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World Bank Document Report No. 3922-PO Republic of Portugal COFY Transport Sector Memorandum Public Disclosure Authorized August 15, 1983 Projects Department Europe, Middle East and North Africa Regional Office FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their officia-l duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS 1974 1 US Dollar 25 Escudos 1 Escudo 0.039 US Dollar 1975 1 US Dollar = 26 Escudos 1 Escudo = 0.039 US Dollar 1976 1 US Dollar 30 Escudos 1 Escudo 0.033 US Dollar 1977 1 US Dollar = 38 Escudos 1 Escudo = 0.026 US Dollar 1978 1 US Dollar 44 Escudos 1 Escudo = 0.023 US Dollar 1979 1 US Dollar = 49 Escudos 1 Escudo = 0.020 US Dollar 1980 1 US Dollar = 50 Escudos 1 Escudo = 0.020 US Dollar 1981 (mid-year) 1 US Dollar = 65 Escudos 1 Escudo 0.015 US Dollar 1982 (mid-year) 1 US Dollar = 78 Escudos 1 Escudo = 0.014 US Dollar 1983 (March) 1 US Dollar 96 Escudos 1 Escudo = 0.010 US Dollar ACRONYMS AND ABBREVIATIONS ANA Aeroportos e Navegagao Aeria (Airports Authority) ASEF Acordo de Saneamento Economico-Financeiro (Economic and Financial Restructuring Agreement) CNN Companhia Nacional de Navigagao CP Caminhos de Ferro Portugueses (Portuguese Railways) CTM Companhia Portuguesa de Transportes Maritimos DGTT Direccao Geral de Transportes Terrestres (Land Transport Dept.) EEC European Economic Community GDP Gross Domestic Product GEP Gabinete de Estudos e Planeamento (Studies and Planning Unit) GPP Gabinete de Planeamento e Programagao (Planning & Programming Unit) INE Instituto Nacional de Estatistica JAE Junta Autonoma de Estradas (Autonomous Road Authority) MHPW Ministry of Housing and Public Works (up till Sept. 1981) MHPWT Ministry of Housing, Public Works and Transport (since Sept 1981) MTC Ministry of Transport and Communications (up till Sept. 1981) NTP National Transport Plan RN Rodoviaria Nacional (National Road Services) TAP Transportes Air Portugal, formerly Transportes Aereos Portugueses FISCAL YEAR January - December FOR OFFICIAL USE ONLY PORTUGAL TRANSPORT SECTOR MEMORANDUM Synopsis This memorandum reviews developments in the transport sector in Portugal, as background for the Bank's dialogue with the Government on the sector. The major issues it finds recurring in each mode of transport are; (a) over-age equipment ar,d low productivity; (b) large deficits among almost all the public sector tra,nsport agencies; and (c) investment programs that have allocated too much to large-scale projects with slow and uncertain returns. The report endorses the policy initiatives taken by the Government in 1982 and 1983 to put road and rail transport on an equal competitive footing and to rehabilitate the railway financially. To help in the implementation of this policy change, the report recommends that the railway, as well as other agencies required to provide uneconomic services, should be compensated by the interest groups sponsoring such obligations. Finally, it recommends that investments should be concentrated on fast-yielding eliminatiort of congestion and the modernization of existing facilities. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its conlients may not otherwise be disclosed without World Bank authorization. (i) REPUBLIC OF PORTUGAL TRANSPORT SECTOR MEMORANDUM Table of Contents Page No. SUMMARY ........... ....................................... 1 I. TRANSPORT SYSTEM OVERVIEW ............................ 6 II. ROADS .................................................... 7 A. The Importance of Road Transportation .... ............ 7 B. Road Transport Demand ................................ 8 Road Safety ....................................... 10 C. Road Transport Services .............................. 11 Buses ............................................. 11 Trucking ...... 12 D. Road Infrastructure .................................. 13 Diagnosis ......................................... 13 Organization ...................................... 14 Expenditure on Roads ........................ 15 New Construction .................................. 15 Maintenance and Rehabilitation .................... 16 Road Revenues ..................................... 16 E. Vehicle Manufacturing Industry ....................... 17 III. RAILWAYS ................................................. 18 Railway Traffic ...................................... 18 Public Service Obligations and their Financial Consequences3 ......... .................. ......... 19 Operating Efficiency ................................. 20 Financial Rehabilitation under 1983 Decree-Law ....... 21 Recommended Investment Strategy ...................... 