Documentof The World Bank Public Disclosure Authorized
ReportNo. 13795-CHA
STAFF APPRAISAL REPORT
Public Disclosure Authorized CHINA
SEVENTH RAILWAY PROJECT
APRIL 14, 1995 Public Disclosure Authorized
Transport Operations Division
Public Disclosure Authorized China and Mongolia Department East Asia and Pacific Regional Office CURRENCY EQUIVALENTS (as of October 1, 1994)
Currency Name: Renminbi Currency Unit: Yuan (Y) = 100 Fen $1.00 = Y 8.70 $0.115 = Y 1.00
FISCAL YEAR January I - December 31
WEIGHTS AND MEASURES
ctkm = converted tkm or traffic unit (I pkm 1 tkm) ha = hectare (= 2.47 acres) km = kilometer[= 0.621 mile (mi)] m = meter (= 3.281 feet) M2 = square meter (= 10.764 square feet) Mp = million passengers Mpkm = million passenger-klometers Mppy = million passengers per year Mt = million tons Mtkm = million ton-kilometers Mtpy = million tons per year mu = 0.1647 acre = 0.0667 hectare (ha) = 667 square meters pkm = passenger-kilometer (= 0.621 passenger-mile) tkm = ton-kilometer (= 0.621 ton-mile)
ACRONYMWISAND ABBREVIATIONS
CETE = Cost-Effective Technology Evaluation CIF = Cost, Insurance, and Freight COSCO = China Ocean Shipping Group Company CPI = Consumer Price Index CRC = China Railway Container Company CTS = Coal Transport Study DECO = Diversified Economy Company EIA = Environmental Impact Assessment ERR = Economic Rate of Retum FCTIO = Foreign Capital and Technical Import Office FSA = Fuzhou Subadmirnistration GDP = Gross Domestic Product GNP = Gross National Product GRC = Guangzhou Railway Group Corporation ICB = Intemational Competitive Bidding IDC = Interest During Construction ISO = Intemational Standards Organization LCB = Local Competitive Bidding LIB = Limited International Bidding MIS = Management Information Systems MOC = Ministry of Communications MOF = Ministry of Finance MOR = Ministry of Railways MPT = Ministry of Post and Telecommunications NBF = Not Bank-financed NPV = Net Present Value PHRD = Policy and Human Resources Development (Fund) PID = Policy reform and Institutional Development PRS = Passenger Reservation System PSO = Public Service Obligations RCT = Rail-Based Container Transport RIS = Railway Investment Study RME = Railway Management and Economic Contract SAA = State Audit Administration SIPS = Strategic Issues in Ports and Shipping Study SIT = SinoRails Intermodal Transport Company SOE = State Owned Enterprise SPB = State Pricing Bureau SPC = State Planning Commission TA = Technical Assistance TEUs = 20-foot equivalent units TMIS = Transport Management Information System YEZTS = Yangtze Economic Zone Transport Study 7FYP = Seventh Five-Year Plan 8FYP = Eighth Five-Year Plan 9FYP = Ninth Five-Year Plan CHIlNA
SEVENTH RAILWAY PROJECT
LoAN AND PRoJEcr SUMMARY
Borrower: People's Republic of China
Beneficiary: Ministry of Railways (MOR)
Poverty: Not Applicable
Amount: $400 million equivalent
Terms: 20 years, including 5 years of grace, at the Bank's standardvariable rate
Commitment Fee: 0.75 percent on undisbursed loan balances, beginning 60 days after signing, less any waiver
FinancingPlan: See para. 3.37
Economic Rate of Return: 27 percent overall.
Map: IBRD 26327
CONTENTS
1 TransportBottlenecks and Reforms ...... 1
A. Introduction ...... 1 B. Traffic ...... 2 C. Past Transport Reforms ...... 2 D. Bank Group Participationand Future Transport Reforms ...... 3 E. Outline of Report ...... 5
2 The Railway System and Reform Opportunities. 6
A. The Railway System. 6 B. Rationale for Bank Involvement. 8 C. Reform Constraintsand 30-pointAction Statement. 9
This report is based on the findings of an appraisal missionthat visited China in October/ November 1994. Membersof the appraisal team includedMessrs./Mmes. T. Watanatada (Transport Economist,Task Manageruntil negotiations),H. Deboeck (FinancialAnalyst, Task Manager from negotiationsonwards), P. Anderson (Railway Specialist),J. Fraser (FinancialAnalyst, Consultant),M. Gill (ResettlementSpecialist, Consultant),N. Holcer (TelecommunicationsEngineer), R. Kopicki (Transport Industry Specialist), M. Kuby (Transport Specialist, Consultant), U. Marggraf (Railway Engineer), R. McAfee (InformationSystems Specialist, Consultant), W. Siemieniuk (EnvironmentalSpecialist, Consultant), A. Somani (Environmental Specialist), R. Spero (Transport Economist, Consultant), L. Thompson (Railway Advisor), W.H. Thompson (Container Transport Specialist, Consultant), S. Tsukada (Transport Specialist). Assistancewas also provided by Messrs./Mme. Juemin Chen, Huikang Xu and Yan Zong, Operation Officers in the Resident Mission in China. Mmes. M. Dearborn and T. Ortega provided the word processingsupport for the documents. Peer reviewersfor the project were Messrs./Mme. R. Bums (SA21N),R. Carruthers (LA2IE),J. Holt (EC3IV)and E. Vasur (EC2IN). The Division Chief is Mr. Richard Scurfieldand the DepartmentDirector is Mr. Nicholas C. Hope. - H1 -
3 The Project ...... 14
A. Objectives ...... 14 B. Lessons Learned ...... 14 C. Policy Reform and Institutional Development Initiatives ...... 15 D. Investments for Expansion, Modernization and Reform ...... 15 E. Studies for Modernization and Reform ...... 18 F. Cost Estimates ...... 20 G. Financing ...... 21 H. Implementation and Risks ...... 22 I. Procurement ...... 23 J. Disbursements ...... 25 K. Monitoring, Evaluation and Supervision ...... 25 L. Environmental Impacts and Resettlement ...... 26
4 Economic Evaluation and Risk Analysis of Project-Financed Investments 28
A. Introduction ...... 28 B. Main Benefits ...... 28 C. Expanding Corridor Capacity ...... 29 D. Modernizing Information Systems ...... 30 E. Upgrading Telecommunications Systems ...... 30 F. Commercializing Container Transport ...... 31 G. Expanding System Capacity ...... 31 H. Overall Evaluation and Risk Analysis ...... 32
5 Flnancial Viability of Railway Transport Operation ...... 34
A. Introduction ...... 34 B. Past Financial Performance ...... 34 C. Present Financial Position ...... 35 D. Future Financial Performance: Base Case ...... 36 E. Sensitivity Analysis ...... 37 F. Conclusions ...... 39
6 Agreements Reached and Recommendation ...... 41 - iii -
TABLES
General
1.1 Freight Traffic Intensitiesand Road and Railway Network Density in Selected Countries ...... 43 1.2 Freight Traffic by Mode ...... 44 1.3 Passenger Traffic by Mode ...... 45 1.4 Transport Investmentvs. Economic Output in China ...... 46 1.5 Investment in the Transport Sector ...... 47 1.6 Summary Statistics of Bank-financedTransport Projects ...... 48
2.1 Freight Traffic Carried by MOR ...... 50 2.2 MOR's Freight Tonnage Originated ...... 51 2.3 Average Distance of Freight Traffic Carried by MOR ...... 52 2.4 MOR's Passenger Traffic and AveragePassenger Travel Distance . 53 2.5 Selected OperationalStatistics of MOR, 1980-93 ...... 54 2.6 Railway Asset Utilization in SelectedCountries ...... 57
InvestmentCosts, ImplementationSchedule, and Disbursements
3.1 InvestmentCosts and Loan Summary ...... 58 3.2 Investment Costs of Corridor Capacity Expansion Component . . . 62 3.3 InvestmentCosts of InformationSystems Modernization Component 63 3.4 InvestmentCosts of TelecommunicationsUpgrading Component . 64 3.5 InvestmentCosts of ContainerTransport Commercialization Component .65 3.6 InvestmentCosts of Pilot EnvironmentalProtection Component . . 66 3.7 InvestmentCosts of System CapacityComponent ...... 67 3.8 Costs of Technical Assistance ...... 68 3.9 ImplementationSchedule ...... 69 3.10 CumulativeDisbursement Schedule .82
Economic Evaluation
4.1 ERR and NPV Calculationfor the Corridor Expansion Component 83 4.2 ERR and NPV Calculationfor the InformationSystems ModernizationComponent .84 4.3 ERR and NPV Calculationfor the Telecommunications Upgrading Component .85 4.4 ERR and NPV Calculationfor the ContainerTransport CommercializationComponent .86 4.5 ERR and NPV Calculationfor the SystemCapacity Expansion Component .87 - iv -
ANNEXES
1. Bank Group Participation in the Transport Sector ...... 89 2. Summary of Previous Railway Projects ...... 91 3. Summary of Completed, Ongoing and Proposed Programs of Cooperation between MOR and the World Bank ...... 94 4. Reforming China's Railway System: Progress to Date ...... 100 5. Indicators and Targets for Monitoring the Progress and Effectiveness of Implementation of Investment Components ...... 110 6. Action Plans for Policy Reform and Institutional Development Components 114 7. Completion Dates for Study Components ...... 120 8. Environmental Impact Assessment: Wuhan-Guangzhou Electrification and Upgrading ...... 121 9. Resettlement Plan: Wuhan-Guangzhou Electrification and Upgrading ... 123 10. Supervision Plan ...... 129 11. Documents Available in the Project File ...... 130
CEHARTS
C.1 General Organization Chart of the Ministry of Railways ...... 133 C.2 General Organization Chart of the Government of China ...... 134 C.3 Long-Distance Telephone Network ...... 135 C.4 Data Communications Packet Switching Network ...... 136 C.5 Route Map of China Railways Container Company (CRC) ...... 137
MAP
IBRD 26327 China Railway System
TABIEs IN TExT Chapter
3 Cost Summary ...... 21 3 Financing Plan ...... 22 3 Procurement Summary ...... 24 4 Net Present Value and Economic Rate of Return by Component ...... 29 4 Results of Sensitivity Analyses ...... 33
S Actual Revenues and Expenses, 1988-93 ...... 35 5 Forecast of Revenues and Expenses, 1994-2000: Base Case ...... 38 5 Sensitivity Analysis-Key Ratios, 1994-20W ...... 39
FIGURESIN TEX
1 Intemational Comparison of Railway and Road Networks ...... 1 - 1 -
1. TRANSPORT BOTTLENECKS AND REFORMS
A. INIRODUCTION
1.1 Since the mid-1980s, China's transport system-and especially the railway- has been unable to handle the country's spiralinggrowth of freight and passenger traffic (average annual growth rates of about 7 percent and 10 percent, respectively). Many key railway lines have developed bottleneckswhere traffic in at least one direction reaches 95 percent of the design capacity or more. These bottlenecks occurred on less than 10 percent of the network in the mid-1980s,but reached nearly 40 percent by the end of the decade. This, in turn, causes the railway to ration service extensively.
1.2 The situation developed because the economy grew rapidly after the Governmentadopted the open-doorpolicy in 1978 (averaging9.4 percent a year from 1980 to 1993). And, although capacity was also expanded-with the network more than doubling in the last three decades-it still did not keep pace with economic growth. In fact, the network is one of the sparestin the world, comparedwith the area and population it serves (see the figurebelow; Table 1.1). Thus, China has not been well-servedby either the rail or highway system and growth has been hampered (most severely in the hinterland). Accordingto World Bank figures, this led to at least a 1 percent loss of GNP annually.
INTERNATIONALCOMPARISON OF RAILWAYAND ROAD NETwoRKS
Ralliwy Networks Road Networks
* s h1w Le.slh h, bm 30000
T,.ak 5- .mgIl, cM _f
- - | T ,# ~~~~~~.M5.LPSkh KS w 2100 l ) Fasd l..ghh IEn mpe | am ~~~~~~~l7ll5cooLIl. KM P. IsoSOO /A| 0gPb bIm Ptl
ClJna Russia ISA India SsaSm Jall1n CRloa Russi USA Ilndi Braln Japan - 2 -
1.3 The railway system was unable to match economic growth for two reasons. First, the country underinvested in transport infrastructure-an annual average of 1.4 percent of GNP from 1980 to 1993, compared to 2 to 3 percent in Brazil and India (Tables 1.4 and 1.5). Second, authorities did not apply congestionpricing on routes with bottlenecksto moderatedemand and raise more revenues to expand capacity. To correct the capacity problem, China has embarked on a massive investmentprogram since 1992: it aims to build by the year 2000 some 16,000 route-kmof new railway lines to add to the existing 54,000 route-km, and some 5,000 route-km of new high-capacity, high-speed expresswaysto add to the roughly 1,500 route-km of expresswaysbuilt so far.
1.4 If China is to move to a market economy fully, another set of pressing issues also need to be resolved. These relate to regulations and the relationship between the railway system and the Government,the railway's managementand organization, and its technology, operations and services. The railway recognizes that it must undertake reforms so as to operate in a marketeconomy. MOR formulatedits own vision of changes in a 30-Point Action Statement for Railway Reform, which was endorsed by the State Council in April 1994 (Chapter 2), and which the proposed project will support.
B. TRAlc
1.5 The surge in traffic occurred despite capacity constraints and related bottlenecks. Highway freight traffic grew at the highest annual rate (14.2 percent), compared with 6.3 percent for railway traffic and 9.7 percent for coastal and inland waterway traffic (Table 1.2). Nevertheless, intercitypassenger travel per capita remains very low-about two thirds the level in India. Civil aviation traffic, which grew at 17.7 percent a year (from a very low base) from 1982 to 1993, remains limited-with market share of 6 percent-while long-distancepassenger rail traffic grew by 7.5 percent a year during the same period (Table 1.3).
1.6 Although the railway's share of total traffic declined over the past decade as the road network developed, rail transport still dominates: In 1993, about 55 percent of freight (Table 1.2) and about 44 percent of passengers(Table 1.3) moved by rail, and the rest moved by road, inland waterway, coastal shipping, pipeline and air. The dominance in freight transport is due partly to the economy's past dependenceon heavy industry and partly to comparatively poor road conditions and small, inefficient vehicles. With passenger transport, it is partly due to inadequateintercity bus service, the virtual absence of private automobiles, and the limited use of civil aviation. However, the move to a market economy will increase demand for more responsive transport and thus shift the emphasis to road transport-although it will still leave a growing market for the relatively low-cost rail services.
C. PAST TRANsPoRT REFoRMs
1.7 In the past decade, China attempted to increase economic efficiency with reforms designedto: (a) reduce Governmentintervention in the productionand distribution process; (b) reduce its deficits and subsidies to state-owned enterprises (SOEs); and -3-
(c) open the economyby expandingtrade and allowinggreater participationof private and collectiveenterprises.
1.8 In transport, the country also launched various reforms. These included:
(a) Eliminating almost all price distortions by (i) decreasing the volume of commoditiesproduced under the state plan; (ii) raising the in-plan commodity prices closer to marketlevels; (iii) raising the tariffs chargedby state transport enterprisesfor railways, highwaysand waterways;and (iv) reducingoperating and capital subsidies for major infrastructure services through higher cost- recovery and user-fundedcapital constructionfunds;
(b) Allowingprivate individuals and collectiveand townshipenterprises to provide passenger and freight services on roads and inland waterways, and encouragingprovincial and national authorities to develop local railways and other transport projects with private sector financing;
(c) Introducingstructural reforms in the organizationand managementof the ports and civil aviation, which have increased financial autonomy and accountability,reduced central governmentcontrols, and paved the way for competitiveservices;
(d) Encouragingthe introductionof more modem transport technology,primarily by improvingrolling stock; enhancingcontainer and bulk handlingcapacity in the ports; improving road pavement design and geometric standards; and increasingthe use of computerizeddata processingand planning techniquesin all modes.
D. BANKGROUP PARTICIPATION AND FuTURE TRANSPORT REFORMS
1.9 The Bank Group has supported government initiatives in transport through loans and credits of $4.53 billion for 29 projects (Table 1.6 and Annex I . These projects, which represent 6 to 8 percent of government-financedinvestments during 1982 to 1992, involved:
(a) Expandingrail capacity; modernizirglocomotives and rolling stock, facilities, track maintenance, telecommunicationsand information systems; providing technical assistance (TA) and training programs ($1.78 billion in seven projects);
(b) Constructing 2,180 km of high-quality national and provincial roads, upgrading 6,850 km of rural roads, improving the supervision and quality control of road construction;conducting studies of key issues in road safety, pavement management, user charges and methods of financing for road maintenanceand construction;and upgrading roads and inland waterwaysin Jiangsu Province ($1.82 billion in 12 projects); - 4 -
(c) Constructingterminals, jetties and berths in six ports, dredging navigation channels, and providing TA and training for port planning, operations managementand containerization($715 million in eight projects);
(d) Improvingurban transportin Shanghai,including upgrading infrastructure and improving urban transport planning, finance and management($210 million in two projects).
1.10 The Government-Bankdialogue has occurred through project preparation activities, project-financedstudies and secto. studies done in collaborationwith Chinese authorities, especially in the areas of multimodal transport investmentand the setting of sectoral priorities. Eight studies explored multimodal pricing and investment issues. These included the Waterway Transport Sector Study, the Guangdong Comprehensive Transport Planning Study, the Yangtze Economic Zone Transport Study (YEZTS), the Coal Transport Study (CTS), the Railway InvestmentStudy (RIS), the Strategic Issues in Ports and Shipping (SIPS) Study, the Price Reform Study, and the Road Freight Service Study. Further, the Bank and the Governmentprepared railway and highway strategies so as to provide broad, long-term recommendationson how the two largest transport subsectorsshould be developedand reformed.
1.11 Recommendationsfrom all these efforts were used as inputs to transport planning, pricing and reforms. CTS and RIS results supportedthe Government'sdecision in 1992 to raise the economic growth rate for infrastructureinvestment planning from 6 percent a year to 8-9 percent; SIPSresults supportedthe decisionsto invest in container transport. The Price Reform Study Report was a basis for a major Government-Bank dialogue, with railway tariffs used as a key example of the need for price reform. The Ministry of Railways (MOR) drew on the railway strategy paper when preparing its 30-Point Action Statement, which was endorsed by the State Councilin April 1994.
1.12 Six other studies funded under Railways IV, V and VI focused on technical improvements with systemwide implications, including its telecommunications and informationsystems, maintenanceand rehabilitationof track and equipment (locomotives and rolling stock), electrification,and heavy-hauloperations. MOR applied their findings when it modernizedthe railway.
1.13 Finally, eight other studies were launched under Railways VI to deal with costing, tariffs, and accountingissues, as well as regulations,management concerns, and restructuring. They provided a basis for: (a) rationalizing tariffs in the market framework; (b) redefining the Government-railwayrelationship; (c) restructuring the monolithic railway organization into a number of profit-oriented, market-focused enterprises; (d) bolstering the railway's treasury capability; (e) improving its labor productivity; (f) rationalizingits diversifiedbusinesses; (g) reforming its housing system; and (h) enhancingits human resources. Some of the studies' results underpin the Bank's reform assistance under RailwaysVII. - 5 -
1.14 Still, the Governmentneeds to take further measuresto alleviate bottlenecks and rationalize the transport system, in particular:
(a) Boost the level of transportinvestment relative to GNP to expand capacity to meet new demandsand eliminate underinvestmentbacklogs; realize the most economicbalance of investmentsamong the major modes (railway, highway, waterway and civil aviation);
(b) Further increase the productivity of existing transport assets through technological modernization and management reforms-for example by applying congestionpricing to selected bottlenecklinks to moderate transport demand and raise more revenues for transport capacity expansion, and by adding a premium for better services; and
(c) Improve and expand the multimodaltransport system, both across and within modes, particularly through more extensiveuse of containers.
1.15 The Bank will continue to assist the Govemment in designing and implementingtransport reforms. For example, a Transport Logistics Study was launched with the Chinese authorities to establish a policy framework for market-oriented, intermodalfreight transport, dealingwith improving distribution of seabomecontainers and modernizingcustoms documentationand clearanceprocesses.
E. OUTLINEOF REPORT
1.16 Chapter 2 provides a background of the railway system and summarizes current constraints, past reforms, and the future agenda. Chapter 3 describesthe project's components, Chapter 4 evaluates the investment components, Chapter 5 analyzes the railway's financesand Chapter 6 presents the covenants for the Bank proposed loan. - 6 -
2. TIE RAILWAY SYSTEM AND REFORM OPPORTUNITIES
A. TE RAmLWAYSYSTEM
2.1 The railway systemis the dominantmode of transportin China, carrying about 55 percent of the country's total freight and about 44 percent of its passenger traffic in 1993. The national network comprises about 54,000 km of main routes (Map IBRD 26327), and is administeredby the Ministry of Railways (MOR) an organizationof some 1,000 employees. In addition, provincial and local govemmententities administer4,400 route-km of local railways (Tables 2.1-2.6).
2.2 Organization. MOR is headed by a minister who is assisted by three vice- ministers, a chief dispatcher, a chief engineer and a chief economist (Chart 1). The Chinese railway system has a workforce of about 3.4 million, 51 percent of whom are engaged in rail transport. The remaining 49 percent work in nontransport activities: 17 percentin constructingrailway infrastructureand facilities; 13 percent in manufacturing locomotives, rolling stock, signaling, and communicationsequipment and other various railway parts and components; 8 percent in the "diversified economy" which includes thousandsof smallbusiness ventures (DECOs); and 11 percentin other activities. Through various measures MOR is expected to keep the number of employees constant over the next several years.
2.3 The rail transport systemis organizedinto 12 regional administrations. MOR performs both regulatory and central transport management functions. It is also responsiblefor nontransportactivities that include35 factories,20 constructioncompanies, 7,000 DECOs, 4,700 hospitals and clinics, 11 universities, 14 research institutes, 140 technical schools plus numerous primary and secondary schools for the employees' children. The railway is a relatively well-managedorganization. It has a disciplined workforceand the utilizationrate of its track and equipmentis among the world's highest: in 1993, the railway's average wagon turnaroundtime was four days, and the density of its freight and passenger traffic was about 29 million convertedton-km (ctkm) per route- km (ctkmiare defined as equal to the sum of freight tkm and passenger-km,pkm) (Table 2.5).
2.4 Trafric and Bottlenecks. Partly because of past underinvestment, rail transport demand far exceeds supply. In 1993, freight traffic grew at 4.5 percent and passenger traffic at 11.2 percent. Demand is projected to grow at similar rates through the year 2000. Thus, present capacity is stretched to the limit. Althoughtotal length of nationaland local railwaysare expectedto increaseto a total 70,000 km by 2000, capacity constraintsare projected to continue into the next century. - 7 -
2.5 Major bulk and semibulkcommodities (such as coal, grains and construction materials) account for about 75 percent of total freight (Tables 2.1 and 2.2). The remaining 25 percent includes general merchandiseand materials that can be moved in containers, traffic that has been increasing each year and for which the railway faces increasing competition from trucks. On average, roughly 20 percent of the railway capacity is for passenger transport.
2.6 Faced with rapidly growing demand, the railway rationed services by controlling wagon allocations to shippers and the number of train seats available for passengers. For example, in 1990, on average more than 40 percent of monthly wagon requests had to be denied. This inevitablyled to higher operatingcosts for shippers who must schedule their activities around the availability of transport services. Also, on crowded routes, passenger trains compete for space with freight trains and are often delayed because of conflicts with freight train schedules.
2.7 Outlook of Rail TransportDemand. Besides the possibility that railway tariffs will increase, the next decade is likely to see highways, waterways, and civil aviation mount increasingcompetition with the railway. Highway transport is expanding rapidly with more high-quality roads and more modem trucks and buses that provide competitiveservices over short to mediumdistances. Waterway transport is modernizing to includecontainer transport in the coastaland river delta areas to serve import and export traffic. Air transport is growing fast, with more modem aircraft and the birth of regional airlines to encouragecompetition. As a result, the railway is likely to lose market share: some long-distancerailway passengerswill likely switch to civil aviation while others and shippers of light manufacturedproducts, usually shipped by rail over short to medium distances, are likely to shift to highways and waterways, especially in coastal areas or where modem highways run parallel to railways. Conversely, because of its low-cost servicesfor mediumand long distances, the railway is likely to retain its competitiveedge, especially in long-distancebulk and semibulkfreight transport as well as in long-distance passenger transport. Taling these various factors into account, future railway transport demand is forecast to be in the range of 4 to 6 percent per year for freight and 10 to 12 percent per year for passengers, according to the Bank's "China's Railway Strategy,' prepared in close cooperationwith MOR (Report No. 10592-CHA).
2.8 Investments. Railway investment in new or upgraded lines and transport equipmentis planned by MOR to rise (in current prices) to Y 350-400billion in the 1996- 2000 period. This is a sharp rise from the Y 154 billion investmentin the 1991-95Eighth Five-Year Plan (8FYP), and the Y 52 billion investmentin the 1986-90period (7FYP). This substantialincrease is due to the Government's recent focus on expandingChina's transportationinfrastructure to handlethe projectedeconomic growth rate of 8 to 9 percent per year through 2000. The main thrust will be to reduce bottlenecksin heavilytrafficked routes, and increase the carrying capacityof the coal routes from north Chinato the coastal cities.
2.9 MOR/SPC and the Bank have had in the past several years a constructive dialogue on expendituresfor expandingcapacity (mainlythrough the RailwayInvestment - 8 -
Study), developingcost-effective technologies, and maintainingtrack and equipment. This dialogue is being strengthenedunder the proposed project.
B. RATIONALE FOR BANK INvOLvEmENT
2.10 The railway has as its objective to become a market-oriented,commercially- operated entity. To give MOR a mandate, the State Councilapproved in April 1994 a 30- Point Action Statementof RailwayReform prepared by MOR, which provides the railway witha comprehensiveagenda for this transformation. The ActionStatement supports a 50- Point Agendaof NationwideEconomic Reform promulgatedby the Governmentat the 14th National Congressin November 1993. [The 50-Point agenda aims to focus on enterprise reform to support commercializationof state-ownedenterprises (SOEs) and participation of the private sector; this adds to price reform, which is now several years into implementation.] The Action Statement also conforms with the Bank's railway strategy paper and the CountryAssistance Strategy (CAS) to be discussedat the Board in May 1995 in conjunctionwith this project. The CASaims to assist Chinain alleviatinginfrastructure bottlenecks, reforming SOEs, and safeguarding the environment. Because the implementationof the Action Statement's agenda will have far-reachingramifications not only for the railway but also for the economy, the restructuringof the railway into various self-accountingprofit centers must be determined with great care, as must the new regulations and the relationshipbetween the railway and Government.
2.11 Because of its limited familiarity with structures and operating practices of market-economyrailways, MOR has asked the Bank to assist it in implementingthe initial phase of the Action Statementthrough the proposedproject. The Bank, given its extensive experiencewith railway reforms in other countries and its familiarity with the railway, is in a position to assist. Indeed, since 1984 the Bank has lent to China's railway sector $1.8 billion, through six nationalrailway operationsand one local railway operation(Annex 2!. Railways I to V were mainly for physical investments, which were or are being satisfactorily implemented. Furthermore, these loans supported MOR in undertaking several studies to develop plans to modernize the railway's information systems and its track and equipment technologies(Annex 3). Railways VI was designed as a transition project with the aim of establishinga foundationfor policy reform through studiesand the preparation of analytical tools. Its tariff, accounting and railway management and economicstudies (covering, among other themes,the relationshipbetween the Government and MOR, restructuringof the railway, and railway financial resource mobilization)have been completedor are near completion, a railway investment model and costing model have been developed, and a pilot program to modernize rail container transportationhas been initiated (Annex 3). Railways VII builds on these studies, tools and pilot effort to continuetariff reform, railwayrestructuring, strengtheningof MOR's investmentdecisions and their financing,and commercializationof container transport. - 9 -
C. REFORMCONStANSS AND30-POINT ACnION STATEMENT
2.12 Althoughthe railway is relativelywell managed,it is still constrained in four main areas: (a) cumbersome regulations and government control over operations; (b) command-economyorganization and management;(c) inadequatecapacity, investment and finance; and (d) outdatedtechnologies, operations and services. MOR has taken many corrective steps in recent years (Annex4), but much remains to be done. MOR's 30-Point Action Statementdescribes a set of major objectivesand many, but not all, of the required actions to ameliorate these constraints.
2.13 Government-RailwayRelationship and Railway Regulations. MOR, which is part of the Government,exercises both regulatoryand executivecontrol over all aspects of the railway's operations. Other governmentagencies also engage in the microcontrol of selected key management decision-making. For example, the Ministry of Labor approves the size of total compensation. The State Planning Commission(SPC) not only approves tariffs but also assigns coal freight traffic quotas from three provinces that the railway must meet, sometimes at tariffs below costs. This is done without full compensation;thus, the railway furnishes these services at a loss.
2.14 To tackle these problems, the 30-Point Action Statement proposes to: (a) separate the roles of the Government and railway agencies-with the Government limited to developing and implementing macroregulations (for example as related to financialtargets); (b) introducecompensation for public service obligations;and (c) create an enabling environment, by amending the Railway Law, in which modern railway enterprises can develop. Previous efforts have addressed some of these issues. These included:
(a) Forming an Economic Contract. In 1986, MOR entered into an economic contract with the Government,which caused two major changes. First, the MOR would receive no direct Govemment subsidies and finance all of its operating expendituresand capital investments(through internally generated funds and borrowings). Second, the contract offered incentives: the MOR's total wage bill would be based on revenueper net tkm handled. This formula encouragedthe railwaysto increase total outputsas well as to control the size of its workforce, but not to improve services, revenues and profits. In early 1994, the Governmentand MOR agreed to modify the contract to emphasize financialresults;
(b) Eliminating Price Subsidies. Until 1990, the MOR enjoyed indirect input price and loan rate subsidies from the Governmentequal to 20 to 25 percent of its total expenses for materials, fuel and electricity, because it bought a portion of these items at less-than-marketprices. In 1990, prices were permitted to gradually rise to market levels and by late 1993, all price and loan rate subsidieswere eliminated; - 10 -
(c) Enacting a Railway Law. In 1991, China's first Railway Law was enacted to provide a frameworkfor regulating the railway's activitiesand establishing the rights and responsibilitiesof the various levels of govemment, MOR, its 12 administrations,and the public. However, several provisionsin the 1991 Law do not conform with MOR's 30-Point Action Statement (such as the principle of separatingMOR's operatingand regulatoryfunctions). Thus, the Law needs to be amended, and MOR has asked the Bank for assistance in drafting revisions.
2.15 Organization and Management. The 12 railway administrationsare subject to MOR's central planning and control-although, since 1990, a series of incremental reforms have been introducedto give the administrationsa modest increase in autonomy. As of 1994, the administrationswere: (a) managing small-scale investment projects; (b) retainingprofits from local transport (shipmentsthat originated and terminatedwithin the administration);and (c) deciding on their internal organizationalstructure, staff size and composition,and distributionof pay incentives.
2.16 Until now, the railway's objectivewas to maximize the physical transport of freight and passengers; its services have not been organized by line of business and its compensationsystems have not focusedon increasingrevenues and profits. Also, it does not have management information systems (MISs) that are suitable for managing its transport operationsby line of businessor its nontransportoperations in a Socialist market economy. In addition, its nontransportmanufacturing and diversifiedeconomy activities need to be restructured to competeeffectively in a Socialist market economy and to take advantageof economiesof scale. Finally, like other SOEs, the railway has to shoulder the burden of providing welfare services (housing,pensions, health and education)to its staff.
2.17 To deal with these issues, the Action Statementproposes to: (a) increase the autonomy of the administrationsand subadministrations;(b) form various profit-oriented transportenterprises organized along lines of business(for example, systemwidecompanies that provide specialized interregional transport services such as hauling containers); (c) allow these enterprises to interact through arms-lengthcommercial relationships, such as operatingand lease agreements; (d) regroup the equipmentmanufacturing companies to achieve competition and economies of specialization; (e) expose railway construction companies to international competitive bidding; (f) rationalize the diversified-economy companies;(g) divest the railway of its social welfare responsibilities;and (h) improvethe staff compensationand manpowerplanning systems. Past efforts in these areas include:
(a) Initiating Pilot Reform Programs. MOR began experimentingwith railway restructuring and enterprise reform by setting up pilot programs aimed at evaluating "line-of-business"organizations for selected railway lines and subunits of regional administrations. These included (i) two railway lines (Datong-Qinhuangdaoand Guangzhou-Shenzhen);(ii) two subadministrations (Fuzhou and Jinan), and (iii) one administration (Guangzhou). Technical assistance for some of these programs, which was started under Railways VI, would be supportedunder Railways VII also; - 11 -
(b) Increasing Labor Productivity. MOR decided to control the size of its workforce by (i) minimizing the staffing for new lines; (ii) penalizing managers for exceedingtargeted staffing levels; (iii) reducing managementin the administrationsand MOR by 15 to 20 percent; and (iv) hiring almost all new employees on a contract, rather than lifetime, basis. These programs would be supportedunder Railways VII;
(c) Refocusing the Diversified-Economy Program. MOR resolved to (i) separatethe managementof diversified-economycompanies (DECOs) from that of rail transport; and (ii) expand the scope of its DECOs, which currently are profitable, to absorb additionalredundant transport employees, from the present 200,000 to 400,000 by the year 2000.
2.18 MOR has not yet resolved,in its 30-PointAction Statement,the functionsand organizationalrelationships of a possible central transportationmanagement entity. This entity would assume network responsibilityfor overseeing (a) empty wagon distribution; (b) power assignmentsof throughlocomotives; and (c) day-to-daymodifications of through train schedules. This is a difficultissue. Based on the experienceof other freight-oriented railways in developed-marketeconomies, there are inherent efficiencies in centralized managementof trains, locomotiveand freight wagons. However, strong politicalpressures persist in China to decentralizetransportation decision-making to the administrationsand subadministrations. MOR has asked the Bank to help resolve this issue under Railways VII.
2.19 TransportCapacity Investments and FmancialManagement. The Chinese railway system has chronicallylacked the capacity to adequately support rapid economic growth. In addition, the current expansionprogram may not close more than 75 percent of the anticipatedgap between transport demand and supply in 2000. This is partly due to MOR not regularly applyingmodern investment and financialplanning tools to optimize the location, scale and timing of railway investmentsor to forecastits long-termneeds for investments,borrowings and increases in tariffs and surcharges. Another reason is that the railway just began to adopt modern, cost-effectivetrack and equipment technologies (such as using trains with a high ratio of payloadto tare weight)to expandits capacitywith less investment. Further, the railway has limited experience in raising capital and managing assets and liabilities. Last, it is not familiar with commercial practices commonlyfollowed in market economiessuch as operationallogistics and contract tariff negotiations.
2.20 To remedy these deficiencies, MOR's Action Statement proposes to: (a) employ modern investmentand financialplanning tools; (b) adopt more cost-effective technologies;(c) attract private sector funds to railway enterprises through both debt and equity financing; and (d) improve pricing-for example, by initiating congestion and contract pricing. Some changes were already introduced:
(a) ApplyingInvestment Planning Tools. In 1992, MOR applied the decision- support system it developed under the Bank-supportedRailway Investment - 12 -
Study (RIS) to (i) determine priorities of railway investment projects, and (ii) support the Government's decision to augment railway investment. Further applicationswould be carried out under Railways VII;
(b) InvolvingForeign Investors. In 1992, new policies were issued to encourage some of MOR's nonrail entities to raise capital by creatingjoint ventures with private foreign investors. In 1994, a joint venture (with 25 percent foreign equity) was created to build and operate a new local railway line between Jinhua and Wenzhou (330 km);
(c) ExpandingCapacity More Efficiently. In 1994,MOR decidedto implement recommendationsof the Bank-supportedCost-Effective Technology Evaluation (CETE) study to expand railway capacityat significantlylower costs, notably by raising wagon axle loads from 21 tons to 25 tons in heavily trafficked corridors;
(d) IntroducingNew Types of Tariffs. From 1993 to 1994, MOR received permissionfrom the State Pricing Bureau (SPB) to introduce special tariffs, such as extra charges for congested passenger lines, higher tariffs for new lines, contractprices for oversizedor extraheavyfreight loads, and passenger fare surcharges for higher quality services. Some of these tariff initiatives would be supportedunder Railways VII.
2.21 Technology, Operations and Services. Although the railway utilizes its physical assets intensively, much of its technology is outdated and not always cost- effective. For example, although they are being phased out, some 35 percent of the railway's locomotiveswere steam-poweredat end-1993. Also, the top-downapproach to transportplanning, combinedwith shortagesof freight wagons, means shipperswait from 20 to 50 days to receive a wagon. This standard of service would be unacceptablein virtuallyall market economies.
2.22 To correct these problems, the Action Statementproposes to: (a) upgrade railway track and equipmenttechnologies; (b) developa more dynamic wagon distribution planning system; (c) adopt modem managementpractices to improve the use of track and equipment and the productivityof labor (using service as a criterion for rewarding staff performance); and (d) install modern management information systems to improve customer services. Changes already introducedinclude the following:
(a) Modernizing Track, Equipment, and Telecommunications Technologies. During 1988 to 1992, MOR conductedBank-supported studies to modernize the maintenance of railway track and transport equipment, upgrade the telecommunicationssystem, and apply new electrificationtechnologies. Many recommendationsfrom these studies are being implemented;
(b) IntroducingModern Information Systems. In 1992,MOR embarkedon two complementaryprograms: (i) it installeda digital packet-switchtelecommuni- - 13 -
cations network and (ii) it initiatedthe replacementof the hierarchicalwagon- tracing system with a modem, computer-based transport management informationsystem (TMIS). When fully implementedin 1997, the TMIS will provide the tools to decrease shippers' waiting timesthrough better distribution of empty wagons. It will also permit transport managers to monitor and control the movement of trains, wagons, locomotives and containers on a network basis. This work would be continuedunder Railways VII;
(c) Adopting Customer-ResponsiveOperating Practices. In 1993, MOR launcheda Bank-assistedpilot program to provide container transport services that used unit trains running at passenger-trainspeeds north-to-southbetween Harbin and Guangzhouand east-to-westbetween Shanghai and Xian. This work would be extended under RailwaysVII.
