Report No. 1526b-TA FILE COPY Tanzania Appraisal of a Trucking Industry Rehabilitation and Improvement Project September 21, 1977 Regional Projects Department Eastern Africa Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit Shilling (T Sh) US$0.12 T Sh 1 US$1.00 T Sh 8.30 US$1,000 T Sh 8,300 SYSTEM OF WEIGHTS AND MEASURES METRIC Metric System British/US System 1 meter (m) 3.28 feet (ft) 1 kilometer (km) 0.62 miles (mi) 1 metric ton2(m ton) = 2,204 pounds (lb) 2 1 sq. km (km ) 0.386 sq. mile (mi ) GLOSSARY OF ABBREVIATIONS CIDA - Canadian International Development Agency EAA - East African Airways EAC - East African Community EARC - East African Railways Corporation ICB - International Competitive Bidding IS - International Shopping MCT - Ministry of Communications and Transport MFP - Ministry of Finance and Planning MoW - Ministry of Works NIT - National Institute of Transport NMC - National Milling Corporation NRHC - National Road Haulage Company NTC - National Transport Corporation SMC - State Motor Corporation TAT - Tobacco Authority of Tanzania TAZARA - Tanzania - Zambia Railway Authority TCA - Tanzania Cotton Authority TCSL - Tanzania Coastal Shipping Lines TLA - Transport Licensing Authority TRS - Tanzania Road Services TRDB - Tanzania Rural Development Bank ZTRS - Zambia - Tanzania Road Services GOVERNMENT OF TANZANIA FISCAL YEAR July 1 - June 30 FOR OFFICIAL USE ONLY TANZANIA APPRAISAL OF A TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Table of Contents Page No. SUMMARY AND CONCLUSIONS .... .......................... i-ii 1. INTRODUCTION ................................ .. ... ......... . 1 2. THE TRANSPORT SECTOR ...................................... 3 A. Economic Setting . ........ . .................. ........ . 3 B. The Transport System - . . ......... .. ... . .... ......... . 4 C. Transport Policy, Planning and Coordination .......... 5 D. Previous Bank Projects in the Transport Sector ....... 7 3. THE TRUCKING INDUSTRY - ...... . . . .................... . . . . . . ........... . 8 A. Structure of the Industry ............................ 8 B. Truck Fleet ....... ............... .................... 10 C. Traffic ............................................. 11 D. Regulations and Rates . ................... .... . . ... . 11 E. Industry Performance .......... .. .... . . . ................. . ... 12 F. Truck Maintenance and Repair ............ 13 G. Personnel ............. .................. .O.... 15 4. THE PROJECT .................... ........................ 16 A. Objectives ............ ....................................... 16 B. Description ................................................ ......... 16 C. Cost Estimate ... . .................. .................. 21 D. Financing .... ................ 23 E. Implementation .... ................. - ............... 23 F. Procurement . .............- ..... . ...... . . ..... .... 24 G. Disbursements . ..... ... . ............................. . 25 H. Environmental Aspects .... . . . . . ...................... ....... . 26 5. ECONOMIC EVALUATION .......... o.............................. 26 A. Main Benefits and Beneficiaries ..... oo-.o.......... 26 B. Areas of Influence of Project ........................ 26 C. Economic Analysis of Aid to Selected Trucking Companies .*o*oo...** ...................... 27 D. Economic Analysis of Spare Parts Imports .... o- ...... 28 E. Economic Evaluation of Other Project Components ...... 28 F. Sensitivity Analysis .......... . ................. . . 29 6. AGREEMENTS REACHED AND RECOMMENDATION .................... 29 This report was prepared by Kenneth Clare (Economist), Steve Carapetis (Engineer) and Marie Garcia-Zamor (Technical Editor). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. TABLES 1. Road User Charges 2. Motor Vehicles - New Registrations, 1962-74 3. Road Vehicle Fleet, 1962-75 4. Vehicle and Spare Parts Imports, 1972-74. 5. Age Composition of Truck Fleet, Private and Parastatal, 1962-75 6. Estimated Regional Distribution of Truck Fleet, 1975 7. Axle-load Regulations 8. Estimated Schedule of Disbursements 9. Performance Targets for the Five Transport Companies 10. Truck Fleet of the Five Transport Companies, 1977-82 11. Consolidated Operating Statements for the Five Transport Companies Projected for 1980 12. Truck Fleet Capability of the Five Transport Companies After Strengthening, 1977-82 13. Costs and Benefits Based on Assistance to the Five Transport Companies 14. Costs and Benefits of Truck Spare Parts Imports ANNEXES 1. Transport Modes Other than Roads 2. Previous Bank Group-Financed Transport Projects 3. Public and Private Truck Transport Operations 4. Transport Problems of the Selected Regions 5. Technical Assistance, Terms of Reference 6. National Institute of Transport, Training Program 7. Project Monitoring Indices CHARTS 1. Organization of Ministry of Communications and Transport 2. Organization of the National Transport Corporation 3. Organization of Trucking Companies to be Assisted 4. Initial Implementation Schedule 5. Implementation - Activities and Responsibilities MAP TANZANIA: Trucking Industry Project, Transport Network (IBRD 12603) TANZANIA APPRAISAL OF A TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT SUMMARY AND CONCLUSIONS i. Tanzania's largely agricultural economy depends heavily on truck transport, which is provided by both public and private entities. Over the last few years, however, trucking services have so deteriorated that the present lack of efficient and reliable services constitutes a serious bottle- neck to economic activity. ii. The Bank Group became involved in the transport sector of Tanzania in 1964 when Credit 48-TA (US$14 million), supplemented by Credit 115-TA (US$3 million) in 1968, helped finance construction of various road sections totalling 860 km; this project was satisfactorily completed in 1970. The Second Road Project, financed in 1969 under Credit 142-TA (US$15.5 million) and Loan 586-TA (US$7.0 million), assisted with the construction of the TANZAM Highway and was satisfactorily completed in 1972. A Third Project, financed in 1971 by IDA Credit 265-TA (US$6.5 million), also assisted with road construc- tion, and a Fourth, financed in 1974 by IDA Credit 507-TA (US$10.2 million), aimed at improving road maintenance; both are still in progress. In addition, Bank Group loans totalling US$166 million were made to the East African Railway Corporation in 1955, 1966 and 1974 and to the East African Harbours Corporation in 1969 and 1972. iii. Under the proposed project, the major component will assist the Government in improving public trucking facilities in line with its socialist policies and comprises the establishment and initial operation of five public trucking companies, including technical assistance, procurement of necessary trucks, rehabilitation of existing trucks and provision of truck repair facilities. iv. Financing is also provided for replenishing the country's depleted stocks of spare parts and for technical assistance to improve spare part and truck import procurement. Another component will assist with increasing the supply of trained trucking personnel through provision of technical assist- ance instructors, teaching aids and workshop equipment. Finally, the project also provides technical assistance for coordination of the diverse project activities and for preparing an action plan for organizing, improving and strengthening the whole trucking industry including an explicit strategy and program regarding future public sector involvement in the industry. v. Project execution will be the responsibility of the National Transport Corporation, a parastatal company under the Ministry of Communications and Transport, assisted by a Project Coordinator provided under the project. The Tanzanian Rural Development Bank through which onlending will be arranged will also play a significant role in implementing and overseeing the formation and operation of the trucking companies. Project implementation is expected to start in early 1978 and be completed by the end of 1982. - ii - vi. The total cost of the project is estimated at US$18.2 million (US$17.3 million excluding taxes and duties), with a foreign exchange com- ponent of US$15.1 million. The IDA Credit of US$15 million will cover about 100% of the foreign costs, or about 87% of total project costs net of taxes and duties. The remaining US$3.2 million will be contributed by the Govern- ment. To assist with early mobilization of the technical assistance under the project, retroactive financing of US$75,000 is recommended to help the Government provide prompt logistic support. vii. New trucks and associated spare parts, and workshop equipment will be procured through international competitive bidding in accordance with Bank Group Guidelines for Procurement. Spare parts for truck rehabilitation (estimated value US$500,000) and teaching aids (valued at about US$60,000) will be procured through international shopping. The necessary labor for truck rehabilitation (estimated value US$180,000) will be obtained by local shopping with competent local workshops. Procurement of workshop buildings for the five companies (valued at about US$210,000) will be through local competitive bidding procedures. Spare parts for replenishing dealers' in- ventories will be procured by dealers to whom the foreign exchange will be allocated by the Government. Finally, technical assistants will be employed under terms and conditions satisfactory to IDA and according to an agreed timetable. viii. Quantified project benefits comprise increased efficiency of truck- ing services in project areas, savings in cost per ton-km of road transport and avoidance of substantial capital costs of new trucks. The project is well-justified, yielding an economic return of about 37%. ix. The principal project risk is that expected benefits would be substantially less than anticipated, particularly with respect to technical assistance to the five project companies. Every reasonable effort to mini- mize this risk has been made to help ensure that anticipated benefits mate- rialize. Overall, the project, which represents a necessarily modest attempt to begin alleviating the constraint that inefficient trucking services im- poses on the country's economy, should yield improvements that can serve as a basis for more comprehensive gains in future as the sector's absorptive capacity for assistance increases. x. With the agreements and under the conditions set forth in Chapter 6, the project is suitable for an IDA credit of US$15 million to Tanzania, on the standard terms. TANZANIA APPRAISAL OF A TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT 1. INTRODUCTION 1.01 Tanzania's trucking industry accounts for much of the country's total transport demand. However, trucking services have deteriorated rapidly in recent years, resulting in a serious bottleneck to overall economic activity, especially in the agricultural sector. This situation has come about mainly as a result of difficulties the Government has encountered in translating its socialist development policy into a workable transport sector strategy, specifically from problems encountered in a) substituting public trucking operations for private sector participation in the industry, and b) regulating the import of vehicles and spare parts. Recognizing that there was a problem, the Government commissioned a study of the trucking industry by TRIMAC (Consultants, Canada), financed under the Fourth Highway Project. This study, completed in 1976, forms the basis for the proposed project. Public Sector Trucking 1.02 Almost all road freight was carried by private companies until 1973 when the Government, in line with its socialist ideology, adopted a policy of substituting a public transport system in place of the privately-owned industry. As a result, the private sector lost confidence and many operators left the industry, resulting in a decline in the private share of freight service to about two-thirds of total trucking services. The Government en- tered the industry in a number of ways, including the creation of specialist transport companies and transport wings in manufacturing, trading and crop marketing parastatals. However, many such entities have been characterized by inefficiency, low productivity and unreliable provision of services, and, consequently, have been neither financially viable nor economic. They have inexperienced management, untrained personnel and inefficient organizational procedures (para. 3.28). Further, some of the entities are required to pro- vide unprofitable but essential services and, at times operating over poor roads, are sometimes forced to accept unprofitable rates for services that could command viable rates. Typically, these companies suffer from lack of working capital with high interest and amortization commitments. Import of Vehicles and Spare Parts 1.03 In 1974, the Government charged the Central Bank of Tanzania with determining the amount of foreign exchange to be allocated for the import of vehicles and the amount to be set aside for spare parts imports. Also in 1974, the Government set up the State Motor Corporation (SMC) and made it the sole agency responsible for importing trucks for resale to both the public and private sectors. In importing and allocating trucks, SMC gives priority to parastatals, then cooperatives (citizens in joint ventures) and, last, to private truckers. However, SMC lacks trained staff to collect and analyze data on actual trucking industry needs, with the result that truck imports are frequently unrelated to industry requirements in number, type and size of trucks. This situation results in the import of inappropriate vehicles for - 2 - some operations, and in spare parts and training problems, the net effects of which constrain industry efficiency and productivity. 1.04 For spare parts imports, the SMC receives foreign exchange applica- tions, mainly from dealers (franchise holders and bazaars), parastatals and major transport operators. These applications, which SMC does not have suffi- cient trained staff to analyze, are submitted at six-month intervals to the Central Bank of Tanzania. The Central Bank decides on the foreign exchange to be provided for spare parts for the following six months. Like SMC, the Central Bank has no way of determining actual needs. After the Central Bank allocates the foreign exchange, SMC divides the amount available among the various applicants who import parts against their often insufficient alloca- tions. As a result, spare parts availability has been considerably reduced, with the consequence that a major part of the vehicle fleet, including the economically vital truck fleet, lies idle for lack of spare parts while export crops, local foodstuffs and other vital commodities await transport. It is estimated that as much as 40% of the truck fleet is out of service largely because of lack of spare parts for vehicle maintenance and repair. 1.05 In an effort to reverse the resulting serious deterioration in trucking services, and the concommitant constraint on the economy, the Gov- ernment has reevaluated its policy with respect to private sector operations and has concluded that, while it will continue to emphasize the part of public transport supply, the private sector will continue to play an import- ant role in road freight transport. Accordingly, the private sector has begun to regain confidence in the industry and is beginning to reinvest. The Government also realizes the negative effects of its vehicle and spare part import system and is seeking a means of ensuring adequate and appropriate availability of trucks and spares. Finally, the Government has taken some preliminary steps to improve the performance of public trucking operations, including decentralization of public trucking from the national to the re- gional level (para. 3.04) and the dissolution of uneconomic and financially- pressed public trucking entities. Proposed Bank Group Assistance 1.06 The Government has requested Bank Group assistance in building upon the above-mentioned preliminary steps to rehabilitate the trucking industry. The magnitude of the task of adequately rehabilitating and improving the industry is well beyond the scope of a single project, for several reasons. First, the shortage of skilled managers and personnel limits the industry's current absorptive capacity for assistance. Second, while industry problems are glaringly apparent in general terms, there is little detailed informa- tion available at present on the actual dimensions and geographic spread of these problems. A start must be made on collecting and analyzing such data before comprehensive solutions can be formulated. And third, the task of strengthening public sector trucking, an institution-building exercise which can only proceed on a phased basis as skills are trained, should be approached in a flexible way so that changes can be made in the light of experience gained and as new demands arise. 1.07 In view of the constraints mentioned above, it is obvious that, at present, Association assistance to Tanzania's trucking industry will be -3- attended by some uncertainty and should aim for modest early gains in industry performance. Yet at the same time Association staff believe it is imperative that efforts to revitalize the industry begin now before the economy of the country is further affected. The proposed project (described in detail in Chapter 4) will support Government efforts to address the country's vehicle and spare parts import problem (paras. 4.16-.17) and to increase the supply of trained trucking personnel (paras. 4.10, 4.15), which will benefit the pri- vate, as well as public sector industry. A major thrust of the project is to begin the process of strengthening public sector trucking by assisting in the setting-up and initial operation of five regional trucking companies (paras. 4.03-.14). While the planned services of these companies will represent a small proportion of total trucking services in Tanzania, it is envisaged that as the project unfolds, personnel are trained and experience is gained, this approach could provide a model which would be extended to other regions as well. 1.08 Total project cost is estimated at US$18.2 million (US$17.3 million excluding taxes and duties), with a foreign exchange component of US$15.1 million, 87% of total project cost net of taxes and duties. The project will be financed by an IDA credit of US$15 million and a Government contribution of US$3.2 million, or US$2.3 million excluding taxes and duties. 1.09 This report is based on the findings of an appraisal mission comprising Kenneth Clare (Economist), Steve Carapetis (Engineer), and Earl Federhofer (Consultant), which visited Tanzania in September-October 1976. 2. THE TRANSPORT SECTOR A. Economic Setting 2.01 Tanzania, situated a few degrees south of Ehe equator on the eastern coast of Africa, has a land area of about 940,000 km , a large part of which is high, arid plateau. The population of about 15 million is concentrated near the three main Indian Ocean ports of Dar es Salaam, Tanga and Mtwara, and in the Lake Victoria region, the highlands around Kilimanjaro and the southern highlands near Lake Nyasa. Less than 10% of the population lives in towns, but the urban population is increasing much faster than the national average of 2.7% p.a. 2.02 Agriculture is the main economic activity, accounting for about 40% of GNP and 80% of exports (mainly cotton, coffee, sisal and cashewnuts). The small but growing industrial sector includes textile and sugar mills, tobacco products manufacturing, an oil refinery and diverse other small plants. How- ever, as stated in para. 1.01, the current lack of adequate transport seri- ously constrains the country's economic growth, especially the marketing of agricultural products and the delivery of inputs. -4- 2.03 Tanzania's development philosophy aims at reducing inequalities in income distribution through rural development, and through state control of large-scale agricultural enterprises and important industries and services, including those related to transport (para. 1.02). To facilitate rural development and to improve its overall efficiency, the Government in 1972 decentralized various administrative activities, giving the country's 20 regions substantial power to control planning and budget provisions in their respective jurisdictions, particularly those activities concerned with devel- opment at the local level. With regard to transport, this decentralization policy is reflected in Government's present effort to regionalize public trucking operations, which should help in achieving more reliable and effi- cient services (para. 3.04). B. The Transport System The Network 2.04 Tanzania's transport system comprises roads (about 33,400 km), two railway systems (totalling 3,570 km of track), three main ocean ports and some minor ocean and lake ports, two international airports and over 50 smaller airfields. In addition, there is a 900 km oil pipeline between Dar es Salaam and Zambia; one of the railways and a major road, the TANZAM Highway, were also built mainly to carry Zambian traffic. Roads 2.05 Network. The Government has concentrated road investments in recent years in bituminizing existing roads rather than building new ones; thus the total length of the network has remained virtually unchanged. Of the approximately 33,400 km of roads, only about 2,600 km (8%) are paved and 1,100 km (3%) are engineered gravel. The remainder of the network is unengineered, dry-weather roads. Trunk (6,000 km) and territorial main roads (1,160 km) make up the primary system which links the country's 20 regional capitals with each other and with neighboring countries. Primary roads vary in standard from two-lane paved to unimproved track. Local main roads (9,220 km) make up the secondary system which connects other centers of economic activity with the primary network. The tertiary road system comprises about 17,000 km. 2.06 Density. Averag! road density is among the lowest in Eastern Africa, 38 km per 1,000 km or 2.3 km per 1,000 inhabitants, and varies considerably from one region to another, generally reflecting development and settlement patterns. - 5 - 2.07 Highway Plans. The 1969-74 Second Five-Year Development Plan allocated a total of US$114 million to roads, about US$70 million of which was for the TANZAM4 Highway. Under the 1976-80 Third Five-Year Plan, under preparation, highways are expected to account for a significant proportion of the total budget, with substantial amounts for extension and improvement of the primary road network and roads to serve agricultural development. (Highway and overall transport planning capacity is discussed in Section C.) 2.08 Road User Charges. Charges or taxes on road users have provided funds for recurrent expenditures on road administration and maintenance. Import duties on fuel, vehicles and tires and tubes (see rates in Table 1) have yielded considerable revenue although full information on the amounts is not available. Additional funds (Table 1) are collected from road users in the form of motor vehicle taxes and licenses, and road transport licenses (para. 3.13). 