22 IV. PORTS AND SHIPPIN( ....................................... 23 Ports ................................................. 23 Port Issues .......... 25 Shipping .......... 26 (Continued) This report has been written by Mr. Graham Smith (transport economist), drawing an earlier work by Messrs. Slobodan Mitric and Roy Roberts (also transport economists). The information was compiled during project prepara- tion and supervision work in 1980, 1981 and 1982. Table of Contents (Contd.) Page No. V. CIVIL AVIATION ........................................... 27 Airports ............................................. 27 Air Services ......................................... 28 VI. LISBON REGION TRANSPORT .................................. 29 VII. GOVERNMENT INVOLVEMENT IN THE TRANSPORT SECTOR ... ........ 30 Transport Policy ...................................... 30 Transport Planning ................................... 31 VIII. SECTOR-WIDE ISSUES ........................... 32 Reducing Public-Sector Transport Deficits .... ........ 32 Raising the Operational Efficiency of Transport Services .......................................... 34 Too Many Large-Scale Prestige Projects .... ........... 34 Underinvestment in Replacement and Renewal of Existing Assets .................................... 35 Energy Conservation .................................. 36 IX. RECOMMENDED GOVERNMENT STRATEGY IN TRANSPORTATION ........ 37 ANNEXES 1 Action Plan Adopted by MOT to follow up on National Transport Plan Recommendations ......................... 39 2 List of Recent Consultants' Reports on Portuguese Transport Sector ....................................... 41 TABLES 1 Breakdown of the Mainland Transport Market by Mode (1979) 42 2 Aggregate Measures of Road Transport ..................... 43 3 New Registrations of Road Vehicles ....................... 44 4 Annual Mileage by Trucks ................................. 45 5 Road Traffic Accidents in Portugal ....................... 46 6 Road User Charges and Expenditures for Highways in Portugal 1972-1978 ..................................... 47 7 Breakdown of Capital Expenditures on Highways, 1981 ...... 48 (Continued) Table of Contents (Contd.) TABLES Page No. 8 Structure of Fuel Prices, Effective December 1980 .... .... 49 9 Passenger Traffic on Portuguese Railroads (1973-1979) .... 50 10 Freight Traffic oni Portuguese Railroads (1973-1979) ...... 51 11 Deficits of Portuguese Railways 1973-80 .... .............. 52 12 CP Tentative Investment Program 1979-1984 .... ............ 53 13 Port Traffic .54 14 Container Traffic Through Ports .57 15 Port Finances ............................................. 58 16 Portuguese Air Traffic .59 17 Deficits of Public Transport Enterprises in Portugal (1973-1979) .60 18 Operating SubsidiE!s and Investment Grants to Portuguese Transport Enterprises, 1973-1978 .61 GRAPH 1 Comparison of Official Motor Vehicle Fuel Pump Prices and Border Prices, 1973-82 MAP S IBRD 12035R Portugal: Highway System IBRD 14625 Portugal: Lisbon Region Transport System REPUBLIC OF PORTUGAL TRANSPORT SECTOR MEMORANDUM SUMMARY (i) This Memorandum is intended to provide the basis for discussions between the Bank and the Portuguese Government on issues in the transport sector of the Portuguese economy. The Memorandum concentrates on the three major modes: roads, railways, and ports and shipping. Most of the information used was either collected directly by Bank transport missions to Portugal or was drawn from the reports of four consultant studies carried out between 1978 and 1981 under the Bank's First Highway Project: National Transport Planning, Railways Rehabilitation, Highway Master Plan, and Highways Administration and Maintenance. The most recent data quoted are therefore generally for [979. While specific issues have evolved since then - notably as regards the railway and energy, where the analysis has been updated to 1982 - the general conclusions remain valid. (ii) Portugal's transport system is relatively well developed, but much of the infrastructure and equipment is overdue for renewal or modernization. The key issues for the future are: (a) how to modernize the capital stock while avoiding massive and slow-yielding investments; and (b) how to correct the distortions created by the underpricing and oversupply of public trans- port services that are draining public finances. Roads (iii) Roads are the dominant mode of transport for both passengers and freight. Expenditures orn road transport by users reached an estimated 130 billion escudos (US$2.6 billion) in 1979, while only about one twentieth of that was spent on road construction and maintenance (para.
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