobl ihg (Kotoi-Hyd.ra.bd) KR 1.6 3.80 - 3.00 - 3.00 3.3(

(b) Othor 00 40100 corhs 0.0i060 - 30.O0 - 30.00 V-ario 8.(8 - 81.( Rarious 10.00 - 10.00 Var-ois 12.00 - 12.00

Ic) Lahor- Dry Port Z./ No. 1 44.30 28.00 77.30 - 1.30 - 1.31 26.00 19.00 45.00 - 17.00 9.00 26.00

(d) 1il Yard at Mahoud Kot, 2.00 2_.0 - 2.00 2.41,

Sbob-tol V 79.10 28.00 107.33) 14 301 - 14 . 1, _ 36.00 19.00 55.00 29.00 9.2( 78.00

v] . ()To 1---iatslot ioo Vl.co ( sicoollkcoTeLelased - Ranun 277. 90 2880 567.90 - 165.90 148.00 313.9( - 70.00 130.00 200.00 44.00 10.30 54.00

(b) Inproo.d nigoallog - VarRosa 65.00 35.00 100.00 r 9.00 5.00 14.00 - 26.00 18.80 36.00 20.0( 50.08 tse'

Subtoral VI 344.90 323.00 667.90 174.90 153.00 327.9( 96.00 140,00 236.00 74.00 30.00 104.00 PAIISTAN

ELLVPRTR RA[LWAY PROJECT

Medim-Term Plan 1981/8.-1983/84 and the Project 1, (Re MRllion)

Iot.>l 1031 8 1-_95-3 I93-R84 _1984-85 .. . No. c±toI Q.Qa rI. F Ttll c0--ti' I , I( F(= l- I I i .f ''-t I,,,I 0.3F. I,1 Qoartity Local F.E. Total

V11 MloLl-c P-wet & Roll- StReoce

' 1) I_oti-

R--engi,elio n D.1.

Lo .. oti-o N". 611 '0.03 '1.009 T 00 - 10.1n 10.00 2.10 - 10.0 10.0 'OO(_

lopmotcosNT p oo.cc 10.00) 52)00 - O0T 2010 3li.1 - ccl c' 10 -Onc I.0 200.30n 043.O3

i}i>(uaoll P o . No 13 191.00 '170.00 56'.00 - 51.10 SC0.3On 1136.3 _- ' nocn 00 .00.00 - 16.0c TO1( 26.('h

Pctomo t oeo D.E. IV) oce-o- N-. 00 5cn1 65.00 70.02 - .I .01 - Ti - .01 - 0.01 65(cn 70.nn

v Uit.) ExchAoge Pool - - 69.00 138.00 207.00 - - - - 18.Q0 45.00 b3.00 - 18.00 45.00 63.00 - 33.90 48.000 03100

(b) OIlleoc 81001)

i) Ncw Poc-e-g-r Carr-,oo- N . 010 4iT.8O :15.0n 700.80 145. W0 75.00 2)0.83 - 165.0( 75.00 .'40.00 - 165 GO 75.00 230.00

ii) llOppoC T-ruck NS. 430 88.60 11.40 100.00 ) c 33.10 00.00 50 18.60 11.40 50.00 130 20.00 - 20.00

iTil Container l,oo-c NL. 100 34.03 '6.0( (.0.00 - - T 2 0.00 30.00 - '04.0 6.00 30.00

SOihbotal VII iL.O.O 0184.40 2267.80 252.01 216.90 469.41 413.70 541.40 955.10 301.00 301.00 392.00 00.00 40 00 01.00

\ . I P &loM-chinerT tcr W-rkshop,, Shodt _ad_rp))LO

In) Ploot b Rophieory No. Varioun ! .00 48.00 75.00 - 15.00 23.00n '0 00 - 4.00 8.oc 12.00 - 8.00 16.00

(b) Otrocoro 'ckek - --- 1.0 - . - _ 0.03 8.003 - 10.00 - I3. o - 1.03 - 13.00

Ic) F-celiti-s foc -Cc-- factorloo of D.E. I.ocomoLive~ 187.10romponent6 149.90 337.0 _ - - 28.00 20.00 48.00 - 60.00 56.00 116.00 0q.10 73.00 170.5n

VIIISlihtotal 245.10 197.90 443.00 23.00 '.0 470.00 42.00 28.00 70.00 81.00 72.00 153.00 99.10 73. 9( '730.0 IX. Ocproveoet n Rrrkcog *ne-t- - - 15.20 10.80 c0.00 - .70 1.80 1'.50 - 4.0( 8.00 12.00 - 10.00 5.00 15.50