2.09 Maintenance. The condition of the road network is generally poor because there are few engineered roads (para. 2.05) and because adequate maintenance is lacking due to shortage of qualified staff and equipment, institutional inefficiencies, and insufficient budget allocations. Rural roads are especially poor. Current Government action to address these problems includes provision of staff training and equipment, under the IDA-financed Highway Maintenance Project (Cr. 507-TA), and recently-created Betterment and Maintenance Units, which are upgrading selected secondary roads in several regions. In addition, the Government is preparing a further road maintenance project for future Bank Group financing to cover regions not involved in Credit 507-TA. 2.10 Administration and Staffing. The Ministry of Works (MOW) is re- sponsible for construction and maintenance of primary roads; regional admin- istrations, which receive guidance and assistance from MOW, are responsible for the rest of the network. Shortage of qualified staff has long been a problem in all MOW divisions and in the regional administrations. The train- ing program instituted under the Highway Maintenance Project is beginning to redress this problem. Other Modes 2.11 Railways, ports and shipping, air transport and pipelines are described in Annex 1. C. Transport Policy, Planning and Coordination Policy Infrastructure 2.12 In colonial days, the development of transport infrastructure focused on serving Tanzania's external trade; the west (Kigoma) and north -6- (Mwanza and Arusha) were linked by rail to the main ports, Dar es Salaam and Tanga, and roads were developed mainly as feeders to the railway and the ports, both of which are owned and operated by the East African Community (EAC). Since 1969, expansion of transport infrastructure has been directed towards providing neighboring landlocked Zambia with rail (TAZARA, built with the assistance of the Peoples Republic of China) and road access (the TANZAM Highway, partly financed by the Bank Group) to Dar es Salaam. Further, in line with its development policy (para. 2.03) the Government has recently given increasing emphasis to rural road development and to decentralization of road administration. 2.13 Recent developments within the EAC are toward dissolution and de- centralization of EAC railway, ports and air transport corporations; if this continues, Tanzania will face a number of serious problems, particularly the need for large capital investments from the national budget and additional skilled manpower. Road Transport 2.14 Until recent years, Government policy was to leave motor transport entirely to the private sector but, with the evolution of socialism in the country, the Government entered the field directly by setting up parastatal road transport organizations. Nevertheless, most road transport of freight and passenger traffic remains in the private sector, subject to licensing of operators and other types of Governmental control (paras. 1.02-.05 and 3.13). Planning Infrastructure 2.15 The Ministry of Finance and Planning (MFP) has principal respon- sibility for financing transport investments and recurrent expenses. MFP reviews investment proposals from MOW and the Ministry of Communications and Transport (MCT), as well as from the District Councils after preliminary review by the Office of the Prime Minister. Detailed investment plans were contained in the First Five-Year Development Plan, prepared in 1964, and in the 1969-74 Five-Year Plan which was extended to 1975 and then to 1976, to take account of uncompleted works. A Third Five-Year Plan is being prepared. 2.16 Transport planning capability is weak, and data for planning is not systematically collected. In 1970, a small Planning Unit was established in the former Ministry of Communications and Works and given primary transport planning responsibility. In 1975, when the functions of this Ministry were given to the new MOW and MCT, the Planning Unit was assigned to MCT. Recently, contracts for several CIDA-financed expatriates who were assisting the Govern- ment have ended and the remaining planning capability is very limited. tMOW created its own Planning Unit in 1976; although the Unit will be enlarged in future, so far a Director has been appointed, an engineer has been assigned to it part-time and MOW is recruiting an economist, financing for which is provided under the Third Highway Project. -7- Road Transport 2.17 Motor transport is largely in the hands of individual private oper- ators. Government has, however, taken some responsibility for assuring that certain areas, not served by private operators, are provided with trucking services through the creation of public companies. Planning of operations, size of fleets, provision of ancillary services (workshops, spares, etc.) is poor in the public companies. The proposed project is designed to redress this situation (para. 4.18). Coordination Infrastructure 2.18 Coordination of transport infrastructure provision is virtually nonexistent, largely because of the lack of planning capability and partly as a result of the various difficulties EAC transport organizations have faced in the recent past. To date, however, this has not led to serious mis- investment. Road Transport 2.19 Coordination of road transport with other modes is limited largely to that within the East African Railway Corporation which has a motor trans- port division providing a significant amount of trucking services comple- mentary to its rail services. Other public and private transport services operate mostly in isolation of other transport modes. The proposed project will address this matter also (para 4.18). D. Previous Bank Projects in the Transport Sector Previous Projects 2.20 A number or road projects have been financed by the Bank Group (Annex 2): (a) US$14 million IDA credit in 1964 (48-TA) for construction of various road sections totalling 860 km; supplemented by a US$3 million credit in 1968 (115-TA); (b) US$15.5 million IDA credit (142-TA) and US$7.0 million Bank loan (586-TA) in 1969 for reconstruction work on a part of the TANZAM Highway; (c) US$6.5 million IDA credit (265-TA) in 1971 for construc- tion of a main road in the Southeast and betterment of selected feeder roads; and (d) US$10.2 million IDA credit (507-TA) in 1974 for improving the maintenance of primary roads and for carrying out a study of the road trans- port industry. Rail and port improvements in Tanzania have been financed by the Bank Group through loans amounting to US$166 million to the EAC organiza- tions concerned; the loans assisted with modernization and expansion of the EAC railway and, inter alia, the port of Dar es Salaam. -8- Lessons 2.21 The First Highway Project has been reviewed in a report of the Oper- ations Evaluation Department (June 1975). Because of delays and increased costs under the First Highway Project, IDA reappraised and revised the proj- ect and provided a supplementary credit to finance a scaled down project. 2.22 The report's major conclusions were that: a) the actual cost of the revised project was 3% less than estimated and that detailed engineering and construction were carried out satisfactorily. b) "the staffing and training program (which aimed at easing road administration transition to Africanization) was carried out to a very limited extent because of slowness in recruiting expatriates, difficulties with training by them and absolute shortage of African staff." c) "the rather shaky information available suggests that the overall economic return on the project probably approximates the 11% estimated at appraisal." 2.23 As the proposed project depends heavily on the success of the tech- nical assistance, the experience under the revised First Highway Project, as well as subsequent experience associated with the use of consultants under the Maintenance Project has been drawn on and the proposed project has been designed to make efficient use of technical assistance provided; indeed, the Government has already taken steps for mobilization of technical assistance (para. 4.11). 2.24 The study of the road transport industry undertaken by TRIMAC consultants (Canada) under the Fourth Highway Project (para. 2.20) identified various weaknesses and problems but was not very successful in analyzing problems and developing a remedial program, in part because of a lack of detailed industry data. Accordingly, the proposed project will provide for the collection of certain data in this field which will facilitate analysis of industry problems and provide a basis for planning future development and improvements. 3. THE TRUCKING INDUSTRY A. Structure of the Industry Private Sector 3.01 The private sector consists mostly of owner-operators, but it also includes specialist transport cooperatives, and traders or manufacturers who have trucks for their own needs and also offer services for hire. With the -9- advent of direct public participation in 1974, many private operators left the industry; those that remained concentrated on the more lucrative long haul business, withdrawing from short distance operations and from areas where business was less profitable and roads poor. Public Sector 3.02 Responsibility for public sector transport rests with the NTC, a parastatal organization under the Ministry of Communications and Transport. NTC controls the government-owned National Bus Service, Dar es Salaam Motor Transport Company, and Tazania Coastal Shipping Line; the National Road Haulage Company was also controlled by NTC for several years until it was dissolved in April 1977 (Annex 3 and Chart 2). Although NTC does not it- self directly engage in transport operations, it exercises substantial in- fluence over the policies and activities of its subsidiary operating organi- zations. In addition, the NTC recently assumed responsibility for the train- ing of a wide range of skills in the transport field when it organized the National Institute of Transport. NTC fulfills its duties adequately, parti- cularly since the recent appointment of an able and energetic chairman and managing director as its head. 3.03 Public sector trucking services, which account for one-third of total services, are provided by transport parastatals and transport wings in manufacturing, trading and crop parastatals. Until recently, public trucking services included operations at the international, national and regional level. International services were provided by the Long Distance Division of the recently-liquidated National Road Haulage Company (NRHC), which also provided inter-regional services. Regional services were provided by NRHC's Hire Pool Division, by crop-marketing authorities and by the trans- port wings of recently-dissolved cooperative unions. (Further details on public transport entities are given in Annex 3.) 3.04 To replace these operations by a more efficient and reliable system, the Government plans to use the trucks and other facilities of the disbanded entities to form regional transport companies; this would permit effective use of existing capacity because such companies could serve both as transport operators and as regional coordination and clearing centers, with demand for public and private transport channelled through them. During times of peak demand in particular areas, private operators from other areas are expected to supplement local trucking services. 3.05 To determine where initial regional efforts should be concentrated, the Government, with assistance from the Association, identified five econom- ically important areas which are particularly constrained by inadequate trucking services: these areas are Dodoma (where a regional company has recently begun operations), Mwanza, Tabora, Ruvuma and Mtwara regions (where none exists) (Annex 4). Analysis of existing trucking facilities in these regions showed that available private trucking services were limited; on the other hand, total public sector fleet capacity was substantial but because public services had been provided by entities whose transport operations were inefficient, there has been considerable under-utilized public capacity together with unsatisfied transport demand. While it may be possible to meet - 10 - some of this demand by encouraging private sector expansion, Government is committed, as a matter of policy, to direct participation in the industry, and it is not possible for the private sector to meet all of Tanzania's needs. B. Truck Fleet Fleet Size and Characteristics 3.06 Although information on the size and composition of the truck fleet is incomplete (Tables 2, 3 and 4), it is known that since 1972 fleet size has not changed significantly. On the basis of a 1971 survey and annual new truck registrations through 1974 (Table 2), it is estimated that the private and parastatal fleet (excluding Government ministry vehicles) in 1975 was about 13,000 vehicles (Table 5), of which 3,000 were publicly-owned and 10,000 private. 3.07 There is little data available on seasonal or total transport demand or on available truck capacity. Although numerous transport users interviewed reported that the size of the fleet is adequate for the nation's truck transport requirements, Association staff feel there is not enough information available on which to make a reasonable judgement as to optimum fleet size. Because of the constraint that lack of vehicle fleet and opera- ting data imposes on road transport planning, the technical assistance pro- vided under the project will assist with setting up a data collection system (para. 4.17). During negotiations, agreement was reached that the Gov- ernment will set up such a system and collect data on a continuing basis. 3.08 More than half the trucks in the country in 1971 were of 6-ton capacity or less; only 5% had a load capacity over 10 tons. More recently, the trend is toward larger vehicles. However, almost all new trucks are still single-unit vehicles. The Government should consider importing prime mover/semi-trailer combinations, because of the operational and economic advantages they can offer over single-unit vehicles in many instances. Through the technical assistance to be provided under the proposed project, the case for such articulated trucks in Tanzania will be studied (para. 4.17). Geographic Distribution 3.09 In 1967, the latest year for which data are available, more than one-third of the fleet served Dar es Salaam; somewhat more than one-third were located in the four most developed rural regions, Arusha, Kilimanjaro, Tanga and Mwanza, the first three of which are served relatively well by existing transport services. The remaining regions in the country together accounted for only about a quarter of the total fleet. This distribution pattern still exists (Table 6). 3.10 During peak crop seasons in a given region, demand for trucking services may substantially exceed the capacity of the region's available trucks. Private sector truck operators attracted from outside the region by the available business help meet this peak demand for transport. - 11 - Import of Trucks 3.11 Paragraph 1.03 describes the present vehicle import system and its negative effects on the transport industry. While the consequences of the import system on the industry are apparent, sufficiently detailed data on industry requirements and their geographic spread are lacking. This problem is addressed under the proposed project (para. 4.17). C. Traffic 3.12 The only available information on national truck traffic is the TRIMAC (consultants, Canada) study financed under the Fourth Highway Project; the consultants estimated truck traffic in 1974 to have been somewhere in the region of 1,500 million ton-km, two-thirds of which was handled by the private sector. There is insufficient information available on which to estimate present or future traffic levels. Under the proposed project, assistance with collecting traffic data will be provided (para. 4.17). D. Regulations and Rates Licensing of Vehicles, Drivers and Services 3.13 New vehicles are registered by the Central Motor Vehicle Registry, but no annual license fees are collected. Recently, for safety considerations the Government has undertaken a program of vehicle inspection. Drivers are licensed after testing; these licenses are renewed every three years. Ser- vice licenses for inter-regional hauls are issued by the central Transport Licensing Authority (TLA); individual vehicles or companies receive such licenses for specified routes. Regional TLAs issue licenses for general freight operations within a region. Private truck operators have lowest priority for service licenses. There is little data available on the num- bers, types and duration of service licenses issued as the Licensing Author- ities do not compile statistics, analyze demand or assess performance of license holders. The technical assistance under the project will assist with setting up a data collection and analysis system and will advise Gov- ernment on service licensing policies and programs (para. 4.18). Truck Weights, Dimensions and Inspections 3.14 The 1973 Road Traffic Act adequately regulates truck weights and dimensions (Table 7). There had been significant overloading on the TANZAM Highway, but as of December 1976, the Government began enforcing weight restrictions and obliging overloaded vehicles to offload. Information is not available on the situation on other roads, but this matter is being addressed under the Third and Fourth Highway Projects. Rates and Fares 3.15 There is no national freight rate system in effect. Truck trans- port is relatively expensive, as high as US$0.22 per ton-km for general cargo; - 12 - this is because of poor road conditions (para. 2.09) and trucking inefficien- cies, especially in the public sector. Rates charged by the private companies vary according to type of cargo, road condition and the possibility of return loads; the rates are revised frequently and are generally profitable. In the public sector, rates are often negotiated. However, some crop marketing parastatals, in conjunction with regional crop authorities, decide before the harvest season what freight rates to offer truckers, and the Government sometimes obliges public trucking companies to accept, without subsidy, the offered rates, even if uneconomic. Of course, this form of Government in- fluence on the public industry reduces the companies' financial viability. During negotiations, agreement was reached that project companies be permitted to negotiate economic rates for their services. E. Industry Performance 3.16 While private sector trucking operations are relatively efficient, the public sector is performing below a reasonable level of operational efficiency and productivity, as measured by the low proportion of trucks in working order and the low utilization rate of available trucks. Truck Availability 3.17 Truck availability (ratio of vehicles in working order to total vehicles) should be about 80% (based on operations of efficient transport enterprises in other developing countries), but Association staff esti- mates that on average not more than 60% of publicly-owned trucks are opera- tionally available, with the remainder out-of-service for maintenance and repairs. While detailed data are not available, interviews and direct obser- vation in Tanzania show that private truck owners achieve a much higher availability rate than parastatals whose low availability rates are due to: i) inadequate truck maintenance and repair, in turn caused by lack of adequate workshop facilities (para. 3.21) and spare parts (para. 3.23-.26) and by insufficiently trained maintenance personnel (para. 3.28); ii) poor vehicle operation by untrained, poorly motivated drivers (para. 3.28); iii) lack of skilled management (para. 3.28); and iv) poor road conditions (para. 2.09). According to private truckers, their principal problems are the poor road conditions, shortage of spare parts and difficulty in obtaining the trucks required; even so, as noted above, this sector operates relatively efficiently. Truck Utilization 3.18 Truck utilization (ratio of actual ton-km to ton-km capacity of vehicles in working order) should be 70-80% of available transport capacity. - 13 - Based on TRIMAC estimates of available truck ton-km capacity in 1974, the average parastatal utilized only 40% of available capacity. In contrast, many private enterprises achieve 60% utilization in Tanzania. 