Dosumit Aof The WorldBank
Ka OMCILUSE ONLY Public Disclosure Authorized
lptb Ne. 6386
PROJECTCOMPLETION REPORT Public Disclosure Authorized
YUGOSLAVIA
MONTENEGROEARTHQUAKE REHABILITATION (RAILWAYS) PROJECT (LOAN1769-YU)
Public Disclosure Authorized August 19, 1986 Public Disclosure Authorized
RegionalProjects Department Europe,Middle East and North Africa Region
lth d_m.mt ha a uegvkw XdIbd mam bI mmd by uod__ibhmy inlb putwuaue o dk*i ~ehI duIm.an ued.b may go -lllhmwbe & ammi wighe Wui Duak sluulindom THEWORLD BANK Washtngton.D.C. 20433 U.S.A.
Ofke of Direchw.cGwui Opertam Evakhtian
August 19, 1986
MEMORANDUMTO THE EXECUTIVEDIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Yugoslavia MontenegroEarthquake Rehabilitation(Railways) Prolect (Loan 1769-YU)
Attached,for information,is a copy of a reportentitled "Project Complation Report on YugoslaviaMontenegro Earthquake Rehabilitation (Railways) Project (Loan 1769-YU)" prepared by the Europe, Middle East and North AfricaRegional Office. Under the modifiedsystem for project performanceauditing, further evaluation of this projectby the Operations Evaluation Department has not been made.
Yves Rovani
by Ram K. Chopra
Attachment
This document has a restricted distdibutionand may be used by recipientsonly in the performance of their officialduties. Its contents may not otherwise be disclosed without World Bank authorzation. 1FO OFFICIALUSE ONLY
PROJECT COMPLETION REPORT
YUGOSLAVIA: MONTENEGRO EARTHQUAKE REHABILITATION (RAILWAYS) PROJECT (LOAN 1769-YU)
Table of Contents
Page No.
PREFACE ...... **.*.*.***.*.*****...... **..... (i) BASIC DATA SHEET ...... * (ii) HIGHLIGHTS .... *. *....*..** ...... (iv)
I. INTRODUCTION ...... 1
II. PROJECT PREPARATION AND APPRAISAL ...... 3
III. PROJECT IMPLEMENTATIONAND COSTS ...... 6
IV. INSTITUTIONALPERFORMANCE AND DEVELOPMENTS ...... 11
V. ECONOMIC EVALUATION ...... 12
VI. CONCLUSIONS ***** **************.**...... 12
TABLES
1 - Actual and Expected Physical Completion...... 14 2 - Actual and Estimated Project Costs ...... 15 3 - Financing Plan,, ...... 16
ANNEX Borrower Covments ...... 17
MAP IBRD 14638
This documentha a restricteddistribution and may be used by rcipients only in the performunce of their offcialduties. Its contentsmay not othewe be discbsedwithout Wofdd Bnlk authozit (i)
PROJECTCOMPLETION REPORT
YUGOSLAVIA:MONTENEGRO EARTHQUAKE REHABILITATION (RAILWAYS) PROJECT
(LOAN 1769-YU)
PREFACE
This ProjectCompletion Report (PCR)describes implementation of the MontenegroEarthquake Rehabilitation (Railways) Project. As an emergency,a Bank loan (Loan 1769-YU)of US$14.0million was approvedin November1979 based on a President'sReport to provideassistance in restoringrailway facilities damaged by the earthquakeswhich occurredin April and May 1979. The loan was closed in June 1984 after a cancellation of US$38,573,one year after the originalclosing date.
The reportwas preparedby the TransportationDivision of the Europe,Middle East and North AfricaRegion from the informationcontained in a ProjectCompletion Report prepared by RailwayTransport Organization (RTO) Titogradand the Design Instituteof the Communityof Yugoslav RailwaysBelgrade and data in projectfiles.
In accordance with the revised procedures for project performance audit reporting, this Project Completion Report was read by the Operations Evaluation Department (OED) but the project was not audited by OED staff. The draft report was sent to the Borrower for comments; their reply is shown as an annex. (it)
PROJECTCOMPLETION REPORT
YUGOSLAVIA:MONTENEGRO EARTHQUAKE REAEBILITATION (RAILWAYS) PROJECT (LOAN1769-YU)
BASIC DATASHUT
Key ProiectData
Actualor Appraisal Current Item Expectation Estimates
Total Project Cost (US$ million) 52.3 45.3 Loan Amount (US$ million) 14.0 13.96 2/ Disbursement 14.0 13.96 (4/16/85) Cancelled - 0.04 1/ Repaid 3.51 I/ Outstanding - 10.45 2/ PhysicalCompletion Date 12/31/82 06/30/84
OTHER PROJECTDATA
Oriinal Plan Actual
First Mentionedin Files - 05/79 Government'sApplication - 05/79 Negotiations - 10/24/79 Board Approval 11/27/79 11/27/79 Loan Agreement Date 11/30/79 11/30/79 EffectivenessDate 02/../80 04/29/80 ClosingDate 06/30/83 06/30/84
Borrower : RailwayTruasport Organization (RTO) Titograd Guarantor : SocialistFederal Republic of Yugoslavia(SPRY) ExecutingAgency : RailwayTransport Organization (RTO) Titograd Fiscal Year of Borrower : January1 - December31 Follow-onProject Name : None Loan Number Amount (US$ million) : Loan AgreementDate :
1/ US$38,573was cancelledeffective April 16, 1985 2/ As of March 31, 1986 (iii)
MissionData
No. of Month/ No. of Mission Date of Item Year Weeks 1/ Members Man-Weeks Report
Identification 05/79 1.0 1 1.0 - Appraisal 08/79 1.0 2 2.0 11/21/79 2.0 3.0
Supervision 08/79 0.5 1 0.5 1206/719 Supervision 03/80 0.1 1 0.1 03/25/80 Supervision 06/80 0.2 2 0.4 06/30/80 Supervision 04/81 0.4 2 0.8 05/06/81 Supervision 07/82 0.4 2 0.8 07/30/82 Supervision 08/83 0.5 1 0.5 08/17/83 Supervision 01/84 0.4 1 0.4 01/31/84 Supervision 07/84 0.5 1 0.5 08/17/84 3.0 4.0
CURRENCYEXCHANGE RATES YugoslavDinar (YD)
1979 (Appraisal) US$1 = 18.70 1980 US$1 = 24.91 1981 US$1 , 35.51 1982 US$1 = 51.32 1983 US$1 - 94.11 1984 (ClosingDate) US$1 = 143.20
1/ Combinedmissions with RailwaysIV and V, however,number of weeks are given for this project. (iv)
PROJECTCOMPLETION REPORT
YUGOSLAVIA:MONTENEGRO EARTHQUAKE REHABILITATION (RAILWAYS) PROJECT
(LOAN1769-YU.