2.23 The process of railway reform outlined above is expected to be difficult, lengthy and uneven becauseof: (a) the size and complexityof the railway system; (b) the reluctance of some governmentagencies and some railway managementto relinquish their miicrocontrolover the railway; and (c) the ramifications to the entire economy of any changes to the railway in structure, staffing and pricing. For these reasons, the Government and MOR are following a cautious, gradual approach in testing reform initiatives in pilot experiments, which the Bank considers appropriate. - 14 -
3. THE PROJECT
A. OBJEcTrES
3.1 The proposed project is to support MOR's initial efforts to implement its 30-Point Action Statementof RailwayReform. The project's mainobjectives are to assist MOR: (a) redefine the relationshipbetween the railway and the Government;(b) reshape the railway's organizationand strengthenits internal management;(c) expand the railway's transport capacity, raise its investment efficiency, and enhance its finances; and (d) modernize the railway's technologies and bolster the efficiency and quality of its transport operationsand service. To achieve these objectives, MOR formulateda series of components on policy reform and institutionaldevelopment (PID), investments, and studies (SectionsC-E below).
B. LESSONSLEARNED
3.2 The project draws on lessons learned from Railways I to VI, and railway projects in other developed and developingcountries. First, MOR wants to learn new skills from abroad and prepare its own projects, with Bank assistance; it hires foreign specialistsonly when absolutelynecessary. This approach has generally created a sense of ownership, but learning by doing has sometimes delayed project preparation and implementation.Thus, to assist MOR at the earlier stage of reform, the Bankhas provided it in the past five years with extensivetechnical assistance(TA) financedby grants of about $3 million under the Policy and Human Resources Development(PHRD) Fund. This source of TA funding, however, is less likely to be forthcomingin future. To avoid delays in implementingreform under the proposed project, MOR agreed to undertake more TA with its own fundingincluding that from Bank loans.
3.3 Second, railway reform is slow due to the railway's lack of authority over rates, its lack of a commercialapproach to the transport market, and resistanceto change on the part of railway managementand governmentinstitutions. Railways VII would also face these issues. Third, excessivereliance on loan covenantsto achievereform objectives is unrealistic. As the Bank enjoys a constructivedialogue with MOR, loan covenantshave been kept to a minimum under this project. Fourth, it is advantageousto begin making advance procurement arrangementslong before the loan becomes effective, have a well- preparedimplementation plan, and developa systemfor monitoringthe performanceof the project-financedinvestments.
3.4 Furthermore, MOR's reform agenda is broadly consistent with lessons from railway reform in developedmarket economies(World Bank DiscussionPaper No. 269). First, there should be clear separationbetween the role of the Governmentand the role of - 15 - the railway, and between market-drivenactivities and public-service-obligationactivities. Second, railway organizations should be designed along lines of business, with clear financial goals (rather than physical output targets), adequate compensationfor public service obligations,and sufficientauthority in tariff setting. Third, major barriers such as excessive redundant labor and employee welfare obligations should be removed.
C. POLICYREFORM AND INSTITONAL DEVELOPMENTINrITATIvEs
3.5 PID componentswould provide MOR with the TA to implementthree elements of its 30-Point Action Statement: (a) railway enterprisereform, (b) railway tariff reform, and (c) labor productivityenhancement.
3.6 RailwayEnterprise Reform. This componentwould support MOR's initial efforts to transform the railway into a group of geographically-basedenterprises and systemwide, line-of-businessspecialized transport service companies. Specifically, it would help MOR: (a) prepare recommendationsfor improving the legal and regulatory frameworkso as to create an enablingenvironment for market-orientedrailway enterprises to function; (b) undertake experimentalprograms of railway enterprise reform [including the proposed restructuring of the Fuzhou Subadministration(FSA) and the Guangzhou Railway Group Corporation (GRC)]; and, based on lessons learned from these experiments, prepare a comprehensiveplan for railway restructuring; and (c) prepare a debt and equity financingstrategy for selected railway services.
3.7 Railway Tariff Reform. This component would assist MOR in improving railway tariffs further, by: (a) justifying tariff adjustmentson a cost recovery basis (using a costing model and a cost-indexsystem to gear tariffs to price and productivitychanges); (b) pilot-testing contract pricing to increase flexibility in tariff setting; and (c) further experimentingwith passenger congestionpricing.
3.8 Labor Productivity Enhancement. This component would help MOR undertakemeasures to control the size of its workforce and boost labor productivity-by reducing managementoverlap, increasingcontract employment,linking capital budgeting to human resources planning, transferring redundant staff to new diversified economy companies and adoptingnew labor productivityand service-qualitymethods.
3.9 Agreementwas reached at negotiationsthat the Borrower, throughMOR, will carry out the PID componentsin accordance with action plans acceptable to the Bank (para. 6.la, Annex 6).
D. INVESTMENTS FOR EXPANSION, MODERNIZATION AND REFORM
3.10 The proposed six investmentcomponents would financeequipment, materials and TA for MOR to expand, modernizeand reform the railway system. They have been accorded top priority by MOR, either becauseof their economicreturns or becauseof their strategicimportance to railway modernization. Their technicaldesigns are based on results of various technologicalstudies under RailwaysIV and V. Indicators has been developed - 16 - for monitoringthe effectivenessof the investmentcomponents (Annex 5). The components are:
3.11 Expanding Corridor Capacity. Financingwould be providedfor electrifying and upgrading the 1,044-km Wuhan-Guangzhouline (the last remaining section of the Beijing-Guangzhoutrunk line to be electrifiedand modernized). The line represents only 4 percent of the total networkbut carries 15 percent of total traffic. Traffic volumeshave been increasingat about 14 percent per year since 1990compared to the railway's national average of about 9 percent.
3.12 The proposed electrification and upgrading would enable the line to accommodatelonger and heavier trains, consistentwith MOR's decision to raise the axle load from 21 tons to 25 tons for its core network. Its main design features are: (a) 1,050- meter siding lengths, (b) 25 kV/50 Hz electrification, (c) 110 kV power supply with improvementsto the related power supply and distribution system, (d) upgraded signaling and telecommunicationsystems, (e) reconstructedbridges and tunnels, and (t) upgraded maintenancedepot shops. The technical design conforms with recommendationsof the ElectrificationTechnology Study under Railways V.
3.13 The constructionwould produce economicbenefits mainly as savings in rail operating costs. It would also have environmentalbenefits, particularly as it would: (a) eliminate the concentrationsof particulates and carbon monoxide emitted by diesel engines in built-up areas; and (b) reduce soil contaminationcaused by the spills of diesel fuel and lube oil. The electric power would come mainlyfrom large coal-burningplants, and to a lesser extent from hydropower plants, which serve general users, of which the railway use would represent less than 3 percent of total power consumption(Annex 8). Becauselarge thermal plants control pollution more efficientlyand hydro plants create no air pollution, the switch from diesel to electric locomotiveswould reduce net emissionsof air pollutants.
3.14 To allay the Bank's concern over shortagesof electricity, SPC has written to the Bank that power supply would be adequate for the electrified line, and that MOR would have priority, if necessary.
3.15 Modernizing Information Systems. Financing would be provided for acquiringcomputer hardware, software and related TA needed for: (a) the first phase of a computer-basedmanagement information system (MIS); (b) integrated TMIS for major marshalling yards, subadministrations and administrations; (c) a pilot passenger reservationssystem in one administration;and (d) managementof funds under the treasury functions. This technologywould help railway managersmake better-informeddecisions and improve railway operating efficiencyand service quality.
3.16 Upgrading TelecommunicationsSystems. Financingwould be provided for acquiring telecommunicationsequipment and related TA, includingfiber-optic cables and digital microwaveequipment, to enable MOR to expandand modernizethe railway's trunk transmission and data telecommunicationsnetworks. This would be part of the Bank's - 17 - ongoing effort to help MOR implement the railway's TelecommunicationsMaster Plan. Specifically,the componentwould provide financing for: (a) expandingand digitalizing the railway's long-distancetransmission network; (b) expandingthe data communications network; (c) developing a video conference network, with a terminal for each subadministration;and (d) setting up a telecommunicationsnetwork managementsystem.
3.17 CommercializingContainer Transport. Financing would be provided for purchasingcontainer transport and handling equipment (e.g., rubber-tired gantry cranes, forklift container handlers, and highway tractors) and the TA and computer software needed to modernizeand commercializerail-based container transport operations. MOR would lease the equipment on commercial terms to at least two container transport corporations, which are expected to be: (a) the Chinese Railway Container (CRC) Company,a wholly-ownedsubsidiary of MOR; and (b) the SinoRailsIntermodal Transport (SIT) Company, a joint venture among MOR, China Ocean Shipping Group Company (COSCO),and Sinotrans(a freight forwarder). Both corporationswould be authorized to operate on any railway route and serve both domestic and foreign traffic as long as line capacity is available and the operations are profitable.
3.18 CRC and SIT would become prototypes of self-accountingenterprises that provide interregional, specialized rail-based transport services on a commercial basis. More specifically, the component would: (a) serve as pilot programs for MOR to test various aspects of railway enterprisereform; and (b) offer landlockedprovinces access to internationaltrade by providingthem with fast and reliable transportservice for high-value products to major seaports.
3.19 Agreement was reachedat negotiationsthat the Borrower, throughMOR, will: (a) select at least two container transport companiesacceptable to the Bank to which the container transport and handling equipment to be procured under the project shall be leased, (b) employ consultants with terms of reference, qualifications and experience acceptableto the Bank to assist it in the preparation of contractual agreements between the Borrower and said container transport companies required for the leasing and operationof said equipmenton a commercialbasis; (c)furnish said agreementsto the Bank promptly upon theirpreparation and afford the Bank a reasonableopportunity to exchange views with the Borrower thereon; (d) thereafter,take all measuresrequired on its part to concludesaid agreementswith said containertransport companies, taking into accountthe views of the Bank on the matter; and (e) ensure that no invitationsto bidfor contractsfor containertransport and handlingequipment included in the project shall be issued unless and until the Borrower shall have concludedthe agreements referred to in item (d) above (para. 6.lb).
3.20 EnhancingEnvironmental Protection. Railwayenvironmental protection has historicallyreceived low priority because MOR has primarily focused on transportation. However, it now recognizes that to protect the environmentover the long term, it must develop a comprehensive environmental strategy and strengthen its Environmental Protection Bureau. This componentwould finance the TA and equipment for MOR to: (a) undertake pilot programs to address pressing environmental problems; and - 18 -
(b) strengthenthe capabilitiesof its environmentalstaff. These initiatives are consistent with the comprehensivelong-term environmental strategy being prepared under Railways VI.
3.21 The pilot programs would involve: (a) testing noise barriers along a rail line traversing urban Beijing; (b) developing a solid waste management strategy for the Shenyangstation; (c) assessing techniquesfor cleaningup contaminatedsoil at the Taopu freight yard; (d) treating oily wastewaterat a locomotivedepot; (e) upgrading the Beijing Anti-EpidemicCenter; (f) developinglocomotive and factory noise abatement programs; (g) training railway environmental staff in advanced environmentalimpact assessment techniques; (h) developinga fuel additive for diesel locomotivesto boost combustionand reduce emissions;and (i) preparing an environmentally-soundstrategy to dispose of more than 1 million styrofoam lunch boxes per day.
3.22 Expanding System Capacity. This componentwould support MOR's initial effort in its long-term plan to introduce heavy-hauloperations-employing heavier trains with a higher ratio of payload to tare weight-to the core network. Financing would be provided for procuring three-phaseAC electric locomotives,including equipment, tools, spare parts and training, and securingheavy-haul expertise to help MOR raise the axle load limit on the core network from 21 to 25 tons. The acquisitionof these locomotiveswould involve importingfully-assembled locomotives and transferringtechnology for locomotive manufacture from a foreign locomotivebuilder to China (to be financed separately by MOR). This transfer would be either to a joint-venturemanufacturer or to one of China's two electric locomotiveworks. The first use of AC electric locomotiveswould be on the heavy-traffic,269-km single-tracksection betweenBaoji and Yangpingguan. This section, which is part of the Baoji-Chengdumain line, has gradients up to 3 percent.
3.23 The investmentwould reduce operating and maintenancecosts and increase throughput capacity of congested main lines through the use of more powerful electric locomotives to pull the heavier freight trains. The investmentwould also contribute to MOR's strategy to: (a) develop for eventual manufacturein China a new generation of electric locomotivesrequired on other electrified, high-volumemain lines; and (b) upgrade the quality of its locomotive manufacturing, which would be an element of a study componentunder the proposed project.
3.24 The Borrower, through MOR, plans to implement the investmentcomponents according to the implementationschedule given in Table 3.9.
E. STUDIESFOR MODERNIZATIONAND REFORM
3.25 The following study components would provide MOR with the TA and software needed to prepare future railway projects or to develop and apply new railway technologiesand managementtechniques. - 19 -
3.26 FeasibilityStudy of DedicatedPassenger Rail. Foreign experts and training of MOR staff would be provided for the purpose of: (a) forecastingridership on the new dedicated passenger rail line between Beijing and Shanghai and its competing modes; (b) comparingthe life-cyclecosts of the dedicatedpassenger rail line with those of other modes for different market segments; (c) assessing the economic, financial and technical feasibilityof the line; and (d) optimizingthe line's engineeringand operating parameters (such as station spacings, train size, train speeds and operatingpatterns).
3.27 Applicationof the RIS Decision Support System. Expertise and computer software would be provided for helping MOR: (a) refine the decision support system developedunder the RailwayInvestment Study (RIS) to makeit more realistic; (b) develop and apply a new, fast-responsemodel to help MOR optimize railway investmentprograms through2005 under anticipatedbudget constraints (this would replace the existingtrial-and- error procedure); and (c) apply the RIS system to determine the economic priority of the proposed dedicatedpassenger line relative to other major railway projects.
3.28 To strengthenthe dialogue betweenthe Governmentand the Bank on railway investmentplanning, MOR plans to apply appropriatemethodologies (including the RIS system) and criteria to evaluate the proposed railway investments. The results of the evaluationwould be presented in a report to be discussed by MOR and the Bank at the mid-term review. To make the review manageable,the evaluation would focus only on a few most important questions, in particular, those related to the adequacy of the investment programs for capacity expansion, maintenance and rehabilitation, and technologicalupgrading.
3.29 InformationSystems Studies. TA wouldbe providedto MOR for conducting studiesto: (a) developa marketinginformation system built on a systemwidewaybill file; (b) prepare plans for expandingTMIS beyond 1997; and (c) conductfeasibility studiesfor new operating information systems, including one for locomotive and rolling stock maintenanceand a material stock control system.
3.30 TelecommunicationsNetwork Systems Study. MOR would receive TA and training for undertakinga study on network managementand optimization,to monitor the performance and improve the reliability of the railway telecommunicationsnetwork.
3.31 Diesel Engine Design. Financing would be provided to MOR for: (a) acquiring the expertise needed to design high-efficiency,high-power, low-emissions diesel engines for heavy-haul freight operations and higher-speed, higher-capacity passenger services; and (b) importing the critical parts needed to develop a prototype engine.
3.32 Restructuringthe Railway'sManufacturing and OverhaulSector. MOR would obtain TA to prepare an action plan to restructure and modernize the railway manufactureand overhaul sector. The restructuringpart of the proposed TA would deal with (a) rationalizingMOR's 35 factories into appropriategroups of companies, to strike a better balance between specializationand competition;and (b) formingjoint ventures to transfer management expertise and manufacturing technologies to the railway. The - 20 - modernization part would deal with upgrading the quality of railway equipment manufacturing to international standards.
3.33 StrengtheningMOR's TreasuryFunctions. Foreign experts and training of MOR staff would be provided for the purpose of: (a) strengtheningits treasury functions, and (b) establishinga frameworkfor issuing railway bonds.
3.34 Agreement was reached at negotiations that the Borrower, through MOR, will (a) undertake the studies summarized above according to action plans acceptable to the Bank (Annex 7J, (b) exchange views with the Bank on the studies' recommendations;and (c) implementthe recommendationstaking into accountthe Bank's comments (para. 6. 1c).
F. COST ESTIMATES
3.35 The project is estimated to cost $1.75 billion, including physical and price contingencies (see Tables 3.1-3.8 and the cost summary table below). The foreign exchange costs of the project are estimated at $619.9 million, representing about 35 percent of project costs. Base costs were originallyestimated at January 1994 prices; they have been adjusted to January 1995 prices. Physical contingenciesare calculated at 10 percent of the base costs of civil works and 5 percent of the base cost of equipment (7 percent for the container transport component). Price contingencieswere calculated both for foreign and local costs according to Bank guidelines, for each year from 1995 to 2002, when expressed in US dollars: 1.5, 1.8, 2.6, 2.5, 2.5, 2.5, 2.5, and 2.5 percent; and when expressed in Yuan: 14.0, 10.5, 8.5, 7.0, 6.5, 6.2, 6.2, and 6.2 percent. The exchangerate of Y 8.7 to the US dollar was used for converting foreign exchangecosts. MORis currently exempt from import taxes, customs duties and local taxes, but will be subject to import taxes from 1996 onward. Identifiabletaxes and duties amount to about $130 millionequivalent. The costs of the goodsfinanced under this project were estimated on the basis of unit costs of similarequipment, machinery and materials procured in 1993. The costs of TA and training were based on current average fees per month in China and on current costs for travel and subsistencefor foreign consultants. - 21 -
COST SUMMARY (January 1995 prices)
Formign Y million S niullion as % of Bank loan Local Foreign Total Local Foreign Total total (S milion)
Expandingcorridorcapacity 5,884.7 2,426.1 8,310.8 676.4 278.9 955.3 29.2 151.8 Modernizinginforaationsystemn 759.4 1,123.1 1,882.4 80.6 119.0 199.6 59.6 38.9 Upgrading teleconmunications 872.3 375.2 1,247.5 92.2 39.7 131.9 30.1 39.7 Commercializingcontainertranap. 1,199.1 249.4 1,448.5 126.8 26.3 153.1 17.2 26.3 Enhancing environmental protection 22.1 41.2 63.3 2.3 4.4 6.7 66.5 4.4 Expanding system capacity 272.6 804.5 1,077.1 31.3 92.5 123.8 74.7 92.5 Technical asistnce 1.5 63.1 64.6 0.2 7.2 7.4 96.3 7.2
Subtotal 9011.7 50826 140943 10098 568.0 1j77 36.0 360.8
Physical contingencies/a 759.6 269.7 1,029.3 85.8 30.6 116.4 26.3 20.7
Baseline Estimate 9,771.3 5,352.3 15 123.6 1i0956 598.6 1 694.2 35.3 381.5
Price contingencies 2,030.7 1,248.3 3,279.0 32.0 21.3 53.3 39.9 18.5
Total /b 11 802.0 6,600.6 18 402.6 1,127.6 619.9 1,747.5 35.5 400.0
/a Ten percent for civil work. and 5 percent for equipment. /b From 1996 onward, MOR will not be exempt from import taxes, customi duties and local taxes. Identifiable taxes and duties are estinated at $130.1 nillion equivalent.
3.36 The accuracy of cost estimates for the proposed corridor expansion was difficult to assess because the Bank received insufficient details on the goods and labor to be funded domestically. To address the Bank's concern, MOR provided the Bank with cost estimates for the preliminary and final designs, which differ by less than 3 percent.
G. FINANCING
3.37 A Bank loan of $400 million would be made to the People's Republic of China, representing about 23 percent of total project costs and almost 65 percent of the foreign costs. MOF would allocate the funds to MOR. MOR would cover the remaining costs and, if needed, local cost overruns, including contingencies. MOR does not capitalize interest expenses during construction, and interest expenses relating to implementation would be covered by its operating revenues. MOF would allocate the loan proceeds to MOR on the same terms as those of the Bank loan, with MOR bearing the foreign exchange risk. - 22 -
PROJECT FINANCING PLAN ($ million equivalent)
Works Equipment Consultancies Resettlement Total
MOR 294.0 1,035.0 - 18.5 1,347.5 Bank loan - 392.5 7.5 - 400.0
Total 294.Q 1,427.5 7 5 18 5 1.747.5
Foreign exchange - 612.4 7.5 - 619.9
3.38 Implementationof the investment components depends on availability of counterpartfunds, which became an issue in 1993 when local funds originally allotted to Railways VI were temporarilydiverted to another project, thereby delaying RailwaysVI. This implementationrisk would be mitigatedby MOF's newly issued policy that ensures the availabilityof counterpart funds up front.
H. IMPLEMENTATioNAND RLsKs
3.39 MOR, through its Foreign Capital and Technical Import Office (FCTIO), would be the executing agency responsible overall for implementingthe project under similar arrangements to those for the previous loans. Procurement of goods under International Competitive Bidding (ICB) would be handled by tendering companies appointedby MOR. The acquisitionof TA, training, computersoftware, and equipment would be handled by MOR with consultants' help as needed.
3.40 Preparation of general, commercial and technical specificationshas already begun with the intention to complete the bidding process for procurement in 1995 and to have contracts signed when the loan becomes effective. Implementationis expected to spread over six years. The project would be completedby December31, 2001 and closed by December 31, 2002 (Table 3.9-Implementation Schedule).
3.41 The physical investmentsin the proposed project pose minimalrisks in view of the railway's past experiencein implementingsuch components. The risks relate to the policy reform component because of MOR's lack of familiarity with reform and its dependence on endorsement from core government agencies in undertaking reform initiatives. However, the Governmentand MOR are committedto reform, and are clearly movingin the right direction. The risk would be reduced by a continuousdialogue among MOR, other Govemmentagencies, and the Bank on the substanceand timing of reforms, by funding TA and training for sector policy reform, and by intense Bank supervisionof the project. Additionally: - 23 -
(a) MOR has prepared action plans for the various technical assistanceprograms under the proposed project; and
(b) the governmentagencies concerned, especiallySPC, plan to give top priority to supporting MOR in undertaking reform initiatives proposed under the project.
I. PROCUREMENT
3.42 Except as noted, all Bank-financedgoods would be procured under ICB, according to the Bank's Guidelinesfor Procurementunder IBRD Loans and IDA Credits dated May 1992. The bidding documentswould conform with model documentsprepared by the Governmentbased on the Bank's standard bidding documents. Contracts worth $200,000 or less each and totaling no more than $10 million may be purchased by either local or internationalshopping, based on at least three quotationsfrom potential suppliers. Contracts valued at $500,000 or less each and totaling no more than $20 million may be procured by Local CompetitiveBidding (LCB) accordingto procedures acceptable to the Bank (see the procurementsummary table below). Contractsfor goodsabove the threshold of $2 million would be subject to the Bank's prior review procedures. In bid evaluation under ICB, Chinese manufacturerswould be allowed a preferential margin over the CIF costs of competing imports equal to the lesser of 15 percent or customs duties and local taxes MOR would have to pay (expressedas a percentageof the CIF costs). - 24 -
PRtOCuREMENr SUMMARY La (S million)
Total Procurementmethod project Project component ICB LCB OtherLk NBFL& cost
Works - - - 294.0 294.0
Equipmentand machinery 1,297.5 20.0 110.0 - 1,427.5 (262.5) (20.0) (110.0) (392.5)
Consultancies - - 7.5 - 7.5 (7.5) (7.5) of which: PID components - - 0.6 - 0.6 (0.6) (0.6) Investment components - - 0.9 - 0.9 (0-9) (0.9) Study components - - 6.0 - 6.0 (6.0) (6.0)
Resettlement - - - 18.5 18.5
iQoal 1.297.5 20 117.5 312.5 1.747.5 *262.5!(20 0 (117.5) (400.0)
La Figures in parenthesesare the amounts to be financed by the Bank loan. lb Includes Limited IntemationalBidding (LIB), local and intemational shopping, and consultants' services. & NBF = Not Bank-financed.
3.43 The three-phase AC locomotives for $100 million equivalent would be procured by Limited Intemational Bidding (LIB) from reputable electric locomotive builders in the world. The bids would be evaluatedon the basis of criteria that conform with the Bank's Guidelines for Procurement dated May 1992; a margin of preference, however, would not be applicable. Bidders would be requested to quote for transfer of technology,although this would not be financedby the Bank. The bidding process would be subject to the Bank's prior review.
3.44 Bank-financedconsulting services would be provided by qualified consultants appointedaccording to the Bank Guidelinesfor the Use of Consultantsdated August 1981. - 25 -
The Bank's prior review would be required for all contracts over $100,000 for consulting firms and $50,000 for individual consultants, all single-sourcecontracts, and terms of reference for all contracts.
3.45 Items not financed by the Bank-including civil works, miscellaneouslocal materialsand equipment-would be procuredaccording to Chinesegovernment procedures.
J. DISBURSEMENTS
3.46 Disbursementsunder Bank financing would be for: (a) 100 percent of the foreign expenditures for imported goods; (b) 100 percent of the local expenditures (ex-factorycosts) for goods purchased direct from factories; (c) 75 percent of the local expendituresfor other goodsprocured locally; and (d) 100 percent of the costs of services. Domestictransport costs from the border, a port or factory would not be eligible for Bank financing.
3.47 Disbursementsagainst contracts for goods valued less than $2 million each, consulting contracts valued less than $100,000 each for firms and $50,000 each for individuals, and expenses on training and study tours would be made on the basis of Statementsof Expenditure. To facilitate disbursements, a Special Account would be establishedwith an authorizedallocation of $20 million representingabout four monthsof expectedexpenditures on average. Replenishmentwould be made monthly or whenever the Special Account is drawn down by 50 percent of its initial deposit, whicheveroccurs first. Documentationsupporting Statements of Expenditurewould not be submittedto the Bank, but would be kept in MOR's project office in Beijingand made availablefor review by the Bank's supervisionmissions.
3.48 Disbursementprojections (Table 3.10) assume that the loan would become effective by September 1, 1995 and be fully disbursed by December 31, 2002. The projections are conservative with regard to the positive effects of advance procurement arrangements.
K. MONrrORING, EvALUATIONAND SUPERVISION
3.49 Monitoring. To monitor the progress and effectivenessof implementation, MOR would provide the Bank with periodic reports during each year of project implementation(beginning with the year after loan effectiveness)on:
(a) Audits of the Project Accounts, the Special Account, the Statements of Expenditure, and the consolidatedfinancial statements for the railway, CRC and SIT by end-June;
(b) The status of implementationfor each PID component with respect to the target dates shown in Annex 6 by the end of June and December; - 26 -
(c) The status of implementationfor each investmentcomponent as specified in the implementationschedule (Table 3.9) by the end of April, July, October and January;
(d) The performance of each investment component relative to the indicators described in Annex 5 during the period of operation by end-March;
(e) The status of resettlementunder the corridor expansion componentby the end of March;
(f) The results of resettlement monitoring and evaluation and environmental impact mitigationfor the corridor expansioncomponent by end-March.
3.50 Mid-term Review. Given the complexity of the project, agreement was reached at negotiationsthat the Borrower, throughMOR, will undertake,jointly with the Bank, a mid-termreview ofproject implementationno later than November30, 1998 (para. 6.1d).
3.51 Supervision. Two Bank supervisionmissions per year are planned, but more missions may be needed dependingon implementationprogress. Because of its size and complexity, the project would require above-averagesupervision staff-weeks, especially in the first two to three years of implementationinvolving the PID components. Over the project's six-year implementationperiod, the supervision staff time is estimated to total about 94 staff-weeksor average about 13 staff-weeksper year (Annex 10). This estimate incorporatesstaff-week savings expectedfrom combiningthe supervisionof this and other railway projects in China. MOR would submit a Project CompletionReport to the Bank six months after loan closing.
L. ENVIRONMENTAL IMACS AND RESETELEMENT
3.52 EnvirommentalImpacts. This is a Category B project. The proposed Wuhan-Guangzhouelectrification and upgrading has an impact on resettlement; none of the investment components would significantly harm the environment. In fact, the electrificationwould reduce air pollutionand soil contaminationby diesel fuel and lube oil. Agreement was reached at negotiationsthat the Borrower, throughMOR, will carry out the project accordingto health, safety, and environmentalstandards acceptable to the Bank (Annex 8; para. 6. le). The pilot environmentalprotection programs would acquaintMOR with up-to-date technologies and practices, and thereby help MOR develop a comprehensiveenvironmental action strategy for the railways (Annex8).
3.53 Resettlement. Under the proposed electrification,resettlement would result from land acquisition along the Wuhan-Guangzhouline, to make land available for the extension of stations, and the constructionof substations and power supply depots. It would affect about 13,200 individuals (4,300 due to housing demolition). No sites of notable historical or cultural value are in or near the land to be acquired, nor are they - 27 - known to contain habitats of endangered species. MOR has submitteda resettlementplan satisfactoryto the Bank (Annex 9!.
3.54 While resettlement activities would be funded by MOR, the villages and townships in rural areas and the city district government in urban areas would be responsible for planning and implementing them. The local branches of the land administration offices at the county level are charged with monitoring resettlement activities to ensure they comply with the Land Management Law, and the State Audit Agencyis charged with auditing the use of resettlementfunds. Experience under previous railway projects has shown this arrangementto be satisfactory. To ensure a continuous satisfactoryresettlement process, MOR has contracted with the Social SciencesResearch Institute (SSRI) of SouthwestJiaotong University to monitor resettlement activities and alert MOR to problems. MOR would make available to the Bank annual monitoring and evaluationreports prepared by the university. Agreementwas reachedat negotiationsthat the Borrower, through MOR, will ensure that land acquisition and resettlement will be done according to a plan acceptableto the Bank (para. 6. le). - 28 -
4. ECONOMIC EVALUATION AND RISK ANALYSIS OF PROJECT-FINANCED INVESTMENTS
A. INTRODUCTION
4.1 The following five investment components have undergone economic evaluation: expanding corridor capacity, upgrading telecommunications systems, modernizing information systems, commercializingcontainer transport, and expanding system capacity. Monetary inputs and outputs used in the evaluationswere obtained by converting financial costs to economic costs using economic shadow prices and their related conversion factors in two key areas. For local labor costs, a conversionfactor to account for the value of fringe benefits was applied to the amount associatedwith basic wages. For locomotivesand rolling stock, the analysis used a conversionfactor based on the nonsubsidized prices charged by MOR to third-party buyers. Details on the assumptionsare in the Project File.
B. MAiN BENEFTs
4.2 The estimatednet present values (NPV) and economicinternal rates of return (ERR) for each investmentcomponent are summarizedin the table below (specialattention was devoted to avoiding double accounting both between and within component categories). The table also indicatesthe NPVs for the five componentsin terms of three major benefit categories:
(a) By increasing throughput capacity, both the system capacity expansion component and the telecommunicationscomponent would facilitate the production and distribution of new bulk and manufactured goods. As a consequence,these componentswould produce value added to the economy.
(b) Upgrading and electrifying the Wuhan-Guangzhouline (corridor capacity expansioncomponent) and handling more containertraffic by rail rather than road (containertransport commercialization component) would reduce the cost of transport services.
(c) Improvements made possible by the telecommunicationsand information systemscomponents would enable MOR to make more efficientuse of existing rolling stock and fixed plant, thereby creating savings in capital investment outlays. - 29 -
NET PRESENT VALUE AND EcoNoMIc RATE OF RETuRN BY COMPONENT (in Y million)
Type of Benefits Value Added to Reduction in the Avoided Capital Total ERR the Economy Cost of Transport Investments NPV (%) Component (% Benefits) Services (% Benefits) (% Benefits) _
Expand Corridor Capacity 4,123 - 4,123 26.1% (100%)
Modernize Infornation Systems - 4,042 4,042 42.2% (100%)
UpgradeTelocommunications Systems 2,436 - 2,525 4,961 30.2% (49.1%) (50.9%)
Commercialize Container Transport - 956 956 29.0% (100%)
Expand SystemCapacity 3,714 22 - 3,736 20.5% (99.4%) (0.6%) Total NPV 6,149 5,101 6,567 17,818 26.7% (34.5%) (28.6%) (36.9%) _
4.3 Besides the benefits quantified above, several components-particularly the expansion of system capacity and commercializationof container transport-would help spur developmentof interior provinces by expandingtransport services into these areas.
C. EXPANING CORRIDOR CAPACrrY
4.4 Over the next decade, rail freight demand on the Wuhan-Guangzhoucorridor is expectedto grow substantially. By the year 2000, the line will be called upon to handle more than 203 milliontons-two thirds more than the 123 milliontons transportedin 1991. In 2005, demandis anticipatedto approach245 milliontons-a doublingof current levels. Passenger traffic also is projected to expand rapidly: compared to the 29 billion pkm handled by the line today, personal travel will increase 40 percent by the turn of the century and 75 percent by 2005.
4.5 The Wuhan-Guangzhouline, as currently configuredand operated, lacks the capacity to handle all the contemplatedgrowth in freight demand (as priority has been given to passenger trains). Consequently,without the project, as least 15 percent of the anticipated freight volume would need to be rerouted to the more circuitous and nonelectrifiedBeijing-Jiulong rail line (for through traffic the Beijing-Jiulongroute is 1,32'7km comparedto the 1,044 km of the Wuhan-Guangzhouline). In addition, without this investmentcomponent, some of the projected Wuhan-Guangzhoufreight traffic also would be diverted to more costly road transport.
4.6 The benefits were estimated in terms of transport operating costs savings attributableto the lower fuel and maintenanceoutlays madepossible by shifting from diesel - 30 - to electric traction. These savings, in turn, relate to the passenger and freight traffic that, without the project, would be moved over the Wuhan-Guangzhouline by diesel traction, and to the freight traffic that would be redirected to the longer, diesel-operatedBeijing- Jiulong route. Because the unit costs of trucking in China are over 10 times higher than comparablerail outlays, the diversion to trucks that would be avoided by this component would produce further benefits. These savings are properly classified as reductions in transport operating costs. Electricitywas not shadow-pricedto reflect shortagesbecause electricity for the line would not be taken from industry, but would be provided through investment earmarked for expansion of power generation capacity. Still, sensitivity analysis showed that the project would still be economicallyjustified even with the price of electricity doubled.
4.7 Complementaryinvestment costs are quantifiedas the difference between the costs of the with- and without-projectscenarios. The with-projectscenario costs include capital costs for a generating plant with the requisite capacity to supply the Wuhan- Guangzhouline with electric power; the cost of maintainingthe overhead catenary system; the cost of new locomotivesand rolling stock less the cost of comparableequipment that would otherwise be required if diesel service continued; and the costs of population resettlement. Under the without-projectscenario, freight traffic would be diverted to the Beijing-Jiulongroute. To accommodatethis traffic, certain fixed plant capital costs would be incurred (e.g., the double tracking of the Xiangtang-Longchuansection at an earlier date than now planned, and double tracking lines connectingthe alternative route to both Wuhan and Guangzhou). The resultingNPV discountedat 12 percent is Y 4.1 billion and the ERR is 26.1 (Table 4.1).
D. MODERNIZINGINFORMATION SYSTEMS
4.8 From the experience of railways in other countries, modernized information systems produce significant investment savings. The Canadian National, for example, attributes freight car savings of 3.4 percent annually to the introduction of information systems. The consequencesfor British Rail-large gains in the utilizationof rolling stock -are similar. Acknowledgingthe large capital outlay contemplatedby MOR, even conservativeestimates of improvementin plant and equipmentefficiency stemming from a better informationsystem would yield relativelylarge savings. (The savings in plant and equipment tabulated for this componentare separate from and in addition to the capital investment savingsquantified for the telecommunicationscomponent.) The information systems component is anticipated to yield an NPV of Y 4.0 billion and an ERR of 42.2 percent (Table 4.2).
E. UPGRADING TELECOMMUNICATIONS SYSTEMS
4.9 The expansionand modernizationof MOR's telecommunicationsnetworks by this component would make more productive use of existing capital assets. Thus, two major types of benefitscan be anticipated. First, better telecommunicationswould enable MOR to improve car tumaround times and reduce the downtime for locomotive maintenance. This, in turn, would raise the freight-haulingcapacity of the system. This - 31 - is because an improved telecommunicationssystem would allow freight wagons to be dispatched more efficiently, and thereby enable the average wagon to make more trips. When a wagonmakes only one additionaltrip per year, its effectiveannual freight capacity increases by 1.5 percent annually. Calculated on a systemwide basis, this amounts to nearly 23 million tons in incrementalfreight capacityand associatedbenefits in the form of value-addedto the economy. At the same time, the more intensiveuse of existingplant and equipmentmade possible by upgradedtelecommunications also defers the need for new capital expenditures,which MOR presentlyestimates at about Y 70 billion per year. Thus, the gains in efficiency stemming from improved telecommunicationswould create additionalbenefits by postponing the need for near-term capital investmentoutlays. The NPV of this componentis estimatedat Y 5 billion and the ERR at 30.2 percent-a rate that is well in line with other Bank-fundedtelecommunications projects. Not quantified here are other benefits includinghigher worker productivity,greater service quality, and more reliable communications(Table 4.3).
