RETURN o RESOTRICTED
REPORsTS^ <5S-t FILCflD Report No. TO-389a ONE WEEK Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibilityfor its accuracyor completeness.The report may not be published nor may it be quoted as representing their views.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized
APPRAISAL OF A RAILWAY PROJECT
YUGOSLAVIA Public Disclosure Authorized
September Z6, 1963 Public Disclosure Authorized
Department of Technical Operations CURRENCY EQUIVALENTS
1 U.S. Dollar = Dinars 750 1,O000 Dinars = US $1. 33 Yugoslav Fiscal Year: January 1 to December 31 YUCOSLAVIA
APPRAISALOF A RAITLI-AYPROJECT
Table of Contents, Page S-UT11-21ARY
I. INTRODUCTIOIT 1
II. BACKGI7OTUD 1-3
A. General 1 B. Transport in Yugoslavia 1-2 C. Transport Coordiuation 3
III. TdT7TZAIP; TAY SYSTT7y h-h A. Or7anization,INanagement and Staff 4_5 B. hleNetTork C. Physical Properties 6-7 D. Traffic 7-8 E. Operation and Operating Ffficiency 8-9 F. Finances and Earnings 9-13 G. Gcncrl Imnc st.:t P1-n1s 13-14
IV. 7T-DP ROJ'CT 15-18
A. Description 15-16 B. Esti,Lated Cost 16-17 C. Ad--inistration and Execution 17-18
TT. -TImTTn& [rt Iv;G, AlD FINAiTC:S 19-20
-* .CO-~O;IICJITSTIFIC A TION 21-25
T T 11 CO CLSITOISAllorl) TC rS 2:Co5 List of Tables
1. Freight Traffic, by Hiode of Transport, 1952-1962
2. Passenger Traffic, by Ilode of Transport, 1952-1962
3. Investments in Transport, 1954-1962
4. Summary of Selected Operating Statistics, 1958-l962
5. Railway Network and Traffic Density, 1925-1962
6. hiotive Power and Rolling Stock, 1958-1962
7. Age of liotive Power and Rolling Stock, 1961
8. Freight Traffic by Major Commodities, 1950-1968
9. Consolidated Lncome Account of the Railway Transport Enterprises, Actual for 1958-1962 and Estimated 1963-1968
10. Composite Balance Sheet Data of the Railway Transport Enterprises, Actual for 1961 and 1962 and Estimnated for 1963-1968
11. Consolidated Pro,jected Cash Flow Data for the Railway Transport Enterprises, 1963-196d 12. Sarajevo-Ploce Line, Estimated Cost and Expenditure
13. Sarajevo-Ploce Line, Freight-Traffic by Commodities, 1958-1961
14. Sarajevo-Ploce Line, Present and Projected Traffic, 1958-2007
Chart: Organization of the Yugoslav Railways
Map : Yugoslavia, Railway System YUGOSLAVIk
APPRAISAL OF A RAILWAY PROJECT
S WAP3 i. The Government of Yugoslavia, through its Investment Bank, has asked the Bank for a loan to assist in financing the conversion of the Sarajevo-Ploce railway line (195 1cm) from a narrow to a standard gauge. ii. Construction of the new line began in 1959, and about one-quarter of the work has been completed. The quality of the completed work is satisfactory. iii. The total cost of the Project is estimated at US$96.2 million equivalent, including a reasonable allowance for contingencies. This estimate is based largely on quantities obtained from final plans and on actual unit costs of similar work currently under way. iv. The Federal Governmentwould be responsiblefor the executionof the Project. The preparationof plans, award of contractsandsupervision of constructionwould be delegated to the Community of Railway Enterprises in Sarajevo and other governmentsupervised organizationswhich are com- petent. v. The Governmenthas agreed to call for internationalcompetitive bidding on (a) a 28 km section of the line, which is the only section of potentialinterest to foreign contractors,and (b) signallingand tele- communicationsand electrificationequipment. Tender documents for inter- national conpetitivebidding for constructionwork and procurementof equip- ment have already been prepared and are generally satisfactory. This will be the first time that foreign firms would be invited to bid on railway con- struction in Yugoslavia. vi. The Project has a sound economic justification. The present line is a seriousbottleneck, so that a large volume of trafficmust now be carried circuitouslyan average additionaldistance of about 270 km. The economic rate of return on the investment from the eliminationof the bottle- neck and certain other benefits is about 12 percent. vii. The Railw-aytsearnings have generallybeen good, with an average operatingratio of 87 in the last three years. The Railway's sound financial condition is estimated to continue during the next five years. viii. The Project provides a suitablebasis for a Bank loan of US$35 million equivalent to the Yugoslav InvestmentBank, for a term of 25 years, including a 4-1/2 year period of grace. - 1 - I. IN4TRODUCTION
1. The Yugoslav Government, through its Investment Bank, has re- quested a loan to help finance the conversionof the Sarajevo-Plocerailway line from a narrow to a standard gauge. The Investment Bank is a Govern- ment agencyresponsible for financing a large share of major investments, and is authorized to contract foreign loans for this purpose.
2. This would be the first railway loan from the Bank to Yugoslavia, and the second loan in the transportfield. The project was submitted to the Bank in mid-1962. It raised a number of policy issues, including the need for internationalcompetitive bidding, which were discussedwith the Governmentby a Bank mission in December 1962. An appraisalmission visited the project in MIay1963. This report is based on the findings of the Bank's missions and on documents preparedby various Governmentagencies.
II. BACKGROUND
A. General
3. Yugoslavia,with an area of 257,000 sq. km, is about as large as the United Kingdom or the Federal Republic of Germany. Its population of about 19 million is, however, only one-third of these countries. Popula- tion growth has been slowing down and is now about 1.3 percent annually.
4. Yugoslavia'sgross national product was about Din 3,800 billion in 1962 (US.85.0billion equivalent),with a per capita. income of about US',235equivalent. The total real growth rate since 1954 has averaged a high 8 percent annually. With the progress of industrialization,the pro- portion of population in agriculture has dropped from the prewar three- quarters to less than one-half. The transport sector has accounted for about 6 percent of Yugoslavia'snational product in recent years.
5. Yugoslavia is a Federationof six Republicsand can be divided roughly into three main geographicregions: (a) the northeast, the granary of Yugoslavia, (b) a narrow coastal strip along the Adriatic Sea, and (c) the remainingmountainous two-thirdsof the country. Communication between these areas is difficulteven today.
B. Transportin Yugoslavia
6. Yugoslavia'smain domestic transportationsystem consists of rail- ways (see iMap),and to a lesser extent, of highways. Freight traffic on the inland waterways is of some significance,though most of it is inter- national transit traffic. Air transportis limited.
7. The country'smain routes of communicationshave been conditioned by its topography;they have followed the easy paths and have avoided the mountain barriers along the coast and in the south. As a result, the main routes run northwest to southeast along the Sava-DanubeValley. They serve - 2 - the rich agriculturalareas in these valleys and in the north. They also provide easy access to Hungary and the Balkan countries east of Yugoslavia and some connectionsto Austria,Ital:;-and Greece. But the mountain barrier blocks access to the coast, excent at a few gaps.
8. This serious geographicalhandicap was aggravatedby the different historical developmentof the western and northern part under Austro-Hun- garian rule, and of the southeasternpart under Ottoman-Turkishrule. Until 1918, Belgrade was actually a frontier town, with foreign territory just across the Danube and the Sava. The transport system of the former Austro- .Hungarian area, i.e. Slovenia, Croatia and Vojvodina was developed almost to ,!estern European standards, but directed toward Vienna and Budapest and oriented tomards politicaland military needs. Bosnia and Hercegovinawere opened up by a system.of narraw gauge (2-1/2t) railways and a few roads. In the south, developmentof the transportsystem in Serbia, Hiacedoniaand Nontenegro,did not really begin until the establishment of the Yugoslav State in 1919.
9. One aim of ~)ostTir._transport policy has been to open up these less developedregions and to provide direct access from the hinterland (around Sarajevo and Belgrade) to the sea by means of modern railways and roads. Another has been to open Yugoslavia to West European motor traffic lay means of the modern Central Hig'nway from Italy and Austria to Greece via Belgrade and another highway along the Adriatic coast from Rijeka to Bar and then inland to Skopje, where it will join the Central Highway.
10. The railw7ayis still the backbone of Yugoslavia'stransportation system, accounting for nearly 75 percent of freight trafficin 1962 (see Table 1). Highways and shipping split the remainder about equally. As in most countries, the proportioncarried on highways has increasedrapidly - from about 7 percent in 1957 to 15 percent in 1962. As for passenger traffic, the railway accounted for about 63 percent in 1962, interurbanbuses for about 22 percent, and passengercars for nearly 10 percent (see Table 2). '-uthere, too, the proportion carried on highways has doubled in recent years - from about 17 percent in 1957 to 33 percentby 1962. As for the future, it can be expected that the railway will continue to be the largest carrier, especia;ly for freight, but that r4hile&the absolute anount of tr~affic wTill grow, their relative share of trnffic wif1ll continue to decline, t'Thile the importance of highways will increase.
11. Yugoslavia has invested heavily in transportation and communications in recent years. This sector accounted for about 20 percent of gross capital expendituresin the seven-yearperiod from 1956 to 1962, compared to less than 15 percent in the preceding seven years. These amounts are not unreason- able for a country like Yugoslavia. While investmentsfor all modes of transporthave been increasingrapidly (see Table 3), the proportion spent for railways has declined from more than one-half in the 195h-56 period to less than one-third in 1962, w;hile the proportion spent on shipping has not changedmuch. However, the percentagespent for highway transport(including vehicles) has doubled from about 22 to nearly 50 percent during this period. - 3-
C. TransportCoordination
12. The need for transportcoordinatior. is relativelynew in Yugoslavia since modern highways are of recent origin and since some areas of the coun- try have only limited railway service. The main problem exists on the Cen- tral Highway which for most of its length runs parallel to a railway.
13. The general policiy of the Government is to make each form of trans- port commercially viable and competitive with other forms on fair terms. The implementation of this policy is impeded by two major weaknesses. First, railway rates are based on the traditionalsystem of classificationby con- modity 7roups and are unrelated to the particular costs of carrying the particular commodity. As a result, over-simplified criteria as to which types of traffic are best suited to railways and road tend to be used in con- siderin- future investment. These over-simplifiedcriteria, which may be justifiable when there are few truckcs and a general overloading of the trans- port system, will become more and more unreliable in the future.
14. Secondly, it would appear that both railways and highways are sub- sidized. Road operators pay little directly toward the cost of the roads, but have been making high profits. On the other hand, the interest paid by thle railway, on its capital involves a subsidy rate. It is difficult to say which has benefited most.
