Document of fhe World Bank
FOR OFFICIAL USE ONLY
Report No. 7957 Public Disclosure Authorized
PROJECT PERFORMANCE AUDIT REPORT
ZAMBIA Public Disclosure Authorized
THIRD RAILWAY PROJECT (LOAN 1790-ZA/CREDIT 973-ZA)
JUNE 30, 1989 Public Disclosure Authorized
Operations Evaluation Department Public Disclosure Authorized
This document has a restricted -4istribution and mai be used bi recipients only in the performance of their official duties. Its content ma- not othcrwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS
Appraisal Year Average (1979) - US$ 1 = K .79 Intervening Years Average - US$ 1 - K 2.25 Completion Year Average (1987) - US$ 1 - K 8.00
ABBREVIATIONS
AfDB - African Development Bank CIDA - Canadian International Development Agency CTC - Centralized Traffic Control DPC - Data Processing Center EEC - European Economic Community ERR - Economic Rate of Return FRG - Federal Republic of Germany FRR - Financial Rate of Return GOZ - Government of Zambia ICB - International Competitive Bidding ITR - Integrated Train Radio KfW - Kreditanstalt fur Wiederaufbau lb/yd pounds per yard LIB - Limited International Bidding MD - Managing Director NCDP - National Commission for Development Planning OPEC - Organization of Petroleum Exporting Countries p.a. - per annum PCR - Project Completion Report SAR - Staff Appraisal Report SIDA - Swedish International Development Agency SNCZ - Societe Nationale de Chemin de Fer de Zaire TAZARA Tanzania-Zambia Railway Authority ZIMCO Zambia Industrial and Mining Corporation ZR - Zambia Railways
FISCAL YEAR
January 1 - December 31; since 1979: April 1 - March 31 FOR OFFALr ONLY THE WORLD BANK Washington. DC 20433 US.A
OM1re of De"secoai OphatermIts aiatmin
June 30, 1989
IEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Performance Audit Report on Zambia Third Railway Project (Loan 1790-ZA/Credit 973-ZA)
Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Zambia Third Railway Project (Loan 1790-ZA/Credit 973-ZA)" prepared by the Operations Evaluation Department
Attachment
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. ALL. ONLY
PROJECT PERFORMANCE AUDIT REPORT
ZAMBIA
THIRD RAILWAY PROJECT (Loan 1790-ZA/Credit 973-ZA)
TABLE OF CONTENTS
Page No.
Preface ...... i Basic Data Sheet ...... ii Evaluation Summary ...... iv
PROJECT PERFORMANCE AUDIT MEMORANDUM
I. Introduction ...... 1...... 1 II. The Third Railway Project ...... 4 III. Conclusions and Recommendations ...... 9
1. Zambia: The Railway Network ...... 15
Figures
1. Zambi.a: Foreign Trade Flows by Rail and Road, 1979 and 1983 ...... 16 2. Zambia Railways: Freight, 1981-1987 ...... 16 3. Third Railway Project: Estimated and Actual Investments ... 17 4. Third Railway Project: Investments, Foreign Exchange Component ...... 17 5. Third Railway Project: Operating Expenses to Revenues 1980-1987 ...... 18
PROJECT COMPLETION REPORT
I. Introduction ...... 19 II. Project Origin, Preparation, Appraisal and Negotiations ...... 20 III. Project Imylementation and Cost ...... 22 IV. Traffic ard Operations ...... 32 V. Financial Performance of Zambia Railways ...... 36 VI. Institutional Performance and Development ...... 38 VII. Economic Reevaluation...... 40 VIII.Conclusions and Lessons Learnt ...... 43
This document has a restricted distribution and may be used by recipients only in the performance of their ofl-al duties. Its contents may not otherwise be disclosed without World Bank authorization. Tables
1. Actual and Expected Physical Completion ...... 24 2. Award of Contracts under Bank/IDA Financing ...... 30 3. Actual and Original Satimates of Project Costs ...... 31 4. freight Traffic - Actual versus Forecast ...... 33 5. Operational Objectives and Actual Achievements ...... 35 6. Special Covenants ...... 38
Annexes
1. Schedule of Actual and Estimated Cumulative Disbursements ...... 45 2. Actual and Forecast Freight Traffic ...... 46 3. Selected Operating Statistics ...... 47 4. Actual and Projected Balance Sheets or 4aust-it Railways 1980-87 ...... 48 5. Actual and Projected Revenues and Expenses of Zambia Railways 1980-87 ...... 49 6. Actual and Projected Cash Flows of Zambia Railways 1980-87 ...... 50 7. Actual and Original Expectation of Financing During Project Period ...... 51 8. Financial Rate of Return ...... 52 9. Economic Rates of Return ...... 53 10. Consultants Employed for Major Studies and Local Training...... 59
CHART
Organization Chart - Zambia Railways Limited
ATTACHMENT
Is Commnents from KfW...... 61 II. Comments from ZIMCO...... 63 EI. Comments from CIDA...... 0...... 67
MAPS
IBRD 14252-Rl and 14253-R2 PROJECT PERFORMANCE AUDIT REPORT
ZAMBIA
THIRD RAILWAY PROJECT (Loan 1790-ZA/Credit 973-ZA)
PREFACE
1. This is the Project Performance Audit Report (PPAR) on the Third Railway Project (Loan 1790-ZA/Credit 973-ZA), financed with a Bank loan of US$25 million and an IDA Credit of US$15 million, approved by the Board on December 27, 1979. The Closing Date was extended twice (from September 30, 1984 to September 30, 1986) and an outstanding balance of US$839,000 was cancelled. The project was cofinanced by the African Development Bank (AfDB), the European Economic Community (EEC), the EEC Special Action Fund, the Federal Republic of Germany (FRG), Japan, the Organization of Petroleum Exporting Countries (OPEC) Fund and the Swedish International Development Agency (SIDA).
2. The PPAR consists of (i) an Evaluation Summary and a Project Performance Audit Memorandum (PPAM) prepared by the Operations Evaluation Department (OED), and (ii) a Project Completion Report (PCR) prepared by the Africa Regional Office. The PCR contains a thorough si-mary of experience gained from inception through to the completion stage. .o prepare the audit, OED reviewed the Staff Appraisal (SAR) and President's Report (PR), as well as legal documents, transcripts of the Executive Directors' meeting which considered the project, Country Economic Reports, and Transport Sector Memoranda. After studying the file and discussing the project with Bank staff in Washington, OED conducted a field mission to Zambia in February 1989 to visit project sites, and to secure the views of the Borrower and of representatives of the major cofinancing agencies. The PPAM, after outlining the role of Zambia Railways in the country's economy, elaborates on a number of points related to project identification, preparation and implementation, and offers some recommendations which might be taken into account when Government, the Bank and other donors contemplate future interventions in the railway sector.
3. According to standard procedureg, OED sent copies of the draft PPAR to the Government and cofinanciers for comments. Comments from the Kreditanstalt fur Wiederaufbau are appended as Attachment I. Comments from the Zambia Industrial and Mining Corporation Limited are appended as Attachment II. Comments from CIDA are attached as Attachment II. - ii -
PROJECT PERFORMANCE AUDIT BASIC DATA SHEET
ZAMBIA: THIRD RAILWAY PROJECT (Loan 1790-ZA/Credit 973-ZA)
KEY PROJECT DATA
Borrower: The Republic of Zambia Executing Agency: Zambia Railways
Appraisal Actual Estimate
Total Project Cost (US$ million) 188.2 137.2 Overrun/(Underrun) (%) (27.1) Loan/Credit amount (US$ million) 40.0 Disbursed 39.2 Cancelled 0.8 Date Physical Components Completed 12/83 09/88 % Completed by Above Date 35 Time Overrun (%) 84 Economic Rate of Return (%) 19 4
PROJECT DATES
Original Item Plan Actual
First Mention in Files 9/20/78 Negotiations 10/29/79 Board Approval 12/27/79 Effectiveness 10/13/80 3/31/81 Closing Date 9/30/84 Loan: 9/30/86 Credit: 5/23/86 Final Disbursement Loan: 5/13/87 Credit: 5/23/86 - iii -
STAFF INPUTS (staff weeks) FTY78 FY79 FY80 FY81 FY82 Fy83 Fy84 FY85 F86 FY97 FY88 TOTAL
Identification/ .1 10.9 11.0 Preparation Appraisal 41.4 17.6 59.0 Negotiations .1 17.9 18.1 Supervision 7.6 18.9 37.8 20.4 13.2 12.1 13.7 7.3 1.8 132.8 Other .3 .9 .2 .9 2.2 .0 .0 4.6 Total .1 52.7 44.0 19.0 38.7 22.6 13.2 12.2 13.7 7.3 1.8 225.4
MISSION DATA
Date No. of Specializations Performance Types of (mo./yr.) Persons Represented Rating 1/ Trend2/ Problems3/
Identification/ Preparation 9/78 3 Eng.,Econ.,F.A. Appraisal 1/79 4 Eng.,Econ.,F.A.,Conf,. Post-Appraisal 5/79 2 Econ.,F.A.
Supervision 1 2/80 3 Eng.,Enon.,F.A. 1 Supervision 2 11/80 1 Eng. 1 2 M,T Supervision 3 3/81 2 Eng.,Proc.Advisor 1 2 M,T Supervision 4 7/81 2 Eng.,Econ. 2 2 M,F Supervision 5 10/81 2 Eng.,F.A. 2 3 F,M,0 Supervision 6 2/82 2 Eng.,F.A. 2 2 F,M,0 Supervision 7 9/82 4 Eng.,F.A.,Econ., 2 2 F,M,0 Rwy Advisor Supervision 8 2/83 2 Eng.,F.A. 2 2 F,M Supervision 9 7/83 3 Eng.,F.A.,Econ. 2 2 F,M Supervision 10 2/84 4 Eng.,F.A.,Econ., 2 2 F,M Technical Educator Supervision 11 10/84 2 Eng.,Cons. 2 2 F,M Supervision 12 2/85 2 Eng.,Econ. 2 2 F,M Supervision 13 9/85 2 Eng.,Econ. 2 F,M Supervision 14 6/86 3 F.A.,Eng.,Econ. 2 F,M
Follow-On Project: Name: Fourth Railway Project Credit Number: Credit 1575-ZA Amount (SDR million) 20.5 Approval Date: 3/28/85
1/ 1- Problem-free or minor problems; 2- Mouerate problems; 3- Major problems
2/ 1- Improving; 2= Stationary; 3- Deteriorating.
3/ F- Financial; M- Managerial; T- Technical; 0- Other - iv -
PROJECT PERFORMANCE AUDIT REPORT
ZAMBIA THIRD RAILWAY PROJECT (Loan 1790-ZA/Credit 973-ZA)
EVALUATION SUMMARY
Introduction
1. In Zambian transport, the railroad plays the dominant role for imports, exports, domestic freight, and intercity passenger travel. The country is landlocked and access to the.sea preoccupies the Goverrment which, over the years, has used a number of "corridors". Zambia Railways (ZR) emerged from the breakup of the Unitary Railway System that, prior to 1965, ope4ated in both northern and southern Rhodesia. The split endowed ZR with only a few managerial and senior technical staff, and with a fleet of aging and unreliable locomotives and wagons. Continued ZR operation, therefore, depended on foreign assistance, and the Third Railway Project was to strengthen Zambian capacity to move both domestic and international traffic (PPAM, paras 1-2). The project was appraised in January 1979, approved by the Board in December 1979, and became effective in March 1981 (PCR, paras 2.01- 2.03). It was to be implemented between 1980 and 1983, and to cost US$188.2 million (PCR, para 1.05). The foreign exchange component of US$130.1 million would be financed by IBRD/IDA, AfDB, EEC, the EEC Special Action Fund, the Federal Republic of Germany, Japan, the OPEC Fund, and SIDA (PCR, Annex 7). The Fourth Railway Project, approved in 1985, was a f;llow-on operation.
Project objectives and components
2. Principal objectives were to reverse deterioration in railway capacity; to modernize rolling stock; to increase utilization of locomotives and wagons; and to improve ZR ability to handle traffic growth until 1986 (PCR, para 2.04). To achieve these objectives, the project provided for: renewing 112 km. of track; renewing the Centralized Traffic Control (CTC) system and improving the telecommunications network; purchasing locomotives and wagons, and providing for their spare parts; improving maintenance and handling facilities; staff housing; data processing facilities; and advisory services at senior and middle management levels, and training at all levels to reduce ZR's dependence on expatriate personnel (PCR, para 2.06).
Implientation
3. A variety of problems (PCR, paras 3.01-3.02) delayed effectiveness by almost a year. Project execution was hindered by Zambian socio-economics, by discontinuity at top levels of ZR management, by ZR shortages of middle and lower level tecnnical staff, and by procurement and disbursement procedures which differed among cofinancing agencies (PPAM, para 22; PCR, Table 1). As a result, project completion took almost five years more than had been expected (PCR, pares 3.05-3.21). Slower than anticipated disbursements necessitated two extensions of the Closing Date (PCR, para 3.24). Detailed comparisons of - v -
estimated and actual costs are not easy because of difficulties in allocating local costs to specific components, and because of the devaluation of the Kwacha during the latter years of project execution. Total actual costs were about 731 of the appraisal estimate (US$137.2 million as against US$188.2 million). Part of the reduction is due to cancelled reconstruction of the Kafue River Bridge (PCR, para 3.25 and Table 3).
Results and sustainability
4. Traffic growth did not measure up to appraisal forecasts. Freight traffic was expected to grow by 22% between 1979 and 1987; it was 27% below target in 1987 (PCR, paras 4.01-4.02 and Annex 2). Passanger traffic was expected to grow by 42 per annum; it was 24% below target in 1987 (PCR, para 4.04). Operating performance targets were not met (PCR, Table 5). Locomotive availability, turnaround times and productivity of rolling stock did not improve (PCR, paras. 4.05-4.09). Financial performance improved towards the end of the implemet,tation period due to tariff increases. However, major additions to fixed assets, and currency depreciation, have generated high debt service obligations, and these will burden ZR's financial position unless performance, or volumes of traffic hauled, improve considerably (PCR, paras 5.01-5.03). The re-estimated financial rate of return is 14%, lower than projected at appraisal (20%) but still reasonable (PCR, para. 5.06).
5. The re-estimated economic rate of return (ERR) is 4%, as against 19% estimated at appraisal (PCR, para 7.03). New assets and better repair facilities did not generate :he expected benefits. Track rehabilitation affected only a small portion of ZR's network and did not significantly improve ZR performance. Contrary to expectations, motive power was insufficient, and ZR had to lease additional locomotives, which permitted use of wagons that would otherwise have remained idle (PCR, para 4.07). Low availability of locomotiv- an be attributed only in part to inadequate maintenance; more seri problems were institutional: inexperienced staff, weak planning and low sta.. discipline (PCR, para 8.03).
6. Appraisal objectives were too broad and should not be used as yardsticks against which project results might be measured (PPAM, paras 19- 21). The project did pro-ide for track rehabilitation, new locomotives and wagons, equipment and macerials for repair, as well as technical assistance and training. It over-emphasized, however, the provision of new assets and paid too little artention to potential institutional constraints to their efficient utilization (PPAM, para 22). ZR's transport capacity was not increased for three main reasons. First, some appraisal assumptions proved to be inappropriate: a possible economic downturn was not taken into account, and traffic forecasts for copper exports were optimistic (PCR, paras. 4.02-4.03). Second, the impact of poor management was not anticipated and too much reliance was placed on expatriate assistance (PCR, paras. 3.02 and 6.01-6.03). Third, some of the investments made under the project (specifically, in telecommunications/signalling and in data processing), were not based on a proper assessment of ZR needs (PPAM, para 24 and PCR, paras 3.11 and 3.18). - vi -
7. The audit concludes (PPAM, par& le) thut completion of the Third Railway T roject left ZR in the following situation:
(a) Approximately 15% of the mainline railway operates on track of acceptable standard. The balance needs drastic improvement because it presently contributes to low speeds and frequent derailments. The capability now exists to launch a continuous rehabilitation program, albeit with expatriate technical assistance.
(b) Locomotive availability continues to be a major weakness; it can be addressed through improvements in mr.intenance productivity, more flexible acquisition of spare parts, and greater operating discipline.
(c) The signalling and communications system requires relatively small additional investments before full operational benefits can be realized.
(d) With regard to training, there is a pressing need for artisans and technicians in all operating departments; Zambian nationals ought to be given managerial responsibility for track rehabilitation and rolling stock maintenance.
8. Sustainability of project benefits will depend significantly upon ZR's access to foreign exchange for spare parts and for the continuation of the track rehabilitation program. Suspension of disbursements (since May 1987) under the Fourth Railway Project has deprived ZR of needed funds, for which there do not seem to be other sufficient sources (PPAM, para 23).
Recommendations
9. The railway sector needs financial assistance of magnitudes large enough to warrant a coordinated approach by Government and the donor community. When suspension of disbursements has been lifted and discussions are resumed on the future of the railway, the Bank could help not only as a source of financing but, also, as the agency to harmonize investment and institution-strengthening measures sponsored by a variety of donors (PPAM, paras 23-27). Future programs of assistance ought to ensure that:
--- first priority be given to track and equipment rehabilitation and improvement;
--- more emphasis be placed on the training and career development of operational staff;
--- in filling senior management positions, Government be encouraged to draw more extensively on ZR technical staff who are already familiar with railway operational problems (PPAM, para 28). PROJECT PERFORMANCE AUDIT XAU.al
ZAMBIA
THIRD RAILWAY PROJECT (Loan 1790-ZA/Credit 973-ZA)
I. INTRODUCTION
1. In most countries, road transport has supplanted railroads, but not in Zambia. Between 1966 and 1978, the Bank attempted to encourage highway transport by financing three projects,./ but with little effect.21 In 1989, the railroad plays the dominant role for imports, exports, domestic freight, and intercity passenger travel. Population distribution parallels the spinal route of Zambia Railways (ZR), from Livingstone at the border with Zimbabwe in the south, through the capital, Lusaka, some 500 km to the northeast, and on to the Copperbelt region and the border with Zaire in the north (Map 1: Zambia -- The Railway Network).31 Besides serving domestic demand for freight and passenger transport, a significant percentage of ZR's business is generated by transit traffic. Because Zambia is landlocked, access to tidewater depends upon interlining with other railways and disruptions in international traffic, occurring periodically due to strife within littoral countries, are a source of preoccupation for the Government which must seek alternative access routes to the sea. Over the years, corridors through Tanzania, Ztmbabwe, Mozambique and South Africa have been used with varying degrees of success.4/
2. ZR emerged from the breakup of the Unitary Railway System that, prior to 1965, operated in both northern and southern Rhodesia. The split endowed ZR with only a few managerial and s6nior technical staff, and left Zambia with a fleet of aging and unreliable locomotives and wagons. As a result, continued operation of the ZR depended on expatriate technical assistance and foreign aid. In addition, and like railroads in other
1/ The First Highway Project of 1966 (Loan 469-ZA; US$17.5 million); the Second Highway Project of 1968 (Loan 563-ZA; US$10.7 million); and the Third Highway Project of 1978 (Loan 1566-ZA/Credit 798-ZA; US$ 22.5 million).