HIGHLIGHTS
The primaryobjective of the MontenegroEarthquake Rehabilitation (Railways)Project was to provideassistance to RTO Titogradfor rehabilitationof railwaysdamaged by a seriesof earthquakeswhich occurredin April and May 1979 along the AdriaticCoastline of the Republic of Montenegro. During this period, intensiveearth tremorscovered also the southernpart of the Republicof Croatiaas well as the Republicof Bosnia-Herzegovina(PCR, para. 2.01).
Heavy damage occurredon the snuthernpart of the Belgrade-Bar Line, one of the main lines in Yugoslaviaconnecting Republics of Serbia and Montenegro. There were also damageson the northernpart of the line betweenTitograd and Trebesica,but of smallerscale. The whole Niksic-Titogradline was in the earthquakezone where the line structures were also damaged (PCR, paras. 2.02 and 2.08).
The Bank loan (Loan 1769-YU)of US$14.0million was approvedin November1979 to rehabilitateand restoreabout 90 km of railwaylines damaged in the earthquakesand to expand railwayyards at Bar and Titograd (PCR, para. 2.07).
A Federallaw providingfor local funds from all Republicsand Provinceswas enacted (SFRY OfficialGazette No. 36 of July 27, 1979) in order to providedirect financialassistance for rehabilitation.This interimcontribution amounted to US$37.6million for the rehabilitation project (PCR, para. 3.16).
The projectwas problem-freedespite some delays in project completionand disbursements.Supervision requited a relativelylow effort and was alwaysundertaken with other ongoingpr'jects (PCR,paras. 3.07, 3.08 and 3.17). PROJECTCOMPLETION REPORT
YUGOSLAVIA:MONTENEGRO EARTHQUAKE REHABILITATION (RAILWAYS) PROJECT
(LOAN 1769-YU)
I. INTRODUCTION
1.01 Railwaysform an essentialpart of Yugoslavia'stransport system with the main trunk line runningfrom Italy and Austria in the northwestto Greeceand Bulgariain the southeastand main lines lankingthe trunk line to the Adriaticcoast. Althoughroad transportnow carriesa biggervolume of freight,the railwaysplay a vital role in the economyas the principal carrierof bulk materialsover long and mediumdistances. By the early 1960s the railwayshad experiencedan extendedperiod, of only minimum investmentgoing back to before the SecondWorld War. At that time, 2000 of the system's2,300 locomotiveswere steam driven and 70% were over 35 years old, and two-thirdsof the rollingstock was over-age. Stations, marshallingyards and signallingsystems were in urgentneed of modernization.
1.02 In 1963, a First RailwayProject from the Bank financedthe conversionof the Sarajevo-Ploceiine to standardgauge with electric tractionand signalling. In 1964,a Bank loan was concludedfor the Second RailwayProject to supportthe railways'1964-70 Modernization Program. This was a comprehensiveprogram designed to modernizeoperations and equipment,in particularthe modernizationof some 1500 km of main lines with track renewal,signalling and electrification,the acquisitionof motivepower and other equipmentas well as the constructionof extension of six major marshallingyards. The projectturned out to be over ambitious,and was beset by major problems. The railways'financial performancedeteriorated. Investment cost escalateddue to inflation - whose effects were compounded by delays of execution - and design changes. As a result,the Bank loan was fully disbursedwell before the ModernizationProgram was completed. The Third RailwayProject, for which a loan was made in 1968, was for the constructionof the Belgrade-Barline, a developmentproject of great technicalcomplexity involving the constructionof over 300 tunnelsand severalmajor bridges. Althoughthe projectwas completedsuccessfully, there was a four-yeardelay becauseof technicaldifficulties, and soon after the line was opened,traffic on the railwayand throughthe port of Bar was disruptedby the 1979 earthquakein Montenegro.
1.03 Becauseof problemson the secondproject, the Bank, in agreement with the Yugoslavauthorities, undertook a comprehensivestudy of the railwayswith the assistanceof consultants.This preparedthe ground for the FourthRailway Project, agreed in 1974, under which the Bank's loan was allocatedto the completionof the 1964 ModernizationProgram and to "RelatedInvestments" needed to maximizeits benefits,all to be completed by the end of 1976. In contrastto earlierprojects which consistedonly of investmentsto which the Bank loan had been allocated,the fourth - 2 -
projectwas definedas the totalityof the railways'investments in 1974-76,whose cost was estimatedat US$1,138million; the Bank loan thus amountedto about 12% of projectcost and comprisedone of the first Bank-financedsector projects. Agreementwas reachedon measuresto resolvethe railways'financial problems, principally by tariffincreases. An importantfeature of the projectwas the preparationof comprehensive Action Plans which, given Yugoslavia'sdecentralized system, were designed to contributeto a commonunderstanding of objectivesand responsibilityby all concerned. Althoughonly about two-thirdsof projectinvestments were executedby the end of 1976, thesewere reasonablybalanced to maximize systemeffects; the remainderwere includedin the 1976-80Investment Plan. Executionof Bank-financed"Related Investments" was substantially better (about752), and the electrificationof the main line traversing Yugoslaviafrom the Austrianand Italianborders to Skopje,near the Greek borderwas completed.
1.04 Yugoslavrailways envisaged the Fifth RailwayProject as a major contributorto their principalobjective of improvingfurther the efficiencyand the competitiveposition of the railwaysmainly through trackoverhaul of about 1,400 km of main lines and electrificationof about 300 km of high densityroutes. The projectwas successfulin achievingthe objectivesdespite some delays in procurementof track materialsand a shortageof local funds causedby increasingdifficulties of the Yugoslav economy.