F. COMMRCIALIZINGCONTAINER TRANSPORT
4.10 Following the pilot container transport project funded by the Bank under Railways VI, this component would further enhance MOR's efforts at moving larger quantities of higher-valuedgoods in containers. This merchandiseis now handled either by truck or rail in break-bulk form. For traffic diverted from trucks, economicbenefits stem from: (a) the much lower unit cost of containerrail transport; and (b) the shorter trip distances of rail comparedwith truck. Based on the lengths of haul for the five highest- volume rail container routes in service today (Shanghai-Xian, Shanghai-Tianjin, Guangzhou-Zhengzhou,Beijing-Guangzhou, and Guangzhou-Wuhan),the long-runvariable cost of transportinggoods by rail is nearly Y 860 per ton less than the comparablecost via truck. For traffic diverted from break-bulk rail service, savings in handling costs are estimated by MOR at Y 106 per ton. The resulting NPV of this investmentis Y 956 million and the ERR is 29.0 percent (Table 4.4).
G. EXPANDINGSYSrEM CAPACrrY
4.11 While they would eventually be used systemwide, three-phase AC electric locomotiveswould be deployed first on the mountainousBaoji-Chengdu route in western China. At present, this line-utilizing standard SS4 electric locomotives-operates at capacity and cannot sustain any growth in freight volume. By comparison, the AC units can haul about 20 percent more than the SS4s. Further, due to their greater power, higher speed and more effectivebraking systems, the AC units permit more trains to be run over the line than do the SS4 units. Taken together, these capacity-enhancingfeatures of the AC locomotiveswould greatly increase the amount of traffic that can be carried over the route, from 20.2 million tons today to 37 million tons-a gain of 78 percent.
4.12 Given this increase, the project would foster the production and consumption of new products that would result in value-addedbenefits to the economy (especiallyin the interior western region). These benefits have been calculated based on the anticipated yearly growth in incremental traffic using a methodologyfor valuing induced traffic. - 32 -
Further, comparedto the SS4s, the AC units are expectedto cost less to maintainand have a much lower failure rate. Consequently,benefits in the form of annual operatingsavings of about 16 percent per year also are anticipated.
4.13 MOR proposes to import 32 locomotivesover the three-year period 1997-99. In calculatingthe economiccosts of this component,a unit price representing the average of initial quotationsalready obtainedby MOR has been employed. Since the locomotives are to be manufacturedand assembledabroad, there are no pertinent local costs. The initial quotations also include a three-year spare parts guarantee; accordingly, it is not necessary to specify this cost element separately until 1999. Finally, an allowance for tools, instruments, and training is included as a part of the total project investment. Becauseimport duties and value added taxes are not regardedas economiccosts, they have been excluded from this analysis. Including the complementarycosts for expandingmine and factory capacity neededto produce the incrementaltraffic, the NPV of this component is estimated at Y 3.7 billion and the ERR at 20.5 percent of the incrementalinvestment of replacing SS4s with new locomotives(Table 4.5).
H. OVERALLEVALUATION AND RISK ANALYSIS
4.14 As summarizedin the table above, each of the componentshas an ERR of at least 20 percent and taken together, all componentsas a group yield an overall ERR of 26.7 percent. The NPVs of most components exceed Y 3.7 billion (the NPV of the comparativelylower-cost container transport component amounts to almost Y 1.0 billion). The investmentswould expand rail capacityand thereby create more value added of goods and services-particularly in the interior provinces. Moreover, the more efficient rail service afforded by these investmentswould produce additional benefits in the form of lower capital outlays and reduced transport operatingexpenses. Therefore, the proposed investmentis well justified.
4.15 Executionof the investmentcomponents would entail certain risks. Several of the components-the AC locomotives,information systems and telecommunications- involve newer technologies. As such, they are subject to delays in procurement and implementationthat could retard the flow of expectedbenefits. By contrast, with respect to the Wuhan-Guangzhoucorridor capacityexpansion component, the technologiesare well known to MOR. One concern, though, pertains to the failure rate of electric catenary systems and whether MOR's statement of electric locomotive operating expenses fully reflects these outlays. To compensatefor possibleshortfalls, an additional complementary cost for catenary maintenanceis includedin the economicanalysis. The risks and potential benefits of the container transport component largely depend on the pricing and logistics policies adoptedby CRC and SIT. Rates that adequatelycover rail long-runvariable costs and properly take into account the pricing and service offerings of trucks should succeed in diverting substantial volumes of higher-valuetraffic from trucks. At the same time, however, unreliable and erratic rail delivery schedules would fail to attract the desired business, while below-costrail tariffs would yield unacceptablelosses. - 33 -
4.16 To assess the above-mentionedrisks, two separate sensitivityanalyses were conductedon each of the investmentcomponents. First, the economic cost (includingall complementarycosts) of each componentwas increasedby 20 percent. Second, the total value of all economicbenefits associated with each componentwas reduced by 20 percent. In no case did any of these tests reduce the ERR to less than 15 percent. The results of both sensitivitytests, along with the base-case values, are presented in the table below.
RESULTSOF SENsrnrPv ANALYSIS (Y million)
Increase in Decrease in Benefits Base Case Investment Costs COMPONENT NPV NPV NPV (ERR%) (ERR%) (ERR %) Expand Corridor Capacity 4,123 3,561 2,752 (26.1%) (23.1) (22.4%) Modernize Information Systems 4,042 3,793 2,984 (42.2%) (37.7%) (36.7%) Upgrade Telecommunications Systems 4,961 3,239 2.247 (30.2%) (21.9%) (20.2%) Commercialize Container Transport 956 746 555 (29.0%) (23.6%) (22.5%) Expand System Capacity 3,736 2,199 1,451 ______(20.5%) (16.2%) (15.4%) - 34 -
5. FINANCIL VIBILITY OF RAILWAY TRANSPORT OPERATION
A. INTRODUCTION
5.1 Since enteringinto an economiccontract with the Governmentin 1986, MOR has been financingall of its operatingand capital expendituresthrough internally generated funds and borrowings. This chapter examinesthe past and present financialperformance (1988-94)of the railway's transportoperation (comprising the 12 regional administrations but not including the diversified economy companies) and forecasts its future financial performance (1995-2000).
B. PAS FINANCL PERFR NCE
5.2 By Governmentdecree, gross revenue from the railway's transport operation is divided into two parts: the first is from base tariffs, which covers operating expenses and contributes to the net income of the railway's transport operation; the second comes from a Railway ConstructionFund freight surchargeearmarked for capital investmentsand cannot be used to meet operatingexpenses. This separationhas served the Government's effort to control operating costs. Adjustmentsof the base tariffs and freight surcharge require SPC/State Council approval, which limits MOR's flexibilityin setting tariffs.
5.3 During 1988-92,the railway was profitable, although an increasingoperating ratio since 1990indicates that base tariffs did not keep pace with inflationand the complete phasing out of input subsidies. Since 1988,operating costs per ctkm escalated 99 percent, while revenues grew only 70 percent (the latter exclude freight surcharge revenues earmarked for capital investments). From 1992-93, the cost of previously subsidized inputs such as electricity, energy and materials increased 77, 58 and 41 percent, respectively. Nonoperatingexpenses (i.e., interest) also grew 75 percent during this time due to more borrowingfor capital investmentand to the phasing out of interest subsidies by the Government. At the same time, the freight surcharge increased from 0.2 fen/tkm in 1991 to 2.7 fen/tkm in 1993.
5.4 When it was introduced in 1991, the Railway Construction Fund was not leveraged, i.e., funds had to be used 'yuan for yuan' for capital investments. However, starting in 1993, the fund could be used to pay the interest on debt incurred for these investments,and the railway showeda net loss of Y 0.7 billion in 1993 (after paying Y 3.2 billion interest from surchargerevenues). Had the surchargerevenues been included with base tariff revenues, the railwayswould have shown a profit of Y 20.4 billion in 1993 (see the table below). - 35 -
ACTUALREVENUES AND EXPENSES, 1988-93 (Y million, in current prices)
/a /a Annual 1988 1989 1990 1991 1992 1993 Growth
OveratineRevenue 28 062 31607 41.105 46.704 56.471 80.294 23% of which surchargerevenue - - - 1,996 8,604 24,347 -
OperatingExpenses 20.272 24 982 27.807 32 509 35 811 47 641 19%
Operatine Income 72790 6.625 13.298 14 195 20 660 32653 33 %
Net Income /b 6,414 3,558 7,370 7,630 10,626 20,385 26% of which: Inc./(loss) from trpt oper. /c 4,952 2,258 5,870 4,111 3,907 (734) - TransfertoRwyConstr. Fund/d - - - 1,889 6,719 21,119 Transfer to Special Fund 1,462 1,300 1,500 1,630 - - -
Workinz Ratio (%) /e 60 67 57 59 64 75
Operating Ratio (%) /f 72 79 68 70 75 85
Unit operating revenue /e 2.14 2.36 3.14 3.28 3.29 3.63 70% incr. (fenlctkm) aince 1988 Unit operating expense 1.55 1.86 2.13 2.39 2.46 3.09 99% incr. (fen/ctkm) since 1988
/a 1992-93 operating expenses and income are not directly comparable to previous years due to changes in the accounting guidelines. /b Operating income less net nonoperating expenses, interest and taxes. /c Capital Construction Fund under old accounting guidelines, i.e., balance of net income after allocationsto the Railway Construction Fund and the Special Fund (which was eliminated under new accounting guidelines). /d Revenues from the freight surchargeless business taxes (and less interest expense in 1992 and 1993). /e Operating expenses, less depreciation, expreswedas a percentage of operating revenue less surchargerevenue. If Operating expenses expressed as a percentageof operating revenue leu surcharge revenue. /g Operating revenue from base tariffs Ci.e., excluding freight surcharge revenue).
C. PRESENT FINANCIAL PERFORMANCE
5.5 MOR projects (based on unaudited figures) an operating ratio approaching 100 percent and a loss of Y 2.9 billion (basedon base tariffs and after paying Y 6.5 billion interest from surcharge revenues) in 1994. If freight surcharge revenueswere treated as fungible with base tariff revenues, MOR would project a profit of about Y 26.0 billion. MOR is now in a situation that it has funds to build new railway lines, but is having trouble maintainingthe railway's physical assets and replenishingpension and welfare funds becauseof the segregationof base tariff and freight surcharge revenues. Protracted deferment of maintenancecould impair the safety of railway operations, especially by heighteningthe risk of derailments.
5.6 As to financial self-sufficiency(see definition in table in para. 5.14), MOR projects that the railway will internally generate 67 percent (compared to 75 percent in 1993)of averagecapital investmentsincluding equipment replacements, other than normal repairs and maintenance. The decline is due to higher capital investments(Y 45.0 billion - 36 -
in 1994 comparedto Y 40.0 billion in 1993)and to the absenceof across-the-boardtariff increases in 1994 [i.e., in 1994, only selective tariff increases (see para. 5.8) compared to an across-the-boardfreight surcharge increase in 1993 took place].
5.7 The self-financingratio in the railways is relatively high because 80 to close to 100 percent of internally generated funds is from freight surcharge revenues that are earmarked for capital investments. The remainder of the internally generated funds are noncash expenses (i.e., depreciation)and the differencebetween base tariff and operating (excludingdepreciation) and nonoperatingexpenses.
5.8 MOR is trying to sustainthe railway's profitability (i.e., the excess of book tariff revenues over expenses) by containing costs, raising productivity, and proposing tariff hikes. With regard to freight, MOR initiatedin 1993a "new line, new tariff" policy to achieve full cost recovery for newly built lines. Applyingthe policy to the new Daqin, Lanwu and Zhenwu lines raised the average base freight tariff from 2.7 fen/tkm in 1992 to 2.9 fen/tkm in 1993(a 6.7 percent increase). With regard to passenger traffic, two new policies were introduced. First, a "higher price for higher-qualityservice" policy was applied to 12 pairs of passenger trains in 1993 and to 26 train pairs in 1994. Second, passengertariffs were raised in Guangdongprovince during peak demandperiods. These measures increasedthe average passenger fare from 4.4 fen/pkm in 1992 to 4.6 fen/pkm in 1993 (a 3.4 percent increase). Still, these initiatives were insufficient to keep the railway profitable (excludingfreight surchargerevenues) in 1994.
5.9 To restore profitability, MOR has proposed to SPC a cost-indexmethodology for justifying future tariff adjustments. In addition, MOR has developeda costing model. Once data are available, the costing model will have the capabilityto track specificpoint- to-point costs that, combined with a centralizedwaybill file (to be developed along with management information systems), can calculate revenues and costs for the origin- destination movements of major commodities, and thus, determine profitable and loss- making lines and traffic categories. MOR is also preparing a plan in which concrete measures for reductionsof operating costs over the next two to three years would be set forth.
D. FUTUREFINANCIAL PERFORMANCE: BASE CASE
5.10 The base case reflects the most likely increases in base tariffs and freight surchargefrom 1995to 1997and MOR's proposedcapital investmentsfrom 1995 to 2000. In the base case and all scenarios(except the medium scenario, which assumesa surcharge increase in 1998), under the sensitivityanalysis, it was assumed that no tariff increases would take place from 1998 to 2000. This approach was taken because discussionswith the client on tariff increasesbeyond 1997were inconclusive. Key assumptionsfor the base case financialprojections for 1995-2000are given below. Detailed financialassumptions are in the Project File.
(a) A capital investmentprogram of Y 61 billion in 1995 and Y 418 billion from 1996 to 2000 (includingY 350 billion of new investmentsand Y 68 billion of - 37 -
equipmentreplacement) based on a real GNP growth rate of 8 to 9 percent, which correspondsto a combinedfreight and passenger traffic (ctkm) growth rate of 6.6 percent per year;
(b) About 50 percent of the capital investmentplan to be implementedin 1995-97 and the remaining50 percent in 1998-2000;
(c) An increase in average passenger fares from 4.77 fen/pkm to 6.77 fen/pkm in 1995 (about 42 percent increase);
(d) An increase in average base freight tariffs from 2.85 to 4.35 fen/tkm in 1996 (about 53 percent increase);
(e) An increase in the freight surcharge from 2.7 to 4.2 fen/tkm in 1997 (about 57 percent increase).
5.11 For 1995, MOR estimatesa loss of Y 4.4 million; after a brief recovery in 1996 to 1998 (due to projected tariff increases in 1995, 1996 and 1997), it projects losses in 1999 and 2000 because no tariff increases were assumed beyond 1997 (see para. 5.10) (see table below). The operating ratio (net of freight surcharge revenue) approaches 100 percent in 1995, recovers to 82 percent in 1996, but deteriorates to 98 percent by 2000. Aside from the projected loss/profit, MOR would have net surcharge revenues ranging from a low of about Y 29 billion in 1995 to a high of about Y 62 billion in 2000. The surcharge revenuesare net of interest; since 1993 SPC and MOF have allowedMOR, on a year-to-yearbasis, to use surchargerevenues to cover some nonoperationalexpenses. Thus, a first step has been set in the direction of fungibility of revenue sources. If surcharge revenues were fungible in their entirety, the net result would be a profitable MOR (see table below). The self-financingratio is projected at 67 percent in 1994 (based on unaudited figures), 52 percent in 1995, 63 percent in 1996 and over 80 percent from 1997 to 1999.
E. SENsrnwvr ANALYSIS
5.12 The ability of the railway to increase the base tariffs and freight surchargeis crucial to the upkeepof its infrastructure,the welfare of its workforce, and the realization of its capital investmentprogram. Two scenarios, a low and high case, are examined in comparison with the base case, where the low case implies no tariff increases for the period forecast and the high case implies the full tariff increases as proposed to the State Councilin June 1994. In addition, a medium case is tested to determine the implications of delaying all tariff increases, assumed in the base case, by one year. The purpose is to evaluate the implicationsfor: (a) the level of the self-financingratio, (b) the amount to be borrowed, and (c) coverage of debt service. The detailed financialresults under each of the scenarios are in the Project File.
5.13 The results are given in the table below. The low-case scenarios assume no tariff increases from 1995 to 2000 and can be rejected because it implies that MOR either - 38 -
FoREcAST OF REVENUESAND ExPENSES, 1994-2000: BASE CASE (Y million, in current prices)
Annual 1994 1995 1996 1997 1998 1999 2000 Growth
Oneratinr Revenue 92.328 104.637 130,.533 161,033 171.977 184.063 197.520 14 of which: Surcharge Revenue 33,507 35,181 36,450 60,900 65,100 70,140 75,600 15%
OperatingExpenses 57.146 68489 77475 86935 97.103 107.747 119.112 13%
Oeratinir come 35.182 36.14 7 5 7 74.874 76.36 78408 14%
Net Inco le/a 25981 24.294 36.928 55.147 55.922 56.089 56. 14% of which: Inc./(loo) from trpt oper. /b (2,911) (4,355) 9,907 6,324 2,489 (1,549) (5,381) - Net tanafer to Railway Construction Fund /c 28,893 28,649 27,021 48,823 53,433 57,638 62,089 14%
Workine Ratio (%) Id 86 87 72 75 78 81 83 Ooerating Ratio (%) /e 97 99 82 87 91 95 98
Unit operating revenueIf 3.67 4.13 5.32 5.30 5.29 5.27 5.26 43% incr. (fenlctkm) since 1994 Unit operting expense 3.57 4.07 4.38 4.60 4.81 4.99 5.13 44% incr. (fen/ctkzn) since 1994
/a Operating income less net nonoperting expenses, interest and taxes. /b Reflects net income after taxes but excludes interest and freight surcharge revenue. /c Revenues collected from the freight surcharge les businew taxes andinterest. a Operatungexpenses, les depreciation, expresed as a percentage of operating revenue less surcharge revenue. /e Operating expenses expresed as a percentage of operating revenue from base tariffs only. Tf Operating revenue from base tariffs (i.e., excluding freight surcharge revenue). has to: (a) reduce its capital investmentsby almost 15 percent in 1995 and by over 70 percentduring the 1996to 2000 period; or (b) borrow substantialamounts to implement its investmentplan in 1995 to 2000, and run its operationsfrom 1995 onward. Option (a) is contradictoryto a nationalinvestment policy to increase investmentsin transport; option (b) is infeasiblebecause MOR could not service its debt from 1997onward. Both low-case scenariosresult in increasingoperating losses (due to base tariffs and freight revenuesnot being fungible), evidenced by an operating ratio of 111 percent in 1995, deterioratingto 141 percent by 2000.
5.14 The high-casescenario assumes that the railway receives approval for the full tariff increase as submittedto the State Council in June 1994: average base freight tariffs increase in 1996 from 2.85 fen to 5.55 fen per tkm, while increases in passenger tariffs and surcharges remain the same as under the base case. In addition, the 1996 to 2000 capital investmentprogram is assumed to increase by Y 50 billion to reflect the high end of the Y 350-400 planning range. The high case should also be rejected because it assumes that the proposals MOR submittedto SPC in June 1994 for increases in freight tariffs, freight surcharge and passenger rates would be approved in their entirety with - 39 -
SENsrnvyrYANALYSIS-KEY RATIOs, 1994-2000
1994 1995 1996 1997 1998 1999 2000
Base Case, Railway's current plans Operating Ratio, % /a 97 99 82 87 91 95 98 Self-Financing Ratio, % /b 67 52 63 82 84 84 - Debt Service Coverage c 2.9 3.4 3.4 3.3 4.2 4.5 4.7
Low Case (1). no tariff increases, reduction in capital investment Operating Ratio, % 97 111 1is 125 131 136 141 Self-Financing Ratio, % 71 50 43 42 52 50 - Debt Service Coverage 2.9 2.3 1.7 1.1 1.4 1.4 1.3
Low Case (21. no tariff increases, increase in borrowines Operating Ratio, % 97 111 118 125 131 136 141 Self-Financing Ratio, % 67 40 25 14 6 -4 - Debt Service Coverage 2.9 2.8 1.5 0.7 0.6 0.4 0.3
HiMhCase. full tariff increases and increase cavital investment to high range Operating Ratio, % 97 99 70 74 77 80 83 Self-Financing Ratio, % 67 52 76 93 91 89 - Debt Service Coverage 2.9 3.4 4.0 3.8 5.0 5.4 5.7
Medium Case, delay each tariff increase by one year. increase borrowings Operating Ratio, % 97 111 105 37 91 95 93 Self-Financing Ratio, % 67 40 36 52 77 77 - Debt Service Coverage 2.9 2.3 1.9 1.7 2.4 2.8 3.0
/a Operating expenses expressed as a percentage of operating revenue. Freight surcharge revenues are not included in this percentage. /b Defined as internal cash generation (including net revenue lou, railway surcharge revenues and depreciation) as a percent of the average capital investment and equipment replacenent in years (x-1), x and (x+ 1). /c Defined as inconmeafter taxes plus interest and depreciation divided by interest and repayment on long-term to be paid in the same year. regard to timing and level of increase. Based on experience since 1990, this is unlikely to happen.
5.15 The medium-casescenario assumes a one-year delay in tariff increases, i.e., average passenger tariffs increase by 2 fen/pkm in 1996, average base freight tariffs increase by 2.7 fen/tkm in 1997, and the freight surcharge increases by 1.5 fen/tkm in 1998. As a result of decreased revenues, MOR would need to mobilize Y 97 billion in additional borrowings during 1995 to 2000 to maintain positive cash flow. The loss in 1995 would increase from Y 4 to Y 12 billion and a loss of Y 9 billion would be incurred in 1996. MOR would become profitable in 1997. Including surcharge revenues, MOR would be profitable in each year from 1995 to 2000.
F. CONCLUSIONS
5.16 The base case is the most desirable scenario because it limits the period of transitionallosses (the latter not includingsurcharge revenues). The low case is a worst- case scenariobecause it would either not enable the railwaysto carry out the much-needed - 40 - capital investments,or it would result in a nonviablerailways from 1999 if it borrows the funds needed to implementthe capital investmentsprogram. The mediumcase represents a possible altemative to the base case. It is less desirable because it lengthens the period of transitionallosses by one year.
5.17 To effectively serve an increasingly market-driven economy, the railway requires, among other things, to increase its base tariffs by at least an amount that would allow it to phase out its transitionallosses. Agreement was reached at negotiationsthat the Borrower, throughMOR, will produce or cause to be produced in respect of MOR's railway transport operations, for each of its fiscal years, finds from internal sources equivalentto not less than the following percentage of the annual average of the capital expendituresincurred, or expected to be incurred,for that year, the previous fiscal year and the nextfollowingfiscal year: (a)for itsfiscal year endingon December 31, 1995 and its fiscal year ending on December 31, 1996: 50 percent; and (b)for each of its fiscal years thereafter: 55 percent (para. 6. 1f). - 41 -
6. AGREEMENTS REACHED AND RECOMMENDATION
6.1 During negotiations,agreement was reachedwith the Borrower that it, through MOR, will:
(a) Implement the PID componentsof railway enterprise reform, railway tariff reform, and labor productivity according to action plans acceptable to the Bank (para. 3.9);
(b) (i) select at least two container transport companiesacceptable to the Bank to which the containertransport and handlingequipment to be procured under the project shall be leased; (ii) employ consultants with terms of reference, qualifications and experience acceptable to the Bank to assist it in the preparationof contractualagreements between the Borrower and said container transport companiesrequired for the leasing and operationof said equipment on a commercial basis; (iii) furnish said agreements to the Bank promptly upon their preparation and afford the Bank a reasonable opportunity to exchangeviews with the Borrower thereon; (iv) thereafter, take all measures required on its part to conclude said agreementswith said container transport companies, taking into account the views of the Bank on the matter; and (v) ensure that no invitationsto bid for contracts for container transport and handlingequipment included in the project shall be issued unless and until the Borrower shall have concludedthe agreementsreferred to in item (iv) above (para. 3.19);
(c) Carry out the study components of (i) dedicated passenger rail feasibility, (ii) application of the RIS decision-supportsystem, (iii) railway information systemsdevelopment, (iv) railway telecommunicationssystems management, (v) diesel engine design, (vi) strengtheningof MOR's treasury functions, and (vii) restructuring the railway's manufacturing sector, according to action plans acceptable to the Bank; then, exchange views with the Bank on the studies' recommendations;and, finally, implement the recommendations, taking into account the Bank's comments (para. 3.34);
(d) Undertake,jointly with the Bank, a mid-termreview of project implementation no later than November 30, 1998 (para. 3.50);
(e) Ensure that (i) the project will be implementedaccording to health, safety, and environmentalstandards acceptable to the Bank and (ii) the resettlement of people affected by the corridor expansion component will be carried out according to the plans acceptable to the Bank (paras. 3.52, 3.54); and - 42 -
(f) Produce or cause to be produced in respect of MOR's railway transport operations, for each of its fiscal years, funds from internal sources equivalent to not less than the followingpercentage of the annual average of the capital expendituresincurred, or expectedto be incurred, for that year, the previous fiscal year and the next following fiscal year: (i) for its fiscal year ending on December 31, 1995 and its fiscal year ending on December 31, 1996: 50 percent; and (ii) for each of its fiscal years thereafter: 55 percent (para. 5.17).
6.2 Subjectto the above, the proposedproject would be suitablefor a loan of $400 million to the People's Republic of China. The loan would be for a term of 20 years, includinga grace period of 5 years, at the Bank's standard variable interest rate. Table 1.1: FREIGHT TRAFFICINTENSnTIES AND ROAD AND RAELWAYNETwoRK DENSrTyIN SELEcTED CouNTRIEs
Country Country Area Tons Originated/a Ton-km/a Average Estimated GNP Tons/$1,000 Ton-km/$ GNP Name (millionkn 2) (millions) (billions) Distance(i)/a ($ billion) of GNP
China 9.6 10,347 2,018 195 546 18.9 3.7 Russia 17.1 21,147 3,766 178 374 56.5 10.1 USA 9.4 6,938 5,259 758 5,935 1.2 0.9 India 3.3 1,043 634 608 274 3.8 2.3 Brazil 8.5 1,210 507 419 426 2.8 1.2 Japan 0.4 6,919 559 81 3,510 2.0 0.2
/a Includes rail, highway, inland waterway, pipeline, and air freight only. RoAD AND RAILWAY NETWORK DENsmY IN SELEcTED CouNTRIES
Country Population Area Rail Length Rail Density Road Length Road Densitv Name (million) (million km2) ('000 km) kn/'000 pop km/'000 kmZ ('000 ki) km/'000 pop km/'000 km
China 1,162 9.6 53.6 0.05 5.6 1,057 0.9 110.5 Russsia 149 17.1 87.2 0.59 5.1 879 5.9 51.5 USA 255 9.4 270.3 1.06 28.8 6,366 24.9 679.1 India 884 3.3 62.5 0.07 19.0 1,970 2.2 599.1 Brazil 154 8.5 28.8 0.19 3.4 1,662 10.8 195.2 Japan 125 0.4 27.3 0.22 72.3 1,112 8.9 2,941.7
Sources: China: Statistical Yearbook of China 1993 (Data for 1992), pp 460-68. Russia: "The Former Soviet Union in Transition," vol. 2-Study papers submitted to the Joint Economic Committee, Congress of United States, February 1993, p. 1162. Jane Holt: 'Transport Strategies for the Russian Federation," World Bank, 1993, Chapter 1 (1992 data). USA: World Faabook 1992 (Central Intelligence Agency), pp 358-9; World Road Statistics 1988-93 (International Road Federation) (data for 1991). National Transportation Statistics: Annual Report, June 1992, pp 54, 105; ENO Transportation Foundation: Transportation in America, PP 44-46. India: Indian Railways Ycarbook-1992-93, p. I1; cIndia:Transport Sector Long-Term Issues, " Internal Document no. 13192-IN, Annex 1 (data for 1992). Brzil: World Road Statistics 1988-1992, International Road Federation, 1993, Section V; Kessides,I: Brazilian Railroad Industry: Options for Organizational Restructuring, p 41 (data for 1991). Japan: World Road Statistics 1988-1992, International Road Federation, 1993, Section V (data for 1991). Area & GNP: World Bank: The World Development Report 1994, pp 162-3 (GNP in 1992 US dollars). Population: World Bank: The World Development Report 1994, pp 162-3. - 44 -
Table 1.2: FREIGHTTRAmC BY MODE (in billion ton-km)
Domestic Pipe- Civil Ocean Rail Road waterwayLa line aviation Total Shipping
1952 60.2 1.4 11.8 - 0.002 73.4 2.8 Modal split (X) 2.0 16.0 - - 18.0 -
1977 456.9 25.1 102.1 38.7 0.076 622.9 174.1 Modal split (9) 73.4 4.0 16.4 6.2 - 100.0 -
1979 559.9 74.5 139.3 47.6 0.123 821.4 317.1 1980 571.7 76.4 152.1 49.1 0.141 849.4 353.2 1981 571.2 78.0 150.7 49.9 0.170 850.0 364.3 1982 612.0 94.9 170.8 50.1 0.198 928.0 376.9 1983 664.7 108.4 181.1 53.4 0.229 1,007.7 397.7 1984 724.8 153.6 196.1 57.2 0.311 1,132.0 437.4 1985 812.6 169.3 237.1 60.3 0.415 1,279.7 532.9 1986 876.5 211.8 270.0 61.2 0.481 1,419.9 594.8 1987 947.1 266.0 288.9 62.5 0.650 1,565.2 657.6 1988 987.8 322.0 310.4 65.0 0.730 1,686.0 696.6 1989 1,039.4 337.5 349.8 62.9 0.690 1,790.2 768.9 1990 1,062.2 335.8 345.1 62.7 0.820 1,806.6 814.1 1991 1,097.2 342.8 396.5 62.1 1.010 1,899.6 899.0 1992 1,157.6 375.5 422.2 61.7 1.342 2,018.4 903.4 1993 1,195.5 407.0 472.6 60.8 1.661 2,137.6 913.4 Modal split (%) 55.9 19.0 22.1 2.8 0.1 100.0
Growth rate % 1.a.
1952 - 77 8.4 12.1 9.0 - 15.7 8.9 18.0
1983 - 84 9.0 41.7 8.3 7.1 35.8 12.3 10.0 1984 - 85 12.1 10.2 20.9 5.4 33.4 13.0 21.8 1985 - 86 7.9 25.1 13.9 1.5 15.9 11.0 11.6 1986 - 87 8.1 25.6 7.0 2.1 35.1 10.2 10.6 1987 - 88 4.3 21.0 7.5 4.0 12.3 7.7 5.9 1988 - 89 5.2 4.8 12.7 (3.2) (5.5) 6.2 10.4 1989 - 90 2.2 (0.5) (1.3) (0.3) 18.8 0.9 5.9 1990 - 91 3.3 2.1 14.9 (1.0) 23.2 5.1 10.4 1991 - 92 5.5 9.6 6.5 (0.6) 32.9 6.3 0.5 1992 - 93 3.3 8.4 11.9 (1.5) 23.8 5.9 1.1
1982 - 93 6.3 14.2 9.7 1.8 21.3 7.9 8.4
L/ Excludes oceangoing trnsprt from 1979 to 1993; includes oceangoing trasport in 1994.
Source: Statistical Yearbook of China-1994, Table 14-7, p. 461. - 45 -
Table 1.3: PASSENGERTRAFFC BY MODE (in billion passenger-km)
Civil Rail Road Waterway Aviation Total
1952 20.1 2.3 2.5 0.024 24.8 Modal split(X) 80.9 9.1 9.9 0.1 100.0
1977 102.3 44.8 9.7 1.834 158.7 Modal split (X) 64.5 28.2 6.1 1.2 100.0
1979 121.6 60.3 11.4 3.5 196.8 1980 138.3 73.0 12.9 4.0 228.1 1981 147.3 83.9 13.8 5.0 250.0 1982 157.5 96.4 14.5 6.0 274.3 1983 177.7 110.6 15.4 5.9 309.5 1984 204.6 133.7 15.4 8.4 362.1 1985 241.6 172.5 17.9 11.7 443.7 1986 258.7 198.2 18.2 14.6 489.7 1987 284.3 219.0 19.6 18.7 541.6 1988 326.0 252.8 20.4 21.4 620.7 1989 303.7 266.2 18.8 18.7 607.5 1990 261.3 262.0 16.5 23.0 562.8 1991 282.8 287.2 17.7 30.1 617.8 1992 315.2 319.3 19.8 40.6 694.9 1993 348.3 370.1 19.6 47.8 785.8 Modal split (%) 44.3 47.1 2.5 6.1 100.0
Growth rate % g.a.
1952 - 77 6.7 12.7 5.7 18.9 7.7
1983 - 84 15.2 20.9 0.0 41.6 17.0 1984 - 85 18.1 29.0 16.1 40.1 22.5 1985 - 86 7.1 14.9 1.9 25.1 10.4 1986 - 87 9.9 10.5 7.6 27.8 10.6 1987 - 88 14.7 15.4 4.1 14.7 14.6 1988 - 89 (6.8) 5.3 (7.7) (12.9) (2.1) 1989 - 90 (14.0) (1.6) (12.4) 23.1 (7.4) 1990 - 91 8.2 9.6 7.3 30.9 9.8 1991 - 92 11.5 11.2 12.1 34.9 12.5 1992 - 93 10.5 15.9 (1.2) 17.7 13.1
1982 - 93 7.5 13.0 2.8 20.9 10.0
Sourcc Statistical Yearbookof China-1994,Table 14-5, p. 460. - 46 -
Table 1.4: TRANSPORTINVETMFNr vs. ECoNoMIc OuTpur IN CHNA (in Yuan billion)
Annual GNP Transport transport (current investment Year investment prices) as % of GNP
1966-70 3FYP 15.0& 935.0 1.6 1971-75 4FYP 31.81a 1,323.0 2.4 1976-80 5FYP 30.28a 1,758.0 1.7 1981-85 6FYP 41.9 3,130.5 1.3 1986-90 7FYP 89.1 6,875.3 1.3
1980 5.9 447.0 1.3 1981 3.6 477.3 0.8 1982 5.2 519.3 1.0 1983 7.2 580.9 1.2 1984 10.0 696.2 1.4 1985 15.9 856.8 1.9 1986 16.7 969.6 1.7 1987 17.4 1,130.1 1.5 1988 19.0 1,406.8 1.4 1989 18.0 1,599.3 1.1 1990 18.0 1,769.5 1.0 1991 30.0 2,023.6 1.5 1992 39.3 2,437.9 1.6 1993 63.9 3,134.2 2.0
1980-93 average 1.39
& Investment of FYPs includes Post and Telecommunications (about 4 percent of total).
