Document of The World Bank
FOR OFFICIAL USE ONLY C $?/ / Public Disclosure Authorized Report No. 5461-BA
STAFF APPRAISAL REPORT Public Disclosure Authorized
BUR4A
TIMBER DISTRIBUTION PROJECT
May 30, 1985 Public Disclosure Authorized Public Disclosure Authorized
Power & TransportationDivision South Asia Projects Department
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents maY not otherwisebe disclosed without World Bank authorization. CURRENCYEQUIVALENTS
Currency Unit = Kyat (K) US$1.00 = K 8.90 K 1.00 = rJS$0.112
Value of Kyat is tied to SDR and floats against US dollar.
WEIGHTS AND MEASURES
1 hoppus foot (HF) = 1.273 cubic feet (cu. ft.) true geometric measure for roundwood 1 hoppus ton (Ht) = 50 HF in round logs, equivalent to 50.64 - 63.66 cu. ft. depending on log shape = 1.4-1.8 cubic meter (M) of wood underbark depending on log shape 1 sawn ton (St) = 50 cu. ft. of sawnwood, or 1.416 m 1 metric ton (mt) = 2,205 pounds
ABBREVIATIONS
AAC - Annual Allowable Cut ADB - Asian Development Bank BFSSC - Burma Five Star Shipping Corporation BPC - Burma Ports Corporation 3RC - Burma Railways Corporation CC - Construction Corporation CAO - Central Accounts Office CMCC - Central Movement Coordination Committee ERR - Economic Rate of Return FAG - Food and Agriculture Organizaticn of the United Nations FD - Forest Department FFS - Forest Feasibility Studies FFYP - Fourth Five Year Plan FOB - Free on Board GDP - Gross Domestic Product GOB - Government of the Socialist Republic of the Union of Burma Ht - Hoppus Ton ICB - International Competitive Bidding IDA - International Development Association IWTC - Inland Water Transport Corporation K - Kyats LTT - Lanaing Tank Type MAF - Ministry of Agriculture and Forests hOC - Ministry of Construction MOPF - Ministry of Planning and Finance MOTC - Ministry of Transport and Communications PCG - Project Coordination Group PU - Project Unit RTC - Road Transport Corporation SEE - State Economic Enterprise St - Sawn Ton TC - Timber Corporation TFYP - Third Five-Year Plan UNDP - United Nations Development Program
FISCAL YEAR
April 1 - March 31 FOR OFFICIALUSE ONLY
BURMA
TIMBER DISTRIBUTION PROJECT
STAFF APPRAISAL REPORT
Table of Contents
Page No.
I. ECONOMIC SETTING ...... 1
II. FORESTRY AND TRANSPORT SECTORS ...... 2
The Forestry Sector:
A. Introduction ...... 2 B. Forestry Sector Objectives ...... 2 C. Forest R-sources ...... 3 D. Forest Management ...... 3 E. The Timber Corporation ...... 4 F. Timber Management ...... 5 G. Teak Sales and Export Pricing ...... 6 H. Manufacturing Facilities ...... 7
The Transport Sector:
I. Introduction ...... 7 J. Transport Planning and Coordination ...... 8 K. Transport Agencies ...... 8 L. Road Systems and Transport ...... 9 M. Rail System and Transport ...... 10 N. River Transport ...... 12 0. Rangoon - Log Depots ...... 12 P. Ports and Ship Loading ...... 13 Q. Ocean Shipping ...... 13
III. THE PROJECT ...... 14
A. Project Genesis and Strategy ...... 14 B. Project Objectives ...... 14 C. Project Components ...... 14 D. Cost Estimates ...... 16 E. Financing Plan ...... 17 F. Implementation ...... 18 G. Operational Conditions ...... 20 H. Procurement ...... -...-..... 21 I. Disbursements ...... -...... 23 J. Environmental Impact ...... -. 23 K. Reporting ...... -...... 23
| This document has a restricted distribution and may be used by recipients only in the performance of | their official duties. Its contents may not otherwise be disdosed without World Dank authorization. -ii-
Page No.
IV. ECONOMIC EVALUATION ...... 24
A. Main Benefits and Beneficiaries ...... 24 B. Economic Evaluation of Subcomponents ...... 25 C. Overall Evaluation ...... --. 29 D. Sensitivity Analysis ...... 29 E. Risks ...... 29
V. AGREEMENTS REACHED AND RECOMMENDATIONS ...... 30
ANNEXES
Annex 1 - Selected Documents Available in the Project File 32 Annex 2 - Central Movement Coordination Committee ...... 34 Annex 3 - List of Railway Stations to be Developed as Primary Timber Shipping Points ...... 37 Annex 4 - Details of Project Components ...... 38 Annex 5 - Implementation Schedule ...... 45 Annex 6 - Project Coordination Group ...... 46 Annex 7 - Expected Annual Traffic Volumes to be Transported in the Main Proposed Project Subcomponents ...... 48 Annex 8 - Details of the Economic Analysis of the Myitkyina Region Component ...... 49
TABLES
Table 1 - Logs and Sawn Timber Transported to Rangoon ...... 51 Table 2 - Timber Distribution Performance - Teak and Hardwood ...... -----. 52 Table 3 - Sawmill Capacity ...... 54 Table 4 - Transportation of Logs by Rail ...... 55 Table 5 - Logs Inventory at Railway Stations ...... 56 Table 6 - Inventory of Timber Wagons ...... 58 Table 7 - Inventory of Logs at Storage Depots, Rangoon ...... 59 Table 8 - Detailed Cost Estimates ...... 60 Table 9 - Estimated Schedule of Disbursements ...... 64
CHART
World Bank-25042 - Timber Corporation - Organization Chart
MAP
Map No. IBRD 18518 - Burma Timber Transport/Distribution Project
This report was prepared by Messrs. Alikhan, Auzmendi, Melrose, and Sabeti (ASPPT), and Messrs. Holmsen and Burns (Consultants) BURMA
STAFF APPRAISAL REPORT
TIMBER DISTRIBUTION PROJECT
I. ECONOMIC SETTING
1.01 Burma covers an area of about 262,000 square miles and consists of lowlands in the basins of the rivers Irrawaddy, Chindwin, Sittang, and Salween, surrounded by hills and mountains to the east, north, and west and divided by a hill range running from north to south in central Burma (Map IBRD 18518). The country has a total population of about 35 million, which is growing at a rate of about 2.0% per annum. About one-quarter of the population lives in urban areas and the rest is dispersed in a large number of villages located in the main agricultural areas, i.e., the river basins and the Irrawaddy delta. The main centers of population and economic activity are Rangoon and Mandalay, the former being the capital, the seat of Government, and the country's main internationalport.
1.02 Per capita income (FY82 current value) is reported to be K 1,275 (US$143), up from K 1,145 (US$129) in FY81. The real growth in per capita income during the Third Five-Year Plan (TFYP) period was 4.6% p.a. Because of a sharp reduction in rice exports, export earnings declined significantly in FY83, resulting in a balance of payment deficit of K 915.4 million versus the targetted K 213.7 million. The foreign exchange reserves were consequently reduced from K 1,586.5 million (US$178.3 million) (March 1982) to K 781.8 million (US$87.8 million) at the end of September 1982.
1.03 Because of damage suffered during World War II, internal unrest and a decade of economic stagnation during a period of social restructur- ing (from the mid-60's to the mid-70's), Burma has only recently begun to expand per capita output of major commodities and to augment export earn- ings in real terms. During the mid and late 70's, the Government of Burma (GOB) carried out a series of major reforms aimed at reorienting economic policies in a more open and pragmatic fashion. These reforms included shifts of investment priorities in favor of the primary producing sectors, adjustment of producer and retail prices to enhance incentives and ration- alize the price structure, and increased emphasis on commercial principles in the management of State Economic Enterprises (SEE). Mainly as a result of these reforms, real GDP increased approximately 6.5% p.a. between 1976/77 and 1980/81, against only 2.9% p.a. between 1971/72 and 1976/77; while growth rates in the transport sector were 7.3% p.a. and -0.4% p.a., respectively. -2-
1.04 The GOB's main economic goals under the Fourth Four-Year Plan (FFYP) 1982/83-85/86are to maintain overall economic growth and to realize a surplus on the balance of payments, while avoiding undesirable inflationarypressures. This will require, among other things: (a) recovery and maintenance of forestry and agricultural production; (b) further improvements in capacity utilization and productivity, espe- cially in transport and industry; (c) a more selective approach to public investment projects; and (d) sufficient resources, both foreign and domes- tic to carry out the planned investment program. Continued economic development will be reflected in increased pressures on all transport systems as well as on the forest resources.
II. FORESTRY AND TRANSPORT SECTORS
THE FORESTRY SECTOR
A. Introduction
2.01 Burma is well endowed with natural resources. Forests form a major element of this endowment. Climate and topography together have contributed both to a rich variety of forest species and to a river system providing access for timber extraction. Teak and a few other valuable hardwood species have historically formed the major part of forest output.
2.02 Burma's forests cover about 96 million acres or about 50% of total land area. GOB has classified about 24 million acres as national forest reserves. About 54% of all forest land is mixed deciduous forest, 26% is hill and temperate evergreen forest, 16% is tropical evergreen forest, the rest being swamp land. About 35% of Burma's forest resources, including 15% of standing teak volume and 25% of the teak Annual Allowable Cut (AAC), are currently inaccessiblefor security reasons. Planned forestry operations in these areas are usually not possible.
B. Forestry Sector Objectives
2.03 The principal GOB sectoral objectives are: (a) to maximize teak log export revenues in the near term; (b) to satisfy the domestic market for sawn hardwoods; and (c) to develop a strategy to maximize long-term economic returns from the forest resource.
2.04 External assistance has been provided to Burma over the past from various sources to meet the above sectoral objectives. The major forestry projects undertaken in Burma in the past ten years are: IDA Forestry I (of which the Forest Feasibility Studies (FFS) is one of the components), IDA Forestry II; IDA Wood Industries I and II; ADB Forestry I -3-
and II; UNDP/FAO National Forest Survey and Inventory, and the UNDP/FAO Forest Research Institute at Yezin. In the foregoing projects, the main issues concerning the forestry sector are addressed and therefore they are not dealt with in the proposed project.
C. Forest Resources
2.05 While forestry activities account for less than 3% of CDP in current prices, the sector is important in export trade where it tradi- tionally has been the second largest foreign exchange earner; in FY81/82 forest products earned about K 696 million (US$78 million). In addition, the sector is an important source of funds for the national budget and in FY81/82 made a net contribution of about K 600 million (US$67 million) to public sector resources in the form of royalties, taxes, duties, and surplus of Timber Corporation (TC). The proposed project would reduce transport/distributioncosts enabling the sector to further increase its net contribution.
2.06 The sector is an important source of construction material, and in 1981/82 supplied about 350,000 sawn tons (St) of lumber and 25 million sq. ft. of plywood. A shortage of these construction materials has con- strained implementationof many projects in Burma. The proposed project will help to improve the hardwood and teak sawnwood availability.
2.07 Forest products provide a high proportion of rural energy con- sumption through firewood and charcoal. The rural population is also dependent on forest products such as bamboo for housing construction. The sector provides total permanent employment to about 160,000 persons. Arrival of logs and timber products to Rangoon by all transport modes totalled about 340,000 Hoppus ton (Ht) during 1982/83. A breakdown of transport volumes by various modes over the period 1977/78 to 1982/83 is summarized in Table 1.
2.08 A description of Burma's forest resources and a discussion of their development potential can be found in a number of documents and reports which are briefly described and listed in the Project File (Annex 1).
D. Forest Management
2.09 All forest land in Burma is owned by the State, and the Forest Department (FD) of the Ministry of Agriculture and Forests (MAF) is primarily responsible for its management. FD, which was founded in 1856, manages Burmese forests in accordance with the Forest Act of 1881 as amended in 1902 and 1941. The Act authorizes the creation of reserved forests. FD sets annual allowable cuts (AAC) within these forests. FD periodicallycalculates AAC of teak and hardwood in each forest division, which would theoretically ensure a sustainable yield from the forest stock in perpetuity. The AAC is based on old forest inventory information, but -4-
GOB is currently updating its forest inventory information with UNDP/FAO assistance. The new inventory will be completed by 1986. FD marks trees that meet the criteria for extraction by TC, including girdling of teak trees in forest areas that supply dry teak. After extraction, FD assesses royalties on the logs extracted at rates of K 200/Ht for teak and K 15-30/Ht for other hardwoods. GOB also receives substantial contribu- tions from wood industries operations through export taxes of about K l,100/Ht and local taxes of about K 110lHt. The combined royalty and tax level is higher than in most other timber exporting countries.
2.10 FD has also a forest plantation program under which about 170,000 acres of teak and about 80,000 acres of other hardwood species have been planted. The program is supported in part by the IDA-assisted Forestry II Project (Credit 949-BA) and is expected to increase the teak supplv in future. Another project with a significant forest plantation component is ,-urrentlybeing prepared for possible IDA assistance.
E. The Timber Corporation (TC)
2.11 TC is a Government-ownedcorporation, formed under the State Timber Board Act of 1950 as a separate legal entity. TC has three main areas of responsibility: (a) extraction of all teak logs and half of the hardwood logs produced in Burma; (b) operation of most of the wood processing industries in Burma including all teak sawmills, plywood and veneer mills, furniture and flooring products factories and about 40% of the hardwood mills; and (c) marketing of wood products, both within and outside Burma.
2.12 TC is a large corporation with about 40,000 full-time employees and 600 professional staff. It is divided into four functional depart- ments: extraction, marketing and milling, engineering, and accounts and is headed by a Managing Director (Chart 1). In 1976 an attempt was made to modify the organization, but in practice, the emphasis is still on func- tional specialization. TC has also created project units (PU) for developmentalpurposes. These PU have typically been formed to implement large, externally assisted development projects. PU have considerable authority and autonomy within TC, reflected in higher level staffing, direct access to the Managing Director when needed, and separate financial statements and audits. This arrangement has been successful in con- centrating effort on areas with the greatest potential for TC.
2.13 TC currently has a central training school for workers in Rangoon, but the training school has few permanent staff, and therefore TC relies almost exclusively on practical training in the mills. A UNDP-financedand FAO-executedtraining project (the Technical and Voca- tional Forestry and Forest Industries Training Project) is strengthening local training within TC by setting up a Forest Industry Training School and developing skills within TC. -5-
F. Timber Management
2.14 Timber extraction reached a peak of 1.3 million Ht in 1972/73 and declined after that, reaching a low of 1.0 million Ht in 1975/76. The decline was due to shortage of extraction equipment and fuel. Since then the IDA-assistedForestry I and II Projects (Credit 493-BA and Credit 949-BA) and the ADB-assisted Sagaing Forestry and Second Forestry Projects have provided substantiaL assistance for extraction, in the form of new equipment and technical assistance. The decline has been reversed, and about 1.4 million Ht of teak and other hardwood logs were extracted in 1981/82. Teak extraction, which is a state monopoly, contributed about 0.5 million Ht, other hardwood extraction by TC contributed 0.7 million Ht with the remaining 0.2 million Ut coming from private sector extraction of nonteak hardwoods.