2/ For a detailed discussion of the First and Second Highway Projects, please see OED Report No. 292-ZA of December 10, 1973: Project Performance Audit-- Zambian Highway Proiects.
3/ Appended to the PPAM texc.
4/ In the mid-1970s, concern for reliable access to the Las motivated the decision to proceed with the Tanzania-Zambia (Tansam) Railway financed and built by the Peoples' Republic of China. - 2 - countries, ZR has had to carry the financial burden of imposed public duties. Due to the poor quality of roads and severe foreign exchange shortages, there are few intercity buses and the railway provides passenger service at low tariffs.5/ Finally, ZR is required to operate uneconomic branch lines, such as the service between Livingstone-Mulobezi, and the opening of the Tanzam Railway deprived ZR of an important source of traffic and revenue, without a corresponding decrease in costs. From the late 1970s, ZR finances have not been solid, and railway service suffers from low reliability, high transit times, low average speeds, and frequent accidents. ZR performance has suffered from weak and unstable management, poor track condition and maintenance, low availability of rolling stock, shortage of trained artisans and technicians, and unwillingness of the government to permit tariff increases which would match costs of operation.
3. To confront these shortcomings, the December 1979 Third Railway Project was initiated by the Bank in cooperation with the African Development Bank and the aid agencies of the Federal Republic of Germany, Sweden, the European Economic Community (EEC), Japan, the African Development Bank, and the Organization of Petroleum Exporting Countries (OPEC). Principal objectives were to avoid deterioration of the railway's infrastructure, and to increase effective capacity. Results could have been better. According to the PCR (para 8.01), the project failed to meet its objectives in terms of performance improvements, disbursal of funds, and implementation.6/ Depending on the source, poor results are attributed to changes in senior management at critical times during the project; to the sudden withdrawal of foreign technical assistance; to unanticipated delays in acquiring local materials for track rehabilitation; to lengthy delays in the approval of disbursements; to limitations on implementation flexibility due to donor restrictions on the use of aid funds; and to unrealistically high forecascs of traffic potential. Some success was noted with respect to track rehabilitation and wagon renewal, but disbursements under the 1985 Fourth Railway Project (which was to continue from where the Third Project left off), have been suspended since May 1987. In 1989, Zambia's economy has reached the stage where drastic, and long-term, reorientations seem to be called for. In the transport sector, the rail vs. road issue ought to be confronted: will the country continue to rely primarily on the railroad, or will highway transport be gradually allowed to take over functions which the railroad does not, or cannot, fulfill. Nevertheless, and without diminishing the need for an explicit policy on modal competition, immediate facts cannot be ignored: Zambia's foreign debt burden is large enough to preclude, over the next five to ten years, construction of a road network and creation of a trucking industry that could effectively compete with the railroal. Therefore, in the
5/ Tn turn, low railway tariffs discourage the emergence of competing bus operations which might provide higher service frequency and faster travel times.
6/ These weaknesses were recognized in the 1985 appraisal of the Fourth Railway Project (conceived as a continuation of the Third), which emphasized improved utilization of existing assets, rather than new investment. - 3 -
short run, iwasures ought to be taken for the improvement of ZR performance because the railway continues to service the bulk of import, export and domestic flows.
4. As the dominant mode of transport, the railway performs two domestic functione as well as a third, related to international traffic. First, as shown in Figure 1 (Zambia: Foreign Trade by Rail and Road, 1979 and 1983),7/ the railway carries ti&e largest proportion of all imports and exports (which are roughly in balance). Second, the railway is the most important carrier of internal freight traffic between the major population centers located along its alignment. Third, the railway serves as an importLnt link for freight traffic between Zaire and Tansania as well as between Zaire and Zimbabwe and South Africa. Transit traffic represents an important source of railway revenue. Figure 2 (ZR: Freight, 1981-1987) shows that the relative mix of domestic freight, imports, exports, and transit traffic remained relatively stable during the 1981-87 period.8/
5. Freight traffic patterns have varied considerably in the past, depending upon closures of the various alternative routes, but the primary export function of ZR during recent years has been to deliver products from the Copperbelt region to the Tanzam terminus at Kapiri Mposhi for routing to Dar es Salaam. In 1987, this feeder service accounted for about 83% of the railway's export traffic. During the same year, 51% of import traffic carried by the railway originated with Tanzam and 37% at the border from Zimbabwe. More recently, there is reason to believe that import traffic from the south . has increased as Zambia imports increasing volumes of South African products. Over the 1981-1987 period, transit traffic to and from Zaire accounted for 55% and 40% respectively of all railway transit traffic which enters and exits Zambia, primarily via Zimbabwe.
6. Although passenger service represents only a small part of the railway's operations, it is essential due to the lack of alternative bus services. For a large portion of the population, the railway, despite poor schedule reliability and extremely low average speeds, offers the only affordable means of travelling between towns and villages.9/ Under current conditions, there does not seem to be much scope for achieving higher cost
Z/ Figures are appended to the PPAM text.
8/ These figures overstate internal freight traffic because about 25% of the internal volumes involve copper, primarily an export commodity. Copper traffic is defined as internal because ZR delivers copper from the Copperbelt Region to the railhead of the Tanzam Railway within Zambia.
9/ Railway management advised the February 1989 audit mission not to travel between Lusaka and Kabwe (the ZR headquarters) by passenger train due to the congested conditions, slow service, and lack of amenities and facilities. The trip was made by road, in a ZR vehicle. recovery through increases in tariffs, o. through reducing service from the present low frequencies.
7. All of the above notwithstanding, ZR still p2ays the major role in the transport sector. In many developing countries, the railway is often contrived as a means of maintaining employment or satisfying politicAl aspirations. In Zambia, without the railway, there are no alternative means of providing adequate capacity for imports, exports, or domestic traffic, unless large investments are to be made in roads and trucks. Thus, although railway services are not efficiently performed, they are so essential that even maintaining existing capabilities without any improvement in performance justifies certain minimum expenditures.
II. THE THIRD RAILWAY PROJECT
8. Formulation of the Third Railway Project reflected a technical assessment of the condition of the railway in the late 1970s, recognition of the importance of the railway within the transport sector, and anticipation of a substantial increase in copper exports. The assessment was burdened with the usual problems associated with antiquated railways that have been inherited from previous administrations: poor infrastructure with insufficient attention to maintenance and rehabilitation; low rolling stock utilization attributable to maintenance procedures and lack of adequately trained managers and technical personnel; a shortage of spare parts and poor inventory control; and the familiar political pressures to maintain low tariffs for both passenger and freight traffic.
9. Iu addition to these generic complications, railway performance in Zambia is affected by problems arising form the country's resource endowment and from its landlocked geographical position. First, due to the high degree of dependence on a single export commodity, freight traffic and revenues are extremely sensitive to fluctuations in the world market for copper.12/ Second, efficient routing of railway traffic can be affected significantly by border closings arising from strife in littoral countries. Third, rolling stock productivity, particularly in the case of wagons, can be severely influenced by turnaround times in jurisdictions (such as the port of Dar es Salaam) where ZR has neither authority nor operational control.1l/ In the audit's view, the SAR, by not making sufficient allowance for these three exogenous factors, each one of which can negate most, or all, benefits derived from purely tnternal ZR improvements, underestimated both the ease of implementation and the time required for project completion.
10/ Traffic projections included in the SAR were overly optimistic, given the evidently depressed world market for copper in 1979.
11/ Wagons owned by ZR and used to transport exports via the Tanzam Railway, incur turnaround times of 30 to 40 days due to congested conditions in the port of Dar as Salaam and are often "lost" while they are used to move internal cargoes within Tanzania. - 5 -
10. The principal objectives of the Third Railway Project were to avoid further deterioration in railway operations and a corresponding reduction in capacity; to modernize the rolling stock and increase utilization of locomotives and wagons; and to improve the ability of the railway to handle the expected growth in traffic, at least until 1986. To achieve these objectives, the project provided for renewing 112 km. of track and extending and improving crossing loops; renewing the Centralized Traffic Control (CTC) system and improving the telecommunications network; purchasing locomotives and wagons and providing for their spare parts; improving maintenance and handling facilities; staff housing; data processing facilities; and advisory services at senior and middle management levels and training at all levels to reduce ZR's dependence on expatriate managerial and technical personnel.
11. Estimated and actual disbursements by project component are discussed in the PCR (para 3.24 and Annex 1), and summarized in Figure 3 (Third Railway Project: Estimated and Actual Investment). The actual expenditures of US$137.2 million were some 73% of the projected US$188.1 million, the most significant deviation occurring in the case of the local currency element of total expenditures, largely due to Kwacha devaluation. In addition, a US$10 million investment for the Kafue Bridge, anticipated to be financed by the U.K., did not materialize. Actual distribution of the foreign exchange component of the Third Railway Project is shown in Figure 4 (Third Railway Project: Investments -- Foreign Exchange Component). The following pLragraphs elaborate on the implementation of the project's main elements.
Track Rehabilitation
12. The track rehabilitation program (FcR, naras 3.05-3.07) was probably the most successful component even though it did face some implementation difficulties. For example, the delayed operation of the concrete sleeper factory necessitated importing sleepers from Zimbabwe to rehabilitate the first twenty-five km. of track. However, the plant is now operational and its capacity suffices to support a continuous track rehabilitation program. The principal delay, and cause for cost overruns, derived from inadequate consideration of the availability and procurement of local materials needed for ballasting. Due to these shortages, some rail and sleeper replacement as well as rail welding proceeded ahead of the ballasting operation (which is usually implemented simultaneously) with the result that further work on improved sections was required at a later time and out of customary sequence. Setting aside the one-time investment for the concrete sleeper plant, it is important to note that the track rehabilitation program was accomplished at a unit cost of about US$131,000 per km, a quite reasonable figure.
Signals and Communications
13. The PCR concluded (paras 3.08-3.11) that expenditures on signals and communications (some 20% of the total foreign exchange component) failed to achieve the intended objectives. It is true that while a fairly sophisticated centralized traffic control system (CTC) has been instal.ed, it is not being - 6 - used to its potential. Adequate funds were made available for the acquisition and installation of the CTC equipment, but the SAR paid insufficient attention to the acquisition and installation of transmission equipment necessary to make the CTC system fully operational. Installation problems were also encountered when the new equipment failed to meet lightning specifications, which created difficulties during the first rainy season, only a few months after installation. A major problem that could not have been anticipated during appraisal concerns theft and vandalism. In 1989, overhead wires used to transmit instructions between the traffic control center at Kabwe and individual switch locations are stolen on a daily basis, and maintenance labor has practically no time for preventive maintenance; replacing stolen wires appears to absorb all their energy. The signalling operation now depends on voice communications and train orders, an arrangement that does not take advantage of CTC capabilities. However, even under this arrangement, further operational disruptions occur because of thefts of portable transceivers and the inadequacy of spare part inventories. All in all, vandalism and theft oblige 4"R staff to spend too much dealing with signal failures and too little time using the CTC system to control operations.
14. In the audit's view, track and rolling stock failures have turned the CTC into a compensatory instrument for inadequacies in the track structure and for low availability of locomotive power and this is why improving CTC reliability is regarded as a high priority by ZR management. Given the density of traffic and the relative simplicity of the rail network, traffic could be accommodated with more "through" trains and a less sophisticated signal system, assuming that disruptions in service due to track failures and equipment breakdowns were to be reduced or eliminated. However, ZR does have a CTC system now and the dilemma is obvious: on the one hand (and over the next few yea:s), considering the investment already made, it is sensible to spend the relatively small amounts needed to keep the system operational; on the other (and over the long run), the real priorities of ZR would be first, to provide a track that is capable of supporting reliable operation and, second, to ensure the availability of rolling stock. Solutions to the first presuppose immediate availability of foreign exchange. Solutions to the second require systematic planning of major investments and funds for track and rolling stock rehabilitation. Foreign exchange injections for relatively minor acquisitions of supplies and equipment to keep the CTC running smoothly had been provided for under the 1985 Fourth Railway Project. Unfortunately, disbursements under this and other Bank-assisted projects have been suspended since May 1987. The February 1989 audit mission verified that ZR staff are doing what they can to keep the CTC operational but, on the whole, investments for signals and communications continue to be underutilized.
Rolling Stock
15. By far the largest expenditures (54% of investment in foreign exchange) under the Third Railway Project relate to modernization and expansion of the rolling stock (PCR, paras 3.12-3.13), which involved the acquisition of new locomotives and wagons, rehabilitation programs, and investment in maintenance equipment and shop facilities. Results are disappointing inasmuch as there have been no significant improvements in locomotive availability or productivity, and breakdowns remain a common - 7 - occurrence, as well as the main cause for unreliable service. Unsatisfactory results have been attributed to restrictions imposed by donors on the sources of equipment supply; to insufficient attention to the a.quisition of spare parts; to poor internal management of the maintenance program; to delays imposed by Bank disbursement procedures; and to the lack of adequately trained artisans and technicians. Opinions vary depending on the source. According to ZR management, despite Bank requirements for international competitive bidding on major capital items, chere was an unspoken but nonetheless definite preference within the cofinancing arrangement that locomotives be acquired in a West European country. Tdus, and although specifications called for U.S. design, locomotives actually procured were manufactured under licence in Europe, leading to subsequent difficulties in comissioning (due to slight differences in components) and spare part availabilities. In addition, ZR management claims that delivery of approved spare parts was delayed because, in a number of instances, Bank approval was received after original quotations had expired. Various donors have observations of their own: they stress that ZR quality of maintenance workmanship is poor, and that ZR attitudes towards maintenance are crisis-oriented, instead of maintenance being a scheduled, preventive operation. ZR management and its advisors claim that significant productivity improvements have already been achieved, and that better maintenance procedures are in place, but the continued dependence on expatriate assistance provided by an Indian consultant (evident from even a brief tour of the ZR shop and maintenance facilities), suggests that the railroad is not yet in a position to carry out these functions with Zambian staff exclusively. Independent reviews of the rolling stock modernization and maintenance improvement program are also critical of ZR management. A 1984 SIDA studyl2/ concluded that further investment in new wagons was undesirable due to the low level of management capability within ZR. That report also emphasized the need to train more personnel at the artisan and technician (or foreman) level in order to bring the existing fleet to acceptable operating standards. A Finnish study, cited by officials of the Swedish Embassy in Lusaka, concluded that even a 10% improvement in utilization could reduce fleet requirements by several hundred wagons. The audit believes that rolling stock availability is not entirely related to mechanical fitness. Lack of discipline also contributes to low equipment productivity. For instance, drivers may randomly "book off" and take entire trains out of service for a variety of reasons, not all of which are under the control of management.
Technical Assistance and Training
16. This is another area where assessments vary. On one hand, the PCR states that improvements in operational management expected from technical assistance were not achieved due to the "sudden" withdrawal of advisors
12/ The Zambia-Sweden Railway Wagon Prolect 1976-1984, Evaluation of Phases I-III. - 8 - provided by the Canadian International Development Agency,13/ and that, after the Canadians left, the main reason for low utilization of available assets was inexperienced staff, weak planning and low staff discipline (PCR, paras 6.01-6.02 and 8.01). On the other hand, the PCR states that the project successfully provided technical assistance and training (PCR, paras 3.19- 3.21). The February 1989 audit mission was impressed with the technical competence of Zambian staff in the ZR Signals and Telecommunications Division, and believes that the Third Railway Project contributed significantly to their professional development. Nevertheless, the audit mission felt that benefits from staff training are mitigated because ZR has suffered from frequent changes in leadership at senior management levels, from a shortage of technicians and artisans in the track and equipment departments, and from heavy reliance on expatriate assistance for middle level management in these same departments. The ZR training school's program for skill upgrading appears well organized but faces two serious problems. One relates to attracting suitable instructors who do not believe that by becoming trainers they take themselves out of the mainstream of railway activity, thus limiting their career development. The second is that, once trained, graduates, particularly in the accounting field, usually find more attractive employment outside the railway.
Project Impact
17. Considering changes in project scope between appraisal and completion, the expanded time for implementation, and the inapplicability of some SAR assumptions, the single most meaningful measure of project impact may well be the ratio of operating expenses to revenues, shown in Figure 5 (Third Railway Project: Operating Expenses to Revenues, 1980-1987). The optimism of the 1979 SAR (derived from high expectations for copper exports and increases in ZR equipment and manpower productivity) has not been justified: copper exports have not matched expectations and productivity remains low. The large decrease in ratios between 1984 and 1987 corresponds to the expenditure pattern shown in Figure 4 (Third Railway Project: Investments -- Foreign Exchange Component) and, in particular, the introduction of new wagons.14/
18. Completion of the Third Railway Project left ZR in a situation which might be summarized as follows:
13/ The record does not support this conclusion. As early as July 1979, CIDA had made it clear that they would not participate in the Third Railway Project and that Canada had already decided, and communicated its decision to Government, to wind up a technical assistance program that had been operational since 1967. Subsequent correspondence consistently reiterated this position. Consequently, there was nothing unexpected about the withdrawal of the CIDA consultant team that had supported ZR management for over twelve years.
14/ The lower working ratios are also attributable to improved locomotive availability resulting from leasing a number of locomotives from South Africa. - 9 -
--- Approximately 15% of the mainline railway operates on track of acceptable standard. The balance needs drastic improvement because it presently contributes to low speeds and frequent derailments. The capability now exists to launch a rolling rehabilitation program, albeit with expatriate technical assistance.
--- Locomotive availability continues to be a major weakness; it can be addressed through improvements in maintenance productivity, more flexible acquisition of needed spare parts, and greater operating discipline.
--- The signalling and communications system requires relatively small mAditional investments before full operational benefits can be realized.
With regard to training, there is a pressing need for artisans and technicians in all operating departments; Zambian nationals ought to be given managerial responsibility for track rehabilitation and rolling stock maintenance.
III. CONCLUSIONS AND RECOMMENDATIONS
Conclusions
19. According to the 1979 SAR, the project's central objective was to increase railway capacity by improving fleet utilization and ZR's ability to handle traffic more efficiently. At pro ct completion in 1987, results, compared to this objective, suggest that, at least in part, the project was a failure. For the 1989 ex-post evaluation, the audit mission began by attempting to understand better the role of the railway within the context of developments between 1970 and 1989. The intention was to answer two questions. First, were the SAR objectives reasonable? Second, did Bank staff believe that the attainment of these objectives would be possible under circumstances prevailing in Zambia? If objectives were rhetorically, rather than realistically, stated, and if Bank staff had reservations about the attainment of these objectives, comparisons betwten intentions and results would possess no meaning.
20. An internal Bank note, dated Septembe r 25, 1975, suggests that project identification was given impetus because of the impending publication in the United Kingdom of a book on the Tanzam Ra-lway. The book was expected to cast unfavorable light upon the Bai.k, pr sent4 ns it as unhelpful to Tanzania and Zambia. In order to dispsl t%is impression, the feeling prevailed that support of a suitable pioject would demonstrate the institution's concern for better "corridors" to landlocked countries. With this in mind, Bank staff participated in a 1977-78 UN-sponsored Review of International Transport Links. Out of this exercise came the September 20, 1978 Project Brief for the Third Railway Project. The Brief noted that the project had "corridor" aspects, that Tanzam's capacity was deteriorating, and - 10 - that strengthening of ZR was urgently needed. The Brief also noted that in July 1978 the President of Zambia, concerned about preserving his country's transport capacity (then, as now, anchored on the railway, even though the Bank was still urging development of road transport and was about to start financing the Third Highway Project of 1978), wrote to the President of the Bank urging acceleration of a project to help ZR.
