World Bank DocumentDocunent of The World Bank FOR OFFICIAL USE ONLY Report No. 7781 PROJECT...

Docunent of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 7781

PROJECT COMPLETION REPORT

PAKISTAN

ELEVENTH RAILWAY PROJECT

(CREDIT 1278-PAK)

MAY 16, 1989

Europe, Middle East and North Africa Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir oficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

COUNTRY EXCHANGE DATA

Name of Currency (abbreviation) Rupee (Rs)Year: Appraisal Year Average US$ 1 = Rs 9.90

Intervening Years Average US$ 1 Rs 13.73Completion Year Average US$ 1 - Rs 16.65

ABBREVIATIONS

CDLW - Central Diesel Locomotive WorksERR - Economic Rate of ReturnGNP - Gross National ProductGOP - Government of PakistanLDP - Lahore Iry PortMIS - Management Information SystemPCR - Project Completion ReportPR - Pakistan RailwaysSDR - Special Drawing RightsTEU - Twenty-foot Equivalent Unit

FISCAL YEAR OF BORROWER

July 1 - June 30

FOR OmCIUL UsE ONLYTHE WORLD BANK

Washington. D.C. 20433U.S.A.

Olhce d OCt,vtGet.wfaOpatmm IwtAgiam

May 16, 1989

MFMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Pakistan Eleventh Railway Project(Credit 1278-PAK)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on Pakistan - Eleventh Railway Project (Credit 1278-PAK)"prepared by the Europe, Middle East and North Africa Regional Office. Noaudit of this project has been made by the Operations Evaluatioa Departmentat this time,

Attachment

This document has a restricted distribution and may be used by recipients only in the Pekformeof their official duties. Its contents may not otherwise be disclksed without World Bank authorindon.

FOR OFICIAL USE ONLY


PAKISTAN


CREDIT 1278-PAK

Table of Contents

Page No.

Preface ......................... ................. (i)Basic Data Sheet .............................. (ii)Evaluation Summary . .. .0. ....... ................ . . .. (iv)

I. INTRODUCTION.o.............. 1II. PROJLCT PREPARATION AND APPRAISAL ................. ...2III. PROJECT IMPLEMENTATION ......................... . ... .5IV. TRAFFIC AND OPERATIONS ................. 0...... . ..... 11V. FINANCIAL PERFORMANCE .............. .............. . 13VI. INSTITUTIONAL PERFORMANCE ..........."........... ...15VII. ECONOMIC REEVALUATION..** .. . ...................... 17VIII. ASSOCIATION PERFORMANCE ......t... .... ............ ...18IX. CONCLUSIONS ................. ............. . ... .20

Annexes

1. Actual and Expected Project Impl_emntation . ............ 212. Actual and Appraisal Estimates of Project Costs.............223. Actual and Expected Cumulative Disbursements ....... ........ .234. Estimated Actual Freight Traffic, 1980-86 ................... 245. Estimated Actual Passenger Traffic, 1980-86.o .............. 256. Comparison of Certain Operation Targets and

Actual Results in 1985-86 ............................... ..267. Operating Indicators, 1980-86 ........................ .... . 278. Revenue and Expenditures Accounts, 1980-86 .................. 289. Summary of PR Performance Under Covenants.***............... 2910. Ex-Post Economic Costs, Benefits and Rate of Return ......... 31

Chart.,.*.................... .*.................... .*......32

Map

This docur.-ent has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

- 1 -


PAKISTAN


CREDIT 1278-PAK

Preface

An IDA credit in the amount of SDR 44.3 million (US$50 millionequivalent) for the Pakistan Eleventh Railway Project was approved onJuly 1, 1982. The credit was closed on December 31, 1985, the originalclosing date. Disbursements under the credit totalled US$25.71 million,and the final disbursement was made on July 25, 1986, at which timeUS$23.28 million was cancelled.

The Project Completion Report was prepared by the Europe, MiddleEast and North Africa Regional Office and is based on the Staff AppraisalReport, the Credit and Project Agreements, supervision reports, transportsector memoranda, and information contained in the project file andprovided by the Borrower during project appraisal. A PCR mission wasundertaken in May 1987 to obtain additional information on the causes ofdelay in project implementation, actual costs of the pioject, and otherdetails.

This PCR was read by the Operations Evaluation Department (OED).The draft PCR was sent to the Borrower on February 23, 1989, for commentsby April 14, 1989, but none were received.

- ii -


PAKISTAN


CREDIT 1278-PAK

Basic Data Sheet

Appraisal

Item Estimate Actual

Total Project Cost (US$ million) 132.7 42.2Credit Amovnt (US3 million equivalent) 49.0 60 0

Disbursed 26.7Cancelled (7/26/88) 238.Reps d 0

Borrowoers Obligation 80.7Date Physical Components Completed June 30, 1985 v

Proportion Comploted by OriginalComplotion Date (X) 100 lSX

Proportion of Tim. Overrun (X) -Economic Rate of Return (X) t8 negative

Cumulative Estimated and Actual Disbursements

(US3 million)

FY88 FY84 FY85 FY88 FY87

(i) Appraisal 4.5 27.0 48.6 50.0 -(1i) Actual 0.1 0.2 7.8 24.9 26.7

(III) as X of (;) 2 1 10 SO

1/ Credit amount SDR 44.3 million. Because of changing SDR/USS exchange rate,th, USS equivalent for disbursed, cancelled and borrowers obligation do notadd up; In SDR million disbursed and cancelled were 23.7, 20.8 respectively.

V/ Not completed as of May 16, 1987; at that time, Pakistan Rallways expectedto complete the project in mid-1988, but the necessary financing was not

arranged.

- iII -

Other Project Data

Appraisalitem Estimate Actual

First Mention In Filo- August 20, 1950 August 20, 1980Negotiationa Completed April 12, 1982 May 12, 1982Board Approval - July 1, 1982Credit Agreemnt Date - July 18, 1982Effective Date October 1, 1982 September 13, 1982Closing Date December 31, 1986 December 81, 1985Executing Agency Pakistan Railways Pakistan RailwaysFiscal Year of Borrower July 1 - June 80 July 1 - June 80

Follow-up Project None None

Staff Inputs(staff weeks)

FY80 FY81 FY82 FY88 FY84 FY85 FY86 FY87 FY88 TOTAL

Preparation 4.6 39.6 20.1 64.0Appraisal 1.4 65.2 58.6Negotiations 16.9 16.9Supervision 14.8 27.5 87.4 80.0 10.6 .2 120.4Other 4.6 41.2 95.8 16.2 27.7 87.5 30.0 10.6 .2 262.6

Subtotal 4.5 41.2 95.6 15.2 27.7 87.5 80.0 10.6 .2 262.6

Mission Data

No. of Date of

Iten, Month/Year Persons Manweeks Report

Identification 9/80 2 12 11/04/80Preparation 1/81 1 1Pre-appraleal 4/81 8 12Pro-appraisal 7/81 8 1O 07/80/81Appraisal 11/81 6 24 02/11/82Supervision 8/83 5 10 07/21/88Supervision 4/84 1 8 04/80/84Supervision 7/84 3 6 08/28/84Supervision 2/86 2 6 04/09/86Supervision 6/85 2 4 06/20/86Supervision 9/86 7 11 11/07/85

- iv -

PORJECT COMPLETION REPORT

PAKISTAN


CREDIT 1278-PAK

Evaluation Summary

Objectives

The objectives of the Eleventh Railway Project were to assistthe railway to respond to the challenges of road competition. Themaajor components of the project aimed to:

(a) improve the reliability of locomotives throughmodernization of maintenance;

(b) improve operational and financial performance throughthe introduction of a management information system; and

(c) establish a regular export/import container servicebetween Karachi and the inland terminal at Lahore.

Responding to the challenge also required operational andfinancial measures to be taken and these were included as covenants.

Implementation Experience

The IDA Credit (1278-PAK) for the project amounted to SDR44.3 million (US$50 million equivalent) but, as a result of delays inproject implementation, only US$25.71 million was disbursed; US$23.28million was cancelled. The proceeds of the credit were onlent to PRby the Government of Pakistan (GOP) at 11% interest rate for a periodof 20 years including a grace period of 4 years. The ileventh RailwayProject was appraised in November 1981 and the credit became effectiveon September 13, 1982.

The components of the project (para 2.07) to be financedunder the credit consisted of expansion and equipping of locomotiveworkshops, an initial stock of locomotive components for a unitexchange pool, provision of maintenance spares for locomotives, amanagement information system, expansion of the Lahore Dry Port androlling stock and handling equipment for container operations. Theproject also included: (a) staff training; (b) technical assistance tostudy the possible expansion of electrification; and (c) a plan ofaction to improve operational and financial performance.

The locomotive maintenance improvement component was modifiedsomewhat (para 3.03) in March 1984 by redirecting some of the projectplant and machinery to the Moghalpura workshop. In December 1985, afew weeks before the closing date, some of the funds of the creditwere reallocated (para 3.04) resulting in an SDR 8,860,000 reductionin funds for plant and machinery and increased funds for unit exchangecomponents and revenue spare parts. At the disbursement closing date(July 26, 1986), an undisbursed balance of US$23.3 million of thecredit was cancelled.

Total project cost of US$42.2 million (as of May 1987) wasonly 32% of appraisal cost (Annex 2), largely because the project wasnot completed. After the termination of credit disbursements, projectimplementation was continued on a much reduced scale utilizing GOP'sown resources and bilateral credits. Spare parts and unit exchangecomponents were purchased from the original manufacturers of existingequipment; otherwise all the goods financed under the credit wereprocured through ICB.

None of the three principal components of the project wascompleted. For the locomotive maintenance improvement, two of theshops were constructed but one was only 15% complete; about threequarters of the unit exchange components originally intended to beprocured were actually purchased. Procurement of revenue spare partsabout equalled the original allocation for this purpose but theadditional funds made available under the credit reallocation were notused. No implementation of the MIS component was carried out becausethe telecommunications installation on which it depended was notcompleted (para 3.08).