2.15 TraditionallyTC's management was extraction oriented, with insufficientemphasis on wood processing industriesand marketing. This resulted in declining product quality and marketing efforts so that TC's exports declined sharply. Over the five years ending in 1977/78, export volume of teak sawnwood declined by 40% (63,400 St to 38,700 St) and of teak logs by 15% (53,700 Ht to 45,600 Ht). Since 1977/78 increasing attention has been devoted to processing and marketing, and in 1981/82 the export volumes of processed teak products and logs have increased to 72,000 St and 75,000 Ht respectively, thereby recouping previous declines.
2.16 While sufficient attenticn in the past has been given to extrac- tion and sawnwood activities, transport has lagged behind. Transport/ distribution problems, mainly of coordination,allocation of traffic to appropriate modes, and investment in necessary infrastructureneed to be addressed if the export levels attained and expected to increase are to be sustained. The proposed project tackles some immediate problems, par- ticularly that of coordinationand transport capacity constraints,and it will address the medium- and long-term issues under a comprehensive study. These problem areas are described in detail in subsequent paragraphs.
2.17 Burma's timber can be broadly categorized into teak and hardwoods. Ideally, most of the teak should be exported and hardwood should be left for local consumption. There is, however, an important inter-relationshipbetween the two as less production and/or transport of hardwoods results in increased consumption of teak locally, thus depriving the country of valuable foreign exchange earnings. Therefore, the tran- sport needs of both teak and hardwood, with emphasis on export oriented products, have been taken into account in designing the proposed project.
2.18 The present AAC for teak is about 400,000 Ht, of which about 350,000 Ht are from accessible areas. The AAC for all types of hardwoods is set at 1.1 million Ht. Although only about 70% of the AMC for total -6-
hardwoods has been cuc, extraction of teak has, for the past 5 years, exceeded the AAC for the country as a whole (Table 2), because greater emphasis is being placed on exportable teak.
G. Teak Sales and Export Pricing
2.19 Because of the nature of Burma's wood processing industry and the quality and efficiency problems facing the industry (para 2.22), TC has a policy of exporting its best teak in log form. In 1981/82, TC exported about 75,000 Ht of high-grade logs worth about US$44 million. Lower grades of teak were exported as sawnwood. Sawnwood exports in 1981/82 were about 72,000 sawn tons 1/, worth about US$45 million. The lowest grades of teak sawnwood are sold locally. Local demand for teak is high because of a shortage of durable sawn hardwood. In 1981/82, local teak sawnwood sales were about 75,000 St, worth about US$12 million. The local prices are lower mainly because of the lower grade of the teak sawnwood sold in local markets.
2.20 TC has a strong position in world teak markets, supplying vir- tually all natural teak logs and 70% of natural teak conversions (sawn) entering internationalmarkets. Logs and lumber from Burma are considered superior in quality to plantation-grown teak that is being supplied in increasing quantities from countries such as Indonesia. Ceneral difficul- ties expressed by buyers of Burma teak and hardwood log and lumber buyers worldwide include a requirement to pay 100% in advance, slow deliveries on contracts because of inadequate transport, expensive and unreliable ship- ping, declining product quality, and damage and loss in shipping. Despite this, there is a high demand for Burma's forest products. The proposed project will address some of these problems.
2.21 Export prices for wood products are set by TC, which is the sole Burmese exporter of those products. Prior to 1978/79, TC management instituted sharp price increases without sufficient notice. This led to a contraction of teak markets as many consumers switched to other hardwoods. Since 1978/79, TC has instituted a more organized pricing policy. TC revises export prices only once every year in April. The market is informed about price increases sufficiently in advance of that date, and the price increases have been moderate at about 10% per year, which is only about 2% to 3% above infLation. As a result of this and improvements in marketing, TC has been able to regain most of its cus- tomers. The current average export price for teak logs is K 4,900/Ht and for teak sawnwood K 5,500JSt, which is about 5% higher than the Indonesian teak price and reflects the quality premium for Burmese teak. Most of the high grade teak is exported. Small amounts (about 1%) of other hardwoods
1/ Equivalent to 166,000 Ht in log form. -7-
are exported in log and sawn form. Hardwood logs, depending on the type, range in prices from K 500/Ht to 4,000/Ht. The average price of sawn hardwood is about K 840/Ht.
H. Manufacturing Facilities
2.22 The manufacturing facilities operated by the TC include about 130 teak and hardwood saw mills, one waste-paper mill, and minor plants such as small furniture factories. About 80 small, private firms receive lumber from TC for resawing, and these account for roughly 25Z of the hardwood sawing capacity. With the exception of the Okkyin mill, most teak and hardwood mills are old, small and simply operated with 2,000 to 10,000 Ht annual input. Table 3 lists the capacity of TC and hired saw- mills by State/Division. The milling processes are generally inaccurate and inefficient,with an average recovery rate of only 34% for teak and 42% for hardwoods (Table 2). All principal teak mills are in the Rangoon area, while hardwood production is widely dispersed in the country.
THE TRANSPORT SECTOR
I. Introduction
2.23 Although forestry accounts for less than 3Z of CDP, it has a 30% share of all freight transport in the coulatry. In the national accounts, there is not a separate breakdown for transportationand communication. Both accounL for about 5% of CDP. About 470,000 (3.3% of total labor force of about 14 million) are employed in transportationand communication.
2.24 Past and current Bank Group lending strategy to the transport sector in Burma has emphasized the improvement, rehabilitation,and main- tenance of transport facilities to achieve greater utilization of the existing assets. Major projects in this sector include: Railways I, II, and III; Inland Water Transport I and II; Ports I, II, and III, and a Construction Industry Project. Ports III and Construction Industry Projects are currently being implemented. The Railways, Inland Water Transport, and Por:s I and II have been satisfactorilycompleted. Project Completion Reports and Project Performance Audit Reports on Railways III (1973 - Credit 414-BA), Inland Water Transport II (1973 - Credit 413-BA), and Ports II (Credit 671-UP) have been issued, and the expost economic rates of return have been respectively 12%, 10% for the railways and water transport projects. It is not available for the Ports II Project. These IDA projects have contributed towards curtailing deterioration of tran- sport capacity, have improved operations of entities through technical assistance, and have achieved modest improvementson institutional and financial aspects of entities involved. -8-
J. Transport Planning and Coordination
2.25 Transport planning and coordination is undertaken within the context of overall national planning, which is based on objectives estab- lished by the Party Congress. On the basis of the overall targets for the transport sector, the Ministry of Transport and Communications (MOTC), through the Central Movement and Coordination Committee (CMCC), estab- lishes the commodity priorities and prepares a four-year plan for all transport modes. The CMCC is chaired by the Deputy Minister of MOTC with the members being the Managing Directors of the following corporations: Burma Railways (BRC), Road Transport (RTC), Burma Five Star Shipping (BFSSC), Burma Ports (BPC), and Inland Water Transport (IWTC). All of these agencies are involved in the distribution of timber. An outline of the organization, aims and objectives of the CMCC is found in Annex 2.
2.26 The main aim for creating CMCC was to move Government goods expeditiously and at the lowest cost to the economy by allocating traffic to the various modes in accordance with perceived commodity transport needs and capacity. However, the system has proven to be ineffective and detrimental to the already inefficient operations of the state-owned transport corporations. The traffic allocations are based on priorities among different commodities (e.g., rice has absolute priority over all other goods) and on a certain order of availability of different public carriers, without any consideration for the most economic mode for dif- ferent types of movements and cargoes, no consideration of return cargo, etc. Moreover, CMCC has serious staff and information data constraints, and user agencies are not formally represented in CMCC. The comprehensive study (para 3.16) included in the proposed project will examine the role and -.urkings of the CMCC and recommend improvements. At the same time, lessons to be learned from the operation of a Project Coordination Group (PCG) (para 3.13) would also help in defining possible improvements to CMCC.
K. Tran_ort Agencies
2.27 The topography of the country, the location of population along the rivers. and deterioration of the railway system have resulted in river and road transport becoming the dominant modes of transport, while the railway is limited to serving the most important population and economic centers. The north-south transport corridor ronnecting Rangoon with Mandalay and Myitkyina represents the main artery of the transporr system. The corridor is served by road, river, and railway.
2.28 MOTC overviews the operation of the BPC, BRC, IWTC, RTC, BFSSC, and other agencies not relevant to the proposed project. Transport activities are within the purview of MOTC, except for highway planning and construction,which come under the Ministry of Construction (MOC). MOTC is responsible for enforcing Covernment policies regarding transportation -9-
by: (a) approving the budgets of transport agencies in consultation with the Ministry of Planning and Finance (MOPF); (b) appointing top level officers at transport agencies; (c) setting tariffs and tariff policies; and (d) enforcing relevant regulations in the operation of the sector.
L. Road Systems and Transport
2.29 MOC, with the ConstructionCorporation (CC) as the executing agency, is responsible for che administration, construction, and main- tenance of the primary and secondary public road network. Forest roads, which are mainly fair weather roads, are constructed and maintained by TC. About 2,200 miles of this type of road -ere constructed by TC in the period 1978/79 to 1981/82, wich technical assistance from CC.
2.30 CC is constructinga major road on the west side of the Irrawaddy River to connect Sagain and Myitkyina. Parts of this road are becoming increasingly important for truck transport of logs. Construction on some sections is still to be completed to tie the system together. Public roads also connect this north-south main road system with the Irrawaddy River at Naba/Katha and Shwebo/Kyauk Myaung. In addition, the TC has extraction roads connecting to the Irrawaddy at Kanbalu/Khayansakan, Kyaikthin/Khayansakan,and Kabo (Mu River)/Zigon/Male. Joint TC/CC road systems also connect Wuntho and Nankhan with the Meza River (Tawma). The road at Wuntho connects west to the Chindwin River via Pinlebu. While the CC main roads are all-weather roads, most of the TC roads are only passable during fair weather. In line with one of COB's main objectives for improvement of the road infrastructure,the proposed project would include the construction of important road links for log transport (Map IBRD 18518).
2.31 Road transport of logs and timber is primarily carried out by TC, which operates a fleet of more than 2,000 trucks. Less than 70Z of these are reported serviceable. TC's trucks are mainly used for long distance haulage, while private trucks, mainly owner-operators or small companies, are used for the local and short-distance log and lumber tran- sport. All private and most TC trucks are of 6-ton capacity or less. Because of the shortage of rail wagon capacity, CC transports by truck a substantialamount of lumber from mills in Upper and Central Burma to Rangoon (over 400 miles) for its own use. The proposed project would provide sufficient rail capacity to eliminate long distance movement of teak and lumber by uneconomic road transport.
2.32 Logs moving by traditionalmeans of stream floating could take 3-5 years on average to reach Rangoon, because the movement is weather-dependent. Where mechanized means are utilized, this time car,be considerablyreduced. Teak-log inventories along roadsides, rail sta- tions, and at rafting and log depots range from 1.5 to 6 times the AAC, depending on the location. Because of the lack of all-weather roads (and -10-
to make the best use of the limited truck supply>. logs are trucked out of the forest on fair-weatherroads during the dry season and placed in interim storage near an all-weather road. The logs are reloaded and transported on all-weathe.rroads to local sawmills, railway, or rafting depots during the wet season. Railway-transportedteak on the Myitkyina line is dumped into the Irrawaddy River at Sagaing where rafts are con- structed for towing to Rangoon, while hardwoods are generally absorbed by Mandalay sawmills. Logs trucked directly to the main rivers are formed into rafts. Dry and green teak are towed to Rangoon, hardwoods to the closer local mills.
2.33 Log production in Upper Burma has been adversely affected by the poor state of the transport system. Storage of logs at roadside landings or along seasonal streams for long periods has resulted in losses from theft and natural deterioration. The proposed project would help coordinate transportactivities and provide funds for investments of urgent nature to meet the near-term needs of the timber dstribution system.
M. Rail System and Transport
2.34 The railways are operated by the publicly owned BRC, which is under the MOTC. The system comprises 2,000 route miles of meter gauge track. Movements of logs and timber products by rail are primarily con- centrated on the following three lines: (a) the Mandalay-Myitkyinarailway line, which runs for 338 miles through parts of the ADB Forestry I and II project areas; (b) the Pyinmana/ Taungdwingyi-Rangoonline, which runs through IDA II Forestry Project areas; and (c) the Prome line serving parts of the IDA I Forestry Project area (Map No. IBRD 18518). While an annual average of about 173,000 Ht of logs (91,000 Ht teak and 82,000 Ht hardwoods) and 13,000 St of sawn timber products were transported by rail during 1980/81 and 1981/82, rail movements were down to 53,000 Ht of logs (47,000 Ht teak and 6,000 Ht hardwoods) in 1982/83. About 20,000 Ht of logs have annually been transported on the Myitkyina line during the past 3-4 years (Table 4). The volume for 1983/84 will be substantially down from this level because BRC is unable to supply railway wagons. Projected future annual rail transport demand on this line is about 80,000 Ht. Although only about 25% of all timber products are transported directly to Rangoon by rail (waterways are the major transport mode), railways are essential for moving logs from areas relatively distant from rivers and in places where only the rail mode is viable.
2.35 BRC owns and operates 23 cranes at 21 stations throughout its national networks for log-handlingpurposes. Because transport capacity, as well as loading equipment and associated facilities are expensive and quite limited in nature, it is advisable that loading operations be con- solidated in the fewest stations. To this end, nine stations on the Mandalay-Myitkyinasection have been identified for development as primary timber shipping points, while other smaller ones should be closed. At negotiations,agreement was reached on consolidation of loading points at nine stations (Annex 3). -11-
2.36 Transport components under previous and current forestry projects have been project-specific,and financing, which was provided within them, focussed on construction of access and feeder roads (from points of extraction in forest areas to main water depots and railway heads) and to a limited extent on railways. IDA Forestry I (1974) and ADB Forestry I (1977) Projects did not have transport components for railways. In 1977, 34 timber wagons were procured under bilateral assistance, the only addition to the fleet in the last ten years. Under the IDA Forestry II (1979) Project, a modest provision of K 6.5 million (about US$1.0 million at the time of appraisal) was made for the repair of 190 timber wagons. A large proportion of these now need to be rehabilitated. Host recently, the ADB Forestry II (1982) Project has provided for rehabilita- tion of 120 timber wagons, while the assessed project requirement was for 150 timber wagons. The balance of 30 timber wagons were supposed to be rehabilitated by BRC, which cannot undertake this work due to a shortage of foreign exchange. The proposed project would provide financial assis- tance for the rehabilitationof those 30 timber wagons.
2.37 Severe capacity constraints on timber transport by rail have resulted in log and timber accumulation at stations and depots along the railway, particularlyon the Hytkyina line (Table 5). This constraint is caused by the deteriorating condition of BRC's rolling stock, which is overaged and lacks spare parts due to foreign exchange shortages. Although the rolling stock inventory shown in Table 6 indicates 538 timber wagons serviceable for log transport, on average only 25% (135) of its timber wagons and 60% of its locomotives are in operation at any given time. Almost none of the wagons are classified as "good" by BRC and most of them are 25-40 years old. BRC estimates that only 10% of its timber fleet has vacuum brakes left on them because of pilferage of brake com- ponents. In addition, the multiplicity of wagons (nine types of bogie wagons) and locomotivesand continual shortage of durable ties is creating vexing problems of maintenance. These factors are reducing the operating speed of trains and the efficiency of BRC's timber operations.
