Document of The World Bank FOR OFFICIAL USE ONLY /,&9 2V/' y X Report No. 4940-IN INDIA RAILWAY ELECTRIFICATION AND WORKSHOP MODERNIZATION PROJECT- STAFF APPRAISAL REPORT APRIL 26, 1984 Power and Transportation Division South Asia Projects Department 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 = Rupee (Rs) US$1.00 = Rs 10.80 US$0.092592 = Rs 1.00 US$92,592 = Rs 1,000,000 WEIGHTS AND MEASURES: METRIC Metric British/US System 1 meter (m) = 3.281 feet I square meter (m ) = 10.760 square feet 1 kilometer (km) = 0.621 mile 1 ton-km = 0.621 ton-mile 1 passenger-km (pass-km) = 0.621 pass-mile FOX OMCIAL USE ONLY ACRONYMS AND ABBREVIATIONS AC - Alternating Current ADB - Asian Development Bank BG - Broad Gauge (1.676 m) cif - Cost, Insurance, Freight CLW - Chittaranjan Locomotive Works C.&A.G. - Comptroller & Auditor General DC - Direct Current DCW - Diesel Component Works DF - Development Fund DLV - Diesel Locomotive Works DRF - Depreciation Reserve Fund EMU - Electric Multiple Unit ER - Economic Rate of Return GOI - Government of India GTKM - Gross Ton Kilometers GTT - Gross Trailing Tons hp - Horsepower HSD - High Speed Diesel Fuel hz - Hertz or Cycles per Second ICB - International Competitive Bidding ICF - Integral Coach Factory IR - Indian Railways IRVA - Indian Railways Wheel and Axle Plant Kmlh - Kilometers per Hour KV - Kilovolt kwh - Kilowatt per Hour LRMC - Long Run Marginal Cost MG - Metre Gauge MW - Megawatt NG - Narrow Gauge (0.762 m and 0.610 m) NTPC - National Trausport Policy Committee OEIE - Overhead Equipment oIS - Operating Information System PF - Pension Fund POH - Periodical Overhaul RDSO - Research, Designs and Standards Organization Indian Railways REPCMG - Railway Electrification Planning, Coordination and Monitoring Grooup RITES - Rail India Technical and Economic Services RKM - Route Kilometers RRC - Railway Reform Committee RTC - Road Transport Corporation RTEC - Rail Tariff Enquiry Committee SEB - State Electricity Boards SFYP - Sixth Five-Year Plan UNDP - United Nations Development Program v - Volt GOVERNMENT OF INDIA FISCAL YEAR April 1 - Harch 31 Tha 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. INDIA RAILWAY ELECTRIFTIATION AND WORKSHOP MODERNIZATION PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. I. BACKGROUND ........................................... I A. Economic Setting and Transport Sector. .1 B. Transport Planning and Coordination ............. 2 C. Transport Policy and Investment Allocations ..... 4 II. INDIAN RAILWAYS .. 5 A. Organization, Management, Staff and Training.... 5 B. Infrastructure ........................... . 6 C. Motive Power .. 7 D. Rolling Stock .. 7 E. Workshops ....................................... 8 F. Manufacturing Units ...........................; 8 G. Operating Performance .. 9 H. Traffic ......................................... 10 I. Railway Investment Plan ......................... 10 J. Railway Planning .......................-.,.,., . 12 K. Modernization Efforts .. 12 L. Performance Under Previous Bank Group Projects.. 15 III. THE PROJECT ... 16 A. Background ... 16 B. Objectives ... 16 C. Description ... 17 D. Cost Estimates ... 24 E. Financing ... 26 F. Implementation . . . 26 G. Environment ... 27 H. Procurement ... 28 I. Disbursements . .. ................ ; 29 This report was prepared by Messrs. M. Alikhan (Financial Analyst), R. Auzmendi (Economist), M. Melrose (Railway Engineer), A. Sabeti (Railway Specialist) and T. Shima (Railway Engineer). - ii- IV. ECONOMIC EVALUATION ................................ . 30 A. General .......... . ..................* * * * 30 B. Electrification of Main Lines .................. . 32 C. Workshop Modernization .. ... 37 D. Overall Evaluation . . . . .. . 37 E. Risks ....... 38 V. FINANCE AND EARNINGS ......... . 38 A. Introduction ......... . 38 B. Recent Changes in Financial Policies . . 39 C. Rates and Fares ... ....... 41 D. Past Performance . ....... .. 41 E. Future Prospects . . ...... 43 F. Financing Plan ..... ........ . 46 VI. AGREEMENTS REACHED AND RECOMMENDATIONS ............... 48 ANNEXES Annex A - Selected Documents Available in the Project File.. 49 Annex B - Notes on IR's Motive Power and Rolling Stock ...... 51 Annex C - Summary Terms of Reference - Workshop Master Plan. 54 Aunex D - Railway Traffic Forecasts ................... ..... 56 Annex E - Description of Main Line Sections to be Electrified and Other Components ................ 70 Annex F - Details of the Six Workshops and ICF and Maintenance Depots Selected for Modernization ... 78 TABLES Table 1 - Age Inventory of Rolling Stock, March 31, 1983 84 Table 2 - Summary of Operating Statistics 1973/74-1982/83 85 Table 3 - Freight and Passenger Traffic 1950/51-1981/82 87 Table 4 - Freight Traffic by Major Commodities 1969170-198 1/82..... 88 Table 5 - Freight Traffic Forecasts by Major Commodities 1984/85-19 90/91.89 Table 6 - IR-s Investment Program 1980/81-1984/85 .......... 90 Table 7 - Electrification Program 1956-1985 ................ 91 Table 8- Project Cost Summary ............................. 92 Table 9 - Detailed Cost Estimates - 1984/85-1988/89 ........ 93 Table 10 - Summary Cost Estimates - Material and Labor 1964185-1988/89 . .......... .. . a .. . 94 Table 11 - Estimated Schedule of Disburseme ntts .............. 95 -iii- Table 12 - Actual Annual Freight and Passenger Traffic in Each Section Proposed to be Electrified - 1976/77 and 1981/82 ........ .... ........ ... 96 Table 13 - Forecast Annual Freight and Passenger Traffic in Each Section Proposed to be Electrified - 1986/87, 1990/91 and 2010111 ......... .......... 97 Table 14 - Economic Evaluation of Electrification of Jhansi-Itarsi Line (381 RKM; Double Track)..... 98 Table 15 - Sensitivity Analysis of Railway Electrification Component .............. ... ...... 99 Table 16 - Economic Evaluation of Workshop Modernization .... 101 Table 17 - IR Revenue and Expenditure Accounts 1977/78 to 1982/83 ................ ........ . 102 Table 18 - IR Balance Sheet March 31, 1983 ............. ..... 103 Table 19 - IR - Distribution of Key Revenue Expenditure Items as Percentage of Total Revenues .......... 106 Table 20 - Changes in Average Fare and Freight Rates in Relation to Prices of Major Inputs of IR-s Costs 1970/71 to 1981/82 ................. ...... 107 Table 21 - IR Revenue and Expenditure 1983/84 to 1989/90.... 108 Table 22 - IR Forecast Balance Sheet as of March 31, 1984 to 1990 ........... .............. 111 Table 23 - IR Forecast Source and Application of Funds 1983/84 to 1989/90 .............. 112 CHARTS No. 18812 - Indian Railways Organization .................. 113 No. 25838 - Railway Electrification Planning, Coordination and Monitoring Group ....................... 114 No. 25798 - Variations of ER with Changes in Electric Locomotive - km per day for Transport of Goods 0.09 . .................... 115 No. 25799 - Implementation Schedule ....................... 116 MAPS No. 17454 - Electrification Scheme No. 17456 - Proposed Modernization of Workshops This report is based on information provided by the Government of India, and on the findings of various preparatory and appraisal missions in 1979, 1980, 1981, 1982 and 1983 consisting of Messrs. H. Alikhan (Financial Analyst), R. Auzmendi (Economist), N.E. Krogh-Poulsen (Economist), M. Helrose (Railway Engineer), E. Pogson (Financial Analyst), A. Sabeti (Railway Specialist), T. Shima (Railway Engineer), A. Soto (Economist) and consultants D. Burns (Mechanical Engineer), G. Fisher (Electrical/Traction Specialist), D. Rowe (Manufacturing Management Specialist) and P. Voss (Electrical/Overhead Equipment Specialist). Mr. J. Griffith (Loan Officer) assisted in the appraisal. Reports and data related to the project available in the Association are listed in Annex A. INDIA RAILWAY ELECTRIFICATION AND WORKSHOP MODERNIZATION PROJECT STAFF APPRAISAL REPORT I. BACKGROUND A. Economic Setting and Transport Sector 1.01 For a country with the size and diversified economic structure of India, transport plays a vital role. It must provide efficient and reliable transport services, and, given the scarcity of financial resources in the economy, it must accomplish these objectives at a minimum cost. It is of paramount importance, therefore, to ensure that the vital production activities of the economy are not hindered by lack of transportation. 1.02 Traditionally transport kept pace with economic development in the country. During the late seventies, however, the discipline and morale of labor in transport agencies and their freight users alike markedly decreased, while investments in transport infrastructure and facilities were given lower priority than those for sectors such as agriculture, energy and industry. Other factors such as substantial changes in the volume as well as in origin and destination of traffic flows, further compounded the problem. 