3.19 Truck utilization in the public sector is constrained by four factors. First, public sector trucking operations are limited by poor management with little or no transport skills. Second, drivers are not motivated to perform efficiently because they are paid low wages, below private sector rates, and there are no incentives for good performance. Con- sequently, they make little effort to secure backhauls for their companies and often make return trips empty; the work of public sector drivers is generally characterized by excessive loading and unloading times and slow travel speeds. Third, because of the difficulty of obtaining spare parts for the additional maintenance and repair work that would be necessary if their trucks were used year-round, the cooperative and marketing parastatals tend not to use their trucks for contract work in the off-season in order to ensure truck availability for their own transport needs during peak season. Finally, utilization is negatively affected by the poor condition of the road network. The first three problems are addressed under the proposed project with respect to the five project companies (paras. 4.09-.14). Further, the increased availability of spare parts which will be effected through the project (para. 4.16) will enable the whole industry to utilize its trucks more intensively. Ongoing and planned actions by Government to improve road con- ditions, which are outside the scope of this project, are described in para. 2.09. 3.20 The private sector's higher utilization rate is primarily attrib- utable to the fact that it has a relatively strong financial incentive to obtain maximum use of its vehicles. Therefore, the private operator loads and unloads efficiently, achieves higher average vehicle speeds than parastatals, carries full loads whenever practicable, searches for and finds backhaul loads and generally accepts only profitable work. F. Truck Maintenance and Repair Workshops 3.21 The workshops run by the major vehicle dealers, located in Dar es Salaam and in the larger regional centers, offer a comprehensive range of services including major overhauls, and rebuilding and reconditioning of major components. Both the quality and quantity of work produced there is good. The remaining commercial workshops, which are frequently small open-air facilities, offer generally poor services. Similarly, apart from a few parastatals which have adequate workshops under competent supervision, public sector repair operations are usually so poor that vehicles often are out of service for long periods. This problem is addressed under the proposed project with respect to the five project companies (para. 4.14). 3.22 The major private vehicle dealers employ the best mechanical staff available, including some expatriates. However, most small commercial workshops - 14 - are owned and operated by inadequately trained people. Likewise, public transport organizations have trouble recruiting trained and experienced staff. The proposed project provides for the training of maintenance personnel, both for the five project companies and for the overall needs of the industry (paras. 4.10 and 4.15). Spare Parts 3.23 Anticipating the establishment of Government controls in 1974 limit- ing the availability of spare parts, dealers built up their stocks before the controls went into effect, but these stocks are now being depleted. Further, trucks compete with cars for the foreign exchange allocated for spare parts imports; because new car imports for private use have been prohibited since 1973, the aging car fleet has been absorbing an increasing proportion of the foreign exchange allocated for spare parts. 3.24 In 1976, there was an estimated net shortfall of about T Sh 30 million in the foreign exchange value of imported truck spares compared with the estimated demand. A continuation of this situation would soon constrain the industry, which has been surviving largely because of earlier stocks of parts. On the other hand, a relaxation of controls would result in a surge of imports because dealers would replenish their inventories. But provided the dealers are confident of the continued relaxation of controls, such a surge would most likely be a once only occurrence. The foreign exchange shortage for spare parts is most seriously felt in the rural areas where, in 1976, seven regions received no foreign exchange for parts; 12 others together received less than 10% of the total allocation, and over 90% was allocated to the Dar es Salaam-based bazaars and dealers. 3.25 The overall absolute shortage of spares due to inadequate foreign exchange allocations to the private sector is further aggravated by two factors. First, as allocations are made biannually, importers must anticipate demand over six months. Mtistakes in demand forecasting are amplified compared to the situation before the controls went into effect when orders were placed monthly. Second, major dealers (particularly franchise dealers), who receive up to 40% of the foreign exchange allocation, often withhold parts from the retail market in order to promote their repair businesses. In the public sector, general parts availability is also constrained because the para- statals, which receive adequate allocations for spare parts, generally lack funds to actually purchase the parts and lack the personnel skilled in inven- tory analysis or ordering. 3.26 The inadequacy of the present spare parts import system stems in part from difficulties inherent in trying to tightly control the import of a mix of highly specialized and diverse items for which demand is considerably inelastic and geographically diffuse. Such difficulties are compounded by the fact that, in the absence of an annual vehicle registration system since 1974, there are no detailed, reliable data on the size, composition and dis- tribution of the vehicle fleet, which information is essential for economic allocation of foreign exchange for spare parts. Association staff have main- tained a dialogue with Government on this issue since appraisal and have presented, to the Government, a written review of the effects of the spare parts import control system on the transport industry and on the economy as - 15 - a whole. This has helped Government realize the severe constraints caused by the control system and it is now seeking a means of remedying the situa- tion; this effort will be supported under the proposed project and finance is provided to help meet the import surge which would result from a substan- tial relaxation of spare parts imports controls (para. 4.16). G. Personnel Private Sector 3.27 Of an estimated 32,000 persons engaged in trucking, the private sector employs about 20,000. Approximately 5,800 owner-operators, who employ about 5,800 laborers, account for 58% of private sector trucks. The remain- ing private companies employ about 8,400 persons. The larger organizations, especially those with more than 10 trucks, have specialists in management, accounting, traffic operations, vehicle repair and maintenance, and they hire and train their own drivers. Public Sector 3.28 Public sector transport comprises about 2,100 persons in administra- tion and traffic control, 3,600 drivers, 4,200 driver assistants and laborers and about 2,100 mechanics and servicing staff. After the Government decided to enter the industry directly, the public companies were formed rapidly. However, most people with knowledge and experience in transport management were in the private sector where wages, incentives and conditions were more attractive than those offered by the new public organizations. Thus, the publicly-owned operations were staffed, and are still operated by people with limited knowledge of the industry. Most of these organizations have large and complex organizational structures with much higher staff-to-truck ratios than in the private companies (an average of four staff per truck, compared with two per truck in the private sector). Recruitment and Training 3.29 The managerial, accounting, mechanical and vehicle-operation skills required by the trucking industry are in short supply because of insufficient training capacity and number of recruits with basic education for further training, and competition from other sectors. The fact that the private sector recruits the most competent and efficient people available intensifies the recruitment problems of the public organizations. Further, the demand for qualified recruits for the industry as a whole, but especially in the public sector, has been and is expected to continue increasing. Training Programs 3.30 Until early 1976, there were no formal training programs specifi- cally for the road transport industry, which had to compete with other sec- tors for trained people from existing training centers. To alleviate this problem, in 1974 the National Transport Corporation (NTC) established the - 16 - National Institute of Transport (NIT), which started operations in early 1976 in temporary quarters with 6 full-time instructors and 10 part-time lecturers. It initially offered a 3-month course on Transport Management for 30 students and is continuing such short-term courses while student accommodations are being constructed with funds from Transport License Authority revenues, as NIT receives 50% of total annual licensing fees. When the accommodations are completed, NIT will begin full-time, three-year diploma courses in Management, Operations and Mechanics, which will start supplying the public and private industry with trained recruits by 1980. However, there will be a continuing need for short-term courses for people already in the industry, and the proposed project provides for this (para. 4.15). 3.31 There is also a need for on-the-job training, particularly in the poorly staffed public transport organizations. On-the-job training would be the most rapid and effective means of upgrading skills, and the critical areas for such training are in management, accounting, vehicle care, maintenance, driving and supplies management. The proposed project also provides for on-the-job training of public sector transport personnel in the project companies (para. 4.10). 4. THE PROJECT A. Objectives 4.01 The proposed project aims to support Government's efforts to re- verse the deteriorating trend in truck transport, a mode upon which the predominantly agricultural economy depends heavily. While early improvements will necessarily be modest, the experience and skills gained under the proj- ect are expected to provide a basis for subsequent comprehensive rehabilita- tion and improvement of the transport industry. B. Description 4.02 The project consists of: (i) the establishment and initial operation of five public trucking companies, including: (a) technical assistance for management, operations, and training; (b) procurement of necessary trucks and rehabilita- tion of existing trucks; and (c) provision of repair facilities; - 17 - (ii) improvement of the overall public and private trucking industry through: (a) strengthening NIT through provision of instruc- tors, and teaching aids and equipment; and (b) replenishing of spare parts inventori s and improvement of the spare parts and truck import systems and; (iii) technical assistance to the NTC for project coordination and monitoring, and policy advice. Establishment and Operation of Five Public Trucking Companies 4.03 This component will assist the Government in its attempt to initiate improvement of public trucking services to meet currently unsatisfied demand. The assistance provided will enable the Government to make the most economic use of existing public trucking facilities by supporting its effort to set up and operate a regional trucking company through consolidation of existing public enterprises in each of the five selected regions (paras. 3.04-.05). Each company will be a general carrier public trucking entity with a franchise to operate both within the region where based and between that region and other regions. While demand-tor-trucking services in a given region during the peak crop season may substantially exceed available fleet capacity (para. 3.10), it would be uneconomic to provide a permanent fleet in each affected region to meet this demand; further, this demand could not be evened out simply by increasing storage facilities because of spoilage. However, the necessary additional services could be satisfactorily provided by the private sector fleet to supplement regional efforts. 4.04 At this stage, in the absence of detailed information on local conditions and needs, it would not be meaningful to try to anticipate exact fleet, organizational, manpower and equipment requirements for the five companies. These precise requirements will be determined through the tech- nical assistance provided for each company, together with the most suitable means of meeting identified needs taking into account facilities provided from dissolved public trucking entitiesi 4.05 Each of the five regional trucking companies will be formed ini- tially with fleet capacity to be taken over from existing and defunct public trucking operators. The Dodoma regional company, which began operations in mid-1976, has already received 13 trucks from the transport wing of a li- quidated cooperative union and will take over about 19 additional trucks from other sources to be nominated by the Government. The Mwanza company will begin operations with about 65 trucks, Tabora about 20, Mtwara about 90 and Ruvuma about 55. The specific sources of these vehicles will be determined in the study (para. 4.04) and subsequent review to be undertaken immediately prior to the formation of each company, and will depend on the shareholders involved and ownership structure. Of the trucks to be allocated to the regional com- panies, some could not be economically rehabilitated and will be replaced - 18 - with new trucks under the project. During negotiations agreement was reached with the Government that the Companies will be formed under terms and condi- tions, including ownership, financial participation, assets and operations and management arrangements, satisfactory to the Association, and fleets transferred to them as described above. Further, it was agreed that this will be accomplished by June 1978 for Dodoma, by December 1978 for Mwanza and Ruvuma, by March 1979 for Tabora and by June 1979 for Mtwara. 4.06 Although detailed forecasts and breakdowns of individual company structures and financial statements cannot be usefully prepared at present, Bank staff have reviewed the performance of typical transport parastatals in Tanzania and, also, of the one or two relatively efficient transport opera- tions in the country, on the basis of which the general structural features of each company have been set out (Chart 3) and operational performance tar- gets have been established (Table 9). These target figures have been used in the economic analysis of the proposed aid to the five companies (paras. 5.05-.07) and represent reasonably attainable objectives for them. Opera- tional targets will be included in the terms and conditions under which each of the five companies will be formed (para. 4.05). Agreement was reached with Government that, in consultation with the Association, it will establish a system for monitoring operating performance (Annex 7). Further, because of the negative effect on the public industry of the Government's present influence on freight rates (para. 3.15), agreement was reached that the five companies will be under autonomous operational and financial management. To assure availability of foreign exchange and transport licenses, and import permits required for the companies' efficient and economic operation and for the timely implementation of the project, it was agreed that all such licenses and permits will be issued promptly as needed. In addition, to avoid in- efficient proliferation and expansion of parastatal transport wings, it was agreed that the merits and reasons for proposals to create new, or substan- tially increase existing, truck fleets of public entities serving the project regions will be discussed with the Association. Also, agreement was reached that proposals and recommendations significantly affecting the operation and organization of project companies and their effects on the trucking industry, will be discussed with the Association as and when they are being considered. 4.07 While detailed financial forecasts cannot meaningfully be made at this stage, it is possible to project anticipated financial performance in general terms. By 1980, the five companies are expected to have about 264 trucks handling about 59 million ton-km of traffic at an average cost of T Sh 0.8 per ton-km (Tables 10, 11 and 12). On this basis, operating expenses would then be about T Sh 47 million. By that year, these companies should be able to obtain sufficient revenue to cover expenses and generate some surplus for reinvestment. Assuming the trucking organizations realize an average revenue of T Sh 0.9 per ton-km, operating revenue would be about T Sh 52 mil- lion and a surplus of T Sh 5 million would result (Table 11). 4.08 To assist with the establishment and initial operation of the five companies, the proposed project will provide each company with the necessary a) technical assistance advisors, b) procurement of trucks, c) rehabilitation of economically reparable trucks, and d) truck repair facilities. - 19 - a) Technical Assistance 4.09 While it would be possible to introduce a team of experts to set up and manage each company, Association staff feel that, since the project aims to assist the Tanzanians in developing the capacity to run their own companies, there is a greater likelihood of achieving this aim if the tech- nical assistance takes the form of advisors to management with respect to organization, planning, personnel policy, financial management, fleet manage- ment and operations, as well as providing training for drivers, repair and maintenance personnel. 4.10 For each company, a technical assistance advisor will be provided for the General Manager to assist with organizational, management, operational and supervisory requirements, including pay rates and incentives, marketing and scheduling. An advisor for the Chief Accountant will assist in operating costing and accounting systems, rate determination and billing procedures. An advisor to the Service Manager will train specialists in operating a spare parts inventory control system, as well as in preventive maintenance systems and workshop management. Finally, an instructor will be provided for mech- anics and drivers. (Terms of reference for technical assistance are detailed in Annex 5). 4.11 As mentioned in para. 1.07, the effort to establish viable public trucking companies includes attendant risks, which relate mainly to the antic- ipated benefits from technical assistance. However, the transport problem being addressed is a critical one and Association staff believe that the proj- ect represents the only feasible approach likely to yield productive results in present circumstances (paras. 1.06-.07). Every reasonable precaution has been taken to minimize risk. Vigorous efforts by the Government to recruit technical assistants are already underway. In addition, the Government is anxious to provide prompt logistical support (housing or caravan accommodation and vehicles) in order to ensure early mobilization of technical assistance. To assist in this, retroactive financing under the project is recommended (para. 4.26). Further, the setting up of the project companies will be phased so that experience gained can be drawn upon as the project unfolds. Finally, detailed coordination and monitoring of all project activities is provided for (para. 4.18). With these measures, there is every reason to expect that the project's objectives with respect to improving public trucking will be achieved. b) Procurement of Trucks and Rehabilitation of Existing Trucks 4.12 As the fleet requirements of each project company are not now known in detail, the technical assistance advisors will assist the company managers in making such assessments. They will take into consideration the condition of the existing truck fleets of dissolved public entities with a view toward determining which trucks are in good condition or economically reparable and can thus form the basis of a regional company fleet. Association staff estimate that about 160 trucks, representing about half of the proposed fleets, will warrant replacement and, accordingly, the project provides - 20 - financing for replacing these trucks; however, the sizes and other specifi- cations of the new trucks may differ from those replaced, depending upon needs of the companies. 