2.38 Of the 538 timber wagons mentioned above, only 440 wagons are within an operationallyeconomic age profile, 6-29 years. If timber wagons were in good serviceable condition and transport activities well coordinated, then about 440 timber wagons should be sufficient to meet the near term transport needs of timber. These should form the mainstay of timber transportationand should be the target group for rehabilitation and maintenance. Under the proposed project, immediate short-term remedies to capacity constraints experienced by BRC are being addressed; the medium- and long-term problems will be the subject of a comprehensive study (para 3.16). Specificallyunder the proposed project, although some new wagons would be procured, the thrust is towards rehabilitation of railway wagons and locomotives on routes (discussed in detail in Chapter III) where large volumes of timber can be most economically moved by rail. -12-
N. River Transport
2.39 Traditionally, rafting and towing of logs on the main rivers has been the principal method used for transporting logs in Burma. This is the responsibility of TC, which has iLs own crews, and additionally uses private contractors. Dry teak logs, which float, are formed into rafts and towed by launches to Rangoon. Hardwood and green teak, being "sinkers", are rafted by mixing dry teak for buoyancy, interweaving bamboo pontoons, or being suspended by slings between country boats. These rafting techniques, however, result in lengthy delays and log losses in transit (Table 2). Other externally assiste%1forestry projects have provided technical assistance for improving rafting techniques.
2.40 The state-owned Inland Water Transport Corporation (IWTC), also under the MOTC, carried about 1.9 million tons of goods traffic in 1982183. No logs, and only minor volumes of lumber, have been carried by barges in the past. Under the proposed project, a component of experimen- tal nature comprising of one pusher tug and five 500 t barges will be utilized in dedicated routes service to transport high valued hardwood logs and lumber. This will be the first time that a barge system, which has the potential for reducing lengthy delays and log losses in transit, will be utilized in Burma to transport logs.
0. Rangoon - Log Depots
2.41 Logs rafted to Rangoon are held at ten riverside depots (Table 7) pending grading and allocation to mills or export sales depots. Total storage capacity of these depots on land and water is about 320,000 Ht. The Okkyin depot is a major processing area for sinkers (hardwoods and green teak) from the Irrawaddy/Chindwinriver systems. The rafts are brought into a shallow channel and dismantled during high tide. As the tide goes out, the logs are left exposed and yarded out. Skidders and loaders are used to bring the logs to road side and onto the trucks. Logs are sorted for trarnsferto the adjacent Okkyin teak sawmill or to hardwood sawmills in the Ran='oonarea. Soft ground, poor roads, and inefficient handling account for low productivity. Provision has been made in the proposed project to improve movement of log and lumber to and from the major Okkyin depot.
2.42 To transport volumes on the Myitkyina corridor by river mode, improvementsare necessary to the Sagaing and Katha log depots (Map No. IBRD 18518). For smooth operations, the interface between rail and river operations have to be compatible, and appropriate design layouts are znder advanced preparation in Burma. At negotiations these preliminary designs were reviewed and agreed with GOBJMOTC. -13-
P. Ports and Ship Loading
2.43 The ports are administered by the Burma Ports Corporation (BPC), also under the MOTC. Export shipments through the Port of Rangoon have averaged about 250,000 tons of logs and 110,000 tons of lumber annually over the past five years.
2.44 Heavy timbers and long lumber for export is transported by trucks from the sawmills to ship side in loose form, while short lumber is steel banded and scantlings floated in rafts to ship side or transported by truck to dock side. Also, logs for export are transported by truck or floated by river to ship side. Loading of logs and sawn timber is slow and inefficient and often subject to lengthy delays waiting for logs to arrive. The bundled or crated teak shorts and scantlings often break or are damaged during positioning in the hold. Stowing is particularly difficult if the ship is equipped with narrow hatches. The new container handling facilities in Rangoon, supported by the IDA Ports III Project, will accommodate an increasing amount of containerized forest products shipments. Buyers of teak products from Burma welcome this development. Provision has been made in the proposed project to handle increased volumes of sawn timber in containers and to transport sawn timber by an efficient barge system, thus avoiding truck transport through the con- gested Rangoon City. Container handling will also involve, for the first time in Burma, the placing of containers directly at saw mills for loading.
Q. Ocean Shipping
2.45 Burma Five Star Shipping Corporation (BFSSC) owns and operates ten coastaL and fourteen ocean-going vessels, eight of them above 10,000 dwt. In addition, a number of foreign-flag vessels are chartered to meet the overall needs of the country's exports, mainly rice and tim- ber. Although most of the log and lumber exports are carried by BFSSC, only about 37% of Burma's foreign trade is carried with its own or chartered vessels. Freight rates of buyer chartered vessels are reported to be significantly lower than BFSSC rates. Although there is no official regulation requiring shipment of logs by BFSSC, the GOB expresses a preference for use of these ships. Since logs and timber products are sold FOB, problems are experienced in the coordination, timing of ship- ments, and slow ship loading. Shipping practices need to be examined in depth and the proposed comprehensive study would address these and make appropriate recommendations. -1b-
III. THE PROJECT
A. Project Strategy and Genesis
3.01 The Government's export promotion objectives ovec the short to medium term are to increase the unit value of export rice through improved grading and milling, and to raise foreign exchange from teak exports through greater efficiency in handling, processing, and transport. IDA's country strategy and lending program support these objectives.
3.02 Recognizing that transport bottlenecks are adversely affecting exports, GOB has begun to tackle specific commodity distribution problems. Since rice and timber are the two major export commodities, initial atten- tion focussed on the flow of these two commodities. After completion of a review by IDA in 1982, it was concluded that each commodity poses its own unique distribution problems requiring a specialized approach. Since timber distribution problems are more acute and need immediate attention, they are being tackled first. Lessons learned from this project could be applied to other key commodity distributions in Burma.
B. Project Objectives
3.03 The principal objectives of the proposed project are to:
(a) achieve significant improvements in the planning and allocation of transport services concerned with the movement of timber;
(b) arrest further deterioration of the existing timber transport/ distribution capacity, with a subsequent improvement in timber quality, quantity, and reliability of supply and export;
(c) reduce timber transport, handling, and storage costs; and
(d) test new timber transport systems.
C. Project Components
3.04 The proposed project approach is designed to be experimental in nature in that: (a) it improves the management of timber transportation witbin the context of the existing institutional framework; (b) it will introduce the possibility of employing different modes of transportation to meet the logistic requirementsof a changing timber market; and (c) it will improve transport to inaccessible areas, permitting better utiliza- tion of forestry resources. One fundamental component of the proposed project is the creation of a Project Coordination Group (PCG) (para 3.13), including user agency participation,with specific responsibility to plan -15-
and coordinate activities relating to the movement of timber. The inter- action of this group wiLl inevitably have an impact which would result in an overall improvement in the distribution of timber. It is envisaged that further Bank involvementwould develop from the positive demonstra- tion effects of the proposed,approach. The proposed project addresses the immediate need to arrest further deterioration in transport capacity, while the overall institutionaland financial aspects of agencies involved in the distribution/transportof timber will be analyzed in a comprehen- sive study (para 3.16) with the objective of strengthening the system.
3.05 To achieve the objectives indicated in para 3.03, the proposed project comprises the components described below. Cross-references indi- cate the identificationof each component with the objectives described in para 3.03.
(a) Creation of a Project Coordination Group (PCG) - to plan and coordinate activities related to the movement of timber (para 3.03 (a));
(b) Comprehensive Study - to analyze and make recommendations con- cerning the major issues affecting the transport/distribution of timber (para 3.03 (a));
(c) Training and Technical Assistance on: - (i) strengthening the PCG; (ii) new timber transport systems to be tested under the proposed project; and (iii) specializedoperator training (para 3.03 (a));
(d) Myitkyina Corridor
i) Naba-Katha - rail and road improvementsfor increased log traffic by provision of additional railway infrastructure and rehabilitationof rolling stock for log transport, introductionof new fastener techniques for prevention of pilferage of critical brake components, Katha log depot improvements,loading/unloading equipment, and improvements of the Naba-Katha Road (para 3.03 (b) and (c));
(ii) Wuntho-IrrawaddyRiver road connection - upgrading of existing roads to aLl-weather transport and provision of additional constructionequipment capacity (para 3.03 (c));
(iii) Sagaing Log Depot - redesign of rail yard, improvements to depot yard, and provision of additional log loading and unloading equipment (para 3.03 (b) and (c));
(e) Prome Rail Line - provision of additional rolling stock for log transport (para 3.03 (c)); -16-
(f) Pyinmana Rail Line - rehabilitation of rolling stock for log transport para 3.03 (b) and (c));
(g) Transport of CC.Sawn Timber - provision of additional railway rolling stock (para 3.03 (c));
(h) Containerizationand Ship Loading - improvements in the efficiency of forest products container loading and ship loading of logs (para 3.03 (b), (c), and (d));
(i) Barge System - provisions for trials of barge transport of logs on the Irrawaddy/Chindwinriver systems (para 3.03 (b), (c), and (d)); and
(j) Rangoon Harbor - tug and barges for transport of timber products to ship side in Rangoon and yard improvements at Okkyin Log Depots (para 3.03 (b), (c), and (d));
Details of the above project components are given in Annex 4.
3.06 The proposed project includes transport and related components which will close the gaps presently existing in the distribution of timber from the points of origin to the destined markets. The physical com- ponents of the proposed project are interdependentbecause the solution adopted for the improvement of one bottleneck may affect other phases. As an example, a substantial increase in the railway capacity to transport logs to the Sagaing depot must be accompanied by improvements in the operations at the depot. Otherwise, the result would be only a transfer of the bottleneck from one place to another. A similar case would occur if no adequate provisions are made in the Rangoon area to receive an increased number of logs. Therefore, under the proposed project, the selection of the physical subcomponentshas been based on an adequate flow analysis. This integrated system approach has taken into account the interdependenceof the different subcomponents.
D. Cost Estimates
3.07 The proposed project components are estimated to total K 258.10 million (US$29.00 million equivalent), of which the total foreign exchange component is US$17.00 million. Principal components and cost estimates are detailed in Table 8 and summarized below. -17-
--- Kyats Million ------US$ Million ---- Foreign Z Local Foreign Total Local Foreign TotaL of Total
Myitkyina Line 44.69 50.40 95.09 5.02 5.66 10.68 52.99 Prome Line 7.33 12.69 20.02 0.82 1.43 2.25 63.55 Pyinmana Line 6.73 11.80 18.53 0.75 1.33 2.08 63.94 CC Timber Transport 6.45 14.33 20.78 0.72 1.61 2.33 69.10 Container Equipment 2.89 6.42 9.31 0.33 0.72 1.05 68.57 Barging System 11.77 12.89 24.66 1.32 1.45 2.77 52.35 Rangoon Harbor Equip. 4.36 4.87 9.23 0.49 0.55 1.04 52.88 Training & T.A. 1.78 1.78 3.56 0.20 0.20 0.40 50.00
Total Base Cost 85.99 115.19 201.18 9.65 12.95 22.60 57.30
Physical Contingency 6.88 11.52 18.40 0.78 1.29 2.07 62.32 Price Contingency 13.03 20.15 33.18 1.47 2.26 3.73 60.59
Total 105.90 146.86 252.76 11.90 16.50 28.40 58.10 Comprehensive Study 0.89 4.45 5.34 0.10 0.50 0.60 83.33
Total Project Cost 106.79 151.31 258.10 12.00 17.00 29.00 58.62
Notes: - Taxes and duties of about K 65.3 million (US$7.3 million) are included in the local costs.
3.08 Cost estimates are based on March 1985 prices. The foreign exchange rate used in the above estimates was US$1.00 = Kyats 8.9. Physi- cal contingencies are calculated at about 9%. Price contingencies are based on estimated foreign cost escalations of 7.0% for 1985, 7.0% for 1986, 6.0% for 1987 and thereafter, and local cost escalations of 6% annually. The average local and foreign price contingencies are based oni the nature of goods involved in the proposed project. During negotiations, the project cost estimates were discussed and agreed with GOB.
E. Financing Plan
3.09 IDA would finance the foreign exchange component of the proposed project, which amounts to about US$16.50 million equivalent, the local cost of the training and technical assistance component (US$0.2 million), and US$1.05 million equivalent for local labor and materials as agreed at negotiations. Thus, the proposed credit represents about 61% of the project costs. UNDP would finance the total foreign exchange component of the comprehensive study (para 3.16), estimated to be US$0.5 million. During negotiations, agreement was reached with COB/MOTC that MOTC will provide local funds for the project, amounting to K 95.68 million -18-
(US$10.75 million equivalent), and release funds in a timely manner and in accordance with the implementation schedule (Annex 5). The proposed financing plan is summarized as follows:
…------(US$ 000) …
IDA COB UNDP Total
Foreign 16,500 500 17,000 Local 1,250 10,750 12,000
Total 17,750 10,750 500 29,000
F. Implementation
3.10 The primary responsibility for implementationof the proposed project will rest with MOTC, acting through the PCG (para 3.13). Day-to-day implementationwill be carried out by MOTC's various agencies (BRC, IWTC) and by CC and TC. By making MOTC ultimately responsible, more effective control can be established over the transport agencies, which are executing a substantial portion of the project and are under the direct control of MOTC. With all agencies connected with timber opera- tions represented on the PCG, the coordinating body, better control, and expeditious implementationwould be achieved. During negotiations, draft arrangements to be signed between MOTC and the respective agencies (BRC, IWTC, TC, and CC) for implementationof the applicable components of the proposed project were discussed and agreements were reached on the content of those documents and that they should be signed by October 1, 1985.
3.11 Under the proposed project, the recipient of funds will be MOTC, which will also provide local funds. MOTC will temporarily retain owner- ship of the new and rehabilitated assets (para 3.18). The assets to be rehabilitatedwill be transferred from the respective agencies to MOTC records for a nominal sum for a fixed period. Proper project accounts and register of assets will be maintained by MOTC. At negotiations, agreement was reached with GOB/MOTC that: (a) MOTC will retain ownership of assets, including rehabilitated assets; (b) records for assets procured and rehabilitatedwill be maintained by MOTC; and (c) project accounts will be subject to annual audit, and that the audited report will be submitted to IDA within six months after the close of the fiscal year of MOTC.
3.12 In order to improve timber movement, a Project Coordination Group (PCG - Annex 6) including user agency (TC) representation has been created by GOB/MOTC as a subgroup of CMCC. PCG will be responsible for a medium- and long-term planning of timber transport, as well as for solving the day-to-day problems affecting the system. PCG should clearly identify timber transport demands in quantity, location and time, define priorities and the most economic way of satisfying the demand, and manage the ade- quate functioning of the system. While PCG is not a new organization, it -19-
differs from the CMCC in that it comprises representatives (technical level traffic managers) from all the operational agencies involved in the movement of timber. The purpose in creating PCC is to establish interac- tion - currently lacking - between the transport agencies and the user agency at a technical working level to deal specifically with timber distribution problems. This is an important aspect of the experimental nature of the proposed project in that it fosters the creation of such subgroups within CMCC for planning and managing the inovementof key com- modities and will demonstrate that such subgroups would be effective in solving transport problems given proper backing. In support of this concept, the PCG has been given direct access to the Deputy Minister of MOTC, and it will function independentlyof CMCC proper. The Government has accepted the recommended conceptual framework of the PCG. It has been staffed and given an office and necessary equipment. For PCG to carry out its coordination responsibilities,two permanent staff members of suffi- ciently high rank from MOTC have been assigned to it with appropriate support staff. The proposed project will include technical assistance and training to further strengthen the PCG.