15. The Federal Government is, however, in a particularly good position to assure adequate coordination in the future and avoid the dilemmas con- frontingmany other countriesin this area. Firstly, it is fully aware of the problem and seermis to have adequate authlority. Secondly, the Secretariat for Transport and Co:mmunications is ably- staffed and well organized, not by mode of transport, but by function, such as irvestm.ent,tariffs, etc. Thirdly, the relatively large scale of the trucking enterprises helps to avoid some of the problems of excess competitionwhich arise wlhenone-truck entre- preneurs charge rates below their real costs. Fourthly, a relatively large proportion of railway-freight is of the bulk type and therfore less subject to highway competition. Finally, the Governmeent has already initiated some important steps, such as relating railway rates more closely to transport costs. It is the Government's intention to continue to follow the problem closely to achieve the most economic distribution of traffic among the various modes of transport.
III. TIE RAILI,Y SYSTD2i
A. Organization, Management and Staff
16. The organization of the Yugoslav Railways is unique in that it is based on the Yugoslav concept of workers' management,in which the workers participatein the management and generallyreceive a share of the profits. Ihe orgarlization has changed several times in recent years and is currently undergoing further changes in accordance with the Law on Organization of the Yugoslav Railways of MvIarch27, 1963. The Organization is shown on the attached chart. - 4 -
17. The Railways were until recently subdividedinto 29 Railway Trans- port Enterprisesand 39 auxiliary enterprises. 7owever, the number of Trans- port Erterprisesis being consolidatedto about 10-15; the number and scope of the auxiliary enterprises are also being changed.
18. The Railway TransportEnterprises operate the fixed assets in their area, and the motive power and rolling stock allocated to them. Their revenues arise from commercial traffic, services rendered to other Railway Transport Enterprises,and from rents, leases etc. In general, the Enterprises have to finance replacements,betterments and additions from their own funds.
19. Each of the Railway Tranisport Enterprises is managed by a Workers' Councl1, a M4anagement Board and a Director. The Workers' Council consists of 70 elected representatives of the workers, and meets every two months. The iananagementBoard consists of 10 representatives of the Workers' Council ald the Director,who cannot be the Chairman. The Director is appointedby the Executive Council of the Republic on the basis of merit. He is respon- sible for the railway operation to the Director of the Community of Railway- Enterprises (see para 21).
20. The auxiliary enterprisesare responsiblefor maintenanceand repair of tracks, for repair of locomotivesand rolling stock, for designing and supervisionof new construction,etc. They receive revenues for their services to the TransnortEnterprises. There are also a few enterprises,which receive outside earnings, such as the Railway Institute, which serves as an engineer- ing consultantfor enter;Drisesother than the Railway.
21. The RailwayEnterprises were until recently organizedinto six Cor(ilunitiesof Railway Enterprises for areas roughly correspondingto the Republics. However, the Communitiesin Skopje and Novi Sad have been dis- solved because after the consolidationof Railway TransportEnterprises, only one Enterprise each remains in these areas; these Enterprisesare representeddirectly on the Community of Yugoslav Railways (see para 23). The Com:;unitiesof Railway Enterprisessupervise and coordinateoperations in their region, distribute the freight car stock among the enterprisesfor day-to-day operations,act as a link with Republicanauthorities, and are responsiblefor projects includingmore than one Enterprise.
22. Each Community of Railway Enterprises is managed by a Yanagement Board and a Dire ctor. The Management Board consists of 30-40 representatives of the Railway Enterprisesin the area. The Director who is member but not chairman of the Doard is appointed by the Executive Council of the Republic on the recommendationof the Management Board and on the basis of merit.
2:3. All Railway Enterprises togetherand the four Communities of Rail- aayEnterprises form the Community of Yugoslav Railways. It has the same supervisingand coordinatingfunctions for Yugoslavia as a whole as the four Communitiesof Railway Enterpriseshave within their region. In addition, it is responsiblefor general policy matters such as rates and tariffs, technical standards,overall planiAng, international traffic and - 5 - time tables, and constructionof new lines affectingmore than one Republic.
24. The Community of Yugoslav Railways is managed by a Railway Assembly, a ManagementBoard and a General Director. The Railway Assembly consists of about 60 representativesof the Railway Enterprises and the Communities. It meets at least twice a year. The Management Board consists of 15 members, of which 14 are elected by the Assembly from amonz its members. The GeneralDirector is a member, but not chair- man, of the Assembly and the Board. He has the right to veto decisions of the Asserbly and tho Board, but his veto is subject to reviewiby the Federal Exec- utijc Council. The present General Diroctorwas formerly Governor of the Yugoslav National Bank. 25. The Railway Enterprisesannually prepare a plan for a certain number of years ahead. It includes future traffic and revenues, opera- tional performance, maintenance and repairs, and investments. The Conmimunities of Railway Enterprises compile these plans and report to the Comnunit,y of Yugoslav Railways, which prepare the overall plan. The general plan is subject to approval by the Federal Secretariat for Trans- port and Communications. Some other matters of national importance, such as rates and fares, major investments,etc. are also subject to Government approval, but the Government does not interfere in day-to-day operations.
26. The 3Railways' staff is ccnpetent and males a good impression, particularly in the field of engineering. The lianagement is capable and there are no deficiencies in the handling of traffic, operations and technical matters. However, the organization and administrative proce- dures are complex. For example, almost aiTy action in theory would require extensive consultation, but the cooperative spirit among the workers and thleir representation at the three levels of organization enables the Railway to operate efficiently.
27. The number of staff has fluctuated during the last 10 years, because some maintenance and workshop enterprises at one time separated fromi the Railways but some of these recently merged again. Table 4 shows that the efficiency of the staff has remained relatively constant in recent years.
B. The Network
28. The railway system in Yugoslavia consists of the original - 6 -
Serbian system and the parts taken over from the Austrian,Hungarian and later from the Italian Railways. Each of these left its own type of equipment and particular technical features.
29. After World War I, the less developed parts of the country were opened up by railways. About 1,200 km of new standard gauge lines were constructed,of which 580 km are in Serbia and 280 km in Macedonia. About 500 route-km of narrow gauge lines were constructed,mainly in Bosnia and Hercegovina.
30. Since the end of World War II, railway constructionhas been accelerated,mainly to provide transportationfor industrialand mining areas. Since 1946 about 1,150 route-km of standard gauge line have been constructed,of which 615 km are in Bosnia; the industrial centers in Bosnia were thus connected for the first time by standard gauge lines with the other parts of Yugoslavia. However, the procurement of motive power and rolling stock did not keep pace with the constructionof new lines (see para 35).
31. By the end of 1962, the Yugoslav Railways operated 9,174 route- km of standard gauge lines and 2,618 km of narrow gauge lines. 728 km of the standard gauge lines were double track (see Map and Table 5). About half of the narrow gauge lines are in Bosnia and Hercegovina. The capacity of the narrow gauge system in Hercegovinaand its extensionto l-ontenegrois limited by the capacity of the 14 km rack railway section between Bradina and Konjic (see Map), which will be bypassed by the new standard gauge line from Sarajevo to Ploce.
32. In 1945 the electrifiedlines from Trieste to Postojna and from Rijeka to Pivka were taken over from the Italian State Railways. During recent years electric traction has been extended to Ljubljana and from Fijika to Ogulin towards Zagreb. The total of electrifiedlines wias310 km at the end of 1962. They are heavy duty lines across the Dinara mountain range.
C. Physical Properties
33. Track, structures and buildingsare well maintained. About 30 percent of the standardgauge tracks are laid with rails heavier than 45 kg per m. The main line Ljubljana-Zagreb-Belgrade-Nisis being laid with 49 kg rails; this is almost cormpleted.Ballasting is good. Prestressedconcrete ties have recently been used.
34. The signallingsystem is generally adequate. It varies from - very modern and efficientplants in Sarajevo and Ljubljana,for instance, to very old plants due for modernization.
35. The motive power and rolling stock (see Table 6) is generally well maintained,but a substantialportion is far beyond its useful economic life of 35 years (see Table 7). The percentage of locomotives and rolling stock in excess of 35 years is shown below: -7-
Standard Gauge Narrow Gauge
Steam locomotives 65,, 77%
Passenger cars 71% 86%
Freight cars 63% 96%
The problem is aggravatedby the fact that the stock consists of many different types, which makes maintenanceand repair expensive.
36. The Railway has already started the urgent modernizationof its motive power by purchasingdiesel locomotivesmainly in the U.S. through U.S. Aid program, and diesel railbuses from domestic producers. It intends to increase its hauling capacity by further dieselizationand by electrifica- tion of some main lines. The capacity of the passengercar stock is generallyadequate but that of freight cars is insuffici-nt. Procurement of rollin- stock mainly for replacexentis planned in t-henext years.
37. Maintenanceand repair facilities for diesel locomotivesand railcars are adequate. In general heavy repairs of steam locomotives and rolling stock are carried out on a contract basis by outside enter- prises. hlostof the Lailway'sown facilitiesfor maintenanceand medium repairs are not modern and some are even obsolete.
D. Traffic
38. The Railway'sfreight traffic increasedby about 80 per cent in the last ten rears (see Table 1). The uLicl slower growtlhin recent years is due to a slow-downin economic activity generallyand especiallyto poor agriculturalcrops which in turn adversely affected the processing industries. However, these are regarded as temporaryfactors and the indicationssince mid-1962 are that the earlier growth is now continuing. The bulk of the railway traffic consists of minerals and heavy materials (see T-able8). Building materials, ore and lumber account for about one- third of the total traffic, and coal for nearly another third.
39. Passenger traffic has more than doubled in the last ten years, but in the last three years has actually declined slightly. The indica- tions for 1963 are, as in the case of freight, that this decline was tern.poraryand that traffic is increasingagain. Passenger traffic accounts for about a quarter of the Railway'srevenues, but for one-half of the train-im. Lo. Ihe narrow gauge system accounted in 1961 for nearly 9 per cent of both passenger-kmand ton-km (see Table 4). The traffic density of the narrow gauge system is about one-thirdof the traffic density of the standard gauge system (see Table 5).
41. The Government is currently developing a new 7-year plan for the 1964-70 period which has not yet been finalized.The present study is based _8- on the Railwayts own forecast,shown in Table 8. It assumes an annual increase of about 4.5 percent between 1962 and 1968, and thus reflects the slower growth in recent years. Passengertraffic is estimatedby the Railway to increase by only about 1.5 percent annually. These estimates are reasonably conservative.
E. Operationand OperatingEfficiency
42. The Railway's operating efficiencyis good and compares favor. ably wiiththat of other railways in Europe. It has remained at about the same satisfactorylevel since 1958 (see Table 4).
43. The maximum speed on standard gauge lines is 120 km per hour; on narrow gauge lines it is only 40 km. The fastest average speeds, including stops, are 77 km per hour on the standard gauge Belgrade- Ljubljana section, and 27 km on the narrow gauge Sarajevo-Ploce section. The average speed of freight trains is 17 km per hour on standard gauge and 13 km per hour on narrow gauge lines.
