Documentof The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized
ReportNo. 10779
PROJECT COMPLETION REPORT Public Disclosure Authorized
HUNGARY
TRANSPORT (RAIL/ROAD) PROJECT (LOAN 2557-HU)
JUNE 16, 1992 Public Disclosure Authorized
MIC' CU1CECOP7Y
Repc,rt ,No. Typf (-4PUu': WT<.X.1i' ./ /' TS I)/ OB'DD: Public Disclosure Authorized
InfrastructureOperations Division Country DepartumentII Europe and Central Asia Regional Office
This documenthas a restricteddistribution and may be used by reipients only in the performanceof their official duties. Its contents may not otherwisebe disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS
Currency Unit = Forints (ft.)
Exchange rate at the end of the following years:
1986 1 US$ = ft. 45.3 1987 1 US$ = ft. 46.4 1988 1 US$ = ft. 52.5 1989 1 US$ = ft. 62.5 1990 1 US$ = ft. 61.5 1991 (mid) US$ = ft. 77.7
WEIGHTS AND MEASURES
Metric System US System
1 meter (m) = 3.2808 feet (ft) 21 kilometer (km) = 0.6324 mile (mi) 2 2 I square kilometer (km) = 0.3861 sq. mile (Mi) I metric ton (m ton) 0.9842 long ton (lg ton) 1 ki'logram (kg) = 2.2046 pounds (lbs) THdEWORLD BANK FOROlmICIL USE ONLY Washington,D.C. 20433 U.S.A.
Officeof Direct(W,Genet#l OpertatmEvAluation
June 23, 1992
MEMORANDUMTO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Hungary Transport (Rail/Road) Project (Loan 2557-HU)
Attached,for information,is a copy of a reportentitled *Project CompletionReport on HungaryTransport (Rail/Road) Project (Loan 2557-HU)" preparedby the Europeand CentralAsia Regionaloffice. No auditof this projecthas been made by the OperationsEvaluation Department at this time.
Attachment
Thisdocument has a restricteddistribution and may be usedby recipientsonly in theperfnac of theirofficial duties. Its contentsmay nototherwise be disclosed without World Banka thofiztion. FOR OFFICIAL USE ONLY
ACRONYMSAND ABBREVIATIONS
ECE Economic Commission for Europe ER//IRR Economic Return/InternalRate of Return FYR First Year Return GDP Gross Domestic Product GTKm Gross Ton Kilometer HC Hungarocamion InternationalFreight Company IBRD InternationalBank for Reconstructionand Development ICB InternationalCompetitive Company Bidding KTI Hungarian Institute of Transport Science LCB Local Competition Bidding LIB Limited IrternationalBidding MAV Hungarian State Railways MOF Ministry of Financt MTCWM (MOT) Ministry of Transport, Communicationand Water Management MSC Maintenance Sub-center M-O Budapest By-pass (motorway) NBH National Bank of Hungary NPO National Planning Office NtKm Net Ton Kilometer PCR Project Completion Report ?Km Passenger Kilometer Pd Km ProductiveKilometers PRD Public Roads Department of MTCWM PRMC Public Road management Centers RF Revolving Fund SAR Staff Appraisal Report SCD Supervisionand Control Department SDB State Development Bank SOE Statement of Expenditures TDD Technical Development Department of MTCWM TEM Trans-EuropeanMotorway TU Traffic Units UIC InternationalRailway Union UNICONSULT United Transport Consulting Firm, Hamburg UTIBER Hungarian Investment Management Firm UTITORM Government Mechanical Branch UNDP United Nations Development Program
FISCAL YEAR
January 1 to December 31
This document has a restricted distribution and may be used by recipients only in the performance of their officialduties. Its contents may not otherwise be disclosed without World Bank authorization. PRQrECT COMPLETIQN REPORT
HUNGARY TRANSPORT (RAIL/ROAD)PROJECT (LOAN 2557-HU)
Table of Contents Page No.
Preface i Evaluation Summary ii
PART I PROJECT REVIEW FROM THE BANIKISPERSPECTIVE
I Project Identity 1 II Background 1 III Project Objectives and Description 2 Description of the Project 3 IV Project Design and Organization 3 V Project Implementation 5 Loan Effectiveness 5 ImplementationSchedule 5 Procurement 6 Project Costs and Financing 7 Disbursement 7 Loan Covenants 7 VI Project Results 7 Physical Targets 8 Economic Performance 8 Financial Performance 10 Technical Assistance and Training 11 VII Project Sustainability 11 VIII Bank Performance 12 IX Borrower Performance 13 X Bank-BorrowerRelationship 13 XI Consulting Services 13 XII Project DocumentationData 13
PART II PROJECT REVIEW FROMTHE BORROWER'SPERSPECTIVE
Preface 14 Summary of Railway. Highway and Hungarocamion Components 15 Railway Component (MAV) 15 Highway Component (annexes attached) 19 Hungarocamion Component 21 Table of Contents (continued)
Page No.
PART III STATISTICAL INFORMATION:
Table I - Related Bank Loans 63 Table 2 - Project TimetablA 64 Table 3 - Loan Disbursements 65 Table 4 - Project Implementation 66 Table 5(A) and (B) - Project Costs and FPnancing 67 Table 6(A) through (F) with attachments- Project Results 69 Table 7 - Status of Covenants 77 Table 8(A) and (B) - Use of Bank Resources 79
Annex 1 -List of Equipment Procured 81 Annex 2 -Traffic Trends 8 Annex 3 - Audited Financial Statements (1985-1990) 86 Annex 4 - Key Indicators for Hungarian Railways and HungarocamionOperation (1980-90) 92
MAP - IBRD 18773R Hungary - Transport (Rail/Road) Prc0ect PROJECT COMPLETIONREPORT
HUNGARY TRANSPORT (RAIL/ROAD)PROJECT (LOAN 2557-HU)
PREFACE
This is the Project CompletionReport (PCR) for the Transport (Rail/Road)Project in Hungary for which Loan 2557-HU in the amount of US$75 million was approved on May 28, 1985. The Loan was closed on June 30. 1991. on schedule. The entire Loan amount of US$75 million was disbursed.
This Completion Report (Parts I and III) was prepared by the InfrastructureDivision (EMTIN) of the Technical Department of the Europe, Middle East and North Africa (EMENA)Region. The report is based on informationobtained from Project files in the EMENA InformationCenter, Sta'. Appraisal Report No.5477-HU of April 30. 1985 for a Transport (Rail/Road) Project. President'sReport, Staff SupervisionReports, procurement documents and several working papers prepared in connectionwith the project in the EMENA Region. Part II. namely a Project Review from the Borrower's Perspective,was prepared ;vythe Borrower. - ili -
PROJECT COMPLETION REPORT
HUNGARY TRANSPORT (RAIL/ROAD) PROJECT (LOAN 2557-HU)
EVALUATION SUMMARY
Objective
1. The project was designed mainly to assist Hungary to increase the efficiency of the transport sector, conserve energy and improve the sector's earnings of convertible currencies. The project also aimed at easing critical transport bottlenecks on Hungary's principal highway and railway networks, vital to international trade, and addressed the need for timely maintenance of the existing tranaport network. In addition. the project included technical assistance, training and institution building, the benefits of which would permeate the entire economy (para. 3.01). The project objectives have been substantially achieved (paras 6.01 - 6.14).
Implementation ExDerience
2. The Hungarian People's Republic, the Borrower, with the participation of the National Bank of Hungary (NBH), the Ministry of Transport (MOT), Hungarian Railways (MAV) and Hungarocamion international freight company (HC), carried out the project. The investment management firm UTIBER was engaged by MOT to provide overall coordination of all project-related activities. Each executing agency, namely MAV, HC and MOT, appointed an officer who was responsible for all project-related matters cf the respective agency and served as a counterpart to UTIBER's coordinating staff. The entire arrangement proved satisfactory throughout project img,1mentation (para 4.05).
3. The Loan was signed on June 4, 1985, and once it became effective (June 10, 1985) as planned, the project progressed smoothly. A substantial number of project components proceeded according to schedule and were completed on target with minor variations (up to a maximum of six months). In the case of modernization of the Ferenevaros marshalling yard, however, there was a delay of about two years mainly due to the inclusion of environmental protection works - such as sound barriers - required by recent legislation, and to construction of the maintenance workshop and health facilities at the first stage instead of at a later stage as previously planned. The quality of construction of civil works was, in general, satisfactory (para. 5.02).
4. This was the first Bank-financed transport project in Hungary. Preparation of civil works bid documents was somewhat slow to start with because of the unfamiliarity of the project executing agencies with Bank procedures and requirements. Retroactive financing for professional assistance in the preparation of technical specifications and other bid documents included in the project in the English language for the proposed ICB helped speed up the process (para. 5.04).
5. The project encountered no serious procurement problems. At an early date, the Bank mission found that the technical specifications, schedules of delivery and Bill of Quantities (List of Unit Prices) prescribed at the time of bid invitation needed amplification to nermit an adequate response from international competitors, but the Borrower readily revised the - iv -
necessary documents and on the whole procurement action proceeded satisfactorily (para. 5.06). At the Bank's initiativethe country did introduce ICB in major civil works (the Budapest by-pass with two major bridges on the river Danube). This was a major breakthrough. The prequalificationand bidding process served as a learning process. For the first time a comprehensiveset of Hungarian specificationsfor road and bridge constructionwas assembled (para. 4.02). The arrangementof a procurement seminar in Budapest at the early stage of project execution to familiarize project-relatedofficials with the state-of-the-arton procurement issues and uiithBank requirementsproved very useful (para. 5.09).
6. The project's two technical studies were also of good quality. More importantly,implementation of major study recommendationsmade with regard to the road user contribution is already in progress and as a first step, taxes on heavv freight vehicles have been increased. Similarly, stud) recommendationscontained in the information/marketingmanagement of the internationalfreight agency served as an important input to the Bank-financed Second Transport Project in Hungary (para. 5.03). The training program, though initially lagging behind, picked up momentum during project execution and ultimately proved very useful (para. 6.14).
7. UTIBER, the project co-ordinatingagency, carried out its responsibilitiescommendably during the project implementationstage. These responsibilitiesinclude all fieldwork in connectionwith expropriationand land acquisition,control of conformancewith project specifications, measurement of work quantitiesand approval of contractors' invoice for payments. Progress reporting of the project to the Bank was also on schedule (para. 5.05).
Results
8. The estimated cost of the transport (rail/road)project at appraisal was US$215.5 million. The final cost came to US$196.2 million (Table 5A and para. 5.10). The decrease in total cost of about 9% in terms of US dollars was due to savings in the estimated cost of major highway civil works because of intense competition in response to ICB (paras 5.07 and 5.09) and unforeseen changes in the exchange rates (para 5.10). The Bank played a major role as a catalyst to enlist co-financingfrom other international financing agencies and only MAV was required to finance a part of the project costs, the balance being fully met from the Bank Loan and assistance from other interrationalagencies (para. 5.10 and Table 5 B). Actual disbursements were consistently faster than the appraisal estimates excepting at the very late stage mainly to accommodate the procurement of some specialized equipment such as the freezing forecast system (para. 5.11, Tables 3 & 4 Part III and Annex 1) allowing sufficienttime to cover performance guarantees. The Loan was closed on June 30, 1991, on schedule (para. 5.11).
9. Overall, the project was successful in meeting its principal objectives (paras I and 6.01). Modernizationof the Ferencvarosmarshalling yard and constructionof the first stage of the Budapest by-pass along with two major bridges on the river Danube were already showing results in facilitatingthe smooth movement of both passenger and freight traffic. Acquisition of fuel-efficienttrucks by HC improved its operational efficiency, helped conserve energy and increased its revenue-earningcapacity substantiallywith better competitive strength. Provision of equipment for v
container handling and road maintenance imp oved interface facilities between rail and road and reduced the journey time significantly (paras 6.01. and 6.08).
10. Taking into account the latest traffic trend and important project-relatedindications, the revised economic rates of return (ERRS), have been calculated. The revised ERRs compare favorably with the appraisal estimates with some minor variations depending on the actual sub-project costs, time of completion and traffic trends. All the project components remain well justified and the overall project remains economically sound as appraisedwith a weighted ER of e.bout20X (paras 6.04-6.08 and Tables 6A (1 and 2) and 6B Part III).
11. The financial performanceof the railways during 1985-89 did not come up to appraisal expectations (paras 6.09 and 6.10). Until 1984, despite having to carry commuter passenger traffic at below-cost fares, MAV covered all operating costs through tariff revenues. This is no longer the case, although freight traffic still covers its costs and provides - surplus. MAV's operating ratios and rates of return on set fixed assets deteriorated significantlyduring this period. The financial performance of the railways was influenced by several factors, namely the traffic pattern, taxation reform and tariff policy. During this period freight traffic dropped significantly (excepting container cargo) mainly as a result of slackened economic growth of the country and its trading partners. A major reform of the Hungarian taxation system, which was implementedduring 1988, introducedvalue added tax and progressive income tax on individuals. Wages were increased to compensate workers for the new income tax. During January/February1989, the Government increased MAV's freight tariffs by 20%, long distance passenger fares by 30%, and inner city fares by an average of 64%. The combination of these factors clearly demonstratesthe inadequacy of tariffs and the urgent need to reduce unit costs (paras 6.09-6.11 and Annex 3A-C Part III). After 1989, owing to the political and economic revolution in Hungary, both the economic and the financial environment changed radically, and Government enterprises (including MAV) are becoming more market-oriented. The traffic profile underwent drastic changes in 1991 (and is still very unstable) and this will be 'ncluded in the PCR for the ongoing Second Transport Project.
12. The enterprise HC continued to perform efficiently and profitably. The rate of return on net fixed assets varied between 30 and 40 percent, showing a much better performance that 'Korecastat appraisal (Table D, Annex 3, Part III). The operating ratios for the period 1985-89 compared favorably with the appraisal estimates for the three year period 1985-89, deteriorated to some extent during 1988-89 mainly due to the Middl3 East situation and to unexpected increases in its new tax obligation during 1988/89. HC's commendable financial performancewas primarily achieved by better vehicle utilization, quicker turnaround time and improved staff productivity (Annex 4, Table B and para. 6.13). - vi -
Sustainability
13. MOT, ?AV and HC are technically strong und competently managed. Improved competitionand ongoing structural adjustments in H%vngaryare gaining deeper roots. The Government intends to continue the policy of free market competitionwith main reliance on pricing measures. The Government has also decided to reduce transport subsidizationsignificant'y before 1993. With these developments, there is reasonable expectation that project benefit will be sustained. It is, however, necessary to review the adequacy of railway tariffs continuouslyand take urgent measures to reduce railway unit costs (paras 11 and 7.01).
Findings and lessons learnt
14. The project has been successful ir meeting most of it3 objectives. excepting the overall operational and financial performance of tne Hungarian railways. A number of lessons have been learnt and these are:
(i) Introductionof ICB for major highway civil works was an important breakthrough,providing an excellent opportunity to familiarize the concerned authorities with the state-of-the-artof procurement procedures and resulting in substantial cost savings (paras 4.02. 5.06, 5.07 and 8.01(a));
(ii) Provision of an uverall coordinatingagency for all project- related activities with appropriatean counterpart from each project executing agency is a step in the right direction (paras 4.05 and 8.01(b));
(iii) In a country like Hungary, where the English language is less familiar, the provision of retroactive financing for professional assistance in the preparation of the technical specificatioasand other bid document details in clear English is well-conceived (paras 5.04 and 8.0l(c)), and;
(iv) Establishmentof a Special Account (revolving fund) greatly facilitated the timely flow of funds to the beneficiaries to finance eligible project expenditureswith minimum administrative delay and should be a welcome feature in all such Bank-financed projects. PROJECT COMPLETION REPORT
HUNGARY TRANSPORT (RAIL/ROAD)PROJECT (LOAN 2557-HU)
PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE
I. Proiect Identity
Project Name: Transport (Rail/Road)Pxoject Loan No. 2557-HU RVP Unit: EMTIN Countrr: Hungary S3ctor: Transport Sub-sector: Railways, Highways and Road Transport
II. Background
2.01 Hungary is a landlocked country in Central East Europe with a diversified transport network to integrate its 93,000 sq.km. of territory and to serve the needs of its population of about 11 million. The transport system consists of about 8.000 km of rail, 30,000 km of arterial roads. 1,300 km of regularly navigable rivers and canals, one internationalairport and a fairly large oil and gas pipeline network. Railways and roads are the backbone of the transport system and, together, carry about 75X of total freight traffic and more than 951 of passenger traffic. As a landlocked country, t-unk routes and internationalconnections are of special concern because Hungary has borders with five countries (see IBRD Map 18773R) and aims to improve its integrationwith the world economy.
2.02 Hungary's economy has grown rapidly since World War II with per capita income in real terms rising about 5% per annum between 1960 and 1980. During the same period, total freight traffic also grew at about 5-6% per annum, public p^ senger transport at about 21 per annum, with the proportion of private tratusport,however, increasing continuouslyat about 15-20% per annum. With the slackening of world economic growth, including that of Hungary. traffic declined in the early eighties and thereafter remained fairly stable. Foreign trade activities are of vital importance for the Hungarian economy and in the 1980s, of the total transported tonnage e,fabout 350 million per annum (in public transport),export/import trade accouintedfor more than 30 million tons per annum (excludingpipeline traffic) and was carried predominantly by rail. The Hungarian railways rank among the leading transport enterprises in Europe.
2.03 The transport sector contributes a significant share to the foreign exchange earnings of the national economy. Out of the gross foreign exchange currency income of about US$200-250 million per annum in the transport sector in the 1980s, about 66-68% was generated by the transportationof goods, about - 2 -
17-19% by passengers and the balance by other activities such as train car rent fees, foreign tourismuetc. At present, the principal task for the sector is to develop transport on the trunk routes and remove crucial bottlenecks including arrears in road and track maintenance,particularly those which affect internationaland transit trade to which the Government attaches a high priority.
2.04 Transport investments in the pu;ic sector aceounted for about 14% of Hungary's total investments in the last two decades. Iovest-nts in the road and rail sub-sectors accounted for about 85-90% of the sector :otal, the balance being made up cc river port, shipping, aviation and pipcline investments. Investments in the transport sector are primarily aimed at (a) improvementof foreign exchange earnings, (b) increased operational efficiency and reduction of unit costs, and (c) energy conservation.
2.05 Hungary's principal transport policy objectives, approved by Parliament, are the efficient provision of services with the complementary development of different modes. Traffic is allocated among different transportmodes mainly by economic criteria (e.g. tariff policy, energy efficiency,manpower needs, etc.) and in case of necessity, by administrative measures. Innovationsand adjustments- usually through increased competition - to keep the transport industry dynamic and cost-effective,became urgent in the late 1980s and the Government favored a structural change in transport undertakings from the point of view of both ownership and undertakings. The number of small- and medium-sizedundertakings has significantlyincreased, and large monolithic organizationswere split into vigorous smaller units to make them more cost-effective. The direct involvementof the MOT in the management of transport enterprisesand services is being gradually reduced. The overwhelmingmajority of transport enterprisesare now authorized to determine the strategies of the respective enterprisesand play a decisive part in all measures related to managez.tent.
2.06 While considerableprogress has been achieved towards introducing competition for road freight transport, the same cannot be said for public passenger transport (exceptingtaxis). Furthermore,while goods transportationin all modes is self-financingin Hungary, i.e. revenues from freight traffic cover all related costs (including operation, maintenance, depreciationetc.), as a matter of socio-economicpolicy, the Government has not set urban/suburbanpassenger fares at a high enough level to recover all costs. Consequently, the Government pays an enormous subsidy (about US$200- 250 million per annum) to the public transport agencies to safeguard the standard of living of the poorer section of the community.
III. Project Objectives and Description
3.01 The objectives of the project were to assist Hungary: (a) to increase the efficiency of the transport sector, conserve energy and improve the sector's earnings of convertible currencies; - 3 -
(b) to ease critical transport bottlenecks on Hungary's principal highway and railway networks, vital to internationaltrade; (c) to increase efficiency and cost-effectivenessin having timely. essential maintenance performed on the arterial roa'd and railway networks to sustain the development of all sectors of the economy: (d) to improve important institutionaland policy matters such as user contributions to road expendituresand optimum utilization of the road network, technology transfer, inte;^- modal facilities and gradual reduction of subsidies; and (e) to familiarize the railway and highway organizationsstaff with recent developmentsand expected trends in operating, monitoring and maintenance techniquesutilizing the latest state-of-the-art.
