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The World Bank 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
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