4.13 An estimated 130 trucks earmarked for the five regional companies require rehabilitation, as do approximately 40 buses which are an integral part of the fleets of two of the companies. The project companies, assisted by the advisors, will diagnose the work each vehicle needs, procure the necessary parts, and then contract this work to competent private workshops, according to agreed procedures (para. 4.24). c) Provision of Truck Repair Facilities 4.14 The project companies, in order to operate efficiently, will re- quire well-equipped and staffed company workshops. As existing facilities are completely inadequate (para. 3.21), the project provides for the neces- sary workshops, including vehicle testing facilities, machines and hand tools. The facilities to be provided will be adequate for day-to-day servicing, running repairs and preventive maintenance; for major repairs and overhauls the companies will rely on independent service organizations, which are considered adequate. Assistance to the Overall Public and Private Trucking Sector 4.15 (a) Strengthening of NIT. Although NIT has recently been provided with excellent classroom buildings and a skeletal staff, the Institute needs strengthening, particularly of its instructional staff, teaching aids and equipment if it is to upgrade the capabilities of public and private transport personnel (para. 3.30). Accordingly, the project provides for four technical assistance instructors, one for trucking management, another for accounting, a third to handle the training of mechanics and drivers, and another to train supplies managers; also provided are workshop equipment and teaching aids. The four instructors will conduct both short courses at the NIT facility in Dar es Salaam and field training sessions in various regional centers (Annexes 5 and 6). 4.16 (b) Replenishing of Spare Parts Inventories and Improvement of the Spare Parts and Truck Import Systems. The proposed project will support the Government in its effort to address the spare parts problem. Financing is provided for the Government to cover the foreign exchange of spare parts needed to enable spare parts dealers to replenish depleted inventories (paras. 3.23-.26); the ultimate buyers of the parts procured will pay for them in local currency. Further, and more importantly, technical assistance advisors will assist the Government in reviewing its spare parts import system. Dur- ing negotiations, agreement was reached that the Government will submit for approval to the Association by March 31, 1978, a plan designed to ensure adequate availability and distribution of vehicle spare parts. 4.17 The present truck import system results in spare parts, repair and training problems and the use of less appropriate vehicles for some opera- tions (paras. 3.08 and 3.11). The lack of necessary transport data also - 21 - seriously constrains transport planning (paras. 3.07 and 3.12). During nego- tiations, agreement was reached that commodity and traffic flow data and statistics will be collected and analyzed to assist in formulating future trucking industry policies and programs. Technical assistance advisors will help establish a procedure for collecting and analyzing information on truck fleet and traffic. The advisors will also assist the Government in examining its truck import policy with a view toward ensuring adequate availability of appropriate trucks (paras. 1.03 and 3.11). Technical Assistance for Project Coordination 4.18 Project coordination will be the responsibility of the NTC which plays an important role in the development of public sector road transport (para. 3.02 and Annex 3). This organization will need some strengthening to fulfill its responsibility. Accordingly, a Coordinator with considerable knowledge of the trucking industry is required. The basic role of the Project Coordinator (Annex 5) will be to monitor the performance of the public com- panies assisted under the project and to train counterparts who would then monitor and coordinate future trucking programs. He will also monitor and coordinate project activities at NIT and of other technical assistants who will advise Government on the spare parts and vehicle import system; take an active role in recruiting the technical assistants, including training specialists, for the transport companies and the NIT; review all documents related to procurement of new trucks, truck rehabilitation services, spare parts, workshop facilities, and teaching aids and equipment; serve NTC as trucking policy advisor; and assist in establishing a data collection system mentioned in para. 4.17. Based on the results of and experience gained from the project, the Project Coordinator will assist Government to prepare an action plan for organizing, improving and strengthening the trucking industry in Tanzania; this action plan should include an explicit strategy and program regarding future public sector involvement in the industry. To help the Coordinator in procurement matters, an assistant will also be provided. C. Cost Estimate 4.19 Total project cost, including contingencies, is estimated at US$18.2 million, or US$17.3 million net of taxes and duties. The foreign exchange component is US$15.1 million, or 83% of total cost. Taxes and duties represent about 5% of total costs. Estimated costs are shown below: - 22 - ----T Sh millions---- ----US$ millions---- Foreign Foreign Local Total Foreign Local Total Componen 1. Project Coordination 2.50 0.25 2.75 0.30 0.03 0.33 91 2. Assistance to Transport Companies a) training & technical assistance 19.83 2.08 21.91 2.38 0.25 2.63 91 b) truck rehabilitation i) parts 2.67 0.33 3.00 0.32 0.04 0.36 89 ii) labor - 1.50 1.50 - 0.18 0.18 0 c) repair facilities i) materials, equipment and spares 3.66 0.75 4.41 0.44 0.09 0.53 83 ii) labor - 1.00 1.00 - 0.12 0.12 0 d) new trucks & spares 39.42 11.08 50.50 4.73 1.33 6.06 78 3. Assistance to NIT a) Instructors 2.58 0.25 2.83 0.31 0.03 0.34 91 b) Equipment & teaching aids 1.67 0.50 2.17 0.20 0.06 0.26 75 4. Assistance for spare parts & truck imports analysis and management 1.67 0.17 1.84 0.20 0.02 0.22 91 5. Truck spare parts' imports 25.00 2.50 27.50 3.00 0.30 3.30 91 Subtotal 99.00 20.41 119.41 11.88 2.45 14.33 83 6. Contingencies a) Physical: 10% for (1) to (4) 7.42 1.75 9.17 0.89 0.21 1.10 81 b) Price: 10% p.a. for 1, 2a, 2b(ii), 2c(ii), 3(a) & 4; 8.00 1.25 9.25 0.96 0.15 1.11 86 7-1/2% p.a. for 1977 to 1979 and 7% p.a. after 1979 for 2b(i), 2c(i), 2d, 3b, & 5 11.50 2.50 14.00 1.38 0.30 1.68 83 TOTAL PROJECT COST 125.92 25.91 151.83 15.11 3.11 18.22 83 TOTAL PROJECT COST (net of taxes and duties) 125.92 18.00 143.92 15.11 2.16 17.27 4.20 The base costs, as of July 1977, the date of negotiations, were derived as follows: (i) Technical Assistance: a total of 816 man-months ranging from US$3,000 to US$5,000 per man-month, plus travel, local subsistence and allowances, based on recent con- tract rates for technical assistance to the MOW; - 23 - (ii) New Trucks: based on current prices of, and duties on, truck imports for 100 trucks of average 12-ton capacity at a retail price of US$39,500 and 60 trucks of average 7-ton capacity at a retail price of US$17,500 (actual sizes and numbers of trucks to be determined as indi- cated in para. 4.12); (iii) Truck Rehabilitation: based on estimates by trucking companies and Bank Group staff; provision is made for US$2,500 for spare parts and US$1,200 for labor per truck for immediate rehabilitation, and US$1,000 per truck for a stock of spare parts; (iv) Truck Repair Facilities: based on estimates by trucking companies, workshop owners and Bank Group staff; (v) Equipment and Teaching Aids for NIT: based on estimates by NIT and Bank Group staff; (vi) Truck Spare Parts Imports: based on 1976 shortfall of imports against demand; and (vii) Contingencies: 10% allowed for physical contingencies for all but the general allocation for truck spare parts imports; 10% per annum price contingency for technical assistance and local labor; for trucks, spare parts, materials, equipment and teaching aids, price contingency provided at 7-1/2% p.a. for 1977, 1978 and 1979 and 7% p.a. after 1979, in accordance with Bank Group estimates. D. Financing 4.21 The US$15.0 million IDA credit will finance about 100% of the US$15.1 million of the foreign cost of the project, or about 87% of total project cost net of taxes and duties. The Government will provide the remaining US$3.22 million, or US$2.27 million excluding taxes and duties. E. Implementation 4.22 The NTC will be responsible for executing the project. During negotiations agreement was reached with Government on the establishment of an implementation schedule, progress reporting procedures and project monitoring indices. Indicative implementation schedules and project moni- toring indices are shown in Charts 4 and 5 and Annex 7. Within NTC, the various project activities will be coordinated by a Project Coordinator (para. 4.18). Technical assistance will begin in early 1978 and end in 1982. Procurement of new trucks and rehabilitation of existing ones, together with construction and equipping of workshops, will be carried out during 1978-80. - 24 - Spare parts will be procured in 1978-79. The anticipated project completion date is December 1982. 4.23 The Tanzanian Rural Development Bank (TRDB) will be the intermediary for channelling all financial assistance, except that for technical assist- ance, to the five project companies. TRDB has been involved as a financial intermediary in a number of Bank Group projects and is familiar with Bank group requirements, procedures and practices. Because of its past experience in lending to the road transport industry and its capable management, TRDB will be able to guide the formation and operations of the project companies along practical and efficient lines. F. Procurement 4.24 All procurement will be arranged and coordinated by NTC, assisted by the technical experts provided under the project, through International Competitive Bidding (ICB), International Shopping (IS), local competitive bidding and local shopping as described in the Bank Group's "Guidelines for Procurement". ICB or IS will be used to procure; (a) new trucks and associated spare parts through ICB to an estimated value of US$6.06 million from suppliers who will be required to provide an adequate service, repair and maintenance organization and a reasonable inventory of spare parts in Tanzania; (b) equipment for the trucking companies' workshops and for the NIT through ICB to an estimated value of US$500,000; (c) spare parts for rehabilitating existing trucks through IS to an estimated value of US$500,000. Trucks for the five regional companies will be repaired under separate con- tracts, spaced at six-to-nine month intervals, both to take account of the staged schedule of setting up the companies and of the work volume capacity of commercial workshops; IS is appropriate because these are a limited number of suppliers of spare parts for the known types of trucks involved; and (d) teaching aids for NIT through IS to an estimated value of US$60,000. The necessary labor for rehabilitating existing trucks to a total value of about US$180,000 will be obtained by local shopping with competent local commercial workshops (usually franchise holders) under separate contracts for each trucking company and, if necessary, for each type of truck involved. Contracts for the construction of workshop buildings to a total value of about US$210,000 will be awarded under local competitive bidding procedures which were agreed during negotiations, on separate contracts for each of the five companies involved. Other spare parts imports under the project's spare parts - 25 - component (para. 4.19), amounting to US$3.3 million, will be procured by the various dealers and merchants to whom the foreign exchange will be allocated by SMC, subject to IDA agreement on the proposed plan for allocations. 4.25 Other procurement of US$3.52 million is for technical assistance to be recruited by NTC. The NTC will arrange for recruitment and hiring of all technical assistance under the project and will make the experts available to the trucking companies and Government entities involved at no charge to those bodies because the central focus of these will be to create a widely applic- able model for the trucking industry throughout the country, and accordingly their cost should not be borne by the first companies to be assisted. Equity capital will be subscribed by the shareholders, and all other assistance to the trucking companies will be in the form of loans; IDA funds will be onlent through the TRDB, and local funds will be provided by Government through TRDB loans, the conditions, terms, and procedures of which were agreed at negotia- tions. IDA funds will be lent to TRDB at 4% for 10 years, including 2 years of grace. These funds will then be relent by TRDB to the project companies at 8-1/2% for 5 years, including one year of grace. 4.26 During negotiations, agreement was reached that suitably quali- fied technical assistants will be employed under the project by agreed dates and under terms and conditions satisfactory to the Association, and that the Project Coordinator and his assistant will be appointed as soon as possible and in no case later than December 1977. Recruitment efforts are already underway for the Project Coordinator and an Advisor on spare parts and truck import policy. It was also agreed that a qualified counterpart will be assigned to each technical assistant on the appointment of the related technical assistant. G. Disbursements 4.27 Credit disbursements will be made on the basis of 100% of the foreign cost and 70% of the local cost of technical assistance, new trucks, spare parts, materials, equipment and teaching aids. Because the technical assistance is vital to achieving project objectives (para 4.11), retroactive financing up to US$75,000 is recommended for technical assistance to NTC, to enable the Government to provide prompt logistical support (housing or caravan accommodation, furniture, household articles, and vehicles) and thus mobilize the technical assistance as early as possible. A disbursement sched- ule is shown in Table 8. A project completion report will be prepared by the NTC within six months after final disbursement. For the loans to the five trucking companies, the execution and delivery of a loan agreement between the TRDB and each project company, under terms, conditions and procedures satisfactory to the Association, will be a condition of disbursement of funds to assist the respective companies. For the replenishment of spare parts inventories, the submission by the Government of, and agreement between the Government and the Association to, a plan to ensure adequate availability and distribution of appropriate spare parts will be a condition of disburse- ment of that part of the credit. Any surplus funds at the completion of the project could be used to assist the formation or strengthening of additional public trucking companies. - 26 - H. Environmental Aspects 4.28 The project is not expected to have any significant environmental effects. 5. ECONOMIC EVALUATION A. Main Benefits and Beneficiaries 5.01 The project will assist the Government in rehabilitating and improving an important part of Tanzania's trucking industry, which accounts for a significant proportion of the total transport service in the country. The five public companies will benefit from suitably trained personnel, adequate truck fleets and workshop facilities, and appropriate operating procedures, all of which should result in efficient and financially strong companies. In addition, private and other public trucking organizations will benefit from the project, particularly through the NIT training program, and improved availability of suitable trucks and spare parts. The project com- ponents concerned with these efforts will contribute to raising the competence of personnel and improving the availability and utilization of truck fleets; as a result, the financial condition of trucking entities will be improved. 5.02 Transport improvement will benefit numerous consumers, farmers, merchants and others through reduced cost of truck transportation. In an industry characterized by a high degree of private sector competition, re- ductions in vehicle operating costs are generally passed on to the shippers, in the first instance, through lower rates. Publicly-owned truck companies will charge rates no higher than necessary to cover their costs and generate sufficient surpluses for reinvestment. Thus, the reduced trucking costs to be realized as a result of the project will be translated into more economic services. Moreover, the project will have a favorable effect on transport reliability and, therefore, there will be fewer transport delays, with re- duced losses associated with such delays. Lower trucking costs and improved reliability of service will undoubtedly have a stimulating effect on general economic development. B. Areas of Influence of Project 5.03 The project will influence truck transport primarily in the five selected regions, although its effects will be felt to some extent throughout the country. Improved availability of spare parts and trucks, as well as the training of personnel of the industry, will have a nationwide impact. 5.04 Certain regions will benefit particularly from the project element concerned with assisting the five regional transport companies. These regions - Mwanza, Tabora, Mtwara, Ruvuma and Dodoma - are widely scattered - 27 - (see Map), and collectively represent about a fourth of the country's pop- ulation and area. Agriculture heavily predominates in all five regions although the crop mix varies considerably among them (Annex 4). All of these regions are road improvements and a strengthened trucking industry are clearly needed. While this project will assist in the latter respect, other projects are directed toward road construction and improved main- tenance. C. Economic Analysis of Aid to Selected Trucking Companies 5.05 Assistance to five selected trucking companies is the principal project component, representing 68% of the total T Sh 119.4 million economic cost. The basis for the economic analysis of this component, as set out below, is an assessment of costs and benefits with and without the proposed project over the estimated economic life of the principal capital inputs (trainers/advisors, truck rehabilitation, workshop structures and equipment and new trucks with spare parts) including physical contingencies; the quan- tified benefits are savings in truck transport costs. The without-project case consists of parastatal trucking companies, not private sector trucking, because the Government is firmly committed to the participation of publicly- owned operations in this field; performance of parastatal trucking companies has been generally poor (paras. 3.17 and 3.19). Estimates show the proposed investment in the companies to be economically sound, yielding a 37% economic return (Table 13). 5.06 Costs. Costs of various elements of this project component, includ- ing a 10% physical contingency, have been estimated, exclusive of taxes and duties, as of July 1977: Item Cost (T Sh '000) Trainers/Advisors 24,011 Truck Rehabilitation 5,048 Workshop Structures 2,165 Workshop Equipment 3,650 Replacement Trucks with Spare Parts 46,690 Total 81,564 Shadow pricing the foreign exchange component of these costs, at 1.33 of the official rate of exchange, yields an economic cost of T Sh 95.4 million, which is used in the economic analysis. 5.07 Quantified Benefits. Savings in truck transport costs comprise the principal benefit from the assistance to the five companies. These savings - 28 - have been estimated on the basis of comparative costs of providing trucking service. Present operating costs (excluding depreciation) are relatively high at about T Sh 1.2 per ton-kilometer of actual traffic, compared with mission estimates of anticipated T Sh 1.0 per ton-kilometer for the companies in 1978, declining to T Sh 0.9 in 1979 and T Sh 0.8 in 1980, when the project will have a major impact on operations (Table 9). The reduced unit costs will result largely from improvements in operating performance as measured by truck availability (ratio of operational trucks to total trucks) and load factors (ratio of actual load to load capacity), both of which are presently very low. The combined effect of training, truck rehabilitation and new trucks with spare parts, and new workshops is forecast to raise the truck availability ratio from 0.50 or less to about 0.80 and the load factor from about 0.50 to 0.70 (Table 9). Consequently, the companies' output (ton-kilometers of traffic), based on project inputs, will be substantially higher than would be the case without the project. Savings in transport cost (Table 13) rise from T Sh 5.9 million in 1978 to T Sh 23.4 million in 1980; the subsequent cost savings result, in part, from the expectation that as units are retired after the end of their estimated four-year economic life, the companies will acquire additional equipment based on self-generated funds to enable them to achieve a continuing traffic growth. D. Economic Analysis of Spare Parts Imports 5.08 The project component for replenishing spare parts inventories represents 23% of the project's total economic cost. These spare parts would permit better utilization of existing trucks. The economic cost of the spare parts imports is estimated at T Sh 75 million but the benefits, though undoubtedly large, are difficult to estimate (Table 14). The prin- cipal benefit will be the avoidance of losses caused by current deficiencies in transport capacity, these losses comprising crop spoilage, reduced in- comes and the like. Another type of benefit will be the avoided capital cost of new trucks to overcome the current deficiency in transport capacity. While the potential transport capability based on the spare parts imports would be sizeable, there is uncertainty as to how much of this capability would actually be utilized. However, even if one assumes that only a third of the capability would be employed, the economic return would be 38%. E. Economic Evaluation of Other Project Components 5.09 An economic return on the other project components, mostly for training, which account for about 9% of total economic cost of the project, has not been calculated; however, benefits will be well in excess of costs. The technical assistance will help address the variety of problems discussed above which face the trucking sector. Aid to NIT will enable the country to make a greater effort in training manpower for the trucking industry and thus raise the quality of trucking management and operations; this will result in - 29 - more reliable and lower cost transport. The project coordination component of the project will be beneficial in that project implementation will be more satisfactory with the participation of the coordination unit. F. Sensitivity Analysis 5.10 Sensitivity of the 37% economic return on the principal component of the project has been analyzed, taking into consideration possible in- creases in costs and reductions in benefits. Due to the shortage of suffi- cient accurate data, estimates of benefits from savings in transport costs were calculated conservatively and are unlikely to be reduced. Provisions made under the project for central coordination and detailed monitoring of project activities are also designed to ensure that anticipated benefits materialize. The Government is also making vigorous efforts to ensure that technical assistance, which will provide the major part of quantified bene- fits, will be mobilized early and fully used. In any event, even if quan- tified benefits are reduced by 15% and costs increased by 15%, the rate of return would still be a satisfactory 21%. Overall, Association staff believe that the project, which represents a necessarily modest attempt to begin alleviating the serious bottleneck that inefficient trucking services imposes on the country's economic activity, is likely to effect initial improvements which will provide a basis for more comprehensive gains in future as the sector's absorptive capacity for assistance increases. 