Description of the Project
3.02 The project consists of high priority items included in Hungary's 1981-85 Investment Plan or the then proposed 1986-90 Investment Plan. The railway components include: (i) a modernizationprogram for the FerencvAros (East) marshallingyard in Budapest; (ii) acquisition of track renewal and maintenance equipment; and (iii) equipment to upgrade interface facilities between rail and road at five container terminals. The highway components include: (i) constructionof the first phase of about 14 km of a 28 km four- lane motorway by-pass of Budapest including two bridges across the Danube; (ii) requisitionof equipmert for the maintenance of national roads, pavement management, road safety and road constructionquality control. The road transport component includes acquisitionof larger capacity, more fuel- efficient and longer-life freight vehicles engaged in internationaltrade together with supporting management informationsystems and maintenance workshop equipment. Technical assistance includes: (i) the contributionof road users to financing the costs of roads; (ii) modern management systems and operational aspects of internationaltrucking companies; and (iii) study visits of about 27 work-months of railway personnel to familiarize them with recent developments in traffic, operations and engineering practices, and about 80 work-months cf highway personnel in modern developments in traffic safety and pavement management. In addition, the project financed about five staff-monthsof foreign consultancyassistance to help produce suitable English-languagetechnical specificationsfor InternationalCompetitive Bidding (ICB).
IV. Project Design and Organization
4.01 The project was designed mainly to relieve transport bottlenecks and mounting congestion on some of the most heavily trafficked railways, out-moded marshalling yards and road sections. The project also specificallyaddressed improvementsthat affected more than one mode of transport, such as containers, concentration/locationof container terminals,and development of interface linkages with rail and other modes of transport. The project also aimed at enhancing internationalcompetitiveness of HC's foreign trade - 4 -
services, thereby improving the inter-modalbalance especially in foreign trade. Within _he highway system, the radial roads spanning the country from Budapest to its borders, which have within their areas of influence most of the country's industrialand commercialactivity, are generally of internationalsignificance and the major thrust of the project was to initiate the constructionof the first stage of the Budapest by-pass (including constructionof two major bridges and five important inter-changes)- which was probably Hungary's most critical bottleneck on an internationalroad route.
4.02 In the past, prior to the Bank's involvementin the transport project, major roads and bridges in Hungary were being constructed by five State-owned contractors. After reviewing Hungary's then constructionpractice in regard to availabilityof personnel (professional,technical, skilled and semi-skilled)and materials, and discussing legal requirementsfor foreigners working in Hungary at the time of preparation of the Bank's first transport project, it was concluded that no constraint existed on a foreign firm working in Hungary. The highway civil works contract envisaged in the Bank's transport project could, in consequence,be awarded to prequalified contractorsafter ICB. Thus at the Bank's initiative the country did introduce ICB in major highway civil works (the Budapest by-pass with two major bridges on the river Danube). This was a major breakthrough. The prequalificationand bidding process served as a learning process. For the first time a comprehensiveset of Hungarian specificationsfor road and bridge constructionwere assembled.
4.03 In the project designing stage, the Hungarians prepared transport feasibility studies using methodology customarily employed in Bank projects. As a result of the Bank's subsequent reviews of these studies and discussions with officials, a number of marginal componentsoriginally proposed for inclusion in the project were either reformulatedor postponed. More important,however, was the inclusion of two important studies, namely, (i) user contributionsto road expenditures,and (ii) a trucking management and informationsystem with special reference to internationalmarketing. The first study was designed to throw light on factors contributingto the inter- modal traffic pattern, which was skewed in favor of railways, with a view to investigatingsubsidies, user charges and pricing policy. The second study was aimed at improving "trade logistics" for the Hungarian international trucking company (HC).
4.04 The People's Republic of Hungary was the Borrower. The beneficiaries of the project were MAV (railway components),HC (internationaltrucking components) and MOT (highway components). The latter, as a government Ministry, received project funds through normal channels. The Bank entered into Project Agreements with MAV and HC to whom the Government did on-land loan funds under terms and conditions satisfactoryto the Bank.
4.05 The investmentmanagement firm UTIBER was engaged by MOT to provide overall coordinationof all project-relatedactivities, to monitor progress and ensure that the various executing agencies comply with reporting requirementsand schedules. The Governmentalso confirmed at Loan Negotiations that each executing agency (MAV, HC and MOT) would appoint an - 5 -
officer to be responsible for all project-relatedmatters of their component and to serve as counterpart to UTIBER's coordinationstaff. The entire arrangement proved satisfactorythroughout the project implementation.
V. Proiect ImRlementation
Loan effectivenessand Droiect start-up
5.01 The Loan (2557-HU)was approved on May 28, 1985 and was signed on June 4, 1985 (Table 2 - Part III). The Loan became effective on June 10. 1985 as planned. Once the Loan was effective the project progressed smoothly.
Implementationschedule
5.02 The schedule of completion of major components of the project at appraisal and their actual completion dates are shown in juxtaposition in Table 4. Part III. A substantialnumber of project componentsproceeded according to schedule and were completed on target with minor variations (up to a maximum of six months). In the case of modernization of the Ferencviros marshalling yard. however, there was a delay of about two years mainly due to the inclusion of environmentalprotection works - such as sound barriers - required by recent legislation,and to constructionof the maintenance workshop and health facilitiesat the first stage instead of at a later stage as previously planned, which did not affect operation of the yard. The quality of constructionof civil works was, in general, satisfactory.
5.03 The project's two technical studies were also of good quality. More importantly,implementation of major study recommendationsmade with regard to the road user contributionis already in progress and as a first step, taxes on heavy freight vehicles have been increased (Tables 4 and 6D - Part III). Similarly, study recommendationscontained in the information/marketing management of the internationalfreight agency served as an important input to the Bank-financedSecond Transport Project in Hungary (Tables 4 and 6D - Part III).
5.04 This was the first Bank-financedtransport project in Hungary. Preparation of civil works bid documents was somewhat slow to start with because of the unfaniliarityof the project executing agencies with Bank procedures and requirements,but was nonetheless satisfactory (SAR - para. 3.20). Retroactive financing for professionalassistance in the preparation of the technical specificationsand other bid documents included in the project in the English language for the proposed ICB proved to be of great value (para. 4.02).
5.05 UTIBER, the project coordinatingagency (para. 4.05), carried out its responsibilitiescommendably during the project implementationstage. These responsibilitiesinclude all fieldwork in connectionwith expropriationand land acquisition (for the Mo By-pass), control of conformance with project specifications,measurement of work quantities and approval of contractors' invoices for payments. Progress reporting of the project to the Bank was also on schedule. -6-
Procurement
5.06 This was the first Bank-financedtransport project in the country. Close Bank-Borrowercollaboration was therefore essential, particularly at the initial stage. In many instances the Bank mission found that technical specifications,schedules of delivery and the Bill of Quantities (List of Unit Prices) needed amplificationto permit an adequate response from international competitors. Based on the Bank's suggestions,the Borrower readily revised the documents whenever necessary and on the whole, procurement action proceeded satisfactorily.
5.07 ICB for the Budapest by-pass with two major bridges on the river Danube and several important interchanges (para. 4.02) turned out to be the centerpiece of procurement-relatedissues. During prequalification,the main Hungarian contractors (two road-buildingfirms and one bridge-buildingfirm) presented their qualificationsalone and in a sizable number of joint ventures. A number of foreign contractorsalso prequalified alone and in joint ventures. In this case of a major bridge contract, both steel and concrete superstructurewere allowed with the clear requirement that a bid must be provided for the "basic design" in case any bidder was interested also in an alternative design. A sufficient number of firms were prequalified which ensured adequate competition. Hungarian contractors finally won the contract on their home ground under intense competition and the ICB resulted in a substantial savings in the project cost estimates of this important component. The indirect outcome of this experience has been to convince Hungarian decision makers of the positive impact of ICB and the production of a useful set of technical documents in English for the procurement of large civil works contracts.
5.08 Adequate competitionwas also experienced in the procurement of railway equipment and vehicles and equipment of different types included in the project (Annex 1, Part III). Many countries, inter alia Germany, Italy, France, Sweden, Spain, Austria and Turkey, successfullybid for these items and won several contracts.
5.09 Because of intense competition and lower bid prices, particularly for railway equipment and major highway civil works (paras 5.07 and 5.08) obtained than those in the appraisal estimate, considerable savings were realized which were subsequentlyutilized, in consultationwith the Bank, for other important items included in the project and within the foreign exchange ceiling (US$119.7, Table 5, Pt.III) but which could not previously be financed because of the limitation imposed by the loan amount. Overall, the project offered excellent experience to Hungarian professionals in procurement matters and no serious procurement problems were encounteredwhich could not be satisfactorilysolved. The Bank also arranged a procurement seminar in Budapest at the early stage of project execution to familiarizeproject- related officials with the state-of-the-artin procurement issues and with Bank requirements. This proved to be very useful. -7-
Project Costs and Financing
5.10 The estimated cost of the Transport (Rail/Road)Project at appraisal was US$215.5 million. The final cost came to US$196.2 million (Table 5A). The decrease in total cost of about 9X in terms of US dollars was due to savings in the estimated cost of railway equipment and major highway civil works (paras 5.07, 5.08 and 5.09) and unforeseenchanges in the exchange rates (Table 5. Part III). Cost estimates of other components at project appraisal compare well with the actuals. The structure of project financing was also very similar to what was planned at appraisal. However, in spite of these savings, the Loan amount was not reduced because the total foreign exchange requirement included in the Project appraisal is still much higher than the Loan amount of US$75.0 million (see para. 5.09). The Bank played a major role as a catalyst to enlist co-financingfrom other internationalfinancing agencies (Table 5B) and only the railways were required to finance a part of the project costs, the balance being fully met from external assistance, namely from the Bank (designatedas Loan 'A') and from other international agencies (designatedas Loan 'B').
Disbursement
5.11 The Loan was fully (100%) disbursed, as follows: Railway (MAV) Components (Part A) - 30.22%; Highway Component (Part B) - 43.26%; and Hungarocamion (Part C) - 26.52% of the total loan amount (US$75.0 million). The final disbursementposition by category is shown in Table 3. Statements of expenditures,against which the Bank disbursed,were submitted at regular intervals by the Borrower through the National Bank of Hungary (NBH). As agreed, the Borrower also establisheda Special Account (revolvingfund) at the NBH amount to US$5 million to maintain an adequate flow of funds to the beneficiaries to finance eligible project expenditureswith a minimum of administrativedelay. Excepting at the very late stage, actual disbursements were consistentlyfaster than the appraisal estimates (Table 3 - Part III). The Loan was closed on June 30, 1991, on schedule.
Loan Covenants
5.12 Compliancewith Loan Covenants was satisfactorythroughout the project implementationstage in spite of some delay in the execution of a few project items (Table 7 - Part III). The Borrower'spart (Part II) of the PCR and the Government's comments on Part I of this report were received and have been taken into account and duly incorporatedin this report.
VI. Proiect Results
6.01 Overall, the project was successful in meeting its principal objectives of easing critical transportbottlenecks on Hungary's principal highway and railway networks vital to internationaltrade. Modernization of the Ferencv&ros marshallingyard and constructionof the first stage of the Budapest bypass along with two major bridges on the river Danube were already showing results in facilitatingthe smooth movement of both passenger and freight traffic. Acquisition of fuel-efficienttrucks by HC similarly - 8 -
improved its operational efficiency, helped conserve energy and increased its competitive strength in internationalfreight transport. The project also provided equipment for container handling and road maintenance which improved interface facilities between rail and road and reduced the journey time significantly. HC's revenue earning capacity increased substantiallyand thereby improved sector's earnings of convertiblecurrencies. The benefits of technical assistance and training provided through the project would permeate the entire economy and some of the study recommendationswere already put into effect (para. 5.03 and Table 6D Part III).
Physical targets
6.02 The physical targets of the project have been achieved as planned (para. 5.02) with some slippage in the time schedule mainly due to inclusion of the environmentalprotection works required by the country's new legislation. Constructionof the maintenancework and health facilities at the first stage instead of at a later stage as previously planned also delayed final modernizationof the FerencvArosEast marshalling yard but the yard was brought into operation as scheduled. The quality of constructionof civil works was satisfactory.
Economic Performance
6.03 The general and sub-project specific methodologiesfollowed for the economic re-evaluationof the completed project are, basically, the same as those used at appraisal. For calculating the economic benefits and costs, internationalprices have been used for imported equipment materials and other tradeable commodities. As regards the latter, prices of mainline locomotives and shurters produced in Hungary or COMECON countries are significantlylower than the internationalprice. Land and other non-tradeable items such as railway ballast and aggregates, skilled and unskilled construction labor, have been valued at local prices, both at appraisal and in the preparation of the completion report.
6.04 The quantitativeeconomic analysis for the improvement of the railway marshalling yard takes into considerationthe major benefits from the avoidance of traffic diversion due to capacity constraints,reduction of total marshalling time for car detention (reception,marshalling and train formation), improved utilization of shunters and reduction in operating costs. The re-evaluatedbenefits from the track maintenance equipment include reduction in track and rolling stock maintenance expenses due to reduced wear and tear and savings in manpower. The economic benefits from container handling equipment would result mainly from better utilization of equipment and loading and storage areas. Benefits due to reduction of accidents in the improved operation of the marshalling yard (skids used instead of secondary retarders before the project execution)have not been taken into account in the ex-post estimates to make the results comparable with the SAR. In the Action Plan envisaged in the SAR (Annex 1 Table 1 of the SAR), and during subsequent dialogue with the Borrower, key targets were fixed for important project-related indicators and their actual performance (Table 6F), nd based on this data the revised ERRs are shown in Table 6B, Part III. In the case of modernization of FerencvSros marshallingyard and track maintenance equipment. -9- the revised ERRs are significantlydepressed. This reduction is primarily due to the drop in rail freight traffic in general in subsequent years and to the delay in completion of the FerenevArosWest marshalling yard and the approach section to Budapest jur.ction,financed by local sources (Annex 2A - Part III). The revised ERR for container handling equipment on the other hand turns out to be more favorable than the appraisal estimate mainly because of the rising trend in container traffic'on Hungarian railways with an appreciable increase in lead in spite of the overall decline in freight traffic (see footnote and Table 6F(c)).
6.05 Economic benefits from the project road construction include savings in vehicle operating costs due to reduced congestion,shortened travel distances, improved road surfaces and reduced travel times. About 8.000-9,000 vehicles per day used important sections of the Budapest bypass during 1990/91, as against the traffic range of 6,000-11,000vehicles per day estimated at appraisal (Table 6F(d)). A significantproportion of this traffic (25-30%) was heavy commercial traffic. The key point is that this traffic will rise sharply with the completion of the on-going Second Transport Project as soon as the adjoining section of the bypass (about another 14 km) is connected with motorways M-1 and M-7. A significantreduction in cost of the civil works (para. 5.07 and Table 5A - Part III) has significantly improved the revised ERR for the Mo motorway (Table 6B - Part III). The rate of return for the first section of the Budapest bypass is influenced by the high constructioncost per km of this sub-sectionbecause of two major bridges and several costly interchanges.
6.06 Considerabletraffic hold-ups were experiencedon heavily trafficked roads in Hungary in the winter time due to road icing, snow falls and blizzards resulting in increased vehicle operation and time costs. The investments in road maintenance equipment such as high-capacity sand/salt- spreading machines. rotary snow ploughs etc., reduced the period of traffic delays from three hours to less than one hour on such occasions. Since with a relatively small investment the period of disruption of traffic could be reduced significantly,the revised ERR for this sub-componentreconfirmed the high rate of return expected at appraisal (Table 6B - Part III).
6.07 Net additions to HC's fleet were designed to improve its export earnings and enhance internationalcompetitiveness. Operating revenues of HC compare well with the appraisal forecasts (Annex 3, Part III). HC's operational efficiency indicators for the latter half of the 1980s fully
/ Container traffic tonnage (in millions) for different years
1980 1.2 1985 2.4 1981 1.5 1986 2.6 1982 1.6 1987 2.6 1983 2.1 1988 2.9 1984 2.3 1989 2.5
Source: SAR SupervisionReport - 10 -
justify the investmentsmade. Compared to other alternativessuch as the leasing/hiringof vehicles, outright acquisition of fuel-efficientlight- bodied vehicles proves to be the least-costsolution with a revised ERR of about 26% depending on the increasingutilization of these vehicles with improved staff productivity (Table 6B - Part III and Annex 4B). The financial rate of return (Annex 3D) is equally impressive.
6.08 The overall project, therefore,remains economicallyjustified as appraised with a weighted E.R. of about 20% (Table 6B - Part III).
Financial Performance
6.09 The financial statementsof MAV. including both appraisal estimates and actual results for FY85-89, are given in Annex 3 (A-C), Part III. MAV's operating ratio, including passenger subsidies, increased from about 87% (actual) in 1983 (SAR, Annex 5, Table 1) to about 97/98% during 1985-89 (Annex 3A, Part III). The operating ratios excluding subsidy during this period similarly deteriorated (i.e. increased) from about 100/101% to 105-110%. Until 1984, despite having to carry commuter passenger traffic at below-cost fares (para. 2.06), MAV covered all operating costs through tariff revenues. The subsidy, therefore,did not finance an overall operating deficit but contributed to funds from which debt service, working capital increases,and most of MAV's capital expenditureswere financed. This is no longer the case, although freight traffic still covers its costs and provides a surplus. MAV's rate of return on net fixed assets, dropped from about 5% in 1983 (SAR, Annex 5, Table 1) to less than 1% in the late 1980s (Annex 3A, Part III), and, thereby, also reflects the inadequacyof tariffs and the urgent need to reduce unit costs.
6.10 A statement of source and applicationof funds for 1985-89 is provided in Annex 3, Table B. Internallygenerated funds for the three-year period 1985-87 covered about 95% of MAV's capital investmentand thereafter for the next two years' percentage share was reduced to about 88-90%. The yearly provision of depreciationaccounted for about 80-90% of these internallygenerated funds. The current ratios during 1985-89 (Annex 3, Table C. Part III) indicate that MAV's current assets during the period under considerationaveraged from four to six times its current liabilities.
6.11 The above financial performanceof the railways was influencedby several factors, namely the traffic pattern, a major reform in the taxation system and tariff policy. Total freight traffic, which was steady up to 1980, fell from 24.0 billion ton-km in 1980 to 19.8 billion ton-km in 1989 (Annex 2, Table 4, Part III), representinga total decrease of about 20% in ton-km. The freight traffic declined mainly as a result of the slackened economic growth of the country and its trading partners (terminationof COMECON cooperation). However, MAV's container traffic increased significantlyduring the same period 1980-89 (para. 6.04). A major reform of the Hungarian taxation system, which was implementedduring 1988, introduceda value added tax and progressive income tax on individuals. Wages were increased to compensate workers for the new income tax. During January/February1989, the Government increasedMAV's freight tariffs by 20%, long distance passenger fares by 30%, and inner city fares by an average of 64%. The financial picture discussed - 11 -
above (paras. 6.09-6.11) is the outcome of the combined effect of all these factors.
6.12 The HC is an internationaltrucking enterprise, operating in the competitive European market for import, export and transit traffic, with the freedom to set freight rates according to the competitive market. As about one-third of its transport revenues are denominated in West European currencies, HC is a significantcontributor of convertible foreign exchange to the economy of Hungary. This enterprise is efficient and profitable. The operating ratios for the period 1985-89 (Table D, Annex 3, Part III) compared favorablywith appraisal estimates for the three years 1985-87 and deterioratedto some extent during 1988-89 mainly due to the Middle East situation and unexpected increases in its new tax obligation during 1988/89 (para. 6.11). The rate of return on net fixed assets varied between 30 and 40 percent, showing a much better performance than forecast at appraisal.
6.13 Traffic, measured in terms of ton-km. rose by about 50% from 1985 to 1989 (Annex 4B, Part III), while operating revenues increased by 100% (Annex 3, Table D, Part III). HC's commendable financial performance during the period under considerationwas primarily achieved by better vehicle utilization. quicker turnaround and improved staff productivity (Annex 4, Table B).