1.05 In May 1981, the KosovoRailway Project financed rehabilitation of the railwaynetwork of RTO Pristina. The main componentsare reconstructionof KosovoPolje Junction*signalling and teleconmmunnication on the line Lesak-DjeneralJankovic, procurement of rollingstock and trainingand technicalassistance to improvemanagement and freight operations. Progressof works on the major parts of the projectsuffered delaysof seven to nine months for variousreasons. The obstacleshave been resolvedand executionwill be completedin autumn 1986. The Closing Date has now been extendedto December31, 1986. The SixthRailway Loan was made in October 1983 and consistsof a slice of the 1983-86core investmentplans of four RailwayTransport Organizations in the Republics/Provinceof (Bosnia-Herzegovina,Macedonia, Serbia and Vojvodina. The projectaims at strengtheningthe four RTOs by improving productivity,quality of service,investment and operationalplanning, and by puttingthe railwayson a path to financialviability through tariff revenues. The project includestrack overhaul,procurement of tractionand rollingstock, modern signallingand telecommunications,electrification, integratedtransport facilities, training and technicalassistance. The projectexecution is progressingwell. Additionalitems in the investment programshave recentlybeen approvedfor Bank-financingunder the loan.
1.06 The Bank approvedthe MontenegroEarthquake Rehabilitation (Railways)Project (Loan 1769-YU)on November27, 1979 to assist in financingre3toration of the railwaylines damagedin the earthquakeand in extendingyard facilitiesin Bar and Titograd. - 3 -
1.07 This ProjectCompletion Report is based on a reportprovided by the Communityof YugoslavRailways (CYR) in May 1985, projectsupervision and on a reviewof the Bank'sfiles in Washington.
II. PROJECTPREPARATION AND APPRAISAL
Origin
2.01 A devastatingearthquake measuring 9 degreeson the modified MercalliIntensity Scale (MCS)with its epicentrelocated near Kotor on the Montenegrocoastline was registeredat 7:19 a.m. local time on April 15, 1979. After, severallesser after-shocks and a last one measuring8 degreeson the MCS scale hit the same area on May 24, 1979. Earth tremors of strongintensity were also felt in other parts of Yugoslavia- the southernpart of the Republicof Croatia,the Republicof Bosnia-Herzegovinaas well as north-westernAlbania. However,the earthquakehad the most disastrousconsequences on the coastalregion of Montenegrowhere significantpart of the Republic'stransport infrastructurewere either destroyedor extensivelydamaged.
2.02 The physicalconsequence was evidenton the Lutovo-Titograd-Bar sectionof the Belgrade-Barline where the earthquakeseverely damaged about 40 km of the line and about 10 km of the Titograd-Niksicbranch line. The earth tremorsthat followeddid furtherdamage to some 33 km of the main line (with irregularitiesup to 65 cm). About 6 km of track had to be renewedcompletely due to damagecaused by fallingrocks on the line. Renewalof 3 km and repairsof 20 km of the overheadcontact line systemwere also necessary. The signallingsystem was also damaged. The tunnelsof Sumanovicaand Susanjon the Titograd-Barsection and the Ostiog and Bare Sumanovicatunnels near Niksicalso sufferedextensive damage. The basic geometrywas distortedin the 6 km Sozina tunneland water seepagestopped temporarilythe use of electricitytraction. At the 200 m long SkadarLake bridge,a lateralmovement downward of one side of 12 cm was noted, and at the 80 m long Moraca River bridge,a similarmovement of both sides of 2 and 9 cm and transversalmovement of 4 to 6 cm occurred. A numberof railwaystations suffered damage, in particularthose of Zeta, Virpazan and Sutomore. The latter was so badly damaged it had to be rebuilt. Other facilities damaged by the earthquake were the locomotive depot at Bar, three buildings at Bar with 70 apartments, RTO Titograd's apartmentbuilding for its workers with 36 apartments, 1 locomotive and 13 freightwagons.
2.03 Immediatelyafter the earthquake,emergency repairs enabled train trafficto be restoredafter 13 days, however,with speed restrictionson bridges(10 km/h) and in areas with unstableslopes (20 km/h). RTO Titogradformed commissions of specialistswhich providedextensive assessmenton the level of the damagesas well as the amountand costs of rehabilitationof damagedand demolishedstructures. The Design Institute of the Communityof YugoslavRailways, Belgrade, prepared a programof rehabilitationof items damagedby the earthquakeon the railwayline and structures. - 4 -
2.04 The FederalGovernment of Yugoslaviarequested the Bank to provide financialassistance for the rehabilitationof the earthquakedamage in the Republicof Montenegro. The Government'srequest emphasized the extremely high cost of restoringthe *hysicaldamages as well as the lossesto the economyof the Republicas a resultof the damage to the touristfacilities and the industriesin the regionof Bar.
Preparationand Appraisal
2.05 The proposedproject was appraisedby the missionwhich visited Yugoslaviain April and August 1979. The primaryobjective of the project consistedof remedialworks to restorethe damagedrailway facilities, and the expansionof the yards in Titogradand Bar. A reporton Effectsof the CatastrophicEarthquake on RailwayFacilities was preparedby the Design Instituteof CYR with a cost estimateof rehabilitationworks. The proposalsfor rehabilitationdid not includeevaluation and justification of investmentsbecause thesewere providedat the time of preparationof the Belgrade-Barproject which was financedunder Bank Loan 532-YU,and the Fifth RailwayProject, Loan 1534-YUwhere the Bank financedtrack overhaul on a sectionof Titograd-Barline. Becauseof the urgentnature of the projectno Staff AppraisalReport was preparedto accompanythe President's Report. As agreedduring appraisal, negotiations were based on the Inatitute'sreport.