6. AGREEMENTS REACHED AND RECOMMENDATION 6.01 During credit negotiations, agreement was reached with the Government: (i) that it will establish and implement procedures for the systematic collection and evaluation nationwide of data with respect to number, age, size, location and ownership for all motor vehicles; seasonal and total transport demand; available truck capacity; and trucking industry performance and financial condition (para 3.07, 3.12 and 4.17); (ii) that the five transport companies to be assisted under the project will be: (a) formed under terms and conditions including owner- ship, financial participation, assets and opera- tional and management arrangements satisfactory to the Association and in receipt of their truck fleets as described in paras. 4.04-.05 by the dates specified in para. 4.05; - 30 - (b) issued promptly all necessary foreign exchange and transport licenses, and import permits re- quired for efficient and economic operations and for the timely implementation of the project (para. 4.06); and (c) a general carrier public trucking entity with a region-wide and inter-regional franchise (para. 4.06); (d) under autonomous operational and financial man- agement (para. 4.06); (e) permitted to negotiate economic rates for their services (para. 3.15); (iii) that proposals to create new, or substantially increase existing, truck fleets of public entities serving the project regions will be discussed with the Association as and when these proposals are being considered (para. 4.06); (iv) on establishment of a project implementation schedule, monitoring indices and progress reporting for all project components (paras. 4.06, 4.18 and 4.22); (v) that proposals and recommendations which would significantly affect the operations and organization of project companies and their effects on the trucking industry will be discussed with the Association as and when they are being considered (para. 4.06). (vi) that, by March 31, 1978, a plan designed to ensure adequate availability of appropriate spare parts will be submitted to the Association for approval (para. 4.16); (vii) on procurement procedures for trucks, spare parts, equipment and other items provided under the project (para. 4.24); (viii) on terms, conditions and procedures for onlending credit proceeds allocated to the five trucking companies (para. 4.25); (ix) that suitably qualified technical assistants will be retained under the project according to an agreed time schedule and under terms and conditions satisfactory to the Association (para. 4.26); (x) that the Project Coordinator and the Assistant will be appointed by December 1977 (para. 4.26); and - 31 - (xi) that a suitable counterpart will be assigned to each technical assistant provided under the project and, by an agreed date, IDA will be given the opportunity to review the qualifications of the proposed counter- parts, with appointments to take place within three months of the IDA review (para. 4.26); (xii) that a Project Completion Report will be prepared with- in six months after final disbursement (para. 4.27). (xiii) that an action plan for organizing, improving and strengthening the trucking industry in Tanzania will be prepared based on the results of and experience gained from the project; such action plan to include an explicit strategy and program regarding future public sector involvement in the industry (para. 4.18). 6.02 The execution and delivery of the loan agreement between the TRDB and each project company will be a condition of disbursement of Credit Funds for truck rehabilitation, repair facilities and new trucks and spare parts for the respective trucking companies (para 4.27). 6.03 The approval by the Association of a plan to ensure adequate avail- ability of appropriate spare parts will be a condition of disbursement of funds provided under the Credit for replenishment of spare parts inventories (para. 4.27). 6.04 With the agreements and under the conditions outlined above, the proposed project is suitable for an IDA credit of US$15 million, on the standard terms, to Tanzania. SeDtember 21. 1977 TABLE 1 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Road User Charges Import Duties on Fuel, Vehicles and Tires and Tubes Gasoline T Sh 600/m3 Diesel T Sh 400/m3 Crude Petroleum T Sh 600/m3 Partly Refined Petroleum T Sh 600/m3 Tires and Tubes 30% Road Tractors for semi-trailers 20% Passenger cars 1,500-1,750 cc 60% Passenger cars 1,750-2,000 cc 75% Passenger cars 2,000-2,250 cc 100% Passenger cars over 2,250 cc 150% Trucks over 3 tons 20% Other vehicles Free Government Revenues from Road User Charges (T Sh millions) FY73 FY74 FY75 FY76* FY77* Motor Vehicle Registration Tax 7.9 9.9 1.7 2.0 0.3 Motor Vehicle Licenses 28.6 5.5 6.1 5.0 4.1 Motor Vehicle Transfer Tax 5.7 5.7 7.7 3.0 7.6 Transport Licenses 4.7 5.1 11.5 7.0 11.0 Total: 46.9 26.2 27.0 17.0 23.0 * Estimated Source: Tanzania Ministry of Finance, 1977. September 1977 TABLE 2 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Motor Vehicles - New Registrations, 1962-74 Light Com- mercial Motor Lorries Buses & Tractors Trailers Other Total Year Cars Vehicles cycles and Trucks Coaches 2/ 3/ Vehicles 1/ All Vehicles (Private and Government): 1962 3,488 1,141 794 955 233 397 367 13 7,418 1963 3,780 1,103 682 879 279 692 271 12 7,702 1964 3,285 1,345 824 1,212 357 648 436 23 8,130 1965 2,776 1,427 1,033 1,011 412 858 276 16 7,809 1966 3,238 1,816 1,002 2,086 349 664 116 9 9,276 1967 2,937 1,784 1,027 1,680 299 928 3 33 8,691 1968 3,313 1,963 1,081 1,758 495 686 341 62 9,735 1969 3,276 1,908 1,165 1,490 494 734 214 19 9,300 1970 3,392 1,859 1,289 2,345 480 806 399 49 10,619 1971 1,886 1,309 989 1,870 376 432 321 20 7,203 1972 1,190 603 687 1,134 317 561 220 25 4,737 1973 2 120 967 1,422 1,542 414 390 282 19 7,156 1974 4/ 2:763 986 1,541 2,490 523 718 415 149 9,585 Government Vehicles Only: 1962 37 211 19 66 11 15 34 3 396 1963 83 219 14 63 5 15 8 2 409 1964 75 250 22 100 12 58 45 12 574 1965 216 251 33 151 33 38 34 - 756 1966 258 399 30 273 29 93 - - 1,082 1967 74 451 101 227 42 219 2 3 1,119 1968 179 303 69 288 31 93 110 11 1,084 1969 149 251 141 202 21 71 35 4 874 1970 418 416 204 514 51 147 84 27 1,861 1971 222 397 176 219 53 78 30 3 1,178 1972 301 99 36 106 20 21 14 1 598 1973 859 380 186 681 71 111 81 8 2,377 1974 1,080 195 480 853 36 179 74 25 2,922 1/ Pick-ups, Vans, Landrovers, Boxbodies, etc. 2/ Until 1967, Tankers were included with tractors. From 1968 onwards Tankers have been grouped together with Lorries and tractors. 3/ Ambulances, Bulldozers, Caravans, Cranes, Fire-engines, Graders, etc. 4/ Provisional figures. Source: Central Registry of Motor Vehicles September 1977 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Road Vehicle Fleet, 1962-75 li62 1963 196) 1965 1966 1267 98J 16 17 91 17 1973 1974 1975 Privatelvy-owned Vehicles Passenger cars 19,048 21,419 22,854 22,985 25,877 28,748 26,809 29,783 33,078 33,261 34,141 Light commercial vehicles 7,755 8,046 8,454 8,557 9,884 11,213 10,648 12,205 14,171 14,280 14,784 Trucks 6,386 6,779 7,301 7,215 9,004 10,461 10,137 11,578 13,570 13,821 14,849 Buses 1,526 1,687 1,887 2,041 2,354 2,613 2,473 2,969 3,486 3,521 3,816 Motorcycles 4,495 4,783 5,221 5,415 6,449 7,293 6,970 7,989 9,306 9,396 10,072 Other 2 2.316 3.101 3.803 3,971 4,557 5,792 43.44 5,939 7.096 7.151 7.921 Subtotal 41,526 45,815 49,520 50,184 58,125 66,120 61,471 70,463 80,707 81,430 85,583 Government-owned Vehiclesl/ 3,623 3,859 4,391 4,238 5,320 6,534 4,003 4,872 7,008 7,855 8,454 (o , w~ich , trucks) (1,290) (1,255) (1,337) (1.381) (1,654) (1,881) (987) (1,196) (1,534) (1,834) (1,940) (2,197) _42487) (2,817) Total Vehicle Fleet 45,149 49,674 53,911 54,1422 63,445 72,654 65,474 75,335 87,715 89,285 94,037 97,411 100,961 104,968 I/ Seeming discrepancies for which no explanation could be obtained. g/ Ambulances, bulldozers, cranes, fire engines, graders, tractors, trailers, etc. i/ All types of vehicles. Source: Central Registry of Motor Vehicles. September 1977 wd TABLE 4 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEIMENT PROJECT Vehicle and Spare Parts Imports, 1972-74 Units TShs thousand L972 1973 1974 1972 1973 1974 Road Motor Vehicles Cars < 1200cc 442 5,881 1200-1500cc 126 2,031 1500-1750cc 338 5,742 1750-2000cc n.a. 298 n.a. 8,130 2000-2250cc 15 283 < 2250cc 19 _ 263 Sub-total 554 1,190 1,233 6,964 20,070 22,430 Buses Mini buses: 1200cc (14 seats) 1 3 1200-1500cc 16 274 1500-1750cc 157 4,233 1750-2000cc n.a. 4 n.a. 110 >2000cc With 14 or more seats: ____ 91 __5,266 Sub-total 59 141 269 1,448 3,751 9,866 Lorries Load capacity< 3 tons 450 8,753 > 3 tons 762 52,752 n.a. 1212 n.a. 61,505 Four wheel drive vehicles 973 _ 29,170 Sub-total 732 1,227 2,185 26,067 28,631 90,675 Trailers 96 4 128 2,221 . 9,714 Engines for Motor Vehicles 56 95 78 170 1,318 576 Parts of Engines for Motor Vehicles 3,839 3,810 11,576 Road Motor Vehicle Parts 50,017 1.385 Road Motor Vehicle Parts 45,937 17,377 Total parts 49,976 55,145 30,914 Source: Import Statistics, 1976. September 1977 Table 5 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Age Composition of Truck Fleet, Private and Parastatal, 1962-75 Year of First New Surviving Percentage of Registration Registrations Vehicles-1975 1975 Fleet 1962 or earlier 889 142 1% 1963 816 228 2% 1964 1,112 434 3.3 1965 860 430 3.3 1966 1,813 1,052 8.0 1967 1,453 959 7.3 1968 1,232 936 7.1 1.969 1,288 1,030 7.8- 1970 1,831 1,575 12.0 1971 1,651 1,486 11.3 1972 1,028 946 7.2 1973 1,844 1,770 13.4 1974 1,624 1,592 12 1 1975 595 595 4.j 13,175 100.0% Sources: Vehicle Fleet Survey, 1971 Central Motor Vehicle Registry Bank Mission Estimates, 1976. September 1977 Table 6 TANZANIA TRUCKING INDUSTRY REdABILITATION AND IMPROVEMENT PROJECT Estimated Reeional Distibution of Truck Fleet, 1975 Estimated Percentage Trucks, 19751' of Total Arusha 1,040 8.0 Coast/Dar es Salaam 4,745 36.5 Dodoma 286 2.2 Iringa 286 2.2 Kigoma 104 0.8 Kilimanjaro 1,040 8.0 Mara 143 1.1 Mbeya/Rukwa 286 2.2 Morogoro 546 4.2 Mwanza 1,326 10.2 Mtwara/Lindi 182 1.4 Ruvuma 169 1.3 Shinyawga 247 1.9 Singida 117 0.9 Tabora 702 5.4 Tanga 1,365 10.5 West Lake 416 3.2 Total 13,000 100.0 1/ Assuming the same distribution pattern as 1967 and excluding Government and defense forces vehicles. Source: Trimac's "Tanzania Trucking Industry Study" 1976, Mission Estimates September 1977 TABLE 7 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Axle-load Regulations- (Kgs) All Roads Maximum gross tire load 2,500 Maximum gross axle load 8,000 Maximum gross tandem axle load -both two-wheel 8,000 -one two-wheel and one four-wheel 11,400 -both four-wheel 14,500 Maximum gross load on adjacent axles -both two-wheel 10,000 -one two-wheel and one four-wheel 13,000 -both four-wheel 16,000 Maximum gross load on three axles -all two-wheel 12,000 -front and rear two-wheel; middle four-wheel 17,900 -front and middle four-wheel and rear two-wheel 21,000 Maximum gross vehicle weight (including trailer) 35,000 1/ More restrictive axle load limits apply to Horohoro-Tanga-Segera-Chalinze and Namanga-Arusha-Moshi-Korogwe-Segera roads because of limited pavement bearing capacity. Source: The Road Traffic Regulations (Maximum Weight of Vehicles), 1975. September 1977 Table 8 TANZANLA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Estimated Schedule of Disbursements IDA Fiscal Year Cumulative Disbursement and Quarter at end of Quarter US$ '000 1977/78 March 31, 1978 45 June 30, 1978 275 1978/79 September 30, 1978 460 December 31, 1978 800 March 31, 1979 1,500 June 30, 1979 4,000 1979/80 September 30, 1979 4,800 December 31, 1979 6,000 March 31, 1980 7,200 June 30, 1980 8,300 1980/81 September 30, 1980 9,200 December 31, 1980 10,500 March 31, 1981 11,250 June 30, 1981 12,250 1981/82 September 30, 1981 12,500 December 31, 1981 13,200 March 31, 1982 13,800 June 30, 1982 14,000 1982/83 September 30, 1982 14,600 December 31, 1982 15,000 SeDtember 1977 TABLE 9 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Performance Targets for the Five Transport Companies Public Companies Targets for Selected Companies Efficient in Tanzania After After Tanzania Trucking (average) 2 years 4 years Parastatal Vehicle-kilometers per truck per year 35,000 40,000 50,000 60,000 Ton-kilometers per truck per year 100,000 125,000 250,000 450,000 1/ Truck availability 0.6 0.7 0.8 0.9 2/ Truck utilization 0.5 0.6 0.7 0.8 Staff/vehicle ratio 4+ 3 2+ 2 Operation cost per ton- kilometer of actual traffic (excluding depreciation) T Sh 1.2 T Sh 1.0 T Sh 0.8 T Sh 0.6 Operating Ratio (Operating Costs) Over 1 Below 1 0.9 0.85 (Operating Revenue) 1/ Truck availability = Number of operational trucks Total trucks 2/ Truck utilization = Used capacity of available trucks in ton-km Total capacity of available trucks in ton-km Source: Transport companies and Appraisal Mission, October 1976. September 3Q77 TABLE 10 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Truck Fleet of the Five Transport Companies, 1977-82 Trucks Present Trucks Rehabilitated Purchased new Total Not Rehabilitated Trucks Under Project Fleet 1978 160 52 0 212 1979 60 104 50 214 1980 0 104 160 264 1981 0 52 160 212 1982 0 0 160 160 Note: The Table shows a decrease in the fleet size after 1980 because only fleet imports financed under the project are considered for this period. In practice, it is expected that sufficient additional trucks would be purchased after 1980 to permit a modest growth in traffic. Source: Transport companies and appraisal mission, October, 1976. September 1977 TABLE 11 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Consolidated Operating Statement for the Five Transport Companies Projected for 1980 Amount ( T Sh '000) Operating Revenue 52,178 Operating Expenses Running Costs Vehicle Repairs 6,105 Fuel and Oil 8,922 Tires and Tubes 9,392 Miscellaneous 2,818 Fixed Costs Salaries and Wages 4,226 Depreciation 9,392 Licenses and Insurance 1,409 Other Administrative Expenses 2,348 Interest 2,348 Total 46,960 Net Surplus 5,218 Note: Based on 264 trucks handling 58.7 million ton-kilometers of traffic at average cost of T Sh 0.8 per ton-kilometer. Source: Feasibility studies for regional transport companies and appraisal mission, October 1976. September 1977 TABLE 12 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Truck Fleet Capability of the Five Transport Companies After Strengthening, 1977-32 (ton-km millions) Present Trucks Trucks Not Rehabilitated Purchased New Total Fleet Rehabilitated Trucks Under Project Capability 1978 22.4 7.3 0 29.7 1979 9.6 16.6 10.0 36.2 1980 0 18.7 40.0 58.7 1981 0 9.4 40.0 49.4 1982 0 0 40.0 40.0 Note: The Table shows a decrease in the capability after 1980 because only fleet inputs financed under the project are considered for this period. In practice, it is expected that sufficient additional capability would be purchased after 1980 to permit a modest growth in traffic. Source: Transport companies and appraisal mission, October 1976. September 1977 TABLE 13 TANZANIA Trucking Industry Rehabilitation and Improvement Project Costs and Benefits Based on Assistance to the Five Transport Companies (TSh Millions) Cost of Cost of Cost of Producing Producing Saving in Procurements TKM with TKM withou Transport Net Under Project I' Project Project 3 Cost Benefits 1978 1.1 29.7 35.6 5.9 4.8 1979 47.1 32.6 43.4 10.8 -36.3 1980 36.5 47.0 70.4 23.4 -13.1 1981 9.0 48.0 72.0 24.0 15.0 1982 1.7 48.0 72.0 24.0 22.3 1983 0 48.0 72.0 24.0 24.0 1984 0 48.0 72.0 24.0 24.0 1985 0 48.0 72.0 24.0 24.0 1986 0 48.0 72.0 24.0 24.0 1987 0 48.0 72.0 24.0 24.0 1988 0 48.0 72.0 24.0 24.0 1989 0 48.0 72.0 24.0 24.0 1990 0 48.0 72.0 24.0 24.0 1991 0 48.0 72.0 24.0 24.0 1992 0 48.0 72.0 24.0 24.0 Economic return 37% 1/ Cost of foreign element in procurements is shadow-priced at 1.33 of the official rate of exchange. 2/ Based on (a) total capability of fleet shown in Table 12 and additional trucks obtained with supplemental financing; and (b) unit operating cost (excluding depreciation) ranging from TSh 0.8 to 1.0 per ton-kilometer of actual traffic. 3/ Based on (a) total capability of fleet shown in Table 12 and additional trucks obtained with supplemental financing; and (b) unit operating costs (excluding depreciation) of TSh 1.2 per ton-kilometer of actual traffic. Source: Transport companies and appraisal mission, October 1976. September 1977 Table 14 Page 1 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Costs and Benefits of Truck Spare Parts Imports Costs: Spare parts procurement: T Sh 62.3 million (T Sh 37.4 million foreign exchange cost shadow priced at 1.33 of the official rate of exchange and T Sh 12.6 million local cost) Labor cost of installing spare parts: T Sh 12.5 million (based on current rates of labor in Tanzania) Benefits: Benefits from the procurement of spare parts are difficult to estimate. Two approaches to the assessment of benefits are: 1. Avoided losses caused by insufficient transport It is known that there are at present widespread delays in movement of goods which result in some spoilage, reduced incomes and other losses. These losses are attributable in part, though the amount has not been measured, to a shortage of transport capacity. The trucking capacity that would be made available as a consequence of the proposed import of spare parts would reduce the losses but the amount of the reduction cannot be readily estimated. 2. Avoided capital cost of new trucks In lieu of bearing the losses suggested above as resulting from insuffi- cient transport capacity, one may assume that additional trucks would be imported to make up the capacity deficiency. The capital cost of such trucks would be avoided if the proposed spare parts were procured thus permitting better utilization of the existing truck fleet. (a) Basic factors for estimating avoided capital cost: (1) T Sh 0.40 per truck kilometer spare parts consumption rate; (2) average 50,000 kilometers per truck; (3) average T Sh 125,000 economic cost of truck (b) Method: (1) T Sh 50 million procurement of spare parts . T Sh 0.40 consump- tion rate = 125 million truck kilometers per year 50,000 kilometers per year = 2,500 trucks; (3) 2,500 trucks x T Sh 125,000 unit cost per truck = T Sh 312 million x 1.33 of the official rate of exchange = T Sh 415 million avoided capital cost shadow priced (c) Conclusion: The T Sh 415 million potential avoided capital cost is far greater than the T Sh 75 million economic cost of this project component. While the benefit from the spare parts imports would undoubtedly be large there is considerable uncertainty as to how much of the Table 14 Page 2 added vehicle capability resulting from such imports would be economically utilized. However, at least a third of the capability would be employed and on this basis the economic return is 38%. Source: Transport companies and appraisal mission, October 1976. September 1977 ANNEX 1 Page 1 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Transport Modes Other Than Roads Railways 1. Two railway systems serve Tanzania, the East African Railway Cor- poration (EARC) and the Tanzania-Zambia Railway Authority (TAZARA) (para. 2). The EARC, a joint venture of the East African Community (EAC; consisting of Tanzania, Kenya, Uganda), serves northern Tanzania with about 2,600 km of 1.00 m gauge track, linking Dar es Salaam and Tanga with Tabora, MJwanza, Kigoma and Arusha. The railway moves a wide variety of Tanzanian goods including cotton and other agricultural exports, as well as diverse import products. In addition, the Kigoma-Dar es Salaam line handles large amounts of transit traffic for its landlocked neighbors, particularly Burundi. EARC operations within Tanzania have recently been unsatisfactory, largely due to difficulties arising from the three Government's disagreements on corporation policies; steps are being taken toward decentralization of the EARC. Follow- ing decentralization, the Tanzania section will require substantial invest- ments in track rehabilitation, workshops, locomotives and wagons; training and technical assistance will also be needed. 