Source: StatisticalYearbook of China-1994,Table 5-2, p. 149, Table 2-10, p. 32. Statistical Yearbook of China-1993, Table 5-22, p. 135, Table 2-12, p. 28. Statistical Yearbookof China-1991,Table 5-22, p. 160. Other data based on SAR of China Fifth Railway Project, Table 1.5, p. 88. Table 1.5: INVESTMEN iN THE TRANSPORT SECTOR (INCLUDING POST AND TELECOMMUNICATIONS) (in Yuan billion)
Ist FYP 2nd FYP 3rd FYP 4th FYP 5th FYP 6th FYP 7th FYP 1953-57 195S-62 1963-65 1966-70 1971-75 1976-80 1981-85 1986 1987 1988 1989 1990 1991 1992 1993
Trasprt Railway 5.9 10.4 3.4 11.3 17.3 4.0 21.8 8.5 8.7 10.2 9.0 12.1 12.6 31.7 Highway ------5.9 2.7 3.3 4.2 4.3 5.5 - 15.8 Waterway ------11.0 3.7 3.9 3.2 3.6 4.8 - 6.1 Aviation ------2.9 1.3 1.4 1.3 1.0 1.5 - 10.0 Pipclizia ------0.1 0.5 0.1 0.1 0.1 0.1 - 0.0
Subotal 41.7 16.7 17.4 19.0 18.0 24.0 30.0 39.3 63.6
Pg & Tlccom. - - - - - 3.6 1.3 1.6 1.8 2.3 2.7 3.1 5.5 1.3
TOW 9.0 16.3 5.4 16.0 31.8 30.2 45.3 18.0 19.0 20.S 20.3 26.7 33.1 44.8 64.9
TotalCapital ihve cniait 58.8 120.6 42.2 97.6 176.4 234.2 341.0 117.6 134.3 152.6 155.2 170.4 211.6 301.3 301.3
Tranuportas % of Tol investznat /a 15.3 13.5 12.7 16.4 18.0 12.9 12.2 14.2 13.0 12.5 11.6 14.1 14.2 13.0 21.1
la Invoetmnt of FYPr, befobr 1980, includesPoe andTcleconmnnicationa (about 4 percentof total).
sourc: samsFcaiYearbook of caina-1993,Table 5-22,p. 135, andTable 5.5, p. 122. SMdcal Yeabo of CQina-1994,Table 5-S, p. 149. Table 1.6: SUMMARYSTATISnCS OF BANK-FINANCEDTRANPoRT PROJEC (T OUGH FY94)
Actua Ltn Amount, SM $ million (net of tanl Board Effective Closng (baSud on SAR) canCellations) Subsector/ProjectNam (Credit) No. Date Date Date IBRD IDA IBRD IDA Status
RML Railway1 2394 03/27/84 07/10/84 12/31/90 220.00 219.25 Closed Railway 11 2540 05/14185 11/22f85 06130194 235.00 220.00 Closed Railway III 26781(1680) 04/15/86 01/14/87 06/30/95 160.00 70.00 160.00 70.00 Ongoing Railway IV 2968 06/23/88 04/25/89 12/31/96 200.00 200.00 Ongoing Inner Mongolia Railway 3060(2014) 05/12189 01/16/90 12/31/96 70.00 80.00 70.00 80.00 Ongoing Railway V 3406 09/24/91 01/26/92 12/31/98 330.00 330.00 Ongoing Railway VI 3581 03/25/93 07/14/93 06/30/99 420.00 420.00 Ongoing
Subtotal 1.635.00 150.00 1.619.25 150.00 oo Total Loan & Credit Amount in S million 1,785.00
PORTS Ports 1 2207 11/02/82 02/02/83 06/30/88 124.00 67.97 Closed Tianjin Port 2689 05/06/86 04/16/87 10/31/94 130.00 130.00 Ongoing Huangpu Port 2877/(1845) 10/06/87 10/20/88 12/31/93 63.00 25.00 63.00 25.00 Ongoing Dalian Port 2907/(1875) 02/09/88 10/13/88 12/31/93 71.00 25.00 70.25 25.00 Closed Ningbo & Shanghai Ports 3006 12/13/88 05/09/89 12/31/93 76.40 76.40 Ongoing Xiamen Port 3007 12/13/88 02/07/89 03/31/95 36.00 36.00 Ongoing Ship Waste Disposal (2391) 06/17/92 12/31/92 06/30/96 15.00 15.00 Ongoing Shanghai Port Restoration & Dev. 3552 12/22/92 05/14/93 06/30/99 150.00 150.00 Ongoing
Subtotal 650.40 65.00 593.62 65.00 Total Loan & Credit Amount in $ million 715.40
... Continued Table 1.6: (CONT'D)
Actual Loan Amount, $M $ million (net of Loan/ Board Effective Closing (based on SAR) cancellations) Subsector/Project Name (Credit) No. Date Date Date IBRD IDA IBRD IDA Status
ROADS Roads I 2539/(1594) 05/14/85 12/04/85 06/30/91 42.60 30.00 29.60 30.00 Closed Beijing-Tianjin-Tanggu Expressway 2811/(1792) 05/12/87 12/14/87 12/31/94 25.00 125.00 25.00 125.00 Ongoing Highway III-Sichuan Highway 2951/(1917) 06/09/88 05/31/89 12/31/94 75.00 50.00 75.00 50.00 Ongoing Highway IV-Shaanxi Highway 2952 06/09/88 05/31/89 12/31/94 50.00 50.00 Ongoing Highway VI-Jiangxi Prov. (1984) 02/07/89 06/14/89 12/31/95 61.00 61.00 Ongoing Highway V-Shandong Provincial Highway 3037/(2025) 05/25/89 12/07/89 06/30/95 60.00 50.00 60.00 50.00 Ongoing Zhejiang Provincial Highway Project 3471 05/19/92 09/17/92 06/30/98 220.00 Ongoing Guangdong Provincial Highway Project 3530 11/17/92 04/16/93 06/30/99 240.00 240.00 Ongoing Henan Provincial Transport 3531 11/17/92 04/16/93 06/30/98 120.00 120.00 Ongoing Fujian Provincial Highway 3681 12/14/93 07/24/94 06/30/00 140.00 140.00 Ongoing Hebei/Henan National Highways 3748 06/07/94 10/18/94 06/30/88 380.00 380.00 Ongoing I
Subtotal 1.352.60 316.00 1.119.60 316.00 Total Loan & Credit Amount in $ million 1,668.60 URBAN TRANSPORT Shanghai Metro Transport (2296) 09/10/91 01/26/92 06/30/98 60.00 60.00 Ongoing Shanghai Metro Transport 11 3652 10/14/93 02/14/94 12/31/98 150.00 150.00 Ongoing
Subtotal 150.00 60.00 150.00 60.00 Total Loan & Credit Amount in $ million 210.00 MULTIMODAL Jiangsu Provincial Transport 3316/(2226) 04/09/91 09/10/91 06/30/96 100.00 53.60 100.00 53.60 Ongoing
Subtotal 100. 53.60 100.00 53.60 Total Loan & Credit Amount in $ million 153.60
Sector Total Loan & Credit Amount in $ 4.532.60 Table 2.1: FREIGITTRAmC CARRED BY MOR (in billion ton-kIn)
19S0 1911 1932 1983 1934 1915 1916 1987 1938 1939 1990 1991 1992 1993 X (93)
Cool 176.70 13.20 199.76 213.15 233.55 259.59 277.00 285.74 299.51 316.18 344.64 341.42 357.71 358.36 30.1 runber 51.20 49.50 49.32 53.15 57.49 62.93 66.23 64.39 53.32 57.89 53.64 51.52 51.10 53.30 4.5 beeASteel Products 46.80 42.40 44.59 49.43 56.83 64.81 74.94 75.61 69.86 72.62 30.59 30.62 81.61 93.61 8.3 Coaouction Materials 33.30 30.40 39.63 41.97 42.11 45.69 46.55 48.32 49.49 52.02 44.17 43.66 46.64 61.16 5.1 Petoleum 30.10 28.70 28.35 29.96 31.26 34.07 37.53 39.69 39.12 39.99 42.00 43.77 46.13 49.90 4.2 NonmtAaUicOres 24.60 24.20 24.17 23.06 31.42 33.37 35.45 35.39 33.22 43.99 41.58 40.08 43.98 56.31 4.7 Grain 22.10 24.70 24.03 26.32 28.36 42.59 42.41 57.33 55.54 53.61 56.55 66.S6 71.70 77.69 6.5 Mcaic Ofts 18.10 16.40 16.96 13.73 21.33 25.32 28.39 29.53 32.11 33.11 44.23 42.95 44.96 47.08 3.9 Feriizer 15.70 17.90 18.69 13.06 19.33 16.55 16.10 19.98 22.58 25.81 26.31 32.21 32.33 23.34 2.0 Coment 9.00 9.60 10.30 11.00 11.53 13.42 14.42 15.20 14.31 17.22 15.41 16.34 19.53 24.83 2.1 Coke 6.90 6.90 6.49 7.30 7.68 9.59 10.33 12.61 15.36 17.28 19.46 18.06 19.40 24.65 2.1 Salt 5.10 5.40 5.56 6.23 6.60 7.36 9.27 10.32 11.90 15.43 12.45 13.40 12.15 11.23 0.9 Coton 1.30 1.60 1.94 2.19 1.82 1.88 2.39 3.50 2.31 2.46 2.32 2.83 2.95 3.35 0.3 Mideeniaeoua 129.10 129.30 140.52 157.39 174.06 192.99 213.46 247.41 276.41 284.68 276.21 301.06 324.61 301.03 25.2 0 Total 570.70 570.20 610.91 663.44 723.47 311.16 875.02 945.57 986.02 1.037.291.060.11 1.094.78 1.154.851.192.34 100.0
Soaane:Mini"y of Railways. Table 2.2: MOR's FREIGHT TONNAGEORIGINATED (in million tons)
1980 1931 1982 1983 1934 1935 1936 1987 19S8 1989 1990 1991 1992 1993 % ('93)
Coal 414.9 412.0 438.5 460.2 487.1 518.6 531.1 543.4 564.8 608.9 628.7 626.0 641.1 653.4 41.7 Timbr 42.4 40.3 41.0 43.0 45.3 47.1 48.1 46.0 42.5 41.2 36.5 34.9 34.1 35.3 2.3 hIm & Steel Products 60.8 55.2 53.8 62.4 67.6 74.5 85.2 U4.9 79.4 79.4 33.0 33.1 84.9 98.5 6.3 CoasructionMaterials 158.5 139.5 162.3 161.3 158.7 158.4 149.8 147.3 149.0 146.7 124.8 119.7 119.2 129.3 8.2 Petroleum 55.6 49.8 50.4 53.3 56.1 5S8.1 62.5 65.7 64.6 64.6 65.3 65.5 67.0 70.4 4.5 Nonnistalc Ores 59.8 57.9 58.6 63.0 65.9 70.6 72.5 71.8 75.4 32.0 78.6 78.2 81.7 98.4 6.3 Grain 31.5 34.3 34.7 35.6 35.9 45.0 46.5 55.4 54.6 53.2 54.3 62.2 64.1 66.1 4.2 MetcllicOres 59.0 53.4 56.5 60.3 64.3 67.2 70.0 72.6 74.2 79.9 36.7 83.7 93.5 98.3 6.3 Fctilizer 22.1 24.5 25.0 25.5 26.3 23.1 22.7 26.7 29.0 31.6 33.7 37.5 33.2 29.3 1.9 Coemn 23.6 24.3 25.1 26.1 27.8 30.1 34.1 34.6 32.9 35.3 34.3 37.1 40.8 43.5 3.1 Coke 14.0 13.0 12.2 13.0 13.3 15.8 16.3 19.2 20.8 23.1 25.5 24.2 25.2 30.9 2.0 Saft 9.3 9.0 9.0 9.0 9.3 9.5 10.8 10.4 11.2 13.2 11.2 11.2 11.6 12.3 0.8 Comm 1.6 1.8 2.1 2.0 1.6 1.5 2.2 2.7 1.8 1.4 1.2 1.4 1.5 1.8 0.1 Micianou 132.8 133.5 136.2 145.6 151.3 155.5 169.9 138.9 205.2 207.6 197.7 209.3 220.4 194.9 12.4
Tzd 1.085.9 1.048.5 1.110.5 1.160.7 L212.2 1.275.2 1.322.2 1.369.5 1.405.6 1.468.0 1.462. 1.478.9 1.523.3 1.567.5 100.0
Somme: Ministryof Railways. Table 2.3: AVERAGE DlSTANCE OF FREIGHT TRAFC CARRED BY MOR (in kilometers)
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
Coal 426 445 456 463 479 501 522 526 530 519 548 545 558 549 Timber 1,208 1,228 1,204 1,237 1,255 1,335 1,377 1,410 1,371 1,404 1,469 1,473 1,499 1,524 Iron & Steel Products 770 768 759 792 841 870 879 890 879 914 971 970 961 1,001 Construction Materials 210 218 244 260 265 288 311 328 332 355 354 365 391 473 Petroleum 541 576 572 557 557 586 620 604 605 619 643 668 689 709 Nonmetallic Ores 411 418 412 446 477 478 489 493 507 537 529 513 538 572 Grain 702 720 695 739 791 946 912 1,034 1,016 1,008 1,041 1,076 1,119 1,175 Metallic Ores 319 307 300 310 332 384 406 408 433 477 510 484 481 479 Fertilizer 710 731 748 710 724 715 709 750 780 817 796 859 846 814 Cement 381 395 411 422 417 446 423 440 450 488 443 442 479 512 Coke 493 531 534 561 555 609 618 658 738 749 764 746 770 797 Salt 548 600 619 691 710 773 859 991 1,065 1,173 1,114 1,201 1,047 910 Cotton 813 889 946 1,101 1,175 1,250 1,331 1,323 1,542 1,755 1,869 2,030 1,967 1,861 Miscellaneous 972 969 1,032 1,084 1,147 1,242 1,256 1,310 1,347 1,371 1,397 1,438 1,473 1,544
Average 526 544 550 572 597 636 662 690 702 707 725 740 758 761
Source: Ministry of Railways and Statistical Yearbook of China-1992, Table 12-17, p. 519. Table 2.4: MOR's PASSENGER TRAFFC AND AVERAGE PASSENGER TRAVEL DISrANCE
1980 1981 1982 1983 1984 1915 1916 1987 1938 1989 1990 1991 1992 1993 pNyeans" (million)
Suburban 195.0 192.5 208.7 212.5 202.4 168.3 154.7 152.1 163.9 157.1 135.9 120.2 120.4 118.2 Odier 717.5 749.9 780.2 836.9 920.3 940.8 918.7 962.1 1,052.1 970.9 813.0 821.9 867.5 927.6
Totl 912.5 942.4 988.9 1.049.4 1.122.7 1.109.1 1.073.4 1114.1 1.216.0 1.128.0 948.9 942.1 9S7.9 1.045.8
Pasenezr-km(billion)
Suburban 4.6 4.6 5.0 5.2 5.1 4.1 3.8 3.8 4.7 4.4 3.9 3.0 3.1 3.0 Other 133.4 142.4 152.2 172.1 199.2 237.1 254.5 280.1 321.1 299.0 257.1 279.5 311.7 344.9
ToWl 138.0 147.0 157.2 177.3 204.3 24U 2St. 2U. 325.7 303.4 261.0 282.5 314.8 347.9
Averc. Diance (km)
Suburban 24 24 24 24 25 24 25 25 28 28 29 25 26 25 Other 186 190 195 206 217 252 277 290 305 308 316 340 359 372
Weighted Avc. 151 156 159 169 182 218 241 255 268 269 275 300 319
Smoe: MiniMq of RaiHways. Table 2.5: SELECFED OPERATIONALSTATISCS OF MOR, 1980W93
19S0 1931 1932 1913 1914 1915 1916 1937 1981 1919 1990 1991 1992 1993
A. Route Lenrth (km. at year end) Standardgauge (1.435 m) 49,225 49,474 49,333 50,905 51,041 51,419 51,717 51,911 52,067 52,412 52,673 52,711 52,895 53,131 Nerrow gauge(1.Om and 0.6m) 710 703 703 694 695 695 695 695 695 700 700 700 666 666 Wide puge 5 5 5 5 5 5 5 5 5 5 5 5 5 5
Toul 49.940 50.1S1 50.541 5160 51741 52.119 52.47 52611 52767 53.17 53.378 541 . 53.02
Of which: Double track 8,119 1,263 3,613 9,183 9,671 9,919 10,013 11,186 11,771 12,523 13,024 13,330 13,653 14,315 Ileetrified 1,667 1,667 1,737 2,334 3,014 4,151 4,430 4,643 5,733 6,372 6,941 7,804 1,434 3,935
D. Staff (at Year-end) Enyloy-e ('000) 2,615 2,710 2,763 2,344 3,053 3,124 3,200 3,247 3,293 3,300 3,331 3,420 3,414 3,409
C. Rollinr Stock (averate of number at berinnin, and end of vear) Steam locomotives Nunber in fleet (exrl. rewerver) 7,801 n.a. n.e. n.a. 7,551 7,674 7,542 7,331 7,130 6,637 6,279 5,936 5,498 5,109 Available, % n.a. n.a. n.a. n.e. n.a. n.a. n.a. n.e. n.a. na. n.a. n.a. n.e. n.a. Diewellocomotives Nunber in fleet 2,190 n.a. n.m. n.c. 3,102 3,511 4,017 4,400 4,336 5,256 5,630 6,111 6,581 7,092 Available, % n.m. n.a. n.s. n.a. n.m. n.e. n.e. n.a. n.a. n.a. n.a. n.e. n.c. n.a. Electric locomotives, nmin line Number in fleet 287 n.a. n.a. n.m. 484 587 707 748 1,197 1,430 1,623 1,809 2,002 2,196 Available, b n.a. n.a. n.a. n.m. n.m. n.m. n.a. n.a. n.s. n.a. n.a. n.s. n.c. n.c. Parwenger cars 16,157 n.m. n.e. n.m. 19,600 20,872 22,138 23,474 24,917 26,304 27,261 27,612 23,464 29,395 Freight care ('000) Box cars 40.4 n.a. n.m. n.m. 49.6 52.7 54.6 55.5 58.0 62.2 66.7 70.3 73.1 75.8 Gondolas 165.4 n.m. n.a. n.m. 173.7 185.7 197.7 209.9 219.2 226.8 233.0 231.1 228.9 240.2 Flat cars 20.8 n.m. n.s. n.m. 19.1 18.8 18.5 17.8 13.2 18.5 18.8 19.3 20.6 21.1 Tank cars 33.5 n.m. n.a. n.m. 32.2 31.8 31.4 32.1 32.5 33.3 33.6 34.1 34.8 35.5 Refrigerated 2.5 n.s. n.a. n.m. 3.7 4.0 4.0 4.3 4.4 4.7 5.2 5.6 5.8 6.2 Others 3.S n.m. n.m. n.c. 7.9 7.9 8.4 3.6 8.0 7.5 7.3 9.6 10.1 11.3
Total fleet 266.4 n.m. n.a. n.a. 291.2 300.9 314.6 328.2 340.3 353.0 364.9 370.0 373.3 390.1
Available, b n.a. n.m. n.e. n.C. 99.0% 100.0% 100.0% n.a. n.m. n.a. n.s. n.a. n.a. n.m.
... Continued Table 2.5: (cONT'D)
1980 1981 1982 1983 1984 1985 1936 1937 193U 1939 1990 1991 1992 1993
D. Traffic Pauenger traffic Pasengers of CentralfRailway(million) 913 942 989 1,049 1,123 1,109 1,074 1,114.0 1,216 1,228 949 942 933 1,046 Pasengers of Local Railway (million) 9.5S 10.61 10.34 10.93 10.33 11.97 12.21 10.65 10.50 10.09 3.24 3.72 9.05 3.73 Pasuenger-km of Central Railways(million) 133,037 146,937 157,200 177,339 204,315 241,251 253,311 234,000 325,731 303,437 261,000 262,414 314,300 347,900 Passenger-km dfLocal wailways(millon) 279 293 234 312 323 363 360 306 301 304 253 321 395 392 Average journey (km) 151 156 159 169 12 218 241 255 268 247 275 300 319 333 Freighttraffic Net tons of cental railway (million) 1,035.3 1,043.4 1,110.5 1,160.7 1,212.2 1,275.2 1,322.2 1,370 1,406 1,463 1,462 1,479 1,523 1,567 Net tons of Local Railway (million) 2.70 2.34 2.43 2.71 2.36 3.19 3.42 3.70 4.40 4.69 4.47 5.00 5.31 6.00 Netton-kmofCentmalRailway(bil.) 571 570 611 663 724 S11 375.0 946 936 1,037 1,061 1,095 1,155 1,192 Netton-kmof Local Railway (bil.) 0.96 1.07 1.08 1.21 1.29 1.41 1.47 1.53 1.74 2.12 2.12 2.39 2.70 3.12 Average haul (km) 526 544 550 572 597 636 662 691 701 707 725 740 753 761 Converted tdn (ctkm - pkm + thn) (billion) 709 717 763 341 923 1,052 1,133 1,230 1,312 1,341 1,321 1,377 1,470 1,554 Traffic densities (miUlion) pkim per route km 2.90 3.10 3.28 3.70 4.24 4.79 5.06 5.43 6.17 5.71 4.39 5.29 5.33 6.47 tkn per route km 12.00 11.90 12.76 13.83 15.00 16.12 17.13 13.07 18.68 19.50 19.86 20.50 21.56 22.16 etkm per route km 14.90 15.00 16.05 17.52 19.24 20.91 22.19 23.52 24.35 25.21 24.75 25.79 27.43 23.33
E. Operations Total locomotive-km (million km) a.m. n.a. n.e. n.s. 1,099.9 1,183.0 1,230.6 1,273.0 1,317.0 1,341.0 1,358.1 1,335.0 1,426.0 1,471.0 - By type of train: Pasenger n.a. n.a. n.a. n.a. 266.5 290.2 301.7 310.0 324.0 324.3 323.4 334.0 342.4 358.3 Frmight n.a. n.a. .A. na.. 320.9 380.6 913.9 954.0 978.0 1,002.1 1,019.2 1,033.7 1,066.4 1,096.7 - By type of traction: Steam n.a. n.a. n.a. n.a. 702.9 633.6 636.2 595.0 562.0 516.2 472.3 431.7 509.4 337.2 Diesel n.a. n.s. n.a. ca. 348.8 433.2 507.6 570.0 622.0 657.5 699.2 754.5 808.5 855.5 lectric n.e. n.a. n.a. na.. 48.1 68.2 36.9 113.0 133.0 163.1 186.1 207.6 301.0 279.4 Main loco-km (train-km) (million km) n.a. n.a. 1.1. n.a. 784.1 848.8 331.9 922.0 956.0 983.3 993.6 1,019.7 1,054.2 1,087.2 - By type of traction: Steam n.s. n.a. n.c. n.a. 491.4 463.9 434.2 389.0 361.0 324.4 296.5 267.0 233.0 201.3 Diesel n.a. n.a. n.a. nA.. 254.7 325.9 386.6 442.0 487.0 51.0 550.3 583.4 619.4 659.7 Electric u.s. na. n.a. na.. 3S.0 54.0 71.2 91.0 108.0 136.9 151.3 169.4 196.S 226.2
... Continued Table 2.5: (CONT'D)
1980 1981 1982 1913 1934 1985 19S6 1987 1988 1919 1990 1991 1992 1993
Freight car-km (nil.) Loaded rn.-. n.S. n.s. n.S. 20,115 22,779 18,390 19,493 20,004 20,779 21,053 21,690 22,319 22,957 Eipty, inchlde caboose n.r. n.a. n.M. n.&. n.e. n.e. 5,061 6,216 5,354 5,358 5,940 5,915 6,590 S,257 Total n.a. n.S. n.. n.a. n.a. n.a. 23,451 25,709 25,358 26,137 26,993 27,605 23,909 31,214 Loaded fmrightcars forwarded per day 61,29S 58,620 61,300 63,149 64,856 67,221 63,911 70,000 70,400 72,919 72,369 72,911 74,109 7S,462 Averg fieih ce tutrnaound tian (days) 3.02 3.21 3.22 3.30 3 3 4 4 4 4 4 4.2 4.2 4.2 Avenge freight Cat turnaround diance (kn) 747 770 770 791 121 870 901 934 952 952 993 1,006 1,025 1,032
F. Performace Indicacr
Paserr perp _trerttmim n.e. n.e. n na.na. U.S. n.e. n.a. n.a. n.a. n.m. na. n.m. n.S. n.a. Freight traffic: Averg usin sii: loaded cars pec train n.e. na.. n.a. n.a. n.s. n.c. n.m. n.S. n.a. n.a. n.a. n.a. na. n.a. Empty cars per trin n.e. n.e. n.e. n.1n. n.a. n.c. n.e. n.a. n.e. n.e. n.. n.a. n.a. n.S. Tol catpe ttrain na.. n .a. n.e. n.e. n.a. n.e. n.e n.A. n.e. n.ena. n.a. n.S. LA Avenge train weight Grom ton 1,994 1,996 2,021 2,073 2,131 2,211 2,291 2,343 2,365 2,409 2,414 2,444 2,483 2,519 Net tons n.e. n.a. n.s. n.a. n.e. n.a. n.a. na. na.. n.a. n.a. n.e. n.a. n.s. Average ld per loaded feight car (net tons) 43.0 49 49 50 51 52 52 53 54 55 56 5S 56 56 Avenge %ped of freight trains (kmnh) 29 29 28.0 28 27 23 29 23 28 29 29 30 30 30 Averge nunber of employces per operational km 32 34 35 33.0 34.2 35 36 37 36 36 36 36 36 36 Yearly disance covered per available loco ('000): Diesel, main line n.e. n.a. na. n.a. n.S. n.a. na.. n.e. n.a. n.a. n.a. n.m. n.a. n.a. Electric, main line n.a. n.a. n.a. n.s. n.a. n.a. n.e. n.e. n.a. n.r. n.s. n.c. n.a. n.a. Steam n.c. n.e. n.a. n.e. n.e. n.m. n.a. n.m. n.r. n.e. n.e. n.e. n.a. n.a. Net ton-kmper available feiht car (million) n.S. n.m. n.e. n.r. n.e. n.a. n.S. n.a. n.a. n.e. n.a. n.a. n.S. n.e.
Sbwve: Ministry of Railways. - 57 -
Table 2.6: RALWAY ASSEr UTILIATION IN SELECrED COUNTRIES
China India USA La Indicators (1993) (1992/93) (1993)
Freight ton-km/route-km (million) 22.2 4.1 9.1
Passenger-km/route-km (million) 6.5 4.8
Freight ton-km/freight wagon owned (million) 3.1 0.8 1.4/b
Average net tons/wagon loaded (tons) 56.1 19.3/c 58.4
Average freight wagon turnaround time (days) 4.2 10.8/c
Average length of freight haul (km) 761 721 1,281
Average number of staff per route-km 63.36 26.39 0.67
Traffic units per route-km (million)/d 28.63 8.93 9.12
Traffic units per employee (000)/d 451.82 335.01 8,433.15
/a Figures converted into metric system. /b Includes wagons owned by wagon companies and shippers. /c Broad gauge. /d Traffic units = ton-km + passenger-km.
Sources: China: Ministry of Railways. India: Indian Railways Yearbook,1992-93. USA: AAR, Railroads Fads, 1994 edition (includes Class I railroads only). Table3.1: INVFsTmENT Com AND LoAN SUMMARY(in $ million) 19)94 1995 1996 1997 Local Foreign Total Loian Local Foreign Totali Loain Local Foreign Total Loan Local Foreign Total Loan t'Crtidor CapacityExpansion Insetrnentcosts 3443 12.11 46.54 0.00 213.53 89.99 303.52 4.37 244.80 107.72 352.52 76.19 132.41 49.94 182.35 43.32 PhN ical contingencies 3.44 0.94 4.38 0.00 21.35 7.02 28.37 0.34 24.48 8.40 32.88 5.94 13.24 3.90 17.14 3.38 Price contingencies 0.00 0.00 0.00 0.00 1.76 0.72 2.48 0.04 6.49 2.80 9.29 1.98 6.79 2.51 9.30 2.18 Intormation Systenis 37.87 13.05 50.92 0.J0 236.64 97.73 334.37 4.74 275.77 118.92 394.69 84.11 152.44 56.35 208.79 48.88
InformationSystems Investmentcosts 11.59 10.61 22.20 0.00O 18.19 26.53 44.72 0.00 21.93 32.59 54.52 7.02 26.68 49.03 75.71 31.60 Physicalcontingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 000 0.00 0.00 0.00 0.14 0.20 0.34 0.00 0.53 0.78 1.31 0.17 1.24 2.28 3.52 1.47 11.59 1061 22.20 0.00 18.33 26.73 45.06 0.00 22.46 33.37 55.83 7.19 27.92 51.31 79.23 33.07
Telecommunicauons Investmentcosts 0.00 0.00 0.00 0.00 0.00 000 0.00 0.00 50.97 13.78 64.75 13.78 39.34 24.07 63.41 24.07 P'hNical contingencies 0.00 0.00 0.00 0.00 000 0.00 0.00 0.00 5.10 0.69 5.79 0.69 3.93 1.20 5.13 1.20 Pricecontingencies 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.35 0.35 1.70 0.35 2.02 1.18 3.20 1.18 0.00 0.00 0.00 OO 0.00 0.00 0.00 0.00 57.42 14.82 72.24 14.82 45.29 26.45 71.74 26.45 tContainerTransport Commercialization Investmentcosts 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 67.19 25.14 92.33 25.14 59.57 1.24 60.81 1.24 1 Phl.ical contingencies 000 0000 000 000 000 0.00 000 0.00 4.70 1.90 6.60 1.90 4.17 0.00 4.17 0.00 IPricecontin"encies 0.00 000 0.00 0t00 0.00 0.00 0.00 0.00 1.73 0.65 2.38 0.65 2.97 0.06 3.03 0.06 0.00 0.00 0.00 0.00 0.00 000 0.00 0.00 73.62 27.69 101.31 27.69 66.71 1.30 68.01 1.29
Pihit i nironmental Protection lnscstntentcosts 0.00 00 0.00 0.00 0.00 0.00 0.00 0.00 0.93 2.70 3.63 2.70 1.23 1.65 2.88 1.65 Pli!sical contingencies 0.00 0.00 000 0.00 0.00 0.00 0.00 0.00 0.00 0.07 0.07 0.07 0.00 0.04 0.04 0.04 Price contingencies 000 0.00 000 0.00 0.00 0.00 0.00 0.00 0.02 0.07 0.09 0.07 0.06 0.08 0.14 0.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 00 0.95 2.84 3.79 2.85 1.29 1.77 3.06 1.78
S stenmCapacity Expansion Investnentcosts 000 0.00 0.00 0.00 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.60 15.00 18.60 15.00 Ph%sical contingencies 0.00 0.00 00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Irice contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.17 0.70 0.87 0.70 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.77 15.70 19.47 15.70
1 cchnicalAssistance, Trainin". Softssare Insesinenteosts 0.00 0.00 0.00 0.00 0.00 0.84 0.84 0.84 0.06 3.17 3.23 3.17 0.06 1.72 1.78 1.72 P'hxsicai contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.00 0.08 0.08 0.08 0.00 0.08 0.08 0.08 0.00 0.00 0.00 0.00 000 0.85 0.85 0.84 0.06 3.25 3.31 3.24 0.06 1.80 1.86 1.80
Touil - BainkFinan,in' Ijisesinientcosts 46.02 22.72 68.74 0.00 231.72 117.36 349.08 5.20 385.87 185.10 570.97 128.00 262.89 142.65 405.54 118.60 Ph\ sical contingencies 3.44 0.94 4.38 0.00 21.35 9.72 31.07 3.04 34.28 13.26 47.54 10.80 21.34 5.14 26.48 4.62 1'rice contingencies 0.00 0.00 0.00 0.00 1.89 0.97 2.86 0.08 10.12 4.80 14.92 3.37 13.25 6.89 20.14 5.74 Total 49.46 23.66 73.12 0.00 254.96 128.05 383.01 8.32 430.27 203.16 633.43 142.17 297.48 154.68 452.16 128.96
Source: Ministry of Railwaysand micsion esumates Table 3.1: (CONT'D) (in $ million)
1998 1999 Total Local Foreign Total Loan Local Foreign Total Loan Local Foreign Total Loan Corridor Capacitv Expansion InNestmentcosts 51.26 19.11 7037 27.89 0.00 0.00 0.00 0.00 676.43 278.86 955.29 151.76 Physical contingencies 5.13 1.49 6.62 2.18 0.00 0.00 0.00 0.00 67.64 21.76 89.40 11.85 Price contingencies 4.13 I.51 5.64 2.20 0.00 0.00 0.00 0.00 19.17 7.54 26.71 6.39 60.52 22i 1 82 63 32.27 0.00 0.00 0.00 0.00 763.24 308.16 1,071.40 170.00
Iilformation Systems Investment costs 2.14 0.12 2.26 0.12 0.03 0.12 0.15 0.12 80.57 119.01 199.58 38.87 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 0.16 0.01 0.17 0.01 0.01 0.01 0.02 0.01 2.08 3.28 5.36 1.66 2.30 0.13 2 43 0.13 0.04 0.13 0.17 0.13 82 65 122.29 204.94 40.53
Telecommunications Investment costs 1.88 1.83 3.71 1.83 0.00 0.00 0.00 0.00 92.19 39.68 131.87 39.69 Physicalcontingencies 0.19 0.09 0.28 0.09 0.00 0.00 0.00 0.00 9.22 1.98 11.20 1.98 Price contingencies 0.15 0.14 0.29 0.14 0.00 0.00 0.00 0.00 3.52 1.67 5.19 1.67 2.22 2.06 4.28 2.07 0.00 000 0.00 0.00 104.93 43.33 148.26 43.35
Container TrainsportCommercialization Investmentcosts 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 126.76 26.38 153.14 26.38 X Physical contngencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8.87 1.90 10.77 1.90 t4, Price contingencies 0,(K 0.00 0.00 0.00 0.(0 0.00 O.(0 0.00 4.70 0.71 5.41 0.71 0.00 0.()0 0.00 0.00 0.00 0.00 0.00 0.00 140.33 28.99 169.32 28.98
PilotEnvironmental Protectipon Investment costs 0.18 0.00 0.18 0.00 0.00 0.00 0.00 0.00 2.34 4.35 6.69 4.35 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.11 0.11 0.11 Price contingencies 0.01 0.00 0.01 0,00 0.00 0.00 0.00 0.00 009 0.15 0.24 0.15 0.19 0.00 0.19 0.00 0.00 0.00 0.00 0.00 2.43 4.61 7.04 4.61
System Capacity Exparision Investment costs 17.41 34.47 51.88 34.47 10.33 43.00 53.33 43.00 31.34 92.47 123.81 92.47 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 00 0.00 0 00 0.00 0.00 Price contingencies 1.27 2.53 3.80 2.53 1.03 4.31 5.34 4.31 2.47 7.53 1000 7.53 18.68 37.00 55.68 37.00 11.36 47.31 58.67 47.31 33.81 1(K)00 13381 100.00
Technical AssisLance,Training. Software Investment costs 0.06 1.41 1.47 1.41 0.00 0.12 0.12 012 0.18 7.26 7.44 7.26 Physical contngencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Pricecontingencies 0.00 0.10 0.10 0.10 0.00 0.01 001 0.01 O0.0 0.28 0.28 0.28 0.06 1.51 1.57 1.51 0.00 0.13 0.13 0.13 0.18 7.54 7 72 7.54
Total - Bank Financin' Investment costs 72.93 56.95 129.88 65.73 10.36 43.24 53.60 43.24 1,009.81 568.00 1,577.81 360.77 Physical contingencies 5.31 1.58 6.89 2.27 0.00 0.00 0.00 0.00 85.72 30.65 116.37 20.73 Price contingencies 5.73 4.29 10.02 4.98 1.05 4.33 5.38 4.33 32.04 21.27 53.31 18.50 83.97 62.82 146.79 72.9 1141 47.57 5 47.57 1.127.57 619.92 1,747.49 400.