Technical assistance and training
6.14 The major technical assistance component under the project was (i) the road users' contributionstudy and (ii) the trucking management information study. The quality of the two completed studies is satisfactory and the study recommendationsare already being utilized (para. 5.03) and acting as inputs for a subsequent Bank-financed transport project (Table 6D, Part III). In addition, a number of middle management level officials and senior specialists from Hungary have undergone short programs of study in (a) improved marshalling yard and terminal operations, (b) traffic control, (c) traffic safety. (d) pavement management, and (e) the trucking management system. This training took place in several countries including the UK. West Germany, USA, Finland, France and Sweden. The training program, though initially lagging behind, picked up momentum during project execution and ultimately proved very useful (Table 6E, Part III).
VII. proiect Sustainab_ilitv
7.01 Improved competition and ongoing structural adjustments in Hungary (para. 2.04) are aimed at keeping the transport industry dynamic and cost- effective. With the present trend of Hungary's emphasis on increased exports and liberalizingimports to promote competition,the country is now placing a higher premium on the more efficient operation of existing transport assets carrying significantvolumes of foreign and transit trade. The Government intends to continue the policy of encouraging free market competition,while fostering energy conservation. The main policy instrumentswould continue to be pricing measures. The Bank in its subsequent transport project in Hungary has urged that policy improvementsbe an essential element of Bank activities - 12 -
in transport. The Government has also decided to reduce the transport subsidy significantlybefore 1993. With these developments, there is reasonable expectation that project benefits will be sustained. The posSibility of changes in the political environment leading to a reversal of the ongoing reform process in the transport sector could be a potential risk. However. with the firm commitment of the present Government towards the ongoing reform process, these risks seem to be minimal.
VIII. Bank Performance
8.01 Through the first transport (rail/road)project, the Bank made a positive contributionto the physical and institutionaldevelopment of the transport sector. There is now increasing consciousnessof the benefits of improved competition,control of operating costs, better .- 3 ntenance and avoidance of uneconomic activities. Inclusion of both rail and road components in the same project allows an integratedview of the land transport system during the supervision stage and helps identify some of the system-wide problems such as the need for (i) structural change in transport ownership/undertakingsto enccurage more competition,and (ii) improved interface facilities to promo-e multi-modal movements and the need to reduce transport subsidies. All these important issues were successfullyfollowed up in the Bank's next transport project. The project encountered no serious procurement problems because of timely action taken by the Bank to assist the Borrower in carrying out the necessary amplificationsin bid documents (para. 5.06) and also by organizing a procurement seminar in Budapest well in advance of project execution to make the concerned agencies sufficiently familiar with Bank requirements. The Borrower fully appreciated the Bank's helpful and reasonable approach in this regard. In retrospect, the following lessons may be learnt from the experience of the completed project:
(a) Introductionof ICB for major highway civil works was an important breakthrough,providing an excellent opportunity to familiarize the concerned authoritieswith the processes of prequalificationand bidding and resulting in substantialsavings (paras. 4.02, 5.06 and 5.07); (b) provision of an overall coordinationagency (UTIBER) for all project- related activities with appropriate counterpart from each project executing agency went a long way to successfullymonitoring progress and complying with Bank requirements (para. 4.05); (c) retroactive financing for professionalassistance in the preparation of the technical specificationsand other bid documents included in the project in English for the purpose of ICB yielded rich dividends (para. 5.04); and (d) establishmentof a Special Account (revolving fund) greatly facilitated the timely flow of funds to the beneficiaries to finance eligible project expenditureswith minimum administrativedelay. - 13 -
IX. borroLerPerformance
9.01 The Borrower's overall performancewas satisfactory. Prompt action taken towards Loan Effectiveness (Table 2, Part III) and timely disbursements (mostly ahead of the appraisal schedule - Table 3, Part III) of the Bank Loan bore ample testimony to that effect. The quality of constructionof civil works included in the project was satisfactory. HC's performance in the internationaltrucking market with all round improved operational performance was commendable. The technical approach to the road users' contributionstudy and trucking management study was comprehensiveand sound. MOT. MAV, HC and NBH are all well-managedorganizations and they maintained good cooperation amongst themselves. Compliance with the Loan Covenants was satisfactory (para. 5.12 and Table 7, Part III).
X. Bank-BorrowerRelationship
10.01 Good relations between the Bank and the Borrower contributed to the clarificationand resolution of many issues that arose during project implementation(para. 5.06). The Bank's flexible and reasonable approach which enabled the Borrower to utilize the ICB-related savings, in consultation with the Bank. for other important items (para. 5.09) included in the project but which could not previously be financed because of the limitation imposed by the Loan amount, was fully appreciated. The successful Bank-Borrower relationshippaved the way to further Bank assistance in subsequent transport projects and continuous dialogue regarding transport policy improvements.
XI. - Consulting Services
11.01 The Hungarian Institute of Transport Science (KTI) and local consultants carried out the study of the present system of contributionby road users towards road expendituresand optimum utilization of the road network. A reform package covering all road users has been recommended in this study. Similarly. UNICONSULT (United Transport Consulting Firm, Hamburg) carried out the trucking management system studies relating to international freight. A number of recommendationshave been made in this study relating to informationsystem requirements,international marketing. etc. Implementation of appropriate study recommendationscontained in both these studies remains in progress and the quality of these studies (paras. 4.03, 5.03 and 6.14, Table D, Part III) is satisfactory.
XII. Project DocumentationData
12.01 The appraisal report and the Loan documents were well documented and provided a useful framework for both the Bank and the Borrower for review of project implementation. Supervisionreports and procurement documents and the Bank's response contained in-depth ongoing analysis of physical, financial and operational aspects of the rail/road sub-sector in general and project components in particular. Timely submission of audit reports of MAV and HC also facilitated preparation of the PCR. - 14 -
PROJECT COMPLETION REPORT
HUNGARY TRANSPORT(RAIL/ROAD) PROJECT (LOAN'2557-HU)
PART II - PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE
PREFACE
The World Bank granted a transport loan amounting to US$75 million to the People's Republic of Hungary, and the legal documents were signed on June 4, 1985.
This loan has been supplementedby a US$24 million Bank co-financing loan enabling Hungarocamion to procure vehicles.
The closing date for disbursementof the Bank loan, which provided hard currency for the development of the transport sector, was June 30, 1991.
The loan facilitated:
- updating of MAV's Ferencvaros East marshallingyard and procurement of container handling, track constructionand maintenance equipment,
- constructionof the first part of the MO Motorway around Budapest, including two bridges over the Danube, running from the M5 motorway to trunk road No.6, in addition to the procurementof road maintenance equipment and road quality testing devices,
- procurement of special large-capacityenergy-saving up-to-date vehicles for Hungarocamion,
- study tours abroad and the engagement of foreign consultants in connection with the program.
The Borrower greatly appreciates the input of all the Bank experts who carried out the appraisal and the cooperation and useful advice of those who assisted in the implementationof the project. - 15 -
PROJECT COMPLETIONREPORT
HUNGARY TRANSPORT(RAIL/ROAD) PROJECT (LOAN 2557-HU)
PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE
S U M M A R Y
RAILWAY COMPONENT
As part of Transport (Rail,'Road)Project I, the Hungarian State Railways (MAV) implemented the following project components in the period 1985-1990:
1. modernization of the out-dated FerenevarosEast marshalling yard in Budapest; 2. modernizationof track constructionand maintenance technology; 3. development of interface facilitiesbetween rail and road at the container terminals;and 4. training program.
In the appraisal of the Project during the first part of the 80s, the World Bank loan generally aimed at providing sufficient foreign exchange for transport developmentsof great in.portance.
The individualdevelopment objectivesand their evaluationare also included in this report.
Formulation/definitionof the first World Bank Transport Project was preceded by a much more careful and thorough study than was usually the case in Hungary as regards traffic as a whole and railways in particular. That study covered not only an evaluation and forecast of the country's transport (Appraisal Report), but also economic analyses relating to each machine purchased.
With regard to the implementationof the developmentsand performance of MAV, the principal objectives were included in a project-related"Action Plan". During implementationof the plan, many difficultieswere encountered in meeting these objectives.
(i) The Bank loan covered only a small part of MAV investments,while the objectives related indirectly to MAV's entire spectrum of activities.
(ii) In the mid-80s, it was impossible to foresee those political and economic changes which would take place in Eastern Europe and Hungary towards the end of the decade and which have had a significant impact on railway performances. - 16 -
(iii) It could not be expected that the Bank's requirementswould be met in such a short period and traditional railway operations replaced by market- and profit-orientedactivities.
(iv) Growing financial difficultieshave prevented the realization of efficiency gains (e.g. development required for staff reduction).
RECONSTRUCTIONOF THE BUDAPEST FERENCVAROS EAST MARSHALLING YARD
1.1 From the viewpoint of the user, reconstructioncovered the East marshalling jard, track, connections leading to it and service sets of tracks. Capacity has been increasedby constructinga second turn-out track between the East starting head and the Budapest Ferenevarosbranching-off point. The starting part received a modern signal installation(type D70V) with the gradient conditions of sorting sidings constructed to ensure continuous wagon speed control by installationof the first type of braking system (ZWUS, Poland) and of the second (ELIN - Austria). A new gravity marshalling yard control system has also been installed.
1.2 As soon as the technical content of the reconstructionhad been clarified, a new operationalplan was drawn up on schedule. Using the simulation method, several versions were analyzed and the best one applied. A report was prepared in 1987 indicating the possible effect of the still present bottlenecks. According to surveys conducted in 1984 and previously, annual goods damages of HUF 30-40 million and wagon damages of about HUF 2-3 million occurred at the East marshalling yard. As a result of the introductionof the ELIN final braking system, damages have been practically reduced to zero. Eliminationof freight slippage that previously occurred in 10-15 wagons a day is also due to application of final braking. Despite a decrease in traffic. utilization of the new technology installed in the East marshalling yard is constantly on the agenda. Station staff have been well trained in handling the new equipment. Based on practical experience, an analysis has been prepared this year to explore potential uses and to identify the method of implementation. The findings support the statements we have previously made in reports, i.e. improving the condition of circular railway track and bridge and completing the reconstructionat Ferencvaros junctions will provide an opportunity for the arrangement of all (North-South)traffic through Szob/Sturovo (Czechoslovakia)and in this context for beginning the gradual liquidationof the network role of Rakosrendez8 (another major marsha'llingyard in Budapest).
ANALYSIS OF COMBINED FREIGHT TRANSPORT DEVELOPMENT
1.3 In spite of a significant decrease in freight traffic (from 122 million tons in 1984 to 87.4 million in 1990 - a decrease of about 28%), container traffic tonnage increased about 9% for the same period. However, in container handling operations MAV has been less successful due to: (i) terminationof COMECON cooperation affecting volume and structure of containers; (ii) delay in forwarding;and (iii) increased road traffic competition (the private sector, in particular, has been developed significantly). - 17 -
1.4 In this field the basic aim of the loan was to develop the equipment of container terminals already existing or under construction (including container-handlingdistrict terminals opened equally to large container traffic) by the installationof special loading machines which were not yet available at MAV and could not be purchased on the COMECON market.
TRAINING PROGRAM
1.5 Within the framework of the training program, MAV experts were able to study the methods used by other countries and railways and the most recent development in railway-relatedmatters. We consider the transport policy and railway conferences organized by the Bank (1989/1990and 1991) very successful,offering us an opportunity to familiarizeourselves with the problems faced by railways in similar situations ir addition to the most developed railways.
ANALYSIS OF TRACK CONSTRUCTIONTECHNOLOGY
1.6 Machine procurementunder Bank financinghas yielded significant results in improving the condition of the machine fleet. Another result is the considerablereduction in manpower needs for track maintenance (person/km) caused by fleet modernization. In the field of mechanization,replacement of worn-out equipment naturally involves the in_tallationof equipment at the highest possible technical level which allows the same operations to be perfotmeu at a higher level of quality and using fewer machines. Thus, installationof new machines ultimately results in savings in railways operating costs and staff.
Experience
1.7 MAV's experience in its first participationin a World Bank project can be summarizedas follows:
(a) MAV has gained a good deal of experiencein the assessment of different investmentsusing the Bank's methods, although the former management were not familiar with them and some decision-makingwas not preceded by preparation of feasibilitystudies.
(b) During project implementation,a new procurement method (International Competitive Bidding - ICB) was learned. This method, which was a completely new departure for MAV, is now being applied widely. As a result of such a new procurementmethod being introduced,MAV had access to the most modern equipment under favorable terms, in many cases introducingnew techniquesand technology.
(c) During implementationof the project, the Bank required much more frequent and stringent supervision than had been applied to previously- implementedMAV projects. Since it effected changes in everyday practices and requirements,implementation proceeded with difficulty. - 18 -
However, the requirementsfor regular reporting and personal liability had a favorable impact on implementationand supervision.
(d) Based on the experience gained and in anticipationof new traffic flows, MAV should investigate the possibility of reducing the number of existing marshalling yards and try to introduce a new system of yards/terminals (concentratingall freight activities in one location).
(e) As a summary of experience gained during the development of the container terminal equipment under Bank financing, it can be stated that the freight handling technology introduced as a result of development has created favorable conditions for increasing containerizedand huckepack traffic and for a better utilization of loading and storage areas at terminals. Based on this favorable experience, there is justification for continuing development in this field in order to facilitate MAV's participation in intermodal combined freight transport which is developing dynamically in Western Europe and which is essential from both economic and ecologicalviewpoints.
(f) Under the training program the most recent developmentsused by other countries and railways in their work have been learned. The transport policy and railway conferences organized by the Bank (1989, 1990 and 1991) were considered successful,offering an opportunity for familiarizationwith the problems faced by railways in similar situations, as well as with the most developed railways. - 19 -
HIGHWAY COMPONENT
As part of the Transport I Project, MTCWM implemented the following developments in the period 1985-1990:
1. constructionof a 14km section of the MO motorway 2. procurement of road maintenance and laboratory testing equipment 3. technical assistance.
1. Constructionof a 14km section of the MO Motorway
Constructionof this section offers the following advantages:
- favorable traffic conditions can be created by directing the flow of traffic around Budapest along the two most important international transit routes (E60 and E75),
- by the constructionof a new bridge over the Danube, an improved road connection is establishedbetween the Eastern and Western parts of Hungary and among settlementson the two banks of the Danube to the South of Budapest (prior to constructionof the bridge, the nearest common highway and railway bridge was 90km from downtown Budapest),
- downtown areas of Budapest are relieved of heavy road traffic resulting in a reduction of the negative environmental impact of road traffic along the affected routes.
Cooperationbetween the Bank and the Borrower
The World Bank representativesmade a number of proposals during the preparation and implementationof the project which proved to be useful in its implementationand allowed the introductionof solutions that are more favorable than those previously applied in Hungary. The application of FIDIC serves as an example of this.
As proposed by the World Bank experts, a detailed analysis was prepared relative to the quality specificationsof road constructionwork and concrete materials. By presenting their opinion and approval rapidly, the Bank experts greatly contributed to the success of the project.
2. Procurement of road maintenance and laboratory testing eguiRment
Road maintenance equipment was procured for the following purposes:
- to improve the mechanizationof winter skid prevention - to replace the multi-purposevehicle fleet - to develop the mechanizationof drainage systems. - 20 -
The aims of the procurementof laboratory equipment were as follows:
- development of the mechanizationof road quality supervision - implementationof a recording device to feed data into the Road Data Bank.
The activities of the Bank expert can be separated into three phases:
In the first phase the expert discussed the correctness of the technical specifications,the intended form of procurement and the planned schedule of purchases. He requested the elaboration of various efficiency analyses.
In the second phase, the Bank expert cooperated in the clarificationof the guidelines related to the rules of tendering and their stipulations.
In the third phase, he helped the Borrower reach important decisions. always on the basis of thorough and detailed analysis.
3. Technical assistance
The technical assistance financed under Loan 2357-HU allowed 60 persons engaged in the transport sector (MTCWM, investment agencies, design and research institutes)to take part in training programs covering 10 subjects (study of investment preparation,ICB, up-to-date technologies and reputed foreign organizations)in 9 European countries and to participate in an IRF congress in South Korea. - 21 -
HUNGAROCAMIONCOMPONEN.
1. Improvementof the vehicle fleet
Hungarocamionhas procured 609 vehicles (saddle tractors and trucks) and 311 trailers under the First Transport Project which represents one third of the entire fleet operating in internationalhaulage. The program provided for a fleet extension of about 10% in addition to replace which, accompaniedby higher km/performance,resulted in an overall capacity increase of 15-16%. The useful life of the imported vehicles is longer by 30% than that of those manufactturedin Hungary. This contributed to reducing the need for investment funds as well as to increasingcapacity. A maintenance cost reduction of 34% can be achieved in comparisonwith that of the Hungarian types. In the case of operating two- and three-axlevehicles, fuel needs could be reduced by 9.6% and 7.0%. respectively. During the 5 years of project implementation,HC was able to save up to 10 million liters of fuel, which contributednoticeably to environmentalprotection. The volume of soot emitted by the vehicles was reduced by 38.5 tons.
2. Study by UNICONSULT
The management system proposed by the study is based on the method "interventionin exceptional cases" which results in the decentralizationof decision making. The proposals were accepted and the organizationalchanges have been introduced. - 22 -
1. ANALYSIS OF THE RECONSTRUCTIONOF BUDAPEST FERENCVAROSEAST MARSHALLING YARD
Technical implementationof the developmentprogram
1.1 From the viewpoint of the user, reconstructioncovered the East marshalling yard, track, connections leading to it and service sets of tracks. Capacity has been increasedby constructinga second turn-out track between the East starting head and the Budapest FerenevArosbranching-off point. The starting part received a modern signal installation(type D70V) with the gradient conditions of sorting sidings constructed to ensure continuous wagon speed control by installationof the first type of braking system (ZWUS, Poland) and of the second (ELIN - Austria). A new gravity marshalling yard control system has also been installed.
Operational plan
1.2 As soon as the technical content of the reconstructionhad been clarified, a new operational plan was drawn up on schedule. Using the simulationmethod, several versions were analyzed and the best one applied. A report was prepared in 1987 indicating the possible effect of the still present bottlenecks. According to surveys conducted in 1984 and previously, annual goods damages of HUF 30-40 million and wagon damages of about HUF 2-3 million occurred at the East marshalling yard. As a result of the introductionof the ELIN final braking system, damages have been practically reduced to zero. Eliminationof freight slippage that previously occurred in 10-15 wagons a day is also due to application of final braking. Despite a decrease in traffic, utilization of the new technology installed in the East marshalling yard is constantly on the agenda. Station staff have been well trained in handling the new equipment. Based on practical experience, an analysis has been prepared this year to explore potential uses and to identify the method of implementation. The findings support the statements we have previously made in reports, i.e. improving the condition of circular railway track and bridge and completing the reconstructionat FerencvAros junctions will provide an opportunity for the arrangementof all (North-South)traffic through Szob/Sturovo (Czechoslovakia)and in this context for beginning the gradual liquidation of the network role of Rakosrendez8 (another major marshallingyard in Budapest).
1.3 Wagon marshalling time
Wagon detention time (reception,marshalling and train formation)has been decreased from the previous average of about 15.6 hours to about 12.5 hours. As compared to the target, only a partial reduction has been realized with respect to the marshalling time of wagons. After the reconstruction,the wagon marshalling time was reduced by about 3 hours with the possibility of a further reduction of about three hours which will be achieved mainly by operational and organization improvementsand the marshalling yard computer controlled information system. - 23 -
1.4 Humping capacity
As a result of the reconstructionof the East marshalling yard, humping capacity reached target. In line with internationalrecommendations concerning the degree of utilization (0.65-0.8),actual capacity is 3.440 wagons/day for the East marshalling yard and, according to a previous calculation,2,800 wagons/day for the West marshalling yard.
1.5 Utilization of shunting locomotives
The 8.5% increase in utilization of shunting locomotives falls behind the target. This is caused by a reduction in traffic and by the fact that the East marshalling yard handles West-routed wagons involving extra shunting operations.
1.6 Existing train cancellations
Less than 10% of all train cancellationsresulted from insufficient receiving and handling capacity at the marshalling group or at the receiving group. The average annual number of stoppages due to modernizationof the FerencvArosmarshalling yard was below one train per day. One of the reasons for this is that MAV ha-scut back through reorganizationof the functions of the station in the renewal periods involving a significantdecrease in marshalling yard capacity.