1/ As a result, ports (particularly Bombay) and railways, the backbone of the country-s transport system, were unable to adequately meet traffic demand, and the road transport system, never designed to carry such traffic, had difficulty covering the railway transport shortfall and did so only at high cost to the economy. All this resulted in supply shortages of vital commodities such as coal, cement and fertilizer, which brought about stoppages and dislocations to critical economic sectors. However, in 1980-82, the general situation in the sector, and specifically in railways and ports, has substantially improved mainly as a result of better railway and port management. 1.03 The railways have traditionally been the main mode of mechanized transport in India and retained their relative position more or less unchanged up to the beginning of the 1950-s, when the railway share of 1/ One of the most important changes was the cessation of foodgrain imports into the country. Before this occurred, the foodgrain requirements in the North were met mostly from imports through the southern ports. Now, all the deficit areas, including the south, are supplied from surplus northern states, reversing therefore the direc- tion and changing the volume of this type of traffic. -2- mechanized land transport was estimated at 90% of total ton-km and 75Z of total pass-km. Over the following two decades, those railways' shares declined to 65% and 40% respectively, with a corresponding increase in the share of road transport, values which have remained practically constant during the 1970s. With respect to freight the increase of highways' share was due to the increasing market for high-value goods moving by road over short and medium distances, where highway transport has inherent advantages over railway transport. With respect to passenger traffic, the main reason for the reduced railway share is that long-distance passenger traffic has tended to increase at a slower rate than short-distance commuter traffic, which can generally be carried more economically by road except for large and dense population centers such as Bombay, Calcutta and Madras. 1.04 Compared with railways and highway transport, the other modes of tra_sport are at present of minor importance as general goods and passenger carriers: coastal shipping and pipelines each carry about 3X of the total freight traffic in terms of ton-km; air transport carries about 1% of total pass-km. These modes are, however, important within their specialized areas, and there is scope for considerable expansion within each mode because of the size of the country and its geographical features. Consequently, projects for expansion of coastal shipping of coal and pipelines for transport of crude oil, gas and petroleum products are currently being undertaken by the Government. B. Transport Planning and Coordination 1.05 The Indian transport sector is under the jurisdiction of various ministries: ports, shipping and roads are under the Ministry of Shipping and Transport; railways are under the Ministry of Railways; civil aviation under the Ministry of Tourism and Civil Aviation; and pipelines under the Ministry of Petroleum. Planning and coordination is undertaken within the context of overall national and regional plans. 1.06 The present institutional arrangements for transport and coordination at the Central Government level consist of: (a) a Cabinet Committee on Transport and Tourism; (b) a Secretaries' Committee on Transport, Tourism and Aviation; (c) a Transport Development Council and an Inland Water Transport Board, which coordinates policies between the Centre and the States; and (d) an Interstate Transport Committee which regulates interstate road transport. The committees described under (a) and (b) are not concerned with the day-to-day process of planning. They provide a forum for discussion and their recommendations are not binding. While railways are exclusively under the Central Government, highways and road transport, minor ports and inland water transport are under the jurisdiction of both Central and State Governments. -3- 1.07 This organizational set up, which has resulted in insufficient coordination within the transport sector, was a matter of concern and of frequent exchange of views between Government of India (GOI) and the Bank Group for several years. In view of the increasing importance of addressing on a sectoral basis this problem together with issues such as the high share (63% in 1979/80) of the transport sector's oil consumption in the country's oil bill, and of formulating investment, pricing and operating policies aimed at minimizing the resource cost to the economy of the transport sector's services, a special study group, the National Transport Policy Committee (NTPC), was created in April 1978. The NTPC, with the assistance of experts provided by UNDP, carried out a study which was presented to GOI in 1980. A review by the Bank indicates that the study-s suggestions and recommendations are basically sound and that they will provide a framework for better development of the country's transport sector. GOI approved most of NTPC recommendations in a cabinet resolution of March 1982. The Bank is now focussing its transport sector work in India in defining, together with GOI, an adequate implementation program and monitoring system, for the main NTPC's recommendations. 1.08 For national transport investments, the Planning Commission assesses and approves for inclusion in the national plan, the investment proposals emanating from the transport sector. The national plan thus formulated by the Planning Commission must subsequently be approved by the Government and the National Development Council. 1.09 For transport pricing, the overall responsibility lies with the Central Government, except in the case of road transport where the responsibility is shared by the Central, State and local authorities. As a result, the type, level and structure of taxes and road user charges vary considerably from one state to another. A number of studies 1/ have recommended improvements to make the system more efficient, less costly in terms of time and requirements and development of a tariff structure which is cost based. These issues are going to be addressed by the Bank in the context of the sector dialogue with GOI indicated in para 1.07. In the case of railways, as mentioned in paras 5.04 to 5.06, a committee convened by Government has studied the rail transport's rates and fares structure and has recommended a number of measures to improve, inter alia, the tariff structure. 1/ Motor Vehicle Taxation Enquiry Committee (1950), Wankhede Study Group (1971), National Transport Policy Committee (1980). -4- C. 1Tansport Policy and Investment Allocations 1.10 The GoverDmenefs economic objectives were stated In the Sixth Five-Year Plan (SFYP) 1980-85. The Plan represents an attempt at realizing high average growth in the economy by increased emphasis on irrigation, rural development and power. The transport sector policy would be implemented through increased support to the highway sector wlth particular emphasis on facilitating transport in rural areas; encouragement of increased efficiency of railway transport operatlons; and discouragement of growth in and decongestion of the central businses distrLets of large metropolitan regions. Of the total public investment in the Sixth Five-Year Plan, Rs 101.6 billion or about 10% would be allocated to transportation. Transport investment outlays are shown below (1951-78 representing outlays in current prices and 1980-85 planned outlays in 1979-80 prices): Rs Million Plan Period Total Plan Transport Percent Transport 1951-56 (First) 19,600 4,340 22 1956-61 (Second) 46,720 11,040 24 1961-66 (Third) 85,770 19,810 23 1966-69 (Inter) 66,250 10,320 16 1969-74 (Fourth) 150,020 25,180 16 1974-78 a/(Fifth) 289,910 41,370 14 1980-85 TSixth) 975,000 101,620 10 a/ The 1974-1979 Five-Year Plan was cut short by change in the Government in 1978. -5- 1.11 The relative allocation of public transport investment funds between the various modes of transport is shown below, 1951-78 representing actual allocations and 1980-85 planned allocations (in percent): Rail Roads RTCs a/ Ports Ships Aviation 1951-56 50 34 0 7 4 5 1956-61 65 20 2 3 5 5 1961-66 67 22 1 5 2 3 1966-69 50 30 5 6 3 6 1969-74 37 34 5 Ll 6 7 1974-78 38 28 9 11 9 5 1980-85 42 28 10 6 6 8 Average 50 28 4 7 5 6 a/ Public Sector Road Transport Corporations, mainly for passenger transport. 1.12 The relative share of railways and road transport has substantially changed along the years, in line with the rapidly expanding role of road transport. The large port investment allocations during the period 1969-78 reflect an expansion program on the east coast which is substantially completed. The Sixth Plan port allocation includes only a nominal amount for the construction of a new port at Nhava Sheva, which was approved by GOI in early 1982. The inclusion of full allocation of funds for this project would substantially change the indicated percentages. II. INDIAN RAILWAYS A. Organization, Management, Staff and Training 2.01 The network of IR is owned and managed by GOI. Its operations are controlled and directed by a Board of five members headed by a Chairman who is ex-officio a Principal Secretary to the Government of India reporting to the Minister of Railways. One board member, the Financial Commissioner, has discretionary powers to report directly to the Minister of Finance on financial matters. The Board, therefore, performs the dual functions of a Secretariat to the Ministry of Railways and of an executive body responsible for railway operations. In financial matters -6- the Government of India, through Parliament, oversees implementation of recommendations made by the Railway Conveution Committee and other parliamentary committees. 