UM - 95-44-0K6 Table 3.1: (CONT'D)(in Yuan million)
1994 195 1996 1997 ILocal Foreign Total L.oan I.oail Foreign Total Loan Local Foreign Totail Loain Local Foreign Total Loan CorridorCalpacits I:xpansion Insestnient costs 29953 105.35 404.88 0.00 1.857.70 782.89 2.640.60 38.00 2.129.73 937.05 3.066.78 662.81 1.151.88 434.50 1.586.38 376.89 Plh s%icalcontingencies 29.95 8.22 38.17 000 185.77 6107 246.84 2.96 212.97 73.09 286.06 51.70 115.19 33.89 149.08 29.40 Pric contingencies 000 011) 0.00 0.00 13836 57 14 195.5( 0.31 464.69 200.37 665.06 17.22 395.51 146.21 541.72 18.94 329.48 II 57 443.0)5 (((K 2.181.83 901 10 .082.94 41.27 2.807.39 1.21(.51 4.017.90 711.72 1.662.58 614.60 2.277.18 425.22
Information Systems Insmesnent costs 106.69 97.66 204.35 0.00 172.0( 251.00 423.10 0.00 207.57 308.38 515.95 61.11 252.41 463.79 716.20 274.91 PItsical contingcncies 000 0O(1) 0.00 0.00 0.00 0.00 00(0 0.00 0.00 0.00 0.00 0.00 0.00 00 0.00 0.00 Price contingencies 0.00 0.(0 0(1) .O0 11.65 16.99 2865 000 41.17 61.17 102.31 1.47 78.79 144.77 223.56 12.81 1(06.69 97.66 20435 000 I183.75 2h8.(0 451.74 0.00 248.74 369.56 618.3(1 62.58 331.18 608.56 939.74 287.72
Telecommunications Insersmrnt costs O 0.00 0.00 0.00 0.0( 0.00 0.00 0.00 482.22 130.28 612.50 119.90 372.23 227.62 599.85 209.42 Phssical contingencics 0.00 0.00 0.00 0.00 0.00 0.00 0 0.00 48.22 6.51 54.74 5.99 37.22 11.38 48.60 10.47 1'rice contingencies 0.00 0(10 00X) 0.00 0.00 0.00 0.00 0.00 105.22 27.1,3 132.35 3.03 127.81 74.60 202.41 10.25 0.00 0.00 O.)) 0( 0.00 0.00 0.00 0.00 635.66 16392 799.58 128.92 537.26 313.60 850.87 230.14
(onlat!ncr Transporl Conrnserciali7ation Inestment costs 0.00 00 00 0.00 0.00 0.00 0.00 0.00 635.60 237.75 873.35 218.74 563.50 11.69 575.20 10.75
I'Phsicalcontingencies 0.00 000 0 00000 0.00 0.00 000 0.00 4449 I8.03 62.52 16.50 39.45 0.00 39.45 0.00 O I'rice continencie (X) 0.00 000 000 O(X) (0.0 0.00 0.00 13490 50.73 185.63 5.67 188.21 3.65 191.86 0.50 00) O(X) 00. 000 0.0( 00(X) (00 0.00 814.99 30f.51 1.121 50 240.91 791.16 15.34 806.50 11.25
Iilot Ii nsimntnienIlt ProLtection Ilsesimtentcosts 000 0.00 000 000 000 000 0.00 0.00 8.74 25.58 34.33 23.52 11.64 15.65 27.29 14.39 Ph%sical continettcics 000 000 0.00 000 000 000 000 0.00 0.00 0.61 0.61 0.65 0.00 0.38 0.38 0.36 P'rice contingencies 0.00 000 0-0O 0.00 0.00 0.00 000 0.00 1 73 5.20 6.93 0.58 3.63 5.00 8.64 0.68 0.00 000 O(Xi 000 O0 0.00 000 0.00 10,47 31.39 41.87 24.75 15.27 21.04 36.30 15.45
SssternCip.icits Expansion Insesimentcosls 0.00 000 O(X) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 31.35 130.50 161.85 130.50 Phssical contingencies 0.00 0.00 0.00 0()0 0.00 0.00 0.00 0.00 00 0.00 000 0.00 0.00 0.00 0.00 0.00 P'ricecotltincencies (0 000 0.00 ooo0o00 o0.00 0.00 0.00 0.00 0o00 0o00 0.00 9.78 40.72 50.51 6.08 000 O(X) OX 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 41.13 171.22 212.36 136.58
echtnical Assistance. Training. Sofltware In\estnmentcost 000 0X) 0.00 0.00 0.00 7.28 7.28 7.28 0.51 27.55 28.07 27.55 0.51 14.95 15.46 14.95 Piissicalcontincencies 000 00 0000 0.0000 0.00 0.00 0.00 0.00 0.00 0) 0.00 0.00 0.00 0.00 0.00 Price contingcriies 000 ((X) 000 0.00 0.00 0.49 0.49 0.05 0.10 5.46 5.57 0.66 0.16 4.67 4.84 0.70 0.00 000 O() 000 0.00 7.76 7.76 7.33 0.61 33.02 33.63 28.21 0.67 19.61 20.28 15.64
Toted - B;anh Finnciii Inestmentcosts 406.23 203.01 609.24 0.0(0 2.029.80 1.041.17 3.07097 45.27 3.464.36 1.666.59 5.130.95 1.113.61 2.383.52 1.298.70 3.682.22 1.031.81 Physical cotiiticLencies 29.95 8.22 38.17 0.00 185.77 8456 270.33 26.45 305.69 117.39 423.08 93.99 191.86 45.65 237.51 40.23 Price contin.gencies 0.00 00(0 0()X) O. 150.01 74.98 224.99 0)71 747.81 350.75 1.098.56 29.33 803.89 419.62 1.223.51 49.96 Total 43618 211.23 647.41 0.00 2,365.58 1,200.71 3.56.29 72.44 4.517.86 2,11373 6 , 1,236.93S2.59 3,379.27 17h63.97 5.143.24 1,122.10
Siuar(e: Ministry of Railways and mission estinates Table 3.1: (CONT'D) (in Yuan million)
1998 1999 Total Local Foreign Total Loan Local Foreign Total Loati Local Foreign Total Loan Corridor Capacity Expansion Investmentcosts 445.89 166.27 612.16 242.65 0.00 0.00 0.00 0.00 5,884.74 2,426.08 8,310.82 1,320.34 I'hysical contingencies 44.59 12.97 57.56 18.93 0.00 0.00 0.00 0.00 588.47 189.23 777.70 102.99 Price contingeacies 202.96 74.17 277.13 19.17 0.00 0.00 0.00 0.00 1,201.52 477.89 1,679.41 55.64 693.44 253.41 946.85 280.75 0.00 0.00 0.00 0.00 7.674.73 3,093.20 10.767.93 1,478.97
InformationSystems Investmentcosts 20.30 1.16 21.46 1.07 0.32 1.16 1.48 1.07 759.37 1,123.16 1,882.53 338.15 Physicalcontingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 8.40 0.48 8.88 0.08 0.16 0.59 0.75 0.11 140.18 224.00 364.18 14.46 28.72 1.64 30.36 1.14 0.48 1.75 2.23 1.17 899.55 1,347.16 2,246.71 352.62
Telecommunications Investmentcosts 17.82 17.25 35.07 15.95 0.00 0.00 0.00 0.00 872.27 375.15 1,247.42 345.26 Physicalcontingencies 1.78 0.86 2.64 0.80 0.00 0.00 0.00 0.00 87.22 18.75 105.97 17.26 Price contingencies 8.11 7.49 15.61 1.23 0.00 0.00 0.00 0.00 241.14 109.22 350.36 14.51 27.72 25.60 53.32 17.97 0.00 0.00 0.00 o0o 1,200.63 503.12 1,703.75 377.03
ContainerTransport Commercialization Investmentcosts 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,199.10 249.44 1,448.54 229.49 Physicalcontingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 83.94 18.03 101.97 16.50 Pricecontingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 323.11 54.38 377.49 6.17 0.00 000u- 000 0.00 0 00 0.00 0.00 0.00 1,606.15 321.85 1,928.00 252.16
Pilot EnvironmentalProtection Investmentcosts 1.68 0.00 1.68 0.00 0.00 0.00 0.00 0.00 22.06 41.23 63.29 37.91 Physicalcontingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.99 0.99 1.01 Price contingencies 0.70 0.00 0.70 0.00 0.00 0.00 0.00 0.00 6.06 10.20 16.26 1.26 2.37 0.00 2.37 0.00 0.00 0.00 0.00 0.00 28.12 52.42 80.54 40.20
SystemCapacity Expansion Investmentcosts 151.40 299.89 451.29 299.89 89.86 374.10 463.96 374.10 272.61 804.49 1,077.10 804.49 Physicalcontingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 O.00 0.00 0.00 Price contingencies 62.65 124.09 186.74 21 98 45.76 190.50 236.26 37.46 118.19 355.32 473.51 65.53 21405 423.98 638.03 321.87 135.62 564.60 700.22 411.56 390.80 1,159.81 1,550.61 870.02
Technical Assistance.Trainine. Software Investmentcosts 0.51 12.26 12.78 12.26 0.00 1.05 1.05 1.05 1.53 63.09 64.62 63.09 PhysicalconOngencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 0.21 5.07 5.28 0.90 0.00 0.53 0.53 0.10 0.47 16.23 16.70 2.41 0.73 17.33 18.06 13.16 0.00 1.58 1.58 1.15 2.00 79.32 81.32 65.50
Total - Bank Financing Investmentcosts 637.61 496.83 1,134.44 571.81 90.18 376.31 466.49 376.21 9,011.68 5,082.64 14,094.32 3,138.72 Physicalcontingencies 46.37 13.83 60.20 19.72 0.00 0.00 0.00 0.00 759.64 269.65 1,029.29 180.40 Price contingencies 283.03 211.31 494.34 43.36 45.92 191.63 237.55 37.67 2,030.66 1,248.29 3,278.95 161.03 967.01 721.97 1,6989 634.90 136.10 567!964 704.03 413.89 IL,80198z CW6.60f&. 18.42056 3
UM -95-1)406 Table 3.2: INVESTMENTCOSTS OF CORREDORCAPACrrY ExPANSION COMPONENT (in $ million)
1994 1995 1996 1997 1998 Total US$ mill Local Foreign Total Local ForeigLn Total Local Foreign Total I ocal Foreign Total Local Foreign Total Local Foreign Total
Preparation 3.21 0.70 3.91 5.43 1.19 6.62 2.17 0.48 2.65 0.00 0.00 0.00 0.00 0.00 0.00 10.81 2.37 13.18 Roadbed 4.73 2.55 7.28 11.20 6.03 17.23 11.20 6.03 17.23 4.80 2.58 7.38 0.00 0.00 0.00 31.93 17.19 49.12 Blridees and cul crts 0.65 1.66 2.31 2.63 6.75 9.38 2.63 6.75 9.38 0.66 1.69 2.35 0.00 0.00 0.00 6.57 16.85 23.42 Tunilsis 0.49 0.33 0.82 2.00 1.34 3.34 2.00 1.34 3.34 0.50 0.33 0.83 0.00 0.00 0.00 4.99 3.34 8.33 Track 1.91 5.17 7.08 7.76 20.98 28.74 7.76 20.98 28.74 .94 5.24 7.18 0.00 0.00 0.00 19.37 52.37 71.74 Communications 0.00 0.00 0.00 9.20 6.13 15.33 19.01 10.18 29.19 15.48 7.85 23.33 1.15 0.77 1.92 44.84 24.93 69.77 Signalling OM0 0.00 0.00 20.30 13.53 33.83 24.66 16.24 40.90 20.68 10.82 31.50 27.01 13.53 40.54 92.65 54.12 146.77 Electric power 1.69 1.13 2.82 6.85 4.57 11.42 6.00 4.00 10.00 2.57 1.71 4.28 0.00 0.00 0.00 17.11 11.41 28.52 Flectnfication o.0 0.00 0.00 37.39 24.93 62.32 75.65 37.39 113.04 29.65 16.62 46.27 7.32 4.15 11.47 150.01 83.09 233.10 Buildings 000 0.)O 0.00 17.94 2.22 20.16 20.93 2.59 23.52 17.94 2.22 20.16 2.99 0.37 3.36 59.80 7.40 67.20 Mtiscellaneous 21.7i 0.57 22.32 89.64 2.32 91.96 66.21 1.74 67.95 33.11 0.87 33.98 11.04 0.29 11.33 221.75 5.79 227.54 Re,etiflieiet 00 0.(0o 0.00 3.1I9 O0.0 3.19 6.SS 0.00 6.58 5.08 0.00 5.08 1.75 0.00 1.75 16.60 0.00 16.60 C
Subtotal 34.43 12.11 46.54 213.53 89.99 303.52 244.80 107.72 352.52 132.41 49.93 182.34 51.26 19.11 70.37 676.43 278.86 955.29
Ph\sical ContinLencies 3.44 0.94 4.38 21.35 7.02 28.37 24.48 8.40 32.88 13.24 3.90 17.14 5.13 1.49 6.62 67.64 21.76 89.40
BawelineEstimaIe 37.87 13.05 50.92 234.88 97.01 331.89 269.28 116.12 385.40 145.65 53.84 199.49 56.39 20.60 76.99 744.07 300.62 1,044.69
Price Contingencies: ' per Year O.) 0O. L1.50 1.50 1.80 1.80 2.60 2.60 2.50 2.50 Comnpounlided 0.00 0.o0 0.75 0.75 2.41 2.41 4.66 4.66 7.33 7.33 2.58 2.51 2.56 ATIIoaUi 0.00 0.00 0.00 1.76 0.72 2.48 6.49 2.80 9.29 6.79 2.51 9.30 4.13 1.51 5.64 19.17 7.54 26.71
Total 37.87 13.05 50.92 236.64 9773 34.37 275.77 118.92 394.69 152.44 . 208.79 60.52 22.11 8263 763.24 308.16 1.071.4
Soirt e: NMinistiy of Railwa s and mission estimates UM -95-04-06 Table 3.3: INVEsTMENTCOsTs OF INFORMATIONSYSrEmS MODERNIZATIONCOMPONENT (in $ million)
1994 1995 1996 1997 1998 1999 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total
TMISEq.ipment 11.59 10.61 22.20 18.19 26.53 44.72 20.10 29.28 49.38 22.00 37.63 59.63 0.00 0.00 0.00 0.00 0.00 0.00 71.88 104.05 175.93 MIS-PhaselIEquipment o.o o.oo 0.00 0.00 0.00 0.00 1.52 2.16 3.68 4.51 10.76 15.27 2.11 0.00 2.11 0.00 0.00 0.00 8.14 12.93 21.07 PTRSInfomration Systems 0.00 0.00 0.00 0.00 0.00 0.00 0.28 1.03 1.31 0.14 0.52 0.66 0.00 0.00 0.00 0.00 0.00 0.00 0.43 1.55 1.98 Comp.System to ManageFunds 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.12 0.15 0.03 0.12 0.15 0.03 0.12 0.15 0.03 0.12 0.15 0.12 0.48 0.60
Subtotal 11.59 10.61 22.20 18.19 26.53 44.72 21.93 32.59 54.52 26.68 49.03 75.71 2.14 0.12 2.26 0.03 0.12 0.15 80.57 119.01 199.58
PhysicalContingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
BaselineEstimnate 11.59 10.61 22.20 18.19 26.53 44.72 21.93 32.59 54.52 26.68 49.03 75.71 2.14 0.12 2.26 0.03 0.12 0.15 80.57 119.01 19958
PriceContingencies: % perYear 0.00 0.00 1.50 1.50 1.80 1.80 2.60 2.60 2.50 2 50 2.50 2.50 % Compounded 0.00 0.00 0.75 0.75 2.41 2.41 4.66 4.66 7.33 7.33 10.01 10.01 2.58 2.76 2.68 Amount 0.00 0.00 0.00 0.14 0.20 0.34 0.53 0.78 1.31 1.24 2.28 3.52 0.16 0.01 0.17 0.01 0.01 0.02 2.08 3.28 5.36
lolal of R s 11.srs0 1MD3 26,73 4L0% 22A6 33.37 55J 27.22 sLin 1230 IA 013 2,A3 0.04 OJ3 0.L1 82a. 122.29 204.94
Source:-Ministry ofRailways anddmission estimates tIm. 9504-04 Table 3.4: INVESTM COS OF TELECOmmuNICATNSUPGRADING COMPONENT (in $ million)
1996 1997 1998 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total
Fiber Optic Systems 32.11 3.50 35.61 18.32 6.18 24.50 0.00 0.00 0.00 50.43 9.68 60.11 Digital Microwave 5.15 1.65 6.80 3.23 2.88 6.11 0.00 0.00 0.00 8.38 4.53 12.91 Satelite Stations 2.89 3.30 6.19 2.90 4.64 7.54 0.00 0.00 0.00 5.79 7.94 13.73 Data Communications Network 5.77 1.55 7.32 7.45 2.06 9.51 0.00 0.00 0.00 13.22 3.61 16.83 Video Conference Network 4.85 3.57 8.42 4.50 6.04 10.54 0.00 0.00 0.00 9.35 9.61 18.96 Telecom. Management Network 0.00 0.00 0.00 2.74 2.06 4.80 1.68 1.62 3.30 4.42 3.68 8.10 Service and Training 0.20 0.21 0.41 0.20 0.21 0.41 0.20 0.21 0.41 0.60 0.63 1.23
Subtotal 50.97 13.78 64.75 39.34 24.07 63.41 1.88 1.83 3.71 92.19 39.68 131.87
Physical Contingencies 5.10 0.69 5.79 3.93 1.20 5.13 0.19 0.09 0.28 9.22 1.98 11.20
Baseline Estimate 56.07 14.47 70.54 43.27 25.27 68.54 2.07 1.92 3.99 101.41 41.66 143.07
Price Contingencies: 'k per Year 1.800 1.800 2.600 2.600 2.500 2.500 'k Compounded 2.409 2.409 4.662 4.662 7.330 7.330 3.47 4.00 3.63 Amount 1.35 0.35 1.70 2.02 1.18 3.20 0.15 0.14 0.29 3.52 1.67 5.19
Total 57.42 14.82 72.24 45.29 26.45 71.74 2.22 2.06 4.28 104.93 43.33 14X.26
Source. Ministry of Railways and mission estimates UM - 95-03-28 Table 3.5: INVESTMENTCOSTS OF CONTAINERTRANSPORT COMMERCIALIZATION COMPONENT (in $ million)
1996 1997 Total Local Foreign Total Local Foreign Total Local Foreign Total
Containers 20-foot 12.88 0.00 12.88 12.88 0.00 12.88 25.76 0.00 25.76 Containers 40-foot 4.12 0.00 4.12 4.12 0.00 4.12 8.24 0.00 8.24 Rubber Tired Gantry Cranes 0.60 1.75 2.35 0.00 0.00 0.00 0.60 1.75 2.35 Forklift Handler 3.42 9.90 13.32 0.00 0.00 0.00 3.42 9.90 13.32 Reach Stacker 3.75 10.86 14.61 0.00 0.00 0.00 3.75 10.86 14.61 Highway Tractors 0.91 2.63 3.54 0.00 0.00 0.00 0.91 2.63 3.54 Highway Chassis 0.31 0.00 0.31 0.00 0.00 0.00 0.31 0.00 0.31 X6B Flatcars 20.60 0.00 20.60 20.60 0.00 20.60 41.20 0.00 41.20 Expand/Upgrade 2 Terminals 20.60 0.00 20.60 20.60 0.00 20.60 41.20 0.00 41.20 Information System 0.00 0.00 0.00 1.37 1.24 2.61 1.37 1.24 2.61
Subtotal 67.19 25.14 92.33 59.57 1.24 60.81 126.76 26.38 153.14
Physical Contingencies 7.6% 4.70 1.90 6.60 4.17 0.00 4.17 8.87 1.90 10.77
Baseline Estimate 71.89 27.04 98.93 63.74 1.24 64.98 135.63 28.28 163.91
Price Contingencies: % per Year 1.80 1.80 2.60 2.60 % Compounded 2.41 2.41 4.66 4.66 3.47 2.51 3.30 Amount 1.73 0.65 2.38 2.97 0.06 3.03 4.70 0.71 5.41
Total 73.62 27.69 101.31 66.71 1.30 68.01 140.33 28.99 169.32
Source: Ministry of Railways and mission estimates UM - 95-03-28 Table 3.6: INVESTMENT COsTsOF PELOT ENVIRONMENTAL PRoTECTIoN COMPONENT (in $ million)
1996 1997 1998 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total
Noise Barrier BarrierConstruction 0.24 0.52 0.76 0.18 0.00 0.18 0.06 0.00 0.06 0.48 0.52 0.99 Nlonitoring Equipment 0.04 0.15 0.19 ()(X) 0.00 0.00 0.00 0.00 0.00 0.04 0.15 0.19 ShenyanoWaste 0.05 0.21 0.26 ) 1' 0.00 0.18 0.00 0.00 0.00 0.23 0.21 0.43 TaopuWaste 0.00 0.00 0.00 0.17 0.31 0.48 0.00 0.00 0.00 0.17 0.31 0.48 Oily Water Treatment 0.22 0.41 0.63 0.24 0.00 0.24 0.12 0.00 0.12 0.57 0.41 0.98 Beijing Anti-EpidemicCenter 0.26 0.82 1.08 0.18 0.00 0.18 0.00 0.00 0.00 0.43 0.82 1.25 NoiseControl Projects NoiseCriterion 0.01 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.01 Train NoiseTransmission 0.04 0.00 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.00 0.04 Loco/VIleel Noise 0.01 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.01 Factorv NoiseControl 0.02 0.00 0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.00 0.02 In\ ironinentailAssess Training 0.00 0.00 0.00 0.01 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.01 DieselAdditive Proorami 0.02 0.08 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.08 0.10 ILunchiBox Management 0.02 0.10 0.13 0.29 1.19 1.48 0.00 0.00 0.00 0.31 1.29 1.60 TechinicalConsultation 0.00 0.41 0.41 0.00 0.15 0.15 0.00 0.00 0.00 0.00 0.56 0.56
Subtotal 0.93 2.70 3.63 1.23 1.65 2.88 0.18 0.00 0.18 2.34 4.35 6.69
PhysicalContingencies 0.00 0.07 0.07 0.00 0.04 0.04 0.00 0.00 0.00 0.00 0.11 0.11
Baseline Estimate 0.93 2.77 3.70 1.23 1.69 2.92 0.18 0.00 0.18 2.34 4.46 6.80
PriceContingencies: -I per Year 1.80 1.80 2.60 2.60 2.50 2.50 'k Compounded 2,41 2.41 4.66 4.66 7.33 7.33 3.97 3.25 3.50 Amount 0.02 0.07 0.09 0.06 0.08 0.14 0.01 0.00 0.01 0.09 0.15 0.24
Total 0.95 2.84 3.79 1.29 1.77 3.06 0.19 0.00 0.19 2.43 4.61 7.04
Sourice: Ministry of Railwaysand miissionestimates UM - 95-03-28 Table 3.7: INVMESNT COSs OF SYSrEM CAPAcrTyCOMPONENT (in $ million)
1997 1998 1999 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total
Locomotives 3.60 15.00 18.60 6.01 25.00 31.01 9.61 40.00 49.61 19.22 80.00 99.22 Spare parts 0.00 0.00 0.00 0.00 0.00 0.00 0.72 3.00 3.72 0.72 3.00 3.72 Tools, equipments & instrunents 0.00 0.00 0.00 11.40 7.67 19.07 0.00 0.00 0.00 11.40 7.67 19.07 Training 0.00 0.00 0.00 0.00 1.80 1.80 0.00 0.00 0.00 0.00 1.80 1.80
Subtotal 3.60 15.00 18.60 17.41 34.47 51.88 10.33 43.00 53.33 31.34 92.47 123.81
Physical Contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Baseline Estimate 3.60 15.00 18.60 17.41 34.47 51.88 10.33 43.00 53.33 31.34 92.47 123.81
Price Contingencies: % per Year 2.60 2.60 2.50 2.50 2.50 2.50 %Compounded 4.66 4.66 7.33 7.33 10.01 10.01 7.88 8.15 8.08 Amount 0.17 0.70 0.87 1.27 2.53 3.80 1.03 4.31 5.34 2.47 7.53 10.00
3.77 j&15 19.47 18.68 37 00 M 11.36 47.31 58.67 33.81 100.00 133.81
Source: Ministry of Railways and mission estimates UM- 95-03-27 Table 3.8: COSMSOF TEcENICALASSANcE (in $ million)
1995 1996 1997 1998 !999 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total PID C'mornUjDt5 Railway Restructuringand EnterpriseReform 0.00 0.07 0.07 0.00 0.31 0.31 0.00 0.00 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.38 0.38 RailwayTariff Reform 0.00 0.00 0.00 0.00 0.05 0.05 0.00 0.05 0.05 0.00 0.00 0,00 0.00 0.00 0.00 0.00 0.10 0.10 Labor Productivity 0.00 0.08 0.08 0.00 0.08 0.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.15 0.15
Investment Components ContainerTransport Consulting Support 0.00 0.00 0.00 0.00 0.41 0.41 0.00 0.41 0.41 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.82 0.82
StudyComoonents FeasibilityStudy DedicatedPassenger Rail 0.00 0.21 0.21 0.00 0.10 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.31 0.31 ApplicationofRIS DecisionSupport System 0.00 0.07 0.07 0.00 0.03 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.10 0.10 FeasibilityStudy for new InformationSystem 0.00 0.00 0.00 0.00 0.52 0.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.52 0.52 Expanding'TMISSystem 0.00 0.00 0.00 0.00 000 0.00 0.00 0.21 0.21 0.00 0.00 0.00 0.00 000 0.00 0.00 0.21 0.21 TelecommunicationsNetwork Study 0.00 0.00 0.00 0.00 0.26 0.26 0.00 0.26 0.26 0.00 1.03 1.03 0.00 0.00 0.00 0.00 1.55 1.55 Diesel EngineDesign 0.00 0.00 0.00 0.06 0.72 0.78 0.06 0.62 0.68 0.06 0.21 0.26 0.00 0.00 0.00 0.18 1.55 1.72 RestructuringManufacturing Sector 0.00 0.41 0.41 000 0.52 0.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.93 0.93 ResourceMobilization 0% 00 Strengtheningof TreasuryFunction 0.00 0.00 0.00 0.00 0.05 0.05 0.00 0.05 0.05 0.00 0.05 0.05 0.00 000 0.00 0.00 0.16 0.16 1 Issuingof Bonds 000 0.00 000 0.00 0.12 0.12 0.00 0.12 0.12 0.00 0.12 0.12 0.00 0.12 0.12 0.00 0.48 0.48
Subtottal 0.00 0.84 0.84 0.06 3.17 3.23 0.06 1.72 1.78 0.06 1.41 1.47 0.00 0.12 0.12 0.18 7.26 7.44
PhysicalContingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
BttselineEstimate 0.00 0.84 0.84 0.06 3.17 3.23 0.06 1.72 1.78 0.06 1.41 1.47 0.00 0.12 0.12 0.18 7.26 7.44
Price Contingencies: % per Year 1.50 1.50 1.80 1.80 2.60 2.60 2.50 2.50 2.50 2.50 % Compounded 0.75 0.75 2.41 2.41 4.66 4.66 7.33 7.33 10.01 10.01 0.00 3.83 3.72 Amount 0.00 0.01 0.01 0.00 0.08 0.08 0.00 0.08 0.08 0.00 0.10 0.10 0.00 0.01 0.01 0.00 0.28 0.28
0.00 0.85 0.85 0.06 3.25 3.31 0.06 1.80 1.86 0.06 LSI 1.57 0.00 0.13 013I 0.18 7.54 7.72
Smer(c NUinilry lR;ai wiys ad missionrsimatcs lNi 95 04(06 Table 3.9: IMPLEMEWrAAnONSCHEDULE
1995 1996 J 1997 ID Name Duration Scheduled ScheduledF 041Q1|02Q3 04 01 02 Q3 04 01 02 03 04 Q1 1 CHINA: SeventhRailway Project 356.8w 94/3/1 00/12/29 _ . 2 Loaneffectiveness 0.2w 95/9/1 95/9/1 I 3 Wuhan- GuangzhouLine 252.4w 94/3/1 98/12/30 _ _ 4 Surveyand DesignEquipment 105.4w 94/12/1 96/12/6 5 ICBprocurement 79.4w 94/12/1 96/67 _7
6 FCO instruction to 4. Design In 50d 94/12/1 95/2/8 2/_£- ______2 / 6 7 Preparationof TechnicalSpecs 1ow 94/12/1 95/2/8 O i 8 Inputfrom RailwayAdnmin low 94/12/1 95/2/8 2/ 9 Input from MOR,P-way Bureau low 95/2/9 95/4/19 4/19 10 Input from MOR,Electronics Bu low 95/2/9 95/4/19 _ a4/19 ON 11 Input from MOR,Loco Bureau low 95/2/9 95/4/19 g 4/19 12 Input from MOR,Rolling St. Bur low 95/2/9 95/4/19 4/19 13 Input from MOR,Construction lOw 95/2/9 95/4/19 4/19 14 Draft Specssent to FCO 0.2w 95/2/9 95/2/9 15 FCO prelim review 2.8w 95/2/10 95/3/1 16 PlanningDiv.: List of Good 2d 95/2/10 95/2/13 _ _ I__ I 2/f 3 17 Procurement Div.: SAR - te 2d 95i2il4 95/2/15 I2/15 _ _
18 Tech. Bureausof MOR 2w 95/2/16 95/3/1 | 31 19 Draft Specssent to State Evalu 0.2w 95/3/2 95/3/2 312
20 Review by State Evaluation Offi 4w 95/3/3 95/3/30 _ O/30 _
21 ITC to prepare Commercial doc' 4w 95/3/3 95/3/30 - _/30
Page: 1 Critical Progress Summary Date: 95/4/21 Noncritical Milestone * Rolled Up O Table 3.9: (CONT'D)
1995 1996 1997 ID Narne Duration Scheduled ScheduledF Ql Q102 Q30 Q4 Q1 Q2 Q3 Q4 Q1 02 03 04 22 Translationof Spec into English 4w 95/3/3 95/3/30 3/30 23 Correctionof translationof Specs 2w 95/3/31 95/4/13 U4/13 24 Approveddraft Specssent to ITC b 0.2w 95/4/14 95/4/14 | 4/14 25 ITC completesCommercial doc's 1w 95/4/17 95/4/21 i 4/21 26 Mailing of doc's to BankbV ITC 1w 95/4/24 95/4/28 I 4/28 27 Bank approval 3w 95/5/1 95/5/19 5/19 28 Printingof documnents 1w 95/5/22 95/5/26 * 5/26 29 Publicationin Gazette 2w 95/5/22 95/6/2 I 6/2 30 Bid period 60ed 95/6/5 95/8/4 8/4 31 Bid evaluation 21.2w 95/8/4 96/1/1 32 Evaluationby MOR 150ed 95/8/4 96/1/1 1/1 33 Reviewof draft eval report by 150ed 95/8/4 96/1/1 1/1 34 State EvaluationOffice approv 150ed 95/8/4 96/1/1 1/1 35 ITC sendsevaluation report to Bank 1w 96/1/1 96/15 _ /5 36 Bank review& 'no objection' 4w 96/1/8 96/2/2 . 2/2 37 Signingof contract. ITC 4w 96/2/5 96/3/1 3 38 Mailing of 2 contracts to Bank, ITC 1w 96/3/4 96/3/8 . 3/8 39 Bank's agreementto finance contra 1w 96/3/11 96/3/15 I 3/15 40 Establishingthe L/C by ITC 25d 96/3/18 96/4/19 4/19 41 Mailing of L/C to Bank 1w 96/4/22 96/4/26 _ 4/26 42 Bank declaresL/C irrevocable 30d 96/4/29 9616/7
Page: 2 Critical Progress Summary ~W Date: 95/4/11 Noncritical Milestone * Rolled Up O Table 3.9: (coNr'D)
1995 1996 1997 1998 ID Name Duration Scheduled Scheduled F Q4 Q1 0Q2 03 4Q01 02I Q3 Q4 l1 02 Q3 04 01 0Q2 0Q3 0Q4 43 Begin of delivery Ow 96/6/7 9616/7
44 Delivery of Survey & 26w 96/6/10 96/1216
45 Preperational Engineering 119w 94/3/1 96/6/10 6/10
46 Substructure 170w 947/1 97/10/2 _I .
47 Earthworks 170w 941/1 97/10/2 1012
48 Auxiliary Works 117w 950/1 97/9/26 . 9/26
49 Bridges and culverts 144w 94/10/1 970/4 __
50 Long & Middle Sized 144w 94/10/1 9717/4
51 Small Bridges & Culv 117w 95/3/1 97/5/27
52 Tunnels 144w 94/10/1 97_7/4
53 Tracks 144w 94/10/1 970/4 g _
54 CommnunicationsEquipme 183.6w 95/6/26 98/12/30
55 Transmrission Equipm 157.4w 95/6/26 98/6/30 _ .
56 ICB procurement 79.4w 95/6/26 96/12/31
57 Delivery of equip 26w 97/1/1 97_7/1
58 Installation 39w 970/2 98/3/31
59 Operational testi 13w 98/4/1 98/6/30
60 Exchange Equipment 157.4w 95/12/26 98/12/30
61 1CBprocurement 79.4w 95/12/26 9707/2
62 Delivery of equip 26w 970/3 97/12/31
63 Instalaton 39w 98/1/1 98/9/30
Page: 3 Critical Progress Summary r r Date: 95/4/11 Noncritical Milestone * Rolled Up O Table 3.9: (coNT'D)
1995 1996 1997 1998 ID Name Duration Scheduled ScheduledF Q2 Q3 Q4 Ql Q2 Q3 Q4 01 | Q2| 03 | Q4 01 Q2 Q3 04 64 Operationaltesting 13w 98/10/1 98/12/30 65 TransmissionUnes 117w 95/7/1 97/9126. 66 Localprocurement 52w 951711 96/6/28 6/28 67 Deliveryof equipment 26w 96/4/1 96/9/27 68 Installation 52w 96/7/1 97/6/27 69 Operetionaltesting 13w 97/6/30 97/9/26 . 70 PowerEquipment 72w 96WM2 97/11/17 71 Localprocurement 26w 96/7/2 96/12/30 12/30 72 Deliveryof equipment 13w 96/12/31 97/3/31 73 Installation 26w 97/4/1 97/9/29 74 Operationaltesting 13w 97/8/19 97/11/17 t' 75 SignallingEquipment 157.4w 95/6/25 98/6/30 76 ICBprocurement 79.4w 95/6/25 96/12/31 77 Deliveryof equipment 26w 97/1/1 97/7/1 78 Installation 39w 97/7/2 98/3/31 79 OperationalTesting 13w 98/4/1 98/6/30 80 ElectrificationsEquipment 52w 97/1/27 98/1/23 81 Installation 39w 97/1/27 97/10/24 i l l 10/24 82 OperationalTesting 13w 97/10/27 98/1/23 83 InformationSystems 161.8w 95/1/21 98/2/26 84 TMISEquipment 161.8w 95/1/21 98/2/26
Page: 4 Critical - Progress Summary Date: 95/4/11 Noncritical Milestone * RolledUp O Table 3.9: (CONT'D)
1995 1996 | 1997 1 ID Name Duration Schaduled Scheduled F 04 Ql1 02 003 004 1 0Q2 Q3 04 01 02 3 Q401 Q2 85 ICB procurement 79.4w 95/5/24 96/11/28 11128
86 Delivery of mini- & yard co 13w 96/11/29 97/2/27 87 Implementation 52w 9712/28 9812/26 - 88 ICB procurement 79.4w 95/1/21 96nt130 7130