X. T-echo,-l OeeTe1oec - - 04.0 26.00 40.00 - - - 1.50 - 4.00 0.00 13.00 - 5.00 7.50 12.50 5.00 6.00 11.00

IT. Plc tolcal Po-l' rte - - 10. S.00 25.00 - 6.33O I .i00 7.50 - 6.50 2.00 0.50 - 6.00 3.00 9.00)

011. ManaRgment Information System - - 30.00 55.50 85.50 - - - 11.00 19.00 30.00 - 15.00 25.00 40.00 4.00 11.50 15.50

GRA_NDTOTAL 2609.25 2154.62 4763.87 - 3,.40 O1..0 1269.S0 860.20166. 40 1726.60 871.80 662.50 1549.30 05.50 169.40 264.90

1/ Based on Jose 1981 prioes, foloding Iontlngeeoieain ocodane- with PR oode. Als, the proposed 1noo=oti-e -aosfaotoring plant has be-e e-oloded.

2/ Civil wo-ks and handling equip=eet

S-orc: PR and Appra-isl Mission

elan 1982 -64- Table 9 PAKISTAN

ELEVENTHRAILWAY PROJECT

Maintenance Modernization- Cost Estimate Details 1/

(Rupees Million)

Local Foreign Total

1. CDLW (Rawalpindi)

a. Plant and Machinery 26.7 134.8 161.5 b. Civil Works 77.5 - 77.5 c. Taxes and Duties 67.4 - 67.4 Sub-Total I 171.6 134.8 306.4

2. Karachi Base Shed

a. Plant and Machinery - 3.5 3.5 b. Civil Works 3.1 - 3.1 c. Taxes and Duties 1.8 - 1.8 Sub-Total II 4.9 3.5 8.4

3. Unit Exchange Components Pool

a. Components - 142.0 142.0 b. Taxes and duties 56.9 - 56.9 Sub-Total III 56.9 142.0 198.9

4. Quality Control Equipment

a. Test Equipment 4.1 7.4 11.5 b. Taxes and Duties 3.7 - 3.7 Sub-Total IV 7.8 7.4 15.2

5. Component Transport Equipment

a. Wagons and Containers 3.0 5.7 8.7 b. Racks 3.0 - 3.0 c. Duties and Taxes 2.9 - 2.9 Sub-Total V 8.9 5.7 14.6

6. Training and Technical Assistance

a. Training 2.1 2.2 4.3 b. Technical Assistance 1.1 2.0 3.1 Sub-Total VI 3.2 4.2 7.4

Total 1-6 253.3 297.6 550.8

7. Revenue Spares

a. Spares - 318.2 318.2 b. Taxes and Duties 127.3 - 127.3 Sub-Total VII 127.3 318.2 445.5

GRAND TOTAL 380.6 615.8 996.4

1/ Not including contingencies(see Table 12)

Source: Pakistan Railways and Appraisal Mission

May 1982 -65- Table 10

PAKISTAN

ELEVENTH RAILWAY PROJECT

Unit Exchange Pool: List of Components and Cost Estimates 1/

Recommended Cost Description Number Estimate

(Rupees Million)

1. Diesel Engine 10 32.01 2. Traction 11 10.27 3. Traction Motor 66 21.85 4. Turbo Super Charger 76 19.99 5. Air Compressor and Exhauster 32 3.64 6. Truck less Traction Motor 18 6.97 7. Aux: Generator 8 0.47 8. Aux Exciter 14 1.42 9. After Cooler 13 0.43 10. Engineer Governor 12 0.37 11. Lube Oil Pump 18 0.69 12. Water Pump 30 1.46 13. Radiator 45 5.54 14. Lube Oil Cooler 28 1.59 15. Traction Motor Blower 37 1.42 16. Fuel Pump with Motor 35 0.41 17. Crank Case with Motor 13 0.19 18. Wheel Axle with Gear 167 10.59 19. Fuel Injection Pump 293 1.85 20. Fuel Injection Nozzle 322 0.78 21. Eddy Clutch Gear Unit 8 0.84 22. Exhaust Manifold 29 1.85 23. Power Assembly Complete 354 17.48

TOTAL 142.11

Taxes and Duties 56.84

GRAND TOTAL 198.95

1/ Not including contingencis (see Table 12)

Source: Pakistan Railways and Appraisal Mission

May 1982 -66- Table 11

PAKISTAN

ELEVENTH RAILWAY PROJECT

Cost Estimates for Containerization Component 1/

(Rupees Million)