1.7 Marshalling oReration cost reduction
An increase rather than a decrease has been experienced in unit costs, due partly to an annual rate of inflation of 10-30% and partly to a reduction in traffic.
1.8 Staff reduction
As a result of the modernization,the previous shortage of staff has been eliminated, including the lay-off of about 100 workers from Poland. The shoeman and switchman functions could also be eliminated.
2. ANALYSIS OF TRACK CONSTRUCTIONTECHNOLOGY
2.1 Machine procurement under Bank financing has yielded significant results in improving the condition of the machine fleet. Another result is the considerablereduction in manpower needs for track maintenance (person/km) caused by fleet modernization. - 24 -
2.2 The following machines were procured under the Loan:
Number Type of machine
1 Pc broad gauge ballast clearing machine 3 pcs standard gauge ballast clearing machine 5 pcs switch regulating machine 2 pcs track regulating machine 2 pcs sleeper changing machine 2 groups switch changing machine 2 pcs ballast regulating machine 80 pcs quick rail cutting device 12 pcs hydraulic rail tightening device 8 pcs power track lifting device 2 pcs hydraulic rail end bending equipment 2 pcs rail web grinding machine 60 pcs petrol engine power-wrench 20 sets high frequency tool set
2.3 From the analysis of the status of mechanization,it is clear that most of the heavy machines operating on railway track were extremely outdated at the time of preparation of the loan program and the maintenance costs of machines increased steadily. In the system of five-year plans used at that time, only maintaining the level of operation, mainly through replacementof worn-out equipment, could be set as a target. In the field of mechanization, replacementof worn-out equipment naturally involves the installationof equipment at the highest possible technical level which allows the same operations to be performed at a higher level of quality and using fewer machines. Thus, installationof new machines ultimately results in savings in railways operating costs and staff.
2.4 Through continuous installationof new machines, as listed in the introduction,it was possible to achieve a significant reduction in the number of individual machines (partly through replacement)as follows:
Type of machine Number of machines 1984 1991
track regulating machine, 06-16 Plasser 10 7 n06-32 o 10 5 ,Attila 8 3 tamping machine, Buda 47 5 switch tamping machine, Csomid 8 8 sleeper tamping machine, Tass 45 23 ballast screening machine, Csaba 4 - ballast regulating machine, R-7-D Matisa 10 3 lining machine, RIL Matisa 3 2
It means that the machine procurement under World Bank financing has yielded significant results in improving the condition of the fleet. Also a result of - 25 -
mechanization is the considerablereduction in the manpower requirement of railways maintenance (employee/km),while an improvement occurred in the machine fleet. The manpower requirementdecreased
4,240 2.743 from ------in 1984 to ------by 1990. 13,798 12.625
2.5 The installationof advanced screening machines gave an impetus to the screening works urgently needed within maintenance operations resulting in a steady improvement in MAV's track conditions.
2.6 Procurement and installationof railway tools was aimed at the small- scale replacement of certain domesticallyproduced outdated categories (e.g. screwdrivers). On the other hand, it was possible to introduce quicker, more advanced working methods: a lightweightquick rail cutting device takes 2-3 minutes for rail cutting, while a rail saw takes 15-16 minutes for the same operation. The use of hydraulic rail tightening devices allowed quick repair of rail failures which increased the safety of jointless rails. The use of high frequency tool sets allowed the repair of wood sleepers and wood-filled concrete sleepers on the track.
2.7 Through procurement, the first steps in the introductionof new mechanized technologieshave been taken. It is to be stressed that only initial steps have been taken, and full mechanization requires further procurement. The use of switch changing machine groups made it possible to lay assembled switches in a single section, together with the connecting rail sections, without deformation,involving a significant improvement in quality. The hard physical work of sleeper changing has begun to be replaced by mechanized methods. Machine operation has been monitored regularly. To utilize both the switch changing machines and sleeper changing machines more efficiently,the machine groups have been organized into machine chains complete with transport, loading, ballast regulating,ballast tamping and tamping machine units as required by the complete technologicalprocess.
3. ANALYSIS OF COMBINED FREIGHT TRANSPORT DEVELOPMENT
3.1 In spite of a significant decrease in freight traffic (from 122 million tons in 1984 to 87.4 million in 1990 - a decrease of about 28%), container traffic tonnage increased about 9% for the same period. However, in container handling operations MAV has been less successful due to: (i) termination of COMECON cooperation affecting volume and structure of containers; (ii) delay in forwarding; and (iii) increased road traffic competition (the private sector, in particular,has been developed significantly).
3.2 In this field the basic aim of the loan was to develop the equipment of container terminals already existing or under construction (including container-handlingdistrict terminals opened equally to large container traffic) by the installationof special loading machines which were not yet available at MAV and could not be purchased on the COMECON market. - 26 -
3.3 During the project it was possible to:
- modernize container terminal equipment, and - take initial steps in the preparationof the huckepack traffic.
In the course of the project, the terms of reference were amended so that side-lift trucks under items 2 and 4 in the tender could be replaced by fork- lift trucks or mobile cranes with telescopicspreader.
3.4 Machines procured are as follows:
Type and number of loading machine Home station ------__------_ 6 HYSTER P6cs, Miskolc, B6k6scsaba, Szombathely, fork-lift trucks Budapest J6zsefvdros,Debrecen
2 BELOTTI B-75 Budapest J6zsefvdros, ZAhony mobile cranes
2 BELOTTI B-75+P1 ZMhony, Szolnok
5 RABA+KLAUS 40' Debrecen, P4cs, Miskolc-G6m8riStation, self-loading Szeged, Szombathely semi-trailerunits
3 RABA+KLAUS 40' Budapest J6zsefvAros
2 KAUP clamping frames Debrecen, Miskolc-G6m6riStation with huckepack arms
Loading machines are operating continuouslysince their implementationfor loading of containersand huckepack type freights.
4. T,RAININGPROGRAM
Within the framework of the training program, MAV experts were able to study the methods used by other countries and railways and the most recent development in railway-relatedmatters. We consider the transport po]icy and railway conferences organized by the Bank (1989/1990and 1991) very successful, offering us an opportunity to familiarize ourselves with the problems faced by railways in similar situations in addition to the most developed railways. - 27 -
Experience
MAV's experience in its first participation in a World Bank project can be summarized as follows:
1. MAV has gained e good deal of experience in the assessment of different investmentsusing the Bank's methods, although the former management were not familiar with them and some decision-makingwas not preceded by preparation of feasibility studies.
2. During project implementation,a new procurement method (International Competitive Bidding - ICB) was learned. This method, which was a completely new departure for MAV, is now being applied widely. As a result of such a new procurementmethod being introduced,MAV had access to the most modern equipment under favorable terms, in many cases introducingnew techniques and technology.
3. During implementationof the project, the Bank required much more frequent and stringent supervision than had been applied to previously- implementedMAV projects. Since it effected changes in everyday practices and requiremhents,implementation proceeded with difficulty. However, the requirementsfor regular reporting and personal liability had a favorable impact on implementationand supervision.
4. Due to a lack of their own funds, MAV did not realize other investments supporting the project components such as completion of the Ferencviros West marshalling yard, Cubacs approach sections and other works at the Budapest junction. The absence of a wagon coupler system (its introductionin all European countries was postponed several times due to a shortage of European railways funds) was one of the bottlenecks at the junction which was transferred to the dispatch zone. These factors have contributed to expected results not being achieved.
5. Based on the experience gained and in anticipationof new traffic flows, MAV should investigatethe possibility of reducing the number of existing marshalling yards and try to introduce a new system of yards/terminals (concentratingall freight activities in one location).
6. As a summary of experience gained during the development of the container terminal equipment under Bank financing, it can be szated that the freight handling technology introduced as a result of development has created favorable conditions for increasing containerizedand huckepack traffic and for a better utilization of loading and storage areas at terminals. Based on this favorable experience, there is justification for continuing development in this field in order to facilitateMAV's participation in intermodal combined freight transport which is developing dynamically in Western Europe and which is essential from both economic and ecological viewpoints.
7. Under the training program the most recent developmentsused by other countries and railways in their work have been learned. The transport policy and railway conferences organized by the Bank (1989, 1990 and - 28 -
1991) were consideredsuccessful, offering an opportunityfor familiarizationwith the problemsfaced by railwaysin similar situations,as well as with the most developedrailways. Proposals: Preparationof regularBank reports(quarterly reports, annual reports, specialreports to missions)involved different and perhapsmore administrativework to be carriedout (in both Hungarianund English). The widespreaduse of Pcs would allow the handlingof a computerizedreporting system. It would be of greathelp in the futureif the Bank could send tables and reportingrequirements on diskette,too. It would facilitateour work and probablylead to an improvementin the level of data supply. - 29 -
PROJECTCOMPLETION REPORT HUNGARY
TRANSPORT(RAIL/ROAD) PROJECT (LOAN257-HU)
PART - _ FROM E -
HIGHWAY COMPONE NT (annexesattached) - 30 -
HIGHWAY COMPONENT
As part of Transport (Rail/Road)Project I, the Ministry of Transport, Communicationsand Water Management (MTCWM) implemented the following project components in the period 1985-1990:
1. cor.,tructionof a 14km section of the MO motorway 2. procurement of road maintenance and laboratorytesting equipment 3. technical assistance.
1. Constructionof a 14km section of the MO motorway
1.1 The MO motorway, which forms a beltway around Budapest, will be one of the most important elements in road network development in Hungary. Due to budgetary constraints,construction is feasible only by stages. A schedule will be drawn up for cross-sectioning(in the first stage, an expresswaywill be build in half width) and longitudinalsectioning. Most important is the Southern section No.1 (between the Ml and M5 motorways); its completion offers the following advantages:
- favorable traffic conditions can be created by directing the flow of traffic around Budapest along the two most important international transit routes (E60 and E75),
- by the constructionof a new bridge over the Danube. an improved road connectioa is established between the Eastern and Western parts of Hungary and among settlementson the two banks of the Danube to the South of Budapest (prior to constructionof the bridge, the nearest common highway and railway bridge was 90km from downtown Budapest),
- downtown areas of Budapest are relieved of heavy road traffic resulting in a reduction of the negative environmental impact of road traffic along the affected routes.
Primarily for financial reasons, Section I will also be built in t,io stages, with the 14km section already completed (between trunk road 6 and the MS motorway, including the bridge over the Danube). and many of the advantages listed are already evident. Constructionof the whole of Section I (between the Ml and M5 motorways)will result in additional benefits. Nevertheless, these advantageswill not be fully apparent in the efficiency indices due to high investmentcosts. The most noted advantageswill be apparent only after completionof investment - 31 -
(Sections I and Ii). However. through considerabledevelopment (e.g. a shopping center) planned for that area, traffic might increase markedly.
Based on traffic data measured in 1991 on the section completed and assuming traffic development for the section between the MI and trunk road 6 by the end of 1994, the calculated efficiency data are given in the attached analysis (see Annex I).
1.2 During project implementation,major socio-economicchanges occurred in Hungary which had engineering implicationsnot only for the MO motorway, but also and particularlyfor its associated facilities. In response to public initiatives and due to environmentalregulations becoming more stringent, the following major alterations (involvingextra cost) had to be made during construction:
- the proposed interchangeat trunk road 51, in the area of the village of Dunaharaszti,had to be omitted and instead the new trunk road 51 by- passing the villages of Dunaharasztiand Taksony was completed under the project,
- due to more stringent environmentalregulations, a more expensive engineering solution had to be applied for the maintenance center that will be responsible for the operation and maintenance of the motorway,
- the motorway leads through Csepel Island which has in the meantime been declared a protected hydrologicalzone; therefore, the drainage system for the motorway had to be modified and irmiperviouslined ditches and emergency flood reservoirswere built along the entire length through the island,
- the proposed section of trunk road 6 leading on the Buda side to downtown Budapest, which was to have been constructedby the Budapest municipality,was not built until completion of the project; therefore, a temporary traffic connection had to be establishedunder the pro,ect.
- due to more stringent environmentalregulations, longer than originally planned sections had to be provided with noise-absorbing walls.
1.3 During construction,an important lesson was drawn from the Hungarian practice that final building permits for relocation of individual public utilities (gas and postal lines) are granted only on the basi3 of final design and since during the tender procedure only Plans for Approval were available, modifications involvingconsiderable extra cost were ordered during the approval of the subsequentlyprepared final design. Therefore, the tender for the next section of the MO motorway includes the data of the approval final design. To meet guarantee obligations. the contract specified 5% of the price; a bank guarantee can be provided for 2% with the remaining 3% retained by the employer. - 32 -
On the basis of experience gained during the project, and in accordance with the stipulationslaid down by the Bank. the employer accepts a bank guarantee for the entire 5% in the second project.
Also due to inflation, in agreementwith the World Bank we have changed over from quarterly invoicing to monthly (monthly estimated sum, quarterly itemized settlement). Changes also cover a price different settlement disadvantageousto contractors (the price difference relative to the base price applied in a given year was received by the contractor in the next first quarter invoice, e.g. the price difference for 1990 as compared tc 1986 reached almost 100% of the building costs for 1990).
Based on our experience, the new regulation allows for the contractor to effect settlement in a given year at the price level of the previous year and the price difference paid in one sum includes only the previous year's price increase.
1.4 The World Bank representativesmade a number of proposals during the preparation and implementationof the project which proved to be useful in its implementationand allowed the introductionof solutions that are more favorable than those previously applied in Hungary. The application of FIDIC serves as an example of this. This international contract system was hardly known in Hungary at the start of the works; contractors tried in various ways to prevent its introduction,but later, after gaining an in-depth knowledge of it, they realized that it serves the interest of both employer and contractor and it is therefore now applied for other contracts, also.
1.5 During implementation,numerous problems arose due to the fact that the specified quality requirementsare too severe and hence difficult to meet. As proposed by the World Bank experts, a detailed analysis was prepared relative to the quality specificationsof road construction work and concrete materials.
The individual evaluation of bituminous pavements as specified in the contract has been compared with the statistical evaluation methods stipulated in specificationsapplied in Germany and Switzerland. For earthworks, a comparison has been made with the previous Hungarian standard. Lessons have been taken into consideration in defining the quality specificationsfor the next section.
During detailed analysis of the quality specificationsfor concrete test cubes, we have stated that the specified permissible degree of variation is too severe; therefore, it has been modified in the new tender and a proposal has even been made to apply it in the new Hungarian standard that is designed to ensure compliance with EUROCOD regulations.
Vacuum concreting has been applied for a major bridge constructionjob under the project. Hungarian specificationsare not available for qualification of concrete made in this way; thus, at the suggestion of the World Bank, French specialistswere involved in the introductionof this process. - 33 -
During constructionof the MO motorway (Section I). we gained much useful experience, which was utilized in the preparation of Section II, and we expect to be able to profit from this experienceduring construction, also.
During the joint work under the project, the representativesof the World Bank provided all possible assistance to those participatingin the preparation and implementationof the project.
This assistancewas essential in the initial period because it was the first Bank-supportedtransport project implemented in Hungary and therefore Hungarian participantshad no experience in the implementation of such projects.
1.6 The World Bank adopted a tolerant approach, accepting the inevitable modifications listed above and considering them as consequencesof the changes in circumstances.
By presenting their opinion and approval rapidly, the Bank experts greatly contributed to the success of the project.
2. Procurement of road maintenanceand laboratory testing eguipment
2.1 The B2 and B3 sub-componentsconsist of road maintenance equipment and laboratory instrumentsrespectively.
2.2 Road maintenance equipment was procured for the following purposes:
- to improve the mechanizationof winter skid prevention - to replace the multi-purposevehicle fleet - to develop the mechanizationof drainage systems.
2.3 The aims of the procurementof laboratoryequipment were as follows:
- development of the mechanizationof road quality supervision - implementationof a recording device to feed data into the Road Data Bank.
All sub-componentgoals were reached within the program except the second goal of the B3 component. However, considering the fact that the supplier did not fulfil the contract and even cancelled it, we found readings reasonable to perform in the form of consultantcontracts based on the internationalconnections gained in the meantime and approved by the Bank experts. Later we ourselves might carry out the readings, provided sufficient experiencehas been gained.
2.4 The efficiency of the connections to the Bank can always be identified or evaluated by the consultancyand advice of the appointed expert.
The activities of the Bank expert can be separated into three phases: - 34 -
In the first phase the expert discussed the correctness of the technical specifications,the intended form of procurement and the planned schedule of purchases. He requested elaborationof various efficiency analyses, and this resulted in the improvementof the economic views of the Hungarian experts.
In the second phase, the Bank expert cooperated in the clarificationof the guidelines related to the rules of tendering and their stipulations.
In the third phase, he helped the Borrower reach important decisions, always on the basis of thorough and detailed analysis.
2.5 During the first Transport Project, the Bank experts showed a readiness to help, and to adapt to the wishes of the Borrower, based on logical reasoning.
3. Technical assistance
3.1 The technical assistance financed under Loan 2557-HU allowed 60 persons engaged in the transport sector (MTCWM, investment agencies, design and research institutes)to take part in training programs covering 10 subjects (study of investment preparation, ICB, up-to-date technologies and reputed foreign organizations)in 9 European countries and to participate in an IRF con.ress in South Korea.
3.2 The subjects were discussed with the Bank representativesduring the appraisal. In the course of the project there were no significant modifications to the program drawn up in the Appraisal Report.
3.3 The Bank provided constant and valuable assistance in preparing the study tours, determining the aspects of utilization and selecting host agencies. For the future, the Bank suggests that the studies on cost- efficiency related methods focus on two areas:
(i) updating of national standards (ii) use of systematic questioningtools at the project level (value engineering)
3.4 The Borrower and the Bank were in continuous consultationduring the program period. The Borrower intends to request these consultations in the future.
While back-to-officereports were formal and contained few recommendations,the Bank's remarks were considered justified.
To improve efficiency and to eliminate language barriers, the Borrower intends to arrange a training program in Hungary as proposed by the Bank. - 35 -
PROJECT COMPLETION REPORT
HUNGARY
TRANSPORT(RAIL/ROAD) PROJECT
(LOAN 2557-HU)
PART 11- PROJECT REVIEWFROM THE BORROWER'SPERSPECTIVE
H I G H W A Y C O M P O N E N T - ANNEXZS ------__-- -36-
PaeI of 21
EFFICIENCY ANALYSIS
on the EXPRESSWAY MO
section I/b. opened for traffic between Km 14andKm 28
-okt6hpr IQQI_ - 37 - Amex 1 Page 2 of 21
Design Po.; 47.700/98/1-llo
EPFICIENCYANALYSIS ON THE
MO EXPRESSWAY, SECTION I/b. as constructed between Km 14 and Km 28
Prepared by;
Traffic Engineer: Ldszl6 Pintdr Ciaba Kal6
Economist Zoltinn4 Szab6
Project Manager s Guzstdv Petki
Oktober, 1991 - 38 - Annex1 Page 3 of 21
Entrusted by the Ministry of Transport, Communication and Water Management and by UTIBER Transport Consulting Manage- ment Ltd.w4th;the present documentation, UVATERV Engineering Consultants are submitting the report on investigating the anticipated efficiency of the MO expressway, Section I/B, opened to traffic at the end of year 1990.
Corresponding to those requested by the World Bank;, the in- vestigation started from the actual project cost and from traffic actually measured on the opened section.
The efficiency analysis was performed for two cases. One of the cases only covers the now opened Section I/B of the MO, disregarding the proposed or just to be launched re- lated developments. The other case consideis Section I/A join- ing I/B as integral with the prcject,.and investigates the efficiency by taking into account the bid price of the con- tractor to whom the contract had been awarded and by consi- dering the completion of the entire project in 1994.
8xistinjTraffic Volume
Data from traffic counts on three occasions were available for determining the volume of the average daily traffic for the year 1991. The interchanges for traffic connections divide the opened-up expressway into four sectors. On two occasions, the target of the traffic counts had been just to determine the traffic of the individual sectors.
-Sites and- durations of traffic c6unts:
1/ A traffic count was organized by the Budapest Technical University, Faculty of Transport Engineering on April 3. -39-
Rage 4 of 21
In the framework of this count, cordon-type censii were performed on all of the sectors and intersection leg.. The survey lasted 12 hours /from 6 a.m. to 6 p. m./.