The principal cause of delayed implementation of the project(para. 3.02) was that during the initial two years of the scheduledimplementaton, the Railway Board gate little urgency to obtaining GOPapproval for project components. Once final approval was givenimplementation proceeded satisfactorily on the locomotive maintenanceand containerization components. As the closing date approached,PR/GOP requested extension of the credit but IDA refused the request(para 3.27). The refusal was based on the inordinate delays inimplementation caused by late GOP/PR approval of the project and theinadequate compliance with important covenants of the Credit Agreement(8.05).

Railway freight traffic (Annex 4), in terms of tonkilometers, increased slowly between FY 1981 and FY 1986, in line withthe modest appraisal forecast. Passenger kilometers (Annex 5) in FY1986 remained at about the same level as in FY 1981, falling 10% shorto_ the forecast level. Among the factors explaining the stagnantrailway traffic is the low availability of locomotives caused in largepart by severe problems in locomotive maintenance. Improvements inoperating indicators (Annex 6) were few (and some worsened) despitethe Plan of Astion incorporated in the project.

- vi -

The financial performance of PR (Annex 8) fell far short ofthe objectives of the project. In contrast to an appraisal forecastof net operating revenue of Rs 711 million in FY86, the PR actuallyincurred a net operating loss of Rs 479 million for that year. Theprincipal reason for the deteriorating financial performapee was thereluctanc of the GOPIPR to raise passenger fares (para 5.05). Onlyafter a long delay was a 15X general passenger fare increaseintroduced in mid-1985 and this increase fell far short of the need.Compliance with financial covenants was inadequate (Annex 9). While afew uneconomic passenger services were eliminated as required underthe plan of action, many more services should, on economic grounds, beterminated; recognizing that, to a large extent, the poor anddeteriorating financial condition of PR is attributable to thecontinuation of uneconomic lines and servizes, there is little hopefor achieving major improvement in these results unless either (1) PRreduces many more such services despite possible adve:se publicreaction; or (2) GOP grants PR substantial subsidies annually tooffset heavy losses incurred by PR where GOP requires that suchservices be provided (para 5.10).

Results and Sustainability

The economic benefits of the partially completed project weresmall and the rate of return negative (Annex 10). If the project isultimately completed, which is by no means assured, the project willprobably yield a low return. Hence, the project is not consideredsustainable.

Findings and Lessons

The main objectives of the Eleventh Railway Project, were notachieved. Nonetheless, the Association has had some favorableinfluence on the long-term development of the railway through itscontinued involvement. The overseas training program has had somepositive impact on the quality of management. Also, theelectrification study completed under the project provides a basis fororderly development of electrification if financing for such a projectbecomes available. More important, the initiatives undertaken withthe main project components are steps that needed to be taken and, ifthe railway is to continue serving the nation with reasonableefficiency, these developments should be carried forward tocompletion. Moreover, since the closing of the loan GOP and PR havebecome more aware of the need for the railway to adjust to thecompetitive environment. The railway has taken various initiatives ofits own and a draft institutional, managerial and financialrestructuring order is currently awaiting Cabinet approval.


PAKISTAN


CREDIT 1278-PAK

1. INTRODUCTION

1.01 Pakistan covers a land area of about 800,000 square kilometers andhas a population of about 96 million. The size and configuration of thecountry and the location of principal population centers are such that muchdomestic trade involves transport over long distances. A distance of about1,500 km (1,000 miles) separates Karachi, the main port and industrial centerin the south, from the important northern centers of Lahore, Rawalpindi, andIslamabad. Since railways generally are economically best adapted tolong-distance transport, the conditions in the country are particularlyadvantageous for Pakistan Railways.

1.02 The steadily improving economic performance of Pakistan betweenfiscal years 1977 and 1983 was interrupted in FY1984 as a result of anunexpected decrease in agricultural production and a fall in migrantremittances as well as a carryover of inflationary pressures built up in theprevious year. FY1985 was also a difficult year for Pakistan's economy;although economic growth rebounded strongly from the slUrp of FY1984, thebalance of payments deteriorated and government finances worsenedconsiderably. The growth rate for gross domestic product averaged 6.7 percentfor the period FY1977-1983, slowed to 3.5 percent in FY1984, then returned toabout the 6.7 percent level in FY1985. Per capita GNP was US$390 in 1983compared with US$300 in FY1981-82.

1.03 Pakistan's transport system consists of Pakistan Railway (PR),semi-public Pakistan International Airlines, National Shipping Corporation,privately owned Pan Islamic Steamship Company, four provincially-owned buscompanies, numerous private road transporters, National Logistics Cell,Karachi-Mu.tan Pipeline and two ocean ports, Karachi and Qasim, through whichvirtually all the country's exports and imports are lhandled.

1.04 The principal lines of the 8,775 km PR were built in the 19thcentury. The system is government-owned and operated and constitutes one ofthe largest and most important public sector organizations in the country.For many years, PR was the nation's principal mode of modern transport butrecently has conceded that dominant position to road transport. A number ofrailway projects including the Eleventh Railway Project were designed toimprove PR's competitive position and reverse this trend. Since 1952, theBank Group has lent US$213 million for railway projects in Pakistan.

-2-

1.05 At the time of appraisal of the Eleventh Railway Project in November1981, PR had already received eight loans and credits amounting to US$187million, all with essentialiy the same objectives of rehabilitating therailway infrastructure and improving PR's planning capacity, accountingprocedures, management and operations. The first loan to the railways (thenPakistan Western Railway) was made in 1952 and the latest (Credit 684-PAK andLoan 1372-PAK) in 1977. All eight of the loans/credits were fully disbursed;performance however, was mixed with satisfactory results for the earlierprojects and less than satisfactory results in the case of the Tenth RailwayProject. Under the Eighth and Ninth Railway projects (496-PAK and 621-PAK),progress in physical implementation was slow and during that period(1965-1979) PR experienced significant declines in its overall performance.Because of politicel disturbances in the early 1970s and the severe flooddamage in both 1973 and 1976, the Ninth Railway Project (621-PAK) requirednine years instead of the estimated three years to be completed. The TenthRailway Project (Credit 684-PAK, Loan 1372-PAK) was completed in seven and ahalf years, some two and a half years behind the original completion date.

1.06 Among the major concerns of the Association during implementation ofthe Eleventh Railway Project was PR's reluctance to prepare an action plan toachieve operational improvements, to curtail uneconomic passenger services andto increase passenger fares inorder to improve the railways' deterioratingfinancial performance.

1.07 The Eleventh Railway Project has not been completed and the projectobjectives have not been realized. Implementation has continued at a slowpace following the termination of disbursements in July 1986 and PR intends tocomplete the project by mid-1988 if sufficient alternative financing can befound.

H. PROJECT PREPARATION AND APPRAISAL

2.01 The proposed content of the Eleventh Railway Project was discussedinformally among GOP/PR officials and Bank staff as early as 1979. In October1980, a mission formally identified the project which was to include threemain components: (a) locomotive maintenance improvements; (b) development ofcontainer handling facilities; and (c) management information system.

2.02 In August 1961, the Secretary of the Railway Board, in a letter tothe Ministry of Railways, proposed that the Eleventh Railway Project beapproved in principle and requested clearance of the project concept; a copyof the request was sent to the Bank. The project differed in one importantrespect from preceding Baak Group-financed projects for PR: previous projectshad involved gene;.al support of railway development plans, but the new one wasdirected to a limited number of specific high priority items.

2.03 Preparation of the project was accomplished by the PR and variousconsultants engaged by PR and the Bank. For improvements in locomotivemaintenance, PR itself in 1980 undertook a study aimed at determining thefacilities and materials required to establish a plant for remanufacturinglocomotive components and assemblies essential to implement a unit exchangesystem. To assist PR in this work, a team of PR officials visited Railway

-3-

organizations in the US and Canada and produced a useful report in 1981. Theintention was to locate the remanufacturing activity at the Central DieselLocomotive Workshop in Rawalpindi, but during subsequent projectimplementation it was decided (April 1984) to concentrate much of this work atthe locomntive workshop in Moghalpura. PR/GOP indecision on this issue causedsubstantial delay in approval of the project by the Railway Board and PlanningCommission.

2.04 For preparation of the component concerning '>:ntainer handlingfacilities, PR was assisted in 1981 by both the Japan International CooperatonAgency and R. Waheed Associates, Ltd., Consultants. In addition, the Bankemployed Anderson Associates (US) to review PR's findings and providetechnical assistance to PR in defining facility expansion and equipmentrequirements for the lahore Dry Port. This work was carried outsatisfactorily.

2.05 Preparation of the management information system (MIS) component wascarried out by PR, but it was not detailed. A consultant, W.H. Thompson (US),employed by the Association in 1980 prepared a brief report on PR managementinformation needs. The railways intended that the specific characteristics ofthe system and its hardware requirements would be determined during projectimplementation by consultants to be engaged by PR. Both PR and theAssociation recognized that a precondition for implementation of the MIS wasthe completion of the telecommunications system, under the Tenth RailwayProject which, at the time of appraisal was expected to be completed beforemid-1983. Later, it became clear that this forecast was much too optimistic:in June 1987, the telecommunications system was still not completed.Consequently, MIS was not begun.

2.06 An additional preparation study for the project was done by EmmayAssociates, Ltd. (Pakistan) in 1981. These consultants studied the future roleof the railway, determining that PR would continue to have an important role toplay in the transport system of Pakistan and that the railway neededstrengthening in several important respects. The report was accepted by theBank as satisfactory. However, the report only confirmed that PR had apotential role, but did not examine the fundamental institutional, managementand financial reforms needed for the railway to be able to realize thatpotential in the face of intensifying road competition. Nevertheless projectpreparation mission discussed the constraints affecting both PR's ability tocarry traffic and its financial performance, and operational and financialcovenants were included in the loan agreement.