3.13 The PCG will arrange for the necessary counterpart support staff to be drawn from appropriate agencies involved in the distribution of timber as needed and requested by the consultants selected for the com- prehensive study. During negotiations, agreement was reached with GOB/MOTC confirming the role of PCG, its responsibilityand authority, the adequacy of provisions for its continual functioning and its responsibility for arranging counterpart staff to the consultants undertaking the comprehen- sive study.
3.14 In line with the proposed project, PCG is working on developing efficient distribution plans for timber. At negotiations, these timber transport plans were discussed and agreement reached with COBIMOTCthat the plans will be implemented. Supervision missions will monitor progress and adjustments subsequently needed.
3.15 The comprehensive study included in the proposed project would aim to: (a) examine the medium- and long-term constraints affecting the distributionof timber; (b) review relevant completed studies; Cc) recom- mend improvements in the general transport management of timber; (d) make specific recommendationson measures Lo be taken by COB to improve the coordinationamong the different agencies responsible for the distribution of timber; and (e) recommend an indicative time-phased and priority-ranked investment program to relieve current transport bottlenecks and economi- cally improve the distributionof timber. The study, which would require about 50 man months of consultant services, would not be restricted to transportaspects, but would encompass all the elements needed to improve the efficiency of the timber distribution system. The draft terms of reference for such a study have been agreed with GOB; funds therefore have been formally earmarked for it under the UNDP Umbrella Project III. During -20-
negotiations, agreement was reached with COB on: (a) a short list of firms who would be invited by IDA, acting as executing agency, to submit proposals for conducting the study; and (b) a timetable for initiating and completing the study, for review of the recommendationswith IDA, and for preparing an action program to implement recommendations,which should start by June 30, 1989. The results of the study should be discussed and agreed with IDA within six months after completion of the study, which is expected to occur in mid 1988. Any follow-up project will be conditional upon the satisfactory impLementationof selected recommendationsof the study agreed between COB and IDA. The TOR of the study are on Project File (Annex 1).
3.16 Technical assistance and training for about 20 individuals from the concerned organizations is proposed in three main areas: (a) training in methods related to the new timber transport systems introduced under the project; (b) technical assistance to PCC; and (c) operator training for loading and unloading of logs (details in Annex 4). In addition, special fasteners, commonly used elsewhere in the world, will be installed on timber wagons and tried for the first time in Burma to prevent pil- ferage of vacuum brake components. During negotiations, technical assis- tance and training for the proposed project were discussed and agreed with COB/MOTC.
C. Operational Conditions
3.17 In order to provide effective control and expeditious implemen- tation, MOTC would be the beneficiary of the proceeds of the proposed credit. In the interest of an efficient operation, and until such time as the comprehensive study (para 3.16) is completed, MOTC would retain owner- ship of equipment procured and also bear the cost of rehabilitationof equipment under the proposed project. Thereafter, the matter of ownership will be decided in the light of the recommendationsof the comprehensive study. The operating and maintenance costs of assets placed into service and operated by the respective transport agencies (BRC and IWTC) would be financed by TC through payment of normal tariffs, which cover these costs. Assets (about 14% of the total) acquired under the proposed project and assigned to TC should be operated and maintained by it. Project roads should be maintained as part of the national highway system. During nego- tiations, suitable arrangements between GOB and relevant agencies for the operation and maintenance of the financed assets were discussed and agreed, and it was also agreed that those arrangements should be signed by October 31, 1985. The execution of this will be a condition for disburse- ment.
3.18 The recovery of capital cost from the project beneficiary (i.e., the TC) is not an immediate and pressing issue. The project is experimen- tal in nature; all agencies involved are Government corporations; it is confined in scope to deal with timber transportationoperations and does not address, at this stage, the broader issues affecting the efficiency of agencies involved in the movement of timber. Moreover, the financed -21-
assets will only become fully operational five years after initiation of the project, and the capital cost recovery issue, as well as the eventual ownership of assets issues (para 3.18), can therefore be fully analyzed in the comprehensive study (para 3.16), which is to be completed by mid 1988. At that time COB, in consultation with IDA, will decide on the most appropriate capital cost recovery system.
3.19 Operational targets have been set with the purpose of increasing the efficiency of the system. Currently, about 3 1/2 years' production of timber is stored at the forestry extraction sites, and about one year's export volume is stored at the Port of Rangoon. The proposed project would increase the transport capacity between the 1!xtractinnsites and Rangoon, thus reducing the timber stock of up-country and increasing the requirement for efficient trans-shipment at Rangoon in order to avoid the build up of timber stocks there. An important precondition to achieving the purposes of the project, therefore, would be to improve timber trans-shipmentat Rangoon. During negotiations, agreements with COB were reached on an inmmediatereduction to a level equivalent to about half the estimated annual arrivals for the timber stocked at the Port of Rangoon and longer-term targets for the substantial drawdown of timber stocks in a period of about seven years at forestry extraction sites, as well as at road and railway timber depots. While the timber stock drawdown at Rangoon would begin immediately,the drawdown of timber stock at the extraction sites would commence only when the project components have been acquired and have become operative from the third year onwards. The present high level of stocks is due to inefficiencies in the distribution system rather than to unfavorable world market conditions because of the already stated quasi-monopolisticposition of Burma in world forest product markets, specially for teak (para 2.20), which represents a high percentage of current stock volumes.
H. Procurement
3.20 All items financed by the Bank Group will be procured by the respective agencies on behalf of MOTC through internationaL competitive bidding (ICB) in accordance with Bank/IDA guidelines except for:
(a) contracts of US$100,000 equivalent or less, where the advantage of ICB would clearly be outweighted by the administrative burden thereof;
(b) the Training and Technical Assistance component, which will be procured in accordance with the Guidelines for the Use of Con- sultants by World Bank Borrowers and by the World Bank as Executing Agency; and -22-
(c) proprietary items which COB procures from particular sources because of the need for procurement under license or for con- tinued standardization of equipment.
Proprietary items, materials and parts of specific make required for fasteners and rehabilitation of locomotives were identified and agreed with COB/MOTC during negotiations. Total amount of contracts less than US$100,000 equivalent, not covered by ICB, is estimated to represent less than US$1.0 million. Local manufacturers are expected to bid for some items under the project, and a domestic preference of 15% or the import duty, whichever is less, would be applied in bid evaluation.
3.21 Procurement arrangements are summarized below:
Procurement Arrangements
(Estimated Cost in US$ Million)
Project Element Procurement Method Departmental ICB LCB LIT Process I/ Other Total
Civil Works 2.12 2.12 (-) (-) Plant & Machinery & 19.70 1.40 3.50 1.28 25.88 Materials (13.45) (1.40) (2.50) (-) (17.35) Training & T.A. 0.40 2/ 0.40 (0.40) (0.40) Comprehensive Study 0.60 3/ 0.60
______C-_ )~~~~~~~, ( -)
Totals 19.70 1.40 3.50 3.40 1.00) 29.00 (13.45) (1.40) (2.50) (-) (0.40) (17.75)
Note: Figures in parentheses indicate proposed IDA financing and estimated total costs are inclusive of taxes and duties.
l/ Railway forces to be used for railway track work and highway forces to be used for highway improvement work. 2/ According to Bank/IDA guidelines. _/ To be financed by UNDP/COB. -23-
I. Disbursements
3.22 Previous experience, as reflected in actual disbursements profiles of prior IDA transport projects, indicates that implementation has been generally on schedule. However, there are no projects in the package for which the disbursement profiles have been prepared with which a comparison for the proposed project can be drawn. Therefore, given that preparation work has been adequate, GOB is fully supporting the project, and the project implementationunit (PCG) is already in place, the estimated schedule of disbursement is reasonable for the proposed project (Table 9). Disbursements are expected to be completed by September 30, 1989. The closing date of the proposed project will be March 31, 1990. Disbursements under the project will be made against:
(a) 100% of foreign expenditure for directly imported items;
(b) 100% of exfactory cost of locally manufactured items;
(c) 65% of local cost of locally pro-ired items, off-the-shelf; and
(d) 100Z of the foreign and local costs of training and technical assistance.
Subject to review and agreement with the Bank Group, savings in any category of the proceeds will be available to cover increases in any other category except proprietary items. During negotiations, the disbursement schedule, shown in Table 9, was discussed and agreed with GOB/MOTC.
J. Environmental Impact
3.23 The logs transfer system by barge and container operations in az1 around the city of Rangoon will reduce congestion in the city. None of the other proposed works in the project are expected to have any adverse influence on the environment.
K. Reporting
3.24 To facilitate monitoring the implementationof the proposed project, agreement was reached at negotiations with GOB/MOTC to: (a) submit quarterly reports to IDA in agreed specified formats; (b) submit minutes of the formal meetings held by PCG within one month of the date of meet- ing; (c) maintain a separate register for assets acquired under the proposed project; (d) maintain a separate account of expenditures relating to the project; and (e) prepare a project completion report within six months of the closing date of the credit. -24-
IV. ECONOMIC EVALUATION
A. Main Benefits and Beneficiaries
4.01 The proposed project is in line with both the country's and IDA's objectives in the agricultural and transport sectors and is designed to help improve transportationand distribution of timber by establishing a mechanism (PCG) for improved planning ard allocation of traffic, upgrad- ing transport capacity of various modes iLJolved, introducing new, more efficient and cost-effectivemethods for timber handling and movement, and improving operations and maintenance. Quantified benefits from the proposed project would accrue mainly in the form of transport (88%) and handling (12%) cost savings. Nonquantified benefits would also accrue in terms of reduction in timber losses, and in gradual reduction of inter- mediate log inventories.
4.02 Benefits indicated in the preceding paragraph are mainly due to the physical components of the project, whose main purpose is to remove some of the transport/distributionbottlenecks in the present system. But there is also a sizable number of nontransport bottlenecks which are the result of marketing, traditional operations, logistic and various proce- dures internal to the handling of timber, which greatly-aggravate the strained transport capacity. Improvementsin these area , which will be thoroughly analyzed in the comprehensive study (para 3.16) included in the project, will enhance the efficiency of the whole operation, with sub- sequent savings in transport and handling costs.
4.03 The increased transport capacity for hardwoods is expected to have an indirect, nonquantified beneficial effect on teak export earnings as well, because domestic needs for sawnwood would be satisfied to a greater extent by hardwoods, where at present exportable teak is consumed. Other nonquantifiablebenefits will accrue through technical assistance and training.
4.04 TC would be the iiiainbeneficiary because the proposed project aims: (a) to facilitate the movement of timber in the country and for export; and (b) through the study, to identify and find solutions for the major issues affecting the transport/distributionof timber. Also, tran- sport agencies would be able to provide improved services to adequately satisfy the traffic demand.
4.05 Economic evaluations have been undertaken separately for the main subcomponents,which comprise railways and handling improvements, road rehabilitation,and utilization of new systems in Burma for transport of timber such as barges and containers. No separate economic evaluation has been carried out for the improvement of the Okkyin log depot, the study, and technical assistance and training, all of which amount to 4% of -25-
total project costs. However, these costs were included without quantify- ing their benefits in the calculation of the ERR for the entire project. Conservatively, only benefits to timber traffic have been included, although other kinds of traffic using the same infrastructure, e.g, roads, which has been improved under the proposed project but is not confined to timber use alone, might also benefit from improvements of some facilities. DetaiLs of the calculations of benefits and costs can be found on the Project File (Annex l), and Annex 7 includes the expected annual timber traffic volumes which wilL be transported by the main proposed project subcomponents.
4.06 The economic cost of each subcomponent has been obtained by deducting from the financial cost all relevant taxes, duties, and price contingencies. Also, economic benefits are exclusive of taxes and duties. Moreover, certain materials and labor components have been shadow priced. For example, the economic cost of labor was estimated on the basis of an assessment of marginal productivity in alternate employment and has been assumed to be 66% of wage rate for unskilled labor while no adjustment was made for skilled labor. Also, the economic price of diesel has been assumed to be 12 K/Imp. gallon as opposed to the official price of 2.5 K/Imp. gallon. The economic analysis assumes a period of investment of three years, followed by an operating period of 20 years.
B. Economic Evaluation of Proposed Project Subcomponents
Myitkyina Region
4.07 This region has the natural conditions for producing a sizable volume of timber, but because of the growing gap between the needed and available transport capacity to transport timber out of the region, the backlog located at different railway stations in the region is estimated to be about 65,000 Ht of dry teak, 5,000 Ht of padauk, and 10,000 Ht of hardwoods, and the expected annual production in the region is estimated to be 36,000 Ht, 2,000 Ht, and 26,000 Ht, respectively. Transport is a severe bottleneck to the materialization of the economic benefits of timber in this region, and therefore it is urgent to find ways of improv- ing its performance.
4.08 Transport improvements in the region should be analyzed as integrated systems because of the strong interdependenceof possible subcomponents. Two main alternatives were selected for the analysis based on two different criteria: (a) the first alternative aims to concentrate all the expected traffic on the present transport facility, Myitkyna- Sagaing railway line, which will obviously demand major improvements; and (b) the second alternative is designed to divert part of that traffic to other suitable transport means, thus relieving some of the pressure on the existing railway line. -26-
4.09 The first alternative requires improvement in operation and maintenance of the railway line Myitkyna-Sagaing to be able to carry the expected annual production and to eliminate the backlog in a period of ten years; this would require the provision of adequate motive power and rolling stock units, major improvements in the track, substantial improve- ments in repair facilities and spare parts, and redesign of some depots, together with the provision of adequate handling facilities in the whole system and major improvementsat Sagaing depot to cope with the big increase in volume to be rafted at this important intermediate station. The second alternative is based on the fact that the railway line Myit- kyna-Sagaing runs basically parallel and close to a navigable portion of the Irrawaddy River, and consequently it seeks to improve and/or rehabilitate traffic links between the railway and the river to which timber traffic can be diverted, such as: (a) Naba-Katha, which provides rail as well as road connection (approximately 15 miles) between the Myitkyna-Sagaingrailway line and the Irrawady River; and (b) Wuntho- Tigyaing road connection (approximately50 miles). This system would require also consistent improvementsat the rafting depots at Sagaing, Katha, and Tigyaing. The annual volume to be moved by either alternative is 72,000 St, which represents the annual production plus one-tenth of the present backlog.
4.10 For the economic analysis 1/, the first alternative was compared with the do-nothing alternative, which it was assumed would be able to transport only 41,000 Ht 2/ per year as compared with the total annual volume of 72,000 Ht to be carried by either one of the two analyzed alter- natives. Under conservativeassumptions, the first alternative was found to be economically feasible with an ERR of 25Z. Next, a marginal economic analysis of the two subcomponentsof the second alternative was carried out: the Naba-Katha improvementhas an incremental ERR of 45% and the Wuntho-Tigyaingroad an incremental ERR of 15%, both over the first alter- native. Therefore, the second alternative is selected; the ERR of this alternative,with respect to the do-nothing, is 23%.
IVTC Barging
4.11 One set of barges, comprising one pusher tug and five 500 t barges (four in operation and one spare), will be procured on an experimentalbasis to serve Monywa for padauk logs only and Sagaing for padauk logs and teak export lumber. It will be a dedicated service, carrying a total annual volume of 6,000 Ht of padauk logs (4,000 Ht from
1/ Details would be found in Annex 8.