Local Foreign Total

1. Civil and Electrical Works

a. Land (three-year lease) 6.93 - 6.93 b. Structural Works 38.38 1.20 39.58 c. Track Work 4.39 - 4.39

Subtotal 49.70 1.20 50.90

2. Equipment

a. Fork Lift - 35 ton, I No. 0.35 5.70 6.05 b. Yard Tractor, 3 Nos. 0.35 1.71 2.06 c. Chassis, 36 Nos. 0.49 4.20 4.69 d. Fork Lift for Shed, 10 Nos. 0.76 2.80 3.56 e. Wagon Mover 0.35 1.43 1.78

Subtotal 2.30 15.84 18.14

3. Rolling Stock

a. Modify Containers

i. 60 flat wagons 1.20 - 1.20 ii. 100 special container flat wagons 24.30 28.30 52.60

Subtotal 25.50 28.30 53.80

4. Technical Assistance 1.20 2.30 3.50

Subtotal 1.20 2.30 3.50

Taxes and Duties 22.70 - 22.70

Subtotal 22.70 - 22.70

GRAND TOTAL 101.40 47.60 149.00

1/ Not including contingencies (see Table 12)

Source: Pakistan Railways and Appraisal Mission

May 1982 -67- Table 12

PAKISTAN

ELEVENTH RAILWAY PROJECT

Summary of Project Cost Estimates

__---- Rs Million ------___------US$ Million------Proposed I. Maintenance Improvements Local Foreign Total Local Foreign Total Credit

1. CDLW a. Plant and Machinery 26.7 134.8 161.5 2.5 12.8 15.3 12.8 b. Civil and Electrical Works 77.5 - 77.5 7.4 - 7.4 - c. quality Control Equipment 4.1 7.4 11.5 0.4 0.7 1.1 0.7 d. Component Transport Equipment 6.0 5.7 11.7 0.6 0.5 1.1 0.5

2. Karachi Shed 3.1 3.5 6.6 0.3 0.3 0.6 0.3 3. Technical Advisory and Training 3.2 4.2 7.4 0.3 0.4 0.7 0.7 4. Unit Exchange Components - 142.1 142.1 - 13.5 13.5 13.5 5. Taxes and Duties 132.5 - 146.8 12.6 _ 12.6 -

Sub Total I 253.1 297.7 550.8 24.1 28.2 52.3 28.5

II. Management Information System

1. Data Network 5.8 12.5 18.3 0.6 1.2 1.8 1.2 2. Hardware 22.0 39.6 61.6 2.1 3.7 5.8 3.7 3. Software 6.9 11.3 18.2 0.6 1.1 1.7 1.1 4. Technical Advisory 1.2 3.4 4.4 0.1 0.3 0.4 0.4 5. Training 2.1 5.3 7.4 0.2 0.5 0.7 0.7 6. Taxes and Duties 31.7 - 31.7 3.0 - 3.0 -

Sub Total II 69.7 71.9 141.6 6.6 6.8 13.4 7.1

III. Containerization

1, Container and Cargo Handling Equipment 2.3 15.8 18.1 0.2 1.5 1.7 1.5 2. Civil and Electrical Works 49.7 1.2 50.9 4.7 0.1 4.8 0.1 3. Rolling Stock Modification (60) 1.2 - 1.2 0.1 - 0.1 - 4. Rolling Stock Purchase (100) 24.3 28.3 52.6 2.3 2.7 5.0 2.7 5. Technical Advisory 1/ 1.2 2.3 3.5 0.1 0.2 0.3 0.3 6. Taxes and Duties 22.7 - 22.7 2.2 - 2.2 -

Sub Total III 101.4 47.6 149.0 9.6 4.5 14.1 4.6

IV. Technical Advisory and Training

1. Maintenance and Operations 1.1 2.1 3.2 0.1 0.2 0.3 0.3 2. Costing Cell 1.1 1.1 2.2 0.1 0.1 0.2 0.2 3. Electrification Study 7.4 3.2 10.6 0.7 0.3 1.0 1.0