2/ Entrusted by the Motorway Directorate, M4rf8ldkd Ltd. held censii on April 30 and July 16. These surveys referred to traffic of an expressway cross section and were per- formed on two of the sectors: before the intersection with Main Road No. 6 at Km 154600 and before ';heinter- change with the M5 motorway, at Km 28+500. The duration of both traffic surveys was 12 hours /from 6 a.m. to 6 p.m./.
3/ On October 14, UVATERV Consultants carried out a 4-hour supplementary traffic census /from 7 a.m. to 11 a.m./ for the intermediate two sectors: by the Csepel intersection at Km 18+700 and by the intersection with Main Road No. 50, at Km 25+500.
From the counts, the ADT values of the MO expresswayseotions have been developed by sections by means of the regularity, peri- odicity factors laid d wn in the book summarizing the regula- rities of vehicular traffic, issued by the Ministry of Trans- port, Public Roads Department in 1987. The data pertaining to the present year 1991 are shown in Table 1.
Traffic Forecast
The investigated section of the MO expressway has an import- ant effect on the road traffic of b-6ththe doUnVry huidBilda- pest, therefore the available national O/D matrix, traffic assignment and road network model as used in preparing the National Highway Development Plan in 1985 were used to forecast traffic. - 40 -
Page S of 21
The traffic assumptions and road network developments influencing the traffic volumes established at the investi- gated times were as follows:
Considers Section I/B of the MO only. In_year 1991: Road network developed as at present. There is no: MO,Section I/A, MO, Eastern Sector, MO,intersection with Road No. 5101. Traffic calibrated to the section between Road No. 51101 and the M5 motorway. In yt___1995: Development of road network: There is no: MO,Section I/A, MNOEastern Sector. There is: MO,intersection with Road No. 5101 Danube-bridge of Lhgym4nyos. The traffic of the road network coincides with the traffic for a car-ownership level of 200 cars per 1000 inhabitants as calculated in the National Highway Development Plan.. In_ Xer 2012: Development of road network: The same as in 1995. The traffic of the road network coincides with the traffic for a car-ownership level of 300 cars per 1000 inhabitants as calculated in the National Highway Development Plan..
fltiqn 2' Following Section I/B of the MO, also Section I/A will reach completion by year 1995. - 41 - ; ~~~~~~~~~~~~~~~Annex Page 6 of 21
In year 1991:
Road network developed as at present. There is no: MO Section I/A, MO, Eastern sector, MO,intersection with Road No. 5101. Traffic calibrated to the section between Road No. 51101 and the MS motorway. Tn year 1995: Development of road network: There is no: MO, Eastern sector, There is: MO, Section I/A MO, intersection with Road No. 5101, Danube-bridge of Ligymanyos. The traffic of the road network coincides with the traffic for a car-ownership level of 200 cars per 1000 inhabitants as calculated in the National Highway Development Plan In year 2012: Development of the road network: The same as in year 1995. The traffic of the road network coincides with the traffic for a car-ownership level of 300 cars per 1000 inhabitants as calculated in the National Highway Development Plan .
The traffic volumes anticipated in years 1995 and 2012 a-re shown in Charts 2 to 3 and 4 to 5. The annual average daily traffic is ten times the design hourly traff5.c flow shown in the plot determined by the ADT computer program.
EfficiencyAnalysis and Evaluation
The economic efficiency analyses have been performed by fol- lowing the methods requested by the World Bank and by calcu- lating the required figures, taking into consideartion the - 42 - Annex 1 Page 7 of-21
differences in benefits and in additional costs calculated ac:ording to the oases of WITH and WITHOUT. The inveetigation also reckons with the traffic c'rcumstances, considering separate values for the operating costs of travel in undls- turbed, disturbed and congested traffio conditions depending on the road capacities.
the 1991-year base values of the specific costs by types of cost are as follows:
Specific costs for vehicle ope_ation Performance-dependent specific cost for cars HUF 6.00/km Performance-dependent specific cost for lorries: HUF16.80/km Non-performance-dependent specific cost for cars : HUF 0.80/km Non-performance-dependent specific cost for lorries ' : HUF 5.70/km
Specific time costs.for_travel and transport Cars on week-days : HUF 167/m.hr Cars on week-ends : HUF 208/m.hr Lorries : HUF 392/m.hr
Accident-related specific costs Fatal : HUF 2.30 million/person With serious injury : HUF 0.28 million/person With slight injury : H'JFQ;.07 million/person
The specific cost- of maintenance and operation anount*co HUF 830 thousand/km/year. The specific cost; of road rehabilitation runSto HUF 8.7 million/kv per 8 years. -43-
~j5 ~~ of21
An often debated element of the cost elements calculation Is the time cost, only some of which is usually accepted by the World Bank. Therefore, the efficiency indices were also cal- culated with half of the above quoted time costs and wlthout
any time cost, for both aotlonsl....'k
BaMio Data of the Economic Calculations
Option 1. Only the completed NO Section I/B exits, without further construction. Project cost utilizatiot.based on the actual yearly costs: Years Million HUF 1986 227 1987 740 1988 991 1989 1245 1990 1683 4886 Date of opening: end of year 1990.
Option 2 Opened-up MO Section I/B is followed by constructing Section I/A. The schedule of the capital costs, based on the actual yearly costs /Seotion I/O/ and prices quoted in the win- ning bid /Section I/A/, wil-l be as follows: Years Million HUF I 986 .. 227 1987 740 1988 991 1989 1245 1990 1979 - 44 - Annex I Page 9 of 21
Years Million HUF 19913 1140 1992 1867 1993 1500 1994 1410 ______11092
Dates of opening to traffic: Section I/B: end of year 1990 Section I/A: _ end of year 1994
For both options: The investigated period : 1991-2012 Bario year : 1991 Discount rate : 12 %
The results of the efficiency analyses are shown in Charts 6 to 11 and a summary of the efficiency indices is tabulated in Chart 12.
Conclusions
It is seen from the investigations performed that both of the options are efficient and cost-saving, their values exceeding the minimum values specified by the World Bank. E.g., the Internal Rate of Return as a function of cost for time saved is not lower than 20% in either of the options. as compared to the required value of 12-15%. According to-the results of,the investigation, on a national economy luvel the returns seem to be ensured. -45- hDfexL
Annual average daily traffic in 1991 on the section I/b of the. Motorway MO
Secti o n Car ( pc) Truck (pc) AADT(pcu) Between roads.. No.6 and 6146 1997 11360 No.51101I Betwcen roods No.51101and -56 8 8 2 7 4 9 10 470 N o.51 ______Between r(ods No. 51 and 68 2 3 3 S 4 4 13 070 No. 50_ _ Between rood No. 50 and 56 S 5 233 4 11 1 10 motorway_MS______
Table Nb. 1 * bXrq~~~~~~~~~~
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11 C-
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10l0drf:iFf t *dilel 3 ..... 2tte.13R 14V l"s e.3 PFhl:le;jlhgFfit llehE SfMIhG Ehsf Fittl4 ItilAL 10FPFfIlt 5" 3 ble No 7. OPTION 1. II V A I rflictercy £.4ALTSIS UF PSiILIC OAUD' JPCSACEIE) 3 F4Cf I Clt51, *sEutFII 1aAlfa21-1Cf-9 DF tIisI'fIismI i ^-u.. Il1T ltli SZ44AS I,1alEK0r:aSG4 VIZSI#ALAI j11114t f ECU0,IhIlC aEvELtUP1P4LhI:MIUNRAL
ACCI2E*I1-CUS) 19's,IaS 1a4ct'm1:1? , F&IAL: 2.39 t?ILLtO fl I1 .Int Vlow; FT 4.0kaAI 04 *1 a.S T.;IS I e VBFA 14rI Of JMUCAIEI. IRAI-IIC: 1.05 $iEAV9 0.2ts NIL.loI1 YFUAl; PFi SffiF itg h ViAR LIGIII: ".117 PISt.I.6 Fl 1IWAVLL-1141-t4J%I It OIF ItASvL TI %E tCIa'1C1frujcvs .. s~s s1:SIIl:.*C1s1|.' Ci .a.a t PAIIl.s1I:l4 rc:.I P/I3.11 'r Vpiesci ..-1eGtA . 3FFeFAtE'uCt *I*ie-bt."ISa,.e.alat:s '-em: .F .Ies.11 c~- a .* a. itv ouLL.ALC,. .1 ... : u I /...... wi' s. ta.* . 1.. :211 z ..eeK-'al$|4fAL-hFln4N~1Ifuli.C4tl t.10 I- I/v.rf... I ; 6I IT.I its016C.:16s; X 'a4P.hf;Ae.^uCL-)fVf4hI)sLilut se.Atl, IIlb.A:- Gdlll.lAt, P.LAE FARI%S 2 11 t-&A.*:)I a
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s^tb~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.4 %#Vst|tit . Out4 I.eZ.§) 1. I I -9,1 I. 4it4 ts.1.1., *.0!45.euO 5aIj".e'o -12q5. 4O a 29111 * ,ut'utn tv.Out 19S4t 0.u11 .6,.44 o.4t00 )t11*3.O1e )e1l3.1-i,t -IbSl.Ov1 1697.vbS 1e,1..S 111.1)4 Iiidd.113 1991 IS 91 a2n.5It i7.4iJ 2. 11 entt 1 4.2l3 19Ce.13 1q920 lUpuur 2js.ettZ It.el 2h7 IOI.nS1ue 19tn,'1457 IS77.01 12.tiu V.'Soo 1410'.9417 IS95 IO5I 1.2,01 1d.111 24j23 1.0ea 1,f21.Z.O il07.32'1 jk3s.695 12.690 8.Sols 205.3291 V.o26 a I0o. btib P1'94 i173 %b 4oo.'daO i,.IO-i 2i.a- I .1 I.Udu *0 bi d a20.b1. 1347.ut04 12.vou 12.01f1 *.C09 31.912196 I'I V loam 1s.0.i l-I -U. 4d 1.,, 13e .S39 132?.01I4 t 71%u.004 3.0l0 Sr33.13' Pv' Ota IeA4.275 I (aaI va -3. .jS 1.Ovaa0 1117h 'vb I .42. 3 S 732.2d1 12.Iw*) 114b7.551 69.153 I £C9.-AA: I.c.' v.21. I .ohl 18042. 4.0 ; 14.2.aS I I2.5Sl 223011 S*U4 2SIZ81.366 IS97 I:.?S'S I4 34v.94 iU.41 0.21i a .1vit,0I .2Pto liaSe.3b 37S2.7U 12.C04Ve 1s !o%4V.SZ7 140.101 e SfO 1. tYe P4 1sp 110p I., Z!6-f-e3 7 .38e AW; I.e;WLIV 84S;te 17.7' P4UU 4 ,i.74 4).'.il? la.bu Ijm..tlev u5D.23 Al Q2.tAd *;5.dll3 12.d'11V 3.iPU. 220e.454 P112 14SpIS?Si 77 G 01..14&..Ql . 14 I.uivm11.711*2.2 1 19a.11m3 *e 4Za.C aS.004u12.b1RO $.asZh2.7sm ll01.09b164#.912 ova I l5I 315S .!26S3vv 1 .1,04 I2. eu. p IbI P1v.. AV4 U10.5al 2.41Ss 14bc.2e2 ;>>"a4~~~~~~$i .#SV2 %JjX*.Sj;03 4C-cu l.ui Itor.icso I 1; e. 2e2 14tj,Y73 12.09J0 R'8ll l;1a-!S4j l 3114.13 4.1.5a1 v. 61v 1.vu. IS9%..03 im911 3S1163 372i.117 12,Q7 2.121 2 Zp50.3 ;5CvO Is5 75 3's121. 41 .oe5 2'vt1 21$4.b4Z41Q I1.UeIi -lSe 5436,.00, 21.2e6 3111.014 A 1.51C*0'ZlEak 1.7Xd 21h.5 Oad)v lUdFl.Cfal bh 40.1.a16.'o'l4.2l *1 ISa u2.. 14C1 .S ;201.1"' 1 560 2.2co.690 P91114 IbS §5*14 $z>9Ap. 8 4h.0144 u.3Zb I . u" 213p.v121 2Z5ll.eYu 1a.u* 1?2,t6 I S5 2C492.6is Ow#* 1#u7 i.qfhg 15.Al m'a.;. 102.0019 v.%wu Al##|ros196Sb g 4.4 I 2b7.b4-b 65 P5 12.kba I . ? IC21IE.91 Peto .* 7S %.l 4*%I. 4h 4%.73l V.11 1 I Vk5ale6 IivCZ310.1 it. 2 .7 Z.Oo 1.181 C2425.0G l1!G 061 I 1/4 0w4l hv4i. J,It 04.s*I a v.4 tI 4 ;pe.61Zmo *4587.0s Zd51jl572 12.avw oi.Vi2 2491.151 R@14; F"24~.S74 Sl 4.!<'7 4d.UU3 ftob l.J4I )vt asw s 2'S10.gS I 2uu.Ist7 SsbD,O0i 5815.969 37S73,012 HI t 712% 391& ebal.10 4191I.S4zt 42,0i§.atb 14l3l.Sb2 TOTAL^ 311440 1116 O te@* gaFtt U j4 aeool *&1faCUIl-61.81 I.I.Ml.4rCE voLues 31 7 . rhX dfl;f I-C031 xallt usq 11^z ;I* EIUI;s 3.71 SECltCz O1F SIb°IAll, %EfI zsoft Of UPefllou, WIfCtE&CY lIl IFUZU 1141t S 26.31S 1t I;4VESIklit WIlP('4F.l .1 ell1 : 16111.313 I 1291 0,3r ,'Vs.rE4Iae,a ll.s IS, 4SA116N C414I FII.4 IOVAL BF4fFlTg 17.41Ol
. i OPTION 1. T obt 0 NOA v 'v A.SAL:413 Uf PISIILIC 1144410 IXVC-llf'tifl S. P&GE COSI, alEmEM uFardID116"s ho aalisor 1.61 SIAKA-41 IMIFILU14y:041; V125GAI.Al Of ECIIhMIL
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"da MI-Ii :,.Ih.i sub U% 1Z.V940 A ook if. I'# I'Am.Z14 12.4109 1.244 1461.495 a67 41. #1"'i ad.d1ma I.J90 $.qumi S 669. 4,3d, IV62.940%I'lk".4va tht.'eavti I tiola I12.080 2 1.111 S9sfi.9v9trodbdo? 4ovu 13709. .181.1 922 35419.418 11185.4811' S366.066 sdis.949 30091.424 1190AVID1.1f OSLUCS 317.1100
SIF"Ffec-Clizil *ATIU I le. ISO 110A SW aeltmkt 4.70 3ECfitoh 4#F OPTIAAL TEAR j0dotoUlK 2S.440 x I"VLSIPIEki OF oetplws EFFIca"Cl TV Vio I #0 t 1999 0.29 11*F 44vior. CUM 1`810-31`411AL 0.090.1 OPTION*2. - . Tabl, No.9. Ua Vr F a V EFFZCIrIACYANALTS13 of PUOIc 0It0A0INV 4E3 P31ACE
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Al * 5941sevl >6.80281 C4 3504.019 8929h.977 .9371.0628 26071.3h5 '12026.000 10728.313 01735.820 aIh.ofR VAUI.Us .0asi .0of oOC)UTEf NENAIWOF.R VALUE: ;29.6bI.