Negotiations
2.06 Duringnegotiations the FederalGovernment requested that the US$2.0million proposed to be providedin the form of retroactivefinancing be increased. The Government pointedout that expendituresalready incurred by RTO Titogradfor initialproject related works exceeded estimatesprepared during appraisal. The Bank agreed that the amounts to be providedfor retroactivefinancing should be increasedto US$3.0million in order to assist as fully as possible in the rehabilitationof Montenegro'searthquake damage. While recognizingthat the proposed lendingrepresented an increasein total Bank lendingto Yugoslavia,the delegationrequested increasing the loan amountof the proposedloan. The Bank rejectedthe requeston the groundsthat the proposedloan amount would be additionalto the substantialnormal lendingprogram to Yugoslavia amountingto over US$300million per year. The Bank and the Federal Governmentboth agreed that InvestmentBank of Titograd(IBT) shouldact as fiscalagent for the Bank loan and assist in preparingplans, bidding documentsand proceduresand reportingon thieprogress of project implementation.It was agr-id that CYR's involvementwould be restricted to planningand procurementassistance and projectreporting.
2.07 Negotiationsfor the proposedloan of US$14.0million equivalent were held in Washingtonfrom October22-26, 1979. The loan was approvedby the Board of Directorson November27, 1979, and the Loan Agreementsigned on November30, 1979. The loan becameeffective on April 29, 1980, due to delay in obtainingthe necessarylegal decisionsfrom the Republic. -5-
ProiectDescription
2.08 The projectcomprised of the followingcomponents which were financedby the Bank:
- repairworks requiredto protectthe damagedrailway structures;
- rehabilitationworks on about 40 km of Lutovo-Titograd sectionand 30 km of Zeta-Barsection on the Belgrade-Bar main line and on about 10 km of Niksic-Titogradbranch line;
- expansionof Titogradand Bar yard facilitieswith the constructionof loadingand unloadingtracks to handle expectedextra trafficnecessary for rehabilitatingthe damaged areas; and
- geological and soil mechanical research.
2.09 Due to the urgent nature of the work involved,the above rehabilitation works were broken down into four components(Table 1):
Group I: Urgent rehabilitationworks - repairof substructures includingballast, repair of tunnelson Titograd-Barsection, repairof bridges,buildings, electrical equipment, track renewal, liningand levellingof track points,provision of tractionand rollingstock, and preparationof rehabilitationdesigns.
Group II: Expansionof yards at Titogradand Bar - buildingof 5 new tracks in Titogradand 8 in Bar and installingoutdoor lightingat both yards.
Group III: Other rehabilitationworks - (a) Belgrade-Barline: rehabilitationof embankmenton Titograd-Barsection, rehabilitationof cuttingson Trebesica-Lutovo-Bratonoziciand Bioce-Titogradsection, rehabilitation of drainagesystems, rehabilitationof two bridgesand Sosina tunnel,and buildingof officeand apartmentbuildings at Bar and Sutomore;(b) Niksic-Titogradline: repairand installdrainage systems, landslidesand steel nets at Povijeand Bare Sumanovica,repair damaged tunnelsat Ostrog and Bare Sumanovica.
Group IV: Geologicaland GeomechanicalResearch - examinationof underground water flows at Sosina tunnel and carrying out of investigations for renewalof demolishedstructures.
2.10 The estimatedcost of rehabilitationincluding contingencies was Din 978.0 million (US$52.3million) excluding duties and taxes. Estimated foreigncost componentwas US$14.7million or about 282 of total costs. Table 2 shows detailedproject costs. Map IBRD 14638 shows the lines affected. The cost estimatesincluded a provisionfor price escalationon the basis of 12% annuallyfor local costs and 7% for foreigncosts and a - 6 -
physicalcontingency of 15%. The foreignexchange component of the works includedin the projectwas based on likelihoodthat all but one of the major contracts(electrical installations) would be executedby local contractors.
2.11 A summaryof the cost estimatesat appraisalis given in the followingtable.
Bank Local _Foreig Total Participation US$ millionEquivalent
I. RehabilitationWorks AllocatedUnder the Loan 6.0 2.8 8.8 2.4
II. Expansionof Marshalling Yards at Titogradand Bar 3.7 2.0 5.7 1.5
III. Other RehabilitationWorks: - Belgrade-BarLine 15.5 5.9 21.4 5.7 - Niksic-TitogradLine 1.5 0.6 2.1 0.6
IV. GeologicalResearch 0.8 0.2 1.0 0.2
Sub-Total 27.5 11.5 39.0 10.4
PhysicalContingencies 4.1 1 8 5.9 1.6
Price Contingencies 6.0 1.4 7.4 2.0
TOTAL 37.6 14.7 52.3 14.0
III. PROJECTIMPLEMENTATION AND COSTS
Start-Up
3.01 The renewaland constructionof facilitiesdamaged by the earthquakecommenced immediately, with much success. However,difficulties arose with establishingthe geologicalconditions in the vicinityof the Sozina tunneldelaying the startingof work until 1982.
ImplementationSchedule
3.02 General. The loan becameeffective April 29, 1980. The implementationschedule provided for completionof rehabilitationworks in Groups I and II in 1979 and 1980, as well as a part of works from Groups III and IV (Table1). Except for preparationof designsfor reconstruction of Sozina railwaytunnel where geologicalresearch was to be made first the works in Group I were actuallycompleted on schedule. Concerningthe expansionof marshallingyards capacity(Group II) more rehabilitationwork was carriedout in Bar stationand less in Titogradstation. From Group III items,priority was given to constructingpart of the depot and workshopat Bar and rebuildingthe 36 apartmentsat Sutomoreand 70 at Bar for employees,however, meeting the Yugoslavlaw on buildingin the earthquakearea sloweddown preparationfor designswhich was completedin 1981, a year behindschedule. All works were completedby July 1984, except for works in Sozinatunnel which was completedin September1984 (Table1).
3.03 The major reasonsfor delaysin implementationwere the need for major geologicalinvestigations, need for detaileddesigns and lengthy biddingprocedures for Sozina tunnel,Povija landslide,galleries, handling space in Titogradyard and the shortagesof suppliesand materials.
3.04 Revisionsand Financin4g.The Bank agreed severaltimes to alter percentageof disbursementat the requestof the Borrower. On March 12, 1981 the disbursementpercentage was changedfrom 27% to 100% financingof foreignexpenditures and 27% of local expenditures.On July 23, 1981,a furtherchange was made on disbursementpercentage to finance100% of toreignexpenditures and 51% of localexpenditures. The reasonsfor the change in disbursementwere: (i) to enable the RTO to use more of its own fundsfor localexpenditures while the Bank financedimported equipment; and (ii) the devaluationof the Dinar againstthe US dollarwhich resulted in underdisbursementof loan proceeds.