21. Preparation of the Third Railway Project was duly speeded up but the February 28, 1979 Issues Paper listed thirteen areas of potentially major difficulty.15/ The March 28, 1979 Decision Memorandum, while acknowledging the seriousness of the thirteen points raised in the Isaues Paper, did not recommend that at least some of the problems be resolved before the project could be presented to the Board. Thus, loan/credit processing continued even though Bank staff had explicitly, and as things turned out, prophetically, listed every single area where difficulties would be encountered during implementation. For all these reasons, the audit surmises that eagerness to proceed fast with a complicated undertaking may have inspired the belief that if SAR objectives were presented in sufficiently positive terms, then the project would be more palatable to the Board. Also, the audit feels that similar considerations may explain the optimistic SAR forecasts for copper exports, as well as the fact that reservations implied in the Issues Paper were relegated to the file, and that international transport links (which were at the heart of the entire project), never figured as a topic deserving special attention in any supervision mission report.
22. That the project would not proceed smoothly soon became evident: Board approval was given in December 1979 but complications postponed effectiveness until March 1981. Project implementation was hindered in unequal measure by the socio-political situation in Zambia, by discontinuity at the top levels of ZR management, by shrrtages of middle and lower level technical staff, and by procurement and disbursement procedures which differed among cofinancing agencies. Not surprisingly, completion took almost five years more than had been expected at appraisal. Problems with each project component are discussed in paras 3.05-3.21 of the PCR but three broad topics (ZR management, technical assistance, and cofinancing) deserve some elaboration. Concerning ZR management the audit does not challenge the Government's right to put in charge of the railway persons enjoying the Government's confidence, and to replace them when they no longer have it. However, changes of ZR's top management in 1979, 1981, 1984, and 1988 -- none of them for reasons having anything to do with railway efficiency-- contributed neither to a healthy organizational climate, nor to the desirable
15/ These were: The foreign exchange component; The local cost component; Project manager; Training; Tariffs; Accounts receivable; The Mulobezi Line; Subsidies; Storage; Foreign exchange for spare parts; ZR organization; Transport planning; and International transport links. - 11 - esprit-de-corps.16/ Concerning technical assistance, the audit wishes to point out that the mere presence of expatriate staff bears little fruit if certain conditions are not met, chief among them being Government commitment to act on sensible advice.17/ In addition, to be fully productive, it is only fair that expatriate personnel be assured of some minimum security and material comfort.18/ Concerning cofinancing, project implementa.;ion involved a number of donors, each with their own procurement preferences, and this multiplied administrative procedures, approvals, and inflexibilities. An example of inflexibility can be seen in the restrictions imposed by one donor who did not allow disbursement for materials procured in South Africa, even though, over the years, South African assistance has been vital to ZR. Specifically, in October 1979, ZR secured from South Africa an allotment of 46 wagons a day on the southern route, enabling movement of 1700 tons of cargo per day. In March 1980, ZR leased 12 diesel locomotives and 10 steam shunters from South Africa. In June 1981, ZR procured rails from the South African Iron and Steel Corporation. In August 1981, a Bank staff member visited South African Railways and stated in his report that the use of South Africa for "corridor" traffic cannot be overestimated. He recommended that more Bank staff ought to visit South Africa to familiarize themselves with the scope of facilities available but the record does not show what action, if any, was taken on this recommendation. Thus, in instances where procurement, and the participation of various donors, are influenced by supplier preferences, it is difficult to respond effectively to what ZR perceives to be its pressing
16/ The Region agrees that senior technical management should be drawn from Zambia Railways staff with demonstrated potential. The Region notes that an underlying problem in ZR, and other African railway systems, is the absence of systematic training and preparation of railways staff for general management (as opposed to training for increased competence in a given field). This is an issue which the Region proposes to address in a number of railway projects under preparation.
17/ Specifically: Government must feel the need for institutional development; sensible proposals for institutional development deserve to be implemented after Government has accepted them; institutional change must be rooced in the culture of the prevailing bureaucracy; there must be a core of local professionals to operate the strengthened agencies or institutions. These and other issues related to productive use of technical assistance have been set out in a September 1985 Bank document entitled: Case Study of the Bank's Efforts to Promote Institutional Development for Macro- economic Policy-making, Planning and Management in Zambia.
18/ For the last ten years, the most ordinary consumption goods are hard to come by, even in the capital. Two examples are illustrative. A May 3, 1979 telex from the Bank's Resident Representative in Lusaka to a Bank Mission scheduled to visit Zambia in mid-May asked for three packets of cornflakes. In February 1989, table salt could be purchased in Government-approved stores selling goods for foreign exchange only. - 12 - needs. Indeed, ZR would be reluctant to disagree with externally assessed priorities for fear of jeopardizing an entire project, some components of which a.e consistent with their own perceptions of need. Another example illustrates this point: while the Third Railway Project was being implemented, technical assistance was provided by oue of the cofinanciers to undertake a feasibility study for the electrification of ZR. Obviously, it would have been awkward for the GoveLnment to refuse this offer of assistance, considering the funds from the same source channeled though the Third Railway Project. However, taking into account the high capital investment and technical skills required, it made no sense to even consider electrifying a railway with such low traffic densities and so short of experienced managers and technical staff. On the whole, 7R might have been better served if Government had the capability to undertake a comprehensive review of all needs within the transport sector and of the specific requirements of the railway within this wider context. One example where beLLer coordination among donors and the Government would have been beneficial is the Mansa-Mwenge-Nchelenge road construction. In the mid-1980s, a Bank-sponsored feasibility stid. concluded that the project was .ot economically justified. However, a European donor financed the road.
Recommendations
23. The ambit of this audit includes neither discussion of the Government's policy on the respective roles of road and rail transport, nor discussion of the socio-political implications of the debt-servicing burden which borrowing abroad has imposed upon Zambia, and which, directly and indirectly, has led to suspension of Bank disbursements since May 1987. The audit is narrowly focussed on the Third Railway Project and, consequently, wishes merely to point out that ZR is suffering from interrupted access to foreign exchange which could have been )rovided under the 1985 Fourth Railway Projert. Hopefully, when Government-BanK relations have been restored, and when discussion will resume on the futu:e of ZR and Tanzam, lessons from the Third Railway Project will be put into good use. Both ZR and Tanzam need financial and technical assistance of magnitudes large enough to warrant coordinated efforts by Government and the donor community. The audit feels that the Bank can help not only as a source of financing but, perhaps more important, as the agency to harmonize investment and institution-building measures sponsored by a variety of donors. The following paragraphs might be useful as the basic agenda for future assistance to the Zambian railway sector.
24. Balanced investment. The 1979 SAR recogaized the major problems faced by ZR but, by devoting reduced attention to track and rolling stock rehabilitation, failed to achieve a proper balance among the various components. No railway can operate without certain minimum levels in the quality of track infrastructure, regardless of rolling stock availability. No management, however competent, can operate a railway with an unacceptable track and without equipment. Even poor management, however, can, after a fashion, run a railway when both track and equipment are in reasonable condition. In future assistance to ZR, improvements of track and equipment ought to receive first priority. As a corollary, technical assistance ought to be directed primarily towards these basic areas of railway operation. - 13 -
25. Technical assistance and Zambian staff. Despite continuous technical assistance over a 20 year period, ZR still requires expatriate personnel to implement modernization and rehabilitation programs for track and rolling stock. This suggests that earlier technical assistance concentrated on the wrong areas, or was provided by advisors not properly sensitized to local conditions. Since operational reliability and capacity issues (as opposed to marketing and policy issues) dominate railway operations, senior ZR management should be drawn from Zambian engineering personnel with demonstrated potential, while foreign technical assistance should concenL.ate on lower level positions such as foremen, artisans, and technicians. The audit mission was particularly impressed with the personnel of the Signals and Communications Division who seem highly qualified to perform their responsibilities and may well represent a source of technical managers for other ZR divisions which continue to rely on expatriate advisors.19/
26. Donor coordination. Many of the implementation problems encountered during the Third Railway Project resulted f. m the ripple effect which occurs when uncoordinated decisions are taken separately about different elements of an integrated program. In the future, and taking into account the procedural guidelines of the various partners (the Government, the Bank, other bilateral and multilateral aid agencies), it may help if the Bank, by exercising a leadership role in cofinanced projects of this nature, could develop an appropriate and coordinated framework that might reduce the risk that the project be put into jeopardy through unilateral action by any one of the partners.20/
27. Evaluation of assistance. Experience from the Third Railway Project seems to suggest that, for Zambian railway operations, end over the next five to ten years, traditional economic and financial rate of return yardsticks are not particularly meaningful as measures of anticipated or actual performance. Since ZR operates with little or no competition for the bulk of its traffic, cost effectiveness (and rate of return analysis based more on cost reductions than revenue increases) might be a bttter criterion for performance evaluation.
19/ The Region agreei with the general proposition that technical assistance should be concentrated on lower level positions. It notes however that there .s still a need for some higher level technical assistance in line positions and that the challenge is to design such assistance to be effetive and of limited duration.
20/ The Region agrees with this recommendation and notes that such an approach, which has already been adopted in two major railway projects under preparation, would also be adopted in any future operation in Zambia. - 14 -
28. In summary, any future program of assistance to ZR, ought to ensure that:
--- investments be made in accordance with basic priorities for improving the reliability and capacity of the railway through track and equipment rehabilitation and improvement;
--- more emphasis be placea on the training and career development of operational staff;
--- additional investments be made to obtain full benefits from the sunk costs in signalling and communications; and
--- in filling senior management positions, Government be encouraged to draw more extensively on ZR technical staff who are already familiar with the operational problems of the railway. - 15 -
Zabla: The Rallway Network
.CY
5 QQ
i - 16 -
Figure 1 Zambia: Foreign Trade Flows by Rail and Road, 1979 and 1983
(1000 tons) 700 1979
600 400-
300-
200 -
100
0 R*-Zaire R-Dar AN-zimbabwe Road-Dat Road-South Other Source: SAR, Fourth Railway Project (March 5, 1985) Report No. 5256-ZA p. 43 Annex 2, Table I Figure 2
Zambia Railways: Freight, 1981-1987
(Millions of Tons) 6
4.
3
2
I
0 1981 1982 1963 1984 196 1966 1987 Source: PCR (1988) p. 15 and Annex 2 Domt6o Imports C~Exports Transit - 17 -
Figure 3
Third Railway Project: Extimated and Actual Expenditures
(US$ - millions) 70
0-
so -
40-
30-
20-
20 -
01 mm Track Signals Vehicles Equipment Data Pr. Assist Local
= Projected Actual
Actual Total * 8137.2 Million US
Figure 4 Third Railway Project: Investments, Foreign Exchange Component
Signals 20%
Trak
Assiat
Vehicles gat& Pr 54%% Equipment
Source: PCR (1988) Annex 7
Total a 0114.5 Million US - 18 -
Figure 5
Third Railway Project: Operating Expenses to Revenues, 1980-1987
(%) 120
100- Actual Working Ratio S.(9)...
Projected Working Ratio ( '
40e- ,Cumulative Inveatment
20 -.
1980 1981 1982 1983 1984 1985 1988 1987
Sources: Projected Working Ratio: SAR (1979) p. 52 Actual Working Ratio: PCR (1988) Annex 5 Cumulative Investment: PCR (1988) Annex 1 - 19 -
PROJECT COMPLETION REPORT
ZAMBIA - TRIRD RAILWAY PROJECT
LOAN 1790-ZA/ CREDIT 973-ZA
I. INTRODUCTION
1.01 Zambia's transport system comprises approximately 35,000 km of roads, 2,000 km of railways, 150 airstrips, and a 1,700 km oil pipeline from Dar as Salaam in Tanzania to Ndola in the Copperbelt. The internal transport system has developed mainly along a narrow strip between Livingstone in the southwest, Lusaka in the southeast and the Copperbelt in the north where the most important mining and industrial-concerns, the best agricultural areas and a relatively high population density are found.
1.02 Since Zambia is a land-locked country relying heavily on foreign trade, international transport links provided by air, rail, road and pipeline play a crucial role in the country's economic development. Air Zambia, a parastatal established in 1967, carries passengers and freight domestically, as well as to other African destinations and to Europe. The pipeline, jointly owned by Tanzania (33Z) and Zambia (67%) and operated by a company registered in Zambia, carries most of Zambia's and some-of Zaire's oil imports. Four roads are providing links to the sea: (i) the Great North Road to Dar a Salaam (TANZAM), (ii) the Great East Road linking Zambia to Malawi Railways and the seaports of Beira and Nacala in Mozambique, (iii) the road through Zimbabwe linking Zambia to ports in South Africa and Mozambique and (iv) the road to South African ports via Botswana. Two railways provide transport links to other countries: Zambia Railways (ZR) which operates a 1067m gauge single line track with a total route length of 1,27.8km linking Zambia and Zaire to South African and Mozambiquan seaports and also Zambia to Lobito in Angola via the Bp.aguela Railway and Soci&te Nationale de Chemin de Fer de Zaire (SNCZ); and the -jointly-owned Tanzania-Zambia Railway Authority (TAZARA) which connects with ZR at Kapiri Mposhi in the Copperbelt and extends for about 1,850.km to the port of Dar es Salaam. Rail transport has been of paramount importance for Zambia to carry heavy and bulk goods, such as minerals and agricultural products, which constitute Zambia's main exports.
1.03 In 1977, Zambia was faced with a situation of capacity shortage to transport imports-and exports. It relied for over 80% of its external trade on the Tanzania-Zambia corridor.(road and rail) and for over 60% on TAZARA alone, since (i) both the borders to Zimbabwe (then Rhodesia) and to Angola had been closed to traffic since 1973 and 1975, respectivelyl (ii) the direct road to Mozambique, the Malawi route and the road to Botswana were not oft all- weather standard and thus out of commission in the rainy seasons; and (iii) transport by air was too expensive. - 20 -
1.04 Internally, ZR, -the most critical and potentially cost-effective transport system providing Zambia with linkages to other rail systems with access to the sea, was facing deteriorating conditions. Most of the track was in urgent need of rehabilitation, about a third of the wagon fleet was over 30 years old, locomotive availability and utilization was low and the communications and signalling systems were working poorly. In this context, the purpose of the Third Railway Project was to raise the long-term operational efficiency of .R, which since the re-opening of the Rhodesian border in October 1978 provided the second important link to the sea after TAZARA, and which also connects the Copperbelt with TAZARA.
1.05 The Third Railway Project was designed to cover the last four years of ZR's five-year (1979-83) investment plan. The actual implementation period extended to 1988. The project focused on urgently needed physical improvements and included the following components: track works; signalling and telecommunications; provision of locomotives, wagons and spare parts; workshops and depots; handling equipment; staff housing; data processing facilities; technical assistance and training. The cost was estimated at US$ 188.2 million, including US$ 130.1 million in foreign exchange. Actual costs amounted to US$ 137.2 million equivalent, including US$ 114.5 million in foreign exchange.
1.06 The executing agency was ZR, which in January 1979 became a subsidiary of Zambia Industrial and Mining Corporation Limited (ZIMCO), a government holding company empowered to approve ZR's budget, corporate plans and targets, and answerable to the Ministry of Finance. At the time of appraisal, the legislative steps necessary for the establishment of a legal relationship between ZR and ZIMCO had yet to be taken. Only in April 1984 was ZR effectively incorporated as a limited liability company operating under the Companies Act as part of ZIMCO.
II. PROJECT ORIGIN. PREPARATION, APPRAISAL AND NEGOTIATION
Oriiin
2.01 in response to the apparent transport crisis in Zambia since the end of 1977, a UN mission visited the country in May of 1978 to review its international transport links. The mission concluded that the most severe problem was the poor performance and poor internal transport linkages to TANZAM and TAZARA. In July 1978, President Kaunda requested the Bank to assist in reviewing the country's trinsport problems.. As a result, the Third Railway Project was identified and a Bank mission visited Zambia in September for discussions with the government and ZR. It was recognized that TAZARA was the cheapest transport link for bulk goods and that, in efficient operation, it alone had the potential to transport all of Zambia's imports and exports. However, owing to operational p-oblems, TAZARA was not expected to realize its full capacity. Moreover, given the history of closure of access routes to seaports (par&. 1.03), Government was keen to ensure that the ZR network, which provided the link to other international railways could exploit its full capacity. In addition, ZR was the major and potentially most cost effective - 21 - mode for transporting bulk domestic traffic. It was felt that TAZARA could mobilize international bilateral support to improve its operational efficiency, thus the Government's interest in Bank support for ZR.
Preparation, Appraisal and Negotiation
2.02 The project, based in ZR's five-year investment plan (1979-83), was prepared by ZR in collaboration and consultation with the National Comission for Development Planning (NCDP). The plan was reviewed by the Bank and it was concluded that it was too optimistic with regard to ZR's implementation capacity and the possibility of getting the necessary funds on time. It was therefore mutually agreed to scale down the investment plan by about 172. Further changes in the project composition were made at or before negotiations. A 30km extension of the Malawi Railway line, which provides Zambia with access to the ports of Beira and Nacala was excluded from the project during negotiations. Excluded also were a proposed rehabilitation of the Mulobezi railway line and a proposed expansion of the Kapiri Mposhi yard to facilitate the transshipment between TAZARA and ZR since transshipment problems were considered relatively minor. The replacement of the Kafue bridge was kept in the project, but excluded from Bank-financing, since ODA was expected to finance it. During negotiations it was decided to include a data processing facilities component in the project, since the leased equipment in use had limited capabilities and the company from which it was leased planned to discontinue its service in Zambia.
2.03 The project was negotiated in October 1979 and approved by the Board for a loan of US$ 25 million and a credit of US$ 15 million in December 1979. The loan and credit became effective on March 31, 1981 and were closed on September 30, 1986 and March 23, 1986 respectively.
Project Objectives and Description
2.04 The project aimed at avoiding the deterioration of ZR's infrastructure with the consequent reduction in transport capacity and at increasing its effective capacity to handle the expected growth in traffic up to 1986. An institutional goal was to provide training at all levels to increase ZR's efficiency and to reduce and ultimately eliminate ZR's dependence on expatriate managerial and technical personnel.
2.05 Traffic forecasts were based on detailed studies carried out by ZR. Key assumptions underlying the forecasts for investment requirements were that the Lobito route, which had remained closed to date, would reopen before the end of 1979 and that the southern route to South African ports would remain open. It was also assumed that the country's foreign trade traffic carried by ZR would be shared as follows: one-fourth to the Lobito corridor, one-third for the southern route and the rest for TAZARA.