2/ The maximum volume reached in any one year over the past five years. -27-
Monywa and the rest from Sagaing) and 3,500 St of lumber destined for Rangoon.
4.12 Benefits from the barge system have been estimated in terms of transport and handling cost savings with respect to the following alterna- tive system: (a) the entire 4,000 Ht of padauk at Monywa would be taken out of the water, trucked to the next railway station (14 miles), loaded on wagons, and railed to Rangoon (457 miles); and (b) padauk logs and sawn timber originated in Sagaing would be sent by rail to Rangoon (392 miles). It was also assumed conservatively that there would be no railway capacity constraints to the provision of the described service. Under these condi- tions, investment in the barge system would be justified with an ERR of 27%.
TC Tug and Barges
4.13 The proposed project would provide one tug boat and four 100 t Landing Tank Type (LTT) barges to transport export sawn timber from the local mills in Rangoon to ship side, where the lumber will be directly loaded into the ship. While the movement of logs from Rangoon depots to shipside is also envisioned, sawn timber should have priority on the use of the equipment and therefore, conservatively, the full cost of the unit is analyzed only against the projected bargeable sawn timber export volume of 10,000 St/year.
4.14 Benefits are estimated as savings in transport cost due to the utilization of the barge system as opposed to trucking the sawn timber to the ship side. It was further assumed that the barge system wilL permit some reduction in ship loading time. Under these assumptions, the barge system is well justified with an ERR of 37%.
Prome Line Log Transport
4.15 The proposed project would provide needed railway equipment to permit a more economic allocation of log traffic volumes originating in this area and destined for Rangoon. Break-even analyses indicate that the dry teak and hardwood logs arriving at Prome (12,000 Ht/year) and Hmawza (8,500 Ht/year) should continue to be trucked to water and towed to Ran- goon, while the rest (20,500 Ht/year) should more economically be tran- sported by rail to Rangoon. At the present time, only 2,000 Ht/year is transported by rail from this area.
4.16 Benefiti are calculated as transport cost savings with and without this project component. The no-project situation assumes, as is now happening, that apart from the above-mentionedProme and Hmawza volumes, which are trucked/towed to Rangoon, the remaining is trucked to the Rangoon River (average distance 60 miles) and rafted and towed about 20 miles to Rangoon Port. Under these conditions, the additional railway equipment is well justified with an ERR of 39%. -28-
Pyinmana Line Log Transport
4.17 Lack of availability of railway equipment is distorting log traffic allocation and consequently increasing the total transport cost. The proposed project includes additional railway equipment to improve the present situation. The center of gravity for the projected volumes from the Pyinmana area (50,000 Ht/year of green teak and 10,000 Ht/year of hardwood) was assumed to be at a place located at 257 rail miles from Rangoon. The railway equipment presently available in this region has the capacity to transport 50,000 Ht annually, and the additional requirement of 10,000 Ht will be met by the proposed project's equipment.
4.18 To estimate benefits in the project situation, it is assumed that the 60,000 Ht/year would be moved by railways, whereas in the no-project situation the shortfall of 10,000 lt would be moved to Rangoon by truck, which is an expensive proposition but was found to have lower transport cost than trucking to Magwe (90 miles) followed by rafting to Rangoon (90 miles). Under those assumptions, the additional railway equipment is justified with an ERR of 76%.
Containerizationof Lumber
4.19 This subcomponentwould provide transport and handling equipment to permit the utilization of some of the containers which at present arrive in Rangoon with imported cargo and are returned empty. Twenty-five percent of lumber, scantlings, and log ends originated in sawmills around Rangoon Port are expected to be containerized,which will reduce ship loading time, damage and losses and will also improve marketing conditions.
4.20 Benefits are estimated as the difference in total transport and handling cost between moving the lumber in containers or using the tradi- tional trucks. The estimated total annual volume to be containerized is 17,500 St, and a potential damage/loss of noncontainerized shipments is estimated at 0.5% of the lumber value. Under these assumptions, the subcomponentis well justified with an ERR of 36%.
CC Sawn Timber Transport
4.21 Due to unavailabilityof railway equipment, CC transports at present all its needs of sawn timber from Upper and Central Burma to Rangoon by truck, in some cases over distances where railways has clear economic advantages as compared with trucks. The project would provide railway equipment to permit rail transport of about 12,000 St of sawn timber for CC from Sagaing, Honywa, and Handalay to Rangoon (average distance of 475 miles). The economic analysis is based on transport and handling costs savings, and the result is a high ERR of 57%. -29-
C. Overall Evaluation
4.22 The project's overall economic return is 35Z, including the cost of components not separately evaluated. A sensitivity analysis indicates that a decrease in benefits of 20% would reduce the overall rate of return to 25%, while a 20% increase in costs would reduce it to 26%; a combina- tion of a 10% increase in cost and 10Z decrease in benefits would yield a rate of return of 26%.
D. Sensitivity Analysis
4.23 The following table presents the economic rates of return for these sensitivity cases: (a) 20% increase in capital cost; (b) 20% decrease in economic benefits; and (c) 10% increase in capital cost together with a 10% decrease in benefits. Under these assumptions, the ERR of all components remain above the opportunity cost of capital assumed to be 12%.
Economic Rate of Return (ERR Z)
20% Cost 20% Benefit 10%, Cost Increase Component Increase Decrease and Benefit Decrease
Myitkyina Line 19 18 19 IWTC Barging 22 21 21 TC Tug and Barges 30 28 29 Prome Line 32 31 31 Pyinmana Line 61 59 60 Containerizationof Timber 29 28 29 CC Sawn Timber Transport 46 44 46
TOTAL 26 25 26
E. Risks
4.24 All project components involve proven technology and therefore technical risks connected with the project are small. The project impLementationwould require a good coordination of the activities of several agencies. Risks from inadequate project implementationare there- fore present, but mechanisms have been proposed, e.g., PCG (paras 3.13 to 3.15) and MOTC control (paras 3.11 and 3.18) under the project to minimize risks. -30-
V. AGREEMENTS REACHED AND RECOMMENDATIONS
5.01 During negotiations, agreements were reached with GOB/MOTC on the following matters:
(a) consolidation of loading points (para 2.35);
(b) design of the Katha and Sagaing log depots (para 2.42).
(c) project cost estimates (para 3.08);
(d) MOTC will provide local funds for the project (para 3.09);
(e) implementation schedule (para 3.09);
(f) arrangements between MOTC and respective agencies (BRC, IWTC, TC, and CC) for implementationof applicable components (para 3.10);
(g) MOTC will: (i) temporarily retain ownership of assets, including rehabilitated assets; (ii) maintain records for assets; and (iii) submit audited accounts within six months after the close of the fiscal year (para 3.11);
(h) definition, responsibility, authority of PCC, and that it will arrange for counterpart staff for the comprehensive study (para 3.13);
(i) agreed timber transport plan(s) will be implemented (para 3.14);
(j) (i) short list of firms for conducting a comprehensive study on timber distribution; and (ii) timetable for initiating and completing the study, for review of the recommendations with IDA and for preparing an action program (para 3.15);
(k) details of technical assistance and training (para 3.16);
(l) suitable arrangements between GOB and relevant agencies for the operation and maintenance of the financed assets; execution of those arrangements will become condition of disbursements (para 3.17);
(m) immediate reduction to a level equivalent to about half the estimated annual arrivals for the timber stocks at Rangoon and longer term targets for the substantial drawdown of timber stocks in a period of about seven years at extraction sites and at road and rail depots(para 19); -31-
(n) list of proprietary items (para 3.20);
(o) disbursement schedule (para 3.22); and
(p) reporting requirements (para 3.24).
5.02 Based on the agreements reached on the foregoing, the proposed project constitutes a suitable basis for an IDA credit of US$17.75 million equivalent. -32- Annex 1
BURMA
TIMBER DISTRIBUTION PROJECT
Selected Documents Available in the Project File
1. GOB Forest Feasibility Study, Timber Extraction Studies, Sandwell Management Consultants, December 1977
2. GOB Forest Feasibility Study, Forest Resources Study, Sandwell Management Consultants, February 1978
3. Burma, IDA IdentificationMission, Timber Transport/Distribution Project, Consultants Messrs. N. Davey and K. Paulsen, July 1983
4. Burma, Appraisal of the Second Forestry Project, ADB, June 1982
5. Burma, Review of the Project ImplementationEast Pegu Yoma Forestry Project, Timber Corporation, September 1983
6. Burma, Review of Project Implementation, ADB (II), Timber Corporation, September 1983
7. Burma, Review of Project Implementation,ADB (I), Timber Corporation, September 1983
8. Burma, Performance and Planned Targets of ADB (I), Timber Corporation, February 1984
9. Burma, 1983 Export Prices for Teak and Hardwoods, Timber Corporation, October 1983
10. Burma, Proposals for Improvement of Export Timber Movement, Timber Corporation, November 1983
11. Burma, Functions of Log Sales and Depots, Timber Corporation, November 1983
12. Burma, Improvements for Log Storage and Export Depots at Rangoon, Timber Corporation, November 1983
13. Burma, Railway Operations, ADB II, Mr. K. Thapar, December 1983
14. Burma, Appraisal of Forestry Project, IDA Report No. 374a-BA, May 1974
15. Burma, Staff Appraisal of Forestry II - East Pegu Yoma Project, IDA II, Report No. 2463-BA, JVLy 1979
16. Burma, Staff Appraisal of Wood Industries I Project, IDA Report No. 3162-BA, February 1981 -33- Annex 1 Page 2 of 2
17. Burma, Staff Appraisal of Wood Industries II Project, IDA Report No. 4596-BA, December 1983
18. Burma, Appraisal of a Third Railway Project, IDA Report No. 172-BA, May 1983
19. Burma, Appraisal of an Inland Water Transport Project, IDA Report No. 171-BA, May 1973
20. Burma, Appraisal of the Burma Railway Development Project, IBRD Report No. TO-263a, January 1961
21. Burma, Appraisal of the Rangoon-Prome Road Project, ADB Report No. BUR-AP-23, September 1983
22. Burma, Some Facts on Production for Export Commodities Transport, Timber Corporation, May 1983
23. Burma, Staff Appraisal for Third Port Project, IDA Report No. 4339-BA, April 1983
24. USA, set of papers concerning Inland Water Transport, August 1983
25. Bangladesh, Staff Appraisal for Fertilizer Transport, IDA Report No. 2957-BD, July 1980
26. Burma, Priorities for Continued Growth, WB Report No. 3852-BA, May 1982
27. Burma, Policies and Prospects for Economic Adjustment and Growth, WB Report No. 4814-BA, December 1983
28. Burma, Transport Sector Memorandum, Draft, WB, September 1984
29. Burma, Staff Appraisal for Third Port Project, IDA Report No. 4339-BA, April 1983
30. Burma, Staff Appraisal for Construction Industry Project, IDA Report No. 3809-BA, April 1982
31. Economic Analyses, ERR Calculations, Computer Print-outs, Sensitivity Analyses for the Proposed Project
32. Agreed Terms of Reference for the Comprehensive Study Included in the Proposed Project (para 3.16)
33. Burma, Notes for Discussions at Negotiations, April 1985 -34-
Annex 2
BURMA
TIMBER DISTRIBUTION PROJECT
Central Movement Coordination Committee
Organization
1. The Movement Coordination Committees are formed by the Ministry of Transport and Communicationsat three levels, viz., the Central Movement Coordination Committee, the State/DivisionMovement Coordination Committee, and Township Movement Coordination Committees. Composition of these movement Coordination Committees is as follows:
Central Movement Coordination Committee
D-Deputy Minister, Chairman Transport and CommunicationsMinistry
-- ManagingDirector, Member Burma Railways Corporation
-- Managing Director, Member Road Transport Corporation
=- Managing Director, Member Burma Five Star Shipping Corporation
-- Managing Director, Member Burma Ports Corporation
-- Director General, Secretary Transport and Communications Planning and Operations Department
State and Division Movement Coordination Committee
-- Chairman Chairman (E.C.) State/DivisionPeoples Council (or) -- One of the E.C. members nominated by the Member State/Division (E.C.) Peoples' Council -35-
Annex 2 Page 2 of 3
-- Two E.C. Members nominated by the State/ Member Division (E.C.) Peoples' Council
-- Representatives from the State Transport Member Organization
-- Sales Manager, Member State/Division Petroleum Products Supply Corporation
-- Representative, Member State/DivisionVehicles and Machinery Stores Trade Corporation
-- State/DivisionalOfficer Secretary State/DivisionTransport and Communications Planning and Operation Department
Township Movement Coordination Committee
-- Chairman, Chairman (E.C.) Township Peoples' Council
-- Two E.C. Members nominated by the Township Member (E.C.) Peoples' Council
-- Representatives from the State Transport Member Organizations
-- Township Officer, Secretary Township Transport and Communications Planning and Operation Department
2. All official functions of the Central Movement Coordination Committee and State/DivisionMovement Coordination Committees are carried out by the staff of the Transport and Communications Planning Operation Department. At the township levels where Transport and Communications Planning and Operation Department township offices are located, all official duties of the Township Movement Coordination Committee are undertaken by the staff of the Transport and Communications Planning and Operation Department.
3. Township Movement Coordination Committees are not established in each and every township, but only in townships where it is deemed necessary and crucial in the way of transport. -36-
Annex 2 Page 3 of 3
Aims and Objectives
4. Aims and objectives of the Movement Coordination Comnittee are as follows:
(a) to coordinate the smooth flow of state-owned freight by using all available transport in the following order: state-owned, coopera- tive-owned, and private-owned;
(b) to coordinate the utilization of transport facilities with a view to achieve optimum benefit to both users and caterers of transport;
(c) to coordinate and make necessary arrangements when problems and difficulties arise in the transportationof passengers; and
(d) to collect necessary data and statistics, which will be useful in planning of transport.
Operational Aspects
5. Transport demands are categorized into planned movement and non- planned movement:
(a) Planned movements are haulage and distribution of seasonal and major commodities such as paddy, rice, fertilizers, c-ment, and timber. To implement this type of movement the Movement Coordination Committee, at various and respective levels, initiate and sponsor regular weekly and monthly coordination meetings between the users and carriers. The Movement Coordination Committees are also responsible for the allocation of fuel for the carriers.
(b) Nonplanned movements, as opposed to planned move;ents, are for the haulage of goods and commodities for nonpredictable demands and, as such, are implemented on an ad-hoc basis.
(c) Utilization of carrier priority are state-owned carriers, coopera- tive-owned carriers, and private-owned carriers.
Source: Ministry of Transport and Communication February 1984 -37-
Annex 3
BURMA
TIMBER DISTRIBUTION PROJECT
List of Railway Stations to be Developed as Primary Timber Shipping Points
1. Hopin 2. Kadu 3. Nansiaung 4. Nankhan 5. ''untho 6. Chatthin 7. Zawchaung 8. Thantabin 9. Namma -38-
Annex 4
BURMA
TIMBER DISTRIBUTION PROJECT
Details of Project Components
Myitkyina Line
1. Katha, located at the navigable portion of the Irrawaddy River, has road as well as rail connection to Naba on the main north-south road/rail system between Sagaing and Myitkyina. Presently only a rela- tively small log volume is transported to Katha by truck and rafted at this location. The appraisal mission identified Katha as a potential major rafting depot for logs presently transported by rail from the north- ern section of the Myitkyina line.