3.05 A requestwas made to the Bank by CYR by telexesdated January21, and February1, 1983 to reallocatethe loan proceedsto permit the use of surplusloan funds for the purchaseof urgentlyneeded spare parts for tractionand rollingstock, trackmaintenance machines and signallingand telecommunicationequipment. At the time of the request,about 701 of RTO Titograd'slocomotive fleet, as well as other equipmentwas immobilizeddue to lack of spare parts which resultedfrom scarcityof foreignexchange. The Bank agreedto reallocateUS$2.8 million for spare parts by lettersof February16 and October12, 1983,with financingof 1001 of foreign expenditures.Since the equipmentto be purchasedwas standardized, procurementwas made directlyfrom the originalmanufacturer and on terms and conditionssatisfactory to the Bank.
3.06 After preparingnew cost estimatesin 1983,CYR requestedthe Bank by letterof August 10, 1983 to increasethe volumeof rehabilitationworks by Dinar 110 million(about US$1.2 million) and to increasefunds for spare parts by US$200,000. The additionalvolume of work would cover parts of earthquakedamage which was initiallyexcluded from the projectdue to financialconstraints of the RTO. It would also help prevent underdisbursementof loan funds resultingfrom the furtherrapid deteriorationof the Dinar exchangerate againstthe US Dollar. By telex of September2, 1983, the Bank agreedto the requestconcerning the rehabilitationworks providedthe additionalworks could be completed before June 30, 1984 ClosingDate. This increasedcost estimatesfrom Dinar 978 millionto Dinar 1,348 million. A furtherrequest to reallocate - 8 - an additionalUS$1.5 million to increasefunds for spare parts was made by RTO Titogradon December29, 1983. The additionalfunds would be used to purchasefrom abroadmore spare parts for electricand diesellocomotives and for signallingand telecommunicationsin order to completea rehabilitationprogram for all of the RTO's electriclocomotives and to increasethe availabilityof diesel locomotives.The Bank, realizingthe RTO would have severedifficulties in findingfunds, especially foreign exchange,agreed by telex of January26, 1984 to reallocatefunds for spare parts, increasingfunds availableunder Category4 to US$4.5million.
3.07 Time schedule. At appraisal,the ClosingDate was estimatedat June 30, 1983. However,progress with the projectwas slowerthan expected mainly due to: (i) time requiredto carry out extensivegeological investigationsfor the tunnels;and (ii) slow rehabilitationprogress on locomotives- the item agreed for Bank financingin February1983 (para.3.C5). The main cause of the delay was the extensivegeological works requiredto completedesigns for tunnelrehabilitation and also for works on slope protection. A drainagetunnel was built 15 meters from the Sozina tunneland duringexcavation it was discoveredthat the geological structurewas differentfrom that of the main tunnel. Work was also interruptedby floodsduring winter months. The possibilitythat works might requirean extensionof the ClosingDate was recognizedduring supervisionmissions in 1981 and 1982 when the Borrowerwas urged to take all steps possibleto preventfurther delays. A new categoryfor spare parts for tractionand rollingstock, track maintenancemachines and sign'Liingand telecommunicationwas added later duringproject implementation(para. 3.05). The foreignspare parts used in the rehabilitationof locomotiveswere installedby a local firm whose capabilitiesslowed down rehabilitationprogress.
3.08 On March 15, 1983 CYR requestedthe Bank for an extensionof the ClosingDate to allow for completionof the tunnelrehabilitation works. In order that loan funds could be used for outstandingcontracts, the Bank agreed to postponethe ClosingDate for one year to June 30, 1984. At that time, rehabilitationworks were not expectedto be completeduntil late 1983 and the loan proceedswere anticipatedto continueuntil first quarter of 1984. These works were actuallycompleted in September1984, however, the outstandingcontracts for locomotivesspare parts delayeddisbursements for the loan proceedsuntil April 1985.
3.09 Reporting. Initialreporting was behindschedule but this improvedthrough Bank supervisionactivity.
Procurement
3.10 General. Due to urgent natureof a large proportionof the rehabilitationworks and due to the fact these works were limitedin scope and widelyscattered, their aggregationinto packagessuitable for conventionalcontract bidding under InternationalCompetitive Bidding (ICB) would have been impracticaland would have imposedunacceptable delays on the rehabilitationprogram. Local CompetitiveBidding (LCB) procedures were applied,except where appropriate,existing contracts employed under - 9 -
ICB proceduresin connectionwith the ongoingBank financedproject (Loan 1534-YU)were used. All contractorsprequalified for the original constructionof Belgrade-Barline were invitedto bid. In addition,the works were undertakenon the basis of fixed pricesper unit agreed between the Borrowerand the contractors. Only from 1983 onwards,did new contract includea price escalationclause.
3.11 Civil Works. There was no signifinantforeign interest in civil engineeringcontracts for constructionof the line and renewalof buildings. Many of the works were limitedin scope and widely scattered which renderedthem unattractiveto foreignbidders. The damagedelectrical installationswere standardizedand thereforenot suitablefor ICB. Procurementof these installationswas thereforeon negotiatedcontracts awardedto the highlyspecialized French firm which had installedthe originalsignalling devices. The rehabilitationworks at the Sozina tunnel were procuredunder LCB, because the Bank acceptedthe RTO Titograd'sand CYR's view that no experiencedforeign firm would be interestedin carrying out this type of rehabilitationwork.
3.12 Rails and Track Materials. Quantitiesof rails and other track materialswere relativelysmall, so it was reasonableto allow the railways to acquiresteel materialsby extensionof contractsawarded thL ugh ICB under the Fifth RailwayProject (Loan 1534-YU). Sleepersand ballastwere also procuredby extensionof existingcontracts. 1/
3.13 Rollingstock, SS & TT equipmentand track maintenancemachines. At the requestof the RTO throughCYR, US$4.5million was made available for procurementof spare parts for rollingstock, signalling and telecommunicationequipment and track and maintenancemachines (para.3.06). Spare parts to repair 18 electriclocomotives, signalling and telecommunicationequipment and surve!inginstruments were purchased from the loan proceedsand procureddirectly from the manufacturers.