89 Delivery of HQ LAN equipme 13w 96/7/31 96/10/29
90 Implementation 4w 96/10/30 96/11/26
91 MIS Phase I 105w 95/1/21 97/1/24
92 ICB procurement 79.4w 95/3/23 96/9/27
93 Delivery of mainframe, Trg. C 13w 96/9/30 96/12/27 .
94 Implementation 4w 96/12/30 97/1/24
95 ICB procurement 79.4w 95/1/21 96n/30 . 7/30 96 Delivery of eq. for CARS, Uni 13w 96/7/31 96/10/29 - 97 Implementation 4w 96/10/30 96/11/26
98 PTRS Information Systems 141 w 95/5/15 98/1/23
99 Preparation of TOR 15w 95/5/15 95/8/25 8/25
100 Hiring of consultants 16w 95/8/28 95/12/15
101 Implementation 104w 96/1/29 98/1/23 - 102 Comp. System to Manage Funds 89w 95/9/1 97/5/15 . r
103 Preparation of TOR 15w 95/9/1 95/12/14 1214
104 Hiring of consultants 16w 95/12/15 96/4/4
105 Iplementation 52w 96/5(17 97/5/15
Page: 5 Critical Progress Summary Date: 95/4/1 1 Noncritical Milestone * Rolled Up 0 Table 3.9: (CONV'D) 95 1 1996 1997 1 1998 1999 ID Name Duration Scheduled Scheduled F Q3 Q4 1l Q2 3 04 0l1 Q2 03 0Q4 I1 Q2 3 Q4 Ql 02 Q3 106 Telecommunications 218.4w 95/9/25 99/11/30 -
107 Fiber Optic System 105.4w 96/1/2 98/1/7
108 ICB procurement 79.4w 96/1/2 97/7/9 79
109 Delivery of equipmen 52w 96/10/10 97110/8
110 Installation 52w 97/1/9 9811 _7
I1I Digital Microwave 144.4w 95/9/25 98/6/30
112 ICB procurement 79.4w 95/9/25 97/4/1 4/1
113 DeliverV of equipmen 52w 96/10/2 97/9/30
114 Installation 52w 97/7/2 98/6/30 -
115 Sattelite Stations 1 1 3.4w 96/7/1 98/9/1
116 ICB procurement 79.4w 9617/1 98/1/6 EMFI71lEm 1/6 4
117 DeliverV of equipmen 52w 97/3/5 98/3/3
118 Installation 52w 97/9/3 98/9/1
119 Data Communications Ne 131.4w 96/4/1 98/10/6
120 ICB procurement 79.4w 96/4/1 97/10/7
121 Delivery of equipmen 52w 97/1/8 98/1/6
122 Installation 52w 97/10/8 98/10/6
123 Video Conference Networ 118.4w 96/7/25 98/10/30
124 ICB procurement 79.4w 96/7/25 98/1/30 1/30
125 DeliverV of equipmen 52w 97/8/4 98/7/31 -
126 Installation 52w 97/11/3 98/10/30
Page: 6 Critical Progress Summary l Date: 95/4/11 Noncritical Milestone * RolledUp O Table 3.9: (coNTI'D) 95 1996 1997 [ 1998 1999 ID Name Duration Scheduled ScheduledF Q3 4 01 02 03 104 Q1 I2 0Q3|04 l 02 03 04 01 02Q Q3 127 Telecom.Management N 131.4w 97/4/24 99/10/29 128 ICBprocurement 79.4w 97/4/24 98/10/30 10/30 129 Delivery of equipmen 52w 98/2/2 99/1/29 130 Installation 52w 98/11/2 99/10/29 131 Services& Training 187w 96/5/1 99/11/30 132 Preparationof TOR 1Sw 96/5/1 96/8/13 8/13 133 Hiring of consultants 16w 96/8/14 96/12/3 134 implementation 150w 97/1/15 99/11/30 135 ContainerTransport Commerci 111.2w 95/5/20 9717/7 136 ICDprocurement 79.4w 95/9/1 97/3/10 3/1l0 137 Deliveryof equipment 26w 97/1 7 97/7/7 Ut 138 ContainerTransp. Info Sy 89w 95/5/20 97/1/31 139 Preparationof TOR 15w 95/5/20 95/9/1 9/1 140 Hiring of consultants 16w 95/9/4 95/12/22 141 Implementation 52w 96/2/5 97/1/31 = _ 142 Pilot EnvironmentalProtection 241.2w 95/7/3 00/2/14 143 NoiseBarrier Equipment 209w 95/7/3 99/7/2 144 Localprocurement 65w 95/7/3 96/9/27 9/27 145 Deliverv of equipmen 13w 96/9/30 96/12/27 146 Construction 65w 96/12/30 98/3/27 147 Testing 52w 98/1/5 99/1/1
Page: 7 Critical Progress Summary Date: 95/4/11 Noncritical Milestone * RolledUp O Table 3.9: (CONT'D)
_5s 1996 1997 1998 1999 ID Name Duration Scheduled Scheduled F Q3 04 Ql Q2 Q30 Q4 Q1l Q2 3 Q4 Ql0 02 03 4 Q1 02 03 148 Report 26w 99/1/4 991712
149 Shenyan Waste 140w 9517/3 98/3/6
150 Local procurement 52w 95f713 96/6/28 6/28
151 Delivery of equipmen 13w 961/1 96/9/27
152 Construction 26w 96/9/9 97/317
153 Testing 26w 97/3/10 97/9/5 154 Report 34w 9717/14 98/3/6 - 155 Taopu Waste 196.4w 95/10/1 99f7/6
156 ICBprocurement 79.4w 95/10/1 97/4/8
157 Delivery of equipmen 13w 97/4/9 9717/B
158 Construction 26w 9717/9 98/1/6
159 Testing 52w 98117 99/1/5 160 Report 26w 99/1/6 99f7/6 - 161 Oily Water Treatment 196.4w 95/10/1 99f7/6 _W_m_ i n
162 ICB procurement 79.4w 95/10/1 97/4/8 4/8
163 Delivery of equipmen 13w 97/4/9 9717/8
164 Construction 26w 97f7/9 98/1/6
165 Testing 52w 98117 99/1/5
166 Report 26w 99/1/6 9917/6
167 Beijing Anti-Epidemic Cen 174.4w 95/9/1 99/1/4 __ * _ * _ _
168 ICB procurement 79.4w 95/9/1 97/3/10 3/10
Page: 8 Critical Progress Summary _ Date: 95/4/11 Noncritical Milestone * RolledUp O Table 3.9: (coNT'D)
95 1996 1997 1998 1999 ID Nrme Duration Scheduled ScheduledF 03 Q4 Q 02C Q3 04 01 02 Q3 Q4 01 02 03 04 Q1 02 Q3 169 Deliveryof aquipmen 4w 97/3/11 971417 170 Calibrationand testin 65w 97/4/8 9817/6 171 Report 26w 98n7/7 99/1/4
172 Noise Control Projects 197w 95/9/1 99/6/10 _ _
173 Preparationof TOR 15w 95/9/1 95/12/14 12/14 174 Hiring consultants 16w 96/2(23 9616/13 175 TA and reports 143w 96/9/13 99/6/10 176 EnvironmentalAsseasme 96w 97/2/27 98/12/30 _ 177 Preparationof TOR 15w 97/2/27 97/6/11 6/11 178 Hiringconsultants 16w 97/6/12 97/10;1 179 TA andreports 52w 98/1/1 98/12/30 ___ 180 DieselAdditive Program 106w 95/9/1 97/9/11 _l _ 181 Preparationof TOR & 15w 95/9/1 95/12/14 12/14 182 Hiring consultants 16w 96/2/23 96/6/13 183 Local purchase 4w 96/6/14 96/7/11 184 TA 52w 96/6/14 9716/12 - _ 185 Report 13w 97/6/13 97/9/11 186 Lunch Box Management 232.4w 95/9/1 00/2/14 _ - 187 Preparationof TOR 15w 95/9/1 95/12/14 12/14 188 Hiringconsultants 16w 96/1/19 96/5/9
189 TA andreports 39w 96/5/10 97/2/61
Page: 9 Critical Progress Summary _ Date: 95/4/11 Noncritical Milestone * RolledUp O Table3.9: (CONT'D)
1995 1996 r 1997 1998 ID Name Duration Scheduled Scheduled F 02Q03l04 01|Q2 Q3 04 IQl10210|3 0Q i02 03 04 Q 01 2 190 ICBprocurement 79.4w 96/11/8 98/5/18 . _ - 191 Delivery 26w 98/5/19 98/11/16 . - 192 Constructionand tes 65w 98/11/17 00/2/14 193 Report 13w 99/11/16 00/2/14 194 Technical Consultation 141w 96/1/3 98/9/15 * 195 Preparationof TOR 1Sw 96/1/3 96/4t16 4/16 196 Hiring consultants 16w 96/4/17 96/8/6 197 Implementation 104w 96/9/18 98/9/15 . 198 SystemCapacity Expansion 296w 95/5/1 00/12/29 - 199 Preparationof list of bidd 3.2w 95/5/1 95/5/22 0 5/22 200 Preparationof draft biddin 3.2w 95/5/1 95/5/22 1 5/22 201 Draft biddingdoc'd sent t lw 95/5/23 95/5/29 202 List of biddersto Bank Ow 95/6/1 95/6/1 203 Bank approvalof list & bi 2w 95/6/1 95/6/14 204 Invitations to bid issued 0.8w 95/6/15 95/6/20 , 205 Bidders'clarification meet Ow 95/7/15 957/1 5 206 Revisedbidding doc's sen 2.4w 95r7/17 95/891 i 8/1 207 Bank approval 1.3w 95/8/2 95/8/10 l 8/10 208 Bid period 5.2w 95/8/15 95/9/20 9/20 209 Bid opening Ow 95/9/20 95/9/20 210 Bid evaluation 20.5w 95/9/20 96/2/9
Page: 10 Critical Progress Summary Date: 95/4/21 Noncritical Milestone * RolledUp O Table 3.9: (CONT'D)
1996 1997 1998 1999 ID Name Duration Scheduled ScheduledF Q4 Q1 Q2 030 Q4 Q1 02 Q3 Q4 01 Q2, 03 4 1 2 Q3 04 211 Evaluationby MOR 17.4w 95/9/20 96/1/19 1/19 212 State EvaluationOffi 3.1w 96/1/19 9612/9 * 2/9 213 ITC sendsevaluation repo 0.2w 96/2/12 96/2/12 2/12 214 Bankreview & 'no object 6.2w 96/2/13 96/3/26 3/26 215 Signingof contract,ITC 7.2w 96/3/27 96/5/15 5/15 216 Mailingof 2 contracts to 0.5w 96/5/16 96/5/20 I 5/20 217 Bank's agreementto fina 0.7w 96/5/20 96/5/23 | 5/23 218 Establishingthe L/C by IT 4w 96/5/24 96/6/20 6/20 219 Mailingof L/Cto Bank 1w 96/6/21 96/6/27 | 6/27 220 Bankdeclares L/C irrevoc 0.4w 96/6/28 9617/1 | 7/1
221 Begin of delivery period Ow 9617/1 96/7/1 222 Designof loco's by suppli 39w 9617/2 97/3/31 3/31 223 Manufactureof locomotiv 156w 97/1/2 99/12/29 224 Testingof locomotives 130w 97/4/3 99/9/29 225 Firstbatch shipment 26w 97/10/2 98/4/1 226 Secondbatch shipment 39w 98r7/2 99/3/31 227 Third batch shipment 52w 99/4/1 00/3/29 228 Shipmentof spares 13w 99/9/30 99/12/29
229 Shipment of tools, equip 13w 9817/2 98/9/30 230 Trainingof Chinesestaff 195w 9617/2 00/3/27
231 Transferof technologyto 234.8w 9617/2 00/12/29 /
Page: 11 Critical Progress Summary Date: 95/4/21 Noncritical Milestone * RolledUp O Table 3.9: (coNT'D)
__ _ 11995 | 1996 1997 1 ID Name Duration Scheduled ScheduledF 04 01 | Q2 103 04)Q 01 02 03 04 01 02 0 i 102 232 TechnicalAssistance 264.4w 94/12/1 99/12/24 m 233 PIDComponents 160.4w 94/12/1 97112126 9 = 234 Ply Restructuring,Enterprise 160.4w 94/12)1 97/12/26 9 p 235 Preparationof TOR 26w 94/12/1 95/5/31 5131 236 Hiringof consultants 37w 95/3/16 95/11/29 a 237 Inplementation 130w 95/7/3 97/12/26 238 LaborProductivity 104w 95/1/1 96/12/27 239 Preparationof TOR 17w 95/3/1 95/6/27 6/27 240 Hiringof consultants 17w 95/7/3 95/10/27 241 Implementation 104w 95/1/1 96/12/27 12/27 242 RailwaVTariff Reform 78.2w 95/9/30 97/3/31 . _ _ 243 Implementation 78.2w 95/9/30 97/3/31 244 InvestmentComponents 141w 95/5/1 98/1/9 245 ContainerTransport Cons. S 141w 95/5/1 98/1/9 246 Preparationof TOR 15w 95/5/1 95/8/11i811 247 Hiringof consultants 16w 95/8/14 95/12/1 248 Implementation 104w 9611/15 98/1/9 249 StudyComponents 258w 951/15 99112/24 m 250 Preparationof TOR 15w 95/11/15 95/4/28 4/28 251 Hiringconsultants 16w 95/5/1 95/8/18 252 FSDedicated Passenger Rail 65w 95/10/2 96/12127
Page: 12 Critical Progress Summary Date: 95/4/11 Noncritical Milestone * RolledUp 0 Table 3.9: (CONT'D)
95 1996 1997 1998 1999 ID Name Duration Scheduled Scheduled F 03 Q4Ql4 Q2|Q3|4 43 01 02 0 04 1QQ0 Q 04 QlQ2 03 253 Implementation 65w 95/10/2 96/12127 ___
254 Application of RIS De 65w 95110/2 96/12/27 MM=*
255 Implementation 65w 95/10/2 96/12/27
256 Restructuring Manuf 65w 95/10/2 96/12/27
257 Impiementation 65w 95/10/2 96/12/27
258 Preparation of TOR 15w 95/5/30 95/9/11 - 9/11
259 Hiring consultants 22w 95/12/5 96/5/6
260 FS New Information 52w 96/6/18 97/6/16 _ W
261 Implementation 52w 96/6/18 97/6/16 156w 96/6/18 99/6/14 262 Telecom. Network St K- ~~~~~~~~~~~~00 263 Implementation 156w 96/6/18 99/6/14
264 Diesel Engine Design 156w 96/6/18 99/6/14
265 Implementation 156w 96/6/18 99/6/14 _ I -- - _ - - t
266 Resource Mobilizatio 245w 95/4/16 99/12/24 -
267 Preparation of T 15w 95/4/16 95/7/28 7/28
268 Hiring consultant 16w 95r7/31 95/11/17
269 Treasury Functio 96w 96/1/1 97/10/31 -_
270 implementat 96w 96/1/1 97/10/31
271 Issuing Bonds 208w 96/1/1 99/12/24
272 Implementat 208w 96/1/1 99/12/24
Page: 13 Critical Progress Summary _ Date: 95/4/11 Noncritical Milestone * Rolled Up O - 82 -
Table 3.10: CUMULATIVEDLSBuRSEmET ScHEDuLE La
China IBRD Fiscal Estimated Disbursements All Sector Year and Quarter Cumulative Disbursement Quarter US$million % Profile /b
FY 96 Mar. 31, 1996 2.5 2.5 0.6 0.0 Jun. 30, 1996 7.5 10.0 2.5 3.0
FY 97 Sep. 30, 1996 10.0 20.0 5.0 Dec. 31, 1996 10.0 30.0 7.5 6.0 Mar. 31, 1997 10.0 40.0 10.0 Jun. 30, 1997 12.0 52.0 13.0 14.0
FY 98 Sep. 30, 1997 10.0 62.0 15.5 Dec. 31, 1997 20.0 82.0 20.5 26.0 Mar. 31, 1998 25.0 107.0 26.8 Jun. 30, 1998 25.0 132.0 33.0 38.0
FY 99 Sep. 30, 1998 30.0 162.0 40.5 Dec. 31, 1998 40.0 202.0 50.5 50.0 Mar. 31, 1999 26.0 228.0 57.0 Jun. 30, 1999 24.0 252.0 63.0 62.0
FY 00 Sep. 30, 1999 22.0 274.0 68.5 Dec. 31, 1999 20.0 294.0 73.5 70.0 Mar. 31, 2000 18.0 312.0 78.0 Jun. 30, 2000 15.0 327.0 81.8 78.0
FY01 Sep. 30, 2000 13.0 340.0 85.0 Dec. 31, 2000 10.0 350.0 87.5 86.0 Mar. 31, 2001 7.5 357.5 89.4 Jun. 30, 2001 6.0 363.5 90.9 90.0
FY 02 Sep. 30, 2001 10.0 373.5 93.4 Dec. 31, 2001 9.5 383.0 95.8 94.0 Mar. 31, 2002 7.5 390.5 97.6 Jun. 30, 2002 5.5 396.0 99.0 96.0
FY 03 Sep. 30, 2002 3.0 399.0 99.8 Dec. 31, 2002 1.0 400.0 100.0 98.0 Mar. 31, 2003 ).0 400.0 100.0 100.0
/a Assuming Board Date in May 1995 UM - 95-04-06 lb World Bank: China, All Sectors (November 1994 ) Table 4.1: ERR AND NPV CALCULATIONSFOR TEIE CORRIDOREXPANSION COMPONENT (in Yuan million)
COSTS Complementary Investments in BENEFITS Net Net Electric Electric Operating Diverted Project Rolling Fixed Power Catenary Resettle- Expense Traffic NET Year Investment Stock Plant Generation Maintenance ment Savings Benefits BENEFITS
1994 501.03 0.00 -493.82 0.00 0.00 3.31 0.00 0.00 -10.52 1995 3,223.23 0.00 -2,572.00 0.00 0.00 23.66 0.00 0.00 -674.89 1996 3,453.68 0.00 -2,572.00 0.00 0.00 55.57 0.00 0.00 -937.25 1997 1,797.31 0.00 -1,954.72 907.50 0.00 42.93 0.00 0.00 -793.02 1998 713.99 29.21 -1,337.44 907.50 0.00 14.75 0.00 0.00 -328.01 1999 0.00 0.00 -843.62 0.00 74.46 0.00 608.00 77.50 1,454.66 2000 0.00 0.00 -720.16 0.00 74.46 0.00 641.00 77.50 1,364.20 2001 1,954.72 0.00 0.00 0.00 74.46 0.00 642.00 142.40 -1,244.78 2002 0.00 0.00 0.00 0.00 74.46 0.00 644.00 262.04 831.58 2003 0.00 805.21 0.00 0.00 74.46 0.00 644.00 481.94 246.27 2004 0.00 0.00 0.00 0.00 74.46 0.00 644.00 885.89 1,455.44 2005 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2006 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2007 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2008 2,417.68 0.00 -2,469.12 0.00 74.46 0.00 644.00 1,629.39 2,250.37 2009 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2010 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2011 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2012 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2013 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2014 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2015 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2016 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2017 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2018 2,417.68 32.33 0.00 0.00 74.46 0.00 644.00 1,629.39 -251.09 2019 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2020 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2021 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2022 0.00 0.00 0.00 0.00 74.46 0.00 644.00 1,629.39 2,198.93 2023 3,477.34 805.21 0.00 0.00 74.46 0.00 644.00 1,629.39 -2,083.63 ERR=26.10% NPV at 12 %=4,122.80 - 84 -
Table 4.2: ERR AND NPV CALCULATIONSFOR INFORMATIONSYSTEMS MODERNIZATION COMPONENT (in Yuan Million)
COSTS BENEFITS NET Year Project Investment Avoided Investment BENEFITS
1994 258.42 -258.42 1995 407.66 -407.66 1996 463.20 -463.20 1997 539.48 -539.48 1998 35.88 -35.88 1999 1,750.00 1,750.00 2000 1,750.00 1,750.00 2001 1,750.00 1,750.00 2002 1,750.00 1,750.00 2003 1,750.00 1,750.00 2004 1,750.00 1,750.00 2005 1,750.00 1,750.00 2006 1,750.00 1,750.00 2007 1,750.00 1,750.00
ERR=42.23% NPV at 12%=4,042.31 - 85 -
Table 4.3: ERR AND NPV CALCuLATIONSFOR TELECOMMUNCATIONSUPGRADING COMPONENT (in Yuan million)
BENEFITS COSTS Avoided Induced Project Capital Traffic NET Year Investment Investment Benefits BENEFITS
1994 1,237.00 0.00 0.00 -1,237.00 1995 2,219.00 0.00 0.00 -2,219.00 1996 2,075.00 1,400.00 1,347.86 672.86 1997 2,075.00 1,400.00 1,347.86 672.86 1998 2,075.00 1,400.00 1,347.86 672.86 1999 1,837.50 1,400.00 1,347.86 910.36 2000 1,837.50 1,400.00 1,347.86 910.36 2001 0.00 1,400.00 1,347.86 2,747.86 2002 0.00 1,400.00 1,347.86 2,747.86 2003 0.00 1,400.00 1,347.86 2,747.86 2004 0.00 1,400.00 1,347.86 2,747.86 2005 0.00 1,400.00 1,347.86 2,747.86 2006 0.00 1,400.00 1,347.86 2,747.86 2007 0.00 1,400.00 1,347.86 2,747.86
ERR=30.19% NPV at 12%=4,960.61 - 86 -
Table 4.4: ERR AND NPV CALCULAT1oNSFOR CONTAINERTRANSPORT COMMERCIALIZATION COMPONENT (in Yuan million)
COSTS BENEFITS Project Diverted SavingsFrom NET Year Investment Traffic Benefits Break-bulk BENEFITS
1995 580.73 -580.73 1996 664.25 -664.25 1997 338.23 106.58 444.82 1998 338.23 106.58 444.82 1999 338.23 106.58 444.82 2000 338.23 106.58 444.82 2001 338.23 106.58 444.82 2002 338.23 106.58 444.82 2003 338.23 106.58 444.82 2004 338.23 106.58 444.82 2005 338.23 106.58 444.82 2006 338.23 106.58 444.82
ERR=29.01% NPV at 12%=955.57 Table 4.5: ERR AND NPV CALCULATIONSFOR TME SYSTEMCAPACrrY ExPANSION COMPONENT (in Yuan million)
BENEFITS COSTS Operating Induced Year Project Complementary Total Expense Traffic Total NET Investment Investment Costs Savings Benefits Benefits BENEFITS
1997 130.50 -69.12 61.38 0.00 0.00 0.00 -61.38 1998 356.40 1,876.53 2,232.93 2.24 253.10 255.34 -1,977.59 1999 374.10 3,120.78 3,494.88 5.95 770.46 776.41 -2,718.47 2000 5,295.84 5,295.84 11.90 1,735.56 1,747.46 -3,548.38 2001 11.90 1,930.19 1,942.09 1,942.09 2002 11.90 2,124.82 2,136.72 2,136.72 2003 11.90 2,124.82 2,136.72 2,136.72 2004 11.90 2,124.82 2,136.72 2,136.72 2005 11.90 2,124.82 2,136.72 2,136.72 2006 11.90 2,124.82 2,136.72 2,136.72 2007 11.90 2,124.82 2,136.72 2,136.72 2008 11.90 2,124.82 2,136.72 2,136.72 2009 11.90 2,124.82 2,136.72 2,136.72 2010 11.90 2,124.82 2,136.72 2,136.72 2011 11.90 2,124.82 2,136.72 2,136.72 2012 11.90 2,124.82 2,136.72 2,136.72 2013 11.90 2,124.82 2,136.72 2,136.72 2014 11.90 2,124.82 2,136.72 2,136.72 2015 11.90 2,124.82 2,136.72 2,136.72 2016 11.90 2,124.82 2,136.72 2,136.72 2017 11.90 2,124.82 2,136.72 2,136.72 ERR=20.54% NPV at 12%=3,736.14 I - 89 - ANNEX 1
BANK GROUP PARTICIPATION IN TRANSPORT SECTOR
1. Through June 1994, the Bank Group had loaned about $4.53 billion to China under 29 projects for the transport sector (see Table 1.6 for Summary Statistics) and is now preparing several new transport sector projects.
2. The railway subsector has received $1,785 million in Bank Group funding: six loans to the national railway system(Loans 2394-CHA; 2540-CHA; 2678-CHA/Credit 1680-CHA;Loans 2968-CHA; 3406-CHA; and 3581-CHA) and one loan to the local railway system (Loan 3060-CHA/Credit2014-CHA). These projects have helped the governmentexpand capacity on key routes and modernizethe technologyfor manufacturing electric locomotives, passenger coaches, and signaling equipment. The local railway project is financing the construction of a line in Inner Mongolia. The most recently approved project is assisting MOR with railway policy and management initiatives; institutional development of the railway system; expansion of railway capacity; and modernizationof railway technology on a systemwide basis. The audit of the First Railway Project noted that physicalcomponents were well executed and that macropolicy adjustments, especially in the area of tariff reforms, and investmentprioritization were likely to have the highest impact; these conclusionsare being considered in the currently proposed railway project. The project completionreport for the Second Railway Project is currently under way.
3. The highway subsectorhas received $1,669 millionin Bank Group financing under 11 projects (Loans 2539-CHA/Credit1594-CHA; Loan 2811-CHA/ Credit 1792- CHA; Loan 2951-CHA/Credit 1917-CHA;Loan 2952-CHA; Credit 1984-CHA; Loan 3073-CHA/Credit2O25-CHA;Loans 3471-CHA;3530-CHA; 3681-CHA; and 3748-CHA). These projects provide for the constructionof high-qualitynational and provincial roads totaling about 2,180 km, and the expansionand improvementof some 6,851 km of rural (lower class provincial, county, village)roads and major bridges. When completed, some of these roads will help to provide vital missing links in the national highway network; others will help to ease severe congestion in parts of the network or provide access to remote areas. The projects are also designed to provide foreign technical assistance and training of Chinese personnel in areas such as supervision and quality control of road construction,design, and planning. Finally, the projects support studieson key issues of highway development such as road safety, pavement management, user charges, and methodsof financingthe expansion, improvement,and rehabilitationof the road network. The First Highway Project (Loan 2539-CHA/Credit1594-CHA) is completed; a Project CompletionReport was issued in May 1992.
4. The ports subsectorhas received $715 millionof BankGroup financingunder eight projects (Loans 2207-CHA,2689-CHA, 2877-CHA/Credit 1845-CHA, Loan 2907- - 90- ANNEX 1
CHA/Credit 1875-CHA, Loans 3006-CHA, 3007-CHA; Credit 5623-CHA; and Loan 3552-CHA). Most of the loan funds are being used in Shanghai, Tianjin, Dalian, Huangpu, Ningbo, and Xiamen for construction of terminals, jetties, and berths for handling bulk commodities, general cargo, and containers, as well as the dredging of navigation channels. Funds also have been used for training, technical assistance, and various studies such as port planning, operationsmanagement, and containerization. The audit report of the first port project, found the project successfullycompleted, on time and below cost, but recommendeddeveloping long-term strategic port investment, planning ports and improving prequalificationprocedures; recommendationson the former point have been incorporated in the preparation of the recent Shanghai Port Restoration and Developmentproject, and recommendationson the latter have been taken into account in the discussion of procurement procedures in transport projects under preparation. The Ship Waste Disposal Project (FY92) involves cofinancing between the International DevelopmentAssociation (IDA) and the GlobalEnvironmental Facility (GEF) to improve ways for disposal of ship effluentsand thus reduce pollutionof internationaland territorial waters caused by ships' waste. The recent Shanghai Port Project (FY93) focuses on restructuring and long-termport developmentwith a complementarytechnical assistance and training componenttargeting institutionaland financial reforms.
5. The urban transport subsector has received $210 million of Bank Group financingunder two projects (Credit 2296-CHAand Loan 3652-CHA). These two urban transport projects are intended as a first stage of a long-term program to upgrade and develop urban infrastructurein Shanghai. They finance capacity increases of key urban links as well as traffic management and safety upgrades and assist the Shanghai Metropolitan Govemmentto strengthenpublic sector managementcapacity by improving the planning and managementof the urban transport system.
6. One multimodalproject was approvedin 1991 (Loan 3316-CHA/Credit2226- CHA, $154 million) to improveprovincial transport in Jiangsu. While the main focus of this project is on rehabilitatingthe provincial road network, the project includes the first loan to the inland waterway subsector to rehabilitate a section of the Grand Canal and expand an important shiplock. SUMMARY OF PREVIOUS RAILWAY PROJECTS
Component | Project Description and Objectives Loan/Credit Am'ount (S millUion) I
RAILWAY I 1. Xinxiang-Yanzhou Une Conosction of single track between Xinxiang and Heze (165 kin, including a 10 km long bridge); and upgrading 113.0
and capacity increa es of the existing Heze-Yanzhou line; and related construction works. This project will increase the capacity. 2. Datong-Taiyuan Line Double-tracking of two ections (127 kn); lengthening of all (34) existing crossing stations; construction of additional crossing 87.0 sations; nd line electrification and insallation of centralized traffic control signalling system. This component will increase overall capacity.
3. Electric Locomotives: Manufac- Provision of technical assistance and training. Provision of equipment to increase and improve production of electric locomotives of 20.0 ture and Technical Asistance the present design. This component will increase the electric locomotive output to meet the overall demand.
Tots 220.0
RAILWAY 11
I. Zhengzhou-Wuhan Line Upgrad- Track lengthening at 59 stations and increase of the loading gauge of 18 bridges; electrification of the 574 km double track section; 211.5 ing and Electrification related construction works; and technical assistance. This component will increasc the capacity of this line which has the second highest traffic density in China.
2. Technical Assistance for Technical assistance to CPCF; training of CPCF personnel in modern technical and management practices; development of a new 8.0 Changchun Passenger Coach coach design adapted to Chinese conditions, and other related works. Bank assistance will enhanec the efficiency of production and Factory (CPCF) improve the quality of the coach. 3. Technical Assistance for China Provision of equipment and instruments to equip the laboratories; and training of Academy staff in fields related to the laboratories. 15.0 Academy of Railway Science
4. Management Information System Upgrading of MOR's management information system to improve the efficiency of its operations. 0.5 Study
TOtal 235.0 SUMMARY OF PREVIOUS RALLWAYPROJECTS
Coa"mponts Project Description and Objectives Loe,a/Credit Anwwt (S million)
RAILWAY III I Chongqng-Guiyang Line Extension of sidings from 550 m to 750 m; replacemeit of 43 kg/m rails with 50 kg/m rails; and line electrification. This compo- 96.0/a Upgrading end Electrification nent will increase the line capacity. 2. Yingtan-Xian men Line Upgrsd- Extension of short crossing loops from 450 m to 650 m and other related works; and electrification. This component will increase 106.0/a Vgand Electrification the line capacity.
3 Technical Asasistnce for Xian Provision of better equipment, facilities and technical assistance to increase production efficiency and improve product quslity. 8.6/a Rsilway Signaling Factory 4. Maintenance of Permanent Way Provision of mechanical equipment to MOR for railway maintenance to improve track condition and increase line capacity. 19.0/a |S Costing Study Comprise specifications of the coating system to be adopted by MOR, and pilot system implementation and training. 0.4/a Toul 230.0
RAILWAY IV f 1. YueIhan-Xiangfan Line Double- Double-tracking of Yueshan Xiangfan line (492 kin) and electrification from Yueshan to Luoyang (113 km) to incrase the line 163.0 Tracking and Partial Electrifica- capacity.
2. Modernization of Three Locomo- Provision of advanced equipment and transfer of new technology to MOR to modernize three locomotive and rolling stock factories 37.0 tive and Rolling Stock Factories to improve the quality of products.
Total 200.0
INNER MONGOLIA LOCAL RAILWAY 1. Line Construction, Design Fea- Construction of a new line with initial capacity of seven million tons per year in each direction. Provision of related operational 150.0 tures and Operational Equipment equipment to improve the quality of railway operation. Total 150.0
/a Data are based on the loan agreement and are different from the cormsponding Staff Appraisal Report. SUMMARY OF PREVIOUS RAILWAY PROJECTS Conponents Project Description and Objectives 1Loan/Credit Amount (S million)
RAILWAY V I Systemwide Component-Perms- Provision of on-track machinery for permanent way rehabilitation and maintenance to improve the track condition and thereby 90.0 nent Way increase line capacity and train speed.
2. Systemwide Component-Loco- Procurement of wheels; critical components for locomotives; and some critical machinery and equipment for the workshops and 60.0 motives and Rolling Stock depot. The objective is to reduce the gap between supply and demand.
3 Capacity Expansion Component Double-tracking of 594 km single-track between Zhuzhou and Hangzhou; and build a new double-track bridge over the Gan River. 160.0 -Zhengan Line The objective is to remove the bottleneck and increase the line capacity.
4. Capacity Expansion Component Provision of additionsl land, new roadbeds, bridges, culverts, buildings, machinery, and equipment. This component will increase 20.0 -Xuzhou Terminal railway capacity, reduce the train delay, and the operational costs.
Total 330.0
RAILWAY VI
1. Capacity Expansion Subcompo- Electrification and modernization of 694 km double track line to increase the traffic carrying capacity of the line by about 50 per- 112.0 nent: Beijing-Zhengzhou cent.
2. Capacity Expansion Subcompo- Electrification and moderization of 1094 km single track line to increase the traffic carrying capacity of the line by about 70 per- 90.0 nent: Chengdu-Kunming cent.
3. Mechanizing Track Maintenance Mechanization of the track maintenance system. The objective is ultimately to lower train operating and maintenance costs. 48.0 4. Locomotive & Rolling Stock Introduction of modern m achine tools for manufacturing critical parts of MOR's equipment fleets which will help reduce the fre- 22.0 Parts Manufacture quency of failures of diesel locomotives and freight wagons and improve their reliability and utilization.
5. Telecommunicationa & TMIS Expansion and modernization of MOR's telecommunications network and implement computerized TMIS to automate wagon opera- 120.0 tions on a systemwide basis. The objective is to increase the flow of information for decision making at all levels and make railway operations more efficient and responsive to customer needs.
6 Pilot Container Transport Demonstration of the operational and economic feasibility of a frequent and regularly scheduled container transport service and 19.0 guide the future expansion of modern container ervices.
7 Technical Assistance for System- Technical *asistance and training for MOR to carry out three major studies including: (1) rail-based container transport study; 9.0 wide Technological Moderniza- (ii) cost-effective technology evaluation study; and (iii) environmental protection study. tion
Total 420.0 SUMMARY OF COMPLETED, ONGOING AND PROPOSED PROGRAMS OF COOPERATION BETWEEN MOR AND THE WORLD BANK
COMPLETED STUDIES
Copoinet Starting project Objectives/scope Funding sources/foreignexchange Status topic & year cost (approx.)/C
I Costing Study Railways I To develop a coating system which provides Total: S800,000 Comoleted. Study was initially delayed 1984 detailed costs of railway trnsport for Raihvays I: $500,000 due to Chinese hcsitation to tackle freight by commodity and for pasengens by Railways mI: S300,000 costing and pricing issues, but MOR class and type of service by origin and agreed with the Bank through Raihways destination. An inmontnt follow-up is to V negotiations on an action plan to: (a) usc the coating model for (i) indexing tariffs complete the tudy by December 1993; to inflation; (ii) contract pricing; (iii) re- and (b) ue study results to formulate moving structural distortions in tariffs; and revision of tariff system. A proposal (iv) calculating comnpenations for PSOe. for railway tariff reforms was prepared See the Railway Tariff Reform Study be- under Railways VI. MOR bas pre- low, pared a costing model, yielding rmilway cost estimates which provided a basis for initial improvements of the railway tariff system under the proposed rail- way tariff reform study (see below). This model is currently being applied in the Fuzhou subadministration.
2. Pilot Msnagement Railways U To improve MOR's infornation system in Railways U: $500,000 Completed. A pilot system for com- Information System 1985 the Harbin Administration through stream- puterizing expenses, revenues and way (MIS) Study lining of information flow and use of mod- bills has been tested for the Harbin era conmuter software. Administration. MOR is beginning to develop a comprehensive MIS for the entire railway system. The compre- hensive MIS would employ the Trans- port Management Information System (TMIS) proposed under Railways VI to provide key input. COMPLETED STUDIES (cont'd)
Compoent Starting project Objectives/scope Funding soureer/foreign exchane Status topic & year cost (approx.)/a
3. Strategic Phn Study Railways IV To imnprove operational nmnagenent and Total: S2,500,000 Cornwieted. Traffic capacity nmdeling 1988 increase transport capacity on the Beijing- Railways IV: S1,000,000 with ALK consultants has been com- Shaghai lne, through three areas of tech- PHRD: $1,500,000 pleted and tested on a pilot basis. This nological mnodernization: model was used extensively in the (a) traffic capacity mnodeling; Coat-effectiveneu Technology Evalua- (b) telecommunications; and tion (CETE) Study Phase I. MOR has (c) TMIS. prepared, with the help of EDS (USA) nd CANAC (Canada) conultants, re- pott on the telecommunications sub- tudy and with CANAC consultants on the TMIS subsudy. Thee reports provided a bai for the proposed investment ubcomponeMt for telecom- nmnications and a Transport Manage- ment Infornation System (FMIS) for Bank financing under Railways VI. %
4. Railway Investnent Railways V To develop a decision-support eytem for Total: S550,000 Conoleted. Phase I (model develop- Study (RIS) 1989 (a) forecrating traffic flows on railway net- World Bank: $200,000 ment and testing) was completed in work; (b) evaluating economic merits of PHRD: $350,000 June 1991. Conmputer tools are now proposed railway capacity expansion invest- available for applicationx by trained ments; and (c) selecting high-priority MOR. staff. RIS Phase n applied a investments and increasing total system decision-support sytem developed throughput under budget constrmints, under RIS Phase I to determine eco- normic priorities of proposed railway investents on a systemwide bais; to maximize system throughput under budget conaints; and to size future railway investmt plans under differ- ent economic growth scenarios. Two of these projects were impiemeted under Railways VI. RS results were used as a basis for the Government decision nade in 1992 to accelerate railway construction in the 8th and 9th Five-Year Plns. COMPLETED STUDIES (cont'd)
Coywncn Start g project Obp.tived/ccope Funding ourfca/foign exchan Stac lepic h ye r cod (appmx. )
5. Technical Studies Railways V To develop action plans to: Total: $3,500,000 Com£leted As rgreed during Railway 1989 (a) modernize tuck maintenance; (b) mod- Railways I: $3,500,000 V negotitions, MOR has carried out ernize loconuotive and olling mock main- the studies (a)-(d). These reports pro- tenance; (c) modernize and expand the rail- vided a basis for preparing four invest- way telecommunications sytem; and (d) mest subcomponents of Railways VI. modernize railway electrification technol- ogy.
6. Tariff Study Railways VI To prepare a proposal to reform railway Total: $250,000 Coenleted. Originated from rhe ongo- 1992 tariffs in order to help MOR strenihen ita MOR(DankLoana):/b $170,000 ing CoMing Study, the study addreaed financial aIf-mufficiency and remove price World Bank: S 0,000 not only dhe isue of price distortions, disonios, but also die isses of trengthening MOR's financial elf-sufficiency nd grsani MOR grter autonomy in price sening. A Tariff Reform Study Committe and Working Group with representation of MOR, MOF, SPC and SPC werm created. An action plan wa agreed with MOR in July 1994 and is currently being implemented. This atudy provides a basis for the PID comnponent on railway tariff reform under Railways VU.
7. Accounting Study Railways VI To prepare railway accounting rules to Total: $300,000 Comnleted. MOR has prepared guide- 1992 conform with national accounting rules to MOR(Bank Loana):/b $300,000 lines for accounting rules and financial be iaued by MOR. reporting, and, accordingly, has revised its chart of accounts accordingly. MOF treated the tudy as a test case for the transport sector. To implement accounting reform, MOR haaagreed to prepare accounting policies with technical asianea under Railways Vi. COMPLETED AND ONGOING STUDIES (cont'd)
Component Starting project Objectives/scope Funding sources/foreign exchange Status topic & year cost (approx.)/a
8. Rail-based Container Railways VI To develop immediate, medium- and long- Total: $500,000 Completed. A short-term action plan Trasiport Study 1991 term action plans to modernize and expand MOR(Bank Loans):/b $200,000 was prepared as a basis for launching a railway container services. This action plan PHRD: $300,000 pilot container transport investment aims to help China promote its exports and component which was implemented spur developments of enterprises in the under Railways VI. Two overseas vis- hinterland, by exploiting the still largely un- its of MOR study team were conducted tapped potential for rail-based container to the USA in May/June and December transport in China's interior. 1992. A final report by Don Breazeale & Aasociates in December 1993 offered recommendations to expand container transport operations and provided a prelimiinary basis for the container transport coniponent under Railways Vl.
9. Study of Cost-Effec- Railways VI To identify rail technologies which offer a Total: $500,000 Comnleted. With Bank assistance, in- tive Railway Technol- 1992 cost-effective approach to expand transport MOR(Bank Loans):/b $200,000 cluding the use of a Panel of Interns- ogy Evaluation throughput capacity, reduce transport cost, PHRD: $300,000 tional Experts, MOR completed the (CETE), Phase I and improve the safety of train and yard study with Bank assistance in Septem- operations. ber 1993. These results are being used as a basis for the CETE Phase 1 study and the CETE investment component of Railways VIL
10. EnvironmentalProtec- Railways VI To strengthen MOR's capability for envi- Total: $350,000 Ongoin!. With UNDP funding, for- tion Study 1992 ronmental assessment, monitoring and MOR(Bank Loans):/b S150,000 eign environmental experts visited control, and to help solve MOR's environ- UNDP: $200,000 China in June 1992 to view areas of mental problems including passenger trains immediate concern including passenger and noise pollution. coach sterilization, night soil manage- ment, solid wase nmanagement and moving train noise. MOR environmen- tal experts visited North America in September 1992. MOR preparedTOR for a long-term environmentl stategy in July 1994 which will be prepared by year end 1995. Some of these resuwls have been uwed as a basis for preparing the pilot enviromnernal protection I compotent of Railways Vl. ONGOING STUDIES (cont'd)
Conyom Staning project Objeetivea/scope Funding sourcea/foreign exchange Statua topic & year cost (approx.)/a
1. RailWay MarnSament Railways VI To facilitate CR's trmnsfonmation into a Total: $2,900,000 Onaoing. TORs for te six tudy com- and Economics 1993 market-orientedentity through: Oi)eablish- MOR(Bank Loans):& $2,400,000 ponents were agreed in July 1993. (RME) Studies ing more flexible railway-government rels- PHRD: $500,000 Inception reports were completed in tionship and reshaping CR's organizational October 1994. Five teama [teama ), structure;(ii) expanding CR's capability for (ii), (ii), (iv) nd (v)l have completed financial resource mobilization; and (iii) foreign study tours, while the remain- providing guidance to the development of ing tam (vi) is planning to conduct a diversified business activities. The RME foreign study tours in early 1995. In studiesare also aiming at helping CR per- addition, two seminnrs were held in form its economic role more efficiently September 1993 and July 1994 to di.- through: (iv) enhacing CR'a labor pro- cus railway organization nd manage- ductivity; (v) advancing CR'B human re- ment iuues and options. The interim ource development; and (vi) reforing report which will st out major policy CR's housing sytem. recommendations are completed for the first five teams, and the report for the remaining team will be completed after its tour in early 1995. These studies are providing the basis for the PID comnponentsof Railways VU.
12a. CETE Phase 11: Railways Vn To implement the 25 ton axle load on MOR Total: $800,000 Ongoing. Study began in July 1994, Implementation of 25 1994 network over the ncxt several years, which MOR(Bank Loans):tb $400,000 would be supported by the Railways ton Axle Load will require new designs of freight cars, up- (to be agreed) Vn loan, and is expectedto be com- grading of track and bridges, and modifi- PHRD: $400,000 pleted in December 1995. Draft In- cations to operating rules and procedures. ception Report has been prepared and is under review by MOR and the Bank.