2. Use of the Katha rail routing could relieve some of the pressure on the presently overtaxed rail capacity. The main constraints to the immediate use of this line for log transport are: heavy gradients, shortages of powerful locomotives, and lack of braking systems on the log wagons as well as shortage of wagons. The Katha station is located within about one mile of the river depot. Although trucks could be used for the short rehaul to the river, it is feasible to extend the rail line along an abandoned grade directly to the river depot. Under this concept, it is proposed that improvementsalso should be made to the depot facilities. About 40,000 Ht of the traffic volume on the Myitkyina line could favorably be shipped through Katha. The Naba-Katha road improvement would aid in reducing some of the accumulated inventories in the area and create additional revenues to the GOB. The road is presently quite rough and needs upgrading to all-weather standard. This improvement work can be implemented in a short time.
3. The project proposes to upgrade existing roads and construct new roads to provide an all-weather road connection from Wuntho to Tigyaing on the Irrawaddy River. While this road will allow truck transport of logs directly to the rafting depot at Tigyaing from accumulated inventories at Wuntho railway station, it will also serve concurrent production tributary to the road to the east and west of the Nyitkyina rail line. When railway capacity is restored, log production near and to the west of the rail line is expected to revert to rail transport for economic reasons. While the road will continue to serve the forest areas and public access between the rail and the river, it will also provide an alternative route for log transport should the railways experience future capacity problems. A concentratedeffort should be made to complete this road link as soon as possible to be able to move some of the inventory located at Wuntho. -39-
Annex 4 Page 2 of 7
4. The rail yard at Sagaing is presently the termination point of all logs (with the possible exception of export padauk) transported by rdil on the Myitkyina line. Rail wagons are unloaded by front-end log loaders, and the logs are dragged to the water by mechanized log skidders or water buffalos. The wagons often suffer substantial damage to the stakes and bolsters under the present unloading procedure. The area along the track is congested, irregular, and poorly surfaced.
5. To provide efficient log handling and improved turn-around time for log trains at the Sagaing yard, new equipment and moderate redesign of the yard layout is proposed. It is proposed that the outside track be removed to accommodate a 20-rail wagon long, 60-foot wide, all-weather surfaced unloading and intermediate storage area along the next track. It is also proposed that a well-anchored concrete runway be constructed at grade level from the unloading area down to the low water level of the river, preferably as close to the center of the working area as possible. Crawler-mounted hydraulic grapple log loaders are proposed for unloading of the rail wagons and intermediate stacking, while rubber tired front-end log loaders are considered most efficient for carrying the logs to the water for rafting. This component will include:
(a) repower three diesel locomotives;
(b) purchase 30 new log wagons and 2 brake vans;
(c) land acquisition, survey, level crossings, service buildings, earth work, track work, etc.;
(d) depot lighting equipment, all-weather surfacing, concrete runway;
(e) purchase one new crawler-mountedhydraulic grapple log loader and two rubber tired front-end log loaders;
(f) improvement to the 15 mile road section from Naba to Katha;
(g) provision of bitumen for same section;
(h) purchase of one road roller;
(i) upgrade to all-weather standard about 16 miles of the Wuntho-Zigon road from Wuntho to its intersectionwith the new Shwebo-Indaw highway;
(j) provide bitumen for about 24 miles of the Shwebo-Indawhighway from the Wuntho-Sigon intersection to the Meza Bridge;
(k) construct or upgrade to all-weather standard about 10 miles of road from Meza Bridge to the rafting depot at Tigyaing; -40-
Annex 4 Page 3 of 7
(l) purchase one new road grader (CC) and one new road roller;
(m) redesign of the Sagaing rail yard;
(n) levelling and all-weather surfacing of working area;
(o) construction of concrete runway; and
(p) purchase of one new crawler-mounted hydraulic grapple log loader and two rubber-tired, front-end log loaders.
The Myitkyina Line improvement is estimated to cost K95.1 million (US$10.68 million) with a foreign exchange component of K 50.4 million (US$5.66 million).
Prome Rail Line - Log Transport
6. Shortage of railway rolling stock has reduced log transport on the Prome line from over 20,000 Ht in 1978/79 to a mere trickle of 2,000 Ht in 1982/83. This has resulted in expensive, fuel-consuming truck transport over distances exceeding 50 miles to the Rangoon River near Hmawbi and additional assembling, rafting, and towing costs for a distance of only 20 miles down river to Rangoon. A large proportion of the production from the area is in the form of green teak and hardwoods. It is important that the green teak is expediently transported to the market to recover as high a price as possible for the logs. Furthermore, rafted green teak is subject to degrading water stain. It is, therefore, essential that rail- way capacity for log transport on this line be increased as needed. This component will include:
(a) repower 2 diesel locomotives;
(b) purchase of 10 new timber wagons and 2 brake vans; and
(c) rehabilitationof 30 timber wagons.
This project component is estimated to cost K20.01 million (US$2.25 mil- lion) with a foreign exchange component of K12.7 million (US$1.43 million).
Pyinmana Line
7. To replace 30 old rail wagons, scheduled to be scrapped and to provide additional locomotive power, the project proposes to provide financing for the following:
(a) repower 2 diesel locomotives;
(b) rehabilitate 30 timber wagons for log transport; and
(c) purchase 2 new brake vans. -41-
Annex 4 Page 4 of 7
This project component is estimated to cost K18.5 million (US$2.08 mil- lion) with a foreign exchange component of K11.8 million (US$1.33 million).
Transport of CC Sawn Timber
8. The Construction Corporation annually transports about 24,000 St of timber products by truck to Rangoon from mills located in Upper and Central Burma. Shortage of rail wagons is again cited as the main reason for this expensive and wasteful mode of transportation. The project therefore, proposes to provide financing for the following equipment to transport a portion of CC needs:
(a) repower one diesel locomotive; and
(b) purchase 20 new hi-side wagons for sawn timber.
This proposed project component is estimated to cost K 20.8 million (US$2.33 million) with a foreign exchange component of K 14.3 million (US$1.61 million).
Containerizationand Ship Loading
9. Most containers presently arriving in Rangoon with goods are returned empty. The pilot project proposes to use some of these con- tainers for return shipment of lumber, scantlings, and log ends. While this will reduce ship loading time, damage, and losses, marketing will also be improved. It is proposed that simple loading ramps be constructed at selected sawmills. The containers will be left on trailers at the sawmill and end-loaded manually or by fork lift truck from the ramp. Refinement of palletizing will be required for some types of material. Facilities are available at the Rangoon Harbor container yard for trailer unloading and loading. Financing is proposed for acquisition of the following equipment and supplies:
(a) four fork lift trucks for container loading (TC);
(b) twelve trailers for container transport (TC);
(c) two truck trailer tractors (TC); and
(d) various packing items, such as steel banding, tools, etc., (TC).
This proposed project component is estimated to cost K 9.3 million (US$1.05 million) with a foreign exchange component of K 6.4 million (US$0.72 million). -42-
Annex 4 Page 5 of 7
Barge Transport - IWTC
10. Rafting and river towing of sinkers, particularlyhigh value species such as green teak and padauk, is exepnsive and time consuming. It is therefore proposed that one of the components of this proposed project tests the feasibility of barge transport of logs. No logs have been transported by barge system in Burma. Under the proposed project it will be tried for the first time and it holds good potential for wider use of this type of system in the future. The transport of padauk and sawn timber on the Chindwin River appears to offer an opportunity to test the barge.
11. Monywa, on the Chindwin River, is served by rail and highway from Mandalay from Sagaing, and by river transport on the Chindwin and Irrawaddy River systems. A shortage of serviceable timber wagons has resulted in an accumulation of about 4,300 Ht of padauk logs at the Monywa rail depot. Almost one half of the logs stored at this location, or 2,000 Ht, are already sold to foreign buyers. This is the only known location to which log buyers actually travel outside Rangoon to purchase export logs. At the past year's rate of rail transport, it will take almost a year to transport the logs already sold. Continued production at projected levels will gradually increase the depot inventory, unless other means of transport are developed. Padauk is subject to more serious cracking during storage than teak. Any lengthy storage on dry land will therefore have a deterioratingeffect on quality and price. The loss in foreign exchange earnings and damage to customer relations caused by these delayed shipments are substantial.
12. The project provides barge trains an pusher tugs to IWTC for log and sawn timber transport on the Chindwin and Irrawaddy rivers. Financing is proposed for the following equipment purchases in this component:
(a) purchase of engines and steel for 1 new pusher tug;
(b) purchase of steel for 5 log barges; and
(c) purchase of 1 five-ton, long boom, crawler-mountedlog crane with log grapples.
The tug barges will be constructed by IWTC's own shipyard in Rangoon. The proposed project component is estimated to cost K 24.7 million (US$2.77 million) with a foreign exchange component of K 12.9 million (US$1.45 million). -43-
Annex 4 Page 6 of 7
Rangoon Harbor Area
13. The project proposes to supply funding for additional TC barge capacity to increase the efficiency of ship-side loading of logs and lumber in Rangoon harbor. The barges are proposed to be non-power landing craft type for efficient roll-on loading of logs and lumber. The project component consists of the following items:
(a) purchase of 1, 200 HP tug boat;
(b) purchase of steel for 4, 100 ton barges, which will be constructed by TC's own shipyard; and
(c) road and yard improvementsincluding bitumen for Okkyin Log Depot.
This project component is estimated to cost K 9.2 million (US$Sl.04 mil- lion) with a foreign exchange component of K 4.9 million (US$0.55 million).
Training and Technical Assistance
14. Training and technical assistance is proposed in these areas:
(a) PCG, a subgroup of CMCC, will be responsible for planning and managing the distribution of timber. Considering the complexity involved in these tasks and the inefficienciesfound at present in CMCC (text, para 2.26), the project will provide financing for PCC members and technical supporting staff to visit similar types of organizations and/or attend relevant university courses outside the country. PCG will also get technical advise through maintain- ing a permanent contact with the consulting firm in charge of conducting the comprehensive study;
(b) the proposed project would assist GOB in introducing timber trar- sport systems which have not been used before in Burma, such as barges, containers, and some handling equipment. Therefore, provisions have been made in the proposed project to finance training in these areas; and
(c) needs have been identified for specialized operator training in log barge loading and operation, hydraulic log loader operation, container lumber and pallet loading, and ship log loading.
Details of the technical assistance and a training program for about 20 individuals from the concerned organizations, including costs of consult- ing services, was discussed and agreed with COB at negotiations. The estimated cost for this project components is K 3.6 million (US$0.4 million) with a foreign exchange component of K 1.8 million (US$SO.2 million). -44-
Annex 4 Page 7 of 7
Comprehensive Study
15. The study is described in general terms in para 3.16 of the text and in detail in the Terms of Reference already agreed with GOB and which form part of the Project File. -45- Annex 5
BNUKA,
TIMBER DISTRIBUTION PROJECT
-Implementation Schedule
Year: I 19851 1986 1 1987 1 1988 1 1989 Quarter: 1 31 41 11 21 31 41 11 21 31 41 11 21 31 41 11 21
Activity Schedule I I I I I I I I I 1 l I I I I I I Credit Effective I I I I I I I I I I I I I I I I Specification & Tendering 11-I1n1I I I I I I I I I I I I Procurement & Delivery '== f.MMMMui=iIrn.i-l I I I I I I I I Rehabilitation or ConstructLuu J--in-InIl lII-IinI1f I I I I Commissioning I I I I I I I I I I I"-1 1 1 1 Road Construction I I mmI mm IoinI' IMMIMmI ' =ImmI I 1 1 11 Other Civil Works 1 1 I--II-I-1- II I I I
Operations Schedule I I I I I I | I I I I I I I I I I
Naba-Katha Rail Haul I I I I I I I I 1 ' '--Katha Trucking I I I 1 I I I I I I 1-I""'mIMMm Rail Expansion I I I I I I I I 11inIIin-1 I-I.1 Timber Rail Haul I I I I I I I I 1 1-1''1I-'I'I .anaRail Expansion I I 1 1 1 I 1 1 1 11in1 1 -mII'1 16 do Trucking I I I I I I I I I I I I''inIII**'I Sagaing Operational I --I I I I I I-II--IIi--IIII-- Log Barging - IVTC I I I I I I I I I I I I l--lI-a-u Rangoon Barging I I I I I I I I I I I 1 1''1''11 Containers/Ship Ldg. I I I I I I I I inIminIIIf-Ii1I-1I1-I Okkyin Log Depot I I I I 1 1''1-1-1'-1-1-1--1'1-1-'
Comprehensive Study, I I I I I
Invitations I I I I I I I I I I I I I I I I Receive Proposals lil I I I I I I I I I I I I I I I Reviev and Award I 11 I I I I I I I I I I I I I I Mobilization I I- I I I I I I I I I I I I I I Study & Draft Report I I II--I--I--I--I--I I I I I I I I I Comment by GOB and IDA I I I I I I I I 1111 1 1 1 1 I Final Report | I I I I I I I I I I l--l--l TrainingtandTechnical Asst. 1 1 1 1 1 1 1 1 1 TraininRsndTechnical Asst. ~I I I I I I I I I I I I I I I I I
Machine Operators 1 1 1 1 I-I--I- I I 'I''1-I 1 1 1 1 1
Railway Sleeper Studies I I I--I--I 1 1 I I I 1 1 I 1 1 1 I
PCG Management Training I I I [-- I..mI I l 1 -I- I 1 1 I 1 1 II 1I 1 1 1 1 1I 1 1 1 1I
Source: GOB and mission estimates
September 1984 -46- Annex 6
BURMA
TIMBER DISTRIBUTION PROJECT
Project Coordination Group (PCG)
1. The Ministry of Transport and Communications (MOTC) formed a Timber Transport Distribution Project Coordination Group (PCC) of the following members (vide MOTC's letter No. 439-Pass/Xhwe (2)83 of January 24, 1984):
PCC Office Title Telephone
1. U Khin Maung Soe Planning & Operation Department Chairman 32332 Director General, Ministry of Transport and Communications
2. U Kyaw [hin 1/ Deputy General Manager Member 81951 Timber Corporation (TC)
3. U Mya Than Chief Traffic Manager Member 76527 Burma Railway Corporation (BRC)
4. U Saw Lwin Deputy General Manager Member 78613 (Transportation) Inland Water Transport Corp. (iWTC)
5. U Thein Aung Staff Officer II Road and Bridge Section Construction Corporation (CC) Member 73912
6. U Myint Sein Deputy Traffic Manager Member 73153 Burma Ports Corporation (BPC)
7. Dr. Thein Swe Deputy Director Member 85011 Foreign Economic Relations Department (FERD)
1/ User Agency -47-
Annex 6 Page 2 of 2
PCG Office Title Telephone
8. U Shwe Deputy Director Secretary 32727 Planning and Operation Department Ministry of Transport and Communications
9. Burma Five Star Shipping Corporation (BFSSC) 1/
ProjectCoordinator - PCG
U Shwe Secretary of the Project 32727 Coordination Group
Project Officer - PCG
U Thadoe Maw Office in Charge 32727 Ministry of Transport and Communications
Address:
Chairman- PCG Timber Transport Project CoordinationGroup Transport and Communications Planning and Operation Department Sinmalaik Dockyard University P.O. Rangoon, Burma
1/ One member of PCG from the Burma Five Star Shipping Corporation (BFSSC) was not yet nominated as he was not essential at this stage (February 1984) of project preparation. At negotiations, name and title of the member from BFSSC will be confirmed. -48- Annex 7
BURMA
T.IMBERDISTRIBUTION PROJECT
Expected Annual Traffic Volumes to be Transported in the Main Proposed Project Subcomponents
The following are the expected annual traffic volumes to be transported, on a dedicated basis, by assets to be procured under the proposed project:
(a) Naba-Katha: 35,000 Ht (rail);
(b) Prome-Rangoon: 20,000 Ht (rail);
(c) Pyinmana-Rangoon: 10,000 Ht (rail);
Cd) Sawn timber for CC to Rangoon: 12,000 St (rail); and
(e) Sagaing area - Rangoon: 6,000 Ht and 3,000 St (barges).