44. The average availabilityof locomotivesand rolling stock in 1962 is satisfactory,especially considering their age (see also Table 6):
Average Availability1962 in percent
Standard Narrow Gauge Gauge
Locomotives, Steam 94 83 Diesel 91 - Electric 90 - Diesel Railcars 81 80 PassengerCars 92 90 Freight Cars 92 94
45. The utilizationof diesel and electric locomotivesin 1962 was 377 kn and 433 km respectivelyper engine day available,which is high. The utilization of steam locomotiveswas 169 km per engine day available; it has declined slightly since 1960 because of the shift to diesel and electric traction. Utilizationand turnaroundtime of the freight car stock is also satisfactory.
46. One special factor hamperingthe efficiency of steam traction in Yugoslavia is the poor quality of the domestic lignite and the absence of hard coal, so that several types of lignite have to be mixed with imported hard coal on the locomotive tender to maintain sufficient steam generation. This is an additional reason for dieselizationand electrifi- cation. In 1962 about 28 percent of the gross ton-km on standard gauge lines were hauled by diesel traction and about 4 percent by electric traction. 9 -
The Railway has substitutedrail buses for several passenger steam trains on stanldardgauge branch lines with good economic result and is going to expand this. On the narrow gauge lines, only steam locomotivesare operated, besides a few prewar diesel railcar sets on the Sarajevo-Ploceline.
F. Finances and Earnings
1. Dudgets, Accounting and Auditing
47. The Communitiesof Railway Enterprisesand the individual Railway Enterprisesjointly prepare in advance an annual working plan for each Enterprise. The plan consists of an estimate of the volume of traf- fic demand and the financialmeans necessary to meet it, in terms of operat- ing and capital budget requirements. These individualbudgets are prepared initiallyby the Railway Enterprises,and are reviewed at the regional and national levels and ultimately by the Central Government. The budgets must be consistentwith the Goverrments'overall economic plan. The Railway's total budget must be approved by the Community of Yugoslav Railways and the Federal Secretariatfor Transport and Communication.
418. Accounting is performedprincipally at the Enterpriselevel, in accordancewith a uniform system prescribedby the Governmentfor all coEmercial enterprises. The system is applied in part by the Raillways,in accorda.cewith regulationsof the Cormmunityof Yugoslav Railways. Of the ten classes of accounts,eight are applicable to the railways aridcorres- pond generally to property, current asset, current liability,stores or inventory, expenses,revenues, surplus and business-fundaccounts.
49. Property was first recorded at original cost, to the extent incurred. Howi,ever, in 1954 the Railways made an evaluation of all fixed assets then in u-se and substitutedvalue for costs in their accounts. A revaluationwas made in 1957 and the recorded value of fixed assets was written up by about 17 percent, on average. These changes have increased depreciationexpense and the "business fund contribution"or "interest"consisting of payments to Governmentamounting to 2 percent of the net value of fixed assets, and resulted in lower rates of return and less favorable operatingratios than otherwisewould have been obtained. Each Enterprise has its own stores and related accounts. Actual prices are recorded. Withdrawals are on the basis of average prices. Inventoryis generally taken annually. Expenses include ordinary maintenarnce on a cash basis and investnrent maintenance on an accrual or annual-estimate basis, which is equivalent to major rehabilitation or renewals.
50. Wages and salaries include the basic monthly amounts as well as the annual year-end distributionof bonuses; both of these items collective- ly include basic social insurancewhich is generally 22 percent of net salary; incormetaxes, l percent; housing payments to the corymunity,4 per- cent; and reduced vacation fares, l.5 percent. Revenues are the sum assigned to each Enterprise by the Conmanity of Yugoslav Railways (see para 53).
51. Accounting procedures customaryin the West are not always followed in Yugoslavia. The principaldeviations are the effect of: a) the deoentral- ized organization and the resulting multiplicity of enterprises; b) procedures for the distributionof income among the enterprises;and c) the final alloca- tion of net income to additional wages and salaries, welfare pro;jects and the enterprises' business fund. - 10 _
52. In several instances,involving transactionsbetween the I?zil,,ay TransportEnterprises, expenses of one enterpriseare the revenues of another with the result that both recorded expenses and revenues reflect some double accounting and are not truly consolidateddata. Additionally, business trans- actions between the main Transport Enterprises and the auxiliary enterprises reduce composite net revenues of the former, inasmuch as, in many cases rolling stock repair, track maintenanceand other expenses would be lower by the amount of profit gained by the auxiliaryenterprises.
53. Each transport enterprisecollects its own receipts,but a special division .-f the Railway'sorganization at the national level, Control of Receipts,assigns total revenues collectedby all enterprises,first to the organizationsat the Republic level and in turn to each railway enterprise on the basis of a complicatedformula designed to permit each enterpriseto cover its terminal costs (such as loading and unloading),and to distribute the remainderin considerationof i) work performed (freight and passenger kilometers);and ii) train-operatingconditions equated for each enterprise in accordancewith agreed factors calculatedto equalize the opportunityto achieve reasonablefinancial results. The assignment of total receipts to individualenterprises has no effect on net income when consideringonly the overall results of all Railway 1ransport Enterprises. However, the in- ternal transactionsrequired by the assignment of revenues affects the volume of such accounts as current assets and liabilities,in the balance sheet (see Table 10).
54e Auditing is performed by a departmentof the National Bank gen- erally referred to as the Service of Social Accounting. This department receives quarterly reports of the Railways as of all economic enterprises in Yugoslavia;in addition it audits the accounts of each enterpriseat least once a year. It issues a certificatethat the accounts are properly kept.
2. Rates and Fares
55. Rates and fares are establishedon uniform bases by the Community of Yugoslav Railways,after discussionwith the Secretaryof Transport and after approval by the Federal Parliament.
Freight Rates
56. Freight rates consist of: i) carload class rates related to ten classes with adequate system of distance blocks; ii) less-than-carload rates. Specific carload rates exist for such commoditiesas lignite, fer- tilizer, bauxite ore, iron ore, coal, firewood,fruits, vegetablesand sea- foods. About 95 percent of freight traffic moves at carload class rates.
57. The freight rate structurewas substantivelyrevised in April 1961. Co~nmoditiesare assigned to one of ten groups instead of twelve as formerly,principally on the bases of value of the commodityand its ability to pay. The freight rates have been made to bear a closer - 11 -
relation to costs by a reductionof the spread between the lowest and high- est class, from 1 to 6 to 1 to 2.7. Freight revenues in 1962 equaled Din 10.3 per net ton/km, (equivalentto about 2.2 cents per net ton-mile)and may be comparedwith 1962 revenues of U.S.1.35 cents per net ton-mile of Class 1, line-haulrailroads in the United States since 1961. The relation- ship between the various principal freight rates is now more reasonable, except for specific low rates on lignite and fertilizers,for which the Railway received in 1962 direct Government reimbursementequalling Din 2.5 billion ( 'OS43.3 million). Freight rates, however, should in time be brought into ev n closer relation to costs.
PassengerFares
58. Passenger fares consist of second and first class,with a relation- ship of 1 to 1.5. They increase in proportion to the increase in distance, at the rate of Din 5.2 per km up to 100 kilometers; they increase less rapidly from 101 to 500 km with the rate decliningfrom 5.2 to Din 4 per km, and again become linear beyond 500 kilometers at Din 4 per mn.
59. Reduced fares are in effect for transportationof children,week- end return trips, group journeys,invalids, students, school excursions, annualleaveand commutationtickets. About 48 percent of all passengersare carried at reduced fares. The federal budget provides a subsidy for fares reduced below a compensatory level. In 1962, the Govemrment reimbursement amounted to about Din 17.5 billion (US423.3 million equivalent). Including this payment, passengerrevenues equaled Din 5.2 per passenger/kmin 1962. This is equivalentto about US 1.1 cents per passenger-mileand may be comparedwith passenger revenues (inclucingcomnruter traffic) of Class 1 line-haulrailroads in the United States amountingin 1962 to about 3.0 cents per passenger-mile.
60. It would appear that freight rates reflect the relativelyshort hauls involved (about 235 km) and that passenger fares are relativelylow. However, in the aggregate, the general level of chargesis adequate,as dis- closed by the following earnings analysis.
3. Earnings
61. The income accounts have been rearranged to show the Railwayts earnings position for 1958 to 1962 (in dinars billions) (see also Table 9>
Interest Net Taxes less Operating Operating Operating Miscellaneous Net Year Revenues Expenses Revenues Income Inicome
1958 130.8 120.5 10.3 - 1.4 8.9 1959 143.9 137.6 6.3 + 14.0 20.3 1960 191.1 160.0 31.1 - 4.6 26.5 1961 195.3 169.9 25.4 - 8.4 17.0 1962 193.5 173.1 20.4 - 9.9 10.5
Note: Operating expenses include depreciationand renewals charges, but exclude interest and contributicnto Government referred to herein as taxes. _ 12 -
62, For 1958 to 1960, the above data pertain to the six Transport Enterprises which made up the Railway during that period; because sufficient data were not available, the elimination of duplicated revenues and expenses has not been possible, Prior to 1958,considerable maintenance expense was included in depreciation. This change in procedure in 1958 substantially increased maintenance or renewals expense and would have materially decreased depreciation, if fixed assets had not been generallywritten up in 1957. However,an undisclosed but significant proportion of maintenanceor renewalsrepresents additions and betterments. hTerethese latter amounts not chargedimmediately to expensesbut capitalized and depreciatedduring the economiclife of the relatedassets, the operating results would have been recorded on a more realistic and more favorablebasis.
63. In 1961 and 1962,there were 29 TransportEnterprises and sufficient data are available to eliminate most duplicated revenues and expenses. As a result, the two periods 1958-1962and 1961-1962 are not strictlycomparable, In any event,the data submittedare sufficiently significant to support the conslusion that earningshave generally been good, as shown by the ratios below. The lower return in 1962 resulted from a decline in traffic principally because of the poor crop,
1960 1961 1962 Operating ratios 84 87 89 Times interestearned n,a. 32 9 Debt servicecoverage n.a. 10 11 Returnon net operat- ing fixed assets 6.4 5.1 3.4 4. Depreciation
64. Straight-linedepreciation is relatedto estimatesof service lives for virtually all fixed assets including track, bridges, and tunnels. Depreciationrates are 14 percent for temporary wooden bridges, 5 percent for locomotivesand rollingstock, 105 percent for track,and 1 percent for roadsand water supplyfacilities. Depreciation policy is reasonable,
5. Taxes
65. Taxes are fixedby federalregulations for all economicenterprises. includingthe Railways. Uihetherdesignated taxes or obligatorycontributions, those wqhichapply to the Railwaysare listedbelow: i) TransportService Tax consistingof le5 percentof gross revenues,payable to the Federalgeneral fund.
ii) Contributionfrom net income,generally 7 percentof gross revenues, However,the Rgilways were exempt from this tax in 1961 and 1962 and again exemptin 1963. In 1960,about Din 12 billionwas paid to the InvestmentFund of what is now the Conmmnityof YugoslavRailways, - 13 It is expected that this tax will be replaced in the new Railway Law of 1963 by contributions of about 10 percent of depreciation charges. iii) Business fund contribution, sometimes referred to as "interest." This tax consists of an annual payment to the Federal Government amounting to 2 percent of the net value of fixed assets not acquired by means of outstanding loans. The contributions are used for general railway development and distributed as grants to Railway Enter- prises where needed. Beginning 1963, distributions will be in the form of interest-bearing repayable loans.