2. TAZARA, financed by the Peoples Republic of China and owned jointly by Tanzania and Zambia, was completed in 1975 and consists of 1.067 m gauge track extending 970 km from Dar es Salaam to the Zambia border and continuing another 890 km into Zambia. The principal traffic at present is, and for some years will continue to be, Zambia's exports of copper and imports. Future growth of Tanzania traffic on the line will depend on general development of its southern regions. Ports and Shipping 3. Though the principal Tanzania ocean ports of Dar es Salaam, Tanga and Mtwara are organized under the East African Harbours Corporation (an entity owned by the EAC), they operate more or less independently, following the move toward decentralization of EAC organizations. Tanga has no deep water berths and requires use of lighterage facilities; Mtwara has two deep- water berths. The major port facilities in Dar es Salaam include eleven alongside general cargo berths for oceangoing ships, 600 meters of lighterage quay, one buoy berth for crude oil tankers and one pier for petroleum products tankers. Dar es Salaam handles nearly four million tons of traffic annually, or about 85% of the total for the three ports. Nearly half of the tonnage through the key port represents Zambian traffic. Operating efficiency in the Dar es Salaam port was unsatisfactory prior to 1972 but has improved signifi- cantly since that time. Recent planning studies of the Tanzanian ports have ANNEX 1 Page 2 concluded that fairly sizeable improvements and expansion are needed in Dar es Salaam, some minor improvements in Tanga; virtually no developments will be required at Mtwara for many years. 4. The Tanzanian Coastal Shipping Lines (TCSL), established in 1971, is a National Transport Corporation subsidiary with headquarters in Dar es Salaam and branches in Mtwara and Lindi. The line has a monopoly on carrying domestic freight and passengers between various coastal and island ports south of Dar es Salaam. The fleet consists of two vessels, each capable of trans- porting 150 passengers and about 500 tons of cargo. A third vessel has been ordered which will be used to transport cattle from Tanzania to foreign markets in the Middle East. Traffic between Dar es Salaam and Mtwara/Lindi is highly seasonal with heavy traffic in the rainy season when alternative road transport is unreliable, circuitous and costly. Until an improved coastal road including a costly bridge across the Rufiji River can be built (which appears unlikely for many years), the TCSL will play an important transport role in southeast Tanzania. 5. Some transport services are also provided on Lake Victoria and Lake Tanganyika. The EARC has historically provided ancillary ferry services at Lake Victoria, both internationally and within Tanzania. In 1976, as a result of controversies between member countries of the EAC, all EARC ferry boats previously operating on the lake were held in Kenya, which adversely affected lake services between the Tanzanian ports of Mwanza, Bukoba and Musoma. The few other vessels serving the lake have insufficient capacity to handle the normal waterborne traffic; this problem has been alleviated to some extent by use of road transport, but this involves delays and relatively high cost. On Lake Tanganyika, Burundi-owned ships transport considerable cargo between Bujumbura and Kigoma, the western terminus of EARC. Air Transport 6. Of the over 50 officially-designated air fields in Tanzania, only a few are built to high enough standards to permit operation of international jet aircraft; many are dirt and grass strips used only occasionally. The airports of highest standard are at Dar es Salaam and Kilimanjaro; Mtwara, Dodoma, Mwanza and Zanzibar also have paved runways. The East African Airways Corporation (EAA), ceased operations in February 1977 due to financial dif- ficulties. Owned by the EAC, it provided regular services to 18 airports within Tanzania, using primarily F-27 turboprop aircraft; its international services linked the country with several countries including Kenya, Mozambique, Malawi and Zaire. Air passenger traffic to and from Dar es Salaam and other Tanzania airports had grown rapidly in recent years. Domestic air service is particularly important in Tanzania, as its road network is of low standard and rail lines do not reach a number of important towns. Since the cessation of services by EAA, internal services have been considerably curtailed with only the major centers of Dar es Salaam, Mwanza, Kilimanjaro and Mtwara served on a much reduced timetable using aircraft chartered by Tanzania from Mozambique. A national airline, Air Tanzania, was formed subsequent of the closure of EAA. It is expected to replace these charters, serving all the major domestic centers formerly served by EAA. ANNEX 1 Page 3 Pipeline 7. A pipeline of 20.3 cm diameter was constructed in 1968 from Dar es Salaam to Ndola in Zambia. Initially, it served as a products line, carrying principally gasoline to Zambia. Following construction of a refinery at Ndola, the line has transported crude oil rather than products from Dar es Salaam. The capacity of the line is 712,000 tons p.a. and traffic flow has generally been at about that level. The role of the pipeline is that of a transit facility for Zambian traffic. September 1977 ANNEX 2 Page 1 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Previous Bank Group-Financed Transport Projects A. Railway and Port Projects 1. Bank Group loans amounting to US$166 million have been made to the two East African Community (EAC) organizations, the East African Railway Corporation (EARC) and the East African Harbours Corporation (EAHC). The railway loans (110-EA in 1955; 428-EA in 1966; 674-EA in 1974) helped modernize and expand the railway system of the EAC countries (Tanzania, Kenya and Uganda). Under the harbor loans (638-EA in 1969; 865-EA in 1972) Dar es Salaam, among other ports, was expanded and improved. B. Roads Projects 2. A number of road projects have been financed by the Bank Group. The first of four Bank-Group road projects in Tanzania was financed by a US$14 million IDA credit in 1964 (48-TA), supplemented by a US$3 million credit in 1968 (115-TA), and consisted of construction of six road sections (860 km) and detailed engineering of part of the TANZAM Highway (230 km) and secondary roads (335 km) in the cotton growing district of Geita. This project was satisfactorily completed in 1970. 3. The second project, financed by a US$15.5 million IDA credit and a US$7.0 million Bank loan in 1969 (Credit 142-TA and Loan 586-TA), consisted of the reconstruction of a 510 km section of the TANZAM Highway and was satis- factorily completed in 1972. A Swedish credit of US$7.5 million assisted with the financing of this major road project in the south. 4. The third project, financed by a US$6.5 million IDA credit (265-TA) in 1971, consists of improving to paved standard of a road extending west- ward from the port of Mtwara and the betterment of 475 km of agricultural feeder roads. Progress on this project has been slow and, because of cost overruns, the funds made available under the credit have been sufficient to finance only the Mltwara-Mingoya section (82 km) and the agricultural feeder roads. The Government has received assistance from the African Development Bank (AfDB) for the Mingoya-Masasi road (118 km) originally included in the Third Project. 5. The fourth project, financed by a US$10.2 million IDA credit (507-TA) in 1974, comprises the first stage of the Government's program to improve the maintenance of primary roads throughout the country. The project ANNEX 2 Page 2 includes (a) maintenance and, where necessary, rehabilitation of about 3,300 km of primary roads; (b) construction/improvement of road maintenance camps, workshops and offices; (c) procurement of road maintenance and work- shop equipment, vehicles, spare parts, tools and materials; (d) training of maintenance personnel; (e) technical assistance to the MOW; and (f) a study of the country's road transport industry. Implementation of this project has been slow, although recently the pace has improved. The transport industry study was completed in 1976, the results of which confirmed the need for the proposed project. September 1977 ANNEX 3 Page 1 TANZANIA TRUCKING INDUSTRY REHABILITATION AND INPROVEMENT PROJECT Public and Private Truck Transport Operations National Transport Corporation 1. The National Transport Corporation was established under the Public Corporation Act of 1969 with a broad charter to conduct or engage in the businesses of carrying, for hire, persons and/or goods by land, sea, inland waterway or air transport and to engage in other related activities. Although NTC does not itself directly engage in transport operations it exercises sub- stantial influence over the policies and activities of its subsidiary operat- ing organizations. At present, the NTC owns and operates three companies: The National Bus Service, Dar es Salaam Motor Transport Company and Tanzania Coastal Shipping Line; the National Road Haulage Company (paras. 2-6) was also controlled by NTC until it was dissolved in April 1977. The NTC recog- nizes the difficulties of managing, from a single base, transport operations that are scattered in many parts of the country. Accordingly, the NTC is exploring ways of aiding in the development of truck transport through the provision of assistance for the formation and expansion of regional transport companies. National Road Haulage Company (NRHC) 2. Prior to 1971, private truckers had been providing transport services satisfactorily, but with the Government's decision to expand public sector participation in the industry, many private operators left the industry, and those who stayed began concentrating on the more lucrative long distance hauls. In an effort to overcome the resulting shortage of services, the parastatal NRHC was created and commenced operations in July 1972 with 10 trucks and 10 trailers, charged mainly with providing economical and reliable road freight transport on the trunk road network between regional centers. In July 1973, NRHC expanded and reorganized to include the Long Distance Division and a Hire Pool Division, for shorter hauls. As a result of financial difficul- ties the company was dissolved in April 1977. Long Distance Division 3. This Division was formed to compete with the private sector in the lucrative inter-regional and international long distance transport industry and was provided with 97 lorries (mainly Scania purchased with a Swedish grant) and 53 trailers. Later it subcontracted trucks to Zambia-Tanzania Road Services (ZTRS) to haul Zambia's copper exports and general cargo imports. A few vehicles operated between Dar es Salaam, Tanga and Arusha but, due to poor operations and management as well as low vehicle availability and use, this service made only a minimal contribution to Tanzania's total transport demand. ANNEX 3 Page 2 Hire Pool Division (HPD) 4. HPD was formed to provide short distance regional transport of cash crops when private transporters began concentrating on long distance haulage. HPD was to provide a mobile pool of vehicles to supplement parastatals and cooperatives' local fleets during peak crop periods, but instead estab- lished branches with permanent fleets in some regions. The only regions where its fleets increased and decreased appreciably with crop seasons were Mwanza and Mtwara, between which about twenty trucks alternated for the cotton and cashewnut seasons, respectively. 5. In 1976, HPD had 216 trucks, purchased with bilateral loans, of which 100 were 8 to 9 ton Mercedes Benz and 116 were 7 ton Isuzus. These trucks operated on low standard feeder roads, which increased breakdowns and vehicle maintenance problems. This, coupled with poor management, insufficient spare parts, lack of trained staff and vehicle repair facilities, generally poor drivers and inefficient operating procedures resulted in low vehicle availability and utilization. At any one time, only about 60% of its vehicles were in operating condition and on average only about 40% of the hauling capacity of operating vehicles was used. As a result of these inefficiencies and because it established permanently based fleets, NRHC did not provide a much-needed mobile fleet of trucks to assist with peak crop seasons, and instead competed for the year round transport business, to its own detriment as well as that of the regionally based fleets. NRHC Financial Position and Dissolution 6. NRHC had serious financial problems throughout its five year exis- tence. Its rapid expansion to provide hire pool services in 1973 were financed by hard loans and overdrafts. However, the company, staffed by inexperienced and untrained people, operated on the poorest roads where operating costs were highest and was forced to accept freight rates which did not cover costs. Its high amortization and interest charges for loans and overdrafts could not be made from revenues that were insufficient to cover even operating costs; thus, the Company's debt increased and its capital assets eroded. The financially- pressed company had no vehicle replacement funds, or even sufficient working capital for spare parts and vehicle repairs. Consequently, a large propor- tion of its trucks were in extremely poor condition and lay idle. The resultant reduced freight revenues compounded the financial problems which finally caused the company to be dissolved. Regional Transport Companies 7. Several regions have been served by companies providing both freight and passenger services. In the southeast, TEETEEKO is owned and operated by the District Development Corporations of Lindi, Mtwara and Ruvuma Regions; CORETCO, a transport cooperative, operates in the Coast and Dar es Salaam regions. Each operates trucks as well as passenger buses and faces problems similar to NRHC's; they operate on poor roads and lack skilled managers and other operational staff, working capital and vehicle maintenance servicing, repair parts and facilities. ANNEX 3 Page 3 8. With the 1976 dissolution of Regional Cooperative Unions, which had transport wings, a number of regions have formed new transport companies using vehicles, facilities and staff taken over from the Cooperative Unions. Companies have been formed in Dodoma and Tanga Regions and others are being planned or considered for Tabora and Mwanza. Other regions are also looking into this approach. At present, there are diverse ownership arrangements among these companies; for example, the Dodoma Company is owned by the District Development Corporations, while in Tabora, the various crop and marketing parastatals will be the shareholders. However, FMO favors regional companies and is considering issuing an edict for their formation in every region. Such an edict would probably include guidelines for their formation and ownership. 9. The companies that have been formed or are being planned are small, similar to the transport wings of the disbanded Cooperative Unions. They will also provide passenger and freight transport services; the Dodoma and proposed Tabora companies will also own and operate petrol stations. 10. There is little information about the performance of these recently- formed companies but, because they are regionally based and controlled, they should be more responsive to regional needs. Provided they are efficiently managed and operated, and gain the confidence of their clients, they could develop into valuable and versatile institutions with the prospect of not only providing transport but also of becoming the main coordinating and clearing centers for all regional transport. Transport Wings of Crop Authorities 11. Most crop authorities have some trucks of their own and hire others as required to transport agricultural produce and the farm inputs they supply. As crop seasons normally last three to six months, these fleets of trucks are rarely used intensively for more than six months each year. In the off-peak season, although they could be used for hire or in other areas they seldom are because of the difficulty in getting spare parts at times and lack of suffi- cient vehicle repair facilities and personnel. Further, because they also have difficulty hiring additional trucks in peak season, the larger authori- ties are attempting to expand their fleets. Should these trends continue, truck utilization will decrease and transport costs rise. Other Non-private Transport 12. Some industrial parastatals have their own transport fleets, such as Tanzania Breweries Ltd and Agip Ltd. The Board of Internal Trade also formed a separate transport company, the Biashara Transport Company to transport merchandise from ports and factories to the sales outlets, normally the Regional Trading Companies. Two other transport organizations operate trucks within Tanzania; the Zambia-Tanzania Road Services (ZTRS) which operates exclusively between Zambia and Dar es Salaam; and Tanzania Road Services, an extension of East African Railways. 13. Tanzania Breweries Ltd. (90 trucks) and Agip Ltd. concentrate on their own products. The Biashara Transport Company, an autonomous company ANNEX 3 Page 4 formed in 1976 by combining the Board of Internal Trade's transport wing with the truck fleet of the National Textile Company, operates 33 trucks and transports merchandise for member companies; it also competes for backhauls in profitable areas with good roads. ZTRS, owned by Zambia (35%), Tanzania (35%), and an Italian vehicle manufacturer (30%), was formed in 1966 to transport Zambia's copper exports to Dar es Salaam and backhauls Zambia's general cargo imports from the port. It operates 320 of its own trucks and hired NRHC trucks and private trucks. The opening of the TAZARA Railway has thrown some doubt on the future of ZTRS trucks' services for the Dar es Salaam- Zambia traffic. However, it is likely that these trucks will be retained to serve Zambia's needs on other routes. Tanzania Road Services (TRS) operates 72 trucks and 63 buses providing road freight and passenger services in areas where the EAR does not have rail services, mainly in the southern highlands. ZTRS, TRS and Biashara Transport Company are operating efficiently and economically, reflecting the skills and ability of their management and operations staff. Private Operators 14. Until 1973 road freight transport was provided almost exclusively by private truck owners and companies. Since then, the Government has adopted a policy of discouraging private operators and increasing the role of publicly- owned transport. Many private truckers left the industry, mapiy leaving the country altogether, including a lot of foreign owned trucks. However, despite this exodus, the private segment of the industry is still dominant, owning over two-thirds of the trucks and providing more than 60% of all road freight trans- port service. More than 90% of private truck owners own less than four vehi- cles and account for about 68% of the fleet, with 58% of trucks being single vehicle owner-operations. In contrast, less than 1% of private trucking organizations own more than 10 trucks but they account for about 20% of the truck fleet. 15. The small fleet and single-vehicle operators have the smaller trucks (average 5.5 tons) and concentrate on intraregional and local services, whereas the larger companies own larger vehicles (average 8.7 tons) and tend to concentrate on the more lucrative long distance inter-regional transport. All private operators, with the objective of maximizing their income, favor long hauls over short hauls, avoid areas with the poorest roads and refuse to serve areas where ferry queues or impassable roads cause long delays. In this way, by concentrating on the more profitable part of the transport de- mand and by operating efficiently, the private segment continues to prosper and, in many cases, is continuing to invest in more and bigger trucks and to grow. The demand by private transporters for new trucks far exceeds the supply which is strictly regulated by the Government, both in total numbers imported and in allocation between prospective buyers. In addition their efficiency is reduced because frequently the Government imports and allocates trucks of different makes and sizes to those applied for, so the operators are forced to accept inappropriate vehicles for their jobs or for the areas in which they operate and also they have to retrain mechanics and increase investments in spare parts stocks. September 1977 ANNEX 4 Page 1 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Transport Problems of the Selected PRgions 1. Certain regions of Tanzania - Mwanza, Tabora, Mtwara, Dodoma and Ruvuma - have particularly difficult transport problems and the project therefore concentrates considerable resources on strengthening the trucking industry in these areas. Characteristics of the regions and a review of their transport systems and problems are discussed below. Mwanza Region 2. General Characteristics: Mwanza region, located in the northwester part of Tanzania and bordering on Lake Victoria, has a land area of 19,700 km its elevation is about 1,000 to 1,500 m and the terrain is rolling in character. Rainfall occurs predominantly in the period from February to May and the annual precipitation ranges from 700 to 1,000 mm. Population of Ehe region is about 1.3 million and the density a comparatively high 66 per km . Agriculture is the predominant economic activity with cassava and maize the main food crops and cotton the principal cash crop. Some industry, including a cotton textile mill, has developed in Mwanza Town, the largest urban center in the region. 