OfW.FFIT-COVt RATIO : 2.607 INf Of RETURN: 8.1 _ SfCCIlUi of OPTIHAL YEAR IN3EOIATE 1"IFRwhEL RA1E ...... 26b5414 X !IY6Rb Of OPEIJINC EfFIClf"CY NFTPRFAPfI wUAIT I 18072.724 . . I 19Y. 0.37 *f`Nf:rC9AGF OF 5i1E bAVING COST F3UH TOTAL. SKEFITs. 51.?72Z OPTION 2 .Tble No.10. ISV1a 1 1 *1 V * *.-- EFFICIEuCt ANALVAISOF PUtlIC OUAOliDVESTI4EU r. *111 A *IrCST I c T 3, PAUG I ~~~~~~~~CU3T.i1FIEFIT Di11t21-8t1-91D1,1C9 WAICWbIPCWI's 840 XIOUl /1.14U82A34ZA8 *IAT011TSAt; 911SGALA1 I Ic;Ier ECusst'.l: 0EWLWPf1thtlskI24AAL
ACCIP_hl-C03T h.fsSYEkR: 1990 ISCu,I11oC FACI0s1 12 Z 1Wai llu irt£IALTSIRS, Zt lFAk F41ALS 2.30 NILLIUti I1 F&CIIIISOF IkU%CAMEuI4AFfICs l.u5 HEAVIS 0o20 SILL1Dt FT rtAk gdSFFOVOh. tIhli 4 frAR LIGdIg 0.07 PILLIT)s FT INAV11t-1114 C031I wvelIite swr.cefic WESIAt. COisi hL11l.1 PASSC.4CLIf r.&ki hJ.e0 FlW."IIISP PRtCMIIASt ,I1I..s*>fufMi.Ja451Aidrs,IAi4feulIl In l'irlcEl.".COF IgAViL. IIAE CAR : Fr/v.lkha:lMs o.se CAuIO04.4 tl/V.nOtdt 5 #1fI.sal 3 ;muv..-oF*NF,..IS.*.F-.IibFh.Il;oll'CgI 5.70 fli/V.KA lKsil9a1%.v I I/A.llouk IU .Ih,.:140 X PfP.WFIIA'1E-L-I`PF'1f8Ev'I CAl I £ *.u W1/v.#.- P 1143C VP'kiU L9S1 15 F1 i.; jOg Z' i'r..ftgq^.a,lr.L.,,tihI5la4la ISILg sa ..h0o s Ddft-311aC PtHCLhIACGE 2: 20 Oife.i110 A
A1 *1 J r. IJ F vLsl1..Pfse.Ii..vte.j-?IbE &CCguE:a. jvEt.ozrr. F*LtJs4 AICuIVFI VIICWiDilEO ,LIscoo.aItE ,sgiIf1 t: V si I 2% IRAvtL- *htuow Po cost c4:r If'Ft(il- It A-t 4iSLL il Iits I. t:ftnI) lit.trFII 0L.F.CfII bt.ktI I CUlls S14tA t,.VO0b SI.0mo 0..00. 7i e 350.169 -221.000 1*1)UW | d *se sq.,- .uOe O.ouO 74"1.00 10139*01 -440.040 *0eto0 O.Mou o.oou 918,.0utt 1243.110 -q-'g.tOo gss t'0.uw ua..so * 4.oO S 1..04 1.94.4bo -1245.0io I0S.0.8. * t 9.90tlv.J041 5g72.ut}0' 11 12.915O -19a2.@O0 1,91 ISI. .. 9 ZL.513.. 7.3e9V1S'i ;o.io1 3 I.OuaO aul.2w3 IGi6.I a3 61q17.wbS ISSZ4uwi lu2d.511 74i.113 19SJ.' leo71b tot a.inp Ib.ite3 145.b61 1.044 g2)150.75Oi 4 I07d.987 15/7.e37 a2)79.000 aoq7.97 st..S9.987 U' IYYs le'tl.~27 is ti:: kV 6.111 14.sqt 1,tl04 1921.2o ;!o 21/.52Y I43$.i#9S IS12.ttou 50148i 2oeii4eb~ 1016.Zl2 SUS.3291 7SlISgh%, 1.#s 1.4 IIS.IO 1.0do1 20I4.o45 2124.ouh 1347.oti4 1427.000 903.7;t 698.606 19"8% 21518,utt. Safini sik.4uv 11.S58 a.VI)d g7Ss2723.?itq 1545.:i4 24.000 11.1:t 2o'9.b9, svv.#tv z0.a4 ,h 121. t I.5 so. I S.Szq 1.004 773o. 141 28ith.b.17 1452.333 24.000 12.159 2842.e7 199 tjitl:I.tt tb4.444 S49.ob 13.1591% 1.vd ;#04-4.214 39h19.'a.o 13bl.30*. 05.0 1.6tS 2'SIb5.546 5189'. 74 5r.4 505A,2S h3.S?7 15.611 1.000 5 ..20 31iSZ.4'd 1;!73.210 1u12.w0.) I9C;. Sdh.Ul 5qh .1, 4 57.351 3010.4t44 nl.214 ia.0;2O I.uuu1 I13A.s1 I 5S.9 .3SS I l. 531 .24.0uo0 8.5 1271.330 ;.v ;'elea. Sr7.5 e ".VTl u.93b. I.-)us 127i.5I, S3tsiS41 I10s.022 2400ut 1.121 3430.241 I. it II 2fI 5 d 2o.3$7 I .l O1.7/I 1.04w 5410.s,4 50el.123 10.9.."15.bDD 00 It¢ 7s ; 211.1500 i57.123 eo.8 7.h 0-Jv 1.04Q vsatb. II SIZ-1.05,4 13.1iOu31St2 S4.150e 5591.054 2.01 7d ,0am 7S4.3ti h.So2 1.) lS.7187 36u&.03? .,'1b.! 5.54 2s0. . ',al.i.%1 z.9110 b4;.eou 3612.937 1.. 1.271 145.j175 60 l1.700W 341.611 14009.b35 b2b.*1i! '1.OuO 4.513 39bS.035 2ieU'f }1iI13;21 792.250 h'I.45J 15.10 i.eo;00k 3954.974 41S2.733 75b.t$09 2a.OoI d.3bS 18123.733 2u04 1,81,id bS3.2i I 93.19 0.296 b 1.0ew 401J1.902J 952i.bi3 I1l.a.10 142.000 23.1b3 Am s3.b)5 20111 d71.11SI *.14oh 1.993 I.0.20 42Z7.1b 440se547 4'16.4'I' 24.000 3.tr.S 4414.5S4 ;IQwa 1S4tbSeo3 l 5.3I2 a 100.$42 7.'t70 I.Vw st161.24.6 161.429 595.1.7 20.600 3.121 %557 .49 ?.ao'. 3wI's,U1'4.9h:9e5..5 10i1.23s 1.004 I.0eu1) oqq.3q 472u.3k, S4b.S2. 24.0vo 2.7e7 '4710.S1 .OSI. l5.10,Ih.b 9141.)t 1;1).vDb 7.e98 i.600 *.63%.430 Q0.2d09 50t.5b64 2'*.t-0O 2.4hh *fl43.209 ZOII5 1621.h:60 4 IIV4 111.632 7.ASs I.VO0 4771.547 Sol0. 12i 154313% 103.000 12.31V *077.IZ4 ;toe %'V74#!I 1.b ll,4 'I5.Z 155a 201.11153.2.. 10,9.0 1 2.5 .u 42to.a!AS l~~~~ ~~3.S2o21.35) I.0mo 4907.6041 515.5.022 2,01 2.11241.0u 1.9C3i93 590t5129i.0Z2a *8. 1 5943u'.bi ) I .I J 4 3 5 1 2 ISbaw4.9 75155.006 701SSo1.563 42322.436 1202*.h06 1072A.313 o668o2.561 1t841111 P&ItE) .6Itii,.@da DISCUUIWED gEhMAf*gOk VALUE: U29.051
IFJEfII-CiSAT R*AIIO'1J 2.233 TIXE nF RETUJRNs 7.11 SECT1o0 UF UP11AL, YEAlRNISWIA1E ... I-todalm #eaIE 4 23.710 S IIIVCSIIEIl OF OPE1h; . FICIEICY . . 85)lPr8fJ1 u4OIl 12323.7714. a 1 99 0.33 PfWdCgl4aj na' TISE ISAVISGCOST fOON lOIALdF.&CfEiI 10.fi50. * OPTION 2. Table MOM.1. Is v a T.F a r . . ;; j _.ffFCtXCy *F AMALT4IS.I,N,. Of PUOLC RO3aDhiNVEStnE#; Pick * ** ..: .,.. , ; , . , C05I, 4EEKErIIT , ATf T,; 21ocTi_,
ISIl1t0lnnsO~NO A1bUl IA.1JiI UZMPASZ SIAIFOtMMSAC WI780ALAT I OF.,09 kCOMPuhIC0&EvCLwF`LsQi :1Hsfs0kA
I ACCItDLEtt-COST 0.tn1 YEARS 1990 DOlCOhilggG FACTOR: 12 S FATAL: Z.30SeILLIGU FT MAIIMTU.I OF *ANL.YSS 42 YEAR FACTOR OF I31UUCAILE TRAFFIC; 1.0 HEAVrts 0.20 MILLIOD. FT WAVS isJfSlF D. lift .4 TEAO LIGdTs 6.07 01ILLION Ft I IRIAVEL-I I1E C31. 3PECIFIC Vf.iiCIE OPERA ING Ctlii fEEfS.V PASSENGEfN Chili 0.0 FT/#.rlOUI . PEOCFTAGEC10 t'FFEHEsiCE.tF TRAVEL TIRE Js-*Ei FelsJ$a4tF-OFFEq.iwE Cj s lbo.I o e.f s.14 *Etsto CARS 0.0 fl/J.6toul s hhi t.t:1 I *,UUofJt#bFOUN4.EE.OVPflfotlgiil 5.70 FtJvA.7. lTdCIt 0.0 fl/V.sOIuI 10 hilLalOd S PFkV.:ALe -,FFE.dCNi CAk i o.O0 FTIW.Ik OAUE YEARi 1099I5 'Ih.1h.OQ 1 p"f1lFJh .rEIrCf$eV.aEs"I ltOC.I :I'..mOfT/V.4h u4iIilUGrenC,tCkTAE: 2 S 20 *s1.:I04 Z I.~~~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~2 S * * I to O ACCIDE'. AV9k.UTFr. rALCTUN ;10DIFIEU U)SCOWtUSED ul3COtOUlEtG OOIf IfO uK S I s TRAVEL- ;O1IFDlEui CoST tG0SI UE*EF1I- fEa.. hiILU12IFT Ihl bF.cFITWl1Et UUEht:'FI 0ECEFSI' COST
e.ea0.000 0.0 e.o. 2au.0qb 357.109 -227.600 0.0a0p .OooV o.-ue 74D.b.e 1039.o47 -740.OvO e.00oo i.0( O.o0v. 9vi.ovp 12a.1.11 -991.000 e0.00 aO.0 G..oao.6a *24S.900 1394.4Oe -1245.000 S994 0.000 0.OuvIY'f 0..Ow.oo v* 1912.6oO -1972.000 V90 I3o0.4;12 G.O004 17.319 14.6o9 k.e00u 6b63.69l Iw9s.ObS 1404.097 1152 w,00 1026d573 S11.05 ISqv. 1627.,m,i os".O3 so.o: :.uO0 1m045.076 1721.3Z4 1377.012 IF79.oeo' 1497.9c7 15,I676 I903 s aS3a.)2TS J ba. 1S a4.5 1 I.God 1a72.e3* 1755.641 1209.631 1512.0o0 076.2a2 243,601 190qi 7133.h *.s@oJ 19.q19D 14.dds 1.000 1733. 5I 1000.0g14 119.b71 J422.000 903.107 meD.814 1"9OS ?35901o 0v.0 52.4819 Ij.56085.638 3.00. 2211-5v 2322.073 13I?.600 Zo.so 2290.075 *o. f O25v.41d 0.0601 S..S 1.SZS a.qOo 26a6.625 a242.q56 1227.u36 24,wva 1Z,159 2397.956 19sl 23451bb7 4 6V, M.bl 13.!59e *.udo 2441. I0 2521.0e3 1tqo.751 24.000 10.056 2497.037 s99'' 43I ;2 0.o.u0! I6 . .S7d 13.b19 I.uua ?044.675 2021.710 1058.bh" I42.00e 57.351 2479.719 ihV4 ;.'5297JDI 0.aifij 67.21.8 10.0z2 I.0vo k52la.060 212S.ovv al0.436 20.404 d.655 2097.60u ;up,$ ;l.o.lOb 0.0 J70.0I 1 A.936 g.eeob 21.7.117 2821.47s 906.439 Z4.0w 7.727 2797.473 2"u1 ;!1e7:53 , * 0.lu1& °1.c.7 0.71" 1.000 v07.Z42 2921.5SA 839.020 240. 1 b."99 2091,354 ?,10o ?V.000 oe .000o 7o.1.4 o.:oo 1.ooo 2R77.35s S021.221 715.474 IS.uoo 34.138 2s88.227 aaisS ?d00;4% 4.0.ow 62.4s0o *.se2 I.0o0 2972.9.mO 3321.1oa 71S.2U 24.000 S.S00 3097.So ?bDq p901.Us. D.ooo'1 a5.757 a.47u 1.000 3067.617 3220.19 659.000oo z.uoO 4.9sr 3196.990 2'as 4013'2al b.0o a9.4s3 a 34o 1.00e 3162.734 3320.011 606.711 24.0o0 4.3US 3296.871 21D0. 3164.703 0.0O0 93.t14 a.26o 1.eoo 3257.652 S420.14 S51.947 142.0.o 23.1b3 3278.74q ?Ws., 3254s.;lS J Y.040 a 7.ss3 I.ouO 33s.90o4 MSz0.634 S12.710 24.000 3.405 390.634 - D0m4 31e15hs 4.1001 I00.?2 7.?10 5.09 3140.1i9 3620.515 471.0o0 z .ova 3.1as 3596.sis ,.4!W 1410,98' G.0U0 104.239 7.seo 1.000 3S53.219 3720.380 431;.bl 24.004 2.787 369b6380 Itme 1%St04006 0.000! 107.915 7.699 1.040 3630.344 .5l2.261 39e.e3e 2".o0o 2.481 3796.261 '.4.. 2055 *0S16244 o.0ooe 531.63Z 7.H3S 1.000 3133.406 3920.942 3.2.847 133.vou 12.310 3707.142 2052 U813.2.a*n 0.660 115.32a 21.357 3.60w 3aio.594 4ug0.023 332.225 24.900 1.903 3996.023
uL 1- S9430 s e0.300 1544.079 u1S.031 649bS.777 18576.541 12926.900 20728013 52039.781 1i0P.RavaauE:. 8529.09,! WalScuoUTrEleeAaINK.A WALUEi 729.s6S
.N ,.FHF;rCO5T.Ri.;..L...... 5.ms. .. .flHf OF RETURN&8.60 . SECTION OF. OPTWIALYEAR .oliNEoRArE , wFRda. ATE-. * 20.742 I.. .1VEs5tlN. T OW OPENiu.G EFFICIERCT. :jz- UPRSu..0T 7'. ftf N.6Dt1N;S7.00e-b.. ,*.,. -.. .1,...... ; 901 .2,.*.29. s. *PfCENT"Sf O Tilt SATR 'COMl FOONTOIAL bF.EFITS .11i.
J - . *:;. * '. . ,. . ., .; s . 4 '' RESULTSOF EFFICIENCYANALYSIS Table No.12 Indicators Option 1. Option 2. Saving of time cost is taken in to account 1l0 % 50 % 0 % 100% 60 % 0 %
NetPresent Value hoill. HIf/ 10721.132 8573.333 6427.658 16072.724 12323.774 8577.8B6 CostBenefit Ratio 2.929 2.542 2.156 2.607 2.233 1.858 Intemal Rateof Ret / %/ 28.991 26.315 23.408 26.544 23.778 20.742 bmediateEfficien 0.37 0.33 0.29 0.37 0.33 0.29 Tioe of Retrn 3.29 3.77 4.70 6.16 7.11 8.60 /years/ - 57 -
PROJECT COMPLETION REPORT
HUNGARY
TRANSPORT (RAIL/ROAD) PROJECT
(LOAN 257-HUW
PART11 - PROJECT EWOM THE BORROWR' PERSP
HUNGAROCAMION COMPONENT - 58 -
HUNGARAOMWONCOQNENT
Between 1986 and 1990, Hungarocamionupgraded its vehicle fleet and had a study prepared to promote the modernization of its structural and operational system.
1. lmprovement of the vehicle fleet
1.1 Hungarocamion has procured 609 vehicles (saddle tractors and trucks) and 311 trailers under the first transport project which is equal to one third of the entire fleet operating in international haulage.
This development program contributed to the replacement of obsolete vehicles (mo1-t of the RAba type) by vehicles of a higher technical level and with reasonable operational costs, but ebtainable only for hard currency. The program also provided for a fleet extension of about 10l in addition to the replacement.
Greater productivity - through higher km/performance - as well as lower dead weight and increasedvolume capacity of some units (oversize vehicles) resulted in an overall capacity increase of 15-16X.
The share of trailers for haulage of goods requiring special treatment is the largest of th- total number of trailers procured under the Loan. Proportions of refrigeration, clothes transporting and miscellaneous special trailers (containers, heavy trailers, interchangeable superstructures, oversize cranes) amount to 46%, 10 and 15X respectively. All this resulted in an improvement in HC's position on the internationalmarket.
There was a favorable shift in the breakdown of HC's fleet by type in the direction of those which are more competitive:
Type Percentageby end of year 1985 1986 1987 1988 1989 I.99C.
Renault 1.7 4.6 .6 8.4 10.8 _4.3 Iveco - - 6.8 14.0 15.3 17.1 Mercedes 36.5 40.3 39.0 36.6 37.2 33.7 Volvo 8.3 8.1 6.1 5.9 5.3 5.3 IUba 510.6 44.2- 38.22 32-S 28.7 2X.7- Miscellaneous 2.9 2.8 3.3 2.5 2.7 2.9
Total 100.0 100.0 100Y.0 100.0 100.0 100.0 - 59 -
The useful life of the importedv,hicles is longerby 30X than that of the those manufacturedin Hungary. This contributedto reducingthe need for investmentfunds as well as to increasingcapacity. 1.2 The programhad a positiveimpact on operationalcosts. Maintenance costs 34X lower than those for Hungarian vehicles were possible. In the operationof two- and three-axlevehicles, fuel needs could be reduced by 9.6X and 7.01 respectively.During the five years of project implementationwe were able to save up to 10 million litersof fuel which contributedmarkedly to environmentalprotection. The volumeof soot emittedby the vehicleswas reducedby 38.5 tons. The estimatedfigures for savingsin maintenanceand fuel costs are summarizedin the followingtable:
Year Maintenancecosts Fuel costs Total (millionFt)
1986 2.2 6.7 8.9 1987 24.5 16.0 40.5 1988 52.5 22.6 75.1 1989 102.5 37.1 139.6 1990 144.0 59.0 203.0 - 60 -
Based on the returns from the procured vehicles within five years, a rate of return of 26X can be expected, as compared to the 16X initially estimated.
Rate of Return Calculation
Year Revenue Capital costs Operational costs Returns (million Ft)
1986 335.2 770.1 213.2 -648.1 1987 1012.1 457.9 615.8 - 61.6 1988 1872.9 337.8 1121.9 413.2 1989 2313.1 426.2 1706.2 180.7 1990 2949.5 216.9 2367.2 365.4 1991 3610.2 20.0 3429.6 160.5 1992 * 4247.8 4035.4 212.4 1993 * 2837.6 2639.0 198.6 1994 * 2314.5 2129.4 185.2 1995 * 1327.3 1207.8 119.5 1996 * 319.5 287.5 31.5 1997 * 45.5 40.5 5.0
Useful life: 6.5 years Rate of return: 26% (* In the years following 1991, the effect of fluctuating exchange rates was not taken into account in the calculation of costs or revenue.)
2. Study by UNICONSULT
The entire amount earmarked under the World Bank project for studies was allocated to three studies prepared by UNICONSULT in 1986-87.
2.1 UNICONSULT made recommendationsregarding an organizationand management system as well as a system of profit centers to be introduced. The management system is based on the method of "interventionin exceptional cases" which results in the decentralizationof decision making. The proposals were accepted and the organizational changes have been introduced.
-2-.;-2-Improvemnt- of the-management--infrzma-on-s-y&tem--seves--as-another important point in the UNICONSUL7 study. In line with UNICONSULT'. recommendations on tl IC1b %'naigrated Computerized Informatlon System), introductlon of a new information system has begun under the second transport project.
2.3 The third study focuses on a five-year marketing plan. This is based on an exhaustive analysis of the company as well as the surroundivgs (both - 61 -
national and international)and conforms to the proposed new organizationand information system.
3. AX2arience
Hungarocamion has gained a good deal of new experience in the field of procurement by international competitive bidding during the four-year period of this project. This solution helped the company considerably in selecting the best technical devices and ensured more advantageous prices, also.
The relationshipbetween the World Bank and Hungarocamionwas very good during the whole period. In constant consultationwith the Bank experts, HC was able to provide for a vehicle fleet modernization program which resulted in more favorable returns.
The experience gained by HC in its first participation in a World Bank project and the new type of reporting requirements, strengthenedthe conviction of HC management that the overall modernization of the information system is absolutely necessary. The reconstructionof the organizationalstructure - in addition to the establishmentof the informationbackground - could also increase management's efficiency, and this projected provided HC with useful assistance in this matter. To meet the new conditions caused by the changes in the country's economy, HC is carrying out an internal decentralizationbased on the profit centers, and with the help of the UNICONSULT study. - 62 -
PROJECT COMPLETION REPORT
HUNGARY
TRANSPORT (RAIL/ROAD) PROJECT
(LOAN 2557-HU)
PART III - STATISTICAL INFORIATION - 63 -
Table 1. Rela.tedBank Loans
Note: This is the first transport sector project in Hungary; informationregarding related previous Bank Loans, therefore,does not arise.
Source: Bank Mission, August 1991 - 64 -
Table-2. ProjectTimetable
Item Date Planned Actual Date
Preparation by 19 months the country (February 1983 - November 1984)
First Presentation to the Bank March 1983
First Bank Mission to consider the project June 1984
Appraisal Mission November 1984
Negotiations Completion date April 1985
Board Approval May 28, 1985
Loan Signature June 4, 1985
Loan Effectiveness June 1985 June 10, 1985
Loan Closing June 30, 1991 June 30, 1991
Project Completion December 31, 1990 June 30, 1991
Source: Bank Mission, President's Report August 1991 - 65 -
Tab'e 3. Loan Disbursements (in Millions of U.S. Dollars)
I8RD Apptaial Adual Adua as % cal Year Estimate Oburmerfl d EstiMa
June86 6.7 91 158
Dec. a 1U9 29.4 211.5 June87 21.7 34.b 159.4
Dec,87 28.3 43.4 155.5 June 88 36.3 492 135.6
109 Dec. 88 44.8 57.1 127.5 June 89 53.5 59.9 112.0
Dec 89 EZO 672 108.4 June 90 68.2 68.2 100.0
1991 Dec. 90 73.4 69.8 95.0 Jun 91 75.0 75.0 1/ 100.0
The final disbursement position was as follows:
Categorv Amount (USD)
1. Equipment - Part A 22,479,523.03 2. Training - Part A 162,377.51 3. Civil Works - Part B 27,540,630.75 4.I. Equipment - Part B2 4,021,485.25 4.II.Equipment - Part B3 555,013.98 5. Training - Part B4 265,654.93 6. Consultants - Part B 26,165.99 7. Vehicles - Part Cl 18.810,020.30 8. Equipment - Part C2 912,658.60 9.. Consultants Study Tours - Part C3 150,261.51 Special Account 76,208.15 2/
I/ A smal amount of undiskuzsed loan was used up before September 15, 1991 when the Loan wa actually closed. i lThis amount represents the currency exchange rate fluctuations for transactions mad. under the special Account.
Source: Bank Supervision Reports August 1991, and Disbursement Division Data - 66 _
Table 4. Project Implementation
Scheduleof AcjaI Completion Complellon at Appraisal Date Comment
A Com,IkUonof CV WoomoA
Modemiaton of Dec. 1988 Dec. 1990 Delay Is prlmaily due to Incluslonof Felrncvamsmarshallng environmentalprotectIon works yard (requiredby new law) and constructlon of the maintenanceworkshop and health facilitiesat the first stage instead of later stage as prevIouslyplanned. Hlchwav Mo motorway Oct 1990 Nov. 1990 Fully operational. UpgradIng (mn 13.9-28.5) envIronmentalprotectIon standards requiredby new law slIghtlydelayed prolectexecution.
EB PWoauwent do_t
Track Constructionand July 1988 Dec. 1988 Spareparls for thesemachines which MaintenanceMachineny were subsequentlyIncluded were procured by Mheend of 1989.
ContalnerHandling Sept/Ocl. 1988 Feb./March1989 Equlpment
Huna RoadMainterance Dec. 1988 Dec. 1988 Equ'pment
Testingand Evaluation Dec. 1988 July/Aug. 1989 Brtdgedeck freezing predlctlondevIces Equipment weresupplied Feb.1990.