2.07 The proposed Eleventh Railway Project contained three high-priorityitems and also included a special electrification study, all of which wereexpected to be completed in mid-1985. The project was estimated to cost aboutUS$132.7 million (Rs 1,393.4 million) with a foreign exchange component ofUS$76.1 million, and included the following components (ref. to Schedule 2 ofthe Credit Agreement):

(a) Locomotive Maintenance Improvements

(i) Expansion, equipping, and modernization of the Rawalpindi CentralDiesel Locomotive Works to provide for remanufacture and overhaul

-4-

of locomotives components for the Borrower's entire dieselelectric fleet, including the provision of stock, spare parts,technical assistance, and training.

(Iii) Modernization, repair, and improvements of the KarachiLocomotive Shed to allow change over to unit exchangemaintenance, including the Drovision of stock, spare parts,technical assistance, and training.

(b) Management Information System

Development and implementation of a management informationsystem, including the provision of a data network, hardware andsoftware, technical assistance, and traini.ng.

(c) Containerization

(i) Expansion of Lahore Dry Port, construction of tracks and storageand acquisition of rolling stock and handling equipment for theoperations of container service.

(ii) Development of a container tariff and information system forKarachi Port Trust.

(d) Other

Feasibility study of electrification of mainlineKhanewal-Karachi.

2.08 Recognizing that the operational and financial performance of therailway had been less than satisfactory immediately prior to the time ofappraisal, the project incorporated a Plan of Action, which set forth targetsfor various operating measures (Annex 7) in the years from 1981/82 to 1984/85,and required elimination of various uneconomic passenger services, staffreductions and other actions.

2.09 At the time of Bank appraisal, the PC-1 documents for variousprincipal components of the Eleventh Railway Project had not been formallyapproved by the Railway Board and the Planning Commission, nor had approvalbeen given at the time of credit negotiations or indeed effectiveness. Thissanction was required by GOP before expenditures could be incurred for any ofthe components, even after approval of the credit by IDA.

2.10 Du-ing negotiations, in May 1982, a major issue was the Association'sinsistence that GOP commit itself to increase passenger fares within aspecified period of time. This issue had been under discussion between PR/GOPand the Bank for months prior to negotiations. The urgent need for asubstantial increase in fares on second class service was clearly required toimprove the financial performance of the railways, but the GOP feared a broadp_blic outcry and political reaction. Ultimately, agreement was reached thatincreases in fares and rates, the amount to be determined by PR/GOP, would beannounced no later than June 30, 1983. This requirement was incorporated in a

- 5 -

Side Letter, which also contained a Plan of Action representing measures to beimplemented by PR to achieve various .pecified targets of operational andfinancial performance. In addition, a number of significant finar.cialcovenants were included in the Credit Agreement.

HI. PROJECT IMPLEMENTATION

Project Start Up

3.01 The credit for the Eleventh Railway Project became effective onSeptember 13, 1982. about 2 1/2 months after Board approval. Little wasaccomplished in 1982 and 1983 as PR was continuing to prepare the PC-1documents for the main project components (para 2.09). In the fall of 1982,however, the electrification study was begun. Procurement of revenue spareparts for locomotives could go forward without PC-1 clearance, but-even herethe PR was slow to act. In March 1984, a supervision mission found that aboutUS$5 million had been expended on locomotive spare parts. Also, limitedtenders had been invited for procurement of some components for the ur.itexchange system and for some container handling equipment, all in anticipationof the clearance of PC-1 documents, since no orders could be placed untilobtaining clearance of those documents.

3.02 There are two principal reasons for the long delay in clearing thePC-ls. First, frequent changes in railway management during 1982-84 resultedin lack of leadership and urgency in preparing the PC-ls by the railway staffand in their finalization by the Railway Board. Also during this period theBoard was giving priority to aquisition of new locomotives and construction ofa railway manufacturing plant. In addition the recommendations of overseasinspection teams for each of the three components resulted in corrections andrevisions being made to the PC-ls. The Board also made little effort to havethe Planning Commission clear the documents in an expeditious fashion.Second, the Ministry of Finance experienced a shortage of local funds for anumber of investment projects under consideration in 1984 and implementationof the Eleventh Railway Project was held up on this account.

Proiect Modification

3.03 The locomotive maintenance improvement component was modifiedsomewhat in March 1984. The original intention was to centralize, as much aspossible, the heavy maintenance and remanufacture of locomotives and criticalcomponents at the Central Diesel Locomotive Workshop in Rawalpindi. Onreconsideration early in 1984, it was found that a more productive approach,at least in the short term, would be to utilize the Moghalpura Workshop forremanufacture of engine blocks, turbochargers, expressors, traction motors andtraction generators. This approach would also ensure continued work for thestaff at Moghalpura which was phasing out its overhaul of steam locomotives.Accordingly, most of the machinery procured under the project would bedirected to Moghalpura rather than Rawalpindi facilities. This change wasconsistent with the PC-1 then approved by the Railway Board.

- 6 -

Reallocation of Credit

3.04 In early December 1985, a few weeks before the closing date, butafter the Association had informed GOP/PR that no extension was possible, GOPand IDA agreed to the following reallocation of the SDR 29,230,000 originallyallocated to the Locomotive Maintenance Improvement component:

Original New PercentAllocation Allocation Change--------- ( S D R ) ------

(a) Plant and Machinery 12,850,000 3,990,000 - 69(b) Components 11,950,000 16,390,000 + 37(c) Spare Part, 4,430,000 8,860,000 + 100

Component fotal 29,230,000 29,230,000 0

The principal reasons for the reallocation were to enable PR to concentrateprocurement where the needs were especially critical and to emphasizeprocurement which could be accomplished most expeditiously in the shortremaining time before disbursements were terminated. Also, not all of thefunds that had been allocated to plant and machinery were required becauseactual costs for many items were substantially lower than the cost estimatesfor those items.

Implementation Schedule

3.05 On the planned project completion date of June 30, 1985, the onlycomponent that had been virtually fnelly implemented was the electrificationstudy (Annex 1) while some 802 of the revenue spares had been procured. TheMIS component had not begun and the rfnaining components were only 15 - 20%completed.

3.06 The locomotive maintenance improvement component was delayed by slowaction on the PC-1. Not until November 1984 was formal approval given for thesubcomponent on plant and machinery and not until December 1984 was approvalobtained on the subcomponent concerning procurements for the unit exchangesystem. Although PR initiated the procurement process prior to PC-1 approval,the entire procurement schedule was severely affected by the delay. Bymid-1985, only about 15% of the component was completed.

3.07 The containerization component was similarly affected by slow GOPprocessing of the PC-1, which was not approved until October 1984;nevertheless, some tendering was initiated earlier in anticipation of thatapproval. By mid-1985, the component was only about 152 complete.

3.08 Implementation of the third major component, MIS, was to have begunin January 1984, but was never initiated becatuse of a long delay in complet.onof the telecommunications component of the Tench Railway Project on which itwis dependent. The several causes of delay in execution of the telecommuni-cations component were identified in the Project Completion Report on theTenth Railway Project.1'

-~' South Asia Regional Office "Pro ect Completion Report: Pakistan TenthRailway Project (Credit 684-PAK and Loan 1372-PAK)" Report No. 5767,June 28, 1985. (Distributed to Executive Directors, President et al onJuly 30, 1985.)

- 7 -

3.09 Procurement of revenu- spares for locomotives was not conditionalupon approval of the Planning Commission and therefore orders could be placedearlier than for other components. Ordering began in 1983 and, as of mid1985, most of the original US$5 million allocated to this component had beenprocured. Subseqiently, additional funds were allocated for this purpose, butthey were not utilized.

3.10 The implementation of the overseas training activity was to havebegun in 1982 with completion expected in 1985. In actuality, the trainingwas undertaken in the first half of 1986, after the closing date but beforethe termination of disbursements. The reasons for the late start relatelargely to the causes of delay in implementation of ocher components (para3.06). In contrast, the feasibility study of electrification on a main linewas begun on schedule but completed in September 1985, long after the May 1983planned completion date, the longer elapsed time being attributable largely tounanticipated difficulties in carrying out the study.

3.11 The Plan of Action called for various measures to be implemented byspecified time periods. In particular, the GOP/PR agreed to announce andintroduce by June 30, 1983 a general increase of at least 20X in the passengerfares on second class service. This was not done and, a telex in April 1984from the Associatior to GOP indicated that IDA support could not continueunless various actions were taken including increasing passenger fares by 20%by July 1, 1984. This was not done and the Assoc iation in a letter ofSeptember 7, 1984, again emphasized the need for GOP to grant approval byApril 30, 1985. An inadequate 152 general fare increase in passenger andfreight rates was put into effect by PR on June 6, 1985 (para 5.05). Theactions taken with regard to implementation of other measures under the Planof Action are discussed below (para 4.07).

Reporting

3.12 PR provided the Association with quarterly progress reports onimplementation of the project and railway operations. The quality and timingof these reports were satisfactory.

Procurement and Physical Implementation

(a) Locomotive Maintenance Improvement

3.13 The civil works element of the maintenance improvement component wasnot implemented in its entirety. Fully completed were the cylindermanufacturing shop and the miscellaneous component repair shop at Rawalpindias well as the extension of a traction motor rewinding shop at Moghalpura andresidential accommodations in two locations. At Rawalpindi, the miscellaneouscomponent repair shop was 80% completed, while the store for unit exchangeassemblies was only 157 completed, as of May 1987. Before the latter item canbe finished, a separate shed needs to be constructed.

3.14 A total of 73 items of plant and machinery were to be procured under-.le maintenance improvement component. As of May 1987, 45 of these items hadbeen received at a total cost of US$5.1 million, of which US$3.6 million wasforeign cost. Following the termination of disbursements in July 1986, the

railway used a small amount of alternative financing to carry out commitmentsmade under some of the then outstanding purchase orders. Notwithstanding thiseffort, over half of the 73 items in the original procurement plan had notbeen purchased as of May 1987. Under the project, procurements of plant andmachinery were based on international competitive bidding.

