Azerbaijan Railways” CJSC (Since 1880) IMPLEMENTATIONIMPLEMENTATION of of REFORMS
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“Azerbaijan Railways” CJSC (since 1880) IMPLEMENTATIONIMPLEMENTATION OF OF REFORMS. REFORMS. DecemberDecember20192019 OUTLINE ACTION TAKEN by ADY INTRODUCTION Completed reform actions for Tranche 1 • General Overview (Rolling Stock) • Completed reform actions for Tranche 2 • General Overview (Network information) • Completed reform actions for Tranche 2 • New rolling stock • PSO and SPA • ADY Smart new rolling stock • Restructuring • Situation prior to reforms • Railway Law • Representation in international organizations • Support Block (Centralization) • Corridors • SLA • ADY in Figures • • HR management brief • Financial Situation • Asset Management RAILWAY SECTOR DEVELOPMENT PROGRAM (RSDP) • Risk Management • Trigger for reforms • KPI System • Strategic goals • Traffic planning automation • Railway Sector Development Program • Electricity efficiency unit • Defining Policy Matrix Phases 23+22 and outputs • Passenger Pricing strategy • Works by ADY Property LLC • Reform directions to be carried out with the French Development Agency MANAGEMENT REPORTING AND TEAMS OUTCOMES AND FINAL WORDS • ADY's reforms Time line • Project Organization Structure • Sustainable support to reforms • ADY reforms leadership team • How to use TA efficiently • Change management Unit Activity • Results • Skillset for the CMU and PSU team • Challenges in reform implementation • Staff motivation • Resistance • Policy Matrix Management • Remaining challenges • Policy Matrix reporting • Template of reporting • Conditions for reforms OUTLINE ACTION TAKEN by ADY INTRODUCTION • Completed reform actions for Tranche 1 • General Overview (Rolling Stock) • Completed reform actions for Tranche 2 • General Overview (Network information) • Completed reform actions for Tranche 2 • New rolling stock • PSO and SPA • ADY Smart new rolling stock • Restructuring • Situation prior to reforms • Railway Law • Representation in international organizations • Support Block (Centralization) • Corridors • SLA • ADY in Figures • HR management brief • Financial Situation • Asset Management RAILWAY SECTOR DEVELOPMENT PROGRAM (RSDP) • Risk Management • Trigger for reforms • KPI System • Strategic goals • Traffic planning automation • Railway Sector Development Program • Electricity efficiency unit • Defining Policy Matrix Phases 23+22 and outputs • Passenger Pricing strategy • Works by ADY Property LLC • Reform directions to be carried out with the French Development Agency MANAGEMENT REPORTING AND TEAMS • ADY's reforms Time line OUTCOMES AND FINAL WORDS • Project Organization Structure • Sustainable support to reforms • ADY reforms leadership team • How to use TA efficiently • Change management Unit Activity • Results • Skillset for the CMU and PSU team • Challenges in reform implementation • Staff motivation • Resistance • Policy Matrix Management • Remaining challenges • Policy Matrix reporting • Template of reporting • Conditions for reforms General information 2019 Classification of main activities 14 mln. 2.8 mln. tons of freight passengers № of employees Average age 19 760 46 Freight Passenger transportation Infrastructure General o verview (Network Information) Length oftrack-km: 4 277km Length of maintrack-km: 2 900 km Length of route-km: 2 070 km 39% is double tracked 60% is electrified 242.2 km of track located on territories of Azerbaijan Republic under occupation General overview (Passenger infrustructure projects) Laki-Gabala Railway Line (43 km) 2018-2020 The total cost of the project 0.27 bln. AZN Khudat-Shahdag railway line (57 km) 2019-2023 The total cost of the project 0.18 bln. AZN Baku Circular Railway 2018-2020 The total cost of the project 0.58 bln. AZN General Overview (General infrastructure projects) Baki-Boyuk Kesik Project 2013-2019 The total cost of the project 1.1 bln. AZN Sumgait – Yalama Project 2018-2022 The total cost of the project 0.6 bln. AZN Alat-Astara Railway line 2018-2027 The total cost of the project 2.02 bln. AZN New rolling stock freight wagons Type of wagon Total number Ne w wagon number Covered wagon 774 401 Platform 812 400 Open wagon 1000 1000 Cistern 956 600 Fitting platform 219 200 Hopper 100 100 Grain wagon 352 300 Cement wagon 100 100 Special platform 11 0 4324 3101 New rolling stock projects Specifications Techniques Newly purchased electric Newly purchased electric which Meeting modern locomotives by the Freight locomotives by the Passenger standards Department Department 4 pieces 15 pieces VL-11m/6 Georgia 9 pieces repair and construction road machines two-storey KISS electric train 4 pieces 40 pieces Stadler Rail Group Switzerland to maintain the road AZ8A Kazakhstan “Alstom Transport SA” used techniques (29 pieces will be delivered between