2.02 IR is the nationes largest single undertaking, with a capital investment of some Rs 75 billion and a total staff strength of about 1.7 million. There are nine Zonal Railways, each of which is under the control of a General Manager, and each zone is a large system on its own account. IR also has three factories engaged in the manufacture of locomotives and rolling stock and two new factorles are under construction, one for production of wheels and axles (para 2.22) and the other for remanufacture of critical diesel locomotives components (para 2.24). IR's organization chart is illustrated in Chart 18812. The quality of senior staff at Central and Zonal Headquarters is high and their knowledge of modern railway technology is good. Training of staff is given high priority and is considered crucial by IR Management in maintaining a high standard of operations. Various forums inside and outside the country are utilized for training, including IR's own training schools. B. Infrastructure 2.03 IR operates over 60,000 route kilometers (RKM), of which about 13,000 RKM have multiple track. IR's trackage is shown below by gauge and category (in km): Running Sidings Of which Gauge Track Yards Total Electrified Broad 45,896 20,398 66,294 13,381 Meter 25,822 7,815 33,637 329 Narrow 4,246 534 4,780 0 Total 75,964 28,747 104,711 13,710 Source: IR Year Book 1982/83 About 63X of total track is broad gauge (BC), 33% is meter gauge (MG), and the remaining 4% is narrow gauge (NG). About 20% of BG and 1% of MG track are electrified. Of total BG running track, 24,000 km or 15,000 RKM constitute the heavy density lines over which average traffic density exceeds 20 million GTKM per RKM per year. -7- C. Motive Power 2.04 As of March 1983, there were 2,638 diesel electric and diesel hydraulic locomotives, 1,137 electric locomotives and 6,292 steam locomotives on IR (details of type and age group of IR:s traction are shown in Table '). Re-examination of IR-s traction policy confirms the need to hasten the pace of steam traction replacement. In order to obtain maximum benefits from diesel and electric traction, however, it is essential to accelerata; the electrification program in the main trunk lines where traffic volumes have reached levels which justify the conversion, to improve the performance and availability of locomotives, to reduce their operating and maintenance costs and to provide greater flexibility in train operations (further notes provided in Annex B). 2.05 In the 1960-s, IR began manufacturing diesel electric, diesel hydraulic, AC and DC electric locomotives in order to reduce dependence on steam traction and reduce foreign exchange requirements for motive power modernization. At the Diesel Locomotive Works (DLW), manufacture of diesel electric loccmotives was set up in collaboration with ALCO, United States; at the Chittaranjan Locomotive Works (CLW), the diesel hydraulic locomotive manufacture was set up in collaboration with MAK, Federal Republic of Germany, and the AC electric locomotive manufacture was also set up in collaboration with the 50 Hz Group (France, Germany, Switzerland and Belgium). At CLW, IR also manufactures a limited number of DC electric locomotives for replacement of DC traction around Bombay, which has the oldest electrified section of the Railways and the only DC section in India. D. Rolling Stock 2.06 The current passenger stock includes 52 diesel rail cars, about 2,600 electric multiple units (EMU); and some 25,000 coaches. The present fleet of freight wagons is about 390,000 units, equivalent to about 540,000 four-wheeler wagons, IR's standard measure of freight capacity. Details of IR-s rolling stock fleet by type and age group are also given in Table 1 and Annex B. Coaches 2.07 To cater to the requirements of the increasing passenger traffic, IR has augmented the number of passenger carriages and their aggregate seating capacity over the years. Additions to the fleet have, however, not been commensurate with the growing needs of traffic. While passenger traffic has gone up by about 180% since 1950 the increase in passenger coaches has only been in the order of about 120%. This has resulted in an acute shortage of coaches and the occupation ratio exceeds 100% on many trains. These factors have resulted in considerable over-crowding at the expense of travel safety, loss of revenues, and higher operational costs. Wagons 2.08 During 1950-s practicaLly all freight was being carried in general purpose wagons - covered, open high sided and open low sided wagons. To be able to cope with the pattern of traffic, the proportion of the special type of stock has been increasing over the years. Now a number of new bogie wagons, with emphasis on higher payload and specialized facilities for Loading and unloading, have been put into service and the number of such wagons is increasing. E. Workshops 2.09 IR-s maintenance workshops were set up and equipped in the latter half of the nineteenth and early twentieth century by the then State and Company Railways. At the time of integration of the Railways in 1952, there were 41 workshops dealing with the overhaul of rolling stock and motive power. The size of these workshops varied from 150 to 15,000 employees. The workload and product mix in these units were governed by the need for self-sufficiency of each individual State/Company Railway, resultirg in a proliferation of diverse activities for different types of rolling stock in individual workshops, which continues today. 2.10 Workshops mainly undertake periodical (programmed) overhauls and manufacture and remanufacture of parts and components. Inspection and servicing (renew brake blocks, change engine lube oil, add water, refuel, etc.) and running repairs are performed in a Large number of Locomotive sheds and carriage and wagon depots dispersed throughout the country. These smaLl repair units are generally referred to as maintenance depots (para 3.23) and so far have been provided with limited machinery and plant, mainly through transfer of old machines from workshops. F. Hanufacturing Units 2.11 IR-s main manufacturing units are the Chittaranjan Locomotive Works (CLW) at Chittaranjan, the Diesel Locomotive Works (DL1) at Varanasi and the Integral Coach Factory (ICF) at Madras. The CLW was set up in 1948 for the manufacture of steam Locomotives. Production in this shop was diversified in the mid-1960-s, and by 1972 this unit had switched entirely to the manufacture of electric locomotives, diesel hydraulic shunters and a variety of components for diesel electric locomotives and other equipment. The ICF commenced production of coaches in 1955 and later added electric multiple units to its product line. The production of coaches at ICF needs to be increased (para 3,23). The DLW began production of diesel electric locomotives in 1964. A large proportion of the original equipment installed in the three production units has already served its useful economic life. Also, WRs manufacturing, remanufacturing ant maintenance activities are growing and rapidly becoming more complex. A need to upgrade manufacturing units and -9- strengthen IR-s organization and management to adequately cover these expanding activities has become evident and has been the subject of extensive discussions between IR and the Bank (para 2.23). G. Operating Performance 2.12 IR-s operating performance for the period 1973174 to 1982/83 is given in Table 2. The best performance level for the most significant operating indicators during the ten-year period has been underlined in Table 2 for easy reference. The overall performance of IR compared to other railway systems in developing countries remains generally satisfactory. While the last years results show definite upswings in many of these indicators, a number of them, especially in motive power and rolling stock equipment, need further attention and improvement. 