The following are the expected annual traffic volumes to bp transported in roads to be partially financed by the proposed project:
(a) Naba-Katha: 5,000 Ht (road); and
(b) Wuntho-Htigyaing: 5,000 Ht (road). -49- Annex 8
BURMA
TIMBER DISTRIBUTION PROJECT
Details of the Economic Analysis of the Myitkyina Region Component
1. The alternativesanalyzed are as defined in paras 4.08 and 4.09. Benefits have been estimated in terms of total transport and handling cost savings, as well as value added of timber. Traffic was allocated based on break-even analyses of different alternative flows. The first alternative was compared with the do-nothing alternative, which it was assumed would be able to handle only 41,000 Ht 1/ per year, as compared with a total annual requirement of 72,000 St. Therefore, the net value added of the difference in volumes is included as a benefit in the economic analysis of the first alternative. It is a common forestry practice to regard unused allowable cut as unrecoverable if a period of more than ten years has elapsed beyond the established rotation age. The ACC is generally calculated on the maximum yield over a given rotation, which is determined by mean annual increment. Carrying a forest capital beyond its optimum age has a diminishing return. In the case of the teak forests in Burma, the delay in cutting in the no-project situation will reduce the overall volume yield, although a value appreciation on individual larger trees will take place provided they are still alive and growing. Therefore, the total value of the foregone annual allowable cut may not be lost. The actual loss is, however, very difficult to determine and will approach total net value of the timber as the time delay increases. It might also happen that the annual cutting would not be reduced with a subsequent increase in backlog volume and further deterioration of logs to an extent that they could be considered lost. If timber of similar cutting maturity can be substituted from other areas of the country, the economic loss for the economy would also be reduced. In practice, a large amount of substitution appears to take place in Burma presently. The substitution is, however, seldom from timber stands of sin lar nature and cutting maturity, but often from considerably younger and smaller dimension timber stands of better accessibility,which would bring another type of loss which is difficult to evaluate. The preceding arguments point out that although it is clear that the first alternative will bring an important benefit in terms of the additional volume which will be taken out of the region, the valuation of such a benefit poses some uncertainties. However, under the reasonable assumption of establishing it as the net value added, the ERR is so high, 76%, that it can be concluded, with a good degree of confidence, that it is clearly feasible even with substantial deviations from the estimated value of benefits. For example,
1/ The maximum volume reached in any one year over the past five years. -50-
Annex 8 Page 2 of 2
if only 50% of the net value added is considered as benefit, ERR becomes 25%. Next, the second alternative was compared with the first one and benefits were estimated based only on transport and handling cost savings, because the assumed annual volume transported is the same for both alternatives. Under these conditions, the Naba-Katha improvement has an incremental ERR of 45%, and the Wuntho-Tigyaingroad an incremental ERR of 15%, both over the first alternative which was found to be feasible in the previous analysis. Therefore, the second aLternative is selected as the best analyzed transport system in the Myitkyina region. TIIOU DISTIIIUT10H PROJECT
Logo and Sawn Tibir Transnorted to Rangoon
1977-78 19__9- 17-_ - - 1980-81 ... j19 - 2 1982-83 -hFrpit/Divioigv Rail Raf.t g1b*. Jal Raft Otz RAi_ 1 Rf Other Rail_t JAIL. Ral f L -abet Rail JIfLL Ot.br
PeAuDivision (2)
Teak loge (MT) 20,216 81,268 22,928 100,751 14,310 108,210 12,645 85,210 2,568 100,192 1,239 92,102 Hardwood (HT) 1,705 154 2,918 2,292 13, 297 192 7,781 8,138 3,600 Savn wood (STI) 139 106 211 226 1,174 835 1,986 1,926 1,174 213
EPP Forestry Proleet
Teak logo (HT) 38, 965 46,641 1,000 33,993 62,007 1, 500 34,844 67, 585 2,000 27,913 71,413 7,000 HNrdvood (HT) 563 4,958 329 Sewn wood (ST) 11,381 11,713 9, 704 186
ADD I Foreetrv _UgigJ
Teak logo (HT) 54, 960 174,920 75, 810 72, 880 77,370 75,780 Hardwood (HT) 12,780 2,210 15,600 9,260 11,310 4,170 7,700 5,320 9,200 2,180 4,560 220 1 Sewn vood (ST) 4,120 3,400 6,040 4,650 3,420 3,680sL
ADS 11 Forestry Proiect
Teak logo (HT) 10, 700 HNrdwood (HT) 1, 850 Sawn wood (ST) 1,470
Extraction (Kain)
Teak logo (IIT) 26,944 90, 751 36, 551 102,606 51,427 96,413 4,254 31,145 9,950 20,346 9,349 25,240 Nerdwood (NT) 9,036 2,925 9,273 47 863 18,450 954 2,469 54 100 Sawn wood (ST)
Timbgr Corp. Total
Teak loge (HT) 47,160 226,979 0 59,479 378, 277 0 104,702 327,074 1,000 50, 892 251, 242 1,500 47,362 265,493 2,000 38,501 275,235 7,000 Hardvood (HT) 12,760 12, 951 0 18,679 21,451 47 15,028 39,917 954 7,892 15, 570 0 14,158 10,372 0 6,739 3,920 0 Savn wood (ST) 4,120 0 0 3,539 0 106 17,632 0 226 17,537 0 835 15,110 0 1,926 6,510 0 213
Source: Timber Corporation February 1984
m NURKL
TIMBERDISTRIUJTION PROJECT Timber Distribution Perfortmince Tink
EXTRACTION SANHILLING EXPORT LOCALSALE TOTALCONSUMPTION Cubic Ton Cubic Ton HODDUs Thruput Outturn Cubic Ton Cubic Ton Cubic Ton Z of Z of Year In Transit Input AlyLYi Lose Z Lose HOpPuY Solid x ConV RODIDU Sawn Ton HOPDuC HODDUe IaDut Arrivlsn 63.66 50.00
1974-75 840,000 350,571 257,806 92,765 26.46 188,278 83,870 34.99 33,409 63,902 2,993 224,680 64.09 87.15
1975-76 312,117 236, 833 75, 284 24.12 183, 149 83, 288 35.72 32, 157 67, 502 7,341 222,647 71.33 94.01 1976-77 333,832 280,177 53,655 16.07 196,879 91,501 36.50 25,775 50,296 6,125 228,779 68.53 81.66 v" 1977-78 357,987 316,209 41,778 11.67 215,521 95,193 34.69 44,256 38,653 9,767 269,544 75.29 85.24
1978-79 462,413 375,584 86, 829 18.78 251,476 106,007 33.11 92,733 86, 981 3,774 347,983 75.25 92.65
1979-80 478, 214 394,243 83,971 17.56 290, 538 121,325 32.80 48,236 54,812 3,588 342,362 71.59 86.84
1980-81 485,081 401,332 83, 749 17.26 292,980 125, 850 33.74 54, 546 82,372 2,927 350.453 72.25 87.32
1981-82 516, 886 435,423 81,463 15.76 297, 565 125,401 33.10 75,069 72,219 3,906 376,540 72.85 86.48 1982-83 1,160,000 500.000 423.689 76,311 15.26 312.643 129.794 32.61 81.366 61.091 394.009 78.80 92.i9 Total 3,477,101 3,121,296 675,805 19.44 2,229,029 962, 229 33.91 487, 547 583, 828 40,421 2,756,997 79.29 88.33
Source: Ministry of Agriculture and Foreats, 1983-01-01 Notes on Forestry in Burma
'- pa ThUgER DISTUIITI0 PROJECT
Timber Distribution Performanee
lxardvood
EXTRACTI0ON _ SAWHILLING UPORT LOCALSALE TOTAL C0ESUMnPTI0 Cubic Topk -- Cubic Ton Roonus Thruput Outturn Cubic Ton Cubic Ton Cubic Ton 2 of X of Year In Transit Innut Arrival Lose I2 Loss HODD Solid I goay RoDpu Sawn Ton H ODDUsHInmu. Itinut Arrival.
63.66 50.00
1974-75 534,789 501,896 32,893 6.15 426,586 237,117 43.66 11,206 1,916 29,778 467,570 87.43 93.16
1975-76 401,275 381,968 19,307 4.81 347,109 188, 847 42.73 3,142 6,128 37,101 387,352 96.53 101.41
1976-77 401,603 360,617 40,986 10.21 257,002 137,629 42.06 6,123 1,900 27,780 290,905 72.44 80.67
1977-78 374,167 368,060 6,107 1.63 327,540 173,204 41.53 9,630 171 43,716 380, 886 101,80 103.48
1978-79 469,224 480,099 -10, 875 -2.32 355,196 188, 850 41.76 45,950 1,027 30, 554 431,700 92.00 89.92
1979-80 7 23, 1 87 679,310 43, 877 6.07 403, 4 85 213, 136 41.49 56, 691 350 29, 280 489,456 67.68 72.05
1980-81 723,632 682,333 41, 299 5.71 483, 239 258,449 42.01 6i, 581 82 51, 509 596,329 82.41 87.40
1981-82 624,043 579,858 44,185 7.08 496,206 261,744 41.43 55,108 44,522 595,836 95.48 102.76
1982-83 630,000 586.380 43.620 6.92 501.591 264.942 4jLA 43.430 6 545,021 816.51 92.95
TOTAL 4, 881,920 4,620,521 261,399 5.35 3,597,954 1,923,118 42.00 292, 861 11, 580 294,240 4, 185, 055 85.73 90.58
Source: Ministry of Agriculture and Forests, 1983-01-01 Notes on Forestry in burma
0 hi -54- Table 3
BURMA
TIMBER DISTRIBUTION PROJECT
Sawmill Capacity
Teak Sawmills Hardwood Sawmills
State Mill State Mill Hired Mill Total State/Division No's Capacity No's Capacity No's CaDacity No's Capacity
Kachin 2 5,000 4 6, 000 6 11,000 Kayah 4 6, 500 4 6,500 Karen 2 3, 500 2 3, 500
SaRains
Sagaing 13 41,500 17 41,700 30 83, 200 Monywa 1 8, 500 12 56, 700 1 2, 500 13 59, 200 Tenessarin 3 8,600 3 8,600
Pe_Yu
Tauugoo 2 17,000 11 77,500 8 29,500 19 107,000 Prome 1 8, 500 10 59, 000 10 59, 000
Magwe (West) 1 9,000 5 18, 500 1 5,000 6 23,500 Magwe (East) 4 12,000 5 11,000 9 23, 000
Mandalay
Mandalay 4 4,100 13 88, 000 3 8, 500 16 96, 500 Pyinmana 10 66,000 14 48,000 24 114,000
Mon 1 12,000 5 20,000 2 3,000 7 23,000 Rakhine 4 17,000 4 5, 500 8 22,500 Rangoon 12 327,000 3 13,000 3 13,000 Shan 1 1, 000 4 10, 500 10 10, 000 14 20, 500 Irrawaddy _ 6 31.100 8 15. 000 14 46.100
Total 23 424,000 107 527,900 81 192,200 188 720, 100
Source: Tizmber Corporation February 1984 BURMA
TIMBER DISTRIBUTION PROJECT
Transportationof Logs by Rail (in HT)
Asency Proiect Svecies 1977/78 1978/79 1979/80 1980/81 1981182 1982/83 1983/84
West Katha ADB I Teak 3,050 2,080 2,430 1,940 1,610 H/W 1,400 1,380 120 Padauk 660 120
Kawlin ADB I Teak 280 6,030 10,890 4,780 15,510 15,340 10,480 H/W 300 1,000 300 140 Padauk 570 2,500 1,100 240 50
Shwebo ADB I Teak 4,210 2,580 2,170 3,340 10,600 970 2,210 H/W 696 3,080 786 1,210 3,820 Padauk 860 6,500 1,990 1,280 660
Hyitkyina ADB II Teak 9,830 10,300 12,380 12,920 580 611 H/W Padauk
Myitkyina Line Total Teak 14,320 18,910 28,490 10,200 41,460 18,830 611 H/W 0 996 4,080 1,086 2,750 5,200 120 Padauk 570 3.360 8.260 2.230 1.330 660 120
All 14.320 19.906 32.570 11.286 44.210 24.030 611
Mavmvo Teak 1.070 860
Monyva H/H 3,070 Padauk 3.520
North of Mandalay Teak 14,320 18,910 29,560 10,200 42,320 18,830 611 Total Rail Transport H/H 0 996 4,080 1,086 2,750 5,200 3,070 Padauk 570 3.360 8.260 2.230 1.330 660 3.640 W
All 14,890 23,266 41,900 13,516 46,400 24,690 7,321
Source: Timber Corporation February 1984 -56- Table 5
MRNA
TIMIR DlSTISIIlTION PROJECT
Loam Inventory at Railwvay Station.