ProiectCosts
3.14 Projectcost estimatesat appraisaland the final actual costs are summarizedbelow and given in detail in Table 2.
1/ Total value estimatedat less than US$3.0million equivalent. - 10 -
Actualand AppraisalCost Estimates (Us$ million)
Actual Cost as S of AppraisalEstimate Actual Cost Original Local Foreign Total Local Foreign Total Estimate1/
I. RehabilitationWorks 6.01 2.83 8.84 2.65 1.26 3.91 44
II. Expansionof Marshal- ling Yards of Titogradand Bar 3.74 2.01 5.75 6.88 3.71 10.59 184
III. Other Rehabilitation Works: - Belgrade-BarLine 15.47 5.95 21.42 15.41 5.99 21.40 100 - Niksic-Titograd Line 1.43 0.61 2.04 3.10 1.27 4.37 213
IV. GeologicalResearch 0.80 0.20 1.00 0.45 0.12 0.57 57 Sub-Total 27.45 11.60 39.05 28.49 12.35 40.84 105
PhysicalContingencies 4.12 1.74 5.86 Price Contingencies 5.99 1.40 7.39
Total 37.56 14.74 52.30 28.49 12.35 40.84 78
V. Spare Parts - - - - 4.50 4.50 -
Grand Total 37.56 14.74 52.30 28.49 16.85 45.34 87
1/ In US$ terms.
3.15 The value of the Dinar relativeto the US Dollar changedover the projectperiod from YD 18.7 in March 1979 to YD 143.2 in June 1984. The variationsin the Dinar/USDollar exchangerates resultedin projectcost being 13.3% less than estimatedexpressed in US Dollar. The cost in Dinars increasedrelative to the appraisalestimate from 978 millionto 1,348 million (1979 prices),with a cost overrunof 38%, mainly due to increased cost of constructingancillary facilities necessary in marshallingyards at Titogradand Bar and in rehabilitationworks at the SozinaTunnel. These costs for the tunnelhad been underestimatedat appraisaland increased after geologicaland geomechanicalinvestigation was completed. Inflation was anothercontributing factor, because works at the tunnelstarted two years later than originallyplanned (paras.3.02, 3.03 and 3.07). - 11 -
3.16 The Bank loan was for US$14.0million of which US$13.96million was disbursedand US$38,572.90was cancelled. The RepublicFund for Reconstructionprovided direct financialassistance for rehabilitation amountingto YD 702.3million (US$37.6willion equivalent).
3.17 Disbursements.Planned and actualdisbursements by year are shown below:
Loan Disbursements (US$ million)
FY Planned Actual
1980 5.0 0 1981 9.0 2.3 1982 12.5 4.2 1983 14.0 6.4 1984 - 11.5 1985 13.9
3.18 During the courseof project implementationand at the requestof the Borrower,the Bank agreed to increasethe disbursementpercentage from 27S to 51%. The loan was mainly disbursedon the basis of 1001 on foreign expendituresand spare parts and up to 51% on all civil works and domestic goods (para.3.04). Due to delays in preparingwithdrawal documents and the Yugoslavlaws on buildingin the earthquakeareas which sloweddown implementationschedule, disbursement lagged well behind the initial forecast(para. 3.02). Due to financingof the spare parts (para.3.05 and 3.06) the last disbursementwas made on April 16, 1985.
IV. INSTITUTIONALPERFORMANCE AND DEVELOPMENT
4.01 The primary objective of the project was to restore both freight and passenger traffic, by rehabilitating the damaged railway facilities and extendingmarshalling yards. This objectivehas been achieved.
4.02 The constructionof the Bank-financedBelgrade-Bar line has been an importantfactor in openingup less-developedregion and integratingit more closelywith major Yugoslavand internationalmarket centers. The developmentand rehabilitationof the railwayfacilities has thus stimulatednational and internationaltrade and economicdevelopment. The Belgrade-Barline carriespassengers to the growinginternational tourist resortsalong the coast and is a major nationaland internationallink into the Port of Bar. The damageon the southernsection of the line (about 52 km) interruptedthe flow of traffic. However,after initialemergency repairson the line trafficincreased substantially for which no forecast was made at appraisal. Actual trafficfigures for 1979-84as are follows: - 12 -
1979 1980 1981 1982 1983 1984
FreightNTK (million) 304 304 340 342 400 523 Passenger-km(million) 175 201 197 223 253 257 TrafficUnits (million) 479 505 537 565 653 780
4.03 RTO Titogradcould not carry out the six years major overhaulof the locomotivesfor lack of fundswhich decreasedthe availabilityof locomotives.After completionof locomotiverehabilitation from the loan proceeds,availability of locomotivesimproved, and enabledto achievea higher trafficvolume for both passengerand freight. This trend is expectedto continueduring the period 1985-1990. The availabilityof locomotivesand the restorationof trafficvolume has, in a wider sense, assistedin the institutionalperformance of RTO Titograd.
V. ECONOMICEVALUATION
5.01 The projectcontributed substantially to the resumptionof economicactivity in the Republicof Montenegroby restoringoperations on the Belgrade-Barand Titograd-Niksicrailway lines. US$30.2million was spent on rehabilitationworks under the projectwhich permittedthe Belgrade-Barline, constructedwith Bank financing(Loan 531-YU) at a 1979 cost of US$700 million,to resumeoperations. US$10.6million was spent on expandingthe Titogradand Bar marshallingyards to cope with earthquake relatedtraffic and to accommodatefuture traffic(traffic increased 8.71 p.a. from 1979 to 1984). US$4.5 millionwas also spent on spare parts under the project,which resultedin an increasein locomotiveavailability.
5.02 The economicreturn for the projectwas not quantifiedbecause the projectwas one of the severalinterrelated investments which were all necessaryto recoverfrom the earthquake,including the Bank-financedroad and port rehabilitationprojects. However,there is no doubt that the regionaleconomy would have sufferedseverely if railwayservices had not been restoredexpeditiously. The projectis thereforeconsidered to be stronglyjustified.