2.06 The project consisted of the following components: (a) Track: Renovatic: of 112 km of over-aged track between Mookamunga and Mukwela with new 90 lb/yd. rails welded into 120 ft. lengths, with new stone ballast, concrete sleepers - 22 -
and a new Central Traffic Control (CTC) signalling system; respacing and lengthening of crossing loops; construction of a.concrete sleeper plant; replacement of the Kafue River Railway bridgc.
(b) Signals and Telecommunications: Renewal and upgrading of the existing obsolete CTC system with a new single control center at Kabwe; extension of ZR's telecommunications system and adoption of an Integrated Train Radio (ITR) system.
(c) Locomotives and Rolling Stock: Repair of four heavily damaged locomotives, procurement of ten new locomotives; supply of 915 new wagons and two breakdown cranes; delivery of spare p4Crts to cover requirements for rehabilitation and regular maintenance during project period.
(d) Workshops and Depots: Acquisition of specialized workshop machinery and tools for repair of some locomotive components; extension of the Kabwe depot for maintenance of diesel locomotives; rebuilding of the repair tracks and provision of necessary equipment at .Ndola, Kitwe, Kabwe and Livingstone.
(e) Handling Equipment: Procurement of goods handling equipment such as forklifts, trucks and tarpaulins for loading and unloading at major stations.
(f) Staff Housing: Building of new and improvement of existing staff housing facilities at headquarters and along the line of rail.
(g) Data Processing Facilities: Purchase and installation of ZR's own data processing facilities, including software, to improve its general operations.
(h) Technical Assistance and Training: 190 man-years of expatriate services in executive positions or as advisors; consultant services for feasibility studies; local and international training for senior and middle level managers; equipment and material for Kabwe training school.
The project was expected to be completed by December 31, 1983.
III. PROJECT IMPLEMENTATION AND COST
Start-up
3.01 The Bank loan and IDA credit became effective only in March 1981, about one year later than expected. The main reasons for this delay were (i) the late effectiveness of co-financing agreements, (ii) delays in the execution of a subsidiary loan agreement between the borrower, the Government of Zambia (GOZ), and the beneficiary, ZR, required for on- lending and (iii) slow the preparation and submission to the Bank of the* legal opinion on the negotiated documents. - 23 -
3.02 Management changes at ZR also burdened the start-up phase of the project, although delays cannot be directly attributed to them. In January 1980, the then MD resigned, leaving the expatriate Assistant General Manager responsible for ZR and the project. Like most wxpatriates in key positions at ZR at the time, he was financed by the Canadian International Development Agency (CIDA). CIDA, however, unexpectedly decided to withdraw its aid by October 1981 after providing technical assistance for twelve years. Despite this long period, ZR still required expatriate support to manage railway operations.
Revisions
3.03 Despite unforeseen finaacial problem and lower than expected traffic, the size of the project was not adjusted during the implementation phase. Most changes were minor except for the replacement of the Kafue bridge. At the time of negotiations, there were prospects that ODA would finance this component. In 1983, ODA decided not to provide fuads for this purpose as it disagreed with ZR on construction specificationm and alignment. This component was therefore dropped during project implementation as no other funds were available.
Prolect Execution
3.04 Table 1 provides a detailed comparison of actual completion dates for the project items with the dates envisaged at appraisal.
(a) Track Rehabilitation
3.05 The renovation of the 112 km of track included in the project started on schedule in April 1981, but implementation was delayed due to late material deliveries. The relaying suffered from constraints in the supply of concrete sleepers which were to come from the new plant to be constructed under the project and scheduled for completion in March 1981. With the completion of the concrete sleepcr plant being delayed to the beginning of 1983 due to lack of construction materials, the relaying program had to start with the scarce existing material but soon came to a halt. Because of this delay and since the yearly capacity of the plant,- once in operation, was below expectation, additional sleepers were procured from Zimbabwe. About 82% of the relaying was completed on schedule. The entire 112 km was completed in September 1984, 9 months later than initially scheduled.
3.06 Other track renovation activities included ballasting, deep- screening and long-welding of rails. They were dela,ed due to a shortage of ballast and locomotives for working trains and because of the late completion of the flash butt welding plant- This plant was constructed under the project and commiss.ioned in March 1985, about two years behind schedule due to a shortage of building materials. Of the entire track rehabilitation,. including relaying, about 60% was completed on schedule, about 5% remained to be done as of February 1988 and is expected to be corpleted by September 1988. Various track materials and equipment were also procured under the project to mechanize track relaying. The k1dols marshalling yard was remodelled to accommodate the new CTC system and crossing loops nearby were extended to improve the traffic flow. - 24 - TAUL I
ZAWIA THIRD RAILWAY PROJECT
LOAN 1796/CREDIT 972-2AM
ACTUAL AND EXPECTED PHYSICAL COMPLMON
S of Original Component Completed by S Time Units of Coletton Date of Copl*4ton Expected Aual Appraial Comletion Date Overrun Major Components Actual Appraisa 1. Track
a) Construction of Concrete 28 Sleeper Plan 1 1 3/3 3/a1 80 165 b) Track Improvementel/ 112 112 9/80 esp. 12/8S 12/62 - c) Rebuilding of Kafue Bridge 0 1 - 2. Signalling and Telocommunications - 2/88 12/03 ex 60% CTC - 895 ITR - - 10/8" 12/83 0 - 5/88 12/83 e3 763 PABX - ex - - 9/88 12/3 1003 Message SwItch e3 713 Radio Block System - - 3/86 12/83
3. Locomotives and Rolling Stock 1w3 O5 a) Delivery of Locomotives i i 6/81 06/83 883 825 b) Delivery of Wagons 1,130!/ 915 7/88 12/83 s 67 c) Delivery of Wrecking Crane 2 2 16/88 89/82 6% 15 d) Delivery of Spare Parts - - 4/87 12/88
4. Workshops and Depots of Materials a) Delivery ex- 21OX and Equipment - - 12/865 6/82 e3 1883 b) Construction and Installation - - 6/87 12/63
5. Station Handling Equipment 353 - a) Delivery - - 3/ 63/82
0. Staff Housing 69 185 a) Construction 129 - 7/84 12/83 12/83 e3 ex b) Building Materials - - 3/ 12/83 - 1033 7. Technical Assistance - - 3/87
ongoing, mainly screening and ballast- was completed in 9/84, but some track improvements are still 1/ Relaying be completed. Fifal completion is expected ing. As of F4bruary 1988, about 6% of the works still remained to in September 1988. 2/ Some wagons were purchased in knock-down condition at a lower price. 1988. 3/ OPEC loan closing date is likely to be extended to Decembes
Source: Zambia Railways and SAR - 25 -
3.07 The 112 km of track renovated are now in very good condition so that speed restrictions could be lifted and safety has improved considerably. The improvement could, however, not raise the operational performance (average speed and turnaround times) of the system as a whole significantly (Table 5 and Annex 3), contrary to what had been assumed at appraisal, since only 9Z of the entire route network were affected.
(b) Simnalling and Telecommunications
3.08 The construction of the CTC control center in Kabwe to replace the earlier decentralized control centers was completed in early 1982, while field installations of CTC equipment were delayed. The entire CTC component was completed in February 1986, 26 months behind schedule. Reasons for the delay were the late deliveries of material and equipment by the contractor and software modifications that became necessary after testing. Initial vulnerability of the new system to lightning had to be reduced through d3sign modifications.
3.09 The implementation of the telecommunications system was based on the results of a study, inanced under the project and completed in Aarch 1982. The design of the ITR system commenced in November 1983. Delays in the installation occurred, however, because the government inspection agency insisted on price examinations of internationally procured materials and equipment. A controversy arose, since this impinged on the Bank's regulations concerning competitive bidding. Although the price inspection was finally waived, it caused additional delays as shipments could not be made as planned and letters of credit became stale. All installation work except for the base stations for track and racio were completed by July 1985, a delay ot -19 months. The entire system was completed, tested and commissioned 15 months later.
3.10 The equipment for the Message Switching System was delivered, installed and comissioned on schedule in September 1983. The installation of a PABX network was completed in May 1986, 29-months behind schedule. The delay was mainly caused by problems with opening of acceptable letters of credit and with inspection requirements. The installation of a Radio Block System.was completed in March 1986 after initial faults had been corrected by the contractor. Overall, there was a 34-month delay in completion of the CTC system compared to the appraisal schedule.
3.11 The installation of the CTC system and the improvements in telecommunication have not had the desired effect or. operations, in particular on turnaround times. The major reason is an unacceptably high number of signal failures. These are caused by deficiencies in the remaining field installations that were not replaced under the project and are subject to equipment failures and vandalism. The information the new CTC system in principle provides facilitates quick decision-making on traffic management, but is not used sufficiently for planning of more efficient train movements, as the CTC personnel is-preoccupted with signal failures. Few.benefits bave therefore been realized. Further, few benefits can be expectea from this high-cost investment, unless further investments to upgrade the remaining old equipment are undertaken, a solution to the problem.of.vandalism of' equipment and track circuit wiring - 26 - is found or a back-up system that exploits some of the equipment facilities is implemented. Even if additional investments solve all existing problems, it is uncertain whether future oenefits will outweigh the costs that have already been incurred.
(c) Locomotives and Rolling Stock
3.12 All ten locomotives purchased with KfW financing were in service by May 1981, 25 months ahead of the schedule envisaged at appraisal. A total of 1,130 wagons were procured under the project, some of them in knock-down condition at a lower than expected price. The 915 wagons originally included in the project were in service by September 1981, 27 months ahead of the implementation schedule estimated at appraisal; all additional wagons had arrived by July 1986. Two cranes to enable prompt restoration of traffic movement in the event of accidents were delivered in October 1983,.13 months behind schedule. They have assisted in reducing the duration of line closures after accidents from about 48 hours before to about 8 hours currently.
3.13 Considerable delays were experienced in the provision of spare parts for the rehabilitation of locomotives and for regular maintenance. ZR suffered from a shortage of spares for locomotives during the entire implementation period of the project contributing to the low locomotive availability. A lack of spares for passenger coaches reduced the availability of coaches which caused a deterioration in passenger service. Reasons for the delays in spare part provision were slow adherence to the procurement procedures of donors as well as ZR's difficulties in providing detailed lists of spare part requirements. Even after spare parts had arrived, locomotive availability improved only temporarily before deteriorating again to its previous level (para. 4.06). Wagon availability, on the other hand, improved significantly, which is partially due to the improved availability of spare parts for the old wagon fleet, but largely due to the addition of new wagons whose initial availability was close to 100%.
(d) Workshops and Depots
3.14 The design for improvements in worishops ahd depots was undertaken by consultants under Bank-financed technical assistance. By December 1985 all equipment for sheds and rip tracks had been delivered. All improvements in the Kabwe running shed to increase its capacity and facilitate locomotive maintenance were completed in May 1987. For the rip tracks, improved handling facilities and roofing to enable work during rains were provided to reduce wagon detention time. For the central workshop in Kabwe, the project provided a new wheel lathe and equipment for foundry modernization and traction motor repair to increase wagon and .locomotive availability. A total delay of.42 months was experienced in the delivery of materials and installation of equipment.
3.15 The procurement of workshop tools and specialized equipment had a significant impact on wagon repair and thus on wagon availability; the wheei-turning .capacity in the workshop increased from 480 to 600 wheels per month and brake block production doubled making the company self-sufficient in their supply. - 27 -
(e) Handling Equipment
3.16 The project included handling equipment for major stations, such as forklifts, cranes and trucks, to facilitate loading and unloading of wagons and thus reduce the stay of wagons in terminals. This component Was financed by OPEC. Most of the equipment had been delivered by February 1988, but some OPEC funds for this component have not been disbursed yet. On March 9, 1988, the OPEC loan closing date was extended to December 31, 1988. The loading and unloading of goods at major stations has been eased through the use of the new handling equipment thus reducing delays. But it could not decrease the average turnaround times noticeably.'
(f) Staff Housing
3.17 The program to construct new and improve existing housing facilities for ZR staff, financed -by OPEC and ZR, started off well, but was soon decelerated because of shortage of local funds. It was then halted for about 18 months until early 1983. Most of the construction of new houses was completed on schedule, but delays were experienced in the provision of building materials for improvements of existing staff housing. Two specific problems delayed disbursements. First, ZR submitted a request for reimbursement of local expenditures, although the OPEC loan agreement covered only foreign expenditures. Second, OPEC was not prepared to finance building materials procured from South Africa, although contracts had been awarded in accordance with agreed procedures. As of February 1988, only 20% of the OPEC loan allocated for this component was diabursed, but the closing date was extended as mAntioned in para. 3.16.
(g) Data Processing Facilities
3.18 To replace ZR's leased computer facilities a new computer was installed by early 1983. It was in full operation by September 1983. Following ZR's request in 1981, a building to house the computer was constructed with funds outside the project. This building was completed in early 1984 with the exception of the installation of the air conditioning which experienced some delay. Due to the swl.tching from the old IBM facilities to the new ICL mainframe computer, the development of new software packages became necessary as well. It was planned to implement four financial software packages, General Ledgers, Accounts Receivable, Accounts Payable and Fixed Aoseti, as well as workshop and stores accounting packages and a traffic information system. Considerable delays occurred in their installation, caused by non-compliance of some packages with original specifications, poor documentation, changes in ZR's requirements, staff shortages and lack of training. An implementation review in November 1986 showed further technical as well as accounting -problems with the new software. As of February 1988, three of the financial packages were working, but parallel to the former system, as the new system was not yet consideree reliable enough. Other ac7counting packages were still in the testing stages. However, once accounting software development is completed, t1e computer's capacity will be insufficient to accomodate all of--them, unless it is upgraded. Even if upgraded, it will not be able to accomm7odate the planned traffic information system which-has not been developed yet. Terminals at major - 28 - stations, which were provided under the project for on-line traffic information, are therefore standing idle or are only used as word processors. The Data Processing Center (DPC) is also still unable to satisfy data requirements of the marketing department in a timely fashion. The problems confronted with this component demonstrate that without comprehensive planning of hardware and software needs and of the users' longer-term requirements few benefits can be derived and the investment may become obsolete before the component is fully implemented.
(h) Technical Assistance and Training
3.19 The project originally envisaged three consultant studies, but no specific target dates for their completion were set. Consultants for studies under the project were selected on a sole-source basis where good working relationships with ZR existed already and on the basis of short lists otherwise. A feasibility study to determine whether the railway line between LivingsLone and Mulobezi should be upgraded or replaced by a road was carried out by consultants in 1981. The recommendation was against upgrading. This study was, however, financed outside the project by CIDA. A feasibility study on railway electrification was undertaken by consultants under Bank financIng and completed in February 1982. It concluded that electrification was not justified at the time. The third study focused on workshop productivity and was carried out in four phases: the first phase concentrated on the wagon repair shop and manufacturing of brake blocks; the second phase looked at wagon overhaul and repair; the third at locomotive service and repair; and the fourth at material requirements and material flow in the workshops. These productivity studies were completed by November 1983. They helped spczify inspection programs and programs to improve manpower utilization in the workshops.
3.20 Other studies had not been specified at appraisal, but were included in the project during implementation as the need for them arose or were financed outside the project, but provided important inputs into the project. The Kafue bridge study, financed separately by CIDA, was completed in late 1981 and made recommendations on the replacement of the bridge which was expected to be carried out under the project. A telecommunications study, performed under Bank financing, was completed in March 1982 and provided the, basis for the implementation of an improved - telecommunications system (para. 3.08). A Bank-financed study on the railway organization reviewed ZR's present organizational arzangements and made recommendations on how to improve efficiency, discipline and control. It led to a complete reorganization of ZR between 1985 and 1987. In a first phase, 30 senior management positions were reviewed; in a second phase 600 positions within ZR followed. A manpower development study was completed by the same consultants in August 1985 to advise ZR on its future manpower development needs and to assess what actions may be required to strengthen ZR's training facilities and activities. It was followed by staff training in work studies to establish and review staff requirements in various departments. An accounting information system study led to the development and implementation-of accounting software programs (para. 3.15) which started in May 1985. The computei:ization program was expected to take-18 months but is still ongoing. Preliminary woxk was also done on a traffic information study,.but the work'was suspended since it was considered precipitate to engage in a fully computerized on-line system - 29 - before reasonable reliability on the new system had been fully established. Details of the studies undertaken are provided in Annex 10. The technical assistance provided by Bank-financed advisors helped in the implementation of the project, but did rot have a measurable impact on the railway's operating performance.
3.21 Bank financing to assist in project implementation was provided for 20 technicians and experts. Staff training was provided locally and internationally and in general satisfactorily. Six consultants assisted in training locally in the areas of telecommunication, data processing, mechanical engineering, electrical engineering and railways operation. The consultant performance for the training of telecommunicatiohs technicians and in data processing was quite successful. Somewhat less satisfactory was the mechanical and electrical artisan training due to frequent changes of the consultant counterparts causing breakdowns in communicatica and due to their additional responsibilities in operations. Under agreenent with the UK, 43 staff members were trained in Great Britain under a first contract and 15 under a second. Several staff were also sent to India for training, six under the workshop productivity study and a further thirty for training between six and 36 weeks. This program was designed to fill gaps in the training program at all levels through crash courses, while ZR would in the meantime prepare its own future manpower training plan. It was successfully implemented and several of the staff who were trained abroad are now in management positions.
Reportin2
3.22 During the implementation period of the project, reporting by ZR was not always satisfactory. First, although a long delay in the provision of audited accounts was experienced only once (five months in 1981), the finalizing of annual accounts was often several weeks late due to internal operational problems such as regular computer breakdowns. Second, the progress reports were often lacking basic traffic and operating statistics or they were found unreliable and inconsistent. Problems were attributed to poor communication between headquarters and regions and to a poor recording s: .m. Although data collection and recording improved considerably.during project implementation,.incoiusistencies in operating statistics are still persistent.
Procurement
3.23 Procurement under the project for Bank-financed components was in accordance with Bank guidelines and the specifications in the Joint Project Agreement concerning international competitive bidding (ICB). Limited international bidding (LIB) was allowed for contracts for equipment and materials under US$ 50,000 provided that the aggregate of such contracts was below US$ 500,000. Critical spare parts could be procured on a negotiated basis up to an aggregate of US$ 1 million. This ceiling was later raised to US$ 2 million,'because the actual need for spare parts exceeded the estimated amount. Procurement proceeded-much slower than expected. Reasons were the late effectiveness of the loan/credit,.initial misunderstandings in the establishment *of letters of credit and GOZ's withdrawal of import licences. The latter problems were resolved by early - 30 -
1982. Further procurement problems in later project years were caused by complicated import and inspection procedures (para. 3.08). Where letters of credit were used as mode of payment, delays were experienced in establishing them, opening them and in issuing amendments. Delays were of particular concern in the procurement of spare parts as mentioned earlier (para. 3.11). Problems were found in the identification of spare parts by ZR due to a poor system of recording past material needs. A further problem, in particular in the early years of the project, was ZR's unfamiliarity with Bank procurement procedures. The employment of the London-based Zambia Engineering Services in 1986 led to considerable improvements in procurement processing, making procurement of material and equipment from abroad easier and quicker. Table 2 shows the countries of origin of firms that won contracts under Bank/IDA procurement guidelines.
