Argentina - Second Railway Project

Document of F L ECOPY The World Bank FOR OFFICIAL USE ONLY Report Ne. P-2489-AR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE ARGENTINE RAILWAYS WITH THE GUARANTEE OF THE ARGENTINE REPUBLIC FOR A SECOND RAILWAY PROJECT March 15, 1979 This document has a restricted distribution and may be used by recipients only tn the performance of their official duties. Its contents may not otherwise be discloed without World Bank authorization.  CURRENCY EQUIVALENTS June 1977 /1 March 1979 Currency Unit - Argentine Peso ($a) US$1 $a400 $al,100 US$1 million - $a400 million $al,100 million $a 1 million - US$2,500 US$910 WEIGHTS AND MEASURES Metric System GLOSSARY OF ABBREVIATIONS FA - Ferrocarriles Argentinos (Argentine Railways) SST - Sub-Secretaria de Transporte (Sub-Secretariat of Transport) UNDP United Nations Development Program FISCAL YEAR January 1 to December 31 /1 Exchange rate at the time of appraisal.  FOR OFFICIAL USE ONLY ARGENTINA SECOND RAILWAY PROJECT Loan and Project Summary Borrower: Argentine Railways (FA) Guarantor: The Argentine Republic Loan Amount: US$96.0 million equivalent Loan Terms: Fifteen years including three years of grace, at 7% per annum. Project Description: The objective of the project is to strengthen FA through rationalization of its system, rehabilitation of its track and equipment and improvement of its management to enable FA to concentrate on traffic for which it has a competitive advantage (principally long haul bulk traffic). These measures should reduce, and eventually eliminate, FA's financial dependency on the Government. The project comprises of a number of sub-projects which are expected to begin in 1979 and 1980, as follows: (a) rehabilitation of track, bridges and communications, and partial track renewal of main lines; (b) purchase of line and shunting locomotives, passenger coaches and specialized wagons; (c) rehabilitation of wagons, purchase of spare parts for wagons and locomotives, and modification of existing box cars; (d) technical assistance and studies. Benefits arise from cost reductions because of improved equipment and facilities and from the railways carrying traffic which otherwise would have been moved by road at a higher cost to the economy. Unquantified benefits include the advantages of more reliable and faster service to shippers and passengers. The project faces no special risks. The success of the rationalization program and the accompanying financial improvements would depend on the Government's support. Government actions give us confidence that such support will continue. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Project Cost: Investment Category Local Foreign Total ------ (US$ Million) ---- Way and Works 252.41 95.09 347.50 Signal and Telecommunications 16.63 15.61 32.24 Motive Power/Rolling Stock 103.04 113.02 216.06 Consulting Services 0.50 3.00 3.50 Physical Contingencies 13.61 9.41 23.02 Price Contingencies 78.48 48.10 126.58 Total: 464.67 284.23 748.90 Financing Plan: l/ Government (Special budget for suburban railway investments) Government Suppliers Bank Total Amount % Amount % Amount % Amount % Amount % (US$ M) (US$ M) (Us$ M) (US$ M) 506.0 42.1 252.0 21.0 348.0 28.9 96.0 8.0 1,202.0 100.0 Estimated Disbursement: Bank FY 1980 1981 1982 ----- (US$ Million) ---- Annual 26.0 49.0 21.0 Cumulative 26.0 75.0 96.0 Economic Rate of Return: Weighted average is 22Z. Appraisal Report: Report No. 2155 -AR, dated March 14,1979. 1/ The financial plan includes US$748.9 million of project costs (1979-1982) as well as $453.1 of other investments started prior to the project and to be carried out in 1979 through 1982.  REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE ARGENTINE RAILWAYS FOR A SECOND RAILWAY PROJECT 1. I subm