VI. CONCLUSIONS
6.01 The projecthas been successfullyimplemented, having achieved its objectiveof restoringboth freightand passengertraffic, and was strongly justified. The delay in completionof the originalproject scope was largelydue to the need for major geologicalinvestigations for Sozina tunnel. Only 34% of the loan was disbursedby the initialClosing Date (June 30, 1983). - 13 -
6.02 RTO Titogradorganized and providedoverall planning and coordinationof the rehabilitationeffort. Its maintenanceBOALs 1/ for track,signalling and telecommunicationsstarted immediatelyafter the earthquaketo clear the damagedline and repair the electricalfacilities. The track renewalBOAL from Novi Sad, presentin Titogradduring the earthquakefor track overhaul,worked as part of the Fifth RailwayProject (Loan 1534-YU)9and commissionsof expertsfrom all RTOs and from Railway Institutein Belgradecarried out systematicinspection to locateand define types of damagessustained and repairwork needed. These efforts and technicalassistance from RTO Belgradeand RTO Zagreb in the repairof two damagedbridges displayed teamwork between Republics, contractors and maintenanceenterprises.
6.03 Most emergencyworks were limitedin scope and largelyscattered to be aggregatedinto sizes suitablefor conventionalcontract bidding. The Bank was flexiblein agreeingto emergencyrepair and rehabilitation works being carriedout on the basis of contractswith unit rates, establishedin advanceand agreedby all contractors(para. 3.10). Bidding throughICB would have been impracticalunder these conditionsand would have causedunnecessary delays on the entire rehabilitationprogram. This approachproved to be very expedientdespite some delaysmentioned in para. 6.01.
6.04 The role of the InvestmentBank of Titograd(IBT) as fiscalagent for the Bank loan,with the Communityof YugoslavRailways (CYR) providing assistance in procurement and reporting, proved satisfactory. Overall, this was a successful project despite the disastrous consequence that promptedthe loan.
6.05 The conceptthat the Bank would considerretroactive financing providedsupport to the RTO Titogradwhich wished to undertakeemergency works to reopen the line as soon as possible. A policyof providinga substantialamount of retroactivefinancing for similardisaster relief loans would seem an efficaciousway for the Bank to overcomeits built-in inabilityto respondquickly to naturaldisasters.
1/ Basic Organizationsof AssociatedLabor.
(6729D) - 14 -
Table 1
PROJECTCOMPLETION REPORT YUGOSLAVIA:HONTENEGRO EARTHQUAKE REHABILtTATION (RAILWAYS) PROJECT (LOAN1769-YU) Actualand ExpectedPhysical Completion 1/
Date of units of completionof major works or components Actual Expected
Group I: Rehabilitation
1. Super and Substructuresincluding ballast 1981 1979 2. Track Renewal 1981 1979 3. Liningand Levellingof Track Points 1981 1979 4. Bridges 1981 1979 S. ElectricalEquipment, SS & TT Equipment 1981 1979 6. Buildings 1981 1979 7. TunnelRepairs 1981 1979 8. Tractionand RollingStock 1981 1979 9. Preparationof Designfor ConstructionWorks 1984 1979 10. Preparationof Designsand commencementof works on MarshallingYards 1981 1979 Group tt: Increasesin Yard Capacity
1. TitogradMarshalling Yard 1983 1980 2. Bar MarshallingYard 1983 1980 Group III: Other Rehabilitation
Lutovo-Titograd-BarLine 1. Embarkments 1983 1980 2. Cuttings- SlopesStabilization 1984 1980 3. Drainage 1983 1980 4. Bridges 1983 1980 S. Tunnels 1984 1980 6. Buildings 1980 1980 Niksic-TitogradLine 1. Drainage 1983 1980 2. Landslides 1984 1980 3. Steel Nets 1983 1980 4. Tunnels 1983 1980 Group IV: Geologicaland Soil MechanicsResearch 1983 1982
Group V: Spare Parts 2/ 1984 -
I/ No Units Available 2/ Additionalitem (paras.3.03 and 3.04) PROJECT CoNPLETI0ISREPORT
YUGOSLAVIA: MONTENEGRO(ARtHOLUAK
REHAPNLITATIONtRAILWAYSI PROJECT (LOAN 1769-YU) Actual and Orialnal Prolect Costs
AetualCost Estimated Actual as X of
(mill. Otn) (mill.US$) (mill. (mill.uin)Us$) Estimate Local roreign Total Local Foreign total 1/ Local Foreign Total Local Foreign Total 1/ (S) Group I: Rehabilitation