2.13 The reasons for the fluctuating level of IR-s performance can be classified into three general categories: (i) factors external to IR and over which the railways have little, if any, control; (ii) events external to IR but to which the railways should be able to adapt smoothly and with reasonable promptness; aud (iii) problems largely within the realm of IR-s management to resolve. The first category includes a deterioration of law and order in the country which resulted in damage and theft of railway property affecting operations adversely, a reduction in efficiency of major railway users in loading and unloading wagons thus increasing ille time of wagons, congestion at major ports which lead to diversion of traffic to minor ports where handling facilities and railway capacity was limited, and an insufficient level of investment in maintenance and renewals in recent years, resulting from reduced priority for railway funds in India-s recext five-year plans. The second category comprises changes in traffic-flow patterns of major commodities. For example, as India-s foodgrain production increased, imports were reduced significantly. For this and other commodities (e.g., fertilizer, cement) the haul distances increased sharply and the commodity flow patterns changed drasticaLly. Given the size and complexity of the system, IR's management could not respond to the changes in a timely manner. The third category includes a drop in productivity of railway staff; insufficient attention to the potential for reducing costs; and the need to increase operating efficiency, improve railway technology, and adopt modern management tools (paras 2.25 to 2.28) which would considerably enhance IR-s ability to cope with these problems. A detailed discussion of these matters was outlined in the Second Railway Modernization and Maintenance Project, SAR Report No. 3431-IN dated October 26, 1982, Section H, paras 2.24 to 2.37. -10- H. Traffic 2.14 IR's freight and passenger traffic statistics from 1950/51 to 1981/82 are shown in Table 3. In the last 31 years, railway freight traffic has increased at an average annual rate of 3.1% in terms of total tonnage and 4.5% in terms of ton-kilometers. The corresponding growth ratios for inter-city passenger traffic are 2.3% and 3.7%. These long-term trends do not reflect, however, gradually changing patterns of growth. While the annual rate of growth of inter-city passenger traffic has increased from 0.5% (for passengers) and 1.0% (for passenger-kilometers) in the decade of the 1950s, to 3.3% and 6.1% in the last decade, the rate for freight traffic in the same decades has decreased from 5.3% (tons) and 7.1% (ton-kilometers) to 2.0% (tons) and 2.9% (ton-kilometers), respectively. Meanwhile, during the last four years, total tonnage moderately increased from 237 to 245 million tons or about 0.8% per annum and ton kilometers increased by 1.7% per annum (from 163 to 174 billion) due to a continuing rise in average haul of freight. Suburban traffic, meanwhile, has grown at a sustained rate of 5.4% for passengers and 6.3% for passenger-kilometers during the last 31 years. Growth has levelled off in the last four years however, suppressed by shortages of rail equipment and terminal facilities. Traditionally, seven groups of commodities have made up the bulk of railway transport in India. In 1981/82 these seven commodities (coal, inputs and production of steel plants, iron ore for export, foodgrains, petroleum products, cement and fertilizers) comprised about 80% of revenue earning traffic in terms of tons moved and 75% in terms of ton-kilometers (see Table 4). 2.15 Details of freight traffic forecasts are provided in Table 5 and in Annex D. Three different alternatives have been analyzed and commodity-wise projections show that a total rail traffic ranging from 186 to 198 billion ton-kilometers, with a medium forecast of 191 billion ton-kilometers can be expected by the end of the Sixth Plan in 1984/85. In addition, by 1990/91, total traffic would range between 212 and 258 billion ton-kilometers. Passenger traffic, moreover, is expected to reach between 246 and 292 billion passenger-kilometers by 1984/85 and from 307 to 444 billion passenger kilometers in 1990/91. The freight traffic forecasts are less than the Sixth Plan estimate of 220 billion ton-kilometers of total freight traffic in 1984/85. However as indicated (para 2.16), the limitations of the Sixth Five-Year Plan are such that even assuming an efficiency similar to the 1981/82 level, the Plan allocations would be generally insufficient to cover the needs of the railways. I. Railway Investment Plan 2.16 To support projected traffic growth and finance asset replacement, IR-s approved investment for the Sixth Five-Year Plan (SFYP) period 1980/81 to 1984/85 totals Rs 51,000 million, including Rs 3,050 -11- million for metropolitau transport projects and investment in road services. The broad features of the Plan are responsive to the country-s needs although improvements are possible. The plan allocations are particularly short in telecommunications and in replacement of motive power and rolling stock. The amount allocated for telecommunications excludes the investment needed to implement an operating information system, for which only a nominal sum has been provided in the 1983/84 budget. Similarly the replacement of motive power and rolling stock is not adequately covered, especially when considering the importance of phasing out steam traction to improve IR-s maintenance and operations and to optimize the use of coal and the age and condition of a sizeable portion of the freight wagons and coaches. Even if IR-s efficiency is maintained --as expected-- at the 1981/82 best historical levels, there would be little safety margin when compared with the conservative estimates of future traffic growth presented in para 2.15, not to mention the need to reduce operating expenses by phasing out obsolete motive power and rolling stock. The detailed investment program is presented in Table 6 and is summarized below: Sixth Plan Outlay for Railways, 1980/81-1984/85 Rs Million Rolling Stock 21,000 41 Track Renewal 5,000 10 Traffic Facilities 4,800 10 Electrification 4,500 9 Workshops and Sheds 2,950 5 Machinery and Plant 2,150 4 Bridge Works 900 2 Signalization and Telecommunication 900 2 Metropolitan Projects, New Lines, Others 8,800 17 Total 51,000 100 Source: Sixth Five-Year Plan IR has proceeded at a fast pace in the implementation of the Plan and its investments in the first four years (1980/81 - 1983/84) are expected to be of the order Rs 48,560 million. The feasibility of enhancement of the total plan outlay during the current Sixth Five-Year Plan is at present under examination but it has already been decided that the IR outlay will be substantially increased. IR is now in the process of preparation of its detailed investment plan for the Seventh Five-Year Plan period 1985186 - 1989/90. Its preliminary estimates indicated that funds needed for the -12- the Seventh Plan Period would be tn the order of Rs 110 billion. This wo%..Ld take Into account the urgent need for early replacement of overaged assets and modernization of its operations. IR's Seventh Five-Year Plan's focus would be largely on investments for replacements of motive power and rolling stock; electrification and modernization of workshops and aids to operational management, which, as in the past, would be continuously discussed with the Bank during the plan period. At negotiations, it was confirmed by GOI that this project is an integral part of the IR capital investment plan and as such, has the Planning Commission's approval. J. Railway Planning 2.17 Under Credit 280-IN (Eleventh Railway Project), a corporate planning exercise was initiated by IR with the objective of ensuring adequate provision of rail transport services for both passenger and freight in areas in which railways could confer optimum benefit to the economy. The exercise was completed in 1976 and resulted in a 15-year Corporate Plan for the total railway system, consolidating the corporate plans of the individual zonal railways on which IR is based. The Plan outlines a proposed development strategy for IR for the period 1977/78 to 1988/89 and covers passenger and freight traffic, traction and rolling stock, line capacity, yards and terminals, shops, production units, research and development, management and manpower and financial aspects. 2.18 The Corporate Plan exercise provided the first comprehensive look at shortfalls and choices in the post-investment level. The Plan also provided GOI with an indicative statement of the impact on the national economy. The Plan stated the need and the framework for modern- ization which was subsquently further elaborated by the Rail Tariff Enquiry Committee (RTEC) and the National Transport Policy Committee (NTPC). Both committees concluded their comprehensive studies and presented their recommendations to GOI in 1980. 