6. Finances
66, Balance sheet data as of December 31, 1961 and 1962 are shown in Table 10. i) CurrentAssets and Liabilities,The ratiosof current assetsto currentliabilities in 1961 and 1762 were 1.5 to 1, and the liquidratios were 1.1 to 1, These ratiosare satisfactoryand would be more favorable if certain duplications betweenenterprises on both internal credit balances and internal obligations were eliminated. This has not been done as the necessarydata are not available.
ii) FixedAssets. Fixed assetsare recordedat cost and were reevaluatedin 19 7. They are separatedas betweenoperating and other assets, in orderto permitthe returnto be calculatedas a measureof operating plant productivity, iii) Debt, Long-term debt has been incurred to provide vorking capital, operating fixed assets and social welfare property such as dwellings, Relatively little debt is outstanding. About one-half of outstanding debt on December 1, 1962, had been borrowed from the Govern- ment's General Fund of Investments and the balance from various banks. Maturitiesrange from 2 to 50 years and averageabout 25 years, Interest rates rangefrom 1 to 4.5percent for Governmentborrowings and from ' 1 to 8 percentfor bank loans, The debt-equityratios were very favor- able in 1961 and 1962, 7/93 and 8/92, respectively.The financesof the Railway are generallysatisfactory 0 G. GeneralInvestment Plan
67. The previous1961-65 Investment Plan for the Railwaywas part of the GeneralDevelopment Plan for Yugoslavia.The plans were cancelled in 1962, because of changes of priorities and shortage of Pv2ija'a1e funds, An interim plan wvasenacted for 1963 and a new 7-year plan for l96411970 is being prepared, The Plan aims, as the previous one did, (1) to increase the Railwayts carrying capacity, (ti) to modernize 6pcrations and aqTipmcnt,n4and (iii)to construictidditionol rnil,`ay lin s for the a--v oj.r.A- t r eds o' s00.1 parts of ths country. 14
68, No detailed information on the Plan was available at the time of the appraisalmission, but the Railway estimates capital investments in 1963-68tentatively at Din 427 billion(see Table11), which include: a. Replacementof antiquatedlocomotives and rollingstock by procurement of 100 diesel locomotives, 1,000 passenger cars and 14,000 freight cars. This procurement would improve the rolling stock situation substantially, but is not sufficient to replace completely even the stock manufactured before 1919 (see Table 7). b, Electrification of the lines from L.jub1Jana to Jesenice and from Ogulin to Zagreb and procurement of 80 electric locomotives, Whether these lines are to be electrified with 3,000 volts D.C0, the same as adjacent lines, or with 25,000 volts 50 cycles AOC.,as planned for the mainline from Ljubljana to Belgrade and for the Sarajevo- Ploce line, has not yet been decided.
cO Improvement of the signalling system on the mainlines.
d, Construction of new lines in order to connect the Adriatic ports with the hinterland:
i) the Sarajevo-Ploce line which is the subject of the present Loan application and is discussed in detail below;
ii) the Zadar-Knin line which is about 60% completed; and iii) further sections of the Belgrade-Bar line and conversion of the narrowgauge line from Niksicto Titogradto standard gauge,
e, Construct-.on of by-pass lines for; freight trafPic and of marshalling yards at Belgradeand Zagreb,
69r, Additional projects which are under study but may have to be past- poned to a later period include electrification of the mainline LjublJana. Belgrade and beyond, and construction of new lines and conversion of narrow gauge lines to standard gauge in connection with industrial projects in Serbia, Bosnia and Macedonia, such as ValjevoZvornikTuzla.
IV. THE PROJECT A. Description
70% The purpose of the Project is to expedite the completion of a 195 km standardgauge single track line from Sarajevo to Ploce,which is to replace the existing0,76 m (-2-1/21) gauge line.
71. The old line was constructed in 1891 mainlyfor militarypurposes 0 With the construction of the standard gauge lines from Vrpolje to Sarajevo and from Banjia Luka to Doboj in 1947 and with the development of Industries in Bosnia and Montenegro, the Sarajevo,Ploce line has become increasingly - 15 - important for the transport of raw materials and industrialproducts. The traffic on the line reached its annual capacity limit of one million tons several years ago.
72. The narrow gauge line was built at low standardswith minimum curve radiuses of 60 m and maximum gradientsof 25 per thousand. There is a 14 km rack section at the southern descent from the Ivan mountain range with a 63 per thousand gradient between Bradina and Konjic. This section impedes the operation of the wholeline,because it limits speed and train loads. The maximum one-way capacity of the rack section is 24 freight trains of 10 cars each. Another impedimentis the need for reloading from the standard to the narrow gauge line and vice versa at the Alipasin Most freight yard near Sarajevo.
73. The existing line is a serious bottleneck in the railway trans- portation system. For this reason all shipments over this line require prior special authorization by the transportation section of the Community of Yugoslav Railways in Belgrade. Export and import goods, which exceed the transport capacity of the Sarajevo-Ploce line have to be carried over circuitous routes to Rijeka, Sibenik or Split. The Project will shift traffic from these circuitous routes and ports to the Project line and the Port of Ploce. This will make capacity available elsewhere,such as at the Ports of Rijeka and Split where the Railways presently cannot fully meet demands for service.
74. The new single track standard gauge line is close to the narrow gauge line, but avoids the 14 km rack section by a 25 km by-pass. The minimum radiuses are 250 m on the by-pass, 300 m in mountainous terrain and otherwise400 m. The maximum gradients are 24 per thousand on the by-pass and otherwise15 per thousand. Tracks will be laid with 49 kg rails. The maximum axleload is 22 tons and the maximum speed on the by- pass is 65 km per hour; otherwiseit is up to 120 km per hour. The line will be equipped with Central Traffic Control (C.T.C.). The distance between crossing stations is generally 8 to 10 km. Some of the stations will not be manned and will be operated by remote control. The line will have electric traction with 25,C00 volts A.C. of 50 cycles. Electri- fication is justifiedin view of
a) the traffic density which will reach about 35,000 gross ton-km per km of line per day in 1968.
b) power consumptionwhich would be about 450,000 kwh per km/year. This substantiallyexceeds the breakeven point of 300,000 kwh above which electric traction generally costs less than diesel traction.
c) the availabilityof cheap electric power from near- by hydroelectricplants.
d) higher speed in gradients and higher acceleration.
75. The plans for the Sarajevo-Ploceline were designed by the Institutefor Project Studies and Supervisionof Constructionat the Cownunity of Yugoslav Railways. The alignment is based on an elaborate geological survey and studies of 10 variants. The design standard is good. About 40 km of line, out of 195, are tunnels. - 16 -
76. The line originatesat the new station at Sarajevo,which was built ten years ago. It ends close to the port of Ploce, which is being remodelled and enlarged. The remodelling of the port and the installation of railway facilities are not part of the railwiay Project. The only inter- mediate station on the line with substantialtraffic is Mostar, important for fruit and wine production.
77. A new junction with the narrow gauge lines to Dubrcvnik, Zelenika and Niksic-Titograd is planned at Capljina, where in the future transhipment will take place and where there will also be facilities for the maintenance and repair of narrow gauge vehicles.
78. Constructi-onof the new Sarajevo-Ploceline started in 1959. Embanlakents,tunnels, bridges and other structuresare almost completed on about 60 km of the northern part of the line, includingthe difficult by-pass between Bradina and Konjic. Earthworks for the station at Ploce are also completed. An additional 24 km of the northern part has been uLnderconstruction since 1962 and will be finished by 1964.
79. Completionof the Project will also require the following con- struction: (a) the connectionof the new line with the stationat Sarajevo (about 12 km); (b) the southern part from Grabovica to Ploce (about 98 km); and (c) alterationsof two tunnels for electric traction clearance. Com- pletion of all constructionis scheduledfor October 1966 and the start of operations for January 1967.
D. Estimated Cost
80. The total estimated cost of the new line is Din 72.2 billior., or US$96.2 million equivalent (see Table 12). The estimate includes only stationaryinstallations and excludes locomotivesand rolling stock. The new electric locomotiveswould replace antiquated steam locomotivesand will be financed from depreciationfunds. Part of the rolling stock would become availabledue to the reduced transportneeds on other lines (see para 111), and the remainderwould replace overage narrow gauge stock and will therefore be financed from depreciationfunds of the Enterprises.
81. It is not possible to determine with any precision the foreign exchange cost of the Project because the results of internationalcompetitive bidding are unpredictable. It would appear, however, that it will not exceed 10 percent of the worlcsstill to be carried out. The foreign exchange costs would inc.Ludecontrol equipmentfor signallingand electrificationwhich is not produced in Yugoslavia; other signallingand electrificationequipment if foreign manufacturersare successfulbidders; and such components of the cost of constructioncontracts as may require foreign exchangepayments. - 17 -
82. The estimate was prepared by the Institute for Project Studies and Supervision of Construction. The estimate appears reliable, because (a) the quantitiesare based on final plans prepared from detailed surveys; (b) unit prices are based on the experience from the sections of the line which have recently been completed; and (c) the engineers of the Institute and of the Community of Railway Enterprises in Sarajevo are highly com- petent. In addition to the Railwayts estimate, an allowance of 10 per cent for contingencieswas added for work performed after January1, 1963.
83. The estimatedschedule of expendituresfor the line is as follows:
EXPEIDITURES US$ MIILION EQUIVALENT
Before January 1, 1963 22 4 January1 - December31,1963 8.8 1964 23.2 1965 27.9 1966 713.9
Subtotal after January 1, 1963. 73.8
Grand Total 96.2
Out of the total of [email protected] million equivaJ.nt for the total cost of the neT line about $73.8 mailion is ircurreA a r January 1, 1&6 3.
C. Administration and Execution
84. The Community of Railway Enterprises in Sarajevo acts as "tinvestor", i.e. it acts on behalf of the Federal Secretariatfor Transport and Com- municationfor the Sarajevo-PloceProject. The organizationand staff of the investor is competent to execute the necessaryconstruction from both the administrativeand technicalpoints of view.
85. Final plans and specificationsare completedfor earthwork, structures,signalling and telecommunications.They are 80 percent com- pleted for bridges, station yards and buildings. The remainder, including the fiiial plan for electrification, will be completed at the latest by July i, 1964.