3. Transport System: The transport infrastructure includes two all- weather, gravel roads which are part of the national trunk system; one of these is an east-west route linking Mtwanza Town with points in the two adjacent regions of West Lake and Mara and the other a north-south route linking Mwanza with neighboring Shinyanga region. Access roads within Mwanza Region were developed largely around the need to move the cotton crop from village stores to the ginneries and this road system is not adequate, many sections being in need of maintenance and impassable during heavy rains. 4. The northern spur of the main trans-Tanzania railway reaches north- ward from the Tabora junction to Mwanza Town. The railway is particularly important to Mwanza region for long-distance movement of freight, especially cotton shipments to Dar es Salaam. Unfortunately, the capabilities of the rail line were somewhat impaired as a result of the decision to decentralize the East African Railway Corporation (EARC). 5. Mwanza region has an extensive shore along Lake Victoria and there- fore economical water transport is available to the area for movement of both goods and passengers within the region, between Mwanza and neighboring regions, and internationally. Since 1975, when the EARC discontinued its principal lake services, water transport capability has been sharply reduced. Remaining vessels are subject to heavy use and cannot meet the demand for lake transport. ANNEX 4 Page 2 6. Mwanza Town has an all-weather paved airport which is currently being upgraded to international standards. Until the recent troubles of the EAA, there were regular scheduled flights to the main towns of central and eastern Tanzania and to Nairobi. A daily small plane service operates between Mwanza and Bukoba. 7. Transport Problems: Mwanza Region faces serious transport problems, one of which is the lack of adequate roads. As a result of the poorly con- structed and inadequately maintained roads, transport costs are high and ser- vice is unreliable, particularly during the rainy season. Some progress has been made recently in the construction of a limited amount of secondary roads but the general situation remains rather poor. 8. Another serious transport problem of the region is the weakness of the trucking industry. Limitations are found in the insufficiently trained personnel, poor workshop facilities and problems in securing spare parts for vehicle repairs. The rapid deterioration of trucks caused by poor roads aggravates greatly the problem of operating reliable and efficient trucking services. 9. The Tanzania Cotton Authority (TCA), with its heavy requirement for transport during the cotton harvest season, has sought to build up its own truck fleet because of the undependability of trucking companies. Although these TCA trucks can be effectively utilized during the harvest season they are not well utilized in other periods. 10. The heavy demand for truck transport during the cotton harvest led the Government to establish some years ago a truck fleet in the National Road Haulage Company (NRHC) that could be moved into the cotton growing area of Mwanza and Shiyanga regions during the harvest period. Weaknesses of the NRHC, however, have limited the number of trucks that could be provided for this purpose. Also, until recent years a considerable number of Uganda trucks supplemented the local capacity for cotton movement but these additions are no longer available. 11. Discontinuance of EARC lake transport services as noted above, has had the effect of placing an increased demand on road transport between various points in the three regions of northwest Tanzania. This addition burden on road transport makes the problem of serving the area with adequate transport service even more difficult. Tabora Region 12. General Characteristics: Tabora Region, located i2 the west-central part of Tanzania, is the nation's largest region (122,000 km ). Its average ANNEX 4 Page 3 elevation is about 1,100 m with some ridges along the eastern border rising to 1,500 m. The average rainfall is about 800 mm and the rainy season begin- ning in November, lasts about six Ionths. Population of the region is about 780,000 and the density 6.4 per km . Agriculture, the principal economic activity, is smallholder farming with maize, sorghum and groundnuts the main food crops and tobacco and cotton the leading cash crops. The region accounts for 55% of the country's tobacco production. 13. Transport System: There are some 2,300 km of roads in the region, mostly radiating from Tabora Town. The most important roads are the links northeastward and westward from that center. The quality of the regions roads is low; there are no paved roads and the routes vary from gravel roads to poorly-drained earth roads and tracks. Road maintenance is minimal. 14. The trans-Tanzania line of the EARC spans the region; in addition to the northern extension there is a spur line in the southwest. The east-west line is not only the principal surface means of communication in west central Tanzania but also an important facility for handling transit traffic of neighboring land locked countries. Unfortunately, the condition of the rail line west of Tabora is poor. 15. An all-weather airport is located near Tabora Town and until the recent EAA problems there were regular scheduled flights to-the main towns of central and eastern Tanzania. Service was also available between Tabora and Kigoma on Lake Tanganyika. 16. Transport Problems: Despite the fact that the region is served by road, rail and air transport there are serious transport problems here. As in Mwanza, this region has a sparse and poor quality network of roads and its trucking industry is weak in all respects. As a consequence transport costs here too are high and service often unreliable. The large size of this region means that the building and maintenance of a good road network would be a great burden. 17. Since tobacco is the region's plain cash crop its movement to markets is of special significance. Transport of tobacco is a major problem, however, because the production areas are widely scattered and the product is trucked over long, and in some cases rather circuitous routes from farms to Tabora Town and to various other stations on the railway. 18. The Tobacco Authority of Tanzania (TAT), faced with the problem of obtaining reliable truck transport, acquired and operates a fleet of trucks to handle much of its own transport needs. As in the case of the TCA, the utili- zation of the TAT trucks is poor in the off-season and loading is directionally imbalanced. TAT proposes to reduce its fleet substantially when the Tabora Regional Transport Company becomes operational and will rely on the latter for most of its transport requirements. ANNEX 4 Page 4 Mtwara Region 19. General Characteristics: Mtwara region, located in the south- eastern corner of Tanzania, borders on the Indian Oc2an and Mozambique; it is one of the nation's smaller regions (16,740 km ). The topography is flat to undulating for the most part, with a maximum elevation of 800 m. The climate of the region differs little from the general pattern for Tanzania, average rainfall being 900 to 1,000 mm. 2Population of the region is about 750,000 and the density about 45 per km . Agriculture is the predominant economic activity, the main food crops being cassava, sorghum, millet, maize and paddy; cashewnut is the leading cash crop with oilseeds also contributing to cash income. Cashewnuts are exported mainly in unprocessed form although some shelling and packing is done in Mtwara Town. 20. Transport System: The road network of the region consists of about 3,200 km of roads, which are relatively evenly distributed throughout the area. The principal artery extends from Mtwara Town northwestward to Mingoya in the Lindi Region, reenters Mtwara Region near Masasi and then continues westward to the border of Ruvuma Region; this road is being paved under the Third Highway Project. The condition of other roads is generally poor, particularly in the rainy season. Only 190 km of the 3,200 km network is maintained by the Ministry of Works and road conditions are highly dependent on self-help maintenance. 21. Mtwara Town has a good natural harbor and the port facilities include a deep water quay and four godowns. Cashewnut exports account for 70% of total exports through the port. The capacity of the port is underutilized and should be able to accommodate traffic needs for several years. The Tanzania Coastal Shipping Line operates freight and passenger services between Mtwara and other coastal cities; during the rainy season the demand for these services is very heavy. No railway serves the port of Mtwara nor is there any railway elsewhere in the region. 22. Mtwara has an all-weather airport with a paved runway capable of handling commercial jet aircraft. There were scheduled air services between the regional center and Dar es Salaam. The town is also served by interna- tional flights between Tanzania and Mozambique. 23. Transport Problems: Mtwara region is experiencing serious transport problems as a result of poor roads and weaknesses in virtually all aspects of the trucking industry. The adverse effects of poor roads are especially great in this region because the period of harvest and transport of cashewnuts - the chief cash crop - coincides with the rainy reason. Because of the hazard of vehicle breakdown during the rainy season, private truck operators are reluc- tant to offer their services when the demand for transport is at its peak. Consequently, the region is plagued with delays in transport, crop spoilage and high transport costs. ANNEX 4 Page 5 24. Cashewnuts and other cash crops originate in widely dispersed locations within the region and flow largely toward Mtwara Town in the extreme eastern part of the area. Thus the transport of these important agricultural products depends on the use of a rather large network of roads which, as indicated above, are in generally poor condition. 25. Mtwara region, which accounts for a high proportion of one of Tanzania's leading exports, cashewnuts, is disadvantaged by a lack of good road connections to Dar es Salaam. The coastal road is interrupted by the Rufiji River across which a ferry boat operates with considerable irregular- ity; during the rainy season the Rufiji delta is generally flooded and is often impassable. An alternative road from Mtwara to Dar es Salaam is that via Tunduru, Songea and Makumbaku where it connects with the TANZAM Highway and TAZARA Railway; although this circuitous road is passable the year round, transport on it is slow and costly. Because of difficulties with road trans- port between Mtwara and Dar es Salaam during the rainy season, there is a heavy seasonal demand for the coastal shipping service and the demand exceeds the capacity of the service in that period. 26. Augmentation of the truck fleet in Mtwara region during the cashew- nut harvest season was one of the main objectives of the Hire Pool Division of the NRHC. Unfortunately, serious limitations in its capabilities resulted in the NRHC making only a small contribution to the truck fleet capacity in this region during the critical harvest period. Dodoma Region 27. General Characteristics: Located in the central part 2f Tanzania, Dodoma is one of the nation s medium size regions with 41,300 km of land area. The topography is quite varied including extensive level to rolling areas but also some mountainous portions in the northwest and south where elevations are 1,500 to 2,000 m. Rainfall is relatively light averaging only 500 to 600 mm; the seasonal pattern of rainfall is similar to that in other parts of the country. Population of the region is nearly 900,000 and the density about 22 per km . As a result of its low rainfall, the region's agriculture is compara- tively poor and cash crops, consisting mainly of grains, are small. In recent years, people of this region have been recipients of large amounts of food relief because of deficiencies in local food production. 28. Transport System: The region has a north-south trunk road and an east-west trunk road both of which run through Dodoma Town, the region's administrative and commercial center. These gravel roads are the principal road transport arteries of the area and are important as interregional routes in addition to serving local needs. Other roads are largely the earth type although some have gravel surfacing. In general, as in much of Tanzania, the condition of the road network is unsatisfactory due to insufficient maintenance as well as lack of good construction. ANNEX 4 Page 6 29. The trans-Tanzanian line of the EARC cuts across the center of the region and Dodoma Town is an important station on the route. Dodoma Town will undoubtedly take on increasing importance as a rail center in the future as the Government proceeds to implement its plan to develop the town as the nation's capital. 30. Dodoma has an all-weather, paved airport located a short distance from the town center. Regular scheduled air services were provided by East African Airways between this airport and various towns of Tanzania. 31. Transport Problems: Transport in Dodoma region is handicapped by poor roads and a weak trucking industry, as in other regions of the country. The low level of production and purchasing power in the area means that trucking operators are not particularly attracted to the region. At the same time, the availability of transport at reasonable cost is an important factor affecting both regional productivity and the ability of Government authorities to distribute to the people essential relief supplies. 32. The lack of reliable transport services from trucking companies has led the National Milling Corporation (NMC) and the Regional Trading Company to build up their own fleets of trucks. While NMC trucks can be effectively utilized inbound to Dodoma Town, they tend to be poorly utilized outbound; RTC trucks have unbalanced loading in the opposite directions. In addition, utilization of NMC trucks is subject to wide seasonal variations related to the seasonal pattern of crop movements. Strengthening of the trucking industry should result in better truck utilization, improved service and lower transport costs. Ruvuma Region 33. General Characteristics: Ruvuma region, located in the south rn part of Tanzania, is the sixth largest of the 20 regions with 61,250 km of land area. The terrain is rolling to mountainous and is dissected by many streams. Elevations in the western portion generally exceed 1,000 meters and decline toward the east. Rainfall is adequate in about two- thirds of the region, reaching about 1,200 mm annually in most areas. Popula- ti2n of the region is approximately 500,000, and the density only about 8 per km . Agricultural production is relatively light but there is substantial cultivable land. The principal food crops are cassava and maize; cash crops include small quantities of cashewnuts and coffee. 34. Transport System: The region is heavily dependent on road trans- port since there are no railways and the rivers are not navigable. The principal road extends from the eastern regional border westward through the two main towns of Tunduru and Songea and then northward to the adjoining Iringa region where it links with the TANZAM Highway. Another significant road links Songea with Mbamba Bay on Lake Nyasa. Virtually all of the 1,450 km of roads are classified as earth roads and, because of the rough terrain in many areas, are often impassable in rainy weather and always difficult. The roads are poorly maintained. ANNEX 4 Page 7 35. Mbamba Bay has a small port and serves as a focal point for lake transport. 36. Songea, the principal commercial and administrative center of the region, has an airport of limited capacity. Regular scheduled air services were provided by East African Airways between this airport and various towns of Tanzania. 37. Transport Problems: Extremely poor roads and a weak trucking industry are severe problems for this region. As in Dodoma region, trucking operators are not attracted to this area of limited production, low incomes and poor roads. The region has, however, considerable potential for agricul- tural expansion, and the improvement of roads and truck transport along with other programs in rural development should make possible significant realiza- tion of this potential. September 1977 ANNEX 5 Page 1 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Technical Assistance - Terms of Reference I. Objectives II. Scope of Technical Services III. Qualifications and Job Descriptions A. For Ministry of Communications and Transport 1. Project Coordinator 2. Assistant to Coordinator B. For Trucking Companies 1. Trainer/Advisor for General Manager 2. Trainer/Advisor for Chief Accountant 3. Trainer/Advisor for Service Manager 4. Trainer/Advisor for Senior Mechanic C. For National Institute of Transport 1. Instructor for Trucking Managers 2. Instructor for Accountants 3. Instructor for Mechanics and Drivers 4. Instructor for Supplies Management D. For Spare Parts & Vehicle Imports 1. Vehicle Imports Advisors ANNEX 5 Page 2 I. Objectives 1. The purpose of the technical assistance is to strengthen, through training and advisory services, the management and operations of selected trucking companies, enhance the capability of the National Institute of Transport to train personnel for the trucking indust:y and to improve the data base, management and analysis of trucks and spare parts import requirements and foreign exchange allocations with a view to increasing the availability and performance of trucks. II. Scope of Technical Services 2. The project will provide the following technical assistance staff: (i) a Project Coordinator and an Assistant for NTC; (ii) four Trainer/Advisors to aid in improving the effectiveness of four key personnel in each of five selected trucking companies, these personnel being the General Manager, Chief Accountant, Service Manager and Senior Mechanic; (iii) four Instructors for the National Institute of Transport to train trucking managers, accountants, mechanics and drivers, and supplies managers; and (iv) two Management Advisors to the Government to help improve the system of import control for trucks and spare parts. The re- quired qualifications and job descriptions of the individuals are described below. III. Qualifications and Job Descriptions A. For Ministry of Communications and Transport 1. Project Coordinator Qualifications 3. The Project Coordinator should have at least 15 years experience in the trucking industry, including some years as general manager of a trucking company having at least 25 trucks, and should have particular experience in recruitment of personnel and procurement of equipment. His background should include reasonably detailed knowledge of accounting, workshop operations and ANNEX 5 Page 3 scheduling of truck operations. Fluency in written and spoken English and the ability to communicate ideas easily are also required. Duties 4. The Project Coordinator will report to the NTC and will assist and advise NTC on all aspects of the project execution including but not limited to: (i) assisting NTC in recruiting and selecting suitable technical assistance personnel for the five transport companies and NIT; (ii) reviewing and where necessary preparing procurement documents for trucks, parts, workshop equipment, tools and teaching aids; (iii) preparing and where others prepare reviewing proposals for setting up Regional Transport companies and generally advising on setting them up; (iv) reviewing plans and documents concerned with construction or improvement of buildings required by trucking companies; (v) reviewing proposals and documents for rehabilitation of trucks; (vi) identifying bottlenecks in the implementation of all aspects of the project and initiating necessary action for their removal; (vii) monitoring trucking operations of the five companies by periodi- cally analyzing specific measures of performance prepared by those companies; (viii) preparing quarterly progress reports on accomplishments and prob- lems concerning project activities in the NTC, five transport com- panies, NIT and authorities concerned with imports of spare parts and vehicles; (ix) assisting in establishing and implementing data and statistics systems relating to the trucking industry size and performance and for traffic and commodity flows; and (x) advising the Government on matters related to trucking industry policies, plans and programs. Location 5. The Project Coordinator will be stationed in Dar es Salaam and will travel to the operating territories of the five transport companies as required. ANNEX 5 Page 4 2. Assistant to Coordinator Qualifications 6. The Assistant should be a qualified mechanical engineer and have at least eight years experience in the trucking industry including some years in managerial positions. He should have particular experience in procurement of trucks, spare parts and workshop equipment. Fluency in written and spoken English and the ability to communicate ideas easily are also required. Duties 7. The Assistant will report to the Project Coordinator and will assist the latter in carrying out his duties as shown above. In the conduct of his work the Assistant will concentrate particular attention on items (ii) and (v) in the above-listed duties. Location 8. The Assistant will be stationed in Dar es Salaam and will travel to the operating territories of the five transport companies as required. B. For Trucking Companies 1. Trainer/Advisor for General Manager Qualifications 9. The Trainer/Advisor for General Manager should have at least 15 years experience in the trucking industry including five years or more as general manager of a trucking company having a fleet of at least 25 trucks. His experience in the industry should reflect substantial involvement in scheduling operations, accounting, rate-making, vehicle repair and marketing of transport services. Fluency in written and spoken English and the ability to communicate ideas easily are also required. Duties 10. The Trainer/Advisor for General Manager will report to the General Manager of the trucking company to which he is assigned and will advise, train and assist his counterpart in all aspects of company management including, but not limited to: (i) assist where necessary in setting up a Regional Transport Company; ANNEX 5 Page 5 (ii) planning and implementing schedules for trucking operations; (iii) procuring trucks, workshop equipment, tools, office equipment and facilities; (iv) planning and implementing truck repair; (v) monitoring and supervising of company operations; (vi) reviewing reports on company accounts and operating statistics; (vii) marketing transport services including negotiation of acceptable rates; (viii) train appropriate company personnel in door-to-door shipping and forwarding operations; (ix) preparing reports on company operations for the owners of the transport company; (x) arranging for temporary augmentation of company fleet by engaging privately-owned truck operators; and (xi) establishing pay and incentive systems for company per- sonnel in line with parastatal regulations. Location 11. The Trainer/Advisor for General Manager will be stationed at the headquarters of the Company to which he is assigned and will travel at times within the operating territory of the transport company. 