2.19 GOI's acceptance of the need for IR's modernization has been reflected in efforts to increase the resource allocation under the development plans (para 2.16) and implementation of various measures aimed at improving WRs maintenance and railway technology (para 2.22), opera- tions (paras 2.20 and 2.21) and finances (paras 5.04-5.06). The Bank has been closely involved and has supported GOI/R-s efforts and the proposed project is a continuation of these efforts. K. Modernization Efforts 2.20 There are multiple reasons behind the problems noted in previous paragraphs, for the periodical deteriorating capacity and shortcomings in. the performance of the railways. With a rapidly growing number of diesel and electric locomotives nearing their mid-lives and in need of major -13- overhaul, IR has taken up the immediate need for a change in investment priorities in favor of modernization of maintenance facilities and motive power and rolling stock design. In support of IR-s move in these new directions, the Bank Group approved the First Railway Modernization and Maintenance Project, Credit 844-IN in July 1978, for an amount of US$190 million equivalent and the Second Railway Modernization and Maintenance Project, Loan 2210-IN/Credit 1299-IN in December 1982 for an amount of US$400 million equivalent. 2.21 The major modernization issues addressed in the recent past years on which the Bank Group has assisted GOI/IR efforts are as follows: (a) a master plan study for modernization and rationalization of workshops; (b) relative economics of diesel and electric motive power; (c) accelerated electrification; (d) railways motive power plan, medium and long range; (e) railways passenger vehicle technology and requirements; (f) unit exchange spares and maintenance system for diesel and electric locomotives; (g) modernization of 1,500 DC Banking locomotives; (h) railways real time information need for freight operation and passenger reservation; (i) the revision of the Corporate Plan based on changes in IR-s operating and traffic environment; and (j) resource mobilization and tariff rationalization. Maintenance and Technology Improvements 2.22 Under the ongoing Credit 844-IN, which is almost complete, the main items dealt with were modernization of IR-s manufacturing unit CLW and four major repair workshops, introduction in some workshops of a modern unit exchange concept of maintenance program and the establishment at Yelanhanka in Karnataka State of a wheel and axle plant (IRWA). This plant will be in operation shortly which would help save scarce foreign exchange. The measures taken under the project have enhanced IR's maintenance capability and has resulted in reducing cost of maintenance as well as improving performance and availability of IR's diesel and electric locomotives. 2.23 While under the Credit 844-IN some key maintenance problems related to IR-s diesel and electric locomotives were tackled, further measures were needed (identified under the Master Plan Study) to upgrade this activity, which the Bank Group supperted under Loan 2210-IN/Credit 1299-IN. Under this ongoing project, the physical thrust of the project aimed at: (a) further modernization and improvement of locomotive maintenance and reliability; (b) improvement of technology and performance of the AC mainline electric locomotives; and (c) improvement of technology, design and operation of heavy bulk movements. In addition, among other areas, examination of IR organization and management, operations and finances continues. -14- 2.24 Major components of the ongoing Railway Modernization and Maintenance II Project, which have a bearing and complement the proposed project, are: (a) the construction of Diesel Components Works (DCW) plant to be constructed and equipped at Patiala, in Punjab State to remanufacture/manufacture diesel electric locomotives critical components/assemblies which IR will utilize to operate a unit exchange maintenance system at DCW and its other workshops; (b) the acquisition and testing of about 20 prototype high-power modern high adhesion AC electric locomotives, which will serve present and future needs for heavy freight trains capable of hauling up to 4,500 GTT on all IR 25 KV electrified lines; (c) the acquisition of components and materials for construction of corrosion resistant high capacity wagons; and (d) acquisition of test equipment for training to improve IR's train operations and fuel efficiency. Modern Management Tools 2.25 While IR's management continues to take measures to resolve some of the key problems, it is constrained in the extent of actions it could initiate, because of lack of modern management tools, which are critically needed and other large railways have successfully employed. Experience has proven in other complex railways, that adoption of a real-time operating information system and of a modern communication capability would, inter alia, immensely help reduce traffic congestion, considerably improve rolling stock and motive power utilization and facilitate maintenance of motive power and rolling stock, and enable IR to quickly adjust to changing traffic patterns all of which will reduce operating and capital costs of the railways. 2.26 Adoption of a real-time Operating Information System (OIS) which would help resolve most of the problems described above has been under discussion between GOI|IR and the Bank Group for several years. The Bank Group's audit of the Eleventh and Twelfth Railway projects also recommended the use of modern technologies to provide real-time up-to-date information on freight carrying capacity and its optimum utilization. 2.27 GOI has endorsed the need for and approved introduction of an online/real-time computer-based OIS for freight operations and management of IR and the related telecommunication and data transmission network. The basic configuration of the integrated computer based freight OIS would be a combination of centralized and decentralized functions. The core functions, like control of wagons, locomotives, train movements, routing of traffic and empty wagon distribution will be performed centrally and to perform this central function IR has decided that a system operating on Canadian National Railways System or British Railways System will be adapted and implemented to suit the needs and conditions of the IR. -15- 2.28 Satisfactory progress by GOI/IR in selection and implementation of a computerized Operating Information System (OIS) and related telecommunication was a pre-requisite to processing the Second Railways Modernization Project, and during its negotiations an understanding was reached on a plan of action for implementation of the OIS and related telecommunication. Progress in implementing the plan of action to date has been somewhat slower than was agreed. Delays were unavoidable given the substantial change in the railways Board personnel, which occurred in February/March 1983. However, the development of a well-integrated Telecommunication/OIS network remains a top priority for IR and since January 1984 steps have been taken towards implementation of Telecommunication/OlS system. To expedite progress towards implementation of the telecommunication portion of the integrated telecommunication/OIS and data transmission network system, GOI/IR indicated during negotiations that a consultant will be selected by August 31, 1984 and the telecommunication project will be sanctioned (approved) by the IR-s Board by March 31, 1985. It was also agreed during negotiations that selection of collaborators/consultants to assist GOI/IR in adaptation and implementation of the OIS will be a condition of effectiveness of the loan. L. Performance Under Previous Bank Group Projects 2.29 Through seven loans and nine credits approved between 1949 and 1982, the Bank assistance to IR totalled over US$1.4 billion dollars equivalent. Prior to 1978, Bank Group loans and credits were based on one to three-year slices of IR investmeut programs and covered foreign exchange for acquisition of: (a) materials, parts and components for manufacture of motive power and rolling stock; (b) machinery and plant for IR manufacturing units; and (c) materials and equipment for line improvement works and telecommunications. 2.30 Previous projects, audits have been carried out for Credits 280-IN and 448-IN (Eleventh and Twelfth Railway Projects) and the findings are contained in the Project Performance Audit Report No. 1658 of June 30, 1977. A Project Completion Report and draft Project Performance Audit Report have also been prepared on the Thirteenth Railway Project, Credit 582-IN. 2.31 The Project Performance Audit Report concluded that the Bank's contribution to the country's development through its involvement in railway projects has been substantial. Bank assistance provided the foreign exchange resources without which IR-s replacement and expansion programs would have been very difficult to carry out. The report also po'nted out the need to: (a) improve the planning, both at the sectoral level and within the railways; (b) introduce a better reporting system of the results of Bank-financed projects; and (c) use computers to provide immediate information to optimize the utilization of its carrying -16- capacity. Additionally, the report mentions IR-s difficulties in paying the fu_l dividend on Capital-at-Charge which IR is obliged to pay GOI annually. 