86e Earthwrorks,striuctures and tunnelsare almost completed between Blazuj and Ostrozac. Contracts for the section Ostrozac-Grabovica were awardedin 1962. Tenders for the section Grabovica-Rastani wll be called for by October 1963 and for the remaining sections from Rastani to Ploce early in 1964. Up to nou contractswere awardedon the basis of competitive bidding among domestic contractors only. - 18 -
87. The Yugoslav Goverrment and the Railway have agreed to call for internationalcompetitive biddinrg for a 28 km section, from Grabovica to Rastani, which is consideredof potential interest for foreign con- tractors. The works include a 3.2 laatunnel and nine shorterones, one major and several minor bridges and other structures. The estimated cost of constructionworks subject to internationalcompetitive bidding would be Din 4.8 billion (USZ6.4million equivalent),representing about 30 percent of the cost of earthworksand structuresof the sections not yet contracted. Constructionof buildings and alteration of existing tunnels are not regarded as suitable for foreign contractors,since the works are generally too small.
88. The other sections do not appear suitable for international competitive bidding because of extensive interference with the existing line and railwrayoperations; the section through the city of Mostar includes local technical difficulties in the urban area (existing buildings, public utility lines, etc.) Tracks on the whole line will be laid by the Railway's own forces with rails rolled in Yugoslavia.
89. Supply of signalling,Central Traffic Control (C.T.C.)and tele- communication equipment, and part of its installation,would be suitable for international competitive bidding. The Railway will ask foreign sig- nalling manufacturers for proposals for a modern C.T.C. system and will accept internationalcompetitive bidding. The Railway will also call for bids for electrificationequipment from both foreign and domestic manufac- turers.
90. Tender documents for internationalcompetitive bidding for earth- work and structures have been reviewed by the Bank and are generally satis- factory.
91. The estimate of wqorkssubject to internationalcompetitive bidding (excludinr,contingencies) is about:
US$ million equivalent
Construction 6.4 Signalling,C.T.C. and Telecommunication 3.2 Electrificationequipment 2.5 12-1 This is about one-sixth of the expenditure until completion of the line. - 19 -
V, FITURE ERMDIGS A1lDFIl2 .NCES
92. The Project will shift traffic from circuitousroutes and from the ports of Rijeka, Sibenik and Split to a more direct route to the port of Ploce. The loss of ton-kilometersand revenue will be imnnediatelyoffset by other traffic and earnings,inasmuch as the railways are now not able to meet the demand for service, particularlyto and from the ports of Rijeka and Sibenik where rail and port facilitiesare con- gested. Traffic and financialforecasts confirm the conclusionthat the Project will niotadversely affect the future finances of the railways.
93. Estimated earnings in 1963-68, based on the traffic forecast dis- cussed in paragraph 41, are shown in Table 9. The earnings forecast pre_ sented below is based on current tariffs and wage rates; it assumes no increase in wages not offset by increasedproductivity or tariffs.
Din billion
Net Interest Operating Operating Operating Taxes less Net Year Revenues Expenses Revenues Miscellaneous Income
______In come
1963 209.7 182.6 27.1 15.2 11.9 1964 216.0 184.4 31.6 17.0 14.6 1965 222.3 185.8 36.5 19.5 17.0 1966 229.8 187.9 41.9 21.2 20,7 1967 238,2 190.1 48.1 23.5 24.6 1968 247.0 192.3 54.7 25.3 29.4
Note: Operating expenses include depreciation and renewals charges but exclude interest and contributionsto Governmentreferred to herein as taxes.
94. Operating ratios would improve each year from 87 in 1963 to 78 in 1968. Times-interest-earned would range from 7 in 1965 to 10 in 1968. Debt service coverage will decline from 8 times in 1963 to 4 in 1964, and remain at about 5 thereafter. The rate of return on net operatingfixed assets would rise each year from 4.4 percent in 1963 to 6.9 per cent in 1968. The future earnings position will be generallyadequate. 20 -
95. The Railwayst cash needs and sources of funds in 1963-68 (see also Table 11), are summarizedbelow:
Dinars (billion) Casha Requirements
Capital investments - rails 426.8 Capital investments- social standard 43.9 Debt service: Interest 16.6 Amortization 41.6
Total cash requirements 528.9
Cash Available
INetincome before interest 134.8 Depreciation 167.4 Total internally generated 302.2 Publicfunds - grants 87.0 Proposed =PJ funds 26.3 11o-Lornizationfund 26.7 Genoral Inv_stmcnt Fund Credits 69.0 Other loans 26.3
Total cash available 537.5
Increase in cash position 8.6
Internal cash generation of Din 302.2 billion would exceed debt-servicere- quirements of Din 58.2 billion by a very substantialDin 244 billion but would be insufficientto cover the proposed capital investmentsof Din 470.7 billion. The deficiency of Din 226.7 billion would be met by Government grants of Din 87 billion and Governmentloans of Din 95.7 billion from the 'IodernizationFund and the General InvestUent Fund. This would leave Din 44.0billion to be obtained from other borrowings. A Bank loan of TJSIq35million equivalentwould cover Din 26.3 billion. nTe Railway would obtain the balance of Din 17.7 billion, plus Din 8.6 billion for improvement of working capital, from domestic banks. During the six-year period, 57 percent of all cash requirementswould be met from internally generated funds.
96. Long-ternidebt would increase from Din 55.8 billion on December 31, 1262, to Din 106.2 billion on December 31, 1968 (see Table 10). Equity during the six-year period would rise from Din 651 billion to Din 832 bIllion. The debt-equityratio would deterioratesomewhat from 8/92 in 1962 to 11/89 in 1968 but still remain at a very favorable level. - 21 -
VI. ECONOIIICJUSTIFTCATION A. Genera1 97. The Banc's 1961 report on "Transport in Yugoslavia" (No. EA-112a, A_nnexIII) concludedthat the completionof the Sarajevo-Ploceline "will obviously be of the greatest importanceto the Yugoslav economy, and the sooner it is completedthe better". 98. The general area of influenceof the Sarajevo-Ploce line includes most of centralYugoslavia. More specifically, its economic importance arises from the fact that it links the importantindustrial centers of Bosnia directly with the sea, and provides the only rail access to Dubrovnik, the most imnortant tourist attractionon the Adriatic, Hercegovina,which has some agricultural development,Niksic, with its new steel mills, and Titograd, the capital of Montenegro. Because the capacity of the present line is limited to about 1 million tons, whereas nearly 4 million tons would use the line in the absence of the capacity limitation (see paragraph 107), it is a serious bottleneck in the free -*lowof traffic.
99. Industry and mining in the Bosnia region around Sarajevo have expanded greatly since World War II and include steel mills, coking and chemical plants, fertilizer,textile, paper and tcbacco fectoriea,coal,iron ore and bauxite mines and others. The developmentof the region required the constructionor recon- structionof most of the railvay lines in the area, includingthe Samac-Doboj- Zenica-Sarajevoline; the Sarajevo-Ploceline is in fact an extension of the latter, and its conversionto standard gauge will not only increase its capacity,but also avoid the need for most reloading at Sarajevo. 1CC. The line also has significancefor Yugoslaviatsagriculture. It provides the most direct connectionbetween Vojvodina,the country'smost important agriculturalarea, and the sea for expandingexports. Along the Adriatic coast, fruits and early vegetablesare important,and livestock rearing is common. A major irrigationproject not far from Metkovic has been started with FAO assistance;it is anticipatedthat upon completionof tlle project in about 10 years, more than a million tons of fruits and vegetables will be produced annually,with an estinatedvalue of Din 48 billion. According to the FAO technicaladvisor, about two-thirdsof the output will be carried by railway. lGlo The composition of the freight traffic on the Sarajevo-Ploce line is show-nin Table 13. The total freight carried is about lol million tons, of which coal accounts for nearly 300,000 tons, or nearly 30 percent. Other major products include cereals,vegetables and other foods (120,000 tons), metallurgicalproducts (50,000 tons), lumber (40,000 tons) and buildingmaterials (30,000 tons). Because the line has been working at full capacity,total freight traffic has remained virtually stable in recent years. The situation is similar for passenger traffic, which has increased slightly from about 5 million passengers in 1958 to 5.6 million in 1962. 102. Ap;proximately40% of the total trafficmoves in the directionfrom Ploce to Sarajevo and beyond and about 60% in the opposite direction. The directioralbalance of traffic is expected to improve to approximately45/55% by 1970. About 90% of all trafficwill move by rail beyond Sarajevo, where a transfer between standard and narrow gaug-eequipment is now required. - 22 -
103. Concurrently with exopanding the caDacity of the Sarajevo-Ploce'line, the Governmentis also planning to expand the capacity of the Ploce port0 Traffic through the port has increasedrapidly, reachinig620,000 tons in 1962. Nearly 450,000 tons were exports,- including275,000 tons of minerals and 65,000 tons lumber, - making Ploce one of Yugoslavia'smost important ports for exports. About 250,000 tons are carried to or from the port on the Sarajevo-Ploce line, rhich is about one-fourth of the line's traffic. Under the 1962-66 investment plan for the port, which has been approved by the Government, its present capacity of about 1 million tons will be increasedto 3 million tons, which is adequate for the expandingtraffic when the new line is completed.
1044 The Sarajevo-Plocerailway runs parallel to a highway.While the highway is not now tlhroughoutin good condition,it is being improved. The problem of competitionbetwreen railwTay and highway has not existed in the past since the railwayts capacitywas severely limited. But the problem will no doubt arise in the future, especiallyfor high-valuecomrnodities,which account for only about 15 percent of the railway tonnage, but for about 25 percent of its revenues. The large proportionof bulk freight and the relativelylong distances for much of the freight make a large part of the railw;ay1 s traffic inmune to diversion. Nevertheless,as suggested in para- graph 15, this is a problem that the YugoslavianGovernment will ha-e to face in time. In any case, the estimate of future traffic on the line (see para- graphs 107 and 108) takes into account the existence of the highway. B. Evaluationof Specific Benefits 105. The major specific benefits of the Project which can be measured in monetary terms includez (a) the savings from shifting a substantial amount of traffic from circuitousroutes to the shorterSarajevo-Ploce route; (b) lower costs of carrying the existin- traffic on the route; and (c) reduced costs of reloadin-. In addition,the net costs of the Project will be reduced sli;htlyby the scrap value of dismantledmaterials on the exis- tin; route. On the basis of the reasonably conservativeassumptions explained below, it is estimated that these benefits alone will bring a return on the investmientof about 12 percent during its useful life of 40 years. Benefit Rate of Return on Investment (percent) More Direct Routing Freight 7,7 Passengers 0.3 Subtotal 8.0 Reduced Costs for Existing Traffic Freight (incl.reduced reloading) 3.0 Passengers 1 1O Subtotal 4.0
Total Rate of Return ____ Twelve percent is a satisfactory return in a country like Yugoslavia, especially since it does not include important other benefits, such as time savings,discussed in paragraph 115. - 23 -
More Direct Routing 106. More direct routing will reduiceoperating costs for both freight and passenger traffic, and will also make availablerailway capacity for other uses. Each of these benefits is discussedseparately below.