Newly purchased electric 1 piece 2020-2021.) locomotives diagnostic control complex 10 pieces to road infrastructure Newly purchased diesel locomotives France “Alstom Transport SA” 2019 -2020 10 pieces Newly purchased wagons TE33A Kazakhstan (General Electric) 20 pieces (10 pieces will be New purchased freight wagons delivered in 2020) 3101 pieces “Stadler Rail Group” Switzerland ADY SMART - manage rolling stock Current processes in ADY • Wagon maintenance . Purchase of Orders • Sorting Stations . Border Stations • Locomotive depots* . Station services • Customer service * (* Processes to be automated) Situation prior to reforms (2015): . Strategic focus; . Working conditions; . Structure and systems; . Average salaries; . Assets (Infrastructure, rolling stocks and other) . Safety and Security; . Management methods; . Quality of service both for cargo and passenger; . Procurement warehousing and supply chain . Prestige of railways and desire to approach railways. Planning; . IT, MISOperations, and automation; . Financial situation; . Investments; . Reporting and evaluation (KPIs); . Internal control environment; . Human Resources Management; Representation in international organizations Rail Council of the Commonwealth Member States Organisation for Cooperation between Railways International Union of Railways International Rail Transport Committee Middle corridor Intergovernmental Organisation for International Carriage by Rail EAST-WEST (middle corridor) BAKU-BOYUK KASIK . The Trans -Caspian East - West Transport Corridor is the most convenient connection between Asia and Southern Europe. Currently, Azerbaijan has a rail link connecting Baku to Boyuk -Kesik (Georgian Border), which is the part of East-West International Transport Corridor. To reduce economic costs and achieve rapid transit over Azerbaijani section of the East-West corridor and to make it Inc. trans-siberian- Caucasus fully operational, route necessary modernization and renovation works on this section are underway. NORTH-SOUTH YALAMA-ASTARA . International North - South Transport Corridor (INSTC) is a 7,200 km- long multi-modal network for moving freight from Azerbaijan, Russia, Iran, Afghanistan, India, and Central Asia. Currently, Azerbaijan has a rail link connecting Yalama (border with Russian Federation) to Astara (border with Islamic Republic of Iran), which is the part of INSTC. Nevertheless, to reduce economic costs and achieve rapid transit over Azerbaijani section of the North-South corridor and to make it fully operational, necessary modernization and renovation works on this section are underway. SOUTH-WEST CORRIDOR Route : India – Persian Gulf – Iran – Azerbaijan – Georgia – Ukraine – Europe The main role of the South – West corridor is the realization of goods transportation between EU Countries and India. This corridor passing through Iran, Azerbaijan, Georgia and Ukraine reduces time loss for the goods transportation between Europe and India. According to estimates, the delivery of goods via this corridor is made within 7 days, while the time spent on alternative routes is 35 – 37 days. ADY in figures Freight Revenue Freight revenue (AZN) 98 2018 93 89 88 85 Domestic 79 79 79 81 6% 61 56 57 export 52 52 22% International In 2018, the main transit routes source of Freight 40 38% revenue came from 31 International Transit 18 routes, import and 16 16 export. 8 2014 2015 2016 2017 2018 International transit routes Import export Domestic Import 34% ADY in figures Trade Relations Total export and import, mln USD 25000 Type of transportation mln, ton 21829 20291 20000 Railways 14 13812 15000 12729 13458 11465 Sea 8 9188 9217 10000 8489 8782 Air 0.2 5000 Pipeline 58 0 2014 2015 2016 2017 2018 Road 145 Import Export Total 230 source: State Statistics Committee of Azerbaijan https://www.stat.gov.az/source/trade/ 2018 6% The main trade partners: Turkey 12 % Italy, Turkey, Russia, China and Germany source: State Statistics Committee of Azerbaijan https://www.stat.gov.az/source/trade/ OUTLINE ACTION TAKEN by ADY INTRODUCTION • Completed reform actions for Tranche 1 • General Overview (Rolling Stock) • Completed reform actions for Tranche 2 • General Overview (Network information) • Completed reform actions for Tranche 2 • New rolling stock • PSO and SPA • ADY Smart new rolling stock • Restructuring • Situation prior to reforms • Railway Law • Representation in international organizations • Support Block (Centralization) • Corridors • SLA • ADY in Figures • HR management brief • Financial Situation • Asset Management RAILWAY SECTOR DEVELOPMENT PROGRAM (RSDP) • Risk Management • KPI System • Trigger for reforms • Traffic planning automation • Strategic goals • Electricity efficiency unit • Railway Sector Development Program • Passenger Pricing strategy • Defining Policy Matrix Phases 23+22 and outputs • Works by