2.32 The issue listed under (a) in para 2.31 has already been addressed by GOI as mentioned in paras 2.17 to 2.19. Additionally, start- ing with Credit 844-IN, a thorough and adequate reporting and monitoring system (issue b) was introduced and has been functioning satisfactorily. A first step towards resolving issue (c) has been addressed by GOI/IR as described in paras 2.25 to 2.28. Regarding the dividend problem, although ( IR has met the full dividend payment to GOI between 1976/77 and 1978/79, it has run into difficulties in meeting this financial requirement (paras 5.03-5.06 and 5.09-5.11). III. THE PROJECT A. Background 3.01 The basic objectives underlying the Bank Group's past assistance to IR have been to assist in rehabilitating and subsequently modernizing railway infrastructure, motive power, rolling stock and in improving railway operating efficiency, maintenance, administration and planning. The Bank Group has had a continued involvement in development, preparation and review of the work mentioned above and for the proposed project. Bank Group missions to IR have been supplemented by consultants in such fields as heavy engineering, manufacturing, electric and diesel traction technol- ogy, maintenance including upgrading of repair workshops, signalling and telecommunication, organization and operating information systems and intermodal transport. Also, arrangements were made at various times for IR officers and those of other Government agencies to visit transport and industrial organizations outside India. Findings and preparation of the various subjects have been extensively discussed with IR and GOI, espe- cially the Ministries of Finance and the Planning Commission. These findings and discussions form the basis for the formulation of a number of projects by IR, including the proposed project. B. Objectives 3.02 The main objectives of the proposed project are to: (i) increase capacity to meet growing traffic demand; (ii) improve utilization of motive power, rolling stock and roadway; (iii) improve cost effectiveness; (iv) utilize energy-efficient traction; (v) improve technology of locally-manufactured components used in electrification of lines; and (vi) strengthen the organization in selected operational areas. 3.03 As a means to achieve these objectives the proposed project comprises two major components, namely, electrification and workshop -17- modernization. The electrification component will contribute, inter alia, by completing energization of the heavy density main trunk lines which have enough traffic to economically justify the conversion (see Chapter IV). The operation of the completed electric network will allow through-train operation of higher tonnage at greater average speeds and increased motive power and rolling stock kilometers per day. The workshop modernization component will contribute by increasing availability and reliability of rolling stock at lower costs. In addition, it will provide needed capacity to the presently inadequate coaching stock production and maintenance system. Further, it will streamline workshop operation and management practices. C. Description 3.04 The proposed loan would support the electrification of about 3000 RKM of IR-s accelerated Electrification Plan; and modernization of six workshops, one manufacturing unit and selected maintenance depots largely through replacement of old obsolete machines with modern and efficient ones. The proposed project is estimated to cost about US$1,212.7 million of which US$280.7 million equivalent is proposed for Bank financing. 3.05 The project consists of: (a) electrification: (i) electrification of the already partially electrified main trunk routes (paras 3.06 to 3.13); (ii) acquisition of OHE Recording/Testing Car (para 3.14); (iii) acquisition of OHE maintenance vehicles for electrified lines (paras 3.15 and 3.16); (iv) improvements in technology for domestic manufacture of components used in electrification of lines (para 3.17); (v) improvement of Ghat Operations (paras 3.18 and 3.19); and (b) workshop modernization: consisting of modernization of six major shops, the Integral Coach Factory (ICF) and selected maintenance depots (paras 3.20 to 3.26); (c) staff training (paras 3.27 and 3.28). -18- (a) Electrification (i) Completion of Electrified Network 3.06 While most of the world's railways have been in the process of, or have completed, the conversion from steam to diesel or electric traction over the last 25 years, IR is, because of its very large size and lack of funds, only about halfway through this conversion. In 1983, on broad gauge, IR locomotive fleet was comprised of 3,523 (52%) steam, 2,061 (30%) diesel and 1,137 (17%) electric units. Obvious priority to improve the operational and financial position and service capability of the railway is to accelerate the conversion from the costly and inefficient steam traction to diesel and to electric traction on heavy density lines, where it is economically feasible to do so. 3.07 IR's policy (Annex A and B) towards conversion of traction has been to: (a) phase out inefficient steam traction; (b) convert from diesel and steam to electric traction where traffic densities make this economically viable; (c) improve through electrification the performance on high density lines by a combination of higher sustained average speeds, higher trailing tonnage per locomotive and greater number of locomotive and rolling stock kilometers per day of utilization; (d) reduce congestion, operating and maintenance costs through elimination of steam and diesel on main lines; (e) build up a suitable and modern motive power fleet and infrastructure to meet the demands of increasing freight train loads to 4,500t and increasing passenger train size to twenty two coaches; and (f) modernize signalliug and telecommunication system as a consequence of necessary changes made during the conversion to electrification. 3.08 The high cost of imported fuel (HSD) is of concern in the country because of the adverse foreign exchange implications. In the immediate future, the railway is one of the few areas where the country could significantly substitute electric power for HSD. At present India imports about 10% of its HSD needs which is equivalent to about the amount that is used by the railways. Moreover, the railways needs are on the rise, which would mean higher imports of HSD. 3.09 While all these reasons suggest a strong case for electrification, because of acute resource constraints, IR was only able to allocate about 3% to 5% of its annual investment outlay for this task since 1958, when it commenced electrification works. By May 1983 only about 5,800 RKM were electrified, which constitutes about 10% of the total network. The 10% electrified route services corresponds to 28% of GTKM carried by IR. Table 7 shows the pace of electrification on IR since 1956. -19- 3.10 The slow pace of electrification has constrained the development of an integrated operational network. As a result, the partially complete electrified system is a detriment to efficient operations since incomplete electrified lines mean change of operations and equipment at points where traction changes, resulting in costly constraints in operations and capacity. 3.11 As part of the national program for the oil conservation program, IR is to accelerate electrification of about 7,500 RKM of its main trunk lines under the Sixth and Seventh Five-Year Plan period 1980 to 1990. This program calls for increasing the pace of electrification from the present 300 RKM to 1,000 RKM annually. With completion of the electrification program by 1989/90, IR expects to haul 65% of the total GTKMs (goods and passenger) by electric traction. In order for IR to be able to handle this volume, GOI/IR indicated during negotiations that sufficient motive power to meet requirements of the newly electrified lines will be supplied. 3.12 The plans relating to the electrification program and the proposed Bank assistance to it, have been extensively discussed with GOI/IR. The proposed loan would support part (3,U0O RKM) of the accelerated electrification program which requires importation of material and equipment to augment the domestic manufacturing capacity. This will complete electrification of the main trunk routes connecting the quadrilateral formed by the four metropolitan cities of Calcutta, Delhi, Bombay and Madras and its diagonals (Map 17454) and the heavy density coal traffic routes of Bilaspur-Annupur-Katni-Bina. The project would assist in the electrification of the following lines: 1. Jhansi-Itarsi (381 km) 2. Itarsi-Bhusaval (301 km) 3. Bhusaval-Nagpur (393 km) 4. Wardha-Balharshah (133 km) 5. Balharshah-Vijayawada (454 km) 6. Bhopal-Nagda (239 km) 7. Itarsi-Nagpur (298 km) 8. Nagpur-Durg (265 kn) 9. Bina-Katni-Anuppur (429 km) 10. Anuppur-Bilaspur (151 km) TOTAL (3,044 km) Details of each of the above lines are described in Annex E. At negotiations, GOI/IR confirmed that electric power supply for IR-s electrified system will be available on a priority basis and that high tension power transmission lines connecting railway substations with State -2U- Electricity Boards (SEBs) will be provided sufficiently in advance of the planned line energization date so that the commissioning is not delayed. 