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REETU wE e i L70' 1 IClc'r - -,7'C ~ g NRc S T NR CTETI D ' rReport No. PTR-1Oa _qv__ _,f- Ip '. F.IICOPY Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or comploetenes The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized A rD ATCA TOF%,L' THIRD RAILWAY PROJECT CHINA Public Disclosure Authorized May 9, 1969 Public Disclosure Authorized Transportation Projects Department Currency Equivalents Currency Unit - NT$ NT$ 40 U=US$ 1.-00 NT$ 1 = US$ 0. 025 N.T$ 1, 000, 000 US$ 25, 000 Fi-sc2l VePr January 1 to December 31 Units of Weights and Measures: Metric 1 kilometer (km) = 0. 62 miles (mi) 1 meter (m . = .8fet(t 1 square kilo- meter (ki 2 -) = 0. 386 square miles (sq mi) 1 liter (1) = 0. 22 imp. gallons - 0. 26 gallons (US) 1 metric ton = 2, 205 pounds (lbs) Abbreviations TRA - Taiwan Railway Administration CIECD - Council for International Economic Cooperation and Development THB - Taiwan Highway Bureau CHINA APPRAISAL OF THIRD RAILWAY PROJECT TABLE OF CONTENTS Page SUIMARY i - ii 1. INTRODUCTION 1 2. BACKGROUIN 1 A. General 1 B. Transportation in Taiwan 2 C. Transport Coordination 3 3. THE TAIW.AN RAILIWAY ADMINISTRATION h A. Organization, Management and Staff 4 B. Propertv C. Manpower, Productivity and Wages 7 D Onperationrc E. Traffic 8 F. Earningrs and Finances 9 A The 19t,9=72 ATw I P U t . ±Ail J.Z7%J7 - I c- JvuvLV A V ILLIL± I ~. .. L B. Description of the Project 14 C.U. E;ecu':Lon7.UU.,LU L1e k ofU±UDJi. LL P'-ojJuJeJ,W JULUI UU- AL ProcurIr,U.16j- ---. - -l.-L-L -4-L -IuA A^.EArninzg US7 11.*~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1 B. Finances 18 6. ECONOMIC JUSTIFICATION 19 A. Traffic Forecasts 19 B. lz'o-nomic Beneits !bb 7. ~ 21RECOIDATIONS This Report has been prepared by Messrs. J. Brechot, engineer, F. Curapman, financial analyst and W. Hughes, economist. TABLE C7 C0TE!TS (Continued) TABLES 1. Rail and Road Freight Traffic, 1956 to 1967 2. Number of Mcotor Vehicles Registered, 1956 to 1968 3. Rail and BuEs Passenger Traffic, 1956 to 1968 4. Planned Investment in the Transport Sector, 1969-1972 5. Motive Power and Rolling Stock, as of December 31, 1968 6. Manpower, Productivity and lWages 7. Summary of Selected Operating Statistics (West Line) 8. Sunmiary of Selected Operating Statistics (East Line) 9. Freight Traffic (Actual and Forecast) 1960-1972 10. Revenues, E-enses and Net Income 11. Sunmiary Balance Sheet Data; Actual as of December 31, 1965-1968 Estimated, as of December 31, 190Y-1972 12. Composition of Debt as of December 31, 1968 13. Capital Investment Program (1969-1972) 14. Statement of Cash Flow 1966-1972 Inclusive 15. Passenger Traffic (Actual and Forecast) 1960-1972 ANrEXES 1. Tariff Structure 2. Conmmuter Traffic and Fares 3. Economic Benefits and Mlethodology MAF Taiwan Railways (IBRD-lh46RJ) CHINA APPRAISAL OF THSIRD RAILWAY PROJECT SUMARY i. The Government of the Republic of China has asked the Bank for a loan of US` 31.2 million to finance part of the Taiwan Railway Adminis- tration's (TRA) invrestments in 1969 and 1970 which are included in the Railwray's revised Investment Plan for the period 1969-1972. TRA's tota:L invest-ment during the two-year period is estimated at NTt 3.L34 million (Us$ 36 million equivalent) with a foreign exchange component of US$ 54 million equivalent. ii. The ReDublic of China received from the Bank a first railwav loan of US$ 20 million (409-CHA) on April 28, 1965, to help finance TRA's requirements during the first four years, 1965 to 1968, of the 1965-1973 Investment Plan. IIowever, traffic increased much faster than expected and. on Januarv 18. 1968. a second loan ( 2)i-CHA) of USt 17-q million was granted to meet additional requirements in 1967-1968. Execution of t,he-se projec-ts. has been satlIsfactory. 111. The Project consists of high priority items of the new! TnIrTe+.