Table 2: Award of Contracts under Bank/IDA Financing 1/
Country 2 of Total Contracts % ofTechnical Assistance Contracts (US$) (US$)
United States 33.5% 0% South Africa 18.9% 0% Canada 8.2% 50.3% Brazil 6.3% 0% France 6.1% 0% Japan 5.3% 8.1% Ziababwe 5.0% 0% United Kingdom 4.3% 18.7% India 3.7% 17.5% Malaysia 3.6% 0% West Germany 3.1% 5.4% Netherlands 1.6% 0% Sweden 0.3% 0%
1/ Excludes about 5% of total contracts whose amounts were too small to be recorded.
Disbursements
3.24 The proceeds of the loan and credit were disbursed against six categories of goods and services. The start-up problems of the project caused considerable delays in initial disbursements as mentioned in para. 3.01. But even taking the late project start into account, disbursement was much slower than expected at appraisal (Annex 1). ZR's internal administrative system for making withdrawals was weak resulting in many applications being returned or delayed in processing. Only 65% of the Bank loan/credit was disbursed by the expected closing date. The Bank closing date was extended twice due to the late project start and the procurement problems. The .final closing dates were May 23, 1986 for the credit and September 30, 1986 for the loan. Implications of the-delays were price escalations and deteriorating infrastructure as equipment and maintenance materials did not arrive in time. --&&------.-(&-----?-----―」’--(&1-1&----1―。・： ・。に．：に犀：1:：・に。。：に；：。：に：11：。に。：・。8:1:：【！(
. . 一 32 -
Costs
3.25 A breakdown of actual versus estimated costs is given in Table 3. At appraisal, the project envisaged & total expenditure of US$ 188.2 million, inclusive of price and physical contingencies. The actual costs amounted to only US$ 137.2 million or 73% of the appraisal estimate. Foreign costs were close to the projected level with the only major foreign cost reduction occurring in the track coioponent. The reconstruction of the Kafue River bridle was excluded from the project, saving US$ 7.8 million plus contingencies. Local costs expressed in US dollar terms, on the other hand, were much lower th&n.projected. This was largely due'to the devaluation of the Kwacha, in the later years of the project. In Kvach& term the total local costs were close to the appraisal estimate. Data in terms of local costs'are, however, often riot readily available or difficult to allocate to specific project components. Actual local costs are therefore likely to be slightly above the level indicated in Table 3.
Financint Plan
3.26 Annex 7 compares the actual financing plan to the financing expected at Appraisal. Financing by foreign donors amounted to about 90% of the projected level. The reduction was mainly due to ODAOs decision not to provide funds for the reconstruction of the Kafue River bridge. About US$ 3.4 million war* lost through currency-translation. Part of the OPEC loan has noc been disbursed yet, but the closing date was extended to December 11988 to allow the-disbursement of the remaining amount.
IV. T-AAFFIC AND OPERATIONS
Freight Traffic
4.01 Forecast and actual freight traffic during the project period is summarized in Table 4 below. Freight_traffic was projected to grow-6y 22% or an average of 2.5 Z per-annum Jp.a.) between-1979 ana 1987. This increase was.expected to come from external as well as local traffic. Actual traffic did not, however, increase o e' this'period and was 27% below target by 1987. More detailed freight traffic data for ZR*s is provided in Annex 2. Between 1979 and 1987, the proportion of local traffic (60-652), exports and imports keach about-10-15Z) and transit traffic (10-15%) has remained roughly unchanged. For each of these components, except for transit traffic, the volumie was lower than projected in every single year during project implementation. - 33 -
Table 4: Freight Traffic - Actual versus Forecast
Financial Year 1979 1984 1987 Actual Forecast Actual Forecast Actual Forecast ('9000 tonnes)
Local Traffic 2,943. 3,381 2,911 3,428 2,926 3,852 Exports 549 812 693 1,105 607 1,145 Imports 465 590 655 846 541 879 Transit 649. 372 582 380 532 397
Total .4,612 5,138 4,841 5,759 4,606 6,273
Source: ZR and SAR
4.02 Both export and import traffic were adversely affected in 1979/80 by the closing of the TAZARA line that was caused by the blowing up of bridges in the north of Zambia. Reasons for lower than expected external traffic in the early 1980s were the reduced coal traffic because of bre&kdowns in the mining facilities and reduced copper production because of the low copper price combined with higher production cost due to geological factors. Another reason was the Government's decision to send most of Zambia's copper to the port of Dar-*a-Salasm, in order to utilize the jointly-financed TAZARA to the maximum extent possible; capacity constraints at TAZARA caused the diversion of traffic to road and ZR could not even benefit from the short haul up to the connecting point with TAZARA. Exports to Zaire and Lobito were negligible because of the border closure. Transit traffic, on the other hand-, was more than 30Z above expectations, mainly as a result of increased Zaire copper exports via South Africa and imports to Zaire via the southern route.
4.03 Throughout the early 1980s, total traffic was adversely affected by the poor performance of the overall economy, which has been on a declining path since the mid-1970s. This xdverse national environment was beyond ZR's control and the extent of the economic decline could not have been foreseen at the time of appraisal. Given the performance of the economy at the time of appraisal and the heavy dependence on a single primary commodity whose market price had dropped significantly, traffic forecasts turned out to be overly optimistic. The stagnation in freight traffic is, however, also partially due to ZR's operational problems that imposed severe limitations on its freright carrying ability (par&. 4.05).
Passenger Traffic
4.04 At appraisal, ZR's passenger traffic was expected to grow at 4% p.a.. Actual passenger traffip stagnated and was 24% below expectations in 1987. ZR's capacity to offer passenger services during the project period was adversely affected by the low availability of coaches as a result of lack of spare parts. Further, given the relatively low passenger - 34 - tariffs, ZR has had a greater incentive to utilize available locomotives for freight traffic. Owing to such pressure, the express passenger train service was cut back in 1984 and later completely withdrawn. The current basic passenger service of one train per day in each direction is observably inadequate to meet the demand.
Operations
4.05 The operational objectives at appraisal compared with ZR's actual achievements are set out in Table 5, overleaf. It is evident that operating performance as measured by locomotive, wagon and staff productivity has fallen from the levels of 1979. These indicators as well as locomotive availability were far below target after project implementation. Only wagon availability increased considerably over the implementation period. The data available on average turnaround times is weak and incomplete; given other operational data, however, the implied turnaround times have increased over the project period for reasons described below (para. 4.08). Under the prevailing operating conditions, ZR was not able to meet the capacity requirements to haul its budgeted traffic.
4.06 The low locomotive availability of about 60% in the past was caused by lack of spare parts for routine and periodic maintenance. The lack of spare parts was partially due to a foreign exchange shortage caused by the country's poor economic performance and foreign exchange allocation system. Many locomotives are 20 years old and have never been overhauled. When locomotives were repaired, deficient parts were often replaced by used parts taken from other old locomotives. Because of this history of inadequate or deferred maintenance, locomotive failures are frequent. The spare parts provided under the project arrived late due to procurement problems as well as ZR's difficulties in assessing spare part requirements. But even with the now improved availability of spare parts and the fairly well equipped and recently improved maintenance facilities, the standard of maintenance has remained low leaving availability at 60% in 1987. The temporary improvement in availability to around 70% in the early 1980s indicates the arrival of new locomotives and spare parts procured under the project, but the addition of those assets did not have a lasting effect on performance.
4.07 The size of the available locomotive fleet has, however, not in and of itself been the major constraint on ZR's operating capacity. More crucial was the productivity per available locomotive, which has been far below its projected level and falling from 90,000"locomotive-km at project start to 82,000 in 1987. This is explained by the low utilization of locomotives made available, which is difficult to measure, but currently appears to be no more than 30% to 40%. The major contributory causes to such poor utilization are train crewing practices, yard operating and train formation practices, the high incidence of'locomotive failures and the frequent use of mainline locomotives for shunting. Poor locomotive management and .labor effectiveness and not a lack of locomotives seem to be the major cause of ZR's low effective capacity. One of the consequences of this-poor performance has been an increasing number.of locomotives being leased from South Africa to accommodate the traffic offered; this number has risen from an average of 4 in 1979 to 18 in 1987/88 and a budgeted 25 in 1988/89. 35 TAI
ZAMIA THID RAILWAY PROJECT
LOANI798/CfEDIT 97S-ZAM OPRATIONAL OBJECTIVES AND ACUAL ACHIEVEMENTS
In Fleeol Y*er
ACTA OBJECTIVE 1979 1961 192 1963 94 19 6 1966 1967 1962 1964
Average diesel lecomotive availabilIty () OS 72 88 67 71 66 63 76 75 Productivity per oval lable lotcometive per year (locoeetive-km l61) 9s s s 91 62 g.8 84 62 96 1" Average wagon ava labIlIty () N/A 8f 73 72 3 91 98 9 38 96 Average turnaround time (in days): a) general freight/dometic traffic 12 15 29 8 9 9.7 19 N/A 11 9 b) minerals domestic traffic 6 i 7 5 6 6.2 9 N/A 7 6 c) minerals export via Der ** Salem ) d) minerals expert via South Rcute) 46 85 38 33 3 87.6 so N/A 39 38 Average wagon load (tonnes): a) general freight N/A 88 26 26 29 27.0 32 33 25 25 b) minerals N/A 40 39 46 37 40.6 41 48 44 46 Productivity per available wagon per year (tonne-ka '66) N/A 261 246 220 248 238.0 23 18" 2611 am Staff productivity ('9M traffic units per employee) N/A 216 296 2M0 255 232 197 194 225 264
Source: Zambia Railways and SAR - 36 -
4.08 While wagon availability increased over the implementation period from 802 to 901, productivity per available wagon declined from 260,000 to 180,000 tonne-km p.a., since ZR did not carry the projected level of traffic. While the average wagon load was slightly above target, the utilization of available wagons as that of locomotives has been lower than expected causing an apparent shortage of wagons to carry the level of traffic offered. Wagons are frequently detained by customers and used as storage facilities, the penalty on which is lower than the cost of renting additional storage space. This problem together with inefficient scheduling and poor operational co-ordination with TAZARA have led to unduly high turnaround times of up to 40 days which have cootributed to the low utilization. The lack of motive power also partially constrained wagon utilization. A further problem was the large number of obsolete wagons that should have been scrapped. The 770 wagons that were scrapped between 1979 and 1987 were not sufficient, since this process involves lengthy bureaucratic procedures. Some obsolete wagons are thus still counted as available, but are seldom in use and increase the burden on the repair shops when used due to their frequent breakdowns.
4.09 Another constraint on operating capacity has been the low level of attained track speeds (Annex 3). Poor track conditions are one contributing factor. At least as important is the high incdence of signal failures and the subsequent waiting time to communicate with the CTC center in Kabwe before a train can pass a false red signal. The low speeds thus obtained between stations together with long waiting times in stations due to crewing patterns or locomoti,e shortage have caused the excessive train turnaround times.
V. FINANCIAL PERFORMANCE OF ZAMBIA RAILWAYS
General
5.01 ZR's income statements, balance sheets and cash flow statements comparing the forecasts at appraisal Oith actual results for ZR's fiscal years 1980 to 1987 are presented in Annexes 4,5 and 6. Throughout the implementatibn period except for 1986 and 1987, ZR showed a much lower than projected operating surplus. The company's net operating revenues after provision for depreciation were negative from 1981 to 1984. Its net income after also accounting for interest payments and foreign exchange losses was negative from 1981 to 1985 with net losses increasing up to 1984, then dropping sharply. The company generated a profit.in 1986 and 1987. The improvements marked the success of a three year recovery program that started in April 1985. The renewed profitability must, however, be weighed against the company's future capital expenditure commitments and its high accrued and prospective debt service obligations.
Reasons for Financial Performance
5.02 The volume of traffic anticipated did not materialize because of low copper exports, lower overall imports as well as operational constraints (paras. 4.01-4.03). At the same time, working expenses rose due to inflation, in particular higher fuel costs and administrative - 37 - expenses. The decline in the value of the Kwacha subsequent to devaluation in 1984 and the introduction of foreign exchange auctioning in October 1985 led to rising debt service charges and costs of imported inputs. Tariff adjustments to compensate for the increased costs were not made in a timely fashion. A traffic costing unit to monitor cost data for tariff purposes had been established under CIDA and was in full operation in May 1981. The intention was that all tariffs, except for passenger fares, would cover total costs. Due to the government's reluctance and subsequent delays in approving tariff increases, however, costs often roea abova tariffs. The resulting low profitability negatively influenced ZR's operations as it led the company to defer maintenance for lack of funds. Since 1986 tariff increases have been approved in a timely manner thus contributing to the better financial performance.
5.03 Passenger service represents only a small part of ZR's operations, and is deemed-by the government as a social service. It is the only means of transportation for many people,.in particular with the recent decline in bus service due to poor spare part availability for buses. In fiscal year 1982, passenger train service only covered 52Z of fully allocated costs. On a full cose recovery basis, ZR showed losses of K. 6.2, 8.6, and 7 million in fiscal years 1983, 1984 and 1985, respectively, for passenger service.
Financial Ratios and Covenants
5.04 As the balance sheets show, ZR experienced a serious liquidity problem between 1982 and 1984 when current liabilities exceeded current assets. The company relied heavily on bank overdrafts and postponed payments to creditors. The current ratio has improved since 1985, but was quite low again in 1987. Until 1984, the debt to equity ratio also deteriorated much more than projected due to the unforeseen deficits. It improved after April 1984, when ZR was incorporated as a limited liability company and K 138 million of debt was converted into share capital. However, after a short recovery, it deteriorated again in 1987. Reasons for the increase in debt were the additions to fixed assets and the currency depreciation, which raised the Kwacha value of foreign debt. The cash flow statements show that most of the financing was projected to come out of operating surpluses, instead long-tefin debt became the major source of funds until 1987. Even with debt financing, there was an excess of disbursements over receipts in 1981 and 1984 financed through bank overdrafts. In recent years with ZR's improved financial performance cash generation from operations has been strong and net cash retention in the business has been aided by the fact that due to weaknesses in the Ministry of Finance's accounting system debt service obligations on on-lent debt are accrued but not paid.
5.05 During most of the implementation.period, ZR did not comply with. two of the financial covenants in the Joint Project Agreement. First, it was-not able to reduce the amount of receivables from government departments, parastatals, and the railway company of Zaire, SNCZ, to 45 days by December 31, 1980. Second, the company did not achieve the required 8% retuKn on fixed assets. As Table 6 shows, ZR generally conformed with the other covenants except for some delays in providing audited accounts. - 38 -
Table 6: Special Covenants
Status
Development Credit Agreement: ---Feasibility study of storage and handling facilities by December 31, 1980 Done. ---Feasibility study of road to replace Mulobezi line by December 31, 1980 Done.
Joint Project Agreement: ---Submit audited accounts within six 1981 report was 5 months months of year end late. Some delays in fina- lizing annual reports. ---Investments beyond project Conformed. ---Debt limitation Not conformed in 1981. ---Return on fixed assets of 8% Not accomplished.
---Revaluation of fixed assets Completed. ---Reduce receivables to 45 days by Not accomplished. By mid December 31, 1980 1983 all current except government accounts.
Financial Internal Rate of Return
5.06 At appraisal, the FRR with the project was projected to be 20%. Annex 8 shows that the re-evaluated FRR is 14%. Total costs in Kwacha terms (real) are lower than projected, which should have increased the FRR. But the operating surplus was much smaller between 1981 and 1985 than even the sensitivity analysis accounted for. Despite the improvements in ZR's financial situation since 1986, the net financial benefits of the project were still lower.
VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT
6.01 ZR suffered from major institutional problems that were not foreseen at the time of appraisal. CIDA, which had financed the Canadian expatriates in key positions for over 12 years, unexpectedly withdrew its aid in 1981 leaving the railway management in a weak position. Frequent changes in top positions followed during the entire project implementation. They were caused by CIDA's withdrawal, subsequent difficulties in finding suitable replacements and a complete reorganization in the later years of the project. Little provision was originally made in the project for institutional development, except for the training component, since major organizational problems had not been obvious at the time. The CIDA- financed expatriates' main task had been to organize and optrate the railway and train ZR staff in taking over future operations. It was expeeted at the time of appraisal that the team would stay and complete the development of institution-building and*staff training. The project was to - 39 - provide additional funds to expedite the training. In response to some of the institutional problems that became apparent after CIDA's withdrawal several studies, additional technical assistance and more training were covered by the project.
6.02 Although the Bank picked up the financing for several formerly CIDA-financed expatriates and financed additional experts under the project (para. 3.21), this rather sudden change influenced the quality of the entire railway organization. Zambian staff had not yet been trained sufficiently to manage the railway on their own. Operational procedures which they could have followed were not well documented. While the organization may have been suitable for the former very experienced staff, problems became obvious when the new Zambian staff took over the existing management positions. For example, the MD had a very large control span which put too heavy a day-to-day management burden on him and therefore distracted his attention from policy planning. Other management positions also seemed to suit the range of qualifications of the respective managers poorly.
6.03 These difficulties were closely related to the frequent personnel changes. When the MD resigned in January 1980, he was replaced by the expatriate Assistant General Manager, who, in the summer of 1981, had to be replaced by a new Zambian MD. To balance his lack of operational experience he was assisted by a Canadian expert under Bank financing, but the cooperation between the MD and the Cinadian expert was not satisfactory. The first assistant returned home for personal reasons after a few months and had to be replaced as well. Several changes also occurred in other positions, in particular that of the Chief Corporate Planning Officer.
6.04 Considerable improvements have been achieved since the present MD took office in July 1984 and with his enthusiasm improved staff morale and implemented major organizational changes. Between 1985 and 1987, following the recommendations of the organizational study that was later included in the project, he took several actions to improve the top level management. He appointed six executive directors reporting to him (see Organizational Chart) and reorganized the financial department. To improve ZR's marketing efforts he also strengthened the regional organization with the three - Regional Managers reporting directly to him and responsible for all aspects of operations including marketing in their regions.
6.05 Given CIDA's then apparent commitment to providing managerial support to ZR operations, the project's main institutional goal was to provide additional training to reduce ZR's dependence on expatriate managerial and technical personnel. This training was successful and the number of expatriates in management positions has been reduced, although a complete Zambianization has still not taken place. For reasons described. above, more attention to the institutional framework was not considered necessary in the project design. For example, no provision was made for a strong corporate planning unit-which did not exist at the start of project implementation causing a lack of coordination and frequent delays. Furthermore, while the project added physical assets such as better track and telecommunication system, it did not look at institutional constraints - 40 -
such as crowing patterns, work morale and discipline that have turned out to inhibit efficient operations at least as much as old equipment and installations. The manpower and organisational studies that were later included in the project were able to address some but not all of the institutional constraints to more efficient operations that became apparent during project implementation.