Hunaarocamlon WorkshopEquipment June 1988 /
C. Procuenlet of VehIles
Hunaarocamlon Vehiles Dec. 1990 Dec. 1990 Vehicleswere procuredaccording to schedulein dfferent tranches.
D. StudIes
Roadusers contrlbutlon Dec.1987 Mid-1988 Implementatlonof major sludy recommendatgonsin progress(Table 6D).
Inftornmlon/management/ c 1987 InformationSystem - Studyrecommendaton sed as an marketing Phase1: March 1988 Input to the Bank-financedSecond International TransportProject (TableOD). Marketing- PhaseIl: Mid-1988 j/ Workshopequlpmnent has been procuredfrom cources other than the Bank Loan. Source: Supervision Reports / Quarterly Progress Reports / SAR August 1991 - 67 -
Page 1 of 2 Table 5. Project Costs and Financing
A - PROJECTCOSTS
AooraisalEstimate RevisedEstimate Actual Items Local Foreign Total Local Foreign Total Local Foreign Total U ~US$million -US$ million - -US$ million- RailwayComoonent a. Modernizationof Ferencvaros 17.2 7.5 24.7 25.8 11.3 37.1 28.6 4.5 33.1 marshallingyard b. Trackrenewal and 4.7 11.1 15.8 6.3 15.0 21.3 6.0 14.4 20.4 maintenanceequipment c. Containerhandling equipment 7.3 6.2 13.5 7.3 6.2 13.5 8.1 3.6 11.7 d. Trainingprograms 0.1 0.1 0_2 0.1 nea. 0.1 0.1 0.2 0 3 Subtotal 29.3 249 54.2 39.5 72.0 42.8 22.7 6 _/ HighwayComponent a. CivilWorks Mo Motorway (km13.9-28.1) 35.4 28.9 64.3 46.0 37.6 83.6 51.4 27.5 78.9 b. Constructionsupervision 2.4 0.4 2.8 2.4 0.4 2.8 2.2 0.0 2.2 c. Maintenanceequipment 0.4 2.3 2.7 0.4 2.3 2.7 0.4 4.0 4.4 d. Testingand Evaluation equipment 0.1 0.9 1.0 0.1 0.9 1.0 0.0 0.6 0.6 e. Trainingprogram 0.2 0.3 0.5 0.2 0.3 0.5 0.0 0.3 0.3 f. Studyof roadusers contribution 0.1 0.1 _J _Q 00 0 0.0 0Q1 Subtotal 38.6 32.8 71.4 49. 415 9 54.1 324 86.5 Hunaarocamion a. Vehicles 0.0 30.0 30.0 0.0 43.3 43.3 0.0 43.7 43.7 b. Workshopequipment 0.0 0.9 0.9 0.0 0.4 0.4 0.0 0.0 0.0 c. Managementstudies andTraining 0.3 0 1 0.4 _ 0O2 0.5 Subtotal 0.3 31.0 1 ° ° 43.7 437 0.3 43.9 44.2 TotalBasic Cost 68.2 88.7 156.9 PhysicalCon'ingencies - Railway 2.4 0.9 3.3 - Highway 3.7 2.9 6.6 Total 6.1 3 99 PriceContingencies - Railway 7.7 6.0 13.7 - Highway 13.8 11.2 25.0 - Hungarocamion 00 100 10.0 Total 21.5 27.2 4_Z
Grandtotal 95.8 119.7 Z=.5 8 117.7 2063 97.2 99.0 196.2 / Physicaland price contingencies included.
V Changesare dueto (i) postponementof somecustoms duty paymentsl,(ii) some minor savings and (iii) unforeseen chiangesin the exchangerates.
Source: Supervision Reports, SAR - August 1991 - and data supplied by che Borrower. - 68 -
Pae 2,of 2 Table 5. Project Costs and Financing
B - PROJECTFINANCING
Source Planned Final US$million-
WorldBank 75.0 75.0 Govemment/Cfinanding 66.0 54.1 Railways 50.2 42.8 HC/Co-financing 24.3 24.3 215.5 19.2
Source: Supervision Reports, SAR August 1991, and data supplied by the Borrower - 69
Page 1 of6 Table. 6. Project Results
A - ECONOMICBENEFlTS 1/
Benefft1/ at Full Ooeration RevisedEstimates on Completionof Workswhen Estimatedat Rail/RoadSedions were Appraisal opento Traffic (in millionFt.)
RAILWAYCOMPONENTS (q Modernizaonof Ferencvarosmarshalling yard 350 260 (Iq Trackconstruction and maintenancemachinery 184 170 (iii) Containerhandling machinery 79 92
HIGHWAYCOMPONENTS (i) Civilworks Mo Motorway(km 13.9-28.5) 415 460 (ii) Roadmaintenance equipment 35 31
HUNGAROCAMION
(i) Vehces 220 467 (i) Infrastructureequipment 9 -2/
1/ Includessavings In operationdcosts, maintenance costs and passenger travel time In appropriatecases, congestioncosts In the caseof the BudapestBy-pass (Mo Motorway) 2/ Workshopequipment has beenprocured from sources other than the BankLoan.
Source: SAR, Mission estimates August 1991 - 70 -
Page 2 of 6 Table 6. Project Results
B ECONOMIC RATEOF RETURN(ER)
Project Appraisal Revaluatedat Component Estimate Project Completion (most ProbableER %)
RAILWAYCOMPONENTS
(i) Modemizationof Ferenovarosmarshalling yard 30 22
(ii) Track constructionand maintenanceequipment 36 34
(iii) Containerhandling equipment 16 18
HIGHWAYCOMPONENTS
(I) Civil works Mo motorway 14 20
(II) Road maintenanceequipment 40 37
HUNGAROCAMION
(i) Vehicles 16 26
(i) Infrastructureequipment (e.g. maintenance,storage etc.) 28 1/
Weightedaverage 17 20
1/ Infrastructureequipment was procuredfrom sources other than the Bank Loan.
Source: SAR, Mission estimates - August 1991 - and estimates provided by the Borrower - 71 -
Page 3 of 6 Table 6. Project Results
C - FINANCIALIMPACT 1/
HunaarianRailways (MA\/) Hunparocamion
OperatinaRatio 2/ OperatinaRatio 2/ Appraisal Appraisal Year Estimate Actual Estimate Actual V
1985 88 98 83 81
1986 88 97 85 80
1987 88 98 83 78
1988 87 99 79 87
1989 86 98 78 85
1990 98 91
J/ Otherdetails are given in detailedfinancia! statements in Annex 3. Z/ operatingexpenses divided by operatingrevenue / appraisalestimates extended only to 1989 - 72 -
Page 4 of6 Table 6. Project Results
D - PROJET STUDY
Typeof Purpose as Defined Impactof Study at Appraisal Status Study
1. Roaduers Analysisof the present The studyhas been The GovernmentIs now contributionstudy systemof contribution completedby the consideringstudy by roadusers towards Consultant,Hungarian recommendations.As a roadexpenditures, and Instituteof Transport firststep, taxes on optimimutilization of Science,by mid-1988 heavyfreight vehicles roadnetwork The and ts recommend- havebeen Increased studywas expected to ationshave been basedon study throwlight on factors discussedwith the Bank recommendations. contributingto the inter- mission. modaltraffic pattem with a vliw to Investigating subsidies,user charges and pricingpolic;. The studywas scheduled to be completedby December31, 1987.
2. TrucIdng Shouldcover the The studyhas been Basedon the study managementsystem followingmanagement- completedIn two recommendations,HC sudis for HC relatedaspects of phases,namely Phase l: hasprepared an Intemationaltrucking (Management IntegratedComputatlon operations: InformationSystem) and Informa:onSystem (I) InformationSystem PhaseII (Intemational (ICIS)which was Requirements(hardware Marketing)by the Includedas an and software) consuitant importantsub- (ii) Intemational UNICONSULT(United componentIn the Bank- marketing TransportConsulting financedSecond (iii) Developmentof Gmbh,Hamburg) during TransportProjecL contairerservices, and 1988) (iv) Developmentof truck terminalfacilities, nearBudapest. The studywas scheduledto be completedby December 31, 1987. 73 -
Page S of 6 Table6. Project Results
E * TRAININGPROGRAM
Purposeas Defined at Appraisal Status Remarks
About115 staff- A numberof middlemanagement lovel officials and seniorspecialists monthsof trainingof haveundergone short prograrm .f studyIn severalcountries such as professionalswas the UK.West Germany, USA, Finland, France and Sweden. The providedIn the tra'ningprogram, though inWiily lagging behind, picked up followingfield: momentumduring project execution and ultimatelyproved very useful (q improved to the organizationssponsoring their officials to learnthe modem mwshailingyard and state-ofthe-art terminaloperations 'iq modem managementof track renewaland ra,iintenance (IQitraffic control (iv)highway traffic safety (v) pavement management (vi) international truckingmanagement system - 74 -
Page 6 of 6 Table 6. Project Results
F PROJECT-RELATEDPERFORMANCE & TRAFFIC CHARACTERISTMIC
(a) Modemization of Ferencvaros EastMarshailing Yard] _/ 1984 1990 (actu) (6Ztual) (I) wagon walting time (in hours) t'.2 125
li) utilization of shunter loos (1984 - 100) 100.0 107.5
oil) laor operation cost (R/wagon at 1984 constant 35.0 25.0 price)
(iv) capacity of marshalling yard (no. ot wagons per day) 5.500 6,240
(b) Rallway track maintenance ?I) labor utilization 0.' 0.2 (employees/kin)
(11) track mrantenance cost 148.4 111.8 (FR/km at 1984 constant price)
(c) Containerizatlon () containerfreight traffic 676.0 819.0 (millton-kn peryear)
(I1) revenue earned (mill. R) 394.0 631.0
(d) AnnualAverage Daly Traffic(AADTn on imourant sectionsof Mo Motorway
Cars Tructk AADT No.of Units No.d Units (Equ'v.no. passengercar units(PCU)) pI) betweenroad nos. 6 and 6,146 1,997 11,360 51101 (1) betweenroad nos. 51101 5S88 2749 10.470 and51 (Ill) betweenroad nos. 51 and 6.823 3.544 13,070 s0 (iv) betweenroad no. 50 and 5.655 2,334 11,110 MotorwayM5 1/ rDamgeto goods and rolilng stock of aboutF 30-40million per annum caused before Insato of tho newbradng systemn were fuily eliminatedby 1988.
I/ Trafficon the dwfent roadsectons In thecommand area of Momotorway In 1995and 20132 as now anticipated Is shown In theattached traffic Dowdiagrams. The key point Is that thc realtraffic increas will occurImmediately th9 Unkbetween MI (West)and MS (South) motorways Is completed(ongoing works tnder the TransportII project).
Source:National Bank of Hungary& SupervisionReports Table 6. Project Results
ATTACHMENT
Motorway MO, section I/b In 1995 200 cmrs/1000 persons HTV pcu/h AA3T T 10 x HTV
/ - ._,~~~~~~~~~~~~~~~~~~~~~~~~~C
; < >W1~~
__ ...... __... o a C 210' 5Oqvola - 77
Page 1 of 2 Table 7. Status of Covenants
LoanAgreement (LA.) ProjectAgreement (P.A.) Description Status Reference
LA. 2.02(b) and Maintainin dollarsa specialaccount In NBH the systemwas established and 4.07(b) and submitaudited statements thereon. auditedstatements received periodically.
LA.3.04 Roaduser charges study to be completed The studywas completed by mid- beforeDecember 31, 1987. 1988. As a first steptaxes on heavyfreight vehicles have been increasedbased on the recommendations. LA. 3.05 Acquireland aj.d rightsin respectof land compliedwith requiredfor carryingout constructionof motorwayMO beforeJune 30, 1986. LA. 3.07 TheBorrower shall (i) appointan institution compliedwith for overallcoordination of project componentsand (ii) causeMOT to designatean officerto liaisefor carryingout PartB of the Project.
LA. 4.01 Establisha systemfor recordingproject The systemwas established and expendituresfor MOT,HC, MAVand submit auditedstatements received at auditedstatements. regularintervals.
LA.4.02 NBHto op' a separateaccount for HC A separateaccount was opened at underthe asidiaryloan agreement and NBHar. i auditecdstatements submitauaited account thereon. receivedat regularintervals.
PA (MAV)2.05 Providea trainingprogram by September The programwas providedand 30, 1985. accepted,and trainingprogressed accordingto schedule. P.A.(MAy) 3.04 AdoptAction Plan to improveMAV's compliedwith operations. Achievementswere reviewed and monitoredon a continuousbasis. PA. (MAV) Provideaudited financial reports by April30 compliedwith 4.01(a) eachyear. someminor time adjustments
P.A.(HC) 2.05 Managementsystems study to be Thestudw was completed during completedby December1987. 1988and reviewedby the Bank. PA. (HC)4.01(a) Providedudited financial reports by April30 compliedwith eachyear. 78 -
Paae2 of 2 Table 7. Status of Covenants
Loan Agreement(L.A.) ProjectAgreement (P.A.) Description Status Reference
PA (H-C)4.02(a) Maintainoperating ratio of 80%. HC continuedto perform well throughout and achieveda return rate (on net fixed assets)of about 40% - well over the covenanted 22% - but becauseof an unexpectedincrease in its tax obligation could not meetthe covenantedoperating ratio targets for the years 1988-90,operating ratios being of tie order of 85%.
Source: Supervision Reports August 1991 - 79 -
Page 1 of 2 Table 8. Use of Bank Resources
A- BANKMISSIONS
Stageof Month/ No. of No. of StaffWeeks Date ProjectCycle Year Staff Weeks in Field of Report
Identification March1983 1 3 3 April1983 Preparation June 1984 3 3 9 July 1984 Pre-appraisal August1984 4 3 12 September1984 Appraisal November1984 4 4 16 December1984 Sub-Total 40 SuprvNision
May 1987 5 3 15 June22, 1987 September1987 2 1 2 Sept.28, 1987 November1987 2 2 4 Dec.15, 1987 Juiie 1988 3 2 6 July 11,1988 May1989 3 2 6 June23, 1989 December1989 4 1 4 January4, 1990 May 1990 5 2 10 June21, 1990 October1990 3 1 3 October31,1990 June 1991 4 1 4 July 19,1991 Sub-Total 154
GrandTotal 94
Source: Supervision Reports August 1991 - 80 -
page 2 o£
Table 8: Use of Bank Resources
Staff Wk by Flical YearAcross Stages Loanredit ProJect la NIer ProJectNan Fiscal Year Preappralsal Appraisal Negotiation Suervislon Other Total 7HNPAO11 L25570 TRANSPORTI 1983 8.1 .3 8.4 1984 21.6 .5 22.1 1985 34.4 51.7 10.2 6.7 12.7 115.6 1988 37.3 0 37.4 1987 25.9 25.9 1988 14.5 14.5 1989 11.2 11.2 1990 10.2 10.2 1991 8.1 8.1 1992 10.2 10.2 Total for theProject Id 7HWPAO11 64.1 51.7 10.2 124.0 13.4 283.5
GrandTotal for all Project IdS 64.1 51.7 10.2 124.0 13.4 263.5 Ex*cludestIme spent by Yomg Professlonals - 81 -
PaaeIof 2
LIST OF EOUIPMENT PROCURED UNDER THE PROJECT (Railway and Highway Component includingHungarocamion)
Amount Item Outitv (USSmillion)
A. Railways
1. Marshalling yard braking equipment 11,089 4.51 Track Constructionand Maintenance Equipment 2. Ballast cleaning machines 4 5.96 3. Tamping, levelling machines for switches 5 3.70 4. Tamping, levelling machines for tracks. 2 1.64 5. Sleepers cnanging machines 2 0.21 6. Ballast profile machines (regulator) 2 0.68 7. Switch exchanger 2 0.68 8. Small machinery - 0.84 9. Spare parts for track machinery - 0.67 Container Handling EguiRment 10. Front loading truck 6 0.52 11. Side loading truck 2 0.64 12. Self loading saddle tractor with trailer 8 1.45 13. Mobile telescope crane for container handling 2 0.70 14. Container grip 2 0.24
B. Highways
Maintenance EauiDment 15. Salt spreaders 15 0.31 16. Universal vehicles (multi-purposetrucks) 20 1.13 17. Lateral snow plough 8 0.13 18. Snow blower 12 2.12 19. Ditch digger 2 0.49 20. guality Control Eauipment 0.31 21. Freezing Forecast System 1 complete system 0.17 22. Falling weight deflectometer 4 0.80 23. Three-axle loaded trailer 7 0.22 - 82 -
AnnexI Page2 of 2
LIST OF EOUIPMENT PROCURED UNDER THE PROJECT
Amount Item Ouantity (USS million)
C. Hungarocamion
24. Vehicles, of which: - tractors 360 16.7 - lorry chassi- 249 13.2
25. Superstructures - tilt body 119 0.7 - replaceable body 20 0.3 - refrigeratorbody 52 1.8 - clothestransporting 25 0.5
26. Trailers and semi-trailers - tilt 95 1.9 - refrigerator 102 3.5 - tank 12 0.7 - heavy trailer 9 0.6 -clothes transporting 32 1.4 - furniture transporting 15 0.4 - frames without superstructure 5 1.1 - truck-crane 3 0.3
27. Refrigeratormachines 114 1.1
28. Hook fittings 76 0.3
Note: Workshop equipment for HC provided in SAR was procured from sources other than the Bank Loan, and has therefore not been included.
Source: Summary Progress Report, April 30, 1991 - UTIBER August, 1991 - 83 -
Annex2 Page1 of 3 TRAFFIC TRENDS
A. Freight traffic by different modes (1980-89) (in million ton-km)
Year Railway Road Water Air Pipeline Total
1980 24,399 11,403 7,889 28 4,393 48,112 (50.7) (23.7) (16.4) (0.1) (9.1) (100.0)
1981 24,342 11,759 8,507 25 4,387 49,020 (49.6) (24.0) (17.4) (0.1) (8.9) (100.0)
1982 23,273 11,883 8,201 29 4,473 47,859 (48.6) (24.8) (17.1) (0.1) (9.4) (100.0)
1983 23,079 11,951 8,376 23 4,335 47,764 (48.3) (25.0) (17.5) (0.0) (9.2) (100.0)
1984 22,847 11,945 9,549 22 4,788 49,151 (46.5) (24.3) (19.4) (0.0) (9.8) (100.0)
1985 22,309 11,927 9,003 26 4,850 48,115 (46.4) (24.8) (18.7) (0.1) (10.0) (100.0)
1986 22,600 12,175 8,644 24 4,954 48,397 (46.7) (25.2) (17.9) (0.0) (10.2) (100.0)
1987 21,732 12,765 10,697 16 5,370 50,580 (43.0) (25.2) (21.1) (0.0) (10.7) (100.0)
1988 21,058 13,210 14,455 14 6,051 54,788 (38.3) (24.1) (26.4) (0.0) (11.1) (100.0)
1989 19,820 6,972 14,921 12 4,966 46,691 (42.4) (14.9) (32.0) (0.0) (10.7) (100.0)
1990 16,783 6,690 14,418 16 4,582 42,489 (39.5) (15.7) (33.9) (0.0) (10.8) (100.0)
(Figures within parentheses denote percentages.)
Source: Mission Reports August 1991 - 84 -
Annex2 Page2 of 3 TRAFFIC TRENDS
B. Public passenger transport by different modes (1980-89) (in million passenger-km)
Year Railway Road and Water Air Total Urban
1980 14,655.8 26,200.9 76.3 1,076.4 42,009.4 (34.9) (62.4) (0.2) (2.5) (100.0)
1981 13,544.6 28,243.7 79.0 1,245.6 43,112.9 (31.4) (65.5) (0.2) (2.9) (100.0)
1982 13,070.5 28,321.1 86.5 1,266.6 42,744.7 (30.5) (66.3) (0.2) (3.0) (100.0)
1983 11,104.5 27,793.0 74.2 1,180.9 40,152.7 (27.7) (69.2) (0.2) (2.9) (100.0)
1984 11,274.4 28,229.3 72.9 1,238.8 40,815.4 (27.6) (69.2) (0.2) (3.0) (100.0)
1985 11,209.4 28,310.6 69.0 1,333.0 40,922.0 (27.4) (69.2) (0.2) (3.2) (100.0)
1986 11,233.7 28,093.7 74.1 1,143.0 40,534.5 (27.7) (69.3) (0.2) (2.8) (100.0)
1987 11,324.4 28,158.9 78.5 1,285.6 40,847.4 (27.7) (68.9) (0.2) (3.2) (100.0)
1988 11,511.9 27,879.1 72.3 1,344.3 40,807.6 (28.2) (68.3) (0.2) (3.3) (100.0)
1989 11,886.9 26,418.8 57.1 1,575.5 39.938.3 (28.2) (68.3) (0.2) (3.3) (100.0)
1990 11,402.5 22,980.7 53.8 1,597.1 36,034.1 (31.6) (63.8) (0.1) (4..) (100.0)
(Figures within parentheses denote percentages.)