Sub Total IV 9.6 6.4 16.0 0.9 0.6 1.5 1.5

V. Contingencies

1. Physical 13.2 - 13.2 1.3 - 1.3 - 2. Price 20.0 57.3 77.3 1.9 5.4 7.3 3.3

Sub Total V 33.2 57.3 90.5 3.2 5.4 8.6 3.3

TOTAL T-V 467.0 480.9 947.9 44.5 45.8 90.3 45.0

VI. Revenue Spares

1. Spares - 318.2 318.2 - 30.3 30.3 5.0 2. Taxes and Duties 127.3 - 127.3 12.1 - 12.1 _

Sub Total VI 127.3 318.2 445.5 12.1 30.3 42.4 5.0

GRANDTOTAL 594.3 799.1 1,393.4 56.6 76.1 132.7 50.0

1/ Includes assistance to KPT for container yard information system

Source: Pakistan Railways and Appraisal Mission

May 1982 -68-

Table 13

PAKISTAN

ELEVENTH RAILWAY PROJECT

Estimated Schedule of Disbursements

IBRD Fiscal Year Cumulative Disbursement and Quarter at End of Quarter

US$ Million

1982/83

December 31, 1982 1.3 March 31, 1983 2.3 June 30, 1983 4.5

1983/84

September 30, 1983 8.5 December 31, 1983 13.0 March 31, 1984 19.0 June 30, 1984 27.0

1984/85

September 30, 1984 33.5 December 31, 1984 40.0 March 31, 1985 44.0 June 30, 1985 46.5

1985/86

September 30, 1985 48.5 December 31, 1985 50.0

Principal Assumption: Effective date of credit, not later than October 1, 1982

Source: Appraisal Mission

May 1982 PAKISTAN

ELEVENTH RAILWAY PROJECT

Economic Evaluation: Unit Exchange System, Management Information System, Technical Assistance and Training

(US$ million)

1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97

Economic Costs

Unit Exchange System

Capital Cost 23.48 39.14 15.66 Operating Cost 1.31 2.62 3.93 3.93 3.93 3.93 3.93 3.93 3.93 3.93 3.93 3.93 3.93 3.93 3.93

Management Information System

Capital Cost 2.57 3.01 1.18 Operating Cost 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80

Technical Assistance and Training 0.54 0.54 0.26 -

TOTAL COSTS 28.70 46.11 21.83 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73

Economic Benefits

Reduction in locomotive downtime - 0.79 1.57 2.36 8.99 8.99 8.99 8.99 8.99 8.99 8.99 8.99 8.99 8.99 8.99

Increased fleet-wide availability 1.50 3.00 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49

Reduction in number of locomotives awaiting spares 1.58 3.15 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73 4.73

Utilization of increased tractive effort 3.70 7.41 11.12 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49 4.49

TOTAL BENEFITS - 7.57 15.13 22.70 22.70 22.70 22.70 22.70 22.70 22.70 22.70 22.70 22.70 22.70 22.70

NET ECONOMIC BENEFITS (28.70) (38.51) (6.23) 17.97 17.97 17.97 17.97 17.97 17.97 17.97 17.97 17.97 17.97 17.97 17.97

The Estimated Economic Rate of Return is: 17%

Source: Pakistan Railways and Appraisal Mission

March 1982 PAKISTAN

ELEVENTH RAILWAY PROJECT

Economic Evaluation: Container Rail Operation

1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97

TEUs handled at Karachi Port 50,000 60,000 70,000 80,000 92,000 106,000 122,000 1/ 1/ 1/ 1! 1/ 1/ 1/ 1/

TEUs handled at Lahore Dry Port 2,000 4,200 7,700 12,000 18,400 26,500 36,400 36,400 36,400 36,400 36,400 36,400 36,400 36,400 36,400

(as % of those handled at Karachi Port) 4% 7% 11% 15% 20% 25% 30% 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/

Economic Costs (US$ million)

Capital Investment 6.90 3.07 0.98

Operating Costs 0.22 0.46 0.84 1.31 2.01 2.89 3.97 3.97 3.97 3.97 3.97 3.97 3.97 3.97 3.97

Total Costs 7.12 3.53 1.82 1.31 2.01 2.89 3.97 3.97 3.97 3.97 3.97 3.97 3.97 3.97 3.97

Economic Benefit$ (US$ million) 0.55 1.15 2.11 3.29 5.04 7.26 9.97 9.97 9.97 9.97 9.97 9.97 9.97 9.97 9.97

NET ECONOMIC BENEFITS (US$ million) (6.57) (2.38) 0.29 1.98 3.03 4.37 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00

The estimated Economic Rate of Return is 29%

1/ In year 1988/89, container traffic between Karachi and Lahore will reach the maximum amount that can be carried by the proposed investment.

Source: Pakistan Railways, Karachi Port Trust and Appraisal Mission

March 1982 -71- Table 16

PAKISTAN

ELEVENTH RAILWAY PROJECT

Revenue and Expenditure for Financial Year to June 30 for 1976/77-1980/81

(Figures in Rupees Million)

1976/77 1977/78 1978/79 1979/80 1980/81

Operating Revenue

Passengers 473.6 640.7 697.8 998.0 1,090.6 Other Coaching 69.1 80.9 82.3 95.1 104.1 Freight 1,152.7 1,446.0 1,458.0 1,558.0 1,700.0 Sundries 31.5 27.8 32.6 26.5 35.3 Miscellaneous 1.6 2.3 2.9 1.2 1.7

Total Operating Revenue 1,728.5 2,197.7 2,273.6 2,678.8 2,931.7

Operating Expenses

Fuel 342.4 376.3 457.0 678.7 814.4 Labor 734.7 992.9 1,048.9 1,082.2 1,230.5 Material 342.0 246.1 329.6 454.0 462.4 Others 117.3 133.2 93.6 268.7 270.7

Total Working Expenses 1,536.4 1,748.5 1,929.1 2,483.6 2,778.0

Appropriation to Depreciation Reserve Fund 207.4 263.7 272.8 370.0 420.0

Total Operating Expenses 1,743.8 2,012.2 2,201.9 2,853.6 3,198.0

Net Operating Revenue (loss) (15.3) 185.5 71.7 (174.8) (266.3)

Interest on Loans 143.7 154.6 175.7 305.8 135.5

Appropriation to Improvement Fund 25.1 35.2 39.4 54.9 60.0

Dividend Paid on Capital-at-Charge 34.3 154.1 171.9 - -

Net Operating Surplus (deficit) (218.4) (158.4) (315.3) (535.5) (461.8)

Operating Ratio (percent) 101 92 97 107 109

Average Receipt per Passenger-kilometer (paisa) 3.6 4.2 4.2 5.8 6.7

Average Receipt per Ton-kilometer (paisa) 14.7 16.9 15.6 18.1 21.5

Source: Pakistan Railways

March 1982 PAKISTAN

ELEVENTH RAILWAY PROJECT

Changes in Relationship of Revenues and Costs 1972 - 1982

Base Year =100 Actuals Estimate Forecast

Revenues 1972/73 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82

Passenger 100 150 203 222 317 344 Coaching 100 170 199 202 234 286 Freight 100 201 253 254 272 300 Total 100 185 234 241 287 312

Costs

Fuel 100 221 243 295 439 527 556 Labor 100 220 298 315 325 356 361 Materials 100) )274 )226 )252 )430 )521 )540 Other 100) ) ) ) ) ) )

Total Working Expenses 100 235 267 295 379 439 473

Source: PR Budget Estimates for 1981-82

March 1982

P3 PAKI STAN

ELEVENTH RAILWAY PROJECT

Passenger Fares and Costs 1972 - 1981

PR II Class PR II pass. fare fare @ Infla- charged 1972/73 tion i current constant Base paisa/ price paisa/ 1972/73 pass. Km pass. Km Fare Increases

1 2 Date % Note 3 4

1972/73 100.00 July 1972 20 A/C + 1st 2.50 2.50 1973/74 132.85 - _ only 2.50 1.88 1974/75 164.19 July 1974 20 3.03 1.85 1975/76 178.28 March 1976 20 Not 3rd (1) 3.03 1.70 1976/77 198.38 3.03 1.53 1977/78 210.92 July 1977 20 3.70 1.75 1978/79 225.14 3.70 1.64 1979/80 246.14 July 1979 20 4.40)* 1.79)* January 1980 30 5.02) 2.04) 1980/81 264.50 5.10 1.93

H (1) Now 2nd Class m H * Based on fares introduced on July 15, 1979 and January 17, 1980

Source: EMMAY CONSULTANTSand Report of the Experts Committee on Railways 1980

March 1982 Table 19 -74-

PAK STAN

ELEVENTH RAILWAY PROJECT

Forecasts of Revenue ard Expenditure: 1980/81 - 1985/86

(Fivures in Million Pupees)

Year Ending June 30

Actual Estimate Forecast * ******* ******* ******* 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86

-'?ERATING REVENUES PASSENGERS 998.0 1091.0 1100.0 1200.0 1570.0 180(.0 2200.C .THER SOAC4ING 95.0 104.0 125.0 140.0 200.0 250.0 270.3D =REIiGHT 1558.0 1700.0 1800.0 2750.0 2000:D.0 3400.0 3800.( LTHER 28.0 37.0 30. C0 50.0 50.0 50.0 50 .0

T-'A. OPERATING REV.;ENUES 2979.0 2932.0 3055.0 4140.0 4820.0 5500.0 9320.0

AiMTNG EXPENSES CE_ 579.0 814.0' 8O.0 94G.0 1070.0 1302.0 1487.0 *ASCR 1082.0 1230.0 1314.0 1445.0 1590.0 1748.0 1981.0 M;ATERIAL 454.0 482.0 583.0 670.0 770.0 887.0 1004.-D . . -HER 289.0 271.0 343.0 377.0 415.0 452.0 517.0

f_lA xORKING EXPENSES 2434.0 2777.0 31C0.)0 3438.0 3845.0 4393.0 489E.0

''PR-PPRIATION TO DRF i70.0 42.0) 440.0 470.0 541. 0 S01.0 520.(D

.7A. OPERATING EXPENSES 2854.0 3197.0 3540.0 3909.0 4335.0 4554.0 580D9.0

-0T CPERATING REVENUES (LOSS) -175.0 -265.0 -- 485.0 232.0 43f4.0 506.0 7.1.0 NTLRES ON OANS 308.0 135.0 130.0 146.0 220.0 250.0 280D.0 T ^ PROpRIAI3N TO IMPROV'EM-NT FUND 80.1 65.7 87.4 73.7 97.4 112.8 135.5 ;'.'ID-NDO VET OPERATING SURPLUS (LOSS) -541.1 -465.7 -682.4 12.3 115.6 133.3 295.1

nSSEENGER K'15 (MIL-ION) 16310.0 18800.0 17200.0 177-0.0 18200.0 18700.0 E'.ENL- EAR'(ING TON KM (MILLION) 7600.0 7800.0 7500.0 7800.0 8000.0 8100.0 8250.0 'EVENUE PER PASSENGER KM (PAISA) 9.7 8.7 8.8 8.4 9.8 n1.8 -_;'E!E PER FREIGH7 73N KM (PAISA) 21.5 24.0 34.8 38.0 42.0 46.0

:=DRATZN2 RAT'O 109.5 .08.0 11-5.9 34.4 S81.0 50.8 86.8

~ourcs:Pakistan Railways & mission May 1982 -75- Table 20

PAKISTAN

ELEVENTH RAILWAY PROJECT

Forecasts of Source and Application of Funds.: 1980/31 - 1984/85

(Figures in Million Rupees)

Year Ending June 30

T otal I otal 1980/81 1981/82 1?82/83 1983/84 1981/84 1984/85 1981/85 SOURCE OF FUNDS

N--T OPERATING REVENUE (LOSS) -265.0 -485.0 232.0 434.0 181.0 505.0 687.0 APPROPRIATION TO DRF 420.0 440.0 470.0 541.0 1451.0 601.0 2052.o 5 A PROPRIATION TO IMPROVEMENT FUND 65.7 67.4 -73.7 97.4 238.5 112.8 351.3 DRAWN FROM RESERVES 21.0

RAILWAYS CASH GENERATIDN 241.7 22.4 775.7 1072.4 1870.5 1219.e 3090.3

FOREIGN EXCHANGE GOVERNMENT FOR ADDITIONS 30.0 271.0 214.C 223.0 714.0 714.C FOR REPLACEMENTS 170.0 234.0 464.0 441.0 1139.0 228.0 1337.0

LOCAL CURRENCY GOVERNMENT FOR ADDITIONS 382.0 433.0 333.0 463.0 1228.0 504.0 1733.0 FOR REPLACEMENTS 174.0 328.0 489.0 5S8.0 1385.0 1385.0 GRANT IN AID FOR OPERATIONS 188.0 552.0 552.0 552.0 lOTAL SOURCES 1205.7 1840.4 2275.7 2773.4 6888.5 1151.8 8841.3

APPLICATION OF FUNDS

D:BT SERVICE 231.0 221.0 308.0 386.0 8Z6.0 420.0 1346.0 INVESTMENT ON ADDITIONS 457.0 705.0 547.0 691.0 1943.0 700.0 2ZE43.0 INVESTMENT ON 9EPLACEMENTS 331.0 562.0 953.0 1042.0 2557.0 228.0 2785.0 EXPENDITURE ON IMPROVEMENTS 36.0 53.0 60.0 80.0 193.0 100.0 293.0 AVAILABLE FOR/PAST LIABILITIES/DIVIDEND -466.0 -G62.0 12.0 117.0 -553.0 133.0 -42J.0

-CTAL APPLICATIONS 589.0 859.0 1881.0 2326.0 5066.0 1581.0 6847.0

CHANGES 1N WORKING CAPITAL/8ALANCES 316.7 981.4 384.7 447.4 1823.5 370.8 Z194.3

TOTAL 1205.7 1840.4 2275.7 2773.4 E889.5 1951.8 8841.3

Note: The investment on additions in 1984/85 includes the sum of 264 million Rupees included in the Medium-Term Development Plan for 1981-1984 which the mission estimates will be spent after June 1984.

Source:Pakistan Railway Mission May 1982 -76- Chart 1

PAKISTAN PAKISTAN RAILWAYS ORGANIZATION

S FEDERAL MINISTER OF RAILWAYS

DNSECTOROF RA SECRETARY, MINISTER OF RATLFAYS

CHAIRMAN,. RAILWAY .. AR.

MEMBERA NNINMEG1ERAND PROCUREMEN MANAGER IF OF FINANCE | ENGINPERINGRSS TRA FFICPDTR

CHIEF CH EF D~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1VISIOIN | D SIDNI ACCOUNTS PERSONNEL SUP~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ER NTENDENT - t UPRINTEINDENT] CRIESERS OFFICER CFULTANOUETA

CHSVR ACFIC DR F AV NR P C DIVIS ON ADMINISTRATIO'N SUERINTENDE]NT_ SUEll NTENDENlT AND CUDGETAN EAWALPINDF STORS

PRJEC EDGIREER CHIEFCHIEF OPERATINR ESUPERINTNENT

OPEN L NES ESUPERINTENDENT

| EFGENAL ANEERCH L CHIEIEF FICEMMERCIAL |TELECOMMUNICATIONS E|EGNEER C3 j HATOFIE | MNAGER

R OFINANCE AS RDIRECTORE E OF FIFICEE CHISR TRAANIC L

KARACH ROTRI~~~~~~~~~~~~~~TMOHLPR | SURVEY ANGER __ CIFCNRLE ORGANIZATION L_ PROJECT DIRECTOR | ONSTRUCTION STRSAND METHODS SOFRERAIL

CH, 7]~~~REEAC rPROJECT DIRECTOR1 __ CIF ,CONHTAROLLE R| | IPRI r UCAE SSGSARY1982 DREPOR P~~~PROGESSIG2E- |PIROJECT DIRECTOR] __t RDEC DRETO | ARACH r KOR

'VEMBER FINANCE ALSO REPORTSTO SECRETARY. MINISTRYOF FINANCE

;'FBRUTARY 1982 1od-ak -23804 PAKISTAN

PAKISTAN RAILWAYS ORGANIZATION

Federal Minister of Railways

Secretary, Ministry of Railways

Chairman, Rail]way Board

SceayRiwyBrdIn-C'harge Member Railway Board ~ Member-Railway Board

Federal Government Member Railway Board Member Railway Board Inspector of Railways Traffic l | Civil Engineering

General Manager Railways

Railway Staff

WORLD BANK 23804 May 1982 PAKISTAN: ELEVENTH RAILWAY PROJECT EXPANSION OF DRY PORT AT MOGHALPURA LAHORE (KEY PLAN)

S. NO DESCRIPTION EXISIING XPANSION NO. 2

1. TOTAL AREA OF LAND 812535 SRES 435 ASEST; 103000 SFT; 18.65 ACRES 10.345 ACRES 2.364 ACRES

/2. AREACOvERED 41800 SFT, 60000 S F1 ii. OPENi14000 SFT

3. TRACK'S LENGTH 5000 LFT; 2800 LET. lEOWAGONS 1lOOWAGONS

4 AREA OF OFF ICES 24500 LFT, 800 SFT,

PLATFORMS 5. HIGH EVE L 2000 LET; 400 LET, ii. HAIL LEVE 5O LET;

DDgITIONAL < \ < \ 6 ROADS 6000 LFT, 240 LFT; /v R E A \ < 7 FIRE I IGHTING WITH 13 NO > 7.~~~~~~~~~~~~~~~~~~~HYDRANTS 3- 3800 LET; 2000 LET; T0UNDABYAND TCSTOLONYE W A L>//@/ < \ 8 OPEN AREA FOR STACKING 576300 SFT 330900 SFT, 103000 SFI;

// w , X / < \ re ~~~OFTRACK / H W/bHO~~~~~~~~~~~~~~~~~~

DliARAMPURA YARD // // /

///////<~~~~~~~~~~~~~~~~~~~~~Z 7= = 7=2. ~-C//

%///- t E~~~~~~~~~~~~~~~~~~~~~~~O AD 30' VVIDOF OLFICF`TC- N-- N DA\ V-

--- EISX TIING D RY PO RT CULTIVATED LAND t .2. WORK TO BE DISMANTLED 3. PROPOSED WORK World B-lk 23563 Chart 3 -79-

PAKISTAN ELEVENTH RAILWAY PROJECT pROPOSEDLA-YOUJT OF RFMANUFACTURING SHOPS IN CENTRAL DIESEL WOCRKSHOPSRAWALPINDI

MAIN OrFICE BUILOING

CY I- soE)SMAIN FACTURING LER ANO AIR CMPREsSSO US SPAE E PAR S_|, CYCLE ~-f STANDw ~ tl MILLLMAHIERIGHT C,2n{CRANK SHAFT rI,CRM

EEHCETAVORFF ICLE _ p _nh ,NoMA, fMLCTHIgNGE TRUCK TRLCKAll9t REPAIRLT__ CAR REPAIrNSFIOP SHOP SUPPORTIhItGFACILITTES --- PIFREENGINE AND_ TRUCK OS ELECTRIC

SIJESTA&LrT FACILI IESf

t I t I I , . _ i I I _ I R~~~~~~~~~~~UN NJNG ROOM fi7

ENGINE rco.7T EAIC tJI C_ INTI l Ca 3 ANC COMPONENT .J I | flRE PIGHTINGRfRPAIR8SH P= ip

rAl AK AND) PUMP HOUiSE LON _ , _=

______OILET______Wo.la 5an' - 235C2 -80- Chart 4

PAKISTAN ELEVENTH RAILWAY PROJECT PROJECT IMPLEMENTATION SCHEDULE

1982 | 1983 1984 1985

J F MIAIMIJ IJ A S 0 VD JIFIMIAMIJ |JAIS|O N|DJ F|M|A|M J|J|A Slo NI J FM A|M|J J|A|S|O|N|D

AppraisalIS1OO

Report Preparation

Effectienes Bo0aercdiPresenntation p

a. Maintenance Improvements il i Central Diesel and Other Shops

Specifications -nd Tender Documents

Consltaon with Bank

Tendering

Contrast Awards Dnli-ey 4 Construction and I nstaation

ii Unit Ehcha-ge Components

Specification ond Tender Documerts

Consultation w th Bank

Contract Awaros

Delicery t

iii. Reoenue Spares

Specifications and Tender Documents

Con.ltation w th Bank

Contrat Aw,ards

b. Management Information System

DataI Neatwork

cC nstain Oriaioni, Specification and Tender D---mnt q l r

Contract Awards

i, Facilities Lahore Dry PortIi j| i Ii

SpeecifictionsTendering |*__ and Tender Do et

Contract Awards

Fabrication andC-nt-utonv-

ii. Equipma -a d Rolle g Stock

Specfications and Tender Documents

Contract-Awards

d. Te~i"ctal AOitn d Staffa Tr iming

Spiiilectificatio StudTen om s

So.-,eq B StRff ank

May 1982 World B-k 23803 IBRD 16207R -7n; oso U 5 5 R 701 643-N4r 73o APRIL 1982

S.l RE 0Us,. ... RA. 9 sAFGHAUI TAt DEMOCRATICREPUBLIC OF t > C H N

NSuFX No tfT'3AFGHANISTAN . , d H I AB

SOAHDI ARAB IA _ / INDI4\

20" ARAB EMIRAT... 1

P1AKISTAN r ,3 PA~~~~~~~~~~~~~~~~KO5 IoiSk TAG {- \s Af. tOroo,-,nm,etoe LleOf Control

ELEVENTH RAILWAYPROJECT - J / -

* LAHORE IDR PORT , S-

RAWALPIND DIESEL LOCOMOTIVE

WORKSHOP IlLC W)

>1 1BROAD GfUOF, DOOjRLE TRACK 00.20' 00100 -I-I-I~ I IBROAD ,0AUGE SINGLE TRACK ii

-32 ° I-'.------1 . METER GAUGE . / / \ 00.0V1, 0 AO A 1o OTHER GAUGE KEO.N 320

I:E- :--E-HSELECTR FIED SECEION 010d01 > S /

.01% 6 NATIONAL CAP TAL ) 0 o CITIES, TOWNS, AND RAILWAY STATIONS

j0~ - - DNTERNATIONALBOUNDARIES

-28-~' T/, N D> I A/I 2 280

I R A N hte it b y

0 50 MB1 lEO 200 250

010000;D s2 {'N0 5 3O0 40D500

T. )NO)i ., KAARACHI AREA

ft. ' ,0>>- 2'.

70 24. A R A 8/A N S E A ~- 24 ($./ . o .

>.. Ž4. n>Ih..s{~ sA 10.0.A-. # I \ 'e _ _ E4° 9i I~ba~~,_ 72~~