12b. CETE Phase H: Railways vn To determine the feasibility of the proposed Total: $1,100,000 Ongoing. Study began in July 1994, Feasibility Study of 1994 dedicated passenger railway between MOR(Bank Loans):& $500,000 would be supportedby the Railways Dedicated Pasenger Bcijing and Shanghai. The studyincludes a (to be agreed) VI loan, and is expected to be com- Railway multimnoderidership study for the Beijing- PHRD: $600,000 pleted in December 1995. Draft In- Shanghai Corridor and the technical design ception Report has been prepared and of various options, including infrasucture b under review by MOR and the Bank. and roUing tock, and preparation of an operting plan. PROPOSED STUDIES (cont'd)
Component Starting project Objectives/scope Funding sources/foreign exchange Status topic & year cost (approx.)/
12c. CETE Phae 11: Railways VII To evaluate the proposed dedicated passen- Total: S200,000 Ongoins. Study began in July 1994, Evaluations Using 1994 ger railway between Beijing and Shanghai MOR(Bank LAns):/b $100,000 would be supported by the Railways Railway Investment in the context of major capacity expansion (to be agreed) V bon, and is expected to be com- Study (RIS) Models projects proposed for the Ninth Five Year PHRD: S100,000 pleted in December 1995. Draft Ii- Plan. The work includes modifications to ception Report has been prepared and RIS models to provide more efficient opti- is under review by MOR and the Bank. mization of results and processing of a larger traffic flow matrix for the base peri- od.
13. Inforration Systemn Railways Vll To (i) inroduce a marketing infornntion Total: $1,000,000 Prorot MOR has agreed to under- Studies 1994 system based on a central waybill file; (ii) MOR (Bank oAns):/b $ take these studies. The mnarketing increase the scope and effectiveness of (to be agreed) infiorntion tduy [(i)l can begin imme- TMIS; (iii) conduct feasibility studies for PHRD: $ diately; the remaining three studies [(ii- new informAtion systems; and (iv) develop iv)l should begin when implementation action plas to implement Pasenger Res- of TMIS nears comnpletionin 1997. ervation System and Automated Equipment Identification throughout CR.
14. Railway Manufac- Railways VII To prepare an action plan to restructure and Total: $500,000 Proposed MOR has prepared some turing and Overhaul 1994 modernize CR's equipment mnnufacture MOR (Bank loan): $250,000 background information for a Bank Sector Study and overhaul ector. Restructuring would (to be agreed) mission tentatively scheduled in Spring deal with consolidating MOR's factories PHRD: $250,000 1995 to prepare a TOR. and forning joint ventures as a way to transfer management expertise and manu- facturing technology. Modernization would address upgrading the quality of railway equipment manufacturing to international tandards.
g Exchlde Bank gaffs time and tavel cogs. lb Funing for overwAs visits and traiis for MOR taff. - 100 - ANNEX 4
REFORMING CIIINA'S RAILWAY SYSTEM: PROGRESS TO DATE
The followingtable outlinesthe progress to date in reforming the Governmentof China's (GOC's) railway system. These reform programs have been directly or indirectly influ- enced by the Bank in the last few years as a result of (i) the Bank-preparedChina Rail- way Strategy Paper, (ii) six Bank-financed RME studies,l/ (iii) two Bank-sponsored seminars, (iv) other Bank-financedtechnical assistance, and (v) suggestions by Bank missions. In general, MOR has accepted and is in the process of implementingmany of the reform suggestionsand recommendationsthat have emanated directly or indirectly from the Bank.
The recent reform programs of the railways are grouped under the following four head- ings:
I Improving Government-RailwayRelationships And Railway Regulation;
II Reshaping Organization of the Railways And Strengthening Its Internal Management;
III Increasing the Railway's InvestmentEfficiency And Improving Its Finan- cial Viability; and
IV Enhancing The Efficiency And Quality Of the Railway Operations And Services.
1/ The six RME Studies comprise: (i) Government-RailwayRelationship Study; (ii) DiversifiedEcon- omy Study; (iii) Finance MobilizationStudy; (iv) Labor ProductivityStudy; (v) Housing Study; and (vi) Human Resource DevelopmentStudy. TOPICS & OBJECTIVES PROGRESSTO DATE COMMENTARY
1. IMROVING GOVERNMENT-RAILWAY RELATIONSHIPS AND RAILWAY REGU- LATION:
A. To improve the relaionship between the gov- In 1986 an economic contract was et up between MOR and the govenmuent, to transfer eminent and the aihays by giving the rail- more financial and mnageral responsibiities ftom the govrnment to MOR, with two ways more autonomy andpermitting it to be- main features: have as a commercial entity.
1. MOR was to has become fuHv resoonsible for financine all of the railway's ODeratinx These incentives have encouraged the andcapital expenditures (through elf-generated cash flow andborrowings). In addition railway to increase total outputs as well MOR wasto pay the Govemment of China (GOC) an annual lump-sum tax of Y 2 as to control the sizeof its work force. billion plus a 5.3 % of revenue busines tax to the government. Beginning in 1994, the Since the incentives re not tied to reve- annul lumpsum was been replacedby an eterprise income tax. maeor operating profits produced, how- ever, they have not encouraged the rail- 2. MOR wasto initiate an incentives compensation systemwhereby tota combined com- way to view itself as market-oriented penution for all the rilway employees ould be based on railway productivity mea- enterprise. sures.
O Total compensation for the railway was based on a ratio of yuan per net tkm han- dled, which has been negotiated an-nlly between MOR and the Ministry of Lsbor.
o Total compensation of individual entities within the railway was based on a seriesof more explicit productivity rtios such as the amountsof freight and pauenger traffic originated or carried per employee, the numbersof locomotives androlling tock producedor maintained per employee, etc.
In order to focus the attentionof the railway on revenae and profit, the GOC has abolished the economic contract tarting in 1995.
B. To separateregultion and mangement. Based on MOR's recently adopted30 Point Railway Reform document andMOR and SPC There are ongoing discussion within management presentations made at the July 1994 Bank-sponsoredhigh-level conference, it MOR and other GOC departmens as to is apparet that the establishment of the rilway sytem as an independent entity has now whether there should be a centrl enter- been agreedto in principle, but no concepul approachor formal action plan for accom- prise entity and, if so, what pecific du- plishing this goal has yet been amnunced. ties, responsibiltiesand utdority should be assignedto the cental entity and what The reductionof MOR headquarter saff froin 1,000 to S00 is a first ste toward a reduc- shouldbe assignedto the regionaladmin- tion in the centl micocabtol of the t ihy. istrationsand subadninitrations. TOPICS & OBJECTIVES PROGRESS TO DATE COMMENTARY
.- d):
C. To remove DprCCand credit subsidiesfor MOR. Since 1990, the governmeat hs been slowly phasing out various subsidies.
o Prices for mnterials, including fuel and electricity, have been permitted to rise rdually to international market levels. More specifically, price subsidies have bee_ reduced froin 20-25 % in 1990 to zero by the end of 1993.
o Also, onlending interemtrates on loans to MOR have increased, e.g., to 5 % for Rail- ways V and to the ank's variable lending rate for Railways VI (for a 20-year matur- ity).
D. To clarify the reationships between GOC A Railway Law was enacted in 1991, to provide a framework for proper regulation, con- Before the enactment of the 1991 Rail- and MOR, and to provide a basis for pro- ructior, nmnagement,and operation of China Railways. The LAwlays down th respon- way Law, there had been no legal basis tecting the consumer, incrcasing rail trans- sibilities of the national and local governments, railway enterprises,railway customer, and for assigningresponsibilities for opera- port safety and protecting the environment, the public at large. Its najor provisions are the following: tion of the railways; thus, there was no formal allocation of authority and ac- o the State Council to st forth detailed regulations for railway operations; countability among various parties. The 1991 Railway Law wil have to be amen- o MOR to set forth 'technical regulations'; to plan and consuct national railway proj- ded, however, as a result of several ° ects; and to et railway tariffs subjectto approvalby the State Council; provisions in MOR's 30-point Reform Agenda. MOR has requested that the o MOR to manage the railway's regional adminiations and subadministtions; and Bank provide assistance in drafting reco- mmended changes to the Law. o Regional administrations and subadministrations to provide rail transport services;to meet safety andon-time standards;to provide basic amenitiesand servicesto pasen- gers; andto prevent pollution of the environment along the railway lines.
E. To introduce intrarail conVetition. In July 1994 MOR approvedthe establishment of one or more national container compa- This will be the first time, at least since nies which would be independent subsidiariesof MOR and which would provide inter- 1949, that an individual rail customer modal container srvices in competition with the railway's main freight transportation will have a choice of rail service. It will activities for the for transport of high value general merchandise traffic, alsoprovide an opportunity for the rail- way to tailor customer servicepackages to attract international intcnnodal traffic. At present the railway transports less than 3 % of this traffic between the ports an inland destinations. TOPICS & OBJECTIVES PROGRESSTO DATE COMMENTARY
11. RESHAPING THE RAILWAY's ORGANI- ZATION A STRENGTHENING ITS INTER- NAL MANAGEMENT:
A. To improve the responsiveness of the railway Staning in early 1994 MOR initiated a series of seven geographicly-based pilot programs The State Council has now given approv- to its customer needs aimed at introducing line-of-business type organizations so as to focus on the specific al for threc entities to becomc separte service requiremcnts and profitability of different classes of freight and paswengertraffic, limited liability com,anics. le Bank is They comprise: (i) two rmilway lines (Datong-Qinghuangdaoand Guangzhou-Shenzhen); providing specific technical assistance in (ii) two subadministrations (Fuzhou and Jinan); and (iii) one adminisrtion (Guangzhou). the establishment of lines-of-busines organizational structures for the Fuzhou and Guangzhou pilot programs.
B. To improve the efficiency of the internal man- Since early 1980s decentralization efforts have shifted decision-making powera from MOR agement of the railway by decetGraliing deci- headquarters to the 12 regional railway administrtions and to tie contruction and factory sion making. companies. Now these administrations and companies manage smil-cak investment pro- jecta; retain profits on the basis of their performnance;and make stffing decision such as the internal organizational structure, saff size and composition, and distribution of pay incentives.
C. To control the size of the railway work force. The RME Labor Productivity Study Team, in conjunction with MOR's Labor and Payrol o Departnment,has recommended and received approval from MOR to institute a number of measures to control the size of the work force, as follows:
o Develop pecific progrms to operate the new lines with a mininum number of employ- The manning program for the six new ces, and saff these lines with existing Transportation Department employees to the lines, which will come into operation mAximum extent possible. within the next two years, is targeted at staffing levels of 12 employees per kilo- meter of new line. This ratio compares favorbly with the present railway aver- age of 32 employces per kilometer of line.
o lntrduce local mumcnt penalties aimed at corstminiug overall taffig levels. MOR has developed a manager fining system which penalizes m gers from Y 10,000 to Y 50,000 for adding unau- thorized personnel to their saffs. Th purpowe is to help enmurethat the raimway staff reduction targets are mt as a rfeh of the 5 % historical average a*ttition te. TOPICS & OBJECTIVES PROGRESS TO DATE COMMENTARY H. k~
C. (cogimed) o Reduce management overlap and cut the railway's overhead costs by reducing the MOR recognizes that the railway's over- railway overhead stffs by at least 15 to 20% and MOR total staff by 20% to 800 all management and overhead daffs are employees by January 1996. top-heavy and has et specific reduction targets for each operating unit.
o Increase future flexibility in controlling the size of the work force by hiring *Imost all new employees as 'contract employeea' rather than 'life time workers' and by requir- ing existing employees who request a change in job status or a geographical move to transfer their status from life time worker to contract employee.
o Consolidate and continue to encourage the growth of diversified economy companies The fast-growing and highly profitable (DECOs) with the target of increasing the absorption of redundant transportation em- DECO Program (1993 DECO revenue ployees from the present 200,000 to 400,000 by the year 2000. exceeded $3 billion) is the major vehicle for reemploying surplus Transportation Depattment personnel.
D. To strengthen internal management through MOR has recently completed the implementation of a pilot management information system This pilot installation demonstrated the the introduction of computer-based informa- (MIS) for the Harbin Administration. The implementation of this program took several benefits of a computer-based MIS in tion systems. years and was financed under Railway IL terms of reduced clerical workload, faster preparation of reports and increased data accuracy.
Because of strong internal opposition, In 1992 MOR agreed to replace traditional hierarchial approach of the railway to informa- this was a difficult decision for MOR. tion systems with a centralized transportation management information system (TMIS) ap- But the experience of other large freight- proach. When it is fully implemented in 1997 it will be the foundation for essentially all oriented railways which have installed a Bank-financed information system investments under Rwy VI and proposed Rwy VII. Not modern TMIS and associated telecom- only will the TMIS provide a proven tool for increasing transport capacity, it will also munication systems demonstrates that this provide several customer service application programs. investment was far more cost effective in terms of expanding capacity than a simi- lar invedment in locomotives and rolling MOR is in the process of issuing tenders for a permanent way management information tock. system (PWMIS) which is being financed under Railway VI. Finally, MOR is requesting that the Bank provide financing for computer hardware and software plus technical assis- tance under the possible Railway VII for: (i) a systemwide MIS which would process the input data to TMIS to prepare management financial and statistical reports and (ii) a pilot passenger reservation, ticketing and accounting system (PRS) for the new Beijing station. TOPICS & OBJECTIVES PROGRESS TO DATE COMMENTARY
111. INCREASING THE RAILWAY'S IN- VESTMENT EFFICIENCY AND IMPROVING ITS FINANCIAL VIABILITY:
A. To increase the efficiency of railwas invest- A major portion of the $1.8 billion Bank financial assistance been directed towards expand- Chinese railway is the only major freight- ment through better planning and prioritization. ing the capacity of China Railways, and the Bank has assisted MOR in improving the effi- oriented railway in the world today ciency of capacity expansion investments in the following ways: where demand substantially exceeds capacity. Since the railway is facing severe capital constrainta, it must careful- ly evaluate the most cost effective ap- proaches and tools to increase capacity.
o In the Fourth Quarter of 1993 MOR agreed to implement the following Cost Effective Technology Evaluation (CETE) study recommendation. The objective is to buy ca- pacity using the moat cost effective techniques. For example:
- Increase freight wagon axle loads from 21 tons to 25 tons on all heavy trffic corri- This increase in axle loads (i.e., intro- dors. ducing heavy haul operationa) on the milway'a main freight corridors is the most cost effective approach to increasing line capacity by approximately 20%.
- Expand capacity of Xiang-yu Line (Chongging-Xiangfan) by: (a) operating 'siding The Xiang-yu Line is a heavily used cleaance' length trains; (ii) converting signaling systems from serni-ABS to ABS; single trck, mountainous line which was (iii) upgrading electric traction systems; and (iv) constructing double tracks and add- selected for studying the most cost effec- ing new sidings in selected locations, tive approaches to increasing capacity of a sinsle track line .The Jing-hu Line is a - Expand capacity of Jing-hu Line (Beijing-Shanghai) by: (i) operating 5,000 ton heavily used double trck line which was freight trins at seven minute headways; (ii) using double deck passenger coaches; selected for studying the most cost effec- and (iii) constructing a new high speed Jing-hu Line for passenger trains. tive approaches to increasing capacity of a double track line.
#6 TOPICS & OBJECTIVES PROGRESS TO DATE COMMYIENTARY M. (cotinued)
A. (continued) o Under the Bank-supported Railway Investment Study (RIS), MOR has developed a decision-support system to improve the election of capacity expansion projects. The RIS system has been ued in following three ways:
- to prioritize railway investment projects;
- to increase total traffic throughput by (a) using an optimal combination of improve- ments, and (b) improving the freight routing procedures. One RIS scenario sug- gested nearly 10% increase in traffic throughput, equivalent to S4-5 billion ovings in railway construction cogs through the year 2000 for each measure); and
- to determine the size and composition of railway investment through the year 2000 under different economic growth scenarios.
B To develop costing systems and revise tariff In March 1992, MOR and GOC formally launched a railway tariff study to addres the tructures. question of the tariff level as well as the issues of tariff structure, price and credit subsi- dies, and tsriff-setting flexibility.
MOR has also received permission from SPC in 1993 and 1994 to structure a few special Higher tariffs have been approved for tariffs: Daqin, Lanwu, Zhenwu, Baozhang and Houyue Lines. MOR is grateful for the o Higher tariff rates for new lines. approval of any tariff increase from SPC, but it realizes that tariff surcharges for o Passenger fare surcharges for special services and high passenger traffic seasons (e.g., overutilized existing lines rather than for Spring Festival Season passenger tickets surcharge) for the Guangzhou Administration - new lines may be more effective. - In January 1995, seasonal floating passenger fares for the Spring Festival were extended to the Beijing, Shanghai, Chengdu, Liuzhou, Zhengzhou and Jinan administrations
o Higher passenger fares for higher quality services (e.g., air conditioned and express train services) for 17 pairs of trains
o Charge special contract prices for oversize or extaheavy freight loads. TOPICS & OBJECTIVES PROGRESS TO DATE COMMENTARY
III. (coutinued)
C. To improve the financial viability of the rail- Between 1989 and July 1992 SPC permitted MOR to increawetariffs, fares and surcharges Because of substantial external cost in- way by increasing tariff levels so that MOR could fulfill its agreement to be completely financially self-sufficient, to wit: creases (e.g., costs for teel, fuel, elec- (i) in 1989, SPC granted MOR a one-time increase in passenger tariffs of 112%; (ii) dur- tricity andcement) with essentially no ing 1990-91, base tariffs andsurcharges for railway freight traffic were increased by 41%. passenger fare increase since 1989 and no freight tariff increase since 1992, the In 1991 SPC approved the collection of special Railway Construction Fund surcharges to railway registered a small operadng be used to expand the capacity of the railway. The initial 1991 surcharge was 0.2 fen/tkm. loss in 1993 and 1994. This is the first The surcharge was increased to 1.2 fen/tkm in 1992 and to 2.7 fen/tkm in 1993. loss for the railway since its formation in 1949. In 1993, there would have been no operting losa if construction sur- charge tariff receipts were classified as operating revenue. But in order not to experience negative cash flows, the rail- way has had to curtil its maintenance activities and planned capacity expansion investment programs in these two years (e.g., purchase of locomotives and roll- ing stock and the modernization and elec- _ trification of the Chengdu-Kunming line).
D. To mobilize financial resources other than Since the late 1950s, GOC has promoted the development of local railways which are The Railway VI RME Finance Mobili- tariffs, financed by local governments as another way to expand the railway system. Local rail- zation Study team have been meeting ways now comprise more than 5,000 route-km of the total national railway network, with international investment bankers to explore specific avenues for rising both In 1992 MOR raised domestic bonds for the first time (totaling Y 3 billion). Also, in July debt and equity financing. 1992 new policy changes were announced to encourage various MOR nonrail units to raise capital through joint ventures with private investors and through exports of their products and services, and in early 1994, a joint venture (with 25% foreign equity) was created to build and operate a new local railway line between Jinhua and Wenzhou (330 km). Final- ly, as part of MOR's new 30-point Reform Agenda, MOR will now permit foreign invest- ors to participate in the ownership of new local railways through joint ventures. TOPICS & OBJECTIVES PROGRESS TO DATE COMMENTARY
[1. (continued)
E. To improve the railway accounting systemsand MOR has made the necesary changes in the railway's chart of accounts and its funancial The MOF indructions appearto be in costing systems. reporting to implement the accountingrules issued by MOF in 1993. MOR intends to general compliance, but not full compli- update the railway's accounting standardsduring the next two years in conformance with ance with International Accounting Stan- the staggeredrelease of the nationalaccounting standards by MOF. dards (LAS). For example, one of the moat important requirements of LkS is MOR has also developed a costing model, with Bank assistance under a Railway VI tariff the disclosure of contingent future liabili- study. This costing model can now be used to analyze the cost and profitability of its rail ties, guch as potential under funding for transport operations by traffic or servicecategory. Following the collection of Waybill future pension obligations. data via the TMIS network in 1995 and the development of a central waybill file as part of the new management information system to be financed under the proposed Railway VII, the costing model can be used to evaluate the profitability of origin-destination pairs.
IV. ENHANCING THE EFFICIENCY AND OUALITY OF THE RAILWAY OPERATIONS AND SERVICES:
A. To impmve servicelevels for freight and pas- In addition to introducing intrarail competition (para I.E.)and 'line-of-business' concepts sengercustomenrs. (pam II.A.), MOR is in the process of implementing a variety of systems and programs O aimed at improving customer service levels, but much remains to be done. Examples of °° approved programs include:
o In 1992 MOR agreedto replace the railway's traditional hierarchial approachto infor- The present levels of freight and passen- mation systems with a centralized transportation management information system ger customer serviceson China Railways (TMIS). After completing the implementation of TMIS in 1997, the railway will be in areclearly inadequate for it to compete a position to adopt a less rigid, more timely response to wagon orders and other cus- effectively with other transportation tomer service requesta. modes in a market economy. For exam- ple, a wagon order must be placed from o As an interim step,MOR is implementing procedures and systems to reduce the time 20 to 50 days in advanceand passenger intervals between the preparations of the freight transportation plan from the present transit delays in Beijing vary from I to 3 one month to shorter, but as yet unspecified number of weeks or days. The lengthy days. preparation times for the transportation plan is the main cause for the long lead time requirements.
o MOR plans to implement a pilot passenger reservation and ticketing system (PlMRS) The development of softwarefor the beginning with a pilot installation in the new Beijing Station under Railway VI. national PRTS would be financed under the possible Railway Vll Project. TOPICS & OBJECTIVES PROGRESS TO DATE COIMMENTARY IV. ke 1
A. (contiuted) o In 1993the railway consolidated and expanded dorneatic containar tranport ervices The objective of this pilot program is to through a pilot program of through block trins (i.e., unit trains) north-outh between provide a superior transport service for Harbin and Guangzhou and east-west between Shanhi and Xian. high grade general merchandise to better support the energing rmrket economy.
o In 1993 and 1994 under Railway VI MOR also initiated the design and procurement Heretofore, the container operations of proceses for modernizing container operations by (i) redesigning container yards to uwe the railway werm based on Russian prac- modern pntry cranes and side loaders; (ii) phasing out one, five and ten ton containers tices. With the acceptance of the mod- and replacing them with standard ISO containers; and (ii) acquiring special container ernization recommendations, the railway wagons that can haul the popular 45 foot container. has begun the transition towards contem- porary North American intermodal oper- ating practices.
B. To modernize the maintenance of railwav track In the early 1990s MOR launched a eries of studies finaced by RailwaysV to identify and transort eQuipment (e.g, locomotives, measues for modernizing the maintenansceof ita trck and its rolling stock, locomotives wagons and coaches) and transport equipment. The overaU aim of these sudics was to lower the cost of opera- tion and increa system throughput capacity. Most of the recommendations from these tudies ar in the proce"s of being implemented.
C. To install a modern telecommunications sys- At the suggestion of the Bank and with the assisance of consultants, MOR drafted a Tele- A modern, integrated communication temrn communications Master Plan in 1992. The Telecommunication Maser Plan is a living system is a prequisite to the efficient document which describes in detail the railway's communication standards for all levels of operations of a large railway in a market the operating organization to help ensure that the railway telecommnunicationsystem is, in economy. fact, integrated and cost effective.
D. To introduce modern rilway electrification As a resut of a study under Railway V, MOR has adopted new design technologies for technolories. electrification programs aimed significantly improving the cost effectiveness of railway lins that employ electrical power to drive the locomotives.
E. To sct priorities for the implementation of In 1972, MOR established an Environmental Protection Bureau. In February 1992, MOR In spite of the fact that there are sub- environmental protection proiects. launched a study to prepare action plans to reduce pollution related to paenger trins and stantial inherent environmental advan- noise pollution resulting from passing trains. An extension of this study was carried out tages of rail transport compared to road under Railways VI, to bolster MOR's capability for environmental protection on a more transport, MOR now realizes that it must comprehensive basis. MOR now recognizes that the only effective approach to achieving expand itu technical competence in the environmental protection within the constraint of limited funds is to develop a comprehen- use of various environmental monitoring ive EnvironmnentalAction Plan and it has requestedthe Bank to provide flnsncing under instruments and et specific targets for the possible Railway Vn for technical assistance in preparing this Action Plan and in de- noise abatement, waste clean up and veloping competence in the use of environmental protection instrumentation, control, and the like. -110 - ANNEX 5
INDICATORS AND TARGETS FOR MONITORING THE PROGRESS AND EFFECTIVENESS OF IMPLEMENTATION OF INVESTMENT COMPONENTS
1. MOR has agreed that during the period of operation of each component, MOR would gather the following monitoring data on a regular basis for measuring the achievementof project objectives. The data would serve Bank project supervision and auditing, and provide MOR senior managementwith additional information on project performance.
A. GENERAL
2. The systemwidemonitoring targets for each year through the year 2000 are recorded in Table A at the end of annex. While there will be many factors in addition to the Bank-financedinvestment components that will influence these targets, they provide a framework to judge the overall impact of the Seventh RailwayProject.
B. CORRIDORCAPAcrrY EXPANSION
3. The following monitoring indicators were used to evaluate the economic return of the 1,044 km Wuhan-GuangzhouLine electrificationproject. 1993 2000 Description Base Year Target Year A Passenger train pairs, Wuhan-PuqiSection 19 29 B Passenger train pairs, Zhuzbou-HengyangSection 29 42 C Freight tkm (millions) 63,249ta 101,253 D Passenger-km(millions) 28,669ta 40,706 E Freight density (tkmtroute-km)(millions) 60.58/a 97.00 F Averagefreight train speed, downbound(southbound) (km/hr) 54.4 59.0 G Averagefreight train speed, upbound(northbound) (km1hr) 52.7 57.9 H Average passengertrain speed, downbound(southbound) (km/hr) 68.6 72.1 I Averagepassenger train speed, upbound(northbound) (km/hr) 68.4 71.7 J Yuan operatingexpense per thousandctkm (1994 constantprices) 12.70/L 10.56
.a These amountsare 1994 estimates rather than 1993 actuals. -111- ANNEX S
C. INFORMATIONSYSTEMS MODERNIZATION
4. The primary benefit of the TMIS and MIS systems will be the improvement in the railway's overall operating performance. These improvements can best be measured by systemwidemonitoring indicators contained in Table A. In addition, this investment component is projected to produce the following two direct benefits that would be monitored:
(a) Approximately 4,000 clerical positions are required at the 57 subadministrationsand 12 statisticalfactories to process 4.8 million waybills per month. Following the implementationof the TMIS and the first phase of the integrated MIS under Railway VII, MOR projects that the remaining clerical work at these locations clerical positions can be handled by 1,000 clerical positions, a reductionof 3,000 positions.
(b) At present, it takes between 12 and 18 days to process these waybills and produce the various waybill-based statistics and management reports. Following implementationof the first phase of the MIS, this process should be accomplishedwithin 2 to 3 days.
D. TELECOMMUNICATIONSUPGRADING
5. The following telecommunicationmonitoring indicators and targets were agreed for each type of network developmentinvestment under RailwaysVII:
Description 1993 2000 Base Year Target Year
Equi ment Implementation: A Transit Switch Capacity (trunks) 15,479 312,500 B Local Switch Capacity (000 lines) 450 1,250 C Connected Subscribers (000) 325 1,062 D O.F. Tran. System 8Mb/s (km) 1,150 6,200 E O.F. Tran. System 140Mb/s (km) 2,535 7,500 F Satellite Earth Stations 0 68 G Mobile Satellite Earth Stations 0 12 H Data Telecom Network Nodes 6 25 I Data Telecom Network Subnodes 42 70 J Data Telecom Intel. PAD (No.) 218 600 K Data Telecom Network Maintenance Centers 3 3 L Conference Network Locations 0 70 Network Performance Indicators: M Long Distance Automation (%) 10% 60% N Internal Effective Call Completion Rate (%) 98.81% 99.00% 0 Speech Satisfaction Degree (%) 98.20% 99.00% P Number of Faults / 100 DELs Per Month 60 40 Q Average Duration of Fault (hrs) 1.38 1.40 Efficiency Indicators: R Number of staff / 1,000 DELs 175 80 S Number of staff / 100 km of cable 132 101 T Number of staff 56,253 64,884 -112 - ANNEX S
E. CONTAIERTRANSPORT COMMERCIALIZATION 6. The container transport component is limited to providing financing for 12,000 twenty- and forty-foot containers, selected container-handlingequipment and container informationsystems. Nevertheless,the primary thrust of this componentis to increase the railway's focus on intermodal container operations. This is being accomplishedthrough the establishmentof two new container companies. Thus, the success of this program can best be monitoredby selected systemwidemonitoring targets such as increased market share. These targets are included as part of Table A. F. ENVIRONMENTALPROTECTION 7. The environmentalprotection component comprises a variety of small pilot projects and studies. Each of these pilot projects and studies will produce measurable environmentalbenefits on a localized basis. Monitoring indicators for each of these projects will be specified in the individual work plans. Measurable impacts on the railway's environmenton a national or regional basis will occur when results of the pilot projects are implementedsystemwide. G. SYSTEMCAPACITY EXPANSION 8. The following projected monitoring indicators were used to evaluate the economicreturn of the applicationof new three-phasedelectric locomotiveson the Baoji- Yanepinzuan Line. 1994 2000 Description Base Year Target Year A Failure rate per 100,000km 2 to 3/a 0.3 B Freight density in tkm per route-km(millions) 20.67 33.92 C Yuan operatingexpense per thousandctkm (1994 constant 13.55 11.39 prices) /i 1994 failure rate data apply to SS4 locomotives. Table A: SYSnEmWIDE MONrORiNG TARGETm AND INDICATORS
Description 1993 1994 199S 199C 1997 1998 199f 2000
Base freight and passenger data: A Freight ton kilometers (billions) 1,192 1,241 1,303 1,350 1,450 1,550 1,670 1,800 B Passenger kilometers (billions) 348 360 380 420 440 470 490 520 C Total staff engaged in rail transportation activities 1,713 1,705 1,680 1,670 1,645 1,620 1,610 1,600/a (000)
D Route kilometers 54,000 54,500 55,000 56,000 59,000 62,500 63,500 65,000/a
E Average elapsed time betwoen receipt of wagon 33 31 29 28 26 24 23 22 order and delivery of wagon (days) Key freight and passenger ratios: F Converted tkm per employee 0.90 0.98 1.18 1.24 1.30 1.34 1.39 1.45 U [(A + B) / C] (millions)
G Average freight route density: 22.1 23.0 23.6 24.1 25.2 26.8 27.3 27.7 [A / D] (millions) Container traffic indicators: H CRC and SIT ISO market share 1.7% 2.0% 3.0% 4.0% 5.0% 8.0% 11.0% 15.0% I Number of unit trains per month 35 60 70 80 90 100 110 120 J Number of yards handling 40-foot containers 60 63 70 75 80 85 90 100
/a Preliminary estimates pending the approval of the Ninth Five-Year Plan. -114 - ANNEX 6
ACTION PLANS FOR POLICY REFORM AND INSTITUTIONAL DEVELOPMENT COMPONENTS
1. This annex outlines the action plans for the followingPID components:
A. Railway enterprise reform Annex Al. Application of the costing model to the line-of-business organizationof the Fuzhou Subadministration(FSA)
B. Tariff Reform Annex Bi. Completionof the developmentof cost indices
C. Labor productivityand pension management
NOTE: (a) All dates refer to end-monthunless otherwise stated. (b) All dates are indicativeand delays of six months may be expected.
A. RAILWAY ENTERPRISE REFORM COMPONENT ACTION PLAN
Steps and actions agreed upon with MOR to be undertakenduring the project preparation and implementationperiod, along with their target dates, are set forth below: -115 - ANNEX 6
Subcomponents Activities TargetDate A. Improvementof a - Preparationof TORby MOR May 95 new legalframework - Workshop July 95 - Inceptionreport October95 - Developmentof Framework March96 - Draftingof proposedamendment of law and regula- August96 tions - Submissionof draftRailway Law revision to MOR December96 for appropriateactions B. RailwayEnterprise Reform: 1. FSAExperiment - Draftingof an overallrestructuring plan by FSA October94 - Preparatorywork (evaluation of assets,setting up December94 accountingmethods, etc.) for the conversionof FSA into a limitedliability company prior to the submis- sionof the reformplan to MOR - Submissionof the restructuringplan to MORfor its December94 approval - Decisionson implementationof the trafficcosting July95 modeland related cost allocation methods (See Annex Al) - Establishmentof FSALimited Liability Company December95 2. GRCExperiment - Preparationof an overallrestructuring plan by GRC June 94 - Preparationof a plan for establishingGRC holding June 95 company - Establishmentof GRC'sholding company December95 - Preparationof a detailedrestructuring plan for con- June 96 versionof YanchangSubadministration (YSA) into a limitedliability company - Implementationof the YSArestructuring program December96 - Reviewof the experimentsin YSAand preparation June 97 of broad-basedrestructuring program - UpgradingGRC financial management capability (Mid-1997) withapplication of a trafficcosting model and other managementtools 3. Preparationof - Preparationof TORby MOR May 95 Comprehensive - Workshopfor reviewingexperiment & discussing July95 EnterpriseReform restructuringstrategy Strategy - Inceptionreport October95 - Developmentof a comprehensivestrategy for rail- September96 way restructuring C. Debtand Equity - Preparationof TORby MOR May 95 FinancingStrategy - Workshop July95 - Inceptionreport October95 - Developmentof a strategyfor debtsand equity August96 financingfor selectedrailway services - 116 - ANNEX 6
Annex Al: ACTIONPLAN FOR THEAPPLICATION OF THE COSTINGMODEL TO THE LINE-OF-BUSINESSORGANIZATION OF THE FUZHOUSUBADMINISTRATION (FSA) ACTIONS TARGETDATES 1. Test 1993 MOR unit costs on the FSA October 1994 l______(completed) 2. Develop a set of "interim" 1993 unit costs suitable for FSA October 1994 l______(completed) 3. Identify necessary and feasible changes to expense accounts October 1994 for FSA (completed) 4. Produce "interim" 1993 freight expenses by commodity October 1994 l______(completed) 5. Produce "interim" 1993 passenger expenses by seat type Mid-December1994 6. Discuss "interim" results with FSA 7. Develop a set of "final" 1993 unit costs for FSA and sub- January 15, 1995 mit, in English, to the Bank 8. Produce "final" 1993 freight expenses by commodityand January 15, 1995 "final" 1993 passenger expenses by train and seat type 9. Train FSA staff in costing model Feb-April 1995 10. Design methodologyfor developmentand regular produc- August 1995 tion of the FSA inputs required by the freight point-to-point model: (a) trains; (b) car utilization;and (c) shunting 11. Produce preliminary 1993 FSA inputs to the freight point- August 1995 to-point model 12. Make necessary modificationsto freight point-to-pointcost- August 1995 ing model for FSA 13. Design methodologyto develop the cost of specific Line October 1995 Haul commoditiesin FSA: (a) Study sources of traffic information; (b) Design and collect sample of point-to-point movementsrepresenting specific commodities;(c) Use the point-to-pointcosting model to estimatethe cost of specific commodities 14. Collect the informationrequired to calculate the cost of December 1995 specific passenger services in FSA: a) Crew make-up b) Train consist c) Number of trips per year d) Type of locomotive e) Number of passengers f) Number of parcels -117 - ANNEX 6
B. TARIFF REFORM ACTION PLAN Recommendations Activity Schedule Responsibility A. FREIGHT TARIFFS 1. Contracting: Dimensional Traffic Prepare report Nov 1993 MOR Submit to SPC Dec 1993 MOR l______Implement program* Jan 1994 MOR 2. Contract Pricing: Containers Approve formation of CRC Dec 1993 SC - China Railway Container Cor- Prepare report Apr 1994 MOR/CRC poration (CRC) Submit to SPC Jun 1994 MOR Submit to State Council Dec 1994 SPC l______Implement program* Jul 1995 MOR/CRC 3. Tariff Adjustment: by Commodity Prepare report Apr 1993 MOR l ______Submit to SPC ** MOR 4. General Tariff Increase: Freight Prepare report Sep 1993 MOR Tariffs Submit to SPC Sep 1993 MOR Submit to State Council Mar 1994 SPC Implement program* Jul 1996 MOR/SPC 5. Higher Price on New Lines: Prepare report Nov 93/Nov 94 MOR-EPRI Baozhong/Houyue Lines Submit to SPC Dec 93/Dec 94 MOR Implement program* Sep 1995 MOR 6. Increase the 'Construction' Gen- Prepare report Aug 1994 MOR eral Surcharge Submit to SPC Sep 1994 MOR Submit to State Council Nov 1994 SPC Implement program* Mar 1997 MOR B. PASSENGER TARIFFS 7. Expand Scope of Higher Prices for Prepare report Oct 1993 MOR Higher Quality Services Submit to SPC Nov 1993 MOR Implement program* Jul 1995 MOR 8. Expand Scope of Floating Price Prepare report Oct 1993 MOR - Fujian province & Shanghai Submit to SPC Dec 1993 MOR l ______Implement program* Jan 1994 MOR 9. General Tariff Increase: Passen- Prepare report Aug 1993 MOR gers Submit to SPC Sep 1993 MOR Submit to State Council Mar 1994 SPC Implement program* Sep 1995 MOR C. COSTINGS 10. Enhance the Costing Model (See Annex Al) l l 11. Cost Index Procedure for Adjust- (See Annex B 1) ing Tariffs l
* The schedule shown has been prepared by MOR and indicates its plans and best estimate of timing. Implementation is dependent on approval by the State Planning Commission and/or the State Council. ** Because of losses on all commodities, MOR is no longer pursuing a tariff increase for specific com- modities. Instead, MOR is pursuing a general freight tariff increase.