3.13 This proposed project component is estimated to cost Rs 6,821.7 million (US$631.6 million equivalent) with a foreign exchange component of some Rs 1,143.0 million (US$105.8 million equivalent). In addition, training for this project component is provided as described in para 3.28. (ii) OHE Recording/Testing Car 3.14 At present there is no overhead equipment rccording/testing car with IR and thus manual and time consuming methods are employed resulting in a low standard of maintenance. For efficient operatiou of electrified lines, it is considered essential to have an OHE recording/testing car to measure and record the various parameters of OHE and pantograph under dynamic conditions in monitoring current collection for laying down a rational maintenance and overhaul schedule for OHE (Annex E). This car will be imported and is estimated to cost about Rs 21.1 million (US$2.0 million equivalent) with a foreign exchange component of Rs 14.5 million (US$1.3 million equivalent). (iii) OHE Maintenance Vehicles 3.15 IR now operates a large number of indigenously manufactured OHE inspection/maintenance tower vehicles, which are used to attend to OHE breakdowns on the electrified tracks. Due to the obsolete design and low speed, these vehicles are inadequate to perform the necessary maintenance efficiently. Since the heavy maintenance/repair of OHE is done during common power/traffic blocks, it is extremely important to complete the work expeditiously to minimize traffic disruptions. Therefore, IR needs to develop high-speed vehicles, namely, road-rail vehicles, 4-wheeler self-propelled tower wagons and bogie-type 8-wheeler self-propelled tower wagons to attend to minor, normal and heavy breakdowns respectively. 3.16 Based on IR's current and future needs (Annex E), the Bank would help finance the import of some 20 vehicles with the delivery of 1irst ten by 1984/85 and the balance in 1985/86. The proposed project component is estimated to cost about Rs 59.0 million (US$5.5 million equivalent) with a foreign exchange component of Rs 39.0 million (US$3.6 million equivalent). (iv) Improvements in Technology for Manufacture of Components 3.17 IR uses predominantly locall.' manufactured components such as high-tension circuit breakers, interruptors and power transformers in electrifying its lines. These and other items could be upgraded to tech- nological standards existing elsewhere outside India. To assist i1 bring- ing about technological improvements in local manufacture of critical components, the project will also finance all such Items. Inclusion ef -21- these items in Bank financing will enable the local manufacturer to enter new or update existiEg collaboration agreements and manufacturing facilities. The Bank and IR will ensure that the technology improvements will materialize through tender specification and resulting evaluation of bids. The value of these components, included in the overall electrification cost (para 3.13), is estimated to be about US$30 million equivalent. (v) Improvement of the North-East Ghat Operations 3.18 The main line DC electrified routes Bombay-Kalyan-Igatpuri and Bombay-Kalyan-Pune sections run over steep ghat sections (Annex B, para 4). Both sections are serious bottlenecks in train operations and the conversion of these DC sections to AC to achieve compatability with the rest of IR-s electrified system have been the subject of discussion for some time between IR and the Bank. Because of the complex techno-economic issues involved in the conversion from DC co AC, a study would be needed to evolve an appropriate long-term strategy. At negotiations, IR explained that a multi-disciplinary committee is in the final stages of preparing a report and indicated to the Bank that a decision on the report will be taken by June 30, 1985. 3.19 As an immediate short-term measure to improve operating efficiency in these difficult sections, it is essential that voice communication between the drivers of leading locomotives and the drivers of banking locomotives and signal cabins be provided to improve line operations and reduce delays. The proposed project would provide for necessary radio communication equipment and is estimated to cost Rs 7.3 million (US$0.7 million equivalent) with a foreign exchange component of Ks 5.4 million (US$0.5 million equivalent). At negotiations, IR indicated that it will procure and place into operation a communication system for the Ghat sections by December 31, 1985. (b) Workshop Modernization 3.20 Over the last 25 years, the need and pressure to acquire additional carrying capacity have resulted in a widening of the gap between maintenance requirements and investment allocations. Investment in workshops has averaged only 3.5% of the investment made in rolling stock and motive power, instead of the normal 7% to 117. for railways in developed countries. Moreover, about 45% of this investment in workshop machinery and plant has been exclusively for the manufacturing units: DLW, CLW and Integral Coach Factory (ICF). A 1977 detailed survey showed that of a total of 24,546 machines, 77% of those in mechanical workshops, 53% in production units and 46% in diesel and electric locomotive maintenance depot lines were over 15 years old. At the same time, the level of parts and components available for maintenance has been substantially lower than required by the Railways. -22- 3.21 During this period of low investment in maintenance facilities, extensive changes in the mode of traction from steam to diesel and electric aud consequent diversity of product mix introduced new complexities in repair practices and technology, which further strained the maintenance system. In addition, an increased proportion of older stocks of locomotives, coaches and wagons has measurably added to the quantum of attention needed in POH and rehabilitation. Increased demands for periodic repairs to rolling stock were met by piece-meal expansion of existing facilities. Maintenance capability was further underminrd by a heavy backlog in replacement of overaged machinery and plant item3 resulting from investment constraints. 3.22 Under Credit 844-IN, GOIIIR had agreed to develop a workshop "Master Plan" and this has been prepared as outlined in the Summary Terms of Reference (Annex C). The plan was reviewed and evaluated by the Bank and found to be well-conceived and meets the requirements asked of IR under Credit 844-IN. The proposed workshop modernization component is based on this plan and aims for the most part, at improvement of carriage-wagon maintenance. In view of the physical and finencial constraints, a selection process was devised for choosing the workshops and maintenance depots for the proposed project for modernization. The selection has been governed by the following factors: (a) economic rate of return on proposed investments; (b) change in the product mix; (c) sophistication of product, present and new; (d) priority for improvement in product performaace and reliability; (e) arrears and backlog in workload; (f) changes in future workload; and (g) size, age and antiquity of unit. Using the above criteria, the six major workshops and ICF and maintenance depots were selected. .3.23 In summary, the project component consists of rationalization and modernization of six selected workshops (Map 17456), namely, Parel, Liluah, Jagadhri, Golden Rock, Kharagpur, Ajmer and the Integral Coach Factory (ICF), and replacement of old obsolete machines and equipment in several maintenance depots (Annex F). In both cases, the selected shops and the maintenance depots, the approach is directed towards: (a) rationalization of periodic overhaul workload; (b) rationalization of production activities; (c) provision of improved material handling equipment and suitable workshop layout changes; (d) provision of unit exchange spares; (e) replacement of machinery and plant including testing equipment for better quality control, communication equipment for better inplant management, and cleaning equipment and technology; (f) modification and extension of existing workshop structures to cater to increased periodic overhaul (POH) load and in the case of ICF, to increase production and better work flow; and (g) development of adequate personnel support through organized training. -23- 3.24 Under the proposed project, the bulk of the investment is for: (a) machinery and equipment to achieve precision, proper testing and quality control required for maintenance of modern motive power and roll- ing stock; (b) material-handling equipment and unit exchange components to reduce frequent interruptions in work flow and to reduce damage to material in transport, both having impact on output, quality and cost of repairs; and (c) management information systems (HIS). For this, a com- puter-based MIS, similar to the one developed at ICF, will be installed at the six selected workshops by March 31, 1987. This was confirmed by GOI/IR at negotiations. 