107. A detailed origin and destinationstudy made by the Yugoslav Railway shows that in 1961 about 2.6 million tons of bulk freight (involvingnearly 4.5 million gross tons) were carried on circuitousroutes because of the limited capacity of the Sarajevo-Ploceline; the average additionaldistance was about 270 km. Of these 2.6 million net tons, nearly one-halfwas accounted for by coal. About 900,000 tons of coking coal were imported for the steel plant at Zenica (north of Sarajevo) and about 350,000 tons for the steel mill at Lukavac (near Tuzla). Of the total of 1,250,000tons of coking coal, only 50,000 tons were shipped directly via Ploce; about 200,000 tons were shipped by boat on the Danube, and one million tons were carried by railway via Rijeka and Snlit. The distance from Split to Zenica is 285 km longer than that from Ploce to Zenica. The situation is similar for about 250,000 tons of iron ore and 200,000 tons of miletallurgicalgoods, most of which are destined for or originateat the Zenica steel mill. Other commoditiesincluded in the Rail- road's origin and destinationstudy are lumber (140o000 tons), cereals (120,000 tons) bauxite (100,000 tons), and others. 108, The estimate of benefits assumes that the volume of traffic that will shift to the Sarajevo-Ploce line when it is opened by 1967 will be about 20 percent above the 1961 level of 2.6 million ton-, or about 3.1 million tons. WJhile such a grovlth is generally consistent with the increase in freight in recent years, it may be on the conservative side. For example, the planned expansion of steel output at Zenica would require an increase of coking coal from 900,000 tons in 1961 to about 1.6 million tons by 1970; on the other hand, the plant at Lukavac plans to rely primarilyon domestic coking coal, which would not increase traffic on the Sarajevo-Ploceline. Taking into account the declining grovth of railroad freight traffic in recent years and the experience in other countries,the competitionfrom an improved highway parallel to the railway, and the likelihoodof a direct railwfayconnection between Belgrade and Bar by the middle 1970ts, the estimate assuwmesthat the annual growthof traffic on the Sarajevo-Ploceline will decrease from 3 percent in 1967-77 to no growth after 1987 (see Table 14). 109. The marginal operating costs of carrying 5.4 million gross tons an additional270 lka,i.e. a total of nearly 1.5 billion gross ton-km, are about Din 3 per gross ton-km or a total of about Din 4.5 billion. The marginal cost of Din 3 per gross ton-km is about 75 percent of the average cost. This is a reasonablerelationship when it is consideredthat the Railway facilities are fully used and it is somewhatmore conservativethan studies on marginal costs made by the InterstateCommerce Commissionin the United States. It also assumes that by 1967 about half the traffic would be carried by steam and half by diesel; in 1962 the ratio was still three to one. Since the new line will be electrified, there will be an additional cost reduction of about Din 0.9 1J;cn for a total benefit of Din 5.4 billion in 1967. This would result, with the above assumied traffic growth, in an economic rate of return of 7.7 percent over a p,riod of 40 years on th_ cost of inviestment with the adjustnants ex- pl%ned in pnragraphs 111 and 11h. - 24 -
110. As for passenger traffic, it appears likely on the basis of a study made by the Railway that due to the inadequateSarajevo-Ploce service, about 1 million passengerstravel an additional40 km on other routes of the railway to reach the Adriatic coast and an additional50 km by highway along the coast. The marginal cost of this is about Din 2 per passenger/kmon the railway and Din 5 for bus service. The estimate assumes that traffic will grow about 3 percent annually until 1977, and remain constant there- after (see Table 14). The growth until 1977 is consistentwith recent increasesin passenger traffic and allows for expanding tourist traffic to the Adriatic coast with rising incomes. On the other hand, the improvement of the highway parallelingthe railway and the experiencein other European countriesjustify the assuraptionthat the annual increaseswill be relatively small and may stop altogether in time. The annual saving in 1967 on these assumptions would amount to about Din 350 million; this is only a small fraction of the saving for freight traffic described above, and would rep- resent an economic return of about 0.3 percent.
111. An importantbenefit from direct routing is that it will free a veny substantialamount of railway capacity. As explained above, by 1967 about 3.1 million net tons would have to be transnortedan additional270 km if the Sarajevo-Ploceline is not improved. This amounts to about 840 million net ton-Im, from which must be deducted 180 million net ton-km of traffic to be carried on the Sarajevo-Ploceline, for which new rolling stock will be needed. The net saving of 660 rmillionnet ton-km involves a capacity of about 3,000 freight cars. Taking the value of these cars at about Din 0.6 million each - or about one-sixth of a new car - the total saving will be Din 1.8 billion.
Reduced ReloadingCosts
112. About three-fourthsof the traffic on the Sarajevo-Ploceline arrives from or is destined for areas north of Sarajevo and has to be re- loaded there. Making some allowance for the relativelysmall amount of traffic which in the future will have to be reloaded at Capljina, the saving will be about Din 225 per ton for 750,000 tons, or about Din 180 mi'llion annually.
Reduced TransportCosts for Existing Traffic
113. The proposed investmentwill sharply reduce the traction costs of carrying the freight traffic now existing on the Sarajevo-Ploceline. Because of the exceptionallyunfavorable conditions on this line, the traction costs per gross ton-km average about Din 7.5 compared to about Din 2.7 on normal standard gauge lines operatedwith steam locomotives. It is anticipated that electrificationwill reduce traction costs further to about Din 1 - 1.5, providinga total saving of at least Din 6 per gross ton-km, or about Din 2.5 billion annually for the existing freight traffic. This and the b,nefits from reduced reloading discussed above iwould result in an econcnic return of about 3 perccnt ovcr 40 years. The saving for the existing pass,-a,cr traffic, cal- cul-ted on an analogous basis, rnounts to about Din 1 billion annually, rep- rescntinj- a:bout a one percort econonic return. - 25 -
Scra2 Value of Dismantled14aterials
114. The scrap value of the narrow gauge superstructure,after deducting the costs of dismantlingand transportation,is estimatedat about Din 250 million. The value of the rolling stock - about 80 locomotives,1230 freight cars and 60 passenger cars - is approximatelyDin 150 million, for a total scrap value of about Din 400 million. The cost of the investmenthas been re`.z1ccd by this ailount in th%ucalculation of the econonic return percent- :s .
Other Benefits
115e Other iTnportant benefits include: a. The delay and inconvenience due to reloading in Sarajevo will be eliminated. b. The time saving for existing traffic on the Sarajevo-Ploceline will be substantial, both for freight and passengers. For example, the present passengertrain run of 8 - 9 hours between Ploce and Sarajevo will be reduced to less than 4 hours. On this basis, the Railway estimates the annual passenger hours saved at more than 10 million, or nearly 2 hours per passenger. The new servicewill also be much more comfortable. Similarly, there will be important time savings for the passenger and freight traffic now travelling circuitously(see paragraphs103 and 106).
C. The uneconomicnarrow gauge extensionof the Ploce-Sarajevo line between Sarajevo and the steel mill at Zenica might be abandonned since it runs parallel to an existing standard gauge line. d. In addition to the shorter railroad routing, shipping distances to and from abroad will be up to 200 miles shorter to Ploce than to Rijeka, It is doubtful, however,whether this distance is sufficientlylarge to involve a significantenough saving and thus lead to a reduction in shipping rates. Without such a reduction,the beniefitto Yugoslaviawould be limited to Yugoslav ships and would be small. e. Finally, the very sharp reduction in transport costs and the great improvementsin quality of servicewill in turn stimulate the important industrieswhich depend heavily on this transport. This is likely to have a s;grificantmultiplier effect on the economy as a whole. VII. COICLUSIONSAND RECME2NDATIONS 116. The Project will eliminatea serious bottleneckin Yugoslavia's railway transportationsystem. It is well planned, technicallysound, and will yield a good economic return on the investment. The Yugoslav Government is wiell able to execute the Project.
117. The Project provides a suitable basis for a bank loan of U5 :35 rmillion equivalent to the Yugoslav Investment Bank for a term of 25 years, including a 4-1/2-year period of grace.
Septenber 26, 1963. TABIE 1
FREIGHT TRAFFIC, BY MODE OF TWMSPORT, 1952-1962
(Millionsof ton/km)
YEAR TOTAL RAILWAYS IMARITIME HIGHWAYS Inland Coastal Trucking Own Waterw'ays Traffic Enterprises Account
1952 n.a. 8,383 706 173 115 n.a.
1953 n.a. 8,817 528 143 133 n.a.
19554 n.a. 9,571 766 166 145 n.a.
1955 n.a. 11,577 809 230 180 n.a.
1956 n.a. 11,869 928 208 206 n.a.
1957 15,615 12,984 1,257 226 349 799
1958 16,284 13,031 1,491 257 560 945
1959 17,947 13,974 1,636 499 816 1,022
1960 19,693 15,191 2,009 390 1,016 1,087
1961 19,996 14,926 2,085 370 1,382 1,233
1962 20,705 15,032 2,187 358 1,628 1,500*
Average distances 233 347 285 95 14 of freight haulage (kmn)
* Tentatirm. TABLE 2
YUGOSLkAVDX
PASSENGERTRAFFIC, BY MODEOF TRANSPORT,1952-1962
(Millions of passenger/km)
YEAR TOTAL RAILWAYS1/ HIGIhWAYS AIR IMARITIME Buses 4 Passenger Coastal Inland Cars 3/ Traffic Waterways
1952 5,561 4,815 417 130 24 151 24
1953 6,927 5,981 549 150 29 191 27
1954 7,628 6,488 692 170 33 206 39
1955 8,909 7,533 864 190 50 230 42
1956 8,817 7,314 966 220 48 248 21
1957 10,095 8,059 1,346 325 53 285 27
1958 11,492 8,877 1,760 425 60 340 30
1959 12,502 9,250 2,231 580 82 333 26
1960 14,574 10,449 2,826 810 114 348 27
1961 14,893 10,089 3,139 1,180 136 326 23
1962 15,158 9,908 3,315 1,425 165 325 20
Average distances 50 30 n.a. 300 46 40 per trip (kin)
1/ Beginning in 1955 includes passengerscoming from other countriesor in transit.
2/ Inter-urbanpublic services only.
3/ Estimate based on the reasonablyconservative assumption that each passenger car travelledabout 6,000 km annually in inter-citytraffic, with an occupancy rate of about 2.5 persons per car. TABLE 3
Y'GOSLAVIA
INVESTMENTIN TRANSPORT,1954-1962
(Billionsof Dinars) *
YEAR TOTAL RAILWAY HIGHWAY OCEAN PORTS INLAND AVIATION (incl.vehicles) AND SHIPPING WATERWAYS
1954 67.9 36.6 15.8 12.6 1.5 1.3
1955 73.5 41.6 15.0 14.4 1.9 0.8
1956 90.2 51.2 18.1 18.3 2.2 0.4
1957 104.0 55.3 26.0 17.9 3.3 1.7
1958 102.5 44.2 37.5 15.5 4.2 1.1
1959 124.0 48.7 44.0 24.4 5.4 1.5
196o 143.3 50.8 59.8 23.7 5.8 3.2 1961 162.6 5o.4 71.6 26.9 6.4 7.3
1962 162.2 47.2 78.3 25.3 6.2 5.2
* At current prices. The index for producersprices increasedabout 2 per cent annually during this period. 9 . H w 5 0'10 . wf 4 t?