Soirce: This action plan is based on that provided by MOR on September 27, 1993 and changed as a result of discussions held on September 28/29 and October 4-9, 1993 and November 1-11, 1994. - 118 - ANNEX 6
Annex Bi: ACTION PLAN FOR THE COMPLETON OF THE DEVELOPMENT OF COST INDICES
Note: The completion dates in this table are not sequential because some activities are implemented simultaneously by different staff.
ACTIONS TARGET DATES 1. Make final verification for homogeneity of sample items used in materi- October 1994 al price index calculation and take corrective action (Shanghai and (completed) Harbin administrations) l
2. Complete verification of applicability of stores prices to price index October 1994 determination and substitute market prices for issue prices if necessary (completed) (Shanghai & Harbin adm.) l 3. Extension of pilot study from Shanghai and Harbin administrations to November 1994 six adm. a) Training of staff in Beijing, Zhengzhou, Jinan, Lanzhou administra- tions b) Beijing, Zhengzhou, Jinan, Lanzhou forward data to MOR l 4. Verify productivity calculation through an account-by-account compari- October 1994 son of 1992 predicted and actual expenses, and adapt methodology as (completed) necessary 5. Submit to the Bank updated report for Railway Productivity Calculation October 1994 with Multiple Factors (completed) 6. Apply methodology to 1993 data: June 1995 a) Conversion of first half accounting data in 1993 to apply new accounting guidelines effective since July 1, 1993 b) calculation of 1993 price increases c) calculation of 1993 productivity gains
7. Prepare a draft description of steps to negotiate with SPC/MOF the cost September 1995 indexing methodology and submit, in Chinese and English, 1994 to the Bank: a) MOR Finance Bureau request Economic Planning and Research Institute (EPRI) to prepare plan b) EPRI prepares plan c) MOR Finance Bureau reviews plan l 8. Prepare "final' description of steps to negotiate with SPC/MOF cost December 1995 indexing methodology and submit, in Chinese and English, to the Bank l
9. Cost indexing methodology and proposed plan for implementation sub- December 1995 mitted to SPC/MOF as tool in negotiations for tariff adjustments
10. SPC/MOF/MOR negotiate tariff adjustments using cost indexing meth- December 1995 odology -119 - ANNEX 6
C. LABOR PRODUCIVITrY COMPONENT NEXT STEPS AND TARGET DATES
Recommnendations Activity Target Dates 1. Reduce Management - Complete report* - June 1995 Overhead and Cut Over- - 15 to 20% reduction in manage- - January 1996 head Cost ment overhead 2. Increase 'Contract' - Increase contract personnel from - January 1995 Employment 17.8% to 30.0% - Complete report* - June 1995 3. Define Broader Work - Complete report* - June 1995 Classifications and En- - Refine pre/post-training evaluation - Ongoing courage Multitasking - Begin 'position evaluation" - August 1995 4. Constrain Employment - Complete report* - June 1995 Levels at the Operating - Continue to refine manpower - Ongoing through 1995 Unit Level reduction incentives and controls for zero growth - Complete Pilot Line Officer Train- - March 1996 ing - Complete "ProductivityWork- - July 1996 book" 5. 'Zero-Based' Manpower - Complete report* - June 1995 Planning on New Lines - Draw and reposition 110,000 staff - Line by line through 1996 from existing forces 6. Link Capital Budgeting - Complete report* - June 1995 with Payroll and Man- - Develop programs - Contingent on report findings power Planning 7. 'Zero-Based" Manpower - Complete report* - June 1995 Planning among New - Work with CRC and the DECO - Ongoing, case-by-case Enterprises Including Center to develop payrolls, new LOBs organizations and initial manpower controls 8. Productivity, Quality of - Prepare for Bank review TORs for - May 1995 Service Management, and the TA and training required Process Reengineering - Engage foreign experts to train - February 1996 first-line supervisors - Develop training programs for - August 1996 productivity and quality of service management
* A final report of the Railway Management and Economic Studies (i.e., Labor Productivity Enhance- ment Study). - 120 - ANNEX 7
COMPLETION DATES FOR STUDY COMPONENTS
The completiondates for the study componentsare as follows:
a. Feasibility study of dedicated passenger rail June 1996
b. Applicationof RIS decision support system June 1996
c. Informationsystem studies June 1997
d. Telecommunicationssystems studies June 1997
e. Diesel engine design study December 1999
f. Strengtheningtreasury functions, including December 1999 resource mobilization
g. Restructuringmanufacturing sector June 1997 -121 - ANNEX 8
ENVIRONMENTAL IMPACT ASSESSMENT: WUHAN- GUANGZHOU ELECTRIEICATION AND UPGRADING
1. Introduction. The proposed project is classified as Category B for environmental assessment purposes. The Wuhan-Guangzhoucorridor expansion and upgrading component, and other investment components 1/ are not expected to harm the environment. A draft environmental assessment report prepared by MOR was received by the Bank in May 1994. The report addressed the impacts of the Wuhan- Guangzhou corridor expansion component. During the June/July preappraisal mission, the draft environmentalassessment was discussed with MOR officials in Beijing and the Fourth Survey and Design Institute officials in Wuhan (who prepared the Environmental Assessment report). Taking into consideration the comments by the Bank, MOR prepared a revised draft and submittedit to the Bank on October 12, 1994, before the departure of the appraisal mission.
2. The corridor expansion component involves the following construction: (a) electrificationof the 1,044 km Guangzhouto Wuhan line; (b) 24 substations(21 new, 3 reconstruction); (c) 26 sectioning stations (23 new, 3 reconstruction); (d) 7 switching stations (5 new, 2 reconstruction);and (e) switchoverto electric locomotives.
3. Environmental Impacts and MitigationMeasures. Environmentalimpact associatedwith the corridor expansionis expectedto result mainly from constructionand operation of the corridor. Since the tracks and corridor right-of-way already exist, the incremental impact is expected to be minor. During electrification of the line and constructionof associated facilities, which is expected to stretch over three and a half years, major impacts will be from construction noise, fugitive dust, site wastewater, garbage, disturbance of land used for temporary staging areas during construction, and borrow pits. Noise impact will be minimized by avoiding night construction and by keepinghigh noise-generatingequipment away from noise-sensitiveplaces. Dust will be controlled by water sprinklers, by minimizing land disturbance and by reclaiming disturbedland promptly. Use of land as staging areas will be kept to a minimum;topsoil will be stockpiledand used to reclaim the disturbed area as soon as the constructionis completed. Where possible, the borrow pits will be used for aquaculture. Construction workers will be educated in proper sanitation and wastewater will be handled as per specified regulations. Garbage will be collected and disposed of at local landfill disposal sites.
1/ The other investmentcomponents involve mainly the purchaseof equipmentand materialsand minor civil works, if any, such as the installationof fiber-opticcables. - 122 - ANNEX 8
4. During operation, anticipatedimpacts include noise and vibration from trains, electromagneticfields from power lines and substations, oily wastewater disposal, solid wastes, etc. Noise impact will be minimizedby: locating new noise-sensitivebuildings (such as schools, residences, etc.) at least 100 meters from the railway tracks; minimizingthe indiscriminateuse of whistles and by use of low-noise, highly directional whistles; installing continuous-weldedheavy metal tracks 60 km up and down track of noise-sensitivelocations such as Hengyang, Chengzhou, Yingde and Tangxi; planting suitable plants and shrubs to form noise barriers near locomotive depots and other sensitive locations; relocating certain facilities, such as Yeuyang Railway Kindergarten, to less noisy sites; and retrofitting affected schools with sealed aluminum alloy windows and air exchangers for fresh air. Tracks traversing through cities will use shock absorbingpads and heavy continuous-weldedtracks to minimizevibrations. Impact from electromagneticfields will be minimizedby locating substations,sectioning stations and locomotive depots away from residences. Existing residences, cable TV networks and other facilities affected by the electromagneticfield will be relocated gradually.
5. Rolling stock, electric locomotives and the depots will generate oily wastewaterthat will be disposed of using the existing, expanded or refurbished facilities utilizing sedimentation, oil separation and/or air flotation treatment. A pilot oil/wastewater treatment project will be initiated at a selected facility to identify and demonstrate an oil/water separation technology best suited to Chinese conditions. Sewage from the facilities will be handled as per current requirements. Solid waste (mainly lunch boxes) from passenger trains is expected to increase by about 12 percent. Solid waste will be collected at major stations and vehicles will be provided at those stations to collect, transport and dispose of the wastes to local landfills. The project includes a technical assistance component to assist MOR to develop a lunch box managementstrategy to identify and assess alternatives to continued lunch box use, and an investmentcomponent to initiate a pilot program based on those findings.
6. Environmental Benefits. Followingcompletion of the Wuhan to Guangzhou corridor expansion, coal and fuel consumption will be reduced by 39.5 percent and 93.6 percent, respectively. The report estimates that this will result in an improvement in air quality along the corridor through reduction in dust, SO2, NO, and CO. These are estimated to decrease by 94.6, 65.8, 86.2, and 56.7 percent, respectively. Measures to strictly control garbage, and collect and recycle lunch boxes will minimizeland pollution. To ensure environmentalmitigative measures are being undertaken,MOR has committed personnel and resources to project monitoring. Progress reports will be provided to the Bank on an annual basis.
7. Railway VII also includesa number of environmentaltechnical assistanceand pilot program investment components, whose findings and application will benefit not only the Wuhan-Guangzhouline but also the rest of MOR. The proposed pilot programs and technical assistance studies will acquaint MOR with up-to-date environmental protection technologies and practices. When implemented,these programs will form a firm foundation for developmentof a comprehensiveenvironmental action strategy for the Chinese railways. - 123 - ANNEX 9
RESETTLEMENT PLAN: WUHAN-GUANGZHOU ELECTRIEFICATIONAND UPGRADING
I. The Project. The capacityexpansion component of Railways VII consists of the electrificationand modernizationof the Wuhan-Guangzhourailway line. The length of the railway line is 1,044.262 km and if the Jingguang line in the railway hub of Wuhan is included, the entire railway length is 1,081.172 km. The line moves through the three provincesof Hubei, Hunan and Guangdong. Ten regional-levelcities and more than 20 towns (county-level)will be affected by land acquisitionand resettlement. The major purpose of land acquisition in this project is to meet the needs of station and substationexpansion and constructionof electricity supply depots. The project does not involve constructionof new railway tracks and only the existing tracks are proposed to be electrified. The land that will be affected as a result of land acquisitioncan be classified into (a) regional-levelcities, medium and small towns and counties, and (b) rural areas. The former involves production units, commercial structures and residential buildings. The latter includes agriculturalland, residential structures, woodedareas and wasteland.
2. Accordingto the feasibilitystudy of the Wuchang Hengyangand Hengyang- Guangzhousections of the railway line, it is estimated that land acquisitionof 6,582 mu, building demolition of 279,467 m2 and resettlement of 865 households (about 4,300 persons) will be required. A total of 13,168 people will be affected. A detailed socioeconomicsurvey of the affected people will be conducted before displacement in order to establish a baseline of income levels and standards of living. The area to be acquired for the project is predominantlyagricultural land. Only 5 percent of the land is in urban areas. The railway line passes through some of the more developedagricultural areas of the country. No areas of archeologicalimportance will be affected for the project. The land acquisitionand resettlementactivities will be initiated in 1994 and will be completedin 1998.
3. Policy Frameworkand Legal Provisionsfor Resettlement. Resettlement caused by state projects such as railroads is guided by the Land ManagementLaw of the People's Republic of China and associatedprovincial implementingregulations ("the city building relocation rules" published by the State Council, "the land management implementation method of Hubei province," "the land management implementation method of Hunan province," 'the land management implementation method of Guangdong province" and the land acquisition and compensation rules of local governments formulated according to the above national and provincial rules).1/ The regulations handle consistently across provinces the major issues involved in land
I/ Copies can be found in the Project Files. - 124 - ANNEX 9 acquisition and resettlement for this project. The only variation is in the rates of compensation permissible, which are a function of the local conditions and price structure. The basic principle guiding land acquisitionand resettlementis that the land- using department must not only pay compensationfor the properties affected but it must also guarantee that those affected by land acquisition, after resettlement, must enjoy a living standard not lower than their original standardof living. In other words, in order to ensure that the standardof living of the affected people is maintainedor improved, the land-usingunit must pay adequatecompensation to and arrange employmentfor them.
4. The national laws concerningland acquisitionand resettlementcompensation stipulate that, according to the actual farm size acquired and the number of people involved, each affected person should be compensatedwith an amount equal to 2-3 times the average total annual output per mu in the last three years from the land being acquired. Under normal circumstances, the resettlement compensationdoes not exceed 10 times the average annual output value per mu in the last three years before acquisition. However, if the affected farmers are unable to restore their previous standardof living when compensationis calculatedaccording to the normal compensation standards, the compensation may be increased under the approval of the concerned department. However, the total land acquisitionand resettlementcompensation fees may not exceed 20 times the average annual output of the acquired land in the previous three years before acquisition.
5. The following principles of compensation and resettlement would be applicable:
(a) Compensationfor land acquisition used exclusivelyfor vegetables, rice and fisheries are based on the average annual value of output for three years preceding acquisition. An amount equivalentto 5-6 times the annual output will be paid as compensation. Similarly, compensation for orchards, tea plantations, residential land and tree fields are calculated based on average annual output multipliedby a factor that varies accordingto the type of land. There is a difference in compensationprocedures for collectivelyowned and state-owned land. In the former case, which is more relevant here, the national regulations clearly stipulate that those persons losing land will receive compensationadequate to maintain their original standard of living during and after resettlement. Compensationfor restoring productiongoes to the collective unit owning the lost land,. while individuals receive direct payment for the value of standingcrops lost and for trees, houses, and other individually owned assets. The collective is responsible for planning and implementingresettlement that maintainsliving standards and for negotiating with MOR the exact compensationto be paid.
(b) Housing compensation will vary depending on the type and location of housing. The rates vary from Y 200-300/m2 for ordinary structures in the rural areas to Y 300-500/m2 for houses in Guangdong. Compensationfor structures used for production facilities will be negotiatedbetween the land- - 125 - ANNEX 9
acquiring unit, the local administrative office and the affected production unit. Other buildings are valued on a replacement cost basis. A survey of building type and quality is undertaken by MOR as part of resettlement planning. That initial evaluation becomes the basis for negotiating compensationwith the owner of the building.
(c) When business structures are acquired, the principle of "first new construction,then old demolition"should be followed. If urgent construction requires that businessor production be stopped right away, MOR will pay a production stoppage fee to the affected unit according to the total salaries paid to workers employed in the unit multiplied by 15 percent. For the workers whose employment is affected by work stoppage, full payment of salaries must be made by MOR. If some commercial structures need to be removed urgently, temporary commercial structures will be built to prevent loss of jobs.
(d) If, after land acquisition, the per capita land area is less than 0.1 mu, the land-using unit shall be responsiblefor arranging employment for them and paying for such employment. If the concerned departments are unable to adequatelydeal with the employmentarrangement issue, the land-using unit and other government or collectively owned enterprises may provide assistance to the affected people to secure a job. Unemployment compensationis provided until the new job begins. Those who have the least amount of residual land will be given priority in provision of jobs. Compensationpaid to a unit as a result of land acquisitionmay only be used to expand business and production or to develop secondary agricultural production. The compensationmay also be used as a subsistenceallowance for those unable to find employment. No unit or individual may distribute these designated compensationfunds for other purposes. All cities, towns and villages must submit a resettlement fund utilization report to the land- using departmentconcerned every year.
(e) The local governmentand "negotiationand conflict resolution group" will be responsiblefor arranginga new rental place, comparablein rent and standard to the original rental residences, for the tenants and will also pay for the transfer. If such arrangementscannot be made, a one-time compensation, deducted from the affected house owner's compensationfees, may be paid the affected tenants.
6. Affected Population. About 13,00 persons will be affected by land and house acquisition under the project, of whom about 4,300 will have to move because their houses will be demolished. The project files contain a family-by-familycensus of housing and land lost to the project. A detailed socioeconomicsurvey of the affected people will be carried out before displacement, in order to document their present standards of living. The success, or otherwise, of the resettlement program will be - 126 - ANNEX 9
evaluated based on the extent to which the original standards of living of the affected people can be improved, or at least restored.
7. ResettlementPlanning and Implementation. Responsibilityfor planning and implementing resettlement rests with city, country, township and village governments. The local Land AdministrationOffices monitor resettlement and ensure compliance with the Land ManagementLaw. MOR is responsiblefor planning physical works in a manner that minimizesresettlement and for paying compensationas required under the Land ManagementLaw. MOR compensationpayments are channeled through the Land Administration Offices. The State Audit Administration assumes audit responsibilityfor disbursed funds.
8. MOR negotiatescompensation with the land managementdepartment of each affected county, which negotiates on behalf of all affected villages. Although the Land ManagementLaw sets standard multiples of crop output value by which to determine compensation, negotiation can occur over the measurementof crop output value and whether the mandated goal of income maintenance can be attained on the basis of standard compensationor requires additionalcompensation.
9. Once county negotiationswith MOR have been completed, the county in turn allocates compensation among the affected individuals and villages. The country typically sets a standard payment for assets of various types, and individuals directly negotiatecompensation for lost private assets, as do village leaders for expropriatedland. The village managementcommittee plans and implements resettlementsusing collective compensation funds, restricted by guidelines designed to ensure their use for infrastructuredevelopment or other investmentsthat improve villager incomes or social welfare. The people to be resettled in any given village as a result of Railway VII capacityexpansion will be handled through these traditionalplanning mechanisms.
10. In order to ensure that the resettlementwork is done properly, every local governmentis required to form a 'negotiation and conflict resolution group." They are responsible for the coordination of all land acquisition and resettlement-relatedtasks within their jurisdictions. If there are any problems of coordinationbetween the different provincesinvolved in implementation,or betweenthe MOR and any of the provinces, the State Planning Commission will resolve the issue. If the issues cannot be resolved by SPC, it will be resolved by the State Council. A senior official of the State Council will be in charge of project implementationcoordination.
11. Resettlement Strategies. The nature of the resettlement strategy adopted within any one administrativeunit depends fundamentallyon the nature of displacement there. In urban areas, the enterprises are compensated for lost assets and are provided suitable sites for reconstructingneeded buildings. Enterprise managerswere confidentof plans for altemative location of enterprises and were satisfied with the rates of compensationoffered. - 127 - ANNEX 9
12. Requisitionedagricultural land accountsfor the bulk of displacementand lost productive assets under Railway VII. 7he strategy for dealing with such loss is to redistributeall agricultural land within the collective, spreading the burden across the collective. If the per capita land holding falls below a certain level (0.1 mu), the affected persons will be provided with a job.
13. Compensationlevels consideredadequate to at least restore the standardsof living of the affected people will be paid. The level of compensationwill be related to its capacity to help the affected people regain their previous standards of living. For those left with unviable landholdings, the land-using unit will arrange to provide employmentin local enterprises.
14. Rural houses will be relocated within the original village. Compensation rates for houses were determinedat replacementvalue, with the owner having the right to salvage but also responsible for tearing down the old house. A new housing site of equal size will be made available, and most of these sites have been selected. The owner will be responsible for constructing the new house and will have approximately four months in which to do so. A sample of homeowners relocated under earlier railway projects revealed a high level of satisfaction with the compensation and other arrangementsfor new housing.2/
15. Public assets such as roads, and telephone and power lines to be rerouted, will be rebuilt by the appropriate agency of local government. In every case, the displacementin minor and the new routes are expectedto result in minimaldisruption of service and inconvenience to users. MOR has earmarked compensation sufficient to complete this work.
16. Budget and Timetable. Based on preliminary budget projections, resettlementcosts will total Y 140.02 million. The resettlementfinancing plan is a part of the overall project budget. The resettlement timetable presents no extraordinary challenges,since resettlementis spread over the entire length of the railway line. MOR will pay all resettlement compensation to the local government in advance of resettlement,assuring availabilityof funds when needed. The State Audit Administration has assumed responsibilityfor monitoringthe use of resettlementfunds. The resettlement financingplan has been approved by SPC and is a part of the overall project budget.
17. Resettlement Monitoring and Evaluation. The monitoring of progress in the resettlement program will be undertaken by the Social Sciences Research Institute (SSRI) of SouthwestJiaotong University. The terms of reference for this work require, inter alia, that: (i) the monitoringbe conductedquarterly beginningin 1994 through such time as program objectives are achieve; M&E reports will be submitted every nine months to MOR and the World Bank; (ii) monitoringwill include all major resettlement sites and will utilize standard survey methods; and (iii) in addition to indicators of
VI See Project Files. - 128 - ANNEX 9
progress in physical works (e.g., land, housing, infrastructure, etc.), indicators selected for monitoring shall include standard socioeconomic variables designed to measure the well-being of the affected populations. Particular attention will be paid to compensation levels. At the end of each year of the project, SSRI will present a summary report of their supervision to MOR and the World Bank. If SSRI's investigations find problems, SSRI will discuss the solution with the local government and submit to MOR a report about handling of the problem. At the end of the project, a report will be prepared summarizing the resettlement activities under the project.
RESETTLEMENT REQUIREMENTS
Land Housing Acquisition Demolition Number of People Year Area Area Households Affected (mu) (m2) 1994 204 4,511 28 286 1995 1,113 51,382 230 2,347 1996 2,633 111,683 418 5,266 1997 1,975 83,840 140 3,949 1998 657 27,947 41 1,320
Total 6 582 279,364 865 13.168 - 129 - ANNEX 10
SUPERVISION PLAN
TIMING MIN ACTIVITIES SKILLS REQUIRED SW.
NOV 95 INITIAL REVIEW with particular emphasis on: - Transport economics 12 - Steps taken by borrowers concerning loan effectiveness - Railway engineering - Status of equipment procurement - Resettlement - Status of ongoing studies/TA and trmining programs - Functional specialties
MAY 96 SUPERVISION covering overall implementation status emphasizing - Railway engineering II - Procurement of equipment - Financial analysis - Financial performance - Procurement - Status of studies/TA and training programs - Functional specialties - Review of performance/monitoring indicators
NOV 96 REVIEW to facilitate implementation of components with particular - Railway engineering 10 emphasis on: - Resettlement - Identification of issues and agreement on actions to be taken - Functional specialties - Status of studies/TA and training programs - Resettlement
MAY 97 SUPERVISION covering overall implementation sttus emphasizing: - Railway engineering 7 - Procurement of equipment - Financial analyais - Financial performance - Procurement - Status of studies/TA and training progranms - Functional specialties - Review of performance/monitoring indicators
NOV 97 REVIEW to facilitate implementation of components with particular - Railway engineering 6 emphasis on: - Resettlement - Identification of issues and agreement on actions to be taken - Functional specialties - Status of studies/TA and training programs - Reseulement
MAY 98 SUPERVISION covering overall implementation status ernphasizing: - Railway engineering 6 - Procurement of equipment - Financial analysis - Financial performance - Procurement - Review of performancelmonitoring indicators
NOV 98 MID-TERM REVIEW - Railway engineering 10 - Resettlement - Functional specialties - Financial analysis
MAY 99 SUPERVISION covering overall implementation Status - Railway engineering 5 - Financial analysis
NOV 99 REVIEW to facilitate implementation status - Railway engineering 4 - Functional specialties
MAY 2000 SUPERVISION covering overall implementation status - Railway engineering 5 - Financial analysis
NOV 2000 REVIEW to facilitate implementation status - Railway engineering 4 - Functional specialties _
MAY 2001 SUPERVISION covering overall implementation status - Railway engineering 4 - Financial analysis
OCT 2001 PROJECT COMPLETION SUPERVISION to review al aspects of - Transport economics 10 the project implementation and to assess overall perfonnance of the - Railway engineering project - Resettlement - Functional specialties
TOTAL STAFF-WEEKS 94 - 130 - ANNEX 11
DOCUMENTS AVAILABLE IN THLEPROJECT FILE
1. Feasibility Study Report on Capacity Expansion of Wuchang-GuangzhouRailway Line Financed by the World Bank VII Loan, The Fourth Survey and Design Institute, Wuhan, MOR, October 1994.
2. Introducing AC-DC-ACElectiic Locomotivesfor Baoji-ChengduRailway-Feasibil- ity Study, The First Survey and Design Institute, Lanzhou, MOR, August 1994.
3. Feasibility Report on Upgrading 16V280 Diesel Engine, Increasing Power & Reliability and Reducing Emission with the Cooperationof the Foreign Institutions, Qishuyan Locomotive& Rolling Stock Works, August 1994.
4. FeasibilityStudy Report for TelecommunicationNetwork Item of 7th RailwayProject with the Proceeds of the World Bank Loan, MOR, May 1994.
5. Feasibility Study on Railway EnvironmentalProtection Project Using the Seventh Loan of the World Bank, MOR, September 1994.
6. Summarized Principles of Land Acquisition, Building Demolition and Personnel ResettlementConcerning the Wuhan-GuangzhouRailway Expansion Project, MOR, August 1994.
7. Land Acquisition, Building Demolition and Personnel Resettlement Plan for the Wuhan-GuangzhouRailway Expansion Project, MOR, October 1994.
8. Feasibility Study On Railway Container Project Using the 7th World Bank Loan, MOR, September 1994.
9. Aide Memoire of March 1994 Identification Mission for Railway VII, with the followingattachments:
A. Planning Assumptionsfor All InvestmentComponents B. Pilot Railway RestructuringComponent C. Financial Resource MobilizationComponent D. Tariff Reform Component(and Railway Costing Exercise) E. AccountingReform Component F. Labor ProductivityComponent G. Corridor Expansion Component H. Cost Effective TechnologyComponent I. Dragon ServicesSubcomponent - 131 - ANNEX 11
J. InformationTechnology Component-Data Processing Subcomponent K. InformationTechnology Component-Telecommunications Subcomponent L. EnvironmentalProtection Pilot Component M. EnvironmentalImpact Assessmentfor Railway VII N. Investment EfficiencyTechnical Component 0. Expanded CofinancingOperation P. Technical Assistancefor ImplementingEnvironmental Protection Pilot Programs Q. Technical Assistancefor InformationSystems Development R. Pilot Housing System Reform Component S. Golden Bridge IntermodalServices Subcomponent T. Status of the DiversifiedEconomy RME Study U. High-level Seminar on Railway Managementand Organization V. Foreign Study Tours W. Status of EnvironmentalProtection Study X. Current Status of RME Studies Y. Status of TMIS Implementation
10. Aide Memoire of July 1994 Preparation/PreappraisalMission for Railway VII, with the FollowingMission Memoranda attached:
A. Railway VII EnvironmentalAssessment Review B. Tariff Reform: Preparation Checklistfor Railway VII Appraisal Mission C. InformationSystems Short-term Action Plan D. ResettlementIssues E. Reformingthe Foreign Capital and Technical Import Office F. Status of Railway Costing Study G. Main Elements of Railway Restructuring/EnterpriseReform H. Main Elements of Labor ProductivityPolicy Component I. Outline of Foreign Study Tours for RME Studies J. Economic EvaluationInformation Needs K. Work Schedulefor RME Studies L. Commentson the RME DiversifiedEconomy Team Action Plans M. Wuhan-GuangzhouCapacity Expansion N. Request for LORIC BackgroundData
11. Aide Memoire of November 1994 Appraisal Mission for Railway VII, with the followingMission Memoranda attached:
A. Action Plans for PID Components B. Indicators and Targets for Monitoringthe Progress and Effectivenessof Railway VII Implementation C. CompletionDates for Study Components D. Project Monitoringand Supervision E. EnvironmentalProtection Programs F. RIS Action Plan G. StrengtheningMOR's Treasury Function and Financial Resource Mobilization - 132 - ANNEX 11
12. Working Papers
1. Railway Enterprise Reform Component 2. Government's Strategy for RestructuringChina Rail 3. Summary of Railway RestructuringExperiments 4. Tariff Reform Component:Implementation Status 5. Technical Assistancefor Costing and Cost Indexing 6. Labor Productivityand Pension Fund ManagementComponent 7. Description of Corridor Expansion Component 8. Description of InformationSystems Component 9. Technical Assistance for InformationSystems Component 10. Description of InformationSystems Studies (Study component) 11. Description of TelecommunicationsComponent 12. Description of TelecommunicationsSystems Study 13. Railway TelecommunicationsMaster Plan Overview 14. Description of Container Transport CommercializationComponent 15. The Emergence of Competitionin the Chinese Intermodal ContainerIndustry 16. Preliminary Financial Results of Container Companies 17. Description of EnvironmentalProtection Component 18. Railway EnvironmentalProtection 19. Description of SystemwideCapacity Expansion Component 20. Technical Assistancefor SystemwideCapacity Expansion Component 21. Descriptionof DedicatedPassenger Rail Study Component 22. Descriptionof RIS Study Component 23. Descriptionof Diesel Engine Design Study Component 24. General Methodologyfor EconomicEvaluation 25. Economic Evaluationof Corridor ExpansionComponent 26. Economic Evaluationof InformationSystems Component 27. Economic Evaluationof TelecommunicationsComponent 28. Economic Evaluationof ContainerTransport CommercializationComponent 29. Economic Evaluationof SystemwideCapacity ExpansionComponent 30. Notes and Major Assumptions Underlying Financial Forecasts for Railway Transport Operations 31. ResettlementPlan for Land Acquisitionand Demolitionfor Electrificationof the Wuhan-GuangzhouLine Chart C.1 General Organization Chart of Ministry of Railways Minister
Security Bureau j Secretariat Systems Reform Bureau Foreign Cooperation Department
ENINECHIEF I VICE MINISTER VICE MINISTRVIEMNISTERrI3 VICE MINISTER . . . ~~~~~~~~~~~~~~~~~~~~CapitalConstruction Education & CH IEF Planning & Statistics General Bureau Health Dept. Science & DISPATCHER BLureau Tech. Bureau _FnneBra 5 Design Electrification Cmisr -FinanceBureauInstitutes Bureau -Cmisr LCapital Settlement Conmputer Transport Center Hospitals
_oBureauLabor Center & Wages Construction Construction Locomotive & - Bureau Bureau Bureaus Bureau _ Rolling Stock Appraisal Rolling stock _Audit Bureau Factory CnIndustaBridge l
Materials Construction Construction Signal & Management Bureau Bureau 35 Locomotive |Foreign 1 Telecom. Bureau/Company & Rolling Stock Capital< and | Bureau { I j | Civil Engineering Factories Technical Transport ll Company l Import Office Safety 11 Factories Cma * ~~~Bureaull Permanent World Bank Way Counterpart Bureau
I I 12 Regional | Tie Factories] Administrations
Railway Signal & Communication Company Chart C.2 General Organization Chart of the Government of China
State Council (Premierand Vice Premiers)
Industrial i Coordinating Special-function Sectors Agencies Agencies
Ministry of Railways 1 State Planning Commission State Auditing (MOR) ] (SPC) J __Administration_l
Ministry of State Economic & Trade Communications Commission tate Statistics Bureau (MOC) - (SETC)
State Commission for State Environmental .Ministry of Power Industry. Economic Restructuring Protection Agency
foandsr Ministry of Finance State Administration Ministry of Coal Industry 1iitr (MOF) Taxation of
Others General Administration of | Others _ - _ ~~Ministryof Labor l Customsl
People's Bank of China Others
Others Chart C.3 Long Distance Telephone Network
\AZAKHSTAN RUSSIAN FEDERATION )
| KAZAKHSTAN \V-\-. \ <<4 , / / >~~~~~~7 \...\ J Hoiluer gQqiho.. /
SI r_ T- /MONGOLIA Hrb,n '5~~~~~~~~~~~~~~~~~~~~~~~~~~~~h KYROYZ REPUBLI
UZBEKISTAN h Ni>~~~~~~~~~~~~~~~~~~~~~~~*A
The..hw b-rld .k _,*Gin., 'n< -I ..... yh,on Ti w ...... ' >. . .
or onp' .ndos \./ >; , bn°1 rr o orers ocp Gnuo. suof n-... .w LAt
d~~k.wi~~~-dP / 2 ,W-bF7Z POcv/< v>,j,, ;,, Yogpnguzon .,* . ',z' ' o
mum... DIGITALMICROWGWINuMLWAnon
CHINAl EL= / Y J' sobl.. R OCEAN ILALOFt . ~LONGDISTANCE TELEPHONE NETWORK fXhnO; -0 > H ciu ep5ulO ,. <..i.
OeTCl. LTRANSMISSONSYStEKI IN KAJLWAYZ. J i1 I / \b/ - . '.. : do~~~ RAtLWAYNElWORK Kni>\J/) 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ; .. . SAl WTE ne>Gr_hu nGROUNDSTATIONS NwA7rRAJL 7. . w a
* NAllOfALCPTL*j ''< nn o,a. : -: :
o~~~~~ - - INTERNATIONALBOUNDARIES1 VlTNMpKY--- Chart C.4 Data CommunicationsPacket Switching Network Jiamusi
JigoreSu.Ad'xilb lluhhod ^ Sijb Admimlalon Harb~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~SbAroo 'aolou4~S Jliljilq (4) YdialogicHailaer 9\2Oiqili-r Mod
Haiber Co4-7- Srk AdmninisIralo4),n $ehaotie -.. (Co UlanagerneA ( Ururoi()gor041-~C2 S on\ Toai I00\ , Geethu XAB1n~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~?ilchilan d Chan9sh\ ______sl<<__i. TO C CMogqning~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~iga \ \ < Sub). da \ i0r9qlll9dmillislalion /V en Ss X CInnr~~~~~~niKu t- Saga >i1huang rgi~ Adrnmniisraronn 0 iyrng Lla lqa ennin Guenilzou Sii) Admcho11vlle wil Fnslwu Changping ~, A minin Itnlbn 3lrr~rrrnrr Hangzhou \ /uodcr BRauloayVIl o sads'w51319 - 137 - Chart C.5 The Route Map of China Railways Container Company (CRC) JiaM,uS; ManZhouLCjHa- KiagX Aratowpas a416 MuDanJiang SuiFenHe (j) uEeI 673 5119 Muan Tian DainY n me Hana Ta aLiaa DaLAanPar XiNing 1420SsNa CainX E)=aL;anPcri DaLlanBei YinChuani (°4 \ TianJinPort LanZhouXi 0 r i 448 i(a BaoDinig TaiY,-anDJang T hYanTal PoP \. The SNationHadling4-ftContran inal FIZZ, ,rt | Port nternainalContainerTraffic (InTJ 1997 Zhou Cong s 144Zheng BaoW D o g L_DanYunnGangort / | \ ~~~~~~ ~ ~~~~~~~~~~~GangXiHeJlia'Nan /// >5) ~~~~~~~ ~~~JinagAn /3 Cheong _HaX ShangHats eJo Port DuDcn X:nin34 eel ~=0 Sasa 8 \nga 309 Hee Nan JingXi Wuxi / i-gaX / \Cto~~~ngGng5DncngI/ I ) , ~~~~~~~~~~~~~~NanXg / / ( t ~~~~~~~ ~~ChangShaio Nn9 i! / _g~~~~GuiYanDcng ZS'Y )12 Hua \ /| \ FuZh~~~~~~~~~~~~~ou (: \ | Dx1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Na.VeiPort Ku;nN1ingDcrg w cp!whuDong jXiaaMen a ,_fX ~~~~~Guan'XiaMien Pcrt NanNing > Chongy (geb 0 Major Container 'Handling Station (g The Station Handling 40-ft Containz r 0 Near Port Stat;on D> Port - International Container Traffic (inTE J) 1 991 sads,:w5 1454: 100- 110 120- 130' C H I N A domoooo-on.onJ=nr ~h;, n,p do -o RAILWAYSYSTEM Th.W2n B Go.o EXISTING: Iyor ooy.ndor,o,on, 50 DOUBLETRACK RAILWAYS ornoooepro|-.ofundoh SINGLETRACK RAILWAYS J, boondo/ . . . . . ELECTRIFICATION o RUSSIAN FED. X NATIONALMARSHALlUNG YARDS 0 REGIONALMARSHALLING YARDS J PORTS 7 g ~~~~RIVERPORTS _ ;Wyhg > D SELECTEDCITIES )- ( PROVINCECAPITALS _ ho,I', I NATIONALCAPITAL / PROVINCEBOUNDARIES !oocho k oorgrlonh -*- INTERNATIONALBOUNDARIES ------PLANNEDNEW RAILWAYS 9 J Yo,hi HE/b ONGJI C BANK FUNDED PROJECTS: .r. .0 RAILWAYLINES (ONGOING OR COMPLETED PROJECTS) ,o_ . ELECTRIFICATION'__' * BRIDGECONSTRUCTION * TEPMINALSr I I\ ''PROPOSED PROJECT(WITH ELECTRIFICATIONI S J OgK T. -> O FUEC NDEDPROJECTS: nong RAILWAYS , _ 0 100 200 30 00 L PEOPELECTRIFICATION' ~' ' W 0 2 nETRS 400 6 I F_-__~~~~~BRDECONTRUTIO THADEM. REP.d g HA/NAN @ ,Y/g PO '' E'S FJI < g ft tt <9 CShoowut/<~~~~~~~~~~~EIT rS~~~~~~~~~~~~~~ic <,< b)Icog ZtHoho j nzog lbhSIOF yoI1i REP QI\\J8LNGeHAIz Shiiiou . 1. NJI <~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ W_, _ . fb,APRT2 <:t > w VIET NAM S >*8S.ihu>5< Ioo 200 300 400 SOOMILES~~~~~~~~iH30 .-.-.. 11 ' 4 HLPIE /, > ~ ~ I~ ~~~~'\ N ~~ HANA..l J w THAILAND' z \ 1l ) Nncho ffi '< r... o 100<\ ] St\ev v_ f