2. Trainer/Advisor for Chief Accountant Qualifications 12. The Trainer/Advisor for Chief Accountant should have suitable spe- cialized training in the accounting field and at least eight years experience as an accountant for a trucking firm(s) having a fleet of at least 25 trucks. His experience should have involved the full range of accounting and statis- tics work and included preparation of accounting reports appropriate for managerial purposes. Fluency in written and spoken English and the ability to communicate ideas easily are also required. Duties 13. The Trainer/Advisor for Chief Accountant will report to the Chief Accountant of the trucking company to which he is assigned and will advise, ANNEX 5 Page 6 train and assist his counterpart in all aspects of company accounting includ- ing, but not limited to: (i) assist where necessary in setting up a Regional Transport Company; (ii) reviewing and revising as necessary the ccapany's system of accounting; (iii) supervising and training the chief accountant's subordinate accounting personnel; (iv) maintaining records and accounts; (v) analyzing accounts, operating statistics and cash flow; (vi) preparing financial statements and accounting reports; (vii) preparing cost data required for rate making; and (viii) developing budgets and assisting in long range financial planning. Location 14. The Trainer/Advisor for Chief Accountant will be stationed at the headquarters of the Company to which he is assigned and will travel at times within the operating territory of the transport company. 3. Trainer/Advisor for Service Manager Qualifications 15. The Trainer/Advisor for Service Manager should have at least 15 years experience in the field of vehicle servicing including five or more years as a service manager in a trucking company having a fleet of at least 25 trucks. His experience should have included several years work as a truck mechanic and some years operation of a spare parts department. Fluency in written and spoken English and the ability to communicate ideas easily are also required. Duties 16. The Trainer/Advisor for Service Manager will report to the Service Manager of the trucking company to which he is assigned and will advise, train and assist his counterpart in all aspects of the company's service management including, but not limited to: ANNEX 5 Page 7 (i) planning and developing a suitable workshop facility and its equipment and tools; (ii) supervising and training the service manager's subordinate personnel; (iii) planning and operating a suitable spare parts division based on sound principles of inventory control; (iv) evaluating the condition and repair needs of existing fleet units; (v) preparing specifications for procurement of trucks, spare parts and workshop equipment; (vi) arranging for rehabilitation of selected trucks by external workshops; (vii) scheduling and conducting the repair of trucks in company workshop; and (viii) preparing appropriate reports for the General Manager. Location 17. The Trainer/Advisor for Service Manager will be stationed at the headquarters of the Company to which he is assigned and will travel at times within the operating territory of the transport company. 4. Trainer/Advisor for Senior Mechanic Qualifications 18. The Trainer/Advisor for Senior Mechanic should have at least 10 years experience as a mechanic on trucks of generally comparable size and type to those used for transport companies in Tanzania. His experience should have included the full range of vehicle repairs and some years as foreman or supervisor of truck repair work. Fluency in written and spoken English and the ability to communicate ideas easily are also required. Duties 19. The Trainer/Advisor for Senior Mechanic will report to the Service Manager of the trucking company to which he is assigned and will train the various mechanics in the truck repair including, but not limited to: (i) conducting truck inspections to determine vehicle condition and repair requirements; ANNEX 5 Page 8 (ii) performing running repairs on trucks; (iii) undertaking repairs on truck bodies, power train, electrical systems and miscellaneous equipment; (iv) providing limited mechanical training to truck drivers; and (v) providing driver training instruction to truck drivers. Location 20. The Trainer/Advisor for Senior Mechanic will be stationed at the headquarters of the Company to which he is assigned and will travel at times within the operating territory of the transport company. C. For National Institute of Transport 1. Instructor for Trucking Managers 21. The qualifications and duties of the Instructor for Trucking Managers in the National Institute of Transport are the same as for the Trainer/Advisor for General Manager (para. 9 and 10). The Instructor will be stationed in Dar es Salaam and will from time to time travel to regional centers to conduct brief training sessions. 2. Instructor for Accountants 22. The qualifications and duties of the Instructor for Accountants in the National Institute of Transport are the same as for the Trainer/Advisor for Chief Accountant (para. 11 and 12). The Instructor will be stationed in Dar es Salaam and will from time to time travel to regional centers to con- duct brief training sessions. 3. Instructor for Mechanics and Drivers 23. The qualifications and duties of the Instructor for Mechanics and Drivers in the National Institute of Transport are the same as for the Trainer/Advisor for Senior Mechanic (para. 15 and 16). The Instructor will be stationed in Dar es Salaam and will from time to time travel to regional centers to conduct brief training session. ANNEX 5 Page 9 4. Instructor for Supplies Managers 24. The qualifications of the Instructor for Supplies Managers in the National Institute of Transport should include at least eight years experience as a supplies manager for a trucking firm(s) having a fleet of at least 25 trucks. His experience should include some years experience in related work in the trucking field. Fluency in written and spoken English and the ability to communicate ideas easily are also required. The Instructor will conduct training in all aspects of supplies management including, but not limited to, the planning and operating of a suitable spare parts division of a trucking company based on sound principles of inventory control. He will be stationed in Dar es Salaam and will from time to time travel to regional centers to conduct brief training sessions. D. For Spare Parts and Vehicle Imports 1. Vehicle Imports Advisors (2) Qualifications 25. The Vehicle Imports Advisor should have at least 15 years experi- ence in commercial activities concerning trucks and spare parts for trucks. This experience should have included work involving assessing basic demand for trucks and parts and managing parts inventory system in accordance with a sound principle of inventory control. Fluency in written and spoken English and the ability to communicate ideas easily are also required. Duties 26. The Vehicle Imports Advisor will report to an assigned counterpart in the organization in which he is for the time being appointed and will advise and train his assigned counterparts in those aspects of the Authority's operations and management affecting the flow of trucks and spare parts for trucks into and throughout Tanzania, including, but not limited to: (i) establishing a sound system for collecting data on the demand for truck spare parts, by principal types or categories of parts; (ii) assessing the basic demand for trucks and parts, by region, category of the trucking industry and commodity; (iii) determining the availability of trucks and parts, by region, locality, commodity and distribution outlet; (iv) analyzing the flow of trucks and parts through the dis- tribution system to identify bottlenecks; ANNEX 5 Page 10 (v) analyzing the suitability for Tanzania various truck types, makes and sizes and advising the Government on its truck standardization policy; (vi) determining the total amount of foreign exchange that should be allocated by the Bank of Tanzania for import of trucks and truck spare parts over specified time periods; (vii) preparing statements supporting the foreign exchange re- quired for import of trucks and parts for trucks; (viii) implementing changes in procedures to assure that the dis- tribution of trucks and spare parts in the country is in accordance with demand; (ix) preparing quarterly progress reports for the authority to which he is assigned and for the NTC; and (x) assist in collecting general data on trucking industry fleet and operations. Location 27. The Vehicle Imports Advisor will be stationed in Dar es Salaam and will travel to various points within the country as required. September 1977 ANNEX 6 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT National Institute of Transport Special Training Program for Upgrading the Capabilities of Personnel in the Trucking Industry 1. The National Institute of Transport (NIT) has a short term program concerned with training for the motor transport industry of Tanzania. It comprises short term (three-month courses) training for personnel already employed in the industry who need upgrading of their capabilities. The trucking industry project aims particularly to strengthen this program in Dar es Salaam and to enlarge upon it by adding seminars or brief training sessions at various regional centers throughout the country. The curriculum for the three-month courses to be assisted under the project will be developed by the NIT with assistance of the instructors to be provided. 2. A second type of NIT training program, to be initiated in 1977 when student accommodations are completed, consists of relatively long term training (three-year diploma) for school leavers and others seeking to prepare themselves for employment in the industry. September 1977 ANNEX 7 Page 1 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Project Monitoring Indices The following project monitoring indices will be applied during the execution of the Trucking Industry Project: Monitoring of five Trucking Companies: 1. Kilometers operated per month by each vehicle and average kilometers per vehicle operated by fleet; 2. Average tons per vehicle per month between selected key points, by direction of haul; 3. Ton-kilometers operated per month by each vehicle and average ton-kilometers per vehicle operated by fleet; 4. Number of hours per month each vehicle was out of service because of (a) mechanical defects (b) other causes (specify); 5. Average operating speed (km per hour) between selected key points; 6. Number of hours per month each vehicle was employed in operations; 7. Ratio of truck payload to truck capacity for each vehicle in month; 8. Average loading and unloading times including waiting times for trucks during month; 9. Average hours per month each vehicle was under servicing for (a) running repairs (b) other servicing; 10. Average number of operational staff per vehicle per month; 11. Revenue earned per vehicle per month; 12. Operating expense per vehicle per month; 13. Hours worked by operating personnel vs. potential working hours per month; ANNEX 7 Page 2 14. Liters of fuel consumed by each vehicle per month; 15. Ratio of fuel consumption to vehicle kilometers operated by vehicle fleet during month; 16. Ratio of operating expenses to operating revenue during month; 17. Total costs and total revenue during month; 18. Ratios of various specific costs to total costs during month; 19. Average revenue per ton-kilometer per month; 20. Average operating expense per ton-kilometer per month; 21. The ratio of current assets to current liabilities during month; 22. Ratio of gross revenue to capital during year; 23. Ratio of long term debt to capital during year; 24. Operating statement for quarter, month, year; and 25. Balance Sheet at end of year. Monitoring of NIT Training of Trucking Industry Personnel 1. Number of courses conducted per year, by type of course; 2. Number of trainees per course, per year, by type of course; 3. Ratio of trainees to instructors, by type of course; 4. Number of instructional hours per month and per year, by type of course; 5. Ratio of trainee drop-outs to trainee entrants in each type of course; 6. Attendance rate in each type of course; 7. Number of field training sessions conducted per year; 8. Number of attendees of field training sessions at each location; 9. Number of field training session hours per month and per year; ANNEX 7 Page 3 10. Breakdown of trainees by category of industry represented (publicly-owned, privately-owned corporations); and 11. Examination or diploma performance. Monitoring of Import Advisors 1. Number of man-months of technical assistance provided per quarter; and 2. Number of man-months of counterpart work performed per quarter. September 1977 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Organization of Ministry of Communications and Transport |MINISTER] I JUNIOR |MINISTER PRINCIPAL| [SECRETARY FPLANNING UNITNANCE AND ADMINISTRATION SURFACE TRANSPORT AIR TRANSPORT SHIPPING DIVISION| COMMNICATIONS MANPOWER DEVELOPMENT| |VSODIVISION DIVISION Source: Ministry of Communications and Transport 10 TANZANIA Trucking Industry Rehabilitation and Improvement Project Organization of the National Transport Corporation Ministry of Communications and Transport fNational Transport Corporation [ Director of Administration] Ntional Institute National Bus rTanzania Coastal Ship ping Line, Ltd.| Dar es Salaam Motor Transport Company| ofTransport .Service | I I I Note: National Road Haulage Company was also a subsidiary organization of NTC until the Company was dissolved in April, 1977 Source: NTC, 1977 TANZANIA TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Organization of Trucking Companies to be Assisted Board of Directors |General Manager]| [Vehicle Service| Tra ffic ||Accounting and| |Department ||Department ||Costing Departmenti Vehicle Repair Stores Marketing Operations Cashier Accounting Costing Division Division Division Division Division Division Division Source: Appraisal Mission TANZIA TRUCRING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Initial Implementation Schedule ---------------------------------------------- Months ------------------------------------------------- Component n iv s 0 6 12 IR 30 42 6& 66 PROJECT .,. .f... COORDINATION Retiaadffs..... .~ PROJECT ~~~~~~~~~~~~~~~~~~~eritadhire coordination saf [ii FIRST Recruit and hire advisors u.... . ......... - ......._ REGIONAL Inspect & repair existing vehicles TRANSPORT Purchase new trucks COMPANY (RTC) Design, construct & equip buildings '11_ _ .:-- SECOND Recruit and hire advisors ...._ _ :1 ...... . REGIONAL Inspect & repair existing vehicles TRANSPORT Purchase new trucks COMPANY (RTC) Design, construct & equip buildings -- - - THIRD Recruit and hire advisors ........ ... REGIONAL Inspect & repair existing vehicles _______ TRANSPORT Purchase new trucks COMPANY (RTC) Design, construct & equip buildings - - - - - - FOURTH Recruit and hire advisors _.............. -. -- REGIONAL Inspect & repair existing vehicles . __ ___________j : __ TRANSPORT Purchase new trucks COMPANY (RTC) Design, construct & equip buildings FIFTN Recruit and hire advisors ...... .. . .__ ...... REGIONAL Inspect & repair existing vehicles TRANSPORT Purchase new trucks COMPANY (RTC) Design, construct & equip buildings i l NATIONAL Recruit & hire instructors ......... .... INSTITUTE Procure equipment & teaching aids OF TRANSPORT Prepare curriculum material . jj i. (NIT)_________________ - I SPARE PARTS Recruit & hire technical assistance ..........- . ...... ............ AND VEHICLE IMPORTS Issue licenses & import spare parts . : : : E. I ._ __ - . ,- : 1I Chart 5 Page I TANZMIA TRUCKING INDUSTRY REHABILITATION AND IMNROVEMENT PROJECT Implementation - Activities and ResDonsibilites Recruiting Technical Assistance 7. Prepare draft contract and 10. Submit conformed negotiation detailsa] copy to IDA 1. Draft Terms.2. Discuss and_.3. Contact sources _ 4. PFrepare-5. Review, 6. Revie 8. Negotiate_9 Sign 12. Teebnical of Reference agree on TOR & iovite proposals proposals evaluate & recommenda- contract asistants reco=end tions caart 11 Make local Parrangent RRCRUTfl4BN FOR! Activity No. NTC Regional Transport NIT Vehicle Imports Companies Mobile Fleet Mvisor 1 NTC NTC & RTC NTC NTC & NIT NTC 2 NTC & IDA NTC & IDA NTC, IDA NTC, NIT, IDA NTC, IDA 3, NTC NTC NTC NTC, NIT NTC 4. Firms Firms Firms Firms Firms 5 NTC NTC & RTC NTC NTC, NIT NTC 6 IDA IDA IDA IDA IDA 7 NTC NTC & RTC ETC NTC, NIT NTC 8. NTC & Firma NTC. RTC & Firma NTC & Firms NTC, NIT, Firms NTC & Firms 9 NTC & Firms NTC & Firma NTC & Firms NIT & Firms NTC & Firms 10 NTC NTC NTC NTC NTC 11 NTC NTC & RTC WTC NTC & NIT NTC 12. Firms Firms Firms Firms Firms CHART 5 TANZANIIA Page 2 TRUCKING INDUSTRY REHABILITATION AND IMPROVEMENT PROJECT Implementation - Activities and Responsibilities Operation of Trucking Companies Define on-the job Arrange and training needa implement traininl [(NTC,RTC,NIT 1 - (RTC,NIT) Review staff, Draft new Review Zmplement COG anies Prepare Review Define Implement organization - organization - proposals proposals - operational periodic - performance - necessary changes & management. & management (NTC.IDA) (RTC) (RTC) reports (NTC, IDA) changes (RTC) (NTC,RTC) systemsj (RTC,NTC) (NTC,RTC) (NTC,RTC) Discuss Prepare & decide detailed Lreporting - new manage- requirements ment systems (NTC,RTC,IDA) (NTC,RTC) Rehabilitation of Existing Trucks Negotiate with private garagesg - for repairs ReiF (NTC,RTC) Review Inspect and assess leport on proposals for Mobilize labor Repair existing trucks _parts and repair,disposal & order parts _ existing (NTC,RTC) labor required & new trucks (NTC,RTC.Garages) trucks (NTC,RTC) (NTC,RTC,IDA) (RTC,Garages) Reclaim repair & I Surplus parts overhaul parts I to stock & components (RTC) (RTC) See new truck [ Dispose of procurement unwanted trucks and parts (RTC) New Truck Procurement Draft Cntract (NTC,RTC) Finalize Deliver Define number -Prepare specifi-_Review specifi- -Call & receive ,Evaluate & 'Review _Negot ate Contract - Trucks & types of new cations and bid cations and bids recommend recommneda- (NTC,RTC) & financing (Contractor) trucks documents documents (NTC) (NTC,RTC) tions arrangements (NTC,RTC) (NTC,RTC) (IDA) j (IDA) | (NTC,RTC) I~~ ~ ~~~~~~~~~~~~ II Prepare Despatch conformed Review procurement I egotiating copy to IDA procedures agenda (NTC) (NTC, IDA) (NTC,RTC) Vehicle Repair Facilities Draft GontraC c (NTC,RTC) I I ~~~~~~~~~~~Finalize Build, Review buildings_Prepare plans,---Review specifi--Call & receive-Evaluate & .Review - egtiate- Contract-deiver & equipment specifications cations and bids recommend recommenda- (NTC.RTC) & financing & install requirements ,& bid documents documents (NTC) (NTC,RTC) tions arrangements (Contractor) (NTC,RTC)_ _ _NTC,RTC) (IDA) j (IDA) (NTC,RTC) I ~ ~ ~ rpaeI Review procurement Prepare espatch conformed procedures negotiating copies to IDA (NTC,IDA) agenda (NTC) (NTC,RTC) Truck Spare Parts Imports (NTC,& SMC) (NTC & SMC) (IDA) (IMPORTERS) Review _. Decide on Review Art.nge needs allocations allocations procurement L Review p vrocurement procedures (NTC,SMC & IDA) IBRD 12603 F VRARY IE7 JAQA L S T :1- a- k- lv~~~~~~~~~~~~~~~~~~~~d ?l<<bluwt~~~ 0SSLA Wi gMAn X n<'diaMn 7 - h N i g + / 8 < Kil~~~~~~~~~~ ~ ~~~~~~~~~~~~osn Mohoro i \ yi~ > D! b2 cr skm , [,,n; SO-~{Lrl 3 /E N4r Mkongolos' > t v y j ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Nonguru ukuro TRUCKING [NC9V$TRY PROJECT K Transpor_ < At I tet1 llwo L 5rk v i 8 k *f t B 1 . _ _ M L . i A t r ,, ' ' ' W NcrwVmoW TI Moon ORBS sBr SM~~~~~~~~~~~~~~~~~~~~~~~~~~~~-A A~~~~~~ORE./o H~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ii
Groupe de la Banque mondiale · Staff Appraisal Report
Tanzania - Trucking Industry Rehabilitation and Improvement Project
Voir le document original
Le texte intégral est hébergé par l’organisation qui le publie. lawenc.com indexe les métadonnées et renvoie vers la source officielle.
Texte intégral
Informations clés
Organisation
Groupe de la Banque mondiale
Type de document
Staff Appraisal Report
Pays
Tanzanie
Source
Banque mondiale