VII. ECONOMIC REEVALUATION
Economic Evaluation at Appraisal
7.01 At appraisal, the economic evaluation of the project was conducted on two bases:-(a) the overall ERR to the project and (b) the ERR to major components. The evaluation of the overall project ERR was based on the comparisoA of tile cost of the additional capacity provided through the project with the cost of alternative road transport. In the evaluation of the ERR of the major components, the appraisal estimates were based mainly on :omparisons of the benefits of such components ceapared to the next best means of attaining such benefits with alternative railways assets. In both cases the project costs excluded technical assistance components and all foreign exchange costs in base year prices were shadow-priced by a factor of 1.22. In the evaluation of the overall project ERR it was projected that a total of about 600 million ton-kms of additional rail transport capacity would be provided.annually by the different compcnents. This capacity matched the projected increase in traffic up to 1986.
Economic Re-Evaluation of Overall Proiect
7.02 In the economic re-evaluation, the assessment of the ERR to the overall project followed the broad appraisal methodology (Annex 9). However, the appraisal estimate assumed that with the project, overall operational performance would be sufficiently good to balance wagon and locomotive assets thereby obviating the need for locomotive hires. In. fact, ZR's reliance on locomotive hires increased throughout the project, period and is still increasing (para. 4.07). In recognition of this fact, the re-evaluation of the overall project has been done on two bases: (i) assuming that the size, availability and productivity (turnaround times and loads) of the wagon fleet are the binding constraint on transport services provided by ZR; under this assumption, ZR can always vary its motive power requirements by hiring locomotives; (ii) assuming that the constraint on traffic performance is either the existing locomotive or wagon fleet whichever is binding given observed (with project) or hypothetical (without project) operating performance; this latter- basis conforms to the assumptions made at appraisal whereby locomotive hires were expected to be unnecessary.
7.03 Based on the assumption that the effective constraint on ZR's traffic performance is the available number of wagons, the estimate.d traffic diverted to roads is between 80*and 300 million ton-kms annually over the project implementation period and 150 million ton-kms from 1987 - 41 -
on. Available data on road transport costs and performance indicate that the difference between road and rail transport costs has been substantially higher and vehicle performance significantly lower than anticipated at appraisal. The overall re-evaluated ERR to the project on this basis is 112. It would have been considerably lower if the costs of road transport had not increased above their appraisal estimate. On the basis that locomotives are not hired with or without the project, total traffic that would have been diverted to roads also varies between 60 and 300 million ton-kma annually over the project period, stabilizing at 100 million ton- kma from 1986 on. The estimated ERR on the project overall under this assumption is 4%. This compares to an appraisal estimate of 192.
7.04 The substantially poorer economic performance of the project as indicated by the difference between the reevaluated ERR (undertaken on a basis consistent with the assumptions made at appraisal) and the appraisal estimate (4% versus 192) reflects the fact that the track, signals and telecommunications components of the project made no contribution to operating efficiency (paras. 3.07 and 3.11). The provision of spare parts for the locomotive fleet as well as the provision of new locomotives did not have the impact on locomotive availability expected at appraisal. Locomotive availability has declined precipitously to 60% currently as opposed to the consistent 75% expected at appraisal. As a result, if the option of locomotive hires did not exist or was not taken advantage of, motive power availability would have been the binding constraint on traffic performance. Under sucb circumstances, a significant proportion of wagons provided under the project would have been redundant for service.
7.05 The greater ERR attained with increased reliance on locomotive hires reflects the full use of the available wagon fleet made possible by such hires. Effectively, ZR was able to offset the cost to the economy of poor operating performance - intrinsic to its operations and also reflecting the unrealized expectations with cespect to some project components - by hiring locomotives to enable full use of incremental traffic capacity given by the wagons and wagon spare parts provided under the project even with poor operating performance.
Wagons and Locomotives
7.06 In the calculation of the ERR for locomotives and wagons alone, the same methodology as in the re-evaluation of the overall project Xas use The results with the project were compared to a situation where no wagons or locomotives would have been supplied, but all other project components would have been completed. The provision of new wagons and locomotives had an impact not only on the gross wagon and locomotive fleet but also on their availability, as it improved their age profile.. Without these components, about 250 million ton-kms of annual traffic would have been diverted annually to roads under the assumption that any gap in available locomotives would have been filled by hired locomotives and that the operating performance (turnaround times, wagon loads etc.) would have been the same as in the with-project case. This is somewhat higher than the 220 million ton-kms estimated at appraisal. On this basis, an ERR of 65% was calculated, compared to the appraisal estimate of 21%. The higher than projected rate of return is explained by two factors: the higher - estimate of traffic diversion which is caused by the lower than projected - 42 - productivity of the existing locomotive and wagon fleet; and by the higher than projected cost of alternative road transport. If no hiring of additional locomotives had been possible, the importance of the addition of new locomotives would have been even greater. On that basis, an ERR of 82% would have been achieved.
Spare Parts, Workshops and Depota
7.07 These components were expected to increase the availability of locomotives and wagons from 631 to 751 and 80% to 90% by 1986, respectively leading to a saving of locomotives and wagons and an expected ERR of 222. In fact, the locomotive availability fluctuated over the implementation period, but showed no improvement in 1987 as compared to its level at the time of appraisal (Table 4). The number of hired locomotives increased on average from 4 to 18 to handle the traffic at the prevailing low level of efficiency. The availability of wagons, on the other hand, improved as projected, from about 80% to 90%. In the re-evaluation of these components it was assumed that without the addition of spare parts and workshop equipment and materials, provided that all other components of the project were implemented, the availability of both rolling stock and motive power would be lower foi about 10 years. Without the increase ia availability due to these components, about 600 more wagons and 7 more locomotives would have been required to carry the same traffic, given the productivity ZR has achiev3d. The ERR of these componentr was thus estimated at 82%, higher than the appraisal estimate of 22%, because the additional assets would have been required earlier than expected at appraisal due to the lower than projected productivity of existing assets.
Track, Signallini and Telecommunications. and Handling Equipment
7.08 These components were supposed to reduce turnaround times resulting in an increased effective capacity of locomotives and wagons that would also translate into a saving of wagons and locomotives. It was assumed that 40% of the improvement would come from track upgrading, 501 from signalling and telecommunication and 10% from the provision of. handling equipment. The economic returns of the three components were thus estimated at 27%, 21% and 25% or a total 25%.
7.09 As mentioned above (para. 3.16), the provision of handling equipment reduced delays in loading and unloading, but could not reduce the average turnaround times noticeably. The effect of track rehabilitation on the entire system was also small (para. 3.07). Most significant for turnaround times have been the signalling and telecommunications systems, since they affect the entire route network. Frequent signal failures (para. 3.11) have, however, prevented any improvements. The available data for turnaround times is incomplete as mentioned earlier (para. 4.05); given the available operational data, turnaround times appear to have increased. over the "roject period. An ERR on these domponents was therefore not calculated; since no measurable benefits were achieved, it would be negative. - 43 -
Other Items
7.10 Returns on other components of the project - staff housing, data processing facilities and technical assistance - were not quantified at appraisal. Improvements in staff housing did not proceed as fast as planned (para. 3.17) and did not make a measurable contribution to operational efficiency as could be expected. The implementation and impact of the data processing component have been most disappointing (par&. 3.18). The users' longer-term requirements had not been adequately assessed before hardware was purchased and no comprehensive planning of hardware and software needs hid taken place before project implementation. Presently, the software packages that have been implemelted 6:e still only used parallel to the old system. New investments in hardware are already required and will possibly make the current investments obsolete. Technical assistance and training under the project were partially satisfactory as described above (paras, 3.19-3.21), but their impact on operational performance can also not be quantified.
VIII. CONCLUSIONS AND LESSONS LEARNT
8.01 The Third Railway Project constituted the first Bank Group lending operation to ZR. In the 1950s, two loans were given by the Bank to the railway's predecessor before the country's independence. The project did not meet its targets of improving ZR's operating performance, although some investments in infrastructure were required to avoid a further deterioration in the company's operations and a subsequent reduction in its transport capacity. When the project was conceived, it was believed that the lack of operational efficiency was mostly attributable to a deficiency in physical assets. It appears now that the utilization of available physical assets constituted the major .operational constraint. In retrospect, project design overemphasized the provision of physical assets and did not concentrate sufficiently on the institutional framework influencing their utilization. Project design was, however, based on the assumption that the CIDA-financed technical.assistance team would continue to support ZR's management. Their unexpected and premature withdrawal left the railway vulnerable with inadequately experienced staff not suited to - running a railways organization. Furthermore, some of the investments in physical assets were not preceded by comprehensive long-term planning and have therefore generated none or only smail benefiLs.
8.02 Forecasts of traffic, operational achievements and financial performance at appraisal have proved too optimistic. Several unforeseen difficulties contributed to this. The unexpected change in management put a constraint on the company's institutional performance and the subsequent lack of a good corporate planning unit contributed to delays in Implementation. .The GOZ's initial reluctance to grant regular tariff increases contributed to ZR's financial difficulties. Also, GOZ's requirements f-or-import licences and inspection procedures caused some of the delays that were experienced during project implementation. ZR was also faced with an adverse national economic environment. The country's - 44 -
poor economic performance was one, although not the only, constraint to traffic growth. The sensitivity analysis at the time of appraisal accounted for the possibility of stagnating traffic, but benefits were still overestimated due to expected improvements in operational performance. The shortage of foreign exchange prior to and during the project period restricted the purchase of materials. and equipment which led to the neglect of quality maintenance (extensive "cannibalization" of parts practice) from which ZR still suffers.
8.03 The company was successful in inproving track conditions and in increasing wagon availability, and it has completed all major components of the project. Under the project, considerable flexibility was exercized in addressing the need for management support and organizational restructuring that arose with the sudden withdrawal of CIDA supported technical assistance. Nonetheless, ZR's effective capacity to handle traffic has hardly improved and is unlikely to improve in the near future. It has mainly been constrained not by fleet size and its mechanical availability, but by an extremely low utilization of available assets, in particular of locomotives. Although the provision of new wagons and locomotives yielded a high rate of return, the productivity of these assets has actually declined over the project period. Major contributory causes have been train crewing, yard operating and train formation practices, breakdowns of locomotives due to lack of maintenance or of quality control of undertaken maintenance, and frequent interruptions of hauls by signal failures.
8.04 Two major investments undertaken under the project - in signalling/telecommunications and in data processing facilities - have not generated any quantifiable benefits to this point. Only part of the signalling and telecommunications system has been upgraded under the project. Since failures still occur in the remaining old installations, this high cost investment has not improved track speeds as was expected. More investments of a yet undetermined extent are required to obtain any benefits in the future.
8.05 The investments.in data processing have equally lacked a comprehensive plan. The component was included in the project at short notice during negotiations without thorough preparation beforehand. The lack of assessment of users' longer-term requirements and the separate - planning of hardware and software needs has resulted in the system's capacity being inadequate before even the first stage of software implementation has been completed.