3.15 Components and assemblies for the maintenance improvement category ofthe project had been procured as of May 1987, to the extent of US$20.9million, of which US$13.2 million represented foreign cost. To carry on theprocurement after disbursements from the IDA credit terminated, .lternativefinancing was again utilized. Virtually all of the components were purchasedon the basis of quotations from original manufacturers based on lists approvedby IDA.

3.16 Revenue spare parts were similarly purchased on the basis ofquotations from original manufacturers. As in the case of components, not allof the spare parts on order when credit disbursements were terminated could bedelivered, although some of these parts were financed with alternativefinancing. As of May 1987, expenditures on spare parts totalled US$6.8million, of which US$4.9 million was foreign cost. Thus, the procurement fellfar short of the US$8.9 million revised allocation of the credit for thiscategory.

(b) Railway Container Operation Component

3.17 The civil works for expansion of the Lahore Dry Port have beenvirtually (892) completed. The earth work, track rearrangements, drainage,fire-fighting facilities, watchtower, and offices were finished but some work,as of May 1987, remained to be done on the construction of import and exportsheds and a link road. Only 12% the 100 special wagons for transportingcontainers had been built in May 1987; the materials for all 100 wagons hadbeen procured and the remaining 88 were to be completed by mid-1988. About80. of the container handling equipment had been procured at that time. Thelatter equipment was procured on the basis of ICB while the civil works wereundertaken by the PR and the materials for container wagons were procuredlocally for use in PR manufacture.

(c) Management Information System

3.18 This component of the project was deleted because of delay incompletion of :he telecommunications system, a prerequisite for the MIS(para 3.08).

Electrification Feasibility Study

3.19 The feasibility study for the possible electrification of theKhanewal-Karachi railway line was initiated in October 1982 and theconsultants, Transmark (UK) and Saigols (PAKISTAN), submitted a draft finalreport in mid-1983. Certain shortcomings were found in the report and asupplemental study was required, particularly to analyze the economicimplications of incremental development of electrification. The supplementalstudy was begun in July 1985 and the final report was submitted in November

- 9 -

1985. This report was acceptable to the Association and PR/GOP. Itsprincipal finding was that it would be economically feasible to developelectrification of the 160 Km Khanewal-Samasatta line, and the PR plans toinitiate construction of that work, subject to availability of funds and GOPapproval.

Training

3.20 Not until the latter half of 1985 were significant steps taken towardimplementation of the training component. In September of that year PR sentto the Association the first of a series of lists of proposed candidates foroverseas training. In December 1985, the Railway Board forwarded to theAssociation training proposals from various organizations in the UnitedKingdom, Canada, and the United States. The Association approved both a listof candidates and the proposed training program in British Railway andCanadian Pacific; the overseas training began in.J'anuary 1986 with middle andupper level management staff attending programs appropriate to individualspecialties. Sixty two persons were accommodated, each participating forperiods varying from two to four months. About 120 man-months of trainingwere involved which was approximately three times the 42 man-months planned.Management staff consider the program to have been beneficial and expressedinterest in having more opportunities of this type. While the program wasoriginally intended, at least by the Bank, for middle level management staff,a considerable number of the participants were high level staff, someapproaching retirement.

3.21 The overseas training was not begun until after the closing of thecredit. It was carried out between January and July 1986, a period duringwhich IDA continued to make disbursements from the credit. The principalreason for the long delay in execution of this project element is that it wasdesigned essentially as part of the locomotive maintenance improvementcomponent and thus its implementation was affected by the problem of PC-1approval already discussed (para 3.02).

3.22 In the technical assistance area, Transmark, consultants (UK),undertook two studies in addition to the electrification study reviewedabove. One of the studies analyzed track machinery maintenance and the otherexplored the stores and inventory control system; both reports maderecommendations for improvement in procedures and the reports weresatisfactory. The two studies did not begin until January 1986, i.e., afterthe credit closing date, and were completed in June 1986. Another studyundertaken by consultants under the project assisted PR in planning amanagement information system. Initiated early in 1986 by Canadian PacificConsulting Services, this study was completed in June 1986 and the report wasfound to be satisfactory.

Proiect Cost

3.23 The total project e'ost estimated at appraisal was US$132.7 millionbut because of the non- or under-implementation of most of the projectcomponents, actual costs, as stiown in Annex 2 were much lower. Actual costsas of May 1987 were US$42.2 million and included some costs incurred since thetermination of disbursements in July 1986. The difference between theappraisal estimate and the actual cost is due to the shortfall in projectcompletion.

- 10 -

3.24 The MIS component, which was not implemented at all, accounted duringappraisal for US$13.4 million or ten percent of the total cost estimate. Forother components, the percentages of actual cost to appraisal cost, shown inAnnex 2, vary widely and indicate the extent of completion of the particularcomponents. Only in the case of unit exchange components for maintenanceimprovements are the actual and appraisal costs approximately the same.Expenditures on training was lower than the appraisal estimate mainly becauseof the absence of local training costs. The electrification study cost littlemore than a third of the estimate for that item.

3.25 Modification of the project, as indicated in para 3.03, shifted theuse of funds as between workshop installations at Rawalpindi and Moghalpura,but did not have a significant effect on project costs. The reallocation ofcredit funds among categories, as described in para 3.04, recognized thatappraisal estimates for plant and machinery items were high in relation toactual costs. While the funds available,for revenue spare parts were doubledin the reallocation, which occurred ixmediately prior to the closing of thecredit, the increase did not result in larger foreign expenditures for spareparts.

Financial Sources and Disbursement

3.26 Under the original IDA credit, the amount available to GOP/PR wasUS$50 million but only US$25.7 million was actually disbursed. Of the US$42.2million total project cost (to May 1987), the IDA creut of US$25.7 mullioncovered 61%. The remaining cost of US$16.5 million was provided by GOP.

3.27 Extremely small disbursements of the credit were made prior to June30, 1984, as shown in Annex 3. Under the appraisal plan, US$27 million was tohave been disbursed at that time, but only US$200,000 had actually beendisbursed. At the planned project completion date, June 30, 1985, US$7.8million had been disbursed, and when the credit was closed on December 31,1985 the amount was US$13.0 million, about one-quarter of the total credit.IDA denied a request for extension of the credit, but subsequently agreed tohonor applications for withdrawals from the credit for approximately sixmonths after closing. PR accelerated its procurement efforts in 1985 with aview to withdrawing as much of the funds available as possible beforetermination of disbursements. The final disbursement was made on July 25,1986, raising the cumulative disbursements to US$25.7 million. Some US$23.3million, or 47 percent of the US$50 million credit, was cancelled.

3.28 The causes of slow disbursements are because of tAe delays inobtaining GOP/PR approval of the main project components (para 3.02).Although there were some difficulties with PR/GOP processing of withdrawalapplications, due to insufficient experienced staff in the Railway Board,those problems were a relatively minor cause of disbursement delays.

Performance of Consultants, Suppliers and Borrower

3.29 The consultants employed to carry out the electrification study,Transmark (UK) and Saigols (Pakistan), were required to undertake asupplementary study following their draft final report; the results in the endwere found acceptable. The quality of training provided to PR staff byBritish Railways and Canadian Pacific Railway was found to be satisfactory tothe Bank and considered beneficial by PR management. No substantial problems

- 11 -

were experienced in dealings with suppliers although a large and costlymachine shipped from Italy was severely damaged in shipment requiringreplacement with much consequent delay; responsibility for the damage had notbeen assigned but insurance covered the loss.

3.30 Performance of the Borrower in the physical implementation of projectcomponents was less than satisfactory. GOP/PR should have either processedthe PC-1 documents more expeditiously (para 3.02) so as to permit timelyproject implementation or should not have negotiated and signed the creditagreement.

IV. TRAFFIC AND OPERATIONS

Freight Traffic

4.01 At the time of appraisal, freight traffic was expected to increaseslightly at about 1% p.a. between FY 1981, when it was 7.9 billion TKM, and FY1986 when it rose slightly to 8.3 billion TKM. The actual TKM for FY 1986 wasalmost exactly as forecast but, as indicated in Annex 4, followed an erraticpath in the interim, falling sharply in FY 1982 and rising almost asdramatically in FY 1986. In terms of tons of freight loaded, the pattern wasmuch the same. The average length of haul was the same in FY 1986 as in FY1981. The lack of significant growth in railway freight traffic does not meanthat the economy was stagnant during recent years but rather that the railwaywas losing ground to competing transport in the haulage of the nation'sfreight.

4.02 A number of factors explain the lack of steady growth in railwayfreight traffic. One of these causal factors has been the failure of therailway staff .o adapt its policies and practices to the developingcompetitive situation in which PR's competitors, especially truck operators,aggressively pursue the available traffic. The railway's organization andmanagement system has not been conducive to either efficient operations or theprovision of high quality services that are responsive to shipper needs anddesires. Severe problems with locomotive maintenance have been particularlydamaging to reliable, high quality freight services. Failure to implementfully, as planned, the Eleventh Railway Project limited the alleviation ofsome of PR's major constraints on traffic growth.

4.03 The railway which once strongly dominated modern transport inPakistan, has seen its role shrink to the point where it handles less freighttraffic than highway transport. Yet the role of the railway continues to befundamentally important to the economy. PR has substantial potential forincreasing its participation in the total movement of freight. Realization ofthat potential, however, will require reorganization of the railway and animproved management system. Also, the PR must gear itself to handlecontainers expeditiously and on competitive terms. Moreover, much improvementwill be needed in locomotive maintenance to improve operations and thereliability of freight services.

- 12 -

Passenger Traffic

4.04 Appraisal forecasts of passenger traffic were somewhat moreoptimistic than forecasts of freight traffic. Passenger kilometers (PKM) wereexpected to increase at 2 to 3% p.a. from 16.4 billion in FY 1981 to 18.7billion in FY 1986, as shown in Annex 5. Actual PKM in FY 1986 were 16.9billion, or about 10% lower than forecast and at virtually the same level asin FY 1981. Traffic has subsequently increased to 18.0 billion PKM in FY88.The number of passengers carried by PR fell by 422 between 1981 and 1986, asthe railway lost substantial numbers of short-haul passengers to highwaytransport. Accordingly, the average distance travelled by rail passengersincreased from 133 km to 203 km between FY 1981 and FY 1986.

4.05 The reason for the loss of much short-haul passenger traffic is thatbranch line and stopping train services are uncompetitive with modern roadtransport. Another cause of the low passenger traffic in FY 1986 was the'elimination of some uneconomic passenger services. also an action required forimprovement of financial performance.

4.06 Rail passenger service is a major part of the PR's business and willundoubtedly continue to be so. In fact, the railways have given unduepreference to passenger services over freight services in the use oflocomotives and in other ways. In any caze, PR has an important role to playin the movement of passengers although it is likely to experience competitiveproblems similar to those in other countries, namely, that bus operatorscapture much of the short-haul traffic while airlines increase theirparticipation in the movement of long-distance passenger transport.

Operating Performance

4.07 A key element in the Plan of Action included in the Eleventh RailwayProject was the establishment of a set of operational targets to be achievedduring project implementation. Annex 6 shows the appraisal targets for theyears 1982 through 1985 and certain revisions of the 1985 targets proposedduring a Bank supervision mission in July 1984, to allow for the lack ofprogress in the project components. For most indicators, the revised targetswere liberalized at that time in the sense that the new objectives were moreeasily attainable than the original targets. For example, the overallavailablity of diesel locomotives as a percentage of the total fleet of suchlocomotives was originally to increase gradually from 83% in 1982 to 882 in1985. In July 1984, the target for 1985 was reduced to 85X. In 1986, theactual 84.4% level achieved was still short of both the original and therevised targets set for 1985.

4.08 Problems in locomotive maintenance have been particularly severe inrecent years with adverse consequences for operational performance andreliability of service. One of the few positive indications, as shown inAnrax 6, is that in 1986 the percentage of diesel locomotives out of servicesoecifically because of lack of spares had been reduced to 2.26X, a figurebetter than the revised 1985 target. On the negative side, the number oftraction motorL aboard locomotives not working was 300, or double the numberin the revised 1985 target and many times larger than the original target forthat year. The diesel locomotive downtime during scheduled heavy repairsremained above both the original and revised targets for 1985.

- 13 -

4.09 With regard to freight train operations, all three revised 1985targets were achieved ir. 1986 but the original targets had not been attained.

4.10 Various operating indicators are presented in Annex 7 with theresults shown for the fiscal years 1981-1986. Average freight train speedsshow no improvement. Wagons per train rose sightly and net load per freighttrain increased 9% in the period. Turnaround time for wagons rose from 15 to18 days.

4.11 One of the requirements of the Plan of Action was that PR eliminateuneconomical passenger trains at the rate of 2 to 3 per month beginning inJuly 1982. The PR cancelled 18 passenger services in 1982, 4 each in 1983 and1984, 8 in 1985 and 27 in 1986. Other suburban passenger services wereeliminated and trains were dropped on various days for certain additionalservices. Some 143.passenger train stops had been eliminated by Apri.l 1986.Locomotives have been diverted from poorly patronized trains or sections tomore remunerative sections.

4.12 Had the Eleventh Railway Project been fully implemented as scheduled,the operational performance of PR would no doubt have been better than theactual result. A completed locomotive maintenance improvement component wouldhave been a particularly helpful in view of the critical problem of poormaintenance of the locomotive fleet.

V. FINANCIAL PERFORMANCE

Net Operating Revenue

5.01 Appraisal forecasts of net operating income anticipated a loss ofRs 485 million in FY 1982 followed by a surplus Rs 232 million in FY 1983 andgrowing surpluses in subsequent years, as inl1icated in Annex 8. In FY 1986,the surplus was expected to reach Rs 711 million. Realization of theseoptimistic financial forecasts, according to the Staff Appraisal Report, woulddepend largely on significant increases in railway freight traffic andsizeable increases in passenger fares.

5.02 Actual financial results during the 1983-1986 period were far shortof the forecasts. Large net operating losses were incurred *n each fiscalyear 1982-1986, growing rapidly from Rs 224 million FY 1982 to anunprecedented Rs 817 million in FY 1985, then moderating somewhat to a loss ofRs 479 million in 1986. Between FY 1982 and FY 1985, operating expensesincreased by 362 while operating revenue rose only 212 as PR postponed neededpassenger fare increases.

5.03 The primary reason that the financial results fell so far short ofthe forecast was that the PR failed to act quickly and adequately in raisingpassenger fares on reducing costs of providing passenger services. In FY1986, the loss reduction from the preceeding year occurred mainly because of asizeable increase in freight traffic in FY 1986 and the introduction of a 15%general fare increase on June 6, 1985. Operating losses were also influencedto some extent by increases in appropriations to the depreciation reservewhich rose more than had been anticipated in the forecasts.

- 14 -

5.04 Appraisal forecasts show a relatively poor operating ratio of 1162 inFY 1982, then falling sharply to 94% ia FY 1983 and to still more satisfactorylevels in subsequent years. The actual operating ratio rose from 1072 inFY 1982 to 122% in FY 1985, then fell to 111% in the following year. Thereasons for the adverse trend in the actual operating ratios experienced by PRare to be found mainly in the failure of the PR to take timely steps toincrease revenue, as noted above (para 5.04).

Rates and Fares

5.05 Financial covenants 2n the Credit Agreement, summarized in Annex 9,required GOP/PD, inter-alia, Li take measures satisfactory to the Association,to enable PR to earn revenues sufficient to cover operating expenses and debtservice requirements. In carrying out this measure, GOP agreed in the Plan ofAction to announce increases in rates/fares no later than June 30, 1983.. Oneaction required was a substantial general increase in passenger fares butGOP/PR failed to act in 1983. Bank missions and communications remindedGOP/PR frequently of the urgency of action on this issue. Not until June 1985did the PR introduce a general passenger fare increase, two years later thanhad been originally agreed. Moreover, only a 15% fare increase was introducedat that time despite the Association's repeated insistence that PR needed atleast a 20% increase on second class passenger service, the class of serviceyielding by far the largest amount of passenger revenue.

5.06 The basic reason for GOP's reluctance to raise passenger fares hasbeen the fear of widespread public criticism of such action and consequentpolitical reaction. GOP successfully opposed general fare increases duringthe period from 1980 to 1985 even though PR's financial condition wasdeteriorating sharply9 as noted above. Regrettably, the longer fare increasesare postponed the more difficult it becomes during inflationary times to makethe necessary fare adjustments, because the size of the increase requiredrises while the travelling public comes to believe that stable fares are apermanent feature of railway policy.

5.07 The insufficient action on fare increases meant that the borrower didnot comply with the financial covenant of Section 4.03. If PR continues tohave difficulty obtaining GOP permission to charge compensatory fares forpassenger services, the railways would be well advised to concentrate more oftheir resources on freight transport because the financial potential offreight traffic on PR is generally greater than that for passenger traffic andbecause it is generally easier to adjust freight tariffs for cost increases.

5.08 In addition to the financial covenant of Section 4.03 relating toPR's overall pricing structure, Section 4.04(a) required that revenues frompassenger services as a minimum cover the variable costs of such services. Ascf mid-1986, while mail/express trains met this test, other passenger servicesdid not. Section 4.04(D) required that steps be taken to assure that fares ofair conditioned sleeping coach services at least cover the total cost of suchservices; the 15% general increase of July 1985 which was applicable to thisclass of service as well as others was not sufficient to cover total cost ofthe service, ind the railway concluded that any further increase would reducepatronage, t' ss reducing rather than increasing revenue.

- 15 -

Elimination of Uneconomic Services

5.09 Under Section 3.09 of the Credit Agreement, the borrower was to causePR to carry out a Plan of Action, the details of which were agreed between theAssociation and PR. Among the various actions required was the elimination ofuneconomic and underused passenger trains. In response, PR eliminated a fewof these services but, according to PR, pressure from politicians made itnecessary early in 1987 to discontinue, for a time, the cancellation offurther uneconomic services.

5.10 A railway costing study undertaken in the latter part of 1985 haspermitted an analysis of the costs and revenues of different types ofpassenger services for FY86:

Revenue X ofType of Passenger as X. Pass.

Service Cost Revenue of Cost Train(Rs/PKM) (Rs/PKM) KM

Express 0.085 0.097 114 46Ordinary 0.592 0.080 14 51Commuter 0.226 0.030 13 3

Thus while revenues from express services more than cover the cost of suchservices, revenues from ordinary and commuter passenger service cover only asmall fraction of the related costs. Had such an analysis been availableearlier, the Plan of Action (provided for under Section 3.09 of the CreditAgreement) requiring at least a 202 increase in passenger fares, and theelimination of uneconomic passenger trains could have been modified. In viewof road competitior., it would be inefficient to expect express passengers tosubsidize ordinary and commuter passengers. On the other, raising ordinaryand commuter fares the seven to eight fold needed to cover their costs washardly practical. Thus, whereas the fares for express services should berequired to cover costs, for other services the options are to eitherundertake a phased program of withdrawal or for GOP to directly reimburse PRfor losses incurred on those non-commercial unprofitable services that GOPwished to continue for political or social reasons. Discussions with PR/GOPduring 1987/88 in context of a possible Transport Sector Adjustment Loan, havegenerated a better understanding of such an approach and this is now likely tobe adopted.

VI. INSTTUTIONAL PERFORMANCE

Organization and Management

6.01 Among the strengths of the Pakistan Railways organization are themany highly experienced staff who have developed their skills over longperiods of service with the railways. The system is large and complexrequiring diverse technical specialists as well as managers capable ofintegrating the activities of a wide variety of operating units. Highlyexperienced staff are indispensable for efficient operation of such anelaborate system. Wl.ile spr-e staff undoubtedly have substandard capabilities,many are very competent in their jobs and they constitute an invaluableresource on whict, to build a belter and more efficient organization.

- 16 -

6.02 The effectiveness of a workforce depends heavily on how it isorganized and there is no doubt that PR needs much improvement in thisregard. For example, there are too many managers reporting directly to theGeneral Manager. Also, the Railway Board does not confine itself to broadpolicy matters but involves itself unduly in activities such as procurementthat should be the responsibility of the General Manager. The entire outmodedorganizational structure needs to be substantially modified and managementneeds to be assisted by a computer-based management information system. PRmanagement should have more authority over such vital matters as adjustment ofrates and fares. Also, there is need for mote commercial orientation ofmanagerial and operational personnel, particularly of those staff who dealdirectly with the shipping and travelling publLic.

6.03 A study of the PR's organization and management was completed inearly 1987 by the Canadian Pacific Consultants Service. Many recommendationsfor improvement were presented in the report. Subsequently the Bank, at GOP'srequest, in April 1988 examined the need for institutional, managerial andfinancial restructuring. The Bank's report was well received and a draftPresidential Order which adopted most of the key measures identified in theBank's report, is awaiting Cabinet approval.

6.04 Institutional problems of major importance were evident in carryingout the Eleventh Railway Project. After agreeing to the project appraisal andsigning the Credit Agreement, the Railway Board and the Planning Commissionspent two years reviewing project components and approving the PC-1 documents(para. 3.02).

Staff Development

6.05 In mid-1986. PR had a total staff of 128,047, and thus was thelargest public sector employer in Pakistan. Among the measures that were tobe taken by PR under the Plan of Action for the project was that of reducingthe number of non-professional and unskilled staff through attrition. Duringthe period from FY 1982 to FY 1986, traffic increased somewhat while the staffsize declined as follows:

FY 1982 FY 1986 Change

Ton-kilometers (billion) 7.1 8.3 +172Passenger-kilometers (billion) 16.5 16.8 + 2%Total Staff (thousand) 130.0 128.0 - 2Z

Thus some progress was achieved in reducng staff despite a rise in traffic.Nonetheless, substantial overstaffing remains.

6.06 The Directorate of Research and Training, Pakistan Railway, wasestablished in May 1983 by integrating four independent traininginstitutions. In 1986, technical training was provided to 1,489 personnel atthe Walton facility in Lahore; artisan and supervisory training was given inKarachi and at the workshops in Lahore and Rawalpindi. Under the project,overseas training of 62 managerial and technical staff was undertaken inBritish Railway and Canadian Pacific Railway (para 3.20).

- 17 -

VII. ECONOMIC REEVALUATION

7.01 The locomotive maintenance improvement component of the project wasexpected to result in a substantial increase in the availability of diesellocomotives. Specifically, the 83% availability of such locomotives at thetime of appraisal was expected to rise to 88% upon completion of the projectwhich wiuld be equivalent to adding 24 diesel locomotives to the fleet.Approximately the same amount of benefits was expected from increasing thetractive effort of existing locomotives.

7.02 In actuality, the availablity of diesel locomotives, according to1986 data, increased only marginally to 84% and therefore only a fraction ofthe antic4 pated benefits based on this factor were realized. With regard tothe tractive effort of locomotives, the situation actually deteriorated sincethe number of electric motors not working increased from 250 at time ofappraisal to 300 in 1986. The fact that this component has not been fullyimplemented accounts in large part for the minor benefits realized. Benefitsfrom plant and machinery procured but not yet fully operational will increasesomewhat in the near future.

7.03 The railway container operations component was designed to enable thePR to handle a large number of containers be -en Karachi and Lahore,sufficient to operate one container train a week beginning in 1985 and risinggradually to one such train a day four years later. In FY 1986, some 12,000TEU of containers were expected to be handled on the railway, or 15% of thetotal container traffic then forecast to be available. Benefits for the railhaul were expected to be derived from savings in rail transport costs comparedwith trucking costs, reduced pilferage ind damage to freight, reduced shippingrates and lower packaging costs.

7.04 Actual benefits from railway container operations have been much lessthan planned. The number of TEUs transported by the railways in FY 1986 wasonly 2,174, and less than 1% of the total TEUs available. Assuming thesavings factors for particular types of benefits are realistic, the smallvolume of container traffic on the railways indicates that the overallbenefits from this component were only a small proportion of the benefitsforecast. Implementation of this component, of course, was incomplete; thefailure to build 88% of the planned container wagons limited the growth ofcontainer traffic on PR but an even greater constraint was PR's lack ofrigorous marketing of container services in Karachi port.

7.05 Whether the partially implemented locomotive maintenance improvementand railway container operation components will be completed or not isuncertain. PR management in May 1987 expressed its intention to do so but itsability to carry out remaining activities depends on the availability offinancing. Even if full project implementation is achieved over the next yearor two, the long delay will probably result in a low overall economic rate ofreturn. According to the Staff Appraisal Report, a two year delay in projectimplementation would result in a 10% ERR and a three or four year delay wouldreduce the ERR substantially below that level.

7.06 Economic rates of return were calculated in the Staff AppraisalReport for two elements of the project: (i) 172 for the combination of thelocomotive maintenance improvement, MIS and technical assistance and training;

- 18 -

and (ii) 29% for the railway container component. Annex 10 shows that, in viewof the low benefits actually realized, neither of these project elements hasan adequate ERR. As previously pointed out, the MIS component was notimplemented. The locomotive maintenance improvement component has a negativeERR while the railway container component has a low of 4.42 ERR. Overall,given that the components as appraised were either not implemented or onlypartially completed the project yields a negative ERR.

VIII. ASSOCIATION PERFORMANCE

8.01 During project preparation in 1980-82, the need for the railwaymanagement to respond to the challenge of road competition was identified.The Association felt that further project assistance would provide anopportunity to have a continuing dialogue with railway management on how theywere to adjust to this challenge. Adjustment would require increasedefficiency of operations through operating improvements, through improvinglocomotive reliability and utilization, and through adopting modern managementtechniques. The railway also needed to develop new services including movingcontainers between Karachi and Lahore. These items were discussed duringpreparation and the project components carefully prepared over a two yearperiod together with the needed operation improvements and financial changes.

8.02 The selection of high-priority components for inclusion in the effortwere sound. Locomotive maintenance was, at the time of appraisal and remainsa critical problem area and the project approach to alleviating themaintenance constraints on locomotive availability was appropriate. Alsocontainer operations represent a traffic growth opportunity of majorproportions for PR and it was reasonable to assist the railway in gearing upfor that trxffic. Similarly, the introduction of a management informationsystem is o:xe of the best possible measures for improving railway managementand thus warranted inclusion in the project. In addition the project includedcovenants covering financial and operational measures needed for the railwayto make adjustment to a competitive transport environment.

8.03 Project implementation suffered from various factors. Perhaps themost important is that, despite the Pakistan's Fitth Development Plan (1983/84- 1987/88) proposing a change in the railways role, it was only in 1985 thatthe Railway Board's perception of PR's role began to change from their earlierview that it was a public carrier whose primary duty was to provideinexpensive passenger transport. Also during 1982-84 railway management wasin a state of flux with frequent personnel changes in senior positions. Thus,during the critical start up period for the project in 1982 and 1983, railwaymanagement did not g4ve priority to the project either to meeting thefinancial or operati1onal covenants or to expeditiously processing the PC-l's.Indeed the Railway Board gave priority during 1982-84 to acquisition oflocomotives and construction of a locomotive manufacturing plant. With regardto the MIS component, neither the Association nor anyone else could haveforeseen the difficulties and delays that developed in installing thetelcommunications facilities which were a prerequisite for the MIS.

8.04 Credit covenants, including side letters, focussed on the operationaland financial measures needed for the railway to begin adjusting to thecompetitive transport environment. The two year delay in revising tariffs orto obtain direct GOP payments for those non-commercial services that could not

- 19 -

be withdrawn, was thus a major failure to address PR's deteriorating financialperformance, a critical element in the adjustment. Similarly PR's failure toaddress seriously the need for operating improvements and modification ofservices meant that the project's objectives could not be met.

8.05 Beginning in April 1984 the Association alerted PR and GOP to theabove failures in a series of communications, which stated that continued IDAsupport was only possible if financial and operating improvement actions weretaken. Following an April 1984 supervision mission, the South Asia Directorinformed GOP that IDA support for the project could not continue unless thefollowing corrective measures were taken:

(i) By July 1, 1984 passenger fare increase of 20%;

(ii) By August 15, 1984 acceptable program to meet operationaltargets;

(iii) By July 1, 1984 approval of all PC-ls except MIS component.

In a June 1984 internal Association review, senior management (SVPOP) stronglyindicated that cancellation would be fully justified if an acceptable plan ofaction for improving railway operations and finances were not put forward byPR/GOP.

8.06 The July 1984 supervision mission noted that little progress had beenmade and the South Asia VP wrote to the Secretary of Finance reiterating theAssociation's concerns, and stating that for IDA support to continue, actionwas needed by November 1984 on:

(i) Approval of PC-l's except MIS component; and

(ii) ?repar-tion of an acceptable list of dated action covenantsrequired to meet objectives of the Action Plan and the revisedoperational targets.

By the end of November 1984, the PC-l's were approved but no progress was madeon the other matters and GOP was informed of the need for progress on them.Correspondence continued in early 1985 asking for the list of dated actions.The May/June 1985 supervision mission informed GOP that any consideration of arequest for an extension of the project would focus on operationalimprovements. Also although GOP had proposed a 23% fare increase with effectfrom June 1985, th* increase was reduced to only 152. After many years ofinaction such an increase was considered inadequate. The Association againas'ed for an Action Plan to be received by July 31, 1985 and one was finallysei.. on August 11, 1985.

8.07 The September 1985 supervision mission found that financialperformance was inadequate, and that although there was some improvement inoperations, there were deficiencies in certain key areas. The missionrecommended, that based on non-compliance and PR/GOP's inability to provide asatisfactory Action Plan, the closing date remain at December 31, 1985. TheAssociation thus had no option but to decline to extend the closing date sinceit had become quite clear that the overall project objectives of assisting PRto adjust to road competition were not being met.

- 20 -

8.08 Officials of PR and the Ministry of Railways as well as otherinterested agencies of GOP were disappointed that IDA did not extend theCredit beyond the December 31, 1985 closing date. These officials felt thatsuch an extension was warranted and in the best interests of all the concernedparties. They noted that extensions had been granted in preceding projectsand that such action had permitted completion of those projects.Nevertheless, the Bank's decision not to extend the credit, despite half thefunds being undisbursed, has subsequently had a powerful effect in getting themessage acrnss to GOP and PR that unless the railway begins a serious attemptto adjust to the competitive transport environment, it would have little placein Pakistan's future transport system and that investments in the railwaywould be futile without such adjustment. During 1986-88 the Bank has had anextensive dialogue with PR and GOP on railway restructuring in the context ofa possible Transport Sector Adjustment Loan, and there is now a greaterawareness within both PR and GOP of the need for the railway to adjust.

IX. CONCLUSIONS

9.01 The project was well-conceived, concentrating on high priority needsof PR, but suffered on account of factors which had nothing to do with itsdesign or objectives. In retrospect the Association was over-optimistic abouthow quickly the railway management could begin to respond to the challenge ofroad competition. As such, it might have been better to delay appraisal untilit was clear that the Railway Board understood the need for adjustment and waswilling to take appropriate measures. Indeed the latter is now occurring andthe project components will, belatedly, play an important role in assistingthe railway to make the adjustment.

9.02 As regards implementation of the major project components, had thenecessary PC-1 documents been approved before project effectiveness theresults would have been more satisfactory. The principal lesson learned fromthis experience is that such approval should be a prerequisite for projecteffectiveness. This lesson was taken into account during preparations for theFY87 Fourth Highway Project.

9.03 Compliance with certain covenants in the Credit Agreement was toolittle and too late. Some of the requirements of the covenants and the Planof Action called for measures, such as increasing fares and eliminatinguneconomic passenger services, that invited reaction from local politicians.These measures were essential, however, given the rapidly growing deficit andneed for financial discipline.

PAKISTA

ELEVENTH RAILWAY PROJECT (CREDIT 1276-PAKI

PODJEC COT PLETION REPORT

Actual and Exoectod Pro1ect Imlementation

Completed

Consultant by ExV.Contractor Tenderino Contract Award Bepinnina of Work Csmletion nf work Completion

Pro1ect Comoonent (Nationality) Actual LxARMe. Actuil £ZagKIM Actuil EU*&1SA Aluam kU_SOate

Malntenance Improvements

11 Shops 85 1/83-6/83 12/85 6/83-11/83 /85 11/82 not compl 12/84 is

1'fl Unit ExchangeComponents 8b 11/ 2-6/83 12/85 1/83-11/83 /85 10/83 not compl 12/84 IS

'v.agement InformationSystem None -- None 6/83-8/83 not begun 1/84 -- 10/84 0

Data Network None 10/82-12/82 None 3/83-9/83 not begun 1/84 -- 6/85 0

'' Hardware None -- None 8/83-9183 not begun -- 0i) Software

c. Lahore Ory Port 83 11/82-4/83 /83 5/83-8/83 8/83 8/83 not comp 6/85 iS

d. Eouiient & Rollino Stock 84 12/52-4/13 /84 6/83-10/83 8/85 11/83 not compl 10/8% 1S

e. Tech, Assist, b Trainina

(i) =. Adz & British Railway; 2/86 10/82 6/86 S/85 10

Train rg Canadian Pacific

(1i) Electrificati1n Transmark (UK); 82 -- 9/82 9/82 10/82 10/82 9/85 S/83 95

StfWI Saigols (PAK)

f. Revenue Sares 83 11/82-3/84 12/84 1/83-12/83 /84 10/83 not camp 6/85 80

Snurce: Pakistan Railways and Staff Appraisal ReportJune. 1987

PAKISTAN

ELEVENTH RAILWAY PROJECT (CREDIT 1278-PAK)

PROJECT COMPLETInN RUPMR

Actual and Aooraisal Estimates of Prolect Costs

Million

Actual Total

Actual Costs Appraisal Estimates Cost as X of

Local Foreign Total Local Foreign Total Appraisal Cost

_ Prolect Component ,R _USt USt Eautv -R- us3 Us3 Eauiv Estimate 2/

a. Maintenance Imorovements

(i) Shops 20.5 3.6 5.1 211.2 16.3 36.6 14

(ii) Unit Exchange Components 106.0 13.2 20.9 59.5 15.3 20.6 101

b. Manaaement Info System

(i) Data Network 0 0 0 12.7 1.4 2.6 -

(ii) Hardware 0 0 0 43.7 4.2 8.3

(OMi) Software 0 0 0 13.1 1.3 2.5 -

c. Containerization

(i) Civil Works 42.2 0 3.1 72.0 .2 6.7 46

(it) Wagons 30.4 1.3 3.5 34.0 3.2 6.7 52

(iii) Handling Equipment 0 1.1 1.1 4.4' 1.8 2.5 44

d. Tech. Assist. & Trainina

(i) Tech. Advise & Training 0 1.4 1.4 8.8 1.8 2.6 54

(ii) Electrification Study 4.5 0.1 0.4 7.6 .3 1.1 36

e. Revenue SDares 26.8 4.9 6.8 127.3 3l0. 42.5 16

l'otal Cost 230.4 25.5 1/ 42.2 594.3 76.1 132.7 32

1 This amount is USfO.2 million below the amount of the credit disbursed due to use of average

exchange

rate that may differ slightly from actual.

2/ It is important to note that these percentages indicate mainly the extent of completion of

the

components.

Source: Pakistan Railways and Staff Appraisal Report

May 1987

- 23 -Annex 3

PAKISTAN



Actual and Expected Cumulative Disbursements(US$ Million)

IDA Fiscal Appraisal Actual as a 2Year & Quarter Actual Estimate of Approx. Est.

1982/83

Sep 30Dec 31 0.0 1.3Mar 31 0.0 2.3 -Jun 30 0.1 4.52 2

1983/84

Sep 30 0.1 8.5 1Dec 31 0.2 13.0 2Mar 31 0.2 19.0 1Jun 30 0.2 27.0 1

1984/85

Sep 30 2.7 33.5 8Dec 31 3.8 40.0 10Mar 31 4.5 44.0 10Jun 30 7.8 46.5 17

1985/86

Sep 30 10.3 48.5 21Dec 31 13.0 50.0 26Mar 31 13.7Jun 30 24.9

1986/87

Sep 30 25.7

Note: The final disbursement was made on July 25, 1986 at which timeUS$ 23.3 million was cancelled.

Source: Staff Appraisal Report and IDA.June 1987

- 24 -

Annex 4

PAKISTAN



Estimated Actual Freight Traffic, 1980-86

Actual AverageTon Kilometers (million) tons of HaulForecast Actual (million) (Km)

1979/80 - 8,598 11,853 733

1980/81 - 7,918 11,371 705

1981/82 7,500 7,067 11,446 624

1982/83 7,900 7,323 11,836 622

1983/84 8,000 7,385 10,753 691

1984/85 8,100 7,203 10,520 690

1985/86 8,250 8,270 11,805 705

Source: Forecast from Staff Appraisal. Other data from Pakistan Railways.

June 1987

- 25 -

Annex 5

PAKISTAN



Estimated Actual Passenger Traffic, 1980-86

Actual Average LengthPassenger Km (million) Passenger of tripForecast Actual (million) (Km)

1979/80 - 17,316 .44 121

1980/81 - 16,387 123 133

1981/82 16,800 16,502 120 138

1982/83 17,200 18,031 123 147

i983/84 17,700 18,287 107 171

1984/85 18,200 17,807 95 188

1985/86 18,700 16,850 83 203

Source: Forecast from Staff Appraisal Report. Other data from PakistanRailways.

June 1987

- 26 - Annex 6

PAKISTAN



Comparison of Certain Operation Targetsand Actual Results in 1985/86

(Fiscal Year)

Revised* Actual1982 1983 1984 1985 1985 1986

Locomotive Maintenance

Availability of diesellocos as S of total fleet 83 84 86 88 85 84.4

No. of diesel locos outof service for want ofspares as % of total fleet 4.0 4.0 3.0 2.0 3.75 2.26

Diesel loco downtime duringscheduled heavy repairsClass I (days) 32 30 28 25 25 26.9Class II (days) 18 17 16 14 17 19.8

No. of Traction motors aboardlocos not working 250 150 100 250 150 300

Freight Train Operations

Diesel loco-Km per dayper loco in use 310 345 365 385 200 342

Average net tons per freighttrain 570 625 675 725 550 637

Total daily No. of wagons tobe dispatched out of Karachi 750 780 845 910 600 607

*/ Revised July 1984

Source: Forecast from Staff Appraisal Report and Supervision Report.Actual from PR.

June 1987

- 27 - Annex 7

PAKISTAN



Operating Indicators, 1980-86

Fiscal YearIndicator 1981 1982 1983 1984 1985 1986

Speed of thru freights trains (Km/hr) 19 19 19 19 19 19Speed of all freight trains (Km/hr) 18 18 18 18 18 18Wagons per train 52 52 52 54 55 56Net Load per freight train (tons) 582 578 556 586 589 637Turn around time of wagon (days) 15 15 17 19 20 18Wagon Km per day per wagon on line 54 47 46 48 50 53Pass vehicle Km per vehicle on line 342 343 323 333 344 324% diesel locos under repair 15 15 15 16 17 16Engine Km per day per diesel on line 256 255 251 244 249 249Engine Km per day per diesel in use 306 301 298 293 300 295Persons employed (thousand) 130 130 128 125 12s 128

Source: Pakistan Railways

June 1987

- 28 -Annex 8

PAKISTAN



Revenue and Expenditures Accounts, 1980-86(Rs Million)

1982 1983 1984 1985 1986

Actual

Operating Revenue:Passenger 1,114 1,231 1,428 1,425 1,562Luggage, Parcels, Mail 167 174 213 168 212Freight 1,727 1,929 1,989 1,973 2,494Miscellaneous 37 60 51 115 100Total 3,044 3,395 3,680 3,681 4,368

Operating Expenses:Reparis and Maintenance 1,181 1,350 1,394 1,627 1,675operation Fuel 871 996 1,079 1,098 1,107Operation Staff 331 369 460 463 503Other Operation 132 172 171 175 186Administration 323 410 483 484 518Miscellaneous 10 11 16 21 12Total 2,848 3,308 3,604 3,868 4,002

Appropr. to Depr. Reserve 420 485 630 630 845Net Operating Revenue* (224) (398) (554) (817) (479)Operating Ratio (2) 107 112 115 122 111

Forecast

Operating Revenue 3,055 4,140 4,820 5,500 6,320Working Expenses 3,100 3,438 3,845 4,393 4,989Appropr. to Depr. Revenue 440 470 541 601 620Net Operating Revenue* (485) 232 434 506 711Operating Ratio (%) 116 94 91 91 89

*/ Operating Revenue less Operating Expenses and appropri.tion todepreciation reserve.

Source: Forecast from Staff Appraisal Report. Other date from PR.

June 1987

- 29- Annex 9

Page 1 of 2

PAKISTAN



Summary of PR Performance Under Covenants

Sectionsof

CreditAgreement Covenants Ccmpliance

3.06 Comprehensive training program for the A revised training program was final-CDLW to be furnished to the Association ized and submitted to IDA with thefor review and comment by December 31, quarterly report for the period end-1982. ing March 1985. The list of staff

for training was submitted to IDA instages in late 1985.

3.07 Feasibility study of electrification of Completed.Khanewal-Karachi mainline to be carriedout in accordance with timetable andTerms of Reference.

3.08 PR's unit exchange pool to be maintain- The size and composition of the pooled and expanded; the size and composi- was determined in consultation withtion of such pool shall be satisfactory the Bank. Procurement was notto the Association. completed.

3.09 To carry out the Plan of Action, review See Annex 6.its progress, and decide the action tobe taken.

3.10 In allocating public sector freight A Computer study on modal split wastraffic, due consideration is to be carried out and the split based ongiven to the relative economic advan- a National Logistic Model was foundtages and capacities of various modes to be reflective of relative economicsof transport. of modes.

3.11 No change is to be made in the Invest- Complied.ment Plan except for changes amountingto less than Rs 50 million annually.

4.01 (b) Audited financial statements to be Complied.submitted not later than nine monthsafter the end of each fiscal year.

- 30- Annex 9

Page 2 of 2

4.01 (c) Annual budget and accounts to show Ccmplied.proforma accounts that reflect non-railway costs.

4.01 (d) Sums transferred by GOP to PR to cover Compliedoperating deficits shall not be addedto the capital-at-chaige.

4.03 Revenues to cover operating expenses While revenues are meetingthe act-and debt service requirements in ual operating expenses of Railways1982/83 and dividend on capital-at- (i.e., the ordinary working expenses),charge by 1985/86. they are Pot fully meeting "other

revenue expenses" (such as health andwelfare services, educational faci-lities and staff training, etc.) andappropriations to funds and debtservices charge. The resultantresource gap is being picked up by GOPas an outright grant. As regardsdividend due on GOP's capital-at-charge in the Railways, GOP is fore-going recovery of this amount in viewof the above resource gap.

4.04 (a) Revenues from passenger services to The mail/express trains are not onlycover at 'east the variable costs in meeting their variable cost of oper-1983/84 and thereafter. ation, but also covering the fixed

cost. In the cast of other passengerservices, however, their variablecosts are not met in full.

4.04 (b) Increases in the fares of air-condi- While passenger fares were increasedtioned sleeping coach services to by 15Z effective June 1985, it iscover at least total cost by 1984/85 considered that any future increase in

the area of air-conditioned sleepercoach services would be counter-pro-ductive of revenue as it immediatelyleads to diversion of traffic eitherto lower classes of rail service or toother modes of transport.

Annex 10- 31 --


PAKISTAN

ELEVENTH RAILWAY PROJECT - CREDIT 1278-PAK

Ex-Post Economic Costs, Benefits and Rate of Return

Capital and Operating Costs Benefits NetLoco M.I. Cont. Total Loco M.I. 1/ Cont. 2/ Total Benefits

1984 2.3 0.2 2.5 0.0 0.0 0.0 - 2.51985 14.6 2.3 16.9 0.0 0.6 0.6 -16.31986 17.2 4.4 21.6 0.5 0.6 1.1 -20.51987 3.9 0.7 4.6 1.0 0.7 1.7 - 2.91988 3.9 0.8 4.7 3.0 1.1 4.1 - 0.61989 3.9 1.0 4.9 5.0 2.7 7.7 2.81990 3.9 1.5 5.4 5.5 1.4 6.9 1.51991 3.9 2.0 5.9 7.5 2.7 10.2 4.31992 3.9 2.0 5.9 7.5 2.7 10.2 4.319Q3 3.9 2.0 5.9 7.5 2.7 10.2 4.31994 3.9 2.0 5.9 7.5 2.7 10.2 4.31995 3.9 2.0 5.9 7.5 2.7 10.2 4.31996 3.9 2.0 5.9 7.5 2.7 10.2 4.31997 3.9 2.0 5.9 7.5 2.7 10.2 4.31998 3.9 2.0 5.9 7.5 2.7 10.2 4.3

Economic Rate of Return:

Locomotive Maintenance Improvement -2.0%Containerization 4.4%Overall -1.22

1/ Maximum annual benefits to be reached in 1991 would be about one-thirdthe appraisal forecast level.

2/ Maximum annual benefits to be reached in 1991 would be about 25% of theappraisal forecast level.

Source: PR data and Staff Appraisal Report

June 1987

ELIVENT1 DAXUdAV PRiDJEtT ECEOITI 27a-PAKI

PODIECT £OH^PtETWU RE PCI?

Pakistan R,il.v Orpafluat taI

Ftdoral Ministry of Ra11 - ys

Secretary, 4inistry of RailwaysCha1noan, ftallay Board

G neral Iamtaner | Secretarr,

General tanager, Operations ja Mwar nufactunger j -y Doard

Deputy GeneralManager ___

- _ r, Civil

_ _ -_ Eng1ineer

Chief Engineer | InspeCtor General Olvision SWrin Division Suwerin- _ _er. Mchanicel

_ tendent, lUarachi tmndent, Quetta Engineer j N

Chief. Sigals and _ Chief, PersonnelTelecom. Engineer j Officer Oiviston Superin- _ _ Division Superin- __ Ner. Traffic

I tendent, Lahore tendent, Rawalpindi

Chief. Electrical | Chief, Operating I i - I Hwir. finance

Engineer Superintendent Division Superin- I Division Superin- eand Sdeet

l | ~~~~~~~~~~teneent . Sulikur terient. Peshawar

| Chief. ttechanical | _ Chief. Coercial | i

Engineer fanager j Oivision Suoerin- Oivision Suerin-I

I I tende.st, 1ult n tendent. Workshops

Chief, Engineer | _ Chief. TrafficPlanning j Hanager

| Chief. Controller I _ Chief, Medical of Stores a and Health I

Chief. Controller | Director, LOad |of Purchasing j Managemnt

|Flnanthal dvisor &| _ Chief Officer1_Chief Accountant Dry Port

Director, Rest. I IDirector. Mtnaementand Training Inforation System

MAP SECTION

IBRD 16207R1

S F 8 7 't '~ | U.S.S.R.

IRAG (- 5 AFGHANISTANj.- ISLAMICREP. OP IRAN ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ C IN

'. V!L -2/ J HN

"-.1_XS /-.--.PAKISTAN/ AFGHANISTANAFGHANISTAN

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~360-Zo H"A 4 9 INDIA

SAUDI ARABIA

-2°ARAB EPIRATES I OMA A,5A'

PAKISTAN D, Lin o Conbo)

ELEVENTH RAILWAY PROJECT .......O LAHORE DRY PORT KoAH

ER-WALPINDI DIESEL LOCOMOTIVEWORKSHOP (DLCWI

RAILWAYS

II BROAD GAUGE, DOUBLE TRACK Kh.1

I-4I-I-I-t4BROAD GAUGE, SINGLE TRACK

2° *-w--" METER GAUGE l ta

320 ~~~~~~~~OTHER GAUGE A.320.

|- i_, MS.4ELECTRIPIED SECTION

* NATIONAL CAPITAL lh. FWd

) 0 a CITIES. TOWNS. AND RAILWAY STATIONS

-*- INTERNATIONAL BOUNDARIES

R.: Xs~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ift map~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i ha boo Ben rqzre by

Fo.t AM~~~~~~~~~~~~/ ~~~f NWe cownval of anebfu !m sorno . wAUe2--'-'- <; 52l) -tft~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~awt Tt 1,0

ItAnun 5>; wOAhmR \ / # SlPw // t~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~eru (el heNMBv

R.I.O d t Telao HV / Fort AbbS j tadW dBT~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~uo O 6

-< ,, / g ;9 ,. 0<_ / I N D I A _ -

jh. ofWVkt /h.da. N . W_

ISLAMIC REP. Mile, 190 2 2

OF IRAN , 10 b 1 2 t 3 4 0

0 3~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~760

in'T.' . ARCIAE

-240 A R A8 A I SEA 24

640 .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~L

MAK~H 1989

World Bank DocumentDocunent of The World Bank FOR OFFICIAL USE ONLY Report No. 7781 PROJECT...

Documents

Transcript of World Bank DocumentDocunent of The World Bank FOR OFFICIAL USE ONLY Report No. 7781 PROJECT...