1 0 0 0 1 00= 0 H- " Z f H &0 =~~~ 0 0000000 P
g P, 0R ~ P P10
'S i-s H 1 H 00 0 0 0 000 o St~? !~ I -, 0 I & . q I .,i i 0.01 4 P5 - 0' 01 fS0
-1 01 'W~ H01 00'0 0101 0 01 1 00 H 0 '1 H 00 00 0 - oo. to 2 * 9 0-'. 00 00 0 0~~~~~~~~~~~F F 0 0 S~~~~~~~50101 - H ~ ~ ~ ~ ~ ~ ~ ~ 0
-1------0--- - . - H-0- 0 01 -- ~ H - - - - 0 00-- - - - H 0 - 0 -0'-H - - - c-- H------00 0 4~~~~'00 0 0 0 0 0 0 0 1 ir, 10 00 P 8z~~~~~~~~~~~~~~~~~~~~~~~~SH0o'i 01 00
0 000 01010 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 0~~~~~~~~~~~~~~~~~~~~0
- . to 00 0 00 0 00 * 00~~~~~~~~~~~~~~~~~~~~~~~~ts13t
0 0 0t -00------' 2 -3- - - - - YUGOSLAV RAILWAYS
RHalway Network and Traffic Den_siy925 - 1962
1 1925 ' 1950 1 1958 1 1959 ' 1960 ' 1961 1 .962 I. NETWOR t St. G. N. G. ' St. G. N. G. ' St. G. I. G. t St. G. N. G. St. G. N. G. ' St. G. N. G. St. G- N. GL
Route-Kilcieterof lines, Km t 6,700 2,187 8,429 3,112 ' 8,995 2,791 t 9,113 2,769 t 9,152 2,715 ' 9,162 2,705 ' 9,174 2,618
Route-Nilometer of lines, tota- ' I t I I I standard plus narrow gauge,Km ' 8,887 ' 11,54' ' 11,786 11,382 ' 11,867 1.1,367 t 11,792
Double track lines, Fm n.a. ' n.a. ' 633 - t 39 _ 718 _ ' 728 2 728 3
Electrified lines, Km ' - ' n.a. 181 - ' 196 - 233 - ' 255 - 310 -
II. TRAFFIC DENSITY ' I I I t
I n.s. n.a. Passenger-Kia per km of line (000) ' n.a. n.a. n.a. n.e. ' 915 296 1 995 308 ' 1,034 349 ' 1,008 319
Passenger-Km per km of line, average' t I I I I 840 standard and narrow gauge (000) ' 184 t 718 1 764 ' 792 ' 880 850
Freight-net-ton-kmper km I I , I of tine (000) I n.a. n.s. ' n.e. n.a. 1 1,319 509 t 1,407 520 1 1,503 528 1,491 472 ' n a. n.a.
Freight-net-ton-ni Der km ' ' ' ' , of line, average for standard ' ' I I ' 1,277 a-d narrow gauge (000) ' 243 *61 1,124 ' 1,195 1 1,275 I 2,261 I ~~ ~ ~II ~ ~~ ~~ ~~I ~~~~~~~~~~~~~~~~~~ I I , , I I , I I~~ , . I I I
Note: St. G. = Standard Gauge; II.G. = Nnrerw Gauge. 0 0 CDH 0 CD &*I' 0I0H0 - . tP,I 't -
o ~~ ~ ~ ~ ~ A 00FI to Cy0 F
to - - to CD - - -
--- -~ ------to-oIC------' ------'0 0- toa,
------S- - - .------0- - - -. - - ) - - - -
0. 0 a ~~~~~~~~~~~~~~0+ ~ ~ I 0
-0 ------( ti ~ ~ . N 00 H 0 0 H 0~ o- - -~ ' 20- H H H . H
H '0 . '0 H H H p. 0 H 0 .0 H H * '0 20'
------
.2,7W1 TABLE 7
YUGOSLAVRAILlrAYS
Age of Miotive Power and Rolling Stock 1961
Total -- Perind of ,Iainufacture Number Defore 1920- 1930- Since T y_2 e in fleet 1920 1929 194L 19495
( Figures in percent of the total) Locomotives, Steam St. G. 1,671 30 35 24 11 N. G. 531 57 20 9 l-
Locomotives, Diesel St. G. 110 - - - 100
Locomotives,,ElectricSt. G. 27 - - 67 33_
Diesel Pzailcars, St. G. 109 - - 11 89 N. G. 5 - - 100 -
Passenger Cars a/,St. G. 3,566 52 19 6 23 ____ . G. 622 60 26 10 4
Freight Cars, St. G. 63,L80 36 27 19 18 N. G. 9,014 44 52 3 1
St. G. = Standard Gauge N. G. Narrow Gauge a Without service cars, baggage and mail vans. YUGOSLAVRAILWAYS
Frei,ht Traffic by Major Commodities. 1950-1968*
(Billionsof Ton-kmn)
Commodity 1950 1960 1961 1962 1963 1964 1965 1966 1967 1968
Coal 2.3 4.5 4.3 4.1 4.2 4.5 4.6 4.8 5.1 5.3
Ores and Concentrates 0.4 1.4 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3
Building Material 0.8 1.5 1.3 1.3 1.4 1.5 1.5 1.6 1.6 1.7
Lumber 1.7 1.5 1.4 1.3 1.3 1.4 1.4 1.5 1.6 1.7
Metallurgic Products 0.3 1.0 1.0 1.1 1.2 1.2 1.3 1.3 1.4 1.5
Cereals 0.1 0.9 0.8 0.7 0.7 0.8 0.8 0.8 0.9 0.9
Fertilizers n.a. o.6 0.5 0.7 0.7 0.3 0.8 c.8 0.9 0.9
Petroleum and derivatives 0.3 0.4 0.5 0.5 0.6 o.6 0.6 0.6 0.7 0.7
Non metals 0.1 0.5 0.6 0.4 0.4 0.4 0.5 0.5 0.5 0.5
Cement 0.3 0.3 0.3 0.2 0.2 0.2 0.3 0.3 0.3 0.3
Other 2;7 2.2 2.2 2.5 2.7 2.7 2.9 .1 3.2
Total Carload 9.0 14.8 14.5 14.5 15.2 16.0 16.7 17.4 18.3 19.0
Less than Carload n.a. 0.4 0.4 0.5 0.5 0.5 0.6-5 °- -°
Grand Total 9.0 15.2 14.9 15.0 15.7 16.5 17.2 17.9 18.9 19.6
* 1950-1962 actual; 1963-1968 forecast by Railways. YUGOSLA SILW4AYS
Consolidated Inecaie Accounts of the Railway Transport Enterprises!/ Actual for 1958 - 1962 and Estimated 2963 - 1968 (Dan-r. milllioins)
A tua1 E s t i rns te d
L95 1989 1960 2961 I96219 2 i 1966 1967 2968
OperatinR Revenues
2 Passenger 22,345 9,094 32,135 49,003 57,750 57,180 56,931 59,631 62,317 65,496 67,664 F; ight 98,366 105,322 131,770 154,610 156,493 166,377 173,938 179,195 184,912 193,7831 202,196 MLil - - - 2,216 2,228 2,300 2,583 2,798 2,335 2,882 2,912 Other 20,DQ 13.523 21,222 3 9 3 36.70 36.700 33 700 36,700 36.700 36.700
Gross Oper t;ng Revenues 130,841 143,939 191,127 242,723 259,431 262,557 270,152 278,324 227,264 293,359 30,,472
Less Inter-3iterpriseItems N.A. N.A. N.E. 47,443 65,350 52,337 54,168 56,04J 57,416 60,644 62,471
Total Operating Revenues 130,S41 243,939 191,127 195,2S0 193,531 209,720 215,984 222,230 229,348 233,215 247,001
1I?l of Inter-Enterprise ItefJs) Wages: Basic monthly wages 52,094 54,464 Bad-of-year w2 -es 3.991 600
Total Wages N.A. N.A. N.A. 56,085 55,Cr 4 5 ,633 56,926 57,169 57,412 57,655 57,900
Puel and electric po er N.A. N.A. 2.A.,?., 3',4 30,900 29,200 2'3,1'O 27,050 26,150 25,290 Materials and supplies N.A. N.A. II.A. 4,322 4,903 5,339 6,850 3,120 9,390 11,700 13,000 £uzcchase Taxes N. A. N.A. N.A. 594 1,099 1,643 1,727 1,30' 1,377 1,967 2,051 NhnagemenL feesb/ N.A. 2.A.N.A. 5,241 6,676 7,114 7,221 7,329 7,!439 7,551 7,S64 Deprsciation 14,683 20,526, 21,329 19,363 22,776 25,380 26,590 27,300 23,200 29,190 30,500 4aintetanceamrevals 2933 2728 5.5 55,258 56.000 56.00 56,o0o 56.000o, 56.0
Total Ooerating Expenses 120,524 137,6 1 16a0,005 169,927 173,140 1'2,620 124,424 125,813 187,362 190,123 192,315
Net Operating Revenuaes 13,317 6,338 31,122 25,353 20,141 27,100 31,560 36,462 L1,930 43,092 54,686 Deductions fram Niet Oreratina Revenues
Interest on loans N.A. N.A. N.A. 542 1,291 1,80o 2,'00 3,150 3,190 3,150 3,150 Prose ty Taxes 1A. N.A. N.A. 9,935 1,72-6 6,S300 7,0O60 7,320 7,580 7,340 2,100 Incme Taxes - 001 2 _2_ 863 g -4 ?0 1.. - & 1i 3
Totb l Deductions 2,67, 3,393 6,049 11,057 13,280 I L,95 12,575 2n,90,g 22, 90 25,215 26,933
nsornips1g from Business Tronsaotbsng 7,643 2,940 25,073 1°,2% 7,163 10,705 12,985 15,463 10,210 22,87- 27,753
Hiscellaneous Inoone 1,2A2 32,363 1,393 4,711 ,3, 7' 1,5 0 1,5co 1,,40 1,730 2,700
N't ncoe , ,35 0,303 21,466 1,939 1,!,7S7 - 4,575 17,0. j3 ,50 '2S.,6'07 - , .53
O,er- tinz r- tion 1 92 90. 34 87 '9 87 85 34 32 3, 73 Times int'rest eornnd (aFter t;axes) NI.A. N.A. N.A. 32 9 8 8 6 o 9 iO De'Dt sc'rvice cov rage (gft-r t-xes) NR. .A. N.A. 10 11 8 4 5 5 5 5 Return on ncdt oo0r ting fixed -saets at o,zinnin ,r tnr y-r 1 .t S.l 3., 4.'. - .9
a/ As far as po;sible, inter-enterprise items have been eliminated. g/ Expense of federal and regional railway organizations. YUGOSLAVRAl LWAYS
CcPomptte lence Sheet Data of the Railway Transport Enterpri.e.!/ Actual for 196t nnd 1962 - n Estim-ted_form 1963-196? (Dinn rB mili inn,-
_ tunl _ R~~~~~~~~~~Fs t i m ri t.e d 196) 1962 196U 1964 1065 1946 ]907 1068
Asorts
Current Ascots
GOsh 14,526 21,280 20,000 18,700 19,500 21,000 23,000 25,000 Accounts ReceivRble 23,575 14,402 13,300 12,300 ]?,ROO 13,30 33,300 13,800 Prepaym.nta, inter-enterprise item 19,627 36,287 20,002 20,000 20,000 20;0300 24,200 24,000 Mnterinls and supplies 20,218 21,531 21.500 21.800 22.100 2].600 2.,400 21_2'0