1. Super and Substructuresincluding ballast 29.70 5.30 35.00 1.9 0.28 1.87 24.10 11.40 35.50 0.73 0.3S 1.08 58 2. Track Renewal 13.90 9.20 23.10 0.74 0.49 1.24 15.70 7.40 23.10 0.48 0.22 0.70 56 3. Lining and Levelling of Track Points 1.70 0.70 2.40 0.09 0.04 0.13 1.60 0.80 2.40 0.05 0.02 0.07 54 4. Bridges 0.60 0.20 0.80 0.03 0.01 0.04 0.50 0.30 0.80 0.02 0.01 0.02 so S. ElectricalEquipment. SS & IT Equipment S.80 S.90 11.70 0.31 0.32 0.63 4.20 2.00 6.20 0.13 0.06 0.19 30 6. Buildings 12.30 3.10 15.40 0.66 0.17 0.82 8.80 4.20 13.00 0.27 0.13 0.39 48 7. Tunnel Repairs S.90 3.20 9.10 0.32 0.17 0.49 6.20 2.90 9.10 0.19 0.09 0.28 57 8. Traction and Rolling Stock 12.20 18.30 30.50 0.65 0.98 1.63 21.10 9.90 31.00 0.64 0.30 0.94 so 9. Preparationof Design for ConstructionWorks 7.20 0.00 7.20 0.39 0.00 0.39 5.40 2.60 8.00 0.16 0.08 0.24 62 10. Preparationof Designs and comnencementof works on Marshalling Yards 23.00 7.00 30.00 1.23 0.37 1.60 0.00 0.00 0.00 0.00 0.00 0.00 _ _ … ______- _- _- _-- _ _. . _ _- Sub-total 112.30 S2.90 165.20 6.01 2.83 8.83 87.60 41.50 129.10 2.65 1.26 3.91 44 Group 11: Increases in Yard Capacity
1. Titograd Marshalling Yard 16.20 8.70 24.90 0.47 0.47 1.33 77.70 41.80 119.S0 2.3S 1.27 3.62 272 2. Bar MarshallingYard 53.70 28.90 82.60 2.5d 1.SS 4.42 149.50 80.S0 230.00 4.53 2.44 6.97 158 Sub-Total 69.90 37.60 107.50 3.74 2.01 5.75 227.20 122.30 349.50 6.88 3.71 10.S9 184 , Group III: Other Rehabilitation
Lutovo-Titograd-Bar Line 1. 11barkmatnts 31.30 7.80 39.10 1.67 0.42 2.09 57.70 22.40 88.10 t1.7 D.68 2.43 116 2. Cuttings - Slopes Stabilization 83.70 45.00 128.70 4.48 2.41 6.88 214.50 83.40 297.90 6.50 2.53 9.03 131 3. Drainage 12.10 3.10 15.20 0.65 0.17 0.81 IS.76 6.10 21.00 0.48 0.18 0.66 01 4. Brtdges 7.80 3.30 11.10 0.42 0.18 0.59 IS.OO S.80 20.80 0.45 0.18 0.63 107 S. Tunnels 46.20 24.90 71.10 2.47 1.33 3.80 87.10 33.90 121.00 2.64 1.03 3.67 96 6. Buildings 108.10 27.10 135.20 S.78 1.45 7.23 118.6" 46.10 164.70 3.59 1.40 4.99 69 … … _. ----- Sub-Total 289.20 111.20 400.44 15.47 5.9S 21.41 508.60 197.70 706.30 IS.41 S.99 21.40 100 Niksic-TitogradLitne 1. Drainage 12.00 3.00 S.00 0.64 0.16 0.80 41.70 17.00 58.70 1.26 0.52 1.78 222 2. Landslides 9.80 2.50 12.30 0.52 0.13 0.66 36.20 14.00 S1.00 1.10 0.45 I.SS 235 3. Steel Mets 3.50 5.20 8.70 0.19 0.28 0.47 21.30 8.70 30.00 0.6S 0.26 0.91 194 4. Tunels 1.SO 0.80 2.30 0.08 0.04 0.12 3.20 1.30 4.S4 0.10 0.04 0.14 117 Sub-Total 26.80 11.SO 38.30 1.43 0.61 2.05 102.40 41.80 144.20 3.10 1.27 4.37 213 Group IV: Geological and Sotl Mechanics Research 1S.00 3.80 18.80 0.80 0.20 1.01 1S.00 3.80 18.80 0.45 0.12 0.57 57
Group V: Spare Parts 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.50 4.50 total 8asel1ne Costs 513.20 217.00 730.20 27.44 11.60 39.05 940.80 407.10 1347.90 28.51 16.84 45.35 116 Physical Contingencies 76.98 32.55 109.53 4.12 1.74 5.86 0.00 0.00 0.00 0.00 0.00 0.00 0 Price Contingenctes 112.10 26.20 138.30 5.99 1.40 7.40 0.00 0.00 0.00 0.00 0.00 0.00 0 _.. .. …………….…_….…_…______-_-_ _-_ _-_-_-_-. .. Total Program Costs 702.28 27S.75 978.03 37.56 14.75 52.30 940.80 407.10 1347.90 28.S1 16.84 45.35 8B ssnaan=n..... a...... n...... C ...... n wn .~ c=
I/ Using an exchange rate of USS1 = 33.00 for actual costs and USS1 z 18.70 for original estimAte of costs - 16 -
Table 3
PROJECTCOPLETION REPORT
YUGOSLAVIA: NONTENEGROEARTHQUAKE RE4ABILITATION (tRAILWAYS)PROJECT
(LOAU 1769-YU)
FinancingPlan
(in US$ Million)
Local Currency Foreign Currency
original Original Sources of Funds Actual Estimate Actual Estimate
Republic Fund for Reconstruction 28.S 37.6 0.00 0.70 ISRO 0.0 0.0 16.9 14.0
28.S 37.6 16.9 14.7 =333 333 3==333 17 -
DORROUWRC Pap I of 2
ZCZC ST2382 RCA0139 OEDD3 EMlDP TCP1 MET RCA0139 248423 WORLDBANK 11062 SIV YU
BELGRADE JULY 30, 1986 TLX 2591
INTBAFRAD WASHINGTONDC "R. BRIAN SHIELD, CHIEF, ENERGY, INFRASTRUCTURE AND URBAN DEVELOPMENT OPERATIONS EVALUATION DEPARTMENT, EMENA. RES PROJECT COMPLET ON R\POBT ON YUGOCLAVIA - MONTENEGRO EARTHOUAKE REHASILITTION PROJECT (RAILWAYC! (LOAN 1769-YU) AND YOUR LETTER OFJULY 8, 1986. EYE AM PLEASED TO ADVISE YOU THAT WE HAVE NO OMMENTS ON THE MENTIONED PROJECTCOMPLETION REPORT. REOARDSv VLADIMIR RADOVICP D\PARTMENT HEAD, FEDERAL SECRETARIAT FOR FINANCE
R.LBRIAN SHIELDS ...
249423 WORLDBANK 11062 SIV YU
m07301506
U07301141 ALT RTD FROMSOE3M NNNN Jl301i6 - 1.8-
a ge 2 of 2
-r WURLDBANKMS SYSTEM
WORLDBANKMS SYSTEM
ZCZC MTRP1536 JWS0814 EMIDD EMPTR REF : TCP EF
JWS0814 J6W085 IN 12/14144 OUT 12/14:46 61118 YU IEANKA RIT 14.016 12.08 1986
TO INTBAFRAD WASINGTON
WE AGREE WITH YOUR COMPLETION REPORT Oft THE EARHOUAKE REHABILITATION PROJECT CONCERNING THE RAILAY IN MONTENEGRO-LOAN 1769-YU
WE THANK YOU FOR YOUR COOPERATION AND UNDERSTANDING YOU HADE EXTENDED DURING THE REALIZATION OF THIS PROJECT
YOURS VERY TRU&.Y
PRESIDENT OF THE MANAGING BOARC OF ZTO TITOGRAD MR.DPAGUTIN VUCINIC A GRADUATE EXONOMIST
.^11618 YUJ J2ANKAn OCltBEIR1579 YUGOSLAVIA Montenegro
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