3.25 The final objective of IR is to eventually develop an integrated maintenance and repair network on a national basis. The proposed project will cover workshop modernization for the 1984/85 - 1989/90 and is estimated to cost Rs 3,298.8 million (US$305.5 million equivalent) with a foreign component of Rs 1,591.9 (US$147.5 million equivalent). The proposed project would finance 100% of the foreign requirement for the major workshops and ICF, and would cover about 48% of the foreign exchange requirements of the maintenance depot component. 3.26 In the twenty years or so since IR began dieselizing its locomo- tive fleet and adopted improved steel coach and wagon stock designs, a number of technological advances that have been made in materials and components for railway equipment. IR has incorporated a number of these advances in its fleet and no doubt will continue to do so on a case-by-case basis. Many of the advances coupled with the operating experience of other railways have produced opportunities to improve utilization of equipment, safety and reliability, and reduce cost of operations and maintenance. IR has found that it may be able to use some of these maintenance concepts and has discussed with the Bank its need to conduct a comprehensive review of its equipment specifications and main- tenance standards and procedures in light of present-day circumstances. Lhis review should provide a foundation upon which the operating and maintenance practices could be revised to take full advantage of IR-s present equipment fleet and to provide an outline for research needs of the future. At negotiations, GOI/IR provided acceptable terms of reference for a study and indicated that the study will commence by July 1, 1984 and the final report would be available by October 31, 1985. (c) Staff Training 3.27 Training under the proposed workshop modernization component would be i.rovided for process engineering, cleaning processes, painting process and management information system for workshops. Under the proposed project, an amount totalling Rs 26.3 million (US$2.7 million equivalent) has been provided for procurement of train simulators to extend the driver training program which was started under the ongoing -24- Second Railway Modernization and Maintenance Project, Loan 2210-IN/Credit 1299-IN. In total, this project component would amount to Rs 39.0 million (US$3.6 million equivalent) with a foreign exchange component of Rs 25.4 million (US$2.3 million equivalent). At negotiations, an outline of the training program wasprovided (para 3.28). 3.28 Training for the proposed electrification component would be provided in different areas of operations including, inter alia, (a) re-training of steam/diesel locomotive drivers and helpers for elec- tric traction; (b) design, installation and maintenance of OHE; (c) installation and maintenance of power supply; (d) design, installation and maintenance of signaLling and telecommunication; and (e) training of supervisors for remote control centers. About 1,200 personnel would get this training for about 2 to 8 weeks. In addition, in order to obtain exposure to more advanced and specialized technologies, senior-level officers would be trained abroad for inspection/study of electrified railway systems in foreign countries. A total of 1,500 man months of training would be provided under the proposed project; of these, an estimated 200 man months would be overseas. This proposed training program is estimated to cost about Rs 29.2 million (US$2.7 million equivalent) with a foreign exchange component of Rs 9.7 million (US$0.9 million equiv- alent). At negotiations, GOI agreed that budget allocations will be provided to IR to carry out the training programs (paras 3.27). An out- line of the training programs was provided by IR at negotiations, and IR indicated that a detailed training program will be furnished to the Bank by July 31, 1984. D. Cost Estimates 3.29 The proposed project items are included in IR-s investment plan (to be approved by the Planning Commission) 1985/86 - 1989/90 which amounts to about Rs 110 billion (US$10.0 billion equivalent). GOI provides the foreign exchange needs of IR-s investment plan from the following sources: GOI's own reserves; international financial institu- tions such as the World Bank and bilateral loan arrangements. Principal items included in the proposed project are detailed in Annex E and F and constitute an integral part of IR-s investment plan. The project is estimated to cost about Rs 13,099 million (US$1,213 million equivalent) with a foreign exchange component of some Rs 3,629 million (US$336 million equivalent). However, local manufacturers of machinery and components to be procured through ICB under the project could win up to US$20 million equivalent, thus reducing the most likely foreign exchange component to US$316 million equivalent. -25- 3.30 The cost estimates are based on January 1984 prices. They are based on ex-factory prices for similar items manufactured in India and on recent prices of imported equipment. The provision for contingencies allows for (a) physical variation of 7.5% in material and equipment and 10% in labor; (b) annual price escalation in foreign costs of 7.5% in 1984/85; 7% in 1985/86; and 6% thereafter; and annual price escalation in local costs of 7% in 1984/85 and 1985/86 and 6% thereafter. The foreign exchange rate was assumed to be US$1 = Rs 10.80. During negotiations, the cost estimates were discussed and confirmed. The cost estimates are detailed in tables 8, 9 and 10, and summarized below: (IRs Million)L/ (US$ Million)L/ Proposed LocaLZ/ Foreign Total LocaLZ/ Foreign Total Loan A. Electrification 1. Electrification of Mainlines 5,679 1,L43 6,822 526 L06 632 106 2. Recording/Testing Car 7 15 21 1 1 2 1 3. OHE Haintenance Vehicles 20 39 59 2 4 6 4 4. Improvement of Ghat Operation 2 5 7 0 1 1 L 5.Training 20 10 30 2 1 3 3 Sub-Total ELECTRIFICATION 5,727 1,221 6,938 530 112 642 114 B. Workshop Modernization 1. Workshops and ICF 787 652 1,440 73 60 133 60 2. Malaintenance Depots 920 940 1,859 85 87 172 42 3. Training 14 25 39 1 2 4 4 Sub-total WORKSHOP MODERNIZATION 1,721 1,617 3,338 159 150 309 106 Total BASELINE COSTS 7,447 2,829 10,276 690 262 952 220 Physical Contingencies 626 213 839 58 20 78 17 Price Contingencies 1,397 579 1,977 L29 54 183 44 Total PROJECT COSTS 9,471 3,62 13,092 877 335 1,212 280 Front End Fee - 7 7 - 0.7 0.7 0.7 Total FINANCING REQUIRED 9,471 3,628 13,099 877 335.7 1,212.7 280.7 Lt Figures nay not add up due to rounding off; for detailed cost, see Tables 8, 9 and 10. Z1 Taxes and duties of about Rs 2,273 million (US5211 million) are included in local costs. -26- E. Financing 3.31 The total foreign exchange component of the project amounts to about US$336 million equivalent. The Bank will finance the foreign exchange component of all items except the maintenance depots of which only a portion is included in the proposed loan. Thus the proposed loan of US$280.7 million equivalent represents about 28% of the project costs, not including taxes and duties. During negotiations, GOI agreed to finance the remaining US$932 million equivalent including US$55 million equivalent in foreign exchange, and release funds in a timely manner and in accordance with the implementation schedule. F. Implementation 3.32 To execute the electrification program, IR has set up a Central Organization for Railway Electrification (CORE) otherwise known as the Railway Electrification Planning Coordination and Monitoring Group (REPCMG) at Nagpur in central India (Chart 25838). Six field units have also been created directly under the central organization and an additional field unit under the Southern Railways. In addition IR utilizes outside contractors for construction works and installation of OHE. 3.33 The present strength of the organization is 227 officers and 1,574 staff of various categories and disciplines including 294 trainees. A central training school has also been organized at Nagpur, which offers an eight-week condensed course to familiarize participants with design and installation of overhead equipment and power supply installations. Experienced specialized skill personnel are drawn from elsewhere in the railways to fill specific needs. The organization to carry out electrification program is adequate and competently staffed. During negotiations agreement was reached that trained personnel as ueeded will be maintained to meet the needs of electrification. 3.34 Under the ongoing Credit 844-IN, IR established the Central Organization for Modernization of Workshops (COFMOW), a specialist organization wholly devoted to the task of managing the workshop modernization program planned for the twelve-year period beginning in 1978. It is also assisting the implementation of the workshop modernization component under the ongoing Loan 2210-IN/Credit 1299-IN. COFMOW was required to plan and coordinate implementation of: (a) replacement of overaged and obsolete machinery and plant; (b) introduction of modern workshop technology and methods; (c) improvement of workshop layouts to facilitate production and eliminate needless cross movements; (d) rationalization of work functