South Africa - Seventh Transport Project

CIRCULATING COPY R E S T R I C T E D TO BE RETURNED TO REPORTS DESK R e p o r t N o. TO-297b This report was prepared for use within the Bank. It may not be published nor may it be quoted as representing the Bank's views. The Bank accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT APPRAISAL OF A PROJECT FOR THE IMPROVEMENT OF SOUTH AFRICAN RAILWAYS November 21, 1961 Department of Technical Operations  CURRENCY EQUIVALENTS 1 Rand = U.S. $1.40 1 U.S. Dollar = R. 0. 714  APPRAISAL OF A PROJECT FOR THE IMPROVEMENT OF SOUTH AFRICAN RAILWAYS Table of Contents Pag SUIMARY i-i I. INTRODUCTION 1 II. THE RAILWAY 1 A. Organization 1 B. Management and Labor 1 C. Property 2 D. Construction, Manufacturing and Pro- curement Methods 3 E. Operating Efficiency 4 F. Traffic 6 G. Tariffs 8 H. Finances and Earnings 10 J. Road Competition 13 III. SAR DEVELOPMENT PROGRAMS 14 A. Previous Programs 14 B. Present Program 15 IV. THE PROPOSED PROJECT 16 V. ECONOiaIC JUSTIFICATION 17 VI. CONCLUSION AND RECOMMENDATIONS 17 Table 1 - SAR Employment Table 2 - SAR Railway Operations Table 3 - SAR Railway Traffic Table 4 - SAR Railway Revenue by Source 1956-196o Table 5 - SAR Gross Capital Expenditure Table 6 - SIUR Condensed and kijusted Income Statements 1956-1965 Table 7 - SAR Gross Capital Expenditure Table 8 - SAR Purchases from the Proceeds of Previous Bank Loans Table 9 - Comparative Traction Costs on Mainlines Map - South African Railway System  - i - APPRAISAL OF A PROJECT FOR THE IMPROVEMENT OF SOUTH AFRICAN RAILW4AYS SUMMERY i. The South African Government has applied to the Bank for a loan to finance part of the 1960-1965 Development Program of the South African Railway (SAR). The project covers the 1961/62-1962/63 period of the Program and amounts to R. 250 million (US$350 million). The Bank loan would contribute US$11 million (R. 7.85 million) towards the foreign exchange cost of the Proj- ect. ii. The Bank has previously made six loans, amounting to US$136.8 mil- lion, to finance parts of SAR's development programs. The most recent apprais- al is covered by report No. TO-197a, November 24, 1958. Progress under previous programs has been satisfactory. iii. The 1960-1965 Program is estimated at R. 634 million. It includes improvements on existing lines, procurement of electric and diesel locomotives and rolling stock, and construction of new lines, workshops, and buildings. The Program for 1961/62 and 1962/63 which covers the period of this project, provides for 49 miles of new lines, improvements on 212 miles of existing lines, 436 miles of electrification, placing in service of 12 electric locomotives, 29 diesel locomotives, 817 passenger cars, motorcars and trailers, and 8,300 freight cars. iv. SAR is a government department under the iMinister of Transport. Budgets, capital expenditures and tariffs are subject to approval by Parliament. Responsibility for management is vested in a General Manager, assisted by a large and well-organized staff. The management has adequate freedom in direct- ing day-to-day operations. v. Yanagement and staff are competent. There is a shortage of staff in engineering grades, experienced clerks and lower grades reserved for white staff. Non-white staff is employed as unskilled labor and as clerks dealing with non-white customers. SAR tries to overcome the shortage of staff by an intensive training and recruitment program and by improved organization. Labor relations are good. vi. The Railway is by far the main carrier in South Africa. Freight traffic increased substantially since 1945 and is expected to increase at an annual rate of 2-2-1% in the future. The Railway also carries heavy commuter traffic in the irdustrial centers, which is essential for the economy. vii. SAR's financial position is sound. Operations have been profitable in the past and will continue to provide sufficient revenues to permit SAR to finance its part of the program.  - ii - viii. The Program of which the project forms part, is well-balanced and will improve operations and efficiency, decrease operating costs and provide capacity for future traffic growth. ix. The project would be suitable for a Bank loan of US$11 million. An appropriate term would be 10 years, including a grace period of two years.  - 1 - I. INTRODUCTION 1. Since 1951, the Bank has participated with six loans, amounting to US$136.8 million equivalent, in the financing of the Development Prograr. of the South African Railways (SAR) (Loans Nos. 40-SA; 77-SA; 134-SA; 178-SA; 214-SA; and 228-SA). The South African Government has applied to the Bank for a loan to finance part of the 1960-1965 Development Program. The project covers the 1961/62-1962/63 period of the Program, and amounts to R. 250 mil- lion (US$350 million). 2. A review of the project, SAR's operations, financial position and development program was made by a Bank mission which visited South Africa in March-April 1961. This appraisal is based on the findings of the mission. II. THE RAILWAY A. Organization 3. SAR was created under the South Africa Act of 1909. It now has responsibility for railways, harbors, and airways. It is a government depart- ment under the Minister of Transport. He is advised by a Railway and Harbour Board consisting of three members; the Minister is Chairman ex-officio of the Board. Responsibility for management is vested in a General Manager, assisted by two Deputy General Managers, a Financial Manager, and five Assist- ant General Yanagers. Operations of the railway and harbors are conducted on a regional basis by nine systems, headed by System Yanagers. B. Management and Labor 4. By and large, SAR's management is good. The General Manager and his Deputies are appointed by the Minister, and are experienced. Engineering staff is competent. Operating and commercial staff comes from the ranks and is also competent, but appears conservative. A Planning and Productivity Division was established a few years ago and is providing an efficient general management service for statistics, costing, economic analysis and traffic forecasts. 5. Some progress has been made in the mechanization of accounting and other rvffice procedures. However, further mechanization of accounting and the use of computers is only possible after simplification of the present account- ing system, which is under consideration. The recent decimalization of the currency will also help. 6. While conditions of employment have been steadily improving, the problem of labor supply is still difficult. (See Table 1 for SAR employment, 1957-1960). Employment on the Railway's open line operations decreased 4.8% between 1957 and 1960; during this period freight ton-miles  increased by 12.4%) and the number nf passenger journeys by 1l%. The loss of staff ihas been compensated partially by improved efficiency. However, shortages are acute, especially of engir.eers, experienced clerks, firemen, shunters, station foremen etc. There is a lack of active young officials at the level of chief superintendent and department head, SAR has intensified its recruitment and training program. It is the Government's policy to restrict native employment to unskilled and sometimes semi-skilled jobso Recruitment for staff positions in lower grades is still difficult. Work study techniques are being conducted to secure more effective utilization of manpower and equipment. 7. Relations with labor unions have always been good. There are seven unions for Europeans, two for colored workers and one for Indians. The Bantu workers are not represented by unions, but by regional committees selected by the management. Contributing factors to good labor relations have been the training of supervisors in labor relations, a liberal pension plan, free hospitalization and an intensified program of housing constrnction for both white and non-white employees. C. Property 8. SAR operates the entire railway network of South Africa and of South West Africa (see map), cartage services in the main cities, road transport for passengers and freight, the main ocean ports, coastal shipping, and domestic and international airlines. 9. SAR owns 13,564 route miles (18,122 track miles); in addition it operates 199 miles owned by the Rhodesian Railway in Bechuanaland, and 32 miles of private lines (see map). 13,002 miles are of 316" gauge, 793 miles of 2' gauge. 12,638 route miles are single track, 926 miles have two or more tracks. 2,700 track miles, i.e. 15 of the total are electrified and an additional 335 miles are being electrified. tines in mountainous areas, constructed originally at low standards with steep gradients and narrow curvature, have been improved substantially by regrading and deviation. All 2' gauge lines in South West Africa have been broadened to 3'6" gauge. 10. The following table shows SAR's general track standards: Weight Max. Max. Percentage of rails speed axle of total lbs p. yard mzp.h. load mileage tons Class 1 96 45 to 6o 22 30 Class 2 80 35 to 55 18 23 Class 3 61 25 to 45 13 38 Class 4 and narrow gauge 45 25 7 to 10 9  - 3 - Class 1 and 2 comprise main lines within South Africa, Class 3 mainlines in South West A2rica and Bechuanaland and some branch lines, and class 4 the remaining branch lines. Ties are mostly of creosoted hard wood; since these have to be imported, extensive use of concrete ties is planned. SAR operates three rail welding plants, where 96 lb rails are welded to a length of 300' or 600'; they are welded to greater lengths in site afterwards. Ballasting and maintenance are good. 11. Signalling in the heavy traffic suburban areas of the Witwatersrand, Capetown and Durban is adequate, being automatic block with color light signals. On other lines the mechanical interlocking system and the block instruments are over.-age. Central Traffic Control (CTC) exists on about 250 miles of single track lines and will be installed in the next years on an additional 350 miles. Telecommunication is very efficient. 12. The motive power in 1960 consisted of about 2,740 steam locomotives, 740 electric and 75 diesel locomotives. All locomotives are well maintained but 50 percent of the steam locomotives are more than 30 years old. Passenger cars consisted of about 44,635 coaches and 1,415 electric railcars and trailers. There were nearly 107,400 freigAt cars. Rolling stock is generally well- maintained but part of the passenger stock has wooden bodies and is over-age. A substantial number of covered freight cars have permeable roofs and side walls, mainly due to ventilation flaps, so that extensive use of tarpaulins is necessary. 13. SAR's repair facilities consist of 16 workshops, - 10 for steam locomotives and passenger and freight cars, 4 for electric locomotives and rai'cars, and 2 for diesels. Two of these are being closed, but two new ones, under construction at Koedoespoort (near Pretoria) and at Bloomfontein are very modern and well organized. They will also produce most of the spare parts needed by SAR. 14. SARts property includes also about 10,000 houses for the staff, hostels, a Railway College, 35 grain elevators, precooling facilities, wharfs and warehouses at the ports, etc. All property is well maintained. D. Construction, Manufacturing and Procurement Methods 15. SAR does most construction with its own labor force. The engineer- ing department employs a permanent staff of about 2,500 foremen, artisans and others and a casual construction staff of about 3,000. The Railway also owns and operates heavy construction equipment, such as shovels, graders, trucks and caterpillars. SAR awards jobs to contractors only if its own capacity is being fully used or if specialized experience is necessary. Contracts are awarded on the basis of competitive bidding, under supervision of the Railways' Tender Board.  - 4 - 16. The Railway manufactures in its oim workshops about 80 % of the spare parts and fittings for locomotives and rolling stock. The workshops of Koedoespoort and Bloemfontein are very well equipped with machine tools and foundries for cast iron, steel and non-ferrous metals. Strict production planning and controls have been established to prevent manufacture of parts which oould be purchased at lower costs. This extensive manufacturing of spare parts was established primarily to avoid long delays of supply from overseas. As far as construction of rolling stock is concerrBd, SAR plans to put greater emphasis on importing underframes, axles and other parts to be assembled at its workshops, in order to save foreign exchange. E. Operating Efficiency 17. SAR has heavy freight traffic on all mainlines and heavy suburban passenger traffic, but the volume of long distance passenger traffic is comparatively low (see tables 2 and 3). Its transport capacity has increased substantially between l955 and 1960: Increase Total tractive force of locomotives, million lbs 13 Carrying capacity of freight cars, million tons 22 Seats in electric motorcars, trailers and coaches, for suburban traffic 17 1'uring the same period, freight-ton-miles increased 22f arf2 5uburban pass- enFer-trafflc 1i6c;.  -5 - 18. Total gross tons hauled on important sections of mainlines increased substantially from 1950 to 1960: Gross Tons Hauled Line Section Million tons both ways Increase _______ 1950 1960 %_ Johannesburg- Kroonstad- 12.6 21.8 72 Port Elizabeth Bloemfontein (double track) Johannesburg- Klerksdorp- 8.1 13.0 59 Capetown Kimberley (double track) Johannesburg- Kimberley- 9,3 14.6 57 Capetown De Aar (Single track) Johannesburg- Durban-Pieter- 14.8 21.8 47 Durban maritzburg (double track) East Transvaal WJitbank- 26.0 35.3 35 Coalfields to Welgedag Johannesburg (double track) Since these sections were operated in 1950 almost at full capacity, the increase shows the results of the SAR's program of improving line capacity and operating efficiency. 19. High efficiency is also exemplified by the high availability of equipment, the increase in the net load of freight trains, and the high utilization of freight cars (see table 2). However, the average turnaround time of freight cars is high, - 8.5 days in 1955 and 9.1 days in 1960. Since the average speed of freight trains is quite good (20 to 25 m.p.h.) the slow turn-around points to the need to improve the efficiency of marshalling yards and terminal operations. The average speed of long distance passenger and express trains is low (30 to 35 m.p.h.), primarily because of exclusive use of multipurpose lecomotives and long intermediate stops. 20. Utilization of steam locomotives has decreased from 110 to 90 engine-miles per engine a day since 1955, because of progressive electrifi- cation and dieselization. The daily mileage of electric locomotives has decreased because of a greater share of short haul services, but will  increase after the forthcoming electrification tonnects the liUitwatersrand with the Durban area. As shown below, steam locomotives still account for nearly 3/4 of train-miles primarily because of the availability of cheap coal. Train Miles by Types of Traction (percent of total) Year Steam Diesel Electric Electric Locomotives Locomotives Locomotives Railcars 1956 80 - 11 9 1959 78 1 12 9 1960 72 3 15 10 F. Traffic 21. Areas Served. The Railway is by far the main freight carrier in South Africa primarily because of natural factors such as long distances, bulk commodities to be conveyed and the absence of navigable waterways, and, to a smaller extent, because of the protection it has been granted by the Government against road competition (see section J). 22. About half of South Africa's industry is concentrated around Johannesburg on the high plateau of the Transvaal province near the gold- fields of the Witwatersrand and the country's main coal reserves. The other important industrial centers are near the principal ports of Durban, East London, Port Elizabeth and Capetown; they are long rail distances a-,ay from Johrnnesburg (500-1,000 milesY and separated by high mountain ranges from the interior. 23. Freight. SAR derives about four-fifths of its railway revenues from freight traffic (see Table 4). The composition of the traffic has been rela- tively stable in recent years, and is shown below:  -7- 1959/60 Million tons % Coal and coke 20.65 25.2 Minerals and ores 12.86 15.7 Agricultural products 13.0o4 15.9 Livestock .87 1.1 Building materials 3.38 4.1 Manures and fertilizers 3e36 4.1 Other goods 16.13 19.7 Revenue earning freight 70.29 85.8 Service coal 7.05 8,6 Service goods 4.60 5.6 Non-revenue earning freight 11.65 14.2 Total tonnage 81.94 100 Total ton-miles (billions) estirrate 23.11 The major movements are in long haul bulk traffic. Coal, the cheapest and almost exclusive source of power, and still an important source of traction for the Railway, moves from the fields of the Transvaal and Natal to con- sumption centers all over South Africa. Manganese, iron, chrome and other minerals travel long distances (350 - 700 miles) to the ports and the Witurattrs- rand rindustrial area. Exnorts of agric'lltural products nove prinaril.- from an area south of Johannenbiirg to the four rair :Dort. over distances of 300-1,000 miles. 24. The average haul per ton for all commodities - 277 miles in 1959/60 - reflects also an important shorthaul traffic of general merchandise and also coal ;vithin the port areas and in the Witwatersrand, and of certain bulk com- mod`ties, such as sugarcane, which move in quantities -vithin a few miles from Duirban. 25. Service traffic is particularly heavy because of SAR's large development program and the shipments of locomotive coal to remote areas as shown in the following table for 1959/60: Tons Ton-miles Average distance Millions % Millions of Haul miles Revenue-earning Coal and Coke 20.6 75 5,457 66 265 Departnental Coal 7.0 25 2,837 34 404 Total 27,6 10( 8,294 10o 300  - 8 - 26. Since 1945 freight tonnage has increased about 7G% and ton- miles have almost doubled. The growth of tonnage and ton-miles was over 5% in the seven years to 1954, but slowed down to 2F arxi :*% respectively in the following seven years through 1960. It was not until two years ago that, primarily due to SARts development program, it could meet all traffic demands. 27. SARfs forecast of revenue-earning traffic in 1961-65, with actual data for 1959/60 and preliminary data for 1960/61 is shown below: 1959/60 1960/61 i961/62 1962/63 1963/64 1964/65 Tons (millions) 70.3 75.8 76.2 77.6 79.6 82,0 Average haul (miles) 277 276 284 283 284 286 Ton-miles (billions) 19.4 20.9 21.7 22.0 2206 23.4 Ton-miles inimease(%) 4.3 7.7 3.8 1.4 2.7 305 Tonnage is expected to increase by only 0.5% in 1961/62, and by about 2 p annually thereafter. The increase for 1961/62 is small in comparison to the 7.7 % increase the year before, -hich was partly due to except- ional coal shipments. Mqost of this exceptional traffic was short haul, which explains partly the expected increase of the average haul after 1960/61. The annual increase in ton-miles is about 3-3/4. -or lG61 - 4/65; without the exceptional increase in 1960/61, it would have been slightly less than 3%. This compares with the 3-i % annual incre,se from lc54 to 1960. The Mission believes that in view of Soath Africats general economic growth, these traffic forecasts are reasonable. 28. Service traffic is expected to remain at its present level, with the normal increase of departmental goods offset by a decrease in service coal because of electrification and dieselization. 