- ment Plan for the years 1969 and 1970 accounting for about 50% of the eax-En -t+ . Thah ronposead 1 -_an Io, A flnancnd the forelgnn earngetn- rncst of rolling stock and motive power, track materials, signalling equipment, b r mall-,_ra-ry fPn. consuo ' ting servces anA the tra ng a oad of railway st;aff. All purchases would be procured under international coni- iv. ITn add t-n4th- to . e items 4to le fiacd yte rpse on the Plan includes miscellaneous works and equipment which will also help toJ imF.L 'v al. a oper6.,y atCL ion andUVCL hic ar.eU J4Us.L.L.LUi. v. TPrL continues to be well organized and financially sound earn- ing a rate of return of 9.39 in 1968. Operational efficiency is satis:ac- tory arId the utiliLzation of rolling stock arId mOtiVe powJer is good. 1;aim- tenance of railway property is also satisfactory. vi. The Committee for Coordination of Transport of the Council for InternatLonal Economic Cooperation and Dsevelopment (CCVD), formed as the result of an undertaking to the Bank at the time of the first railway Loan, is conducting studies for tne preparation of long-term plans for transnort; development studles under way or to be started shortly concern railway elec- trification, newx port and airport facilities, a north-soutn expressway and urban transport. On the whole, transport coordination through CIECD has progressed satisfactorily and the pattern of further lending will be deter- mined when the various studies now under way are completed. - ii - vii. TRA is an aaencv of the Provincial Government of Taiwan. The previous Bank loans (469-CHA and 524-CHA) were made to the Central Govern- ment of the Republic of China, which owns the railway nronerties; and it is inteiided to follow the same procedure for the proposed loan, the pro.- ceeds of which would be re-lent to TRA on the sam. tprmA nnd cnndi ti nnn as those granted to the Central Government by the Bank. viii. The Project is suitable for a Bank loan of US$ 31.2 million 'qI4-v7a_q I Alhog thz At-nomncnr life o%f' .the nassetsAinth Project+ is about 20 years, a term of 15 years, including a three-year period of gra~ce, 1l re- o erny'AAn economicv a- TPA i ca o servicing the loan on these terms. CHINA APPRAISAL OF THIRD RAILIAY PROJECT 1. INTRODUCTION 1.0:1 The Government of the Republic of China has asked the Bank for a loan of US$ 31.2 million equivalent to help finance part of the fore:Lgn exchange costs of the Railwiay's new 1969-1972 Four Year Investment Pla2., which extends and completes the previous 1965-1970 Investment Plan. The Project is designed to increase the Railway's capacity and to modernize its equipment; it would consist of the high priority items of the new Investment Plan for the years 1969 and 1970, additional to those being financed under the existing Bank loans (409- and 524-CHA). The proposed loan would be for the procurement of additional rolling stock and motive powqer, signalling equipment, track materials, workshops machinery and the fin.ancing: of consulting services and training. 1.02 This Appraisal Report, is based on the findings of a Bank mis- sion in November-December 1968, consisting of Nlessrs. Brechot, Chapman. and Hughes, and on information provided by TRA. 1.03 The Renublic of China received on Anril 28. i965. a first loan (409-CHA) of US.) 20 million to help finance the acquisition of diesel lorrrnntAirPq- passenger nndr freight cars gradel crossing and TnarshalliTng yard equipment. The first loan was intended to cover TRA's most urgent irquirements dl-ing the first four-year period (1965 to 196R) of the 1.hen Six-Year Railway Investment Plan (1965-1970), but traffic increased more r I%idlI-1iy Ih-Ii ea c tel, - naeIcssitatng- eth +lacquslor.+in of- ad9;irl nrin ro:l'i ng stock, motive polwjer and other equipment and resulting in the second loan of~ US 17. 4. LIlloLflL4-CE of~ ar 18,4S 1968.tL -1.0TThe 4 p:rjeck' .de--- .Ja&s14¼ I0=.CaR)enstrcorl a o.ltd except for the construction of the marshalling yard in Chi-tu which was delayed by l'd - a,- tir4u-1 s an- is , e---ected to we -- -+-,pleted by 1971. The project under Loan 524-CHA is progressing satisfactorily and 2. BACKGROUND It. Ue era' it.L * U s2^. _1tA 2.01 Taiwan has an area of about 3o,UUU ian , or about the same as tne Netherlands. Development of the island has been significantly influenced by climatic and topogranhic conditions. Hign mountains, in the central and eastern regions, occupy about 64!o1 of the area. Alluvial plains in the -vest -2- account for another 24%. A third distinguishable region is a narrow and high2Jy fertile valLey close to the east coast. Most of the economic andc social development has taken place within the western coastal plain, stretching from Keelung on the north coast to Kaohsiung in the south. 2.02 The popuLation of the island is about 13 million, or slightly more than that of the Netherlands. From a high growth rate of 3.7p per annurm ten years ago. the nonulation growth has slowed down to 2.3% per annum partly as a result of birth control programs.