Tots- currlnt assets 77,946 93,500 74,800 72,800 74,400 75,900 82,200 84,000
Fi'ed Assets
lAnd - rnilt.ay 6,571 6,617 6,647 (,687 ',732 6,777 6,807 6,330 Porrnnanptwey 9nd structures 614,491 726,061 751,781 787,163 827,843 863,667 898,437 932,514 Rolling stock 322,222 396,898 405,348 415,798 419,373 428,748 439,123 440,g98 Buildings - operating 43,468 60,079 60,699 60,899 61,399 62,399 62,579 62,579 Other operating property 45,159 62,549 71,208 79,108 86,508 94,108 102,828 120,918
Gross operating property 1,031,911 1,252,204 1,295,683 1,349,655 1,401,855 1,455,699 1,509,774 1,561,739 AccuTmuliteddepreciation 537,961 653.960 679,501 699,692 716.558 732.624 750.640 770.206
Net Omornting Fixed AsseFc 493,950 598,244 616,182 649,963 685,297 723,075 759,134 7. ,533
Work inwrogress 30,380 32,259 30,001 30,000 30,000 30,000 30,000 30,000 Social standard property 16,251 28,086 32,536 37,976 42,906 47,826 52,7136 57,636 Borrowed funds, earnarked for 18.018 17.016 20.145 g,20.0 20,000 20.000 21.2r0 24,565 capital inr stment Totnl Fixed Assets 558,599 675,605 698,863 737,939 778,203 820,901 863,070 903,734
Total Assets 636,545 769,105 773,663 810,739 852,603 896,801 945,270 927,734 LiUbilities
Current Litibilities
Accounts payable, m-t-rials 13,889 11,111 10,000 9,000 9,500 30,000 30,500 110,500 Accrued wngeE, interest, taxes, fees and inter-enterpriseitems 36,963 49,769 33,500 33,500 33,500 33,500 37,500 37,500 A.ccrueddebt ervice 725 1.212 1.000 1.000 2.100 1.11' I., 200w .2C
Totn] Oirrent Liabi]ities 51,577 62,092 44,501 43,500 44,100 44,600 4-,20c) 19,200
Long-tee7nDebt
Working capitnl 7,334 9,293 10,05, 4,555 2,005 405 - - Oporating fixed assets 27,129 35,695 43,843 63,165 77,927 92,0913 9',i4 92,500 Sociol stnndcrd property 6.204 10.792 10.200 9.70( 9.20'i 8,70nc t 7,700
To'nc long-"trm debt 40,667 55,780 64,098 77,420 89,132 101,198 107,i48 106,200
Totrl Lianbilities 92,244 117,872 108,598 120,920 133,232 145,798 156,348 155,400
E:uity 544,301 651,233 665,065 689,819 719,371 751,'03 7i,S922 832,334
Total Liabilitiac? !nd &.uitV 636,545 769,105 773,663 810.739 852,603 896,801 945,270 987,734
Current rr?tio 1.5to 1 1.5to 1 1.7 to I 1.7 to 1' 1.7 to 1 1.7 to 1 1.7 to 1 1.7 to I Liouid ratio 1.1 to 1 1.1 to 1 1.2 to 1 1.2 to 1 l.2 to 1 1.2 to 1 1.2 to 1 1.2 to 1 Debt-equity ratio 7/93 8/92 9/91 10/90 11/89 12/88 12/88 11/89 a/ Inter-enterprise items have not been eliminated JYUGOSLAVRAILWAYS
Projected Cash Flow Data for the Railway Enterprises 1963-1968 (Dinars millions)
Total 1963 1964 1965 1966 1967 1968 1963 - 1968 %
Cash Requirements
Capital investments - railways 52,370 71,522 74,225 77,769 76,600 74,290 426,776 80.7 Capital investments - social standards 4,935 7,540 7,098 8,500 8,057 7,800 43,930 8.3 Debt Service: Interest 1,800 2,200 3,150 3,150 3,150 3,150 16,600 3.1 Amortization 2±902 8 800 6.55o 7.300 7550 8L44 41,550 7.9 Total Cash Requirements 62,007 90,062 91,023 96,719 95,357 93,688 528,856 100.0 Cash Available
Net income (before interest) 13,685 16,775 20,173 23,800 27,757 32,603 134,793 25.5 Depreciation 25.80 26.500 27,300 28.200 29.100 30.500 167.4 31.6 Total Internally-Generated Funds 39,485 43,275 47,473 52,000 56,857 63,103 302,193 57.1 Public funds - grants 10,000 10,000 10,000 15,000 21,000 21,000 87,000 16.5 I.B.R.D. funds* 3,100 8,200 9,900 5,050 - - 26,250 4.9 Ions: Goverrment 10,900 20,822 21,450 16,919 12,700 12,950 95,741 18.1 Other 2.800 7,600 2.200 7.750 6000 -- 26.350 5.0 Total Loans 13,700 28,422 23,650 24,669 18,700 12,950 122,091 23.1 Cash surplus beginning of year 15.867 20.145 19 980 19.980 19.980 21.180
Total Cash Available 82,152 110,042 110,023 116,699 116,537 118,233 537,534 101.6 Accummi2lative cash position 20,145 19,980 19,a80 19,980 21.180 24,545 Improvement in cash position 8,678 -1.6
* The IBRD funds are a loan to the Yugoslav Investment Ban}., b ut a gr nt From the Government to the Railways. YUGCSLAVRAIIWAYS
Saralevo.- Ploce Line
Estimated Cost and Schleduled Expenditures
Actual Ecpenditures E s t i m a t e d E x p e n d i t u r e a
Total Exnenditures Until Dec. 31. 1963 1963 1964 1961 tota1 1963 - 1966 D Dinar US$ Million Dinar US$ Million Dinar US$ Milio nDinar 5$ nliX r 1 Ulimz I T E N )allion Equivalent Million Equivalent Million Equivalent Million Equivalent Million Ecuivelant Millimn Eauiyalen Million Euivalmst hrtswork & Structures 39,891 53.2 14,332 19.1 5,089 6.3 8,300 11.1 11,000 14.6 1,170 1.6 25,559 34.1
Tracks 12,031 16.1 135 0.2 62 0.1 3,000 4.0 4,417 5.9 4,417 5.9 11,896 15.9
Buildings 1,695 2.2 30 0.0 42 0.1 700 0.9 333 0.4 590 0.8 1,665 2 .
Signalling, C.T.C. and Telecommunications 3,953 5.3 43 0.1 39 0.1 1,200 1.6 1,190 1.6 1,481 2.0 3,910 5.2
Electrification (without Loccumotives) 4,160 5.5 98 0.1 90 0.1 1,022 1.4 1,342 1.8 1,608 2.1 4,062 5.4
Ecgineering, Purchase of Lnd, Sucervision and Miscellaneous 5.401 7.2 2.177 2.9 678 0.9 1.600 2.1 7473 1.0 203 0.3 3.224 L.3 SUBTOTAL 67,132 89.5 16,316 22.4 6,000 8.0 j15,822 21.1 19,025 25.4 9,469 12.6 50,316 67.1
10% Contingencies mnWorks not yet completed 5,032 6.7 - _ 600 0.3 1,582 2.1 1,903 2.5 947 1.3 5,032 6.7
TOTAL 72,164 96.2 16,816 22.4 6,600 S.3 17,404 23.2 20,923 27.9 10,416 13.9 55,348 73.8
Note: Aboun 22 electric loccnotives are aeeded for t e e2i. !ing of operat on. Trey would cost abcut US$5.5mri.lion equivelent. Their cost s tD be financed from depreciation funds of t- cnternrises and are therefore not incluided in the above estinote.
Totals in JS$ Eq,civalents may not rdd hec un of rounding. TABIZ13
Y-,GOSIAV Ii:'
SARAJEVO-PLOCE LINE Freight Traffic by Cornrodities, 1958-1961 (000 tons)
.Caffaczlodit1°59 19?60 12061
Coal 242 275 281 272
Cercals and oth2.r foods 107 110 106 122
!-tallur,icaj. Pro-i cts 51 50 50 51
,::ioer 34 31 32 37
J'aeli*tl1tcrias34, 30 30 31
Iron Ore 20 22 21 25
Bauxite 15 15 15 16
Cezaent 1I 341 17 15
Servicc Frctht 110 9 U9 92
Otlier 433 434 403 455
T o t a 1 1. 07 1,070 1,0/4 1,116 TABLE 14
YUGOSLAVRArJ T AYS
SARAJEVJO-PLOCELIHE
Present and Projected Traffic, 1958-2007
Freight Traffic Passenger Traffic Year (ilillions of tons) (Millions of Passengers)
1958 1.1 5.0
1961 1.1 5.6
1967 4.2 6.6
1972 5.0 7.7
1977 6.0 9.0
1987 7.4 9.0
1997 8.2 9.0
2007 8.2 9.0
7 ~Foi-e:xmlanation of underlying asuwaptionssee paragraphs'CS and,110. El s~~~~~~~~~~~~~~~~~~~~~~~~~
P1~~~~~~~~~~~~~~~~~~~~~~~~
I
"QU~~~~~~~~-.-~I I ____ 4 A US T WRIT A 'Q <>% ._.,3-J-\ t ~~~~~~13H U N G) A R( Y r 7
up ~~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~4~ ~~
LJUB RA I S SubOPJE
|TI Piwk R U M A N I A
v )Osrlou >C Kuierm
p~~~~~~~~~~ C7C,hocrs ln t A
S.~~~~~~~~~IE YUOLAIe,r S E* A
RAILWAYSYSTEM ~ ~~~~~~~ji oib. ~~~~~ q \ .~~~~LJ..J..J.J..~ P~ ~ ~ ~ ~H~~~~ ~ E~ ~0 v~ I.otvrft9oZ~ ...... ee Standard~~~~~~~~~~~Rrc gag,d1. ( D'jt J Stnarauesige rQk:lJKC 0f
I I I I I I Electrified lines SEPTEMMER903 J Z L.p'-e>fe ^ 183- _ _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~iKso Narrow gauge ° 20 40 SO 80 100 ) _ ) | 5 \~~~N,k,u
SEPTEMBERY SYSTE