Source: Mission Reports August 1991 - 85 -
Annex2 Page 3 of 3 TRAFFIC TRENDS
C. Hungarian Railways (MAV)'s freight traffic Commodity-wise (1980-89) (in million tonnes)
Commodities 1980 1983 1984 1985 1986 1987 1988 1989 i990
1. Coal 14.9 15.3 14.6 15.6 16.2 15.7 16.0 14.4 12.5
2. Iron ore 6.9 7.4 7.2 5.3 6.1 5.6 5.2 4.9 4.0
3. Bauxite 1.7 1.6 1.5 1.5 1.7 1.6 1.5 1.6 1.7
4. Stone 8.5 7.3 6.7 6.0 5.0 4.8 4.4 3.5 2.2
5. Gravel 6.3 5.8 5.9 4.6 5.3 5.0 4.7 4.2 2.2
6. Crude oil and products 8.1 6.6 6.6 6.4 6.1 6.2 5.8 5.4 5.3
7. Steel plate 5.3 5.1 5.1 5.1 5.2 5.3 5.2 4.6 3.9
8. Fertilizer 4.3 4.9 5.1 4.8 5.1 5.4 5.1 4.6 3.5
9. Coke 2.0 1.8 1.6 1.8 1.6 1.4 1.4 1.4 1.0
10. cement 3.2 2.8 2.7 2.3 2.3 2.2 2.1 1.9 1.6
11. Cement products 1.6 1.3 1.3 1.1 1.1 1.0 0.9 0.7 0.4
12. Cereals 1.0 1.4 1.5 1.9 1.9 1.4 1.8 1.7 1.4
13. Sugar beet 2.9 3.3 3.1 3.5 2.9 3.2 3.2 4.0 3.6
14. Timber 4.5 4.2 4.5 4.7 4.9 4.9 4.8 3.2 2.6
15. Top soil and clinker 1.4 1.2 1.2 1.1 1.5 1.3 1.1 .1.1 0.7
16. Other commodities 33.6 33.6 33.2 32.8 33.6 33.6 33.1 31.0 26.0
17. Int. transit 19.8 16.2 16.0 15.1 14.5 13.0 13.0 12.9 12.1
18. Railway materials 4.2 4.2 4.2 3.9 4.1 3.8 3.6 3.4 2.7
Total 130.2 124.0 122.0 117.5 119.1 115.4 111.9 104.5 87.4
Source: Mission Report August 1991 - 86 -
Annex 3 Financial Statem6nts Page 1 of 6 Hungarian Railways (MAV)
A. Income Statement (Ft. million)
1985 1986 1987 1988 1989 BL.sic Appraisal Appraisal Appraisal Appraisal Appraisal Activitv Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forscast Actual
Ooeratina Revenue Passengers 4,761) 4,809} 4,8571 4,9051 4,954} Freight 28,041} 31,431 30,604) 34,073 33,245) 35,041 35,944) 35,265 38,679) 40,047 Other 5.Q3 5.289 5.477 5.917 5.9j16l 6.392 664 6.856 7.011 Sub-Totai 37,837 36,720 40,890 39,990 44,032 41,224 47,241 41,329 50,490 4 i,82 Subsidy 4.503 . 4.840 3.247 5.188 3 .29 k73 5.87G . TotalOperating Revenue 42,340 39,758 45,730 43,237 49,220 45,159 52,770 47,202 56,360 53,753
Ooeratina Exoenditures Materials 7,030 7,784 7,690 8,538 8,260 8,914 8,830 9,038 9,400 9,044 Fusl 5,650 5,188 6,400 4,883 6,870 5,694 7,340 6,199 7,810 6,000 Wage, 12,620 12,901 13,480 13,794 14,330 14,462 15,,'n 16,817 15,980 20,527 Otherexpenses 3,920 5,208 4,230 6,233 4,540 7,169 4,8601 5,170} Provisions 800 960 860 1.479 910 847 9701 7.0351.020} j2Q Sub-Total 30,020 32,041 32,660 34,927 34,910 37,086 37,170 39,089 39,380 44,931 Depreciation 7.210 6 7.720 6.923 8.20 7.107 8.710 7.402 9200 75
Total Operating Expenditures 37,230 38,824 40,380 41,850 43,110 44,193 45,880 46,491 48,580 52,527
Netrevenue 5,110 934 5,350 1,387 6,110 966 6,890 7.1 7,780 1,231 Interest 620 749 640 487 680 353 710 585 750 874 Pre-taxprofit 4,490 185 4,710 900 5,430 613 6,180 126 7,030 357 Municipaltaxes - 1 ------Income taxes 2.877 - &J73 110 3.187 120 3.522 .3.6900 72 After tax profit 1,613 184 1,927 790 2,243 493 2,658 126 3,340 285 Ratios Operatingratio% 88 98 88 97 88 98 87 99 86 98 Rateof return on net fixedassets % 4.5 1.2 4.7 1.8 5.5 1.2 6.2 0.8 7.0 0.6
Source: Supervision Reports, SAR August 1991 - 87 -
Annex 3 Financial Statements Page 2 of 6
Hungarian Railways (MAV)
B. Cash Flows (Ft. million)
1985 1986 1987 1988 1989 Basic Appraisal Appraisal Appraisal Appraisal Appraisal Acit Forcast A& a ForecastActuai Forst ActualFQrecast Actual ForecastActual Sources Aftertax profit 1,613 933 1,927 1,277 2,243 846 2,658 1,174 3,340 1,329 Depreciation 7,210 6,783 7,720 6,923 8,200 7,107 8,710 7,199 9,200 7,391 Provisions 900} 9761 9271 1088} 1138) Long-term loans -} -} -} .) -} IBRDloan 91 689 298) 307 260) 464 298) 2,502 112) 2,127 Othersources 251 43) 120) 187) 232) Grants 100} *) '} }
TotalSources 9,857 8,405 10,963 8,507 11,751 8,417 12,94110,875 14,022 10,847
AanDlicatignls
Transferto Statebudget 1,001 - 663 - 525 - 1,190 - 800 Debtrepayrnent 104 989 104 1,018 104 694 145 416 185 616 Investments 6,045 7,141 8,391 7,517 9,018 8,494 9,489 9,344 11,033 9,801 Increase/decrease In woridngcapitaJ (otherthan cash) 1,939 26 475 2,676 671 (1,063) 646 2,558 513 2,636 Incentivefund payments 587 635 628 630 671 657 718 - 768 - Otheruses / equitytransactions 1,357(1,387) 1,271(3,997) 1,205 (890) 1,894(2,633) 1,401 (3,006) TotalApplications 10,032 8,405 10,869 8,507 11,669 8,417 12,892 10,875 13,900 10,847
(Figureswihin parenthesesIndicate negatlve transactions.)
Source: Supervision Reports, SAR August 1991 - 88 _
Annex 3 Financial Statements Page 3 of 6 Hungarian Railways (!4AV)
C. Balance Sheet (Ft. million)
1985 1986 1987 1988 1989 Appraisal Appraisal Appraisal Appraisal Appraisal Forecat Acu ForecastActua ForecastActual Forecast Actual ForecastActual Asst Grossfixed asents 172,150167,306 177,640170,619 183,930175,585190,920175,585 198,710 184,929 Less depreciaton 97S00 89,7j5 104.500 92.526 111.900 97.210 119.600104.409 127.600 111.80 Netfixed assets 74,550 77,571 73,140 78,095 72,030 78,375 71,320 71,176 71,110 73,129 Assetsunder const. 4,438 4,655 4,438 4,430 4,438 5,822 4,438 15,166 4,438 15,623 Othernon-current assets 2.02g 2.130 2.035 2.312 2.050 2309 2.065 2,360 2.080 2,410 Sub-total 81,008 84,376 79,613 84,837 78,516 86,506 77,823 88,702 77,628 91,162
Currentassets Cash& Bank 1,080 703 1,175 987 1,256 1,058 1,306 1,100 1,427 1,120 -nventofies 12,131 11,075 13,142 11,391 13,175 11,944 12,710 12,943 13,187 15,539 Assetsreceivable 8,624 3,601 8;233 3.767 8.5 3. .i.951059 4.000 10.938 4.080 Sub-total 21,835 15,379 22,550 16,145 23,024 16,953 24,075 18,043 25,552 20,379 TOTALASSETS _g2.843 99.Z% 102.13100.982 0 1542Q103.4101.9106.745 103.180111.901
Liabili'tb8 Long-termdebt 304 851 494 811 565 927 644 3,365 453 4,908 Othernon-current liabilities 1J199 396 _192 37 115 425 326 450 333 470 Subtotal 1,403 1,247 686 1,118 680 1,352 970 3,815 786 5,378
Current liabilifie Short-termdebt 3,193 2,406 3,564 850 3,052 1,754 2,455} 2,6401 Assetspayable etc. 2.31 691 2.923 1.961 3.312 2.784 4165} 3.0 5514 3.624 Sub-total 5,494 4,097 6,487 2,811 6,364 4,538 6,620 3,056 7,794 3,624
TOTALUABIUTIES 6,897 5.34A4 7-!73 3.9_2 7.044 5.L890 7.590 6.871 8.58 9.002
Reserve fund - - - 7 - 162 - - - Otherfunds 94,333 94,227 93,063 96,256 92,25596,914 91,650 99,000 91,260 102,070 Current yeaes profit J.613 104 1927 790 2.243 493 2.658 874 3.340 82. TOTALEOUITY 95,946 94,4'1 94,99097,053 94,49897,569 94,30899,874 94,600102,899
TOTALUABIUTY ANDEQUITY 102,84399,755 102,163100,982101,542103,459 101,898106,745 103,180 111,901 Curret ratio 4.0 3.8 3.5 5.7 3.6 3.7 3.6 5.9 3.3 5.7 Deb/equltyratio 0.5\99.5 0.9\99.1 0.6/99.40.8/99.2 0.7/99.3 0.9/99.1 0.8/99.2 3.3/96.7 0.5/99.5 4.6/95.4
Source:Supervision Reports and SAR,August 1991 - 89 -
Annex -3 Financial Statements Page 4 of 6
D. Income Agcounts (HC) (Ft. million)
1985 1986 1987 1988 1989 Appraisa Appralsai Appraisal Appraisal Appraisal Fgrecast ForecastActuai ForecastActual
Revenue Internationaltransport 5,051 4,555 5,273 5,112 5,886 5,833 6,682 7,070 7,522 8,684 Other 143 1 185 367 196 _40 679 Total OperatingRevenue 5,245 4,698 5,462 5,280 6,071 6,200 6,878 7,473 7,729 9,363 npoefino Exoenditure Materlals 769 711 828 709 928 810 1,032 882 1,139 1,288 Fuel 852 728 902 914 1,016 1,003 1,141 1,178 1,271 1,338 Salariesand relatedcosts 671 660 721 750 763 836 831 1,181 901 1,479 Othercosts 1.0 1.511 1.074 1.9 JA4 i,M 2.41 J 2. OperatingExpenditure befbredepredation 3,695 3,131 3,962 3,447 4,303 4,085 4,669 5,654 5,191 7,102 Deprecdation 640 651 659 743 715 767 772 830 8 Total OperatingExpenditure 4,335 3,782 4,621 4,190 5,018 4,852 5,441 6,484 6,021 7,934 Netoperating Income 910 916 841 1 00 1 1 1.437 _8 1i.70 1.429 Intereston loans 94 100 99 113 117 136 137 207 154 219 Taxeson Income _9 _402 462 416 _492 _2 692 34S 8271/ 698 Netincome after taxes 426 414 280 561 437 320 608 437 727 512
Operatingratlo 83 81 85 8o 83 78 79 87 78 85 Rateof return2/ on netfixed assets 18 30 16 33 18 40 23 29 25 41
.J/ Including 100 million Ft. transfer to Reserve Fund
2/ Operating Income as X of net fixed assets in operations
Source: Supervision Reports and SAR August 1991 - 90 -
Annex 3 Financial Statements Page 5 of 6
E. Cash Flows (HC) (Ft. million)
1985 1986 1987 1988 1989 Appraisal Appraisal Appraisal Appraisal Appraia r-orecast Actua Forecas Actual Forecast Actual Forecast AMua Forecas Actual
Sources
After tax profit 426 493 280 667 437 4°o 608 628 727 708 Depredation 640 651 659 743 71S 767 772 830 830 832 Long-termloans 2701 3821 4321 382) 406} Other sources -0} 68 153} 853 _83} _224} 33 _229}J/ 3
Total 1,426 1,212 1,474 2,263 1,767 1,232 1,986 2,210 2,192 1,896
Investments 815 374 929 965 1,027 265 982 1,424 i,140 858 Debt service 172 251 131 258 186 485 317 383 392 563 Working Capital/ increase/decrease 13 420 84 359 29 (499) (49) (754) 57 208 Other applications 417 233 3a 413 52 757 _3 67 568
Total 1,417 1,273 1,452 1,995 1,744 1,008 1,986 2,628 2,157 1,549
1/ Ir;cludes transfer of 100 million Ft. to Reserve
(Figures within parentheses indicate negative transactions.)
Source: Supervision Reports and SAR August 1991 - 91 -
Ann-ex3 Financial St-atements Page 6 of 6 F. Balance Sheet (HC) (Ft. million)
1985 1986 1987 1988 1989 Apprai6al Appralsal Appraisal Appraisal Appraisal ForecastActual ForecastActual ForecastActual Eorecast Actua ForecastActuai/ Assets Grossfixed assets 5,556 5,435 5,883 5,966 6,321 5,976 6,557 8,046 7,073 8,321 Lessdepreciation 1.8902.2 172 1 2.124 .59 &150 4.576 23 4- Netfixed assets 3,668 3,153 3,911 3,447 4,197 3,377 4,407 3,470 4,718 3,502 Assetsunder const. 14 14 15 24 16 25 17 59 17 61 Other non-currentassets 22 _2Q 24 19 25 19 27 _ 29 - Sub-total 3,720 3,187 3,950 3.490 4,238 3,421 4,451 3,529 4,764 3,563 Currentassets Cash& Bank 221 115 243 383 266 607 266 189 301 536 Inventores 287 279 309 291 346 356 385 431 425 619 Assets receivable 1.172 1.375 1254 1.706 13 1.844 1.415 2.332 J4 3 Sub-total 1,680 1,769 1,806 2,380 1,947 2,807 2,067 2,952 2,219 4,205
TOTALASSETS 5.382 AM956 5 6 6.223 6.18 §.41 6.98 L76 Liabilitiesand Long-termdebt 428 340 654 901 874 613 1,039 1,014 1,02 929 Othernon-current liabilities 398 167 425 _M _45 91 480 :- 507 Sub-total 826 507 1,079 1,287 1,327 704 1,519 1,014 1,709 929 Currentliabilities Short-termloan 266 267 116 292 126 208 43 367 66 441 Assetspayable 649 152 792 251 844 953 1.067 762 1.078 1iA Sub-total 915 419 908 543 970 1,161 1,110 1,129 1,144 1,901 TOTALUABIUTIES ANDUQUIDITY 1j71 926 1.987 1.3 2297 S.86 2.9 2.143 2,830
Eaut Reservefund 50 405 - 427 - 626 - - 100 Otherfunds 3,165 3,211 3,489 3,052 3,450 3,417 3,281 3,901 .3,453 4,426 Currentyear's profit 426 414 280 561 438 320 437 577 12
TOTALEQUITY 3.1 4.03 3.76 4.04 4.3 4 4.130 4.9
TOTALUABIUTIES ANDEQUITY 5.8 4.956 5.75 fQ6. §&JA .41 M ZSZ6
Currentrato 1.8 4.2 2.0 4.4 2.0 2.4 1.9 2.6 1.9 2.2 Debt/equityratio 10/90 8/92 15/85 18/82 18/82 12/88 21/79 19/81 23/77 16/84 ./ Provisional Source: SupervisionReports and SAR, August 1991 - 92 -
Annex 4 Page 1 of 2
A. Selected Operational Statistics - MAV
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1. Percentaae share of traction Electric 53 55 57 59 61 60 61 65 69 70 50 Diesel 44 43 41 40 39 40 39 35 31 30 50 Steam A 2 2 1 _- 100 100 100 100 100 100 100 100 100 100 100
2. UtilizatIon of traction & rollina stock (km per day)
A. PassenaerTrafRic leetricloco 498 462 475 480 500 510 514 508 522 519 529 Diesel loco 322 307 321 332 333 338 337 335 310 329 304 Steam loco 185 187 190 173 159 150 307 34 14 288 180 B. FreiahtTraffic Electric loco 324 304 345 353 329 339 342 332 348 345 348 Diesel loco 222 218 221 219 207 199 192 190 191 193 188 Steam loco 135 83 104 100 99
C,.Availabl (%) Electric loco 84 82 80 82 81 75 74 80 83 84 85 Diesel loco 79 76 75 77 77 76 77 77 80 82 82 Coaches 92 90 89 90 67 78 88 87 88 78 87 Frelghtwagons 94 94 93 83 77 NA 90 88 89 88 84
3. Staff Productivity
Employeeper km of line 17.9 17.6 17.4 17.4 17.3 17.5 17.8 17.0 17.0 16.5 17.2 Traffic units per employee 282 286 276 260 263 256 255 258 254 254 225 (259) (262) (287) (272) (277) (282)
Figures within parentheses indicate appraisal estimate, and no estimate was made at appraisal beyond 1989.
Source: Supervision Report August 1991 93 -
Annex 4 Page 2 of 2
B. Selected Operational Statistics - HC
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1. Totalton-km performed (million) 1,013 1,077 1,215 1,396 1,582 1,636 1,808 1,960 2,203 2,264 2,066 2. Averagevehicle utliation (1000km) 72.5 73.2 80.7 82.8 83.8 GI.0 83.9 90.3 95.1 99.9 97.0 3. AverageTr. distance (km) I,&q6 1,548 1,490 1,458 1,448 1,334 1,341 1,409 1,491 1,503 1,568 4. Averagetime takenfor completing the average distances (days) 4.8 5.2 4.6 4.5 4.5 4.1 3.9 3.9 3.7 3.5 3.6 5. Staffproductivity ('000ton-km per employee) 251.2 275.4 274.9 314.8 306.2 314.5 348.2 378.5 405.7 408.8 380.9
Source: Supervision Reports and SAR August 1991 MAP SECTION TRANSPORT PROJUCT CONQAINLR TRMINAES
- COMPLETED MOlORWAY UNDER TRANSPORTIRAIL/ROAD) PROJECT I 20 40 TONS - - MOTORWAY CONSTRUCTION UNDERONGOING 5S TONS SECOND TRANSPORT PROJECT PLANNED EVENTUAE CONSTRUCTION C Z E C H O S L O V A K I A .LJ ,+ MARSHALLING YARD EXISTING MOTORWNYS * CONIAINER TERMINALS - MOTORWAYS UNDUR CONSTRUCTION ' RAIQWAY IJYT ilYNlTL.AJJ- MAIN NATIONAL ROADS - DOU3S: TACK ELECTR:'ICATION SECONDARY NATIONAL ROADS ,_' Dohen U. S. S. R. DOUBLINGOF EXISTING TRACKS NATIONAL CAPITAL / 1I TRACK REHABILITATION INTERNATIONAL BOUNDARIES
Tel,,d,iEioA EXISTING RAILWAY NETWORK (fORMER) - -'r----tt- DOUBLE TRACKS P PenYe6Like - /-, SINGLL TRAC(S / PRIVATETRACK IGUSEVI)i(< /2g..St>
+MARSHALLING YARDS fi'\_
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