Sp Ia&lav/Nvitkvina Rail Line
(As at October 1, 1983)
Distance Distance Hard- to Rangoon Destination to Rangoon Transport Distance Teak Padauk woods Total station (Kiley) Depot (AMilea) Made (miles) ST IT IT IT-
Kanbalu 490 Sagaing 392 Rail 98 150 150
Thityabin 498 Sagaing 392 Rail 106 150 150
Pintha 506 Sagaing 392 Rail 114 1,270 1.610 Mandalay 380 Rail 126 30 Rangoon 0 Rail 506 310
Zauchaung 521 Sagaing 392 Rail 129 6.040 6.040
Chatthin 516 Sagaing 392 Rail 124 7.180 8,050 Kandalay 380 Rail 136 570 Rangoon 0 Rail 516 300
Kodaungbo 527 Kandalay 380 Rail 147 470 2.830 Rangoon 0 Rail 527 2.360
Kawlin 535 Mandalay 380 Rail 155 1.160 1.160
Vuntho 543 Sagaing 392 Rail 151 14,390 16.960 Kandalay 380 Rail 163 1.630 Tigyaing Truck Alt. 50 Rangoon 0 Rail 543 940
Cyodaung 552 Sagaing 392 Rail 160 1,030 1,030 Katha 380 Rail Alt. 172
Nankhan 559 Sa-aing 392 Rail 167 12.490 13, 560 Mandalay 380 Rail 179 540 Katba 605 Rail Alt. 46 Rangoon 0 Rail 559 530
Indaw 585 Mandalay 380 Rail 205 1,150 1.150
Nabs 590 590 0
Katba 605 605 0
Pinve 597 Mandalay 380 Rail 217 70 70
(awlu 606 Mandalay 380 Rail 226 320 320
lansiaung 612 Sagaing 392 Rail 220 4,643 5,133 landalay 380 Rail 232 490 Katha Rail Alt. 37
Kadu 628 Sagaing 392 Rail 236 4, 800 4, 800 Katba Rail Alt. 53
Kamas 641 Sagang 392 Rail 249 4,381 4,381 Katha Rail Alt. 66
Hopin 651 Sagaing 392 Rail 259 628 628 Katha Rail Alt. 76
Pinbaw 661 Sagaing 392 Rail 269 664 664 Katha Rail Alt. 86
TOtAL 57, 816 4,440 6,430 68,696
Alternative: Katha Rail (truck/river) 28,636 Tigyaiag - truck/river 14,390 Sagaing - Rail Direct 14,790 BURKA
TIMBERDISTRIUITION PROJECT
Lok Inventory at RailwayStations
(As at October 1, 1983)
Distance to Rangoon Destination Transport Distance Teak Padauk Hardwoods Total Rail Line/Station (Kileq) Depot Mode (Miles) BT HT HT HT Kandalav/Monvva
Monyva 457 Rangoon Rail 3, 800 3, 800
Mandalay/Kayoyo
Htonbo 392 Rangoon Rail 268 268
Mandalay
Dewun 385 Rangoon Rail 180 180
Mandalav/Shwenvauna
Yepu 341 Rangoon Rail 634 634 Yirarpin 329 Rangoon Rail 1,006 1, 006 Pvimana (North)
Ywadaw 230 Rangoon Rail 1,027 1,027 Pyimana 225 Rangoon Rail 2,902 2, 902 Pyudwin 229 Rangoon Rail 946 217 1,163 Aungchantha Rangoon Rail 7,930 7,930 Maysagon Rangoon Rail 11,000 11,000 Kuolaybin Rangoon Rail 3,787 3, 787 Taungnyo Rangoon Rail 3,683 3,683 Pantin Rangoon Rail 3,794 3,794 Levin 23 5 Rangoon Rail 1,476 1,476 0 m Takkon 253 Rangoon Rail 155_155_
TOTAL 38,185 4,620 0 42,805
Source: Timber Corporation February 1984 -58- Table 6
BURMA
TIMBER DISTRIBUTION PROJECT
Inventory of Timber Wagons
Carrying Condition Average Capacity Nos. in Z Nos. Age Wagon Type (tons) Stock Good Fair Poor Running Z Years
Log Transport
Bogie Wagons (WBYV) 30 395 - 80 20 352 89 70% over 25 Bogie Wagons (WBY) 30 173 - 10 90 94 54 90% over 40 Bogie Wagons (WBHV) 36 103 - 100 - 58 56 About 13 Bogie Wagons, Others 1/ 30 44 - - 100 34 77 Over 40
Total - 715 - 60 40 538 6/ 75
Sawn Wood
4-wheel timber 55% over 40, wagons, 5 types 18 214 - 45 55 152 6/ 71 rest about 25 Bogie high-sided, open wagons (Sugarcane w.) Type SMBV 27 264 100 - - 235 5/ 89 6 to 18 Others 2/ 27 269 33 57 10 171 5/ 64 67% over 37
Total - 747 47 33 20 558 75
1/ Six different types, capacities 22-33 long tons. 2/ Five different types, all sugarcane type. 3/ Excluding wagons set aside for scrapping. 41 Includes stock used in unit trains. 5/ Available only outside sugarcane season, i.e., 5-6 months of the year. In this period. 50% used for other purposes. 6/ Timber wagons (Bogie, 4-wheelers) also used for other purposes (about 33% of the numbers of wagons are not available for timber), and up to 50% of the remainder are awaiting running repairs.
Source: BRC February 1984 -59-
Table 7
BURMA
TIMBER DISTRIBUTION PROJECT
Inventory of Logs at Storage Depots - Rangoon
(As at October 1, 1983)
Distance Lor CaDacity from E.Q. Length on Land Afloat Depot Township Group (Miles) Feet HT ET
Kyar Chaung Hlegu East 12 6,600 41,400 8,600
Obo Thaketa East 7 7,640 38,000 12,000
Ahlone Ahlone East H.Q. 3,000 2,400 2,400
Daing Su Insein West 5 4,300 3,800 8,200
Shan Chaung Insein West 6 10,400 9,200 29,000
Insein Insein West 6 9,560 11,600 15,200
Kasin Insein West 7 4,000 2,000 9,000
Wataya Htantabin West 20 5,960 12,000 13,000
Htantabin Htantabin West 23.5 3,000 5,000 6,000
Nyaung Waing Hmawbi West 22 12,200 65.700 24.000
TOTAL 191,100 127,400
Source: Timber Corporation February 1984 -60- Tabl e 8
3URKA
TINDI DISTRINI TION PROJECT
Detailed Cost Estimates
---- Kyats x 1,000 - - -USS Killion Local Foreign Total Local Foreign Total
A. KYITRIYA LINE
(i Noba-Kotb
Repower 3 Locos 4,842.00 10,560.00 15,402.00 0.54 1.19 1.73 30 New Wagons 5,535.00 12,300.00 17, 835.00 0.62 1.38 2.00 2 New Brake Vans 237.60 528.00 765.60 0.03 0.06 0.09 Repair Shop 658.35 1,463.00 2,121.35 0.07 0.16 0.24 Wagon Spares 1,900.00 4,188.00 6,088.00 0.21 0.47 0.68 Rail Ezt. & Yard 1,210.00 881.00 2,091.00 0.14 0.10 0.23 lmprove Depot/Light 799.20 °n6.0O 1,635.20 0.09 0.09 0.18 1 Hydr. Grap. Ldr. 1,201.50 2,70.00 3,871.50 0.13 0.30 0.44 2 F.E. Loadprs 1,188.00 2,640.00 3, 828.00 0.13 0.30 0.43 Loader Spares 396.00 880.00 1,276.00 0.04 0.10 0.14 Road Improvement 5,197.80 1, 584.00 6,7 81. 80 0.58 0.18 0.76 Road Roller 128.70 286.00 414.70 0.01 0.03 0.05 PCG Equipment 445.00 89.00 534.00 0.05 0.01 0.06
Subtotal 23,739.15 38,816.00 62,555.15 2.67 4.36 6.98
-ii) Wuntho Road
Improve Existing 5,704.30 334.00 6,038.30 0.64 0.04 0.68 Construct Bew 10,797.00 2.200.00 12,997.00 1.21 0.25 1.46 load Roller 259.70 286.00 545.70 0.03 0.03 0.06 Road Grader 383.40 852.00 1,235.40 0.04 0.10 0.14 Spares 103.05 229.00 332.05 0.01 0.03 0.04
Subtotal 17,247.45 3, 901.00 21,148.45 1.94 0.44 2.38
(iii ) Sagaing Depot
Resurfacing 289.95 111.00 400.95 0.03 0.01 0.05 Nydr. Grap. Loader 1,201.50 2,670.00 3, 871.50 0.13 0.30 0.44 2 F.1. Loaders 1,188.00 2,640.00 3, 828.00 0.13 0.30 0.43 Spares 396.00 880.00 1,276.00 0.04 0.10 0.14 Lighting 222.75 495.00 717.75 0.03 0.06 0.08 Workshop Equipment 400.50 890.00 1.290.50 0.05 0.10 0.15
Subtotal 3,698.,C 7,686.00 11,384.70 0.42 0.86 1.28
TOTAL BASE 44,685.30 50,403.00 95,088.30 5.02 5.66 10.68
Physical Contingency 3.574.82 5,040.30 8,615.12 0.40 0.57 0.97 Price Contingency 7.46L.34 8.970.95 16.432.28 0.84 1.01 1.85
TOTAL COMWIUT 55,721.46 64,414.25 120,135.71 6.26 7.24 13.50 -61-
Table 8 Page 2 of 4
Kyats x 13000 US$ Million - Local Foreiin Total Local Foreign Total
S. PROMSLINE
Repover I Loco 1,584.00 3,520.00 5,104.00 0.18 0.40 0.57 10 New Wagons 1, 845.00 4,100.00 5,945.00 0.21 0.46 0.67 1 New Brake Van 118.80 264.00 382.80 0.01 0.03 0.04 Repair Facilities 456.50 570.00 1,026.50 0.05 0.06 0.12 Spares & Radio Equip. 2,003.20 1,565.00 3,568.20 0.23 0.18 0.40 Rehab. 30 Wagon. 1.321.50 2.670.00 3991.50 0,15 0.30 0L4I
TOTALBASE 7,329.00 12,689.00 20,018.00 0.82 1.43 2.25
Physical Contingency 586.32 1,268.90 1, 855.22 0.07 0.14 0.21 Price Contingency 1.223.76 2.258.44 3.482.21 0.14 0.25 0.39
TOTALCOHPfNUT 9,139.08 16,216.34 25,355.43 0.03 1.82 2.85
C. PYINNANALINE
Repover 2 Locos 3,168.00 7,040.00 10,208.00 0.36 0.79 1.15 2 New Brake Vans 237.60 528.00 765.60 0.03 0.06 0.09 Rehab. 30 Wagons 1,321.50 2,670.00 3,991.50 0.15 0.30 0.45 Spares & Rado Equip. 2.003.20 1.565.00 3. 568.20 0.23 0.18 0.40 TOTALBASE 6,730.30 11, 803.00 18, 533.30 0.76 1.33 -2.08
Physical Contingency 538.42 1, 180.30 1, 718.72 0.06 0.13 0.19 Price Contingency 1.123.79 2.100.75 3.224.54 0.13 0.24 &J6
TOTALCONPONOT 8,392.52 15,084.05 23,476.57 0.94 1.69 2.64
D. CC TImBERTRANSPORT
Repover 1 Loco 1, 584.00 3,520.00 5,104.00 0.18 0.40 0.57 20 Nev Wagons 3,690.00 8,200.00 11, 890.00 0.41 0.92 1.34 Spares 1.174.50 2.610.00 3.784.50 0.13 0.29 0.43
TOTALBASE 6,448.50 14,330.00 20,778.50 0.72 1.61 2.33
Physical Contingeacy 515.88 1,433.00 1,948.88 0.06 0.16 0.22 Price Contingency 1.076.74 2. 550.52 3.627.26 0.12 0.29 0.41
TOTALCNPWEffT 8,041.12 18,313.52 26,354.64 0.90 2.06 2.96 -62- Table 8 Page 3 of 4
---- -Kyats x 1.000 ------USS Million Local Foreign Total Locel Foreign Total
E. CONTAINERIRU IPMENT
4 Forklift Trucks 792.00 1,760.00 2,552.00 0.09 0.20 0.29 12 Contr. Trailers 475.20 1,056.00 1,531.20 0.05 0.12 0.17 2 Truck Tractors 594.00 1,320.00 1,914.00 0.07 0.15 0.22 Packing Items 237.60 528.00 765.60 0.03 0.06 0.09 Spares 792.00 1.760.00 2.552.00 0.09 0.20 0,29
TOTAL BASE 2,890.80 6,424.00 9,314.80 0.32 0.72 1.05
Physical Contingency 231.26 642.40 873.66 0.03 0.07 0.10 Price Contingency 482.69 1.143.37 1.626.06 0.05 0.13 0.18
TOTAL COMPCNENT 3,604.76 8,209.77 11,814.53 0.41 0.92 1.33 F. BARGING SYSTEM
1 Pusber Tug 2,771.50 3,850.00 6,621.50 0.31 0.43 0.74 J Log Barges 6,096.85 3,765.00 9,861.85 0.69 0.42 1.11 1 Log Crane 1,38b.00 3,080.00 4,466.00 0.16 0.35 0.50 Loading Site Sagaing 626.00 220.00 846.00 0.07 0.02 0.10 Spares 889.20 1.976.00 2.865.20 0.10 0.22 0.32
TOTALBASE 11,769.55 12,891.00 24,660.55 1.32 1.45 2.77
Physical Coningency 941.56 1,289.10 2,230.66 0.11 0.14 0.25 Price Contingency l1965.22 2.294.40 4,259.62 0.22 0.26 0.48
TOTAL COMPONENT 14,676.34 16,474.50 31,150.83 1.65 1.85 3.50 H. RANGOON HARBOR B)UIPMENT
1 Tug Boat 2001P 1,125.25 1,945.00 3,070.25 0.13 0.22 0.34 4 Barges 100 Ton 2,139.60 1,288.00 3,247.60 0.24 0.14 0.39 Improve Okkyin Yd 405.70 106.00 511.70 0.05 0.01 0.06 Spares 689.40 1.532.00 2.221.40 0.08 0.17 0.25
TOTAL BASE 4,359.95 4,871.00 9,230.95 0.49 0.55 1.04
Physical Contingency 348.80 487.10 835.90 0.04 0.05 0.09 Price Contingency 728.00 866.96 1.594.97 0.08 0.10 0.18
TOTrALCOMPONENT 5,436.75 6,225.06 11,661.81 0.61 0.70 1.31
I. TRAINING & T.A.
Training 890.00 890.00 1,780.00 0.10 0.10 0.20 TechnicalAssistance 8".(00 890.0089 0 1.780.00 0.10 0.20
TOTAL COMPONENT 1,780.00 1,780.00 3,560.00 0.20 0.20 0.40
J. COMPREHENSrVESTUDY 890.00 4,450.30 5,340.00 0.10 0.50 0.60 Summarv
--- Kyats Million USS Million Foreign Local Foreign Total Local Foreign Total x of Total
Myitkyina Line 44.69 50.40 .95.09 5.02 5.66 10.68 52.99 Prome Line 7.33 12.69 20.02 0.82 1.43 2.25 63.55 Pyinmana Line 6.73 11.80 18.53 0.75 1.33 2.08 63.94 CC Timber Transport 6.45 14.33 20.78 0.72 1.61 2.33 69.10 Container Equipment 2.89 6.42 9.31 0.33 0.72 1.05 68.57 Barging System 11.77 12.89 24.66 1.32 1.45 2.77 52.35 Rangoon Harbor Equip. 4.36 4.87 9.23 0.49 0.55 1.04 52.88 Training & T.A. 1.78 1.78 3.56 0.20 0.20 0.40 50.00
Total Base Cost(June'84) 85.99 115.19 201.18 9.65 12.95 22.60 57.30
Physical Contingency 6.88 11.52 18.40 0.78 1.29 2.07 62.32 Price Contingency 13.03 20.15 33.18 1.47 2.26 3.73 60.59
Total Project Cost 105.90 146.86 252.76 11.90 16.50 28.40 58.10
Comprehensive Study 0.89 4.45 5.34 0.10 0.50 0.60 83.33
Total Project Coat 106.79 151.31 258.10 12.00 17.00 29.00 58.62
0D
0^ -64-
Table 9
BURMA
TIMBER DISTRIBUTION PROJECT
Estimated Schedule of Disbursements
IDA Fiscal Year Cumulative Disbursement and Quarter at End of Quarter. Percentage
1985/86 December 31, 1985 0.20 1 March 31, 1986 0.30 2 June 30, 1986 0.50 3
1986/87 September 30, 1986 0.70 4 December 31, 1986 1.00 6 March 31, 1987 1.30 7 June 30, 1987 1.70 10
1987/88 September 30, 1987 3.30 19 December 31, 1987 5.00 28 March 31, 1988 7.40 42 June 30, 1988 10.70 60
1988/89 September 30, 1988 13.20 74 December 31, 1988 15.70 88 March 31, 1989 16.40 92 June 30, 1989 17.15 97
1989/90 September 3, 1989 17.75 100
Closing Date: March 31, 1990
Source: GOB and Mission Estimates
April 1985 -65-
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