29. Passengers. Total passenger-miles were 4.63 billion in 1959/60, of which 2.87 billion was suburban traffic and 1.76 billion mainline traffic (see Table 3). Competition by private automobiles and airways has substantial3y reduced long distance railroad passenger traffic. On the other hand, suburban traffic, which had increased steadily until 1959, spurted in 1960 in comnection with the Bantu resettleimnt schemes; this high rate is expected to be main- tained until completion of these schemes in 1965. The Treasury reimburses SAR for losses incurred under the resettlement schemes. However, passenger traffic as a whole is operated at a loss, just about covering direct costs. G. Tariffs 30. The Republic of South Africa Ccnstitution Act of 1961 requires S;R to be administered on business principles so as to yield enough revenues, but not more than is required to cover operating expenses, depreciation, improvements and interest. Surplus earnings are crediteu to a rates equalization fund to meet possible deficits.  - 9 - Tariff increases have been made whenever required by rising costs. The last important increase, effective July 1, 1958, ranged from 5% for high_rated to ll5o for low-rated oodq 31. The tariff structure for freight, introduced in 1954L, provides for 14 classes of rates, plus a few special commodity rates (including coal). The tariff is based on the principle of ability to pay which relates rates primarily to the value of the commodity, rather than its transportation costs. Costs are taken into consideration to the extent that the rate should cover at least direct costs. Rates are tapering, increasing less than proportionately with distance. 32. While charging differential rates according to commodities and distances is universal practice, the SAR tariff establishes unusually wide differences between high and low rated commodities .and between short and long distances. For instance, the class 1 rate for the first hundred miles is mrore than ten times the class 14 rate for the same distance; and class 1 commodities are charged almost twice as much per ton-mile for a hunidred miles than per ton-mile for a thousand miles. 33. The average revenue per ton-mile for coal of cts. 0.66 in 1960 was only about half of SAR's average revenue per ton-mile of cts. 1.33. This is partly due to the substantial tapering of coal rates: Mileage 50 100 500 1000 Average rate per ton-mile cts.l.64 1.23 0.55 0.37 For distances in excess of about 500 miles, revenues fall increasingly below the railways' average cost for coal per ton-mile of cts. 0.55. 34. As a result of this tariff structure, high rated commodities in classes 1 to 10, while representing only about 17% of revenue earning tonnage, generate over 50% of revenuos: 1959/60 Tonnage Revenue Million tons Million Rands Classes 1 - 8 9.93 14.1 119.07 47.6 tt 9 - 10 2.11 3.eO l0.44 4.2 ti 11 - 14 36.72 52.3 77.79 31.1 Special rates 21.52 30.6 42.62 17.1 Total 70.28 100.0 249.92 100.0  - 10 - Such a tariff structure, which is made possible by SAR's near monopolistic position (see Section J), makes railway revenues very vulnerable to any re- laxation of existing restrictions on road transport. Such relaxations would require substantial revisions to lessen differences between high and low rated commodities and short and long distances. There is ample room for such adjustments. H. Finances and Earnings 35. Finances. As a Government department, SAR is subject to control by Parliament, whose approval is required for its accounts and for its operating and capital budgets. The double account system is followed, under which the balance sheet is divided into two parts, one being the general balance sheet, the other showing cumulative receipts and expenditures on capital account. The The accounts are designed to show the derivation and use made of all funds rather than to assess, in a commercial sense, the profitability of operations. 36. Except for cash generated from revenues, practically all capital requirements are supplied by the Government in the form of interest bearing capital. This interest bearing capital is reduced only when the assets fi- nanced are abandoned and written off. This is exceptional and applies only to relatively small amounts since assets are not normally written off, unless they have lost their economic usefulness. Assets which are replaced are financed out of revenue, but are maintained on the books at their original cost. The interest bearing capital represents the cumulative investment of the Government in SAR, valued at original cost. Annual interest is paid by SAR to the Govern- ment on the funds made available by it. The average rate was about 4.2% in 1959/60. 37. As may be seen in Table 5, about 30% of SAR gross capital ex- penditures in 1950-1960 were financed from revenue, principally through the Betterment Fund and the General Renewals Fund. The Betterment Fund is fed by appropriations of net revenues and surplus and exceptionally from other sources, and it is used to defray costs of improvements and additions to existing assets. 38. Straightline depreciation, computed on the basis of reasonably estimated service lives, is charged against revenues over the actual service life of each asset. The proceeds of depreciation charges, plus special contributions from net revenue made from time to time by Parliament, are credited to the General Renewals Fund. In the case of operating assets such as rolling stock and workshop plant, the Fund is used to purchase new assets up to the amount of depreciation accrued on similar assets still in service. But in the case of other assets, such as permanent way, the Fund is used only for the replacement of the assets being retired. In this last instance, special revenue appropriations have been made since 1955 to compensate, through a "higher replacement cost account", the difference between the original value and the estimated present day cost of replacement.  - 11 - 39. Although not in accordance with modern commercial practices, SAR's depreciation policy is adequate. Its practical results have been to keep its plant modern and in good condition by replacement as necessary and by financing substantial addition to plant out of revenue rather than interest bearing capital. 4o. The latest balance sheet available, as of March 31, 1960 is summarized below (in R. million): Assets Liabilities Plant & Equipment at cost Capital account Railways 1,233.3 Interest bear- Harbors, Steamships, ing capital 1,369.0 Airways 96.3 1,329.6 Non-interest bearing ca#itel 11508 1,484.8 House Ownership Fund 4106 Investments 94.7 Unallocated surplus 15e5 Current assets Renewals Fund 54.6 Stores 89.6 Betterment Fund 7^3 Cash, accounts receivable 41.4 131.0 Other Special Funds 16.8 Special contribution to Betterment Fund 10.0 Current Liabilities 19.6 Loan funds surrendered 8.3 1,606.9 1,606.9 Pension Fund Investments 2616 Pension Fund Reserves 26106 1,868.5 1868.5 Fixed assets of R. 1,330 million, consisting mostly of railway plant and equipment, are substantially understated as a result of the accounting and depreciation practices descri ed above. According to a tentative estimate by the mission, uncapitalized assets would amount to about R. 270 million, consisting of: a) new assets purchased out of depreciation funds (R. 181 million), b) expenditures from the "higher replacement cost account" (R.29 million), and c) uncapitalized betterments (R. 60 million).  - 12 - 41. SARts current position is satisfactory. Current assets, excluding stores, are about twice current liabilities. Stores amount to more than 5% of the value of fixed assets, which io high.According to SAR, bhis situation will be improved starting in 1961. It is accounted for by a) the size of the current investment program, b) the amount of work done in the Railway's own workshops, and c) the long distances from foreign sources of supply of equipment and spare parts which increase delays in deliveries and require a conservative store policy. 42. Earnings. A summary of income statements, 1956-1965, is shown in Table 6. The railway has generally earned sufficient revenue to cover its operating expenses, including adequate depreciation and interest. The average operating ratio for the last five years was about 87 percent. In 1958/59, the railway suffered a R. 10 million deficit, mainly because of a general slow- down in business activity, while operating expenses continued to rise0 In 1959/60, improvement in traffic, the full impact of a previous tariff increase, and lower operating expenses due to SARls efficiency campaign led to net revenues of R. 11 million. Preliminary results for 1960/61 indicate contin- uation of this trend with an expected net revenue of R. 19 million. 43. During 1959/60, railway depreciation charges amounting to R. 23.4 million were slightly more than 7% of rail-ay gross revenue, a.nd total depreciation charges (including contributions to various funds)'were R. 31.3 million, which is 2.4% of plant and equipment at original cost. Net income before interest for SAR's combined operations was R. 70.2 million, or a rate of return of 5.5 _ r . 1 275 millicn, corresponding to the original cost of plant and equiprent Tess the balance in the Renewals Fund. Over the years there have been uncapitalized additions to plant, but if these were to be included in the computation of the return, a similar and offsetting amount would have to be taken into account representing the depreciation reserves used to finance the additions. In the same year, 1959/60, the interest paid on total capital (predominantly government loan capital) was 3.4h% and it was earned almost 2 times. 4h. In 1962/63 and 1963/64 deficits of R. 3.7 million and R. 1.6 million are anticipated. The main reason for this deterioration of earnings is that the estimate conservatively assumes no further improvements in efficiency and is based on higher costs but existing tariffs. Taking into account the surplus of H. 27 million available at the end of 1961/62, and the net revenue from non-railway operations - which have been consistently profitable - the cumulative surplus for the five year period to 1964/65 would fall short by about R. 16 million of the appropriations of net revenuie now contemplated for financing the program. SAR has advised that in accordance with its normal practice, these forecasts will be reconsidered when the annual budgets are prepared for submission to Parliament. Appropriate steps would then be taken to match revenues and expenses. Accordingly there is every reason to believe that SAR will continue to remain sclf-supporting over the period under review.  - 13 - J. 1oad Competition 45. Systematic restrictions have been imposed by the Government on road transport, primarily to protect its substantial railway investment. The restrictions are intended to prevent road traffic if there is adequate rail-- way service available and to confine road service to local needs and feeder services. These restrictions a) limit common carriers to a 15 mile radius around the center of the city in which they are based, but permit trips of 30 miles to or from a railway freight depot; b) limit firms, which use their own trucks for their business, to a 30 mile radius from their business. There are various exemptions in the areas of Capetown, Witwatersrand and the Orange Free State gold fields as well as for certain goods such as furniture, perishables and fragiles. 46. A consultant was employed recently by the Bank to analyze these restrictions. He found the following undesirable effects: a) a discrininatory rate structure penalizing manufacturing and marketing industries, while subsidizing shipment of agricultural products and raw materials; b) a low rate of utilization of roads and road vehicles; and c) an incentive for industry to concentrate near railway heads and in the vicinity of cities, primarily Johannesburg. 47. SAR estimates that abolition of the road restrictions would cost it abo~ut 14% of its freir-ht tonnage, but 45% of gross freight revenue, and about half of its inter-city passenger traffic. The Bank's consultant found that these estimates are generally credible as far as the immediate loss at the present tariff structure is concernea. Ha concluded, however, that if tariffs for low-rated commodities were raised - for which there are ample opportunities - and if passenger and other unprofitable services were sharply curtailed, "it is by no means certain the SAR could not operate profitably upon relaxation of the road restrictions". 48. There is no indication that the Government is prepared to depart significantly from the present restrictive policies. Even if it were, this would not significantly affect the justification for the proposed project. The Bank's consultant agrees with SAP, that "it is unlikely that relaxation will significantly reduce the investment needs of the Railway over the fore- seeable future". He points out that the loss of freight traffic would soon be made up by the secular growth in traffic, and emphasizes that with respect to the loan project, the replacement of steam locomotives by diesels and electrics is economic regardless of loss of traffic to the roads. 49. A useful step would be to review the costs of short haul traffic by rail and road in order to ascertain whether a revision of existing restrictions on roads would be advisable in order to relieve the railroad of unprofitable traffic, which, however, might be profitable for trucks.  - 14 - III. SAR L)EWMFLOPPIElTT PRT0GR?if!S A. Previous Programs 50. To meet the rapid economic development of the country and the growing pressure on the transportation system, a large program of expansion and modernization has been underway since 1947. The main elements of the program have been described in previous reports and are summarized below: a) increase of line and yard capacity by double-tracking, correction of curves and grades, enlargement of marshalling yards, improve- rnent of signalling and traffic control facilities, electrification of lines in areas with heavy traffic density, etc.; b) new line construction to by-pass congested areas and to serve ore mining and native resettlement areas; c) procurement of additional motive power and rolling stock; d) dieselization of lines which have scarce water supply and are far from the collieries; e) expansion of workshops; f) development of road transport and harbor facilities; g) development of air. 3erviceq. 51. From 1950 to 1960, investments of R. 995 million were made for SAR's railway facilities, (and an additional R.142 million for other faciJitie 5. .snd I 7orking c_p.ital - see Table 7). ILjor items of the program include. Major Investments under Previous Programs (1950 - 1960) a. Permanent WIay Route M4iles New lines constructed 280 Lines regraded and/or deviated 180 Lines doubled or quadrupled 466 Lines electrified 578 b. Additions to Rolling Stock (excLreplacements) Units Steam locomotives 187 Electric locomotives 256 Diesel locomotives 74 Passenger cars, Mllotorcars and Trailers 550 Freight cars 17,964  - 15 - The construction of new railway terminals at Johannesburg (80% completed) and Capetown (40% completed) was started. Very modern workshops are being completed at Koedoespoort (near Pretoria) and at Bloemfontein. Important improvements were also made at the principal ports, including additional deep water berths, pre-cooling facilities, cargo sheds etc. The road trans- port services were further developed to fulfill their primary function as feeder service to the Railway. South African Airways purchased three Boeing 707, 15 other aircraft, and equipment. 52. In 1957 the Government began to accelerate considerably the rate of investment in railway facilities, to meet traffic demands by 1961. As a result, capital expenditures from 1957 to 1960 exceeded substantially the expenditures of the previous seven years. 53. The Bank participated in financing SAR's investment by six loans, totalling US$136.8 million equivalent (R. 97.7 million), or nearly 10% of the 1950-1960 Development Program. 78% of these loans were used for the purchase of locomotives and rolling stock and 15% for permanent way (see Table 8). 54. Physical execution of she program has been satisfactory. SAR's capacity generally meets traffic demands, except for a few bottlenecks, such as some marshalling yards and on heavy traffic lines. B. Present Proeram 55. SAR's 1960-1965 Development Program (see Table 7) has the same basic elements as the previous programs and will continue to (a) increase capacity to meet traffic demands and (b) improve operating efficiency and decrease costs. The Railway intends to balance its capacity with the increasing traf- fic volume by 1965. 56. The cost of the program is R. 634 million, of which about 40% will be in foreign exchange. Parliament has already authorized R. 497 million; authorization of the balance will be sought at the next session. About two- thirds of the program would be financed from Government loans, the remairder from internal sources (see Table 5). 57. The following table shows the main items for the first three years of the program:  - 16 - Major Investments Under Present Program 1960/61 Z 1962/63 Total a) Permanent Way New lines to be constructed (miles) 50 18 31 99 Lines to be regraded and/or deviated 60 11 42 113 Lines to be doubled or quadrupled 19 39 120 178 Lines to be electrified 92 242 194 528 b) Rolling Stock to be Placed in Service Electric locomotives (No.) 76 12 - 88 Diesel locomotives " 63 29 - 92 Passenger cars, motorcars and trailers 279 439 378 1,096 Freight cars 5,422 4,260 4,000 a/ 13,700 a/ a/ Estimate. In addition, orders will be placed and partial payments will be made during the period for rolling stock to be put in service after April 1963. This includes principally an order of 130 electric locomotives, part of which is to be used on the Jonahhesburg - Durban line. 58. The program also includes progress to a state of practical comple- tion of the new stations at Johannesburg and Capetown, extension and mod- ernization of workshops and marshalling yards, and installation of CTC on single track lines with heavy traffic radiating from the JohannesburR area. Cor.plete electrification of the Johannesburg-Durban line, of which a 150 mile single trLck soctio is not yet electrified, will begin in 1962. Thus, SAR would eliminate the most troublesome bottlenecks during the program. IV. THE PROPOSED PROJECT 59. The project is that part of the 1960-1965 Development Program of the SAR, relating to its railway, harbor and road transport facilities, which will be carried out in fiscal years 1961/62 and 1962/63. This part contem- plates expenditure of about R. 250 million (US$350 million). The Bank loan of $11 million (R. 7.85 million equivalent), would be used to pay for elec- tric and diesel locomotives, purchase of freight car wheels, electrification equipment and workshop machinery. All orders have already been placed on the basis of international competitive bidding.  - 17 - 60. In the two-year period from April 1, 1961 to March 31, 1963, dur- ing which the proposed project will be executed, SARts financial requirements total R. 263 million (R. 250 million for railway, harbor and road facilities). Adequate appropriations from loan funds and revenue have already been made for capital expenditures in fiscal year 1961/62. The necessary appropria- tions required for fiscal year 1962/63 will be provided in the corresponding budget, now under preparation. V. ECONOMIC JUSTIFICATION 61. Railway investment is essential to the sound growth of the economy of South Africa. Eighty percent of SAR's freight is heavy bulk traffic between the mining areas in Transvaal and Natal, the industrial area of the Witwatersrand, the various agricultural areas and the ports. Virtually none of this traffic could be carried more economically by other means of trans- portation. More than 60% of SAR's passenger-miles are heavy commuter traf- fic which is essential for the economy and could not be carried by other means of transportation. 62. The program is justified by increased traffic and operational economies to be achieved by (a) eliminating bottlenecks on lines and yards (b) electrification and dieselization. Certaiji parts cf the program e.g. now lino3 for reicttlc .nt sohoncs, ire guarantecd by the goGtrnhnrt against lor.ses. 63. The program is economically sound. An important element of the program is electrification and dieselization. Although the price of coal is very low in South Africa, electric and diesel traction on main lines with adequate traffic volume is more economic than steam traction. Table 9 in- dicates that the cost per 10,000 lbs tractive effort mile is R. 0.39 for a steam locomotive compared to R. 0.29 for a single unit electric and about R. 0.34 for a single unit diesel locomotive; for multiple units, the com- parison is even more favorable. 64. The actual savings from electrification and dieselization carried out in the first two years of the program may be estimated conservatively at R. 3-4 million per year, This will provide a rate of return of 11-14% on the investment and would pay for itself in less than ten years. VI. CONCLUSION AND REC0MENDATION 65. The Railway's 1960-65 Development Program is well conceived. It will improve operations and efficiency and provide the capacity necessary for future traffic growth. Its implementation is essential for the further development of the South African economy. 66. The project forms a suitable basis for a Bank loan of US$11 mil- lion. An appropriate term would be 10 years, including a grace period of two years. November 9, 1961  Table 1 SAR EMPLeyI,ENT 1957 1958 1959 1960 Railways white 108,300 106,000 108,900 105.,200 non-white 118,000 118,400 108,100 104,700 Total 226,300 224,400 217,000 209,900 Harbors white 2,200 2,300 2,400 2,400 non-white 3,200 3,4 3,300 3,000 Total 5s400 5j,700 5,700 5,400 Airways white 2,100 2,200 2,400 2,400 non-white 300 400 300 300 Total 2,400 2,600 2,^700 2,700 Total white 112,60o 1o1,500 113,700 110,000 non-white l21,500 122,200 111,700 l08,000 234,100 232,700 225,4CO 218,000 Non-white staff is employed as unskilled labor anc as clerks dealing with non-white customers.  SkiR RAIWAY OPERATIONS Year Ending March 31, 1955 1956 1957 1958 1260 Total route mileage of open lines, miles 3.3,430 13,453 13,441 13s435 13,439 13,564 Route mileage of electrified lines, miles 859 860 865 871 960 1,199 Locomotives. Steam No. 2,737 2,711 2,711 2,734 2,755 2,742 Electric No. 265 276 307 335 392 471 Diesel No. 2 2 1 1 46 76 Total No. 3,004 2,989 3,019 3,070 3,193 3,289 Total Tractive Force, lbs. million 99.9 99.9 102.0 104.7 109.3 1312.9 SE9 otr'ic Passnger fRalcars, Motor cars No. 311 308 289 292 368 387 Trailers No. 747 758 786 834 1,018 1,029 Passengr Cars No. 4,778 4,743 4,737 4,714 4,642 4,633 Freight Cars, merchandise stock No. 86,996 91,546 92,783 95,569 100,677 104,151 vans, cranes, etc. No. 2,058 2,257 2,357 2,631 2,908 3,219 Total carrying capacity of merchandise stock('000) tons 2,647 2,833 2,878 2,962 3,111 3,233 Average capacity tons 32.8 33.4 33.6 33-8 33-3 33.3 Average Availabilitj, Steam Locomotives % 87.7 66.4 87.9 88.3 88.3 88.8 Electric & Diesel Locos. % 88.6 89.5 91.0 86.2 92.3 94.5 Passenger Stock % 93.6 93.6 94.2 94.3 93.3 94.4 Freight cars % 96.5 96.4 96.2 96.4 96.7 97.3 Englne MlLtes Enni Day- Steam Looos. Miles 110 1.11 113 96 94 90 Average Electric Locos. n 204 214 210 202 190 188 Electric Motorcars N 168 174 189 185 174 170 Diesel LOCOs. - - - - 11.5 166 Train Miles Passenger Miles million 21.7 22.2 22.1 22.3 23.0 23.7 Freight (including mixed) " 68.7 70.8 72.9 73.9 75.9 76.0 Total " 90-4 93-0 95.0 96.2 98.9 99.7 Average Net Load of Freight Trains Tons 287 296 294 302 306 316 Revenue Freight Ton Miles per Freight Car (merchandise stock) (000) 185 187 189 190 185 187 Average Turnaround Time of Freight Cars, days 8.5 8.9 9.0 8.9 9.0 9.1  SAR RAILWAY TRAFFIC 1955 1956 1957 13958 i15 19" Passenger Jmuny,ain line traffic 30.7 30.5 29.9 24.8 24.7 24.4 (milnion) suburban traffic 232.7 231.7 237.9 242.0 249.7 270.3 total traffic 263.4 262.2 267.8 266.8 274.4 294.7 Pssenger miles, mainline traffic n.a. n.a. n.a. 1,868 1,790 1,767 (ndllion) suburban traffic n.a. n.a. n.a. 2,559 2,643 2,867 total traffic n.a. n.a. n.a. 4,427 4,433 4,634 Average diatance of journeys, main line n.a. n.ae. n.. 75.4 72.6 72.5 (mile$) suburban n.a. n.a. n.a. 10.6 10.6 10.6 Freiht tons, revenue earning traffic 63.1 65.3 64.7 65.8 67.7 70.3 (million) departmental traffic 8.8 9.3 10.3 11.2 12.0 11.6 total 71.9 74.6 75.0 77.0 79.7 81.9 Freig 4t ton miles, revenu earning traffic 15,948 17,129 17 1441 18,191 18,603 19,453 ('+llion) departmental traffic 2,891 2,977 3,135 3,212 3,682 3,659 total 18,839 20,106 20,576 21,403 22,285 23,112 Aver g distance of haul. revenue earning traffic 253 263 270 276 275 277 (miles) departmntal traffic 328 319 303 287 307 31I 4ainlne passenger mile per route mile (,000) n.a. n.a. n.a. 139 133 130 Revenue freight ton miles per route mile (,000) 1,185 1,270 1,300 1,360 1,380 1,430 Departmental tou miles in percent of the total freight ton miles: % 15.4 14.8 15-3 15.0 16.5 15.8  Table 4 SAR RAILUAY RE 7ENUE BY SOURCE 1956 - 1960 (in R. Uillions) Fiscal Year 1956 - 1957 1958 1959 1960 Ending: R O R R % R % R General goods 179.8 65.3 183.1 65.6 193.7 66.o 203.9 66.3 216.6 65,8 Coal 27.8 10.0 27.6 9.9 29.9 10.2 33.3 10.8 36.0 lo.9 Livestock 4.6 1.7 4.6 1.7 5.1 17 5.4 1.7 6.1 1.8 Parcels 7.0 2.6 7.2 2.6 7.8 2.7 7.9 2.6 8.3 2.5 Freight 219.2 79.6 222.5 79.8 236.5 80.6 250.5 81.4 267.0 81.0 Passengers 38B4 13.9 38.1 13.7 37.8 12.9 38.1 12.4 42.5* 12.9 Mails 2.0 .7 2.0 .7 1.9 .6 2.4 .8 2.2 .7 Miscellaneous, rent & storage 16.0 5.8 16.2 5.8 17.4 5.9 16X6 5.4 17.7 514 275.6 100.0 278.8 100.0 293.6 100.0 307.6 100.0 329.4 100.0 * Includes R. 4 million advance from "Consolidated revenue fund" for losses sustained in operation of passenger services to non-white resettlement areas.  Table 5 SAR SOURCE0 A D Ail-LITCATION OF FUi,7DS (R.million) Source of Funds Application of Funds a) Govern- Additions Yeara) ment SAR Bette - orking Actual: loans revenueb) Total mentsX Renewals d) oapitale) Total 1950/51 39.4 13.0 52.4 37.4 8.8 6.2 52.4 1951/52 35.6 12.6 48.2 34.6 7.6 6.0 48.2 1952/53 51.8 26.4 78.2 54.6 19.2 4.4 78.2 1953/54 73.6 43.6 117.2 73.6 35.6 8.0 117.2 1954/55 47.6 34.o 81.6 69.4 12.2 - 81.6 1955/56 65.4 28.6 94.o 81.4 12.4 .2 94.0 1956/57 83.6 44.8 128.4 93.4 23.0 12.0 128.4 1957/58 123.6 58.2 181.8 113.8 44.6 23.4 181.8 1958/59 143.8 55.4 199.2 153.9 43.6 1,7 199.2 1959/60 131.6 24.3 155.9 139.0 13.8 3.1 155.9 Tlotal 796.0 340.9 1,136.9 851.1 220.8 65.0 1,136.9 Planned 1960/61 87.0 33.0 120.0 91.6 25.8 2.6 120.0 191/62 78.3 50.6 128.9 87.1 37.6 4.2 128.9 1962/63 86.0 47.7 133.7 93.2 38.1 2.4 133.7 1963/64 81.6 45.6 127.2 88.1 36.1 3.0 127.2 1964/65 79.5 44.6 124.1 86.9 35.2 2.0 124.1 Total 412.4 221.5 633.9 446.9 172.8 14.2 633.9 a) Fiscal year from April 1 through ilarch 31. b) Includes depreciation charges and appropriations from net revenue. c) Includes new investments and "betterments", defined as improvements of existing assets which do not materially add to their value. d) Includes replaced assets but also uncapitalized additions to capacity, paid from depreciation charges. e) Includes general stores required for all services, as well as expendi- ture under the house ownership schemes.  SO UT H A F RICAN R AIL WAYS AND HA R BO RS C O N D E N S E D A N D A D J U S T E D I N C O E S T A T E l4H E N T S 1956 1965 (in millions of Rands) A C T U A L F O R E C A S T Fiscal Year Ending Mwarch 31 :95 122 1958 129S2 1960 1961 12i 19l63 12(i9 l265 Raily&yo Operating revenues 275.6 278.8 293.6 307.6 329.4 345.1 346.9 353.1 363.2 372.5 Operating expenses 214.0 232.8 237.2 258.0 248.8 251.5 254.7 264.3 265.7 266.5 Depreciation 15.6 16.8 18.6 20.2 23.4 26.1 28.1 30.2 32.2 34.1 229.6 249.6 255.8 278.2 272.2 277.6 282.8 294.5 297.9 300.6 Operating ratio: % 83.3 89.5 87.1 90.4 82.6 80.4 81.5 83.4 82.0 80.6 Net operating revenues 46.0 29.2 37.8 29.4 57.2 67.5 64.1 58.6 65.3 71.9 Non-operating income 3.2 2.8 2.8 1.7 2.2 5.0 5.0 1.6 1.2 .8 Net income before interest 49.2 32.0 40.6 31.1 59.4 72.5 69.1 60.2 66.5 72.7 Interest 28.0 29.4 34.4 40.0 47.8 53.3 59.1 62.9 67.1 71.2 Net loss of subsidiary services .2 1.0 .2 1.0 1.0 .4 1.0 1.0 1.0 1.0 Net revenue 21.0 1.6 6.0 (9.9) 10.6 18.8 9.0 (3.7) (1.6) .5 Harbors. Steamshios. Airwavs Operating revenues 29.2 32.0 35.4 34.0 37.6 40.7 44.1 44.8 46.1 47.2 Operating expenses 18.4 21.3 23.1 24.0 23.9 27.1 32.0 33.6 34.6 35.4 Depreciation 1.2 1.7 2.1 2.5 2.9 3.4 3.8 3.8 3.9 3.9 19.6 23.0 25.2 26.5 26.8 30.5 35.8 37.4 38.5 39.3 Net income before interest 9.6 9.0 10.2 7.5 10.8 10.2 8.3 7.4 7.6 7.9 Interest 2.0 2.4 2.6 2.9 3.2 4.3 4.3 4.6 4.7 4.8 Net revenue 7.6 6.6 7.6 4.6 7.6 5.9 4.0 2.8 2.9 3.1 Annropriation of Net Revenue Betterment Fund 10.0 10.0 3.0 3.0 2.0 9.5 - 8.0 8.0 8.0 Renewals Fund 5.8 5.4 2.0 7.0 - 8.0 1.0 7.5 7.5 7.5 Reduction of Intereet Bearing Capital 7.0 - - 4.0 - 4.0 - .5 .5 .5 Miscellaneous Funds .2 - - 1.0 - .5 .5 .5 .5 .5 Rate Equalization Fund - 2.6 (4.2) 4.6 (15.6) 2.7 - - (2.7) - (Surplus) or Deficit Brought Forward - (5.6) 4.2 (8.6) 16.3 (15.5) (15.5) (27.0) (9.6) 2.9 Cumulative Surplus or (Deficit) 5.6 (4.2) 8.6 (16.3) 15.5 15.5 27.0 9.6 (2.9) (15.8) Total Net Revenue 28.6 8.2 13.6 (5.3) 18.2 24.7 13.0 (.9) 1.3 3.6  SAR G R O S S C A P I T A L E X P E N D I T U R E (R million) (a) (b) (c) (d) (e) (f) Improve- Locomo- Airlines ments on tives & Total and New existing rolling Work- Rail- Road Coastal Working G r a n d Y a a r Lines lines stock shops Buildines Other ways Ports Transport shipping Capital T o t a 1 1950/51 1.4 12.2 15.0 2.8 7.6 .6 39.6 .8 .8 5.0 6.2 52.4 1951/52 .4 10.6 9.6 3.8 9.0 3.8 37.2 .8 1.0 3.2 6.0 48.2 1952/53 1.2 19.8 17.8 6.0 12.8 6.8 64.4 1.6 3.8 3.8 4.6 78.2 1953/54 .6 36.0 42.8 6.4 11.4 6.0 103.2 1.6 4.0 0.4 8.0 117.2 1954/55 2.2 25.0 34.4 4.8 9.6 1.6 77.6 1.8 0.8 1.4 0.0 81.6 1955/56 3.8 25.2 26.6 3.6 22.0 6.2 87.4 1.8 o.6 4.0 0.2 94.0 1956/57 5.2 42.2 27.8 5.2 23.0 7.8 111.2 1.8 1.6 1.8 12.0 128.4 1957/58 5.6 68.4 42.2 5.4 23.2 4.6 149-4 3.8 3.6 1.6 23.4 181.8 1958/59 7.4 34.7 99. 7 27.8 5.4 181 5.7 2.1 8.o 1.7 199.2 1959/60 3.7 67.0 36.7 4.9 25.8 5.6 143.7 5.1 1.3 2.7 3.1 155.9 Total 31.5 341.1 352.6 49.6 172.2 48.4 995.4 24.8 19.6 31.9 65.2 1,136.9 Flme: 1960/61 6.7 30.7 40.5 4.6 17.0 .6 100.1 7.2 1.0 9.1 2.6 120.0 1961/62 3.0 40.0 36.9 3.8 26.1 6.3 116.1 4.8 3.3 0.5 4.2 128.9 1962/63 4.6 35.1 36.0 5.1 30.9 8.0 119.7 4.5 2.1 5.0 2.4 133.7 1963/64 3.6 41.3 34.5 4.1 28.2 5.9 117.6 3.8 .6 2.2 3.0 127.2 1964/65 3.6 40.6 26.4 5.1 31.3 7.1 114.1 3.2 .3 4.5 2.0 124.1 Total 21.5 187.7 174.3 22.7 133.5 27.9 567.6 23.5 7.3 21.3 14.2 633.9 Percentage of KU2Uditu,me 1950/60 % 2.8 30.0 30.9 4.4 15.2 4.3 87.6 2.2 1.7 2.8 5.7 100 1960/65 % .4 29.6 27. 3.6 21.0 4.4 93 1.2 3.4 2. 100 a) Fiscal year from April 1 to March 31; d) Includes workshops buildings, machinery and equipment; b) Includes suburban lines to native re-settlements; e) Includes buildings, fixtures and grounds, signalling, interlocking c) Includes works to increase line and yard capacity such as additional and communications; track, regarding, deviation and electrification; f) Includes general stores required for all services.  SAR PURCHASES FROM THE PROCEEDS OF PREVIOUS BANK LOANS ($ Million) Loan Number and Signing Date 40-SA 77-3A 134-SA 178-SA 214-SA 228-SA T o t a 1 Category 1/23/1951 8/28/1953 11/28/1955 10/1/1957 12/2/1958 6/10/1959 Locomotives, rolling stock and spares 11.0 22.0 19.6 25.0 25.0 3.8 106.4 Workshop machinery 1.1 0.3 0.1 - - _ 1.5 Structural and permanent way 4.2 6.4 5.5 - _ 4.7 20.8 Plant materials and equipmeht 1.1 o.6 - _ _ 1.7 Road under equipment 2.0 0.2 - _ _ 2.2 Tugs and harbor craft o.6 0.5 _ _ 1.1 Electrification materials - - - - 3.1 3.1 T o t a 1 20.0 30.0 25.2 25.0 25.0 11.6 136.8  Table 9 COMPARATIVE TRkCTION CC9TS ON MUNLIIES Tractive Average Cost effort Type of (1 hour R. per engine-mile R. per 10,000 lb. Locomotive rating) Direct Indirect tractive effort lb. Cost Cost Total mile Steam (heavy) single unit 42.s000 .98 .68 1.66 .39 double unit 84,0ooo 1.96 1.36 3.32 .39 Electric (.22 00 h.p.) single unit 32 000 .42 .52 .91 .29 double unit 64,ooo .65 .67 1.32 .21 treble unit 96,000 .89 .81 L170 .18 Diesel (1,200 h.p.) single unit 35,000 .51 .69 1.20 .34 double unit 70,000 .85 .90 1.75 .25 (1,800 hp.) single unit 45,000 .72 .71 1.143 .32 double unit 90,000 1.26 1.05 2 v31 .25  BECHUANALAND L BULAWAYO r PROTECTORATE SOUTHERN RHODESIA r SOUT WEST AFRICA Cy \ _>/ WINOHOEKr SOUTH AFRICAN RAILWAY SYSTEM J ERAILWAYS IN OPERATION D ISWALVS AY 3 6 Goug,. Siogle Tr-ck 1 TRAIN AAL I 36 G..go. Double T-ak _______ O G..go, Sioglo T-ok \ \ 7~~~~~~~~~~~~~~~~..,.., Eloctriliod y To b electrified FOREIGN RAILWAYS 4\ : 0 0 i X J ~~~~~~~~~~~~~~~~~~MAEINAE LurJer/ i PRETORIAVrybu SWAZI- -\e r \) 7\ ,# g W/ Xytmit hA T A ,L ph . \/BASUTO- 4TER/ L AND6 -A ~~ ~ ~ ~AJ T LANDR8A O y < ;~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ringontein I? /75psROAN \ t C 6Ri f ~A p E f R CC) \ V ///S Jhs CA re ID\Yo Simonsto < n g < _ rM~~~~~ossel Baxy