8.06 The lessons for future project are threefold: 1) the emphasis must shift away from the addition of physical assets and concentrate instead on their utilization; 2) major investments in physical assets must be made and evaluated in the context of a comprehensive longer-term investment plan even if there are absorptive capacity or financial constraints to the immediate implementation of the entire program; and 3) potential institutional constraints deserve more attention in project'design. - 45- Annex
ZAMBIA THIRD RAILWAY PROJECT LOAN1790/CREDIT 973-ZAM SCHEDULE OF ACTUAL AND ESTIMATED CUMULATIVE DISBURSEMENTS (USS '664) ACTUAL APPRAISAL X OF APPRAISAL IBRO FISCAL YEAR TOTAL ESTIMATE ESTIMATE 1988 June 30, 1989 - 251 1981 September 36, 1989 - 1,001 December 31, 1980 - 2,001 March 31, 1981 - 3,6S1 June 30, 1981 10 6,500 2 1982 September 30, 1981 212 8,000 3 December 31, 1981 212 11,001 2 March 31, 1982 1,395 15,000 9 June 30, 1982 1,395 26,001 7 1983 September 30, 1982 6,100 25,001 24 December 31, 1982 8,200 29,001 28 March 31, 1983 8,200 32,000 26 June 30, 1983 18,283 34,001 54 1984 September 30, 1983 18,263 38,500 5 December 31, 1983 23,200 38,500 80 March 31, 1984 23,200 39,601 59 June 30, 1984 23,200 40,60 58 1985
September 30, 1984 26,100. - 65 December 31, 1984 29,400 74 March 31,.1986 30,800 77 June 30, 1985 31,700 79 1986 September 30, 1986 32,701 82 December ?1, 1985 32,700 82 March 31, 1986 34,320 86 June 3o, 1986 36,289 88 1987
September 30, 1986 38,222. 96 December 31, 1986 38,672 97 April 30, 198? 39,094 98 June 30, 1987*/ 39,181 98
1/ Final disbursement in May 31, 1987, unutilized balance cancelled.
Source: Supervision Reports, Loan and Trust Funds Department. 觔 騙 煙XZ 一 心6~-
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伶 · － ． 。 細屹， RAXUOAYMJIKT ^1790/CMIT vå-ZAM MwIffi ~WC STATISTI
Financial Ywore ii 19M Fn4 A 1.115 - Ii& I - 1.115 TotalaTO m 8.062 a 394 287 7 ::42 276 216 arot ma ft&# ýk~,qåftdo) 327 Oper tima taff 5.447 m a " wili -other 2.564 2.927 2.429 2.771 2^ T,affic 21 1.5 1.2 1.7 1.8 1.8 1.9 1.9 L413 1.9 1.3 2.0 1.6 2.1 288 4W 456 439 alt =4 Wi m 240 240 A.Grege jouý 240 240 240 m 240 4.4 4.6 n* 4.8 - 4.7 - 4.6 4.8 4.7 mot t«* T,offic Doncit, F!9«-ba/r~te ko (th~amnd) 323 259 997 M7 244 FreighL-not Um-ko/routo km ~ änd) 1.196 1.167 1.218 IN 1.00 0.4,*tiono 8.5 4.8 5.2 Trein-lip - "ta 5.5 8.44.9 3.8 4.4 4.7 Loco-liffi 4~ 1 i ion 8.0 Dagratiom Efficia-Cl ff,~ Gromo ton-LE/ rDift-ko 34 all, åm ffl met, t«-bm/ rein-ka 254 261 241 m w7 A.QrD:!B omsi~O 8*994 (Iiialli) 45 40 45 40 45 40 44 40 45 40 45 40 45 Fr i@bl 40 49 a 45 a Panmonger 45 a 48 44 a .6 a 44 a prior ta, the y*ar ond aaa Docembor 31. la thovi'changod to March 31. Foracemta, are b~*4 an an acouzod annual grouth, rote at 0. sourca: Zambia Rail.416 bod SM. An 矗eX4 一 48- 。！：〕〕〕〕〕〕〕〕〕〕！〕＿〕〕〕〕〕〕〕〕‘〕〕〕．〕： � 雙 唱 ． J e. ，響,， !;!：。，�’·｝〔〕！!!；】！:&!！一：：〕〕；邊！·！〕！〕｛ ‘ 二 ‘ ．心 。 開 ZAMI THM R TL>MYPMJWT LOAN19701~1T 973-LAN CWARATIVE 0~11NG STAT~3 19W07 Ammt mø MQJE£Tw "Evtma mo 5M ØF ZAMBIA RAIL.WAYS. IN CL~ FRICES (K 'OM) 1902 - 19» 1%4 i9m 9.797 S.= Ø.Om 8.007 17,2» &.Ml 6.576 s, om 5.951 5,004 4, 4M 5.204 7,491 5.412 9.6% a. &M u. 416 a.«» UG.= GD.~ M,4= 61.716 ", a" 64,224 m. 790 53,042 &0. 128 54.234 67.0*2 66,424 78,097 36.911 2.217 4.261 2-M #^ t~ 19,7= 2-= 3-63 2- 2- 2-141 2,6 2-1 2. 2-1 a. 67.om 2W.M 06.~ g".4= 70. =7 74.792 n,wo 64, aso 60. &67 a. 187 6l.om 77.303 U.024 99.151 64.796 107.U4 gis 677 961 767 1.009 I.Om [.1» 939 1,~ 790 1,201 LID i. s" 671 1.661 ost 1.000 la 1,000 1.081 1,000 2.072 1,000 2.m I.om stoff R~ta 1.444 1. 2W 816 1.000 om l. om 1,41 L= 2-414 L= L= L= 14, «. l l- 2-0 I-M 6$1 LM 2,01 L-4-4i LIN LM i - LM fkaffi uq^ =-M 72-460 406-M n~ T.tel 67-Mi 63. n_ #4,676 W. 26.170 a4.297 da.~ 9,4% 16.331 11,470 15,147 9, zm 20.7% 9,271 16,437 9,816 27,476 9.354 14. *u «.~ 16.~ W.= 16, 7" M.fl» 16.om 70. dm l@,"* R~ø.o' is, m 17.770 26.m 14.728 24,Om 14,642 00.206 W7.om ti.= go.~ ti.m 73.%-4 11.gø» 18,236 13. 648 j&4.054 11.217 16,774 11. 2" in.041 li.~ 20.2» ý1. 419 a, al 5.2» &.971 .(«.0")& 9.449 gi.= 4M O.U7 3.247 6. 1" Z.goo 7.944 9, om a. «* 9.146 7.400 2-17 1 1.77 1-1 1- L,= I-m 1.267 2-4 i-ur 1-469 I.M M. L= 40- 97- IL= AALM 42196 MLZU H-67 47- u- &g.,»& ti- 39-6 77-001 M- 92- m.«» m. tal go.= um.tri SI.Im 17,607 29. M 0 .493 24.073 2.401 25,220 . 8.068 26.359 »D ry.ag is.~ #-M 7-504 10-M7 9,= ~ 40-= a~ f., s- 3-7 7-71 6. g~ 7-%4 19.~ (a. 7») 17,= (7.374) 17.7« 6.072 16.mi o*.4" il. ug 119,On hot M99,8%i-fi %."Ve 32.on 24,012 (1.214) la.al4 (3. L") 17.801 6.100 12,= go.~ 13.6% 61.246 14.910 3.320 4.678 4.256 4.492 5.607 6.225 6-572 6.031 li.= al.= (34) (49." - 2.007 - 4 - 49 - No ~ -- M ~ ---m 2-177 42.179 no^ L22-4 fig-ooo LAU f2.4»1 LM zja L= 14. imt No% lo,; lo-nt 19. 4" fa-9"I L3- 11-7501 ÅLM ff.* I.A 80.8 19. 4 69.6 87.7 MA 86.4 M.* 02.8 (S) 74.2 61.9 qý.8 U.g W. 1 61.1 Ilø iftelud» 13 M~om at Gøgrati~6. low, 31. IOW. f~ fi"Ol il 3 THM MAILMAT m knerco of Fund Operalig surpluo 17,607 29.273 3.492 24072 2.01 25.213 3,053 26333 330 27,830 16~30 ,~ lm.15ä 0.2210,21 1.,Mu Log-Tore Ieht 6 9,9 13.8x 1* 4 5.84 13,74 32,I8R302 26.8W 4&,9*6 1832 (60,440> 18,~ ^10,)1 m m w343I * 1D,Na Cain en Föreign E.cheng 2,07 - - - d- - - - Deere,e in Mon-Cesh working CeOitl - Lm L 2. L4 LM LM Lm Lm Lm - - 7otalsourcme 29.9 80.777 22.77l10 2 i M1.91 4240 so.04s , U.U iL.12 i l R.MI ME- 4L0 -a U** et Fund6 increa.e in Fi.ed Asaea. Net 13,964 21.217 20,72 33,60 19,747 4,20 22.171 37.001 27,92 27.37 27,06 21.73 173.121 w,89 112.748 21,=8 Dobt Serwice - Principal 3,029 4,on4 2,333 3,202 2: 00 3,3 0 5,00. 3,319 7.441 4,112 1,119 348 - .790 - , Interea • 3,323 4,57 4,25 4,42 3,307 3,22 3,173 3,331 11,323 11,333 4, B:*» 6:3 18i3im 100 12 1,2^~ 14.133 In.atmet in Subeiibry 4.002 - 1,712 - 1.048 - (71) - 1.296 - (4,~3) - (2.CM) • Totslis.. 26.167 34. 30. ! 44.0 29.163 ff.424 42.1JJ • .2 §aig iL 439i 46.UI li9.uA I I Ec?sof Receipt. ov., Diah.roe.nt 3.523 1G,275 (7.17) 6.180 23 1,38 244 840 (2,300) (1,570) 37,14:, (2,192) 31,540 <2,797> 13.146 (1.917) jP Frior to 1900; th. year und was D.conbor 31. Concing 1*D0, the yart ond .ee changed te Narch 3l. thu 1980 incld.s 15 menthe of oporatione. g/ Adjugtd for change in fiscel year. / hould be read in conjunct.ion with Urealized Etchangs Lo~s. Source: Zebie R*ilea and SAR. cm IMI LDAMi1790ICEIT 973-ZDan EOE - - - - 1-8yig, ceasing-tes..128516.00 12.3 16.00 - - ..------plant d.cinery and SI~e . (idge - 1000 ------10.00 - - . S a.Simneatia ad Teleeemcasn - - S iC - Fe%me.:ad pgrmding 12.7132 30 ------12.71 12.30 ------ 2- Tel ec ani c251a*1 - - - - - bmproveat vompenmien 6.e7 3.25 6.3 8.25 4 31 5.00 ------I-• C. Lei mciad %Gi li tec 2 .0 - - 1 LeeAuime(10> 10.59 10.00 ------10.59 10.00 ------2 1. ..130) U0. IS0 2.1 2.00 . . - - - - 13.00 12.88 16. M .1=.5 - - 4.40 6.40 - 4.00 ------8 apare peree: ftel.mbililation 6.01 4.00 - - . ------6.01 i4 seMpMrKT: Ut iteane0 .70 7 95 3.21 2 7.- - . -. - - 1.00 - - - 1.00 0.49 83 - -. - - - - 2.60 ------8 Urehing Crmn 1 49 2.50 ------1.49 - . " • 1.65 3.35 2.f 800 ------0.3 ------ ------E. Handline Eui.eent 2.60 3.00 - - - . - 2.60 8.00 - - - - - . ------F. St.ff Hameima .30 1.80. - - - - .30 1.80 - - 0. ntehl- Processine sciliis 2.64 2.80 2.84 2.80 ------. ------ ------, H. Tehel - 10.00 - - I. Ttetl Pereie Cosh 114.51 130.18593.16 40.00 8.81 3/ 1.00 3.11 5/ 4.80 23.30 25.30 13.00 13.00 16.36 16.23 7.99 5/ 9.10 0.40 8.40 ------59.73 36.00 II. Lga CO! 22.73 38.50 ------ - 5.75 59.30 . III. Tom* PRO0"T æuT 137.24 156.68 59.16 80.00 3.31 5.00 4.30 4.30 25.30 25.30 13.00 13.00 16.58 16.00 7.99 6.70 8.40 8.40 10.00 y/ - in.ancimg as perl et ,eh.biitation1 ef the hangmel. Ri tmay.' T/ h. balanae se ee dum to emureat fremeletion. f At *aeiff el' hG clasing dote*e D eer 1~ is likely to b* grea4md e tho6 belonce con bo diamårmed. 6 29811ha.g nat beew abe 161.7 mil lim ere lem% døe te eurrey %r~mlotion. Sarce: Zanihe Roilmyo and SA. - 52 - ZAMIA AIEX 9 THIRD RAILWAY OJCT LOAN 179/CREDIT 978-ZA FD~4CIAL INTUAL RATE OF RET~N (K'66 YAR CAPITAL ~CUT PERATDI LUS DEFLATM WERATING aMPLUS 1/ NET DE =/ PwO/ CT w/ PRO"CT W/0 P~OJCT NIT CASH MARCH 81 (1979 PRICES) (Car VA PRICS) (1979 PRICES) (1979 PRICES) FLOW 1961 14278.748 3492 1.19~ 2914.658 2826.66, -17416.142 -S168S.082 1982 22608.M98 201 1.2719 222.196 1681.=0 -14848.616 -S90.708 1988 7688.14 8868 1.6070 2«24.664 18563.M00 -11629.196 -19412.016 1984 17719.962 *u1 1.7962 194.183 9132.M0 -8947.147 -28767.M99 1906 26774.193 1868 2.2176 8187.122 6268.666 -128.878 -29~88.971 198 I^.64 96161 8.1194 8M118.794 &44*.60 2688.794 17807.118 19687 6187.682 113271 4.739 32842.477 1*47.=66 3096.477 26867.196 198- 32342.477 1947.M08 809.477 006.477 1969 32342.477 1847.~00 3996.477 8096.477 196 32342.477 1347.66M 806.477 306.477 1991 32342.477 1347.~66 5006.477 806.477 1992 32342.477 1347.080 8a996.477 3096.477 1993 32342.477 1347.6~0 3996.477 a08.477 1994 82142.477 1547.~00 81696.477 3096.477 1996 32842.477 1347.~00 806.477 3096.477 1996 82342.477 1847.M66 8996.477 81096.477 1997 $2842.477 1947.~66 g0.477 80M6.477 1998 82342.477 1347.~66 906.477 806.477 1909 82&42.477 1847.600 90.477 380~.477 2889 32842.477 1347.~00 816.477 806.477 201 82i42.477 1347.OM6 80.477 8O0M6.477 2002 32342.477 1347.M0O 38996.477 86099.477 208 32342.477 1347.666 86996.477 8099.477 2«64 32342.477 1847.666 86996.477 806.477 2Ø6 32342.477 1847.666 86996.477 81995.477 IRR 6.189928963 1/ Operating surplu* wlo proJact Is based on appra.lal istiate adjusted for chango In ZR's flnancoial yoar. Operating eurplu w/ project is the actuelly achieved surplus from 1981 to 1997. Ther*after It Is assumed thet the surplus ra.ine at the 1989 levol in real terme. ZMBIA TæI RAILUAY PROET LA 1790/IIT 973-zAM E IC RATE OER A. OUELLPROJECT 1. IFMINIMO OF LC00IVE IS PIlm£ ~FIT 1 UIT 2 PID~IIAL W/P VIP vir W/P W/P W/0 vie= wVAOP~/ V/* vr(L v~B ic ms i. EWAAIN AVAIL TOMAGE CMWAG A A L w 7PØN. =L ~ 1T ~.L AVAIL WAGOS ('000) TIM AVAIL TIME REøl = DIVIGN DIV GI# M . Ø~. ('000 K) (197 K/flT~8) OP.CW O» (DwLIs) WM)TFALL(DIPLIED) (OO) 197 P.) (0058) 57 ('000) 1911 5275 0.0. 5020 4795 13 5675 0.00 13 1276 321 307 270 55262 162 162 49 7924 0.044 0.~ 79 47111 1982 6773 0.73 4944 4674 14 830 0.19 14 742B 1094 995 806 80044 152 419 9 24746 0.044 .04 2 g. . 1903 ' 6315 0.72 4571 4577 13 8421 0.67 13 6952 1026 100 255 M1201 54" 0 7* 0 0.040 0.54 170 1705 1904 6354 0.53 5274 4641 14 5419 0.0 13 6150 691 nøl 324 145190 8an 0 d. 0 0.M~ 0.~9 1~ 1955 11 6462 0.91 5871 4605 16 s392 0.00 18 851 458 447 818 140523 26 0 90 0 0.06 0.41f 145 lamg 1955 635 0.90 5722 4448 16 s29 0.00 13 54 9 20 297 58147 15 0 98 0 0.058 0. 1917 6340 0.89 5643 405 189 10 16 8210 0.80 18 8559 619 Bio 297 181811 m 209 96 27414 0.400 0.0 9 1 MF71 1908 6340 0.80 679 4W0 lå 6210 0.Ø0 18 51a 9 619 G10 297 161611 209 0 90 0 0.050 0.40 0 100 1959 6340 0.67 5816 4505 15 5210 0.G0 13 51s 9 519 510 297 161511 204 0 96 0 1990 0.0 0 0.= Saffi 640 0.58 6452 4508 is 8210 0.80 18 589 85 510 297 151611 259 0 96 0 0.050 O.=M 0 100 1991 6340 0.58 589 4400 15 8210 0.00 18 m 9 19 10 297 151511 204 0 9 0 0.0 0 0.006 BOSS 1992 6340 0.54 825 440 - 1 5210 0.00 1 øs9 519 510 297 141511 209 259 95 27416 0.000 0.0f 05 5F7 1998 6340 0.83 5212 4506 15 5210 0.00 . 1 5559 519 510 297 161611 29 0 OG 0 0.050 0.009 1994 6340 0.02 8199 4506 14 5210 0.00 1 a 164 819 810 297. 151511 294 0 95 0 0.050 0.09 8010 . 1998 640 0.61 8188 4605 14 5210 0.50 1" 5559 519 810 297 151511 259 0 95 1995 0 0.050 0.000 640 0.80 5072 440 14 5210 0.00 1 59 519 G10 297 1511l 209 0 es 0 0.000 0.~ 0 0 1997 5840 0.80 5072 4505 14 6210 0.50 1 a 89 819 510 297 1111 219 29 9 27416 0.000 0. 0 5005 199 6340 0.50 5072 4605 14 5210 0.50 13 5559 519 510 297 181611 299 0 9 0 0.060 0.0 f 01 1999 6340 0.00 5072 4900 14. 5210 0.0 13 9004 619 510 297 181511 299 0 96 0 0.010 9.000 800 k^ 2000 30 0.0 s07 40 14 5210 0.0. 13 * 8=9 819 510 297 181511 29 0. 2001 6340 0.80 a72 460" 14 6210 0.00 1a ~86 s19 610 297 181311 299 0 4 O 0000 0.:2 M 20 $4 0.80 so7 40 14 &210 0.00 19 a~ si9 Uo 297 161511 29 209 OG 27416 0.050 0.= '0750 200 6840 0.80 5072 46016 14 210 0.00 1tg 9 15 151 10 297 1sta1 209 0 0.050 O.Om M5 5g0 2004 6340 0.50 5072 4405 14 8210 0.50 13 s9 . G19 810 297 181811 209 0 96 0 0.050 2006 0.0w 5555 I3S 0.50 5072 4600 14 5210 0.Ø0 13 5889 619 810' 297 181511 259 0 9 0 0 0.000 0.000 0101 2005 5840 0.50. .5072 4G06 14 5210 0.50 1 8559 619 S10 297 181511 209 0 os 0 0.050 0.00 0155 0ENFIT 3 FIANICIAL V/P W /P V/0/P/ w V/0/P % UIO/P NETm r PROET YEAR 5 LOCGS L= LOCO LOC CO LM LDC LDCM TOTAL TOTAL . LET AVAIL AYAIL fl M Him H Hmm FIT0 INE5T. 0EFWIS (-O0 K) ('000 K) (MILLION K) (MILLIONK) (1979P. 191 75 0.72 52 0.72 77 45 7 12 1750 10477 -14.2797 -8. 9 19æ 69 0."5 77 0." 67 59 6 8 1209 20919 -26.9913 1.929 198 69 0.67 4 0.61 74 59 1 1 216 933 -6.!7150 -4.989 . 1964 Ma 0.71 80 0.60 76 se 12 20 2M3 4676 -24.~96 -19.71 198 6 0.66 50 0.51 71 5 12 13 77 1841 -22.1710 -20.8 196 a5 0.58 50 0.55 5 as 12 10 -910 16 -12.0714 -10.45 1957 62 0.50 77 0.15 62 82 14 10 -741 3000 -7.94429 22.04 1980 62 0.50 ,0 0.55 65 82 le 18 -721 2612 0 2.512 1999 62 0.50 87 0.58 71 82 26 11 -750 2552 0 2.582 1990 62 0.50 55 0.55 71 52 24 19 -M32 2701 0 2.701 1991 62 0.60 os 0.58 58 82 28 1 -1008 2295 0 2.295 1992 62 0.50 54 0.59 67 52 22 1 -1055 29692 0 29. 692 1993 $2 0.50 53 0.60 66 52 21 14 -1075 2255 0 2.255 1994 62 0.50 02 0.60 66 52 20 14 -925 2407 0 2.407 199 62 0.50 51 0.50 66 52 19 14 -777 2565 0 2. gu 1999 0.60 62 50 0.50 66 52 le 14 -29 2706 0 2.706 1997 62 0.60 50 0.50 66 52 1 14 -M9 30121 0 0.121 1997 62 0.50 00 0.50 66 52 1 14 -019 2702 0 02 1999 52 0.50 50 0.50 58 52 15 14 -529 2705 0 2.706 2000 62 0.00 50 0.50 66 2 1 14 -29 270 0 g.706 2001 62 0.50 50 . 0.50 a6 52 1a 14 -629 2705 0 2.705 . 002 62 0 60 50 0.50 66 82 -18 14 -629 80120 0 30.121 200 62 0.60 50 0.60 66 52 1ø 14 -629 2706 0 2.706 g' 2004 62 0.50 50 0.50 66 82 1 14 -629 2706 0 2.706 2005 62 0.50 •0 0.60 66 82 18 14 -629 2705 0 2.706 200 62 0.60 50 0.50 a4 82 i 14 -529 2705 0 2.706 ERR 0.107 I ZaMEIA THIM RAILMAYPRæJECT LOM 1790/CRWIT 973-ZAM EONOMIC RATIESOF ET4 A. DVHALL PROJ£T 2. IF HIRIG OF LOCOMOTVE~ 15 MUT P~SI..E W0/P P~OIP W/P UP r/ W,// WDipO V/O/P U/0/P FINACIA VIPG VIPO AVI TW4IP VIP. WII w/ WI Ti Td~ 5W AL a IVE TO= MAX AW . ME FIN IAL WAPAP L T/ C C D~ AVAIL AVAIL AO ('O) O W MB WAGO (lom) m AVAIL VA~M ('000) TINE AVAIL TDNE ('Om0) (IPLIED) (ASSutD) LOCO CONTRAIur LOCO COGTAIN 4700 8976 8799 142747 0.60 13 75 0.72 0.72 65 4590 5020 4590 434 3976 1981 ' 6275 0 80 500 4795 13 5875 4214 8881 40901 22 80=418 4674 14 6638 0.69 14 69 0.68 0.63 b4 4457 4944 4457 1982 6773 0.73 4944 4576 8745 8748 2915 36m 2913 2M 249186 072 4576 4577 13 5421 0 67 13 69 0.67 0.61 84 3745 1983 , 6354 58 4490 274 4490 4122 S236 438 M3 8100 f043 0 .3 5274 4841 14 5419 0.60 13 68 0.71 0.60 1984 6354 0.55 se 4982 5871 4962 8976 3541 4314 841 84m 160 1985 6452 0 91 5871 4686 16 5392 0.0 13 68 0.66 682 13 68 0 63 0.55 se 4884 5722 4884 8794 3637 423 8637 8574 1986 6358 0.90 5722 4445 16 5298 0 80 8489 4188 3489 &429 812S 0.80 13 62 0.60 0- 52 4531 6843 4538 8705 .0 1987 6340 0.89 5643 4606 16 5210 4315 8562 8518 4108 8818 8260 897~0 5579 4606 is 5210 0.60 13 62 0 60 0.55 52 4315 5579 1986 6340 0 8 3943 6516 3948 828 8032 4188 a02 270 "817 0.87 5516 * 4806 15 5210 0.80 13 62 0 60 0.55 52 1989 6340 0 55 52 3943 5452 8943 8881 8032 41868 082 2979 104829 1990 6340 0 86 5452 4606 13 5210 0 80 13 62 0 60 8142 07906 13 62 0.60 0.58 52 8943 5369 3943 4370 8197 41"8 3197 1991 6340 0.85 5389 4606 15 5210 0.60 410 1 22~ 198 68788 5210 0 is 62 0 60 0.59 52 3943 5326 3943 &410 3252 1992 L340 0 64 5326 4606 15 80 3943 5262 8943 8451 8807 4188 8D7 250 9j81 0.63 5262 4606 15 5210 0.00 13 62 0 60 0 60 82 1993 8340 0 60 52 3943 5199 3943 3493 - 307 4108 307 3200 72888 1994 6340 0.62 5199 460 14 5210 0.80 13 62 0.60 om2 s12 13 62 0 60 0 60 62 3943 5135 3948 337 8807 4168 307 1995 8340 0 L1 5135 4606 14 5210 0.80 8807 4106 8807 m0 90292 4606 14 5210 0.00 13 62 0 60 0.60 52 3943 5072 949 s81 1996 6340 0.60 5072 5072 3948 881 8307 4183 8807 82O0 242 6346 0.80 5072 4806 14 5210 0.00 13 62 0.60 0 60 52 8943 1997 0 60 0.60 52 3943 5072 3943 8881 3307 4188 807 8280 0242 1996 6340 0 80 5072 4606 14 5210 0.80 13 62 20 om 13 62 0.60 0.60 52 3943 5072 8948 8881 307 4168 807 1999 6340 0.80 5072 4606 14 5210 0.60 416 87M? 860 5210 0 80 13 62 0.84 0.60 52 3948 6072 3941 m1 880 2000 6340 0 60 5072 4606 14 8948 8881 8307 416 807 82~0 40292 5072 4606 14 5210 0.80 13 62 0.60 0.60 52 3948 5072 2001 8340 0.60 0.60 52 3943 5072 94t 3881 3807 4100 887 8m 40 2002 6340 0 60 5072 4806 14 5210 0.80 13 62 0.60 3307 3280 92 46 13 62 0.60 0.60 62 3943 8072 8943 3881 3307 4140 2003 8340 0.80 5072 4608 14 5210 0.80 8943 3561 8807 4108 887 OM0 96292 14 5210 0 .0 13 62 0.60 0.60 62 3943 5072 2004 6340 0.80 5072 4806 a881 8807 4144 8807 8250 202 4608 14 5210 0 0' 13 62 0.60 0.60 52 3943 5072 8943 2005 6340 0.00 5072 3943 6072 848 3881 8807 4180 3807 2G0 2 2006' 6340 0.80 5072 4606 14 5210 0.60 13 62 0.60 0.60 52 PROJET FINANCIAL W/0/P WI/0P ID". INVEST. W T.JC IN TYAL TOTAL NET YEAR RC.J mITS OP. 1Q5 R . R . TXS D FITS INVESTENT '000 K) (00 (MILLION K (MILLION K) (MILLICN K) P. (1979 P.) .(1979 P.) (1979 P.) (1 97 9 P.) (1979 310 310 15126 16.641 -14.274 2.38 1981 1514 -6.270 1962 2913 576 268 1806 18.721 -26.991 475 0 0 1.545 -i.872 -7.327 1963 1545 -21.120 1984 3141 501 3 255 3.396 -24.595 298 0 0 1.626 -22.171 -20.545 1985 1624 -10.581 1966 1490 124 0 0 1.490 -12.071 153 14549 16.352 -7.944 6.407 1967 1602 154 3.397 198 1975 * 171 15 1422 3.397 0. 000 8o6 2.935 0.000 2.935 1989 2049 177 9 4.357 1990 2300 199 22 205 4.357 0.000 129 0 0 1.494 0.000 1.494 1991 1494 0.000 6.570 1992 1402 121 75 7168 8.570 719 2.036 0.000 2.034 1993 1317 114 8 4.739 1994 1592 138 33 å148 4.739 0.000 162 46 4376 8.249 0.000 6.249 ¶3 1995 1874 4.538 1994 2162 187 25 2376 4.580 . 0.000 187 75 718 q.3 0.000 9.3 oa 19,97 2182 2.632 1998 2162 187 S 719 2.602 0.000 * M 1999 2162 187 33 3148 8.810 0.000 6.310 46 4376 6.53 0.000 6.538 N ) 2000 2162 187 4.538 2001 2162 187 25 2376 4.38 0.000 137 75 714 9.330 0.000 9.330 0 2002 2162 2.062 2003 2162 187 G 719 2.882 0.000 P4 3148 6.310 0.000 5.310 2004 62 . 187 33 6.53 137 46 4376 . 6.538 0.000 2005 182 0.000 4.56 2006 2162 137 25 2376 4.&3@ emt 0.040 一” 一 胤．！一： 一兀一’ 二·’ 一 :．謬 一”&&&&- (9 汗0 C ．寫，d) 了騙市可． 一“ - ~'0 äå3 000,0 000,0 *W 000,0 YLVC 0 0 M tut tu, 9 0010,9 tu 9 0 0 ta tut cm %DL*99 000«0 10£,99 aku leg L96 *Lie 40,41 ow, 0 M' at ct% 95 ffl #lut tom #,LVIR ODD'* >W 2 0 0 La *La Owe pu, 9 000,: tu* 0 0 ta *Lic 061 *W t 000, *N 0 in Ms ONT 10CU 000,0 101,91 L8GU ta at gul L"z £WW 000,0 tog -cz etth 96 Ur 9££9 9661 £W 6 000,0 zul 0 0 at Lut shöl g911 t 000,9 999, 0 0 tig s~ 9,849 £CW9 000,0 in, 9 0 919 gen ta i en 99 000"0 m se Lir 161 en 9061C 96:1 *WC4l 000,0 *9641 L6101 Lot leg titt, 1661 611,* 000,0 att** 0 0 L91: allt Obbt Ue *lm 000«0 Ue 9 0 0 ut ute Hot 0 0 m ~ Whi M-s19 'a n»,0000 9~ UD'mo** ha 1~9 m 9W 9699 lekt *C, 99 000-0 P99,91 99*19 199 m WIN nöt kw' c- st** *_ . . hW& *it am "bl UV& WU9- 9,69,8 96* PM VIGt 000,0 VW 1 0 0 effl 09&1 1£9 G- 140,w 8991,911 MIT log 019 U94 6959 699,9 UVet- 41VNI tolft oxe 019 lift Cd UGO (NCd KGI) Cd Ubl) Cd Vd *Lat? (M wes-nim) NosTmå (x mornIN) 4 .3 (mom.) el~ Lä~E 9^ im *de im om ta 3~ Lwad w~ MJOAR00r41 =. ~ 11 00 gel* a~ 88 09«0 09,0 m Dta kl 9~ UD£ WO mi-b .900C otit J0W lm - om am ene m 09,0 0900 ff. 999 il 9~ UD* 99 0 09 .0 om im att im uff ene a OVO 09, at te vi DM &Log 09 0 09*0 om 9= 41 om mit, im UD* a 09,0 09,0 at Ola vi gno UD§ 06,0 09 0 om 9= en ~41~ ~ att am im uff a WO 09,0 at Dta *1 e~ Uof WO 09,0 om am ~ 411 1106 00 alt LM im uff e~ a 09,0 09,0 a 0949 91 909* Uof 06,0 06,0 om 1006 MW ut* MIN im mm ~ m 09,0 09^0 ge olm pr 9~ Uot 09,0 09,0 om 000 401£1 utt, äm im U09 ene a 09"0 09,0 69 Ola *1 9m 2202 ow, 0 0WC, om höby MILT mil, im im cm Uof "w a 09,0 09*0 at 0990 91 Mow U02 06,0 06 0 om 9k61 ~ Lit om JON U19, ~ im U810 ~ a WO 09,0 a Ola 1¥ 9~ UD§ 001,0 m 0 Dala 1641 ~ 11 ~ Utt, MIR im UD§ NWAR a 09,0 09,0 0 Ola vi *M UN 09,0 09,0 om gael Gina Off mil, ffing WO et Oleg H w** 9919999"10 19,0 om IGGI 1496 mig e~ 069«: W at *la *1 *Oft 561 99* om 9881 an im 066 V96* e~ a 09,0 09,0 at Ola et 90991 gen en 0 C9,0 om shhy mat om 00 ~ om fflie cm DM e~ a 810,0 09,0 et Oleg Ii 901PC om Wc te 0 ortf Ual mm ma 4819 me* ale om cm ~ ene a WO 09*0 ge Oleg 91 Doffi öm WO 99,0 OK9 1661 mm den upp at im an me se 90,2 09,0 at 0969 91 9~ v999 919,0 99-0, om diöl im DI: ~ eTg9 -e-$ a 19 .0 09. 0 at Ola 91 9~ Diet m 0 £go omm mat e~ fta am tio *Lat fin a WO 09,0 99 0199 91 g~ Gigg W 0 mo om Nöt u~ 1190 e~ ~ e~ me fem en* a 99,0 09,0 99 0t89 et ODIPP 6*99 neo Wo on* 4961 ut= ~ im lit* 1084 ~ gut ~ ge W 0 111,0 a an et "" gut OVO 06-0 Dm 9961 W~ ute ~ ~ 086 *Lag mat itu 695* m WO 99,0 a cm et eepe iffl 06,0 16-0 Vytf gul ~ ~ tia im piet 9999 0609 t~ ~ a 41,0 IVO et GZP9 el Z~ tag 06,0 mo om *ni ~00 tiga fla an 9986 WC.Le tvi* 949* Me m 1 0 £*-o 99 ten el "fv 949* £9,0 U,0 9%1 Offl ~ 110C ?110 ~ lew "2» £99,* £ev* m 69,0 99,0 at *m *i Utv YVGI, 69*0 CL 0 CiLf NWM OM am 1919 Um Ohtk OhOV ge CCO WO g£ lin ex 96491 omi kCO 090 ISLU Zeit (9010.) 24~ adv~ 9~94 11VAV "~ o (wo mm 1~0t 1~ om 12VA Iffik ~A 11TAV 11VAT cr -11VAV ffimp, cm mm ~A W3A w~ owl i%a 4 ~ DIA alst .01A alm JIA JIm ila -Zof. VM.1 "m oj va¥ ~DIA d/A ~CIA iJ1,0 m d/m 1¥13~13 7116129U im 51 imil~ -0 MININ 31 9 SWJ~iol cm S~A 6 S31vw 31~ WW2-ctö c~looLl 0WOdd A~¥¥ OKHI vig~ - 57 - TM% RAILMAY PMM."T (PMG 8 oP 6) LOM 1790/ IT 973-ZM O"e"~ PATE Op RT4 C. VAN PAMT. WORSMPS AM HANCLI EmIlP~f IWIT 1 PINANCIAL NEW W/P W/P W/P W/P viol W/P *VIP W/P W/0/3 W/0/S lN~q. COST/ W/0/S YM WAO~ * W~ WM~æ NM "LD WAM AVAIL T~iME CYCLE, WA4M WACM WA^ WA~ON WA= AVAIL W~oi W~oi AVAIL W ('000) TDE R WETFALL REW. ('000 COST AVAIL AVAIL (1979 P) {00 ) 1979 P) 1901 400 6275 0.0 1.00 0.79 0.00 00 4795 13 6249 -26 0 35.4 0 192 53 6773 0.73 1.00 0.69 0.73 4944 4074 14 6747 -26 0 35.4 0 193 63N 0.72 0.99 0.67 0.72 4876 4877 13 0312 26 26 35.4 920 1934 6384 0.3 0.9 0.00 0.03 3274 4~41 14 0301 27 1 38.4 35 1"8 125 6412 0.91 0.97 0.90 0.08 8071 4080 10 7092 640 18 35 4 2168 198 638 0.90 0.96 0.-99 0.03 8722 4448 16 6922 504 0 35.4 0 1907 70 0340 0.09 0.96 0.8M 0.88 "643 4606 16 a12~ 486 0 3.4 0 1900 6340 0.OS 0.94 0.07 0.62 557; 4600 15 6763 423 0 35.4 0 1989 6340 0.87 0.9" 0."0 0. 5516 460 15 6701 361 0 35.4 0 1990 6340 0.06 0.92 0.05 0.49 5482 4006 15 663 290 0 35.4 0 1991 6340 0.85 0.91 0.84 0.82 s3~9 40 15 6575 235 0 35.4 0 1992 0340 0.84 0.90 0.83 0.82 320 460 15 6512 172 0 35.4 0 1993 -340 0.03 0."0 0.12 0.01 5262 40 15 6403 123 0 35.4 0 1994 6340 0.02 0.00 0.81 0.01 5199 40 14 0413 73 0 35.4 0 1995 6340 0.81 0.84 0.80 0.81 8138 40 14 6363 23 0 35.4 0 t996 6340 0.00 0.82 0.00 0.00 8072 40 14 6312 -26 0 35.4 0 1997 0340 0.00 0.00 0.00 0.00 5072 400 14 6340 0 0 35.4 0 1998 6340 0.80 0.00 0.60 0.80 5072 40 14 6340 0 0 35.4 0 1999 6340 0.80 0.0 0.0 0.0 8072 40 14 340 0 0 35.4 0 2000 6340 0.80 0.80 0.80 0.60 5072 406 14 0340 0 0 35.4 0 2001 6340 0.60 0.60 0.60 0.0 5072 400 14 6340 0 0 35.4 0 2002 6340 0.00 0.0 0.80 0.80 5072 406 14 6340 0 0 35.4 0 2003 6340 0.00 0.00 0.00 0.00 8072 400 14 6340 0 0 35.4 0 2004 6340 0.o0 0.60 0.60 0.0 8072 4006 14 6340 0 0 35.4 0 2005 6340 0.60 0.60 0.60 0.80 6072 40 14 6340 0 0 35.4 0 2006 6340 0.80 0.60 0.80 0.80 8072 460 14 6340 0 0 35.4 0 8~T 2 FINAILAL W/P W/0/3 W/P V/P W/P W/P wl/0s W/w INCE COST W/0/S INVEf PRMJET YEAR LOCO LOCO PLX 0 LDC 0 DC0CLD LOCL0M LoC0 CTNUT AVAIL AVAIL LOCO LOCO RED RE. LOC0 RE. COST SPARES ErC. ~rTS AVAIL AVAIL RER. (197 ('000K) ( 0) ('000 K) (979 P,.) (1979 P.) (199 P. 1981 0.72 0.72 0.72 75 82 82 0 641.8 0 0 0 1902 0.68 0.68 1.00 0.63 69 77 76 0 841.0 0 0 0 1903 0.67 0.67 1.00 0.61 69 84 8 0 841.6 0 -471 -149 1984 0.71 0.68 0.90 0.67 68 80 07 7 7 841.8 5893 -2265 -200 195 0.66 0.60 0.92 0.02 6 80 m0 7 0 841.8 0 -4601 2932 1900 0.63 0.60 0.86 0.59 68 80 64 4 841.6 0 -3071 -3071 1907 0.60 0.60 0.84 0."8 62 77 70 0 841.8 0 -1210 -1218 1900 0.80 0.59 0.80 0.80i 2 80 01 1 841.0 0 0 0 1989 0.60 0.58 0.70 0.57 62 07 09 2 641.8 0 0 0 1990 0.6 0.500.72 0.s0 62 06 e9 3 641.0 0 0 0 1991 0.60 0.60 0.68 0.68 62 OG o5 1 841.0 0 0 0 1992 0.00 0.00 0.64 0.89 62 64 64 - 0 841.8 0 0 0 1993 0.60 0.60 0.60 0.60 62 os 63a 0 841.8 0 0 0 1994 0.00 0.60 0.60 0.60 62 e2 82 0 641.8 0 - 0 0 1998 0.60 0.60 0.60 0.00 62 01 01 0 641.6 0 0 0 1996 0.60 0.60 0.00 0.00 62 80 60 0 - 841.0 - 0 0 .0 1997 0.60 0.00 0.00 0.00 62 80 80 0 641.8 0 0 0 - 199 0.60 0.60 0.00 0.60 62 00 80 0 841.8 0 0 . 0 1999 0.60 0.60 0.00 0.60 62 60 80 0 641.0 0 0 0 2000 0.60 0.00 0.60 0.00 62 80 80 0 641.8 0 0 0 2001 0.60 0.60 0.60 0.60 62 .80 0 0 641.6 0 0 0 2002 0.60 0.0 0.0 0.00 62 80 80 0 841.8 0 0 0 2003 0.60 0.00 0.00 0.00 62 80 80 0 841.6 0 0 0 2004 0.00 0.60 0.60 0.00 02 80 00 0 841.8 0 0 0 2000 0.60 0.00 0.00 0.00 62 80 00 0 841.8 0 0 0 2005 0.60 0.60 0.60 0.80 62 80 80 0 841.8 . 0 0 0 £RR 0.a8 - 58 - ANNEX 9 (p 6 of 6) ZAMBIA THIRD RAILWAY PROJECT LOAN 17901 CREDIT 793-ZAM ECONOMIC RATES OF RETURN APPREVIATIONS W/P - with project W/O/P - without project W/O/W&L - without new wagons and locomotives W/0/S = without addition of spare parts, workshop and handling equipment ASSUMPTIONS General: -- 1 truck can carry about 525,000 ton-km of traffic p.a. (appraisal estimate 700,000); its average life span is 5 years. -- All costs and benefits are expressed in Kwacha and 1979 base year prices. -- A conversion factor of 1.22 was applied to the values of foreign exchange components in 1979 prices. -- If no hiring of locomotives is possible, the effective constraint to ZR's capacity is the lower of the number of available wagons and the maximum number of wagons the available locomotive fleet can pull. Evaluation of Overall Project: -- In WO/P case, size, availability and productivity (cycle time and average load) of wagon and locomotive fleet would have stayed a their before-project level. Evaluation of Wagons and Locomotives alone: -- In WO/W&L case, productivity and availability of the old wagons and locomotives would have been as in W/P case. -- The lower age profile of the fleet with the addition of ftew W&L has a positive effect on availability. Evaluation of Spare Parts. Workshop and Handling Equipment: -- The supply of these components affects the availability only of the existing fleet, not that of the new W&L. -- W/O/S the availability is the weighted average of the availability of the new W&L and that of the old W&L without provision of spares and repair equipment. -- The effect of the lower age profile of the fleet on availability in the W/P case was filtered out in the evaluation of these components. - -- In the W/O/S case, size and productivity of the fleet as well as availability of the new W&L would have keen as in W/P case. -- Only 35% of the costs of the wagons and locomotives thit w#ould have been required in W/O/S case are counted as benefits, since they are needed for less than 1/3 of their life time. - 59 - ZAMBIA Annex 10 THIRD RAILWAY PROJECT LOAN 1799/CREDIT 973-ZAM CONSULTANTS EMPLOYED FOR MAJOR STUDIES AND LOCAL TRAINING Completion Consulting Fire Country Finarced By Mulobezi Line Study 1981 CANAC Consultants Canada CIDA Kafue River Bridge Study 1901 M/S Watermeyer, Legge, United Kingdom CIDA Plesold & Uhlmann Electrification Study 1962 Deconsult West Germany World Bank Group T*lecommunications Study 1982 Japan Electric Company Japan World Bank Group Workshop Productivity Study 198 RITES India World Bank Group Organization Study 1986 Coopers A Lybrand United Kingdom World Bank Group Manpower Development Study 1986 Coopers A Lybrand United Kingdom World Bank Group Management Information Study 1986 exp. Coopers & Lybrand United Kingdom World Bank Group Local Training 1967 RITES India World Bank Group CANAC Consultants Canada World Bank Group ZAMgIA THIR) RAILWAY PROJ¶C LOAN 1790/CREDIT 973-ZA gn Ch.Ir - Lt4.Rilys, Lt. 04mn.ging Dir~tlor D~.te, 'f T"ch- Derector 2icel of Treffic Drector of services nd Grkein Direct.r of Director of Frni ace Pie.nel ond DIrectfr of ".eurit.Pul ic Corp4r81e PlIng in@ationa and Intornal AdiL Chi. lat.O- Moderen Chief Purchasin Dmte Fine Chif Mhm.ninl S Civil Cang Men.gr Tr-ffie Chif Chief Copny Chif Corporae r00r .. nd T nd Process Manmgm Mmd'.I Person- - amier Chikf l Enoi pamg., Pangr Sne rer Trainng Socetary of Plenning Electrical c0nO- ing Office, nel ang mal Pele Internel neer' Meage Man.ger Iefety Manager Manmgr Maae aeger sle.y Relmtionm Audior Proj*cta tratgicPolce Engineer En.gneer c.1ions IIEducetion rject. Geneal anagr Gnera MeegerGenral anaer Cnerl Maage s. Wa.h.e CetreiNor0 19E3-06-07 17:11 Vfbl Frankfurt 'Main 49 69 74312944 01 - 61 - Attacnt I Page 1 of 2 cm ta f~ If lm>vrm~r.a.. TELEFAX ELT TIVIo.b41JLJIk~c!rrTee Attn. Mr . Grahan DonaldsoI Washington, D.C. 20433 United StatPs nf Americ3 0705.89 1 9 . vnn gwiceykr,,onk j To: Mr. Graham Denaldson, Chief Aqriculture, Infrastructurp and Human Reso)urces' DivisiLon nperAtionnWl:tone i From: Mr. v. Swievkr)wgki, Kredit-'alt ffb- rjnk ff t e- [L I] b 1 - 7ambij: Third Raylwav Project_ Pr'jrt P"rfr"nen Adi t P s*,ur Myvl ee With thanks we Le.ceived your draft report ui which we wnnjid liko- Oo ,.t -inl:n Týk i casens ' i which the oLecctives uf your Third Railway Prnect wit- 'ambia Ra.lways (ZR) could not be åtet suund ;uite famil, i to us. The economic downtarn of Zambia and its cI.sequences for the perfoLj:.ance of ZR and the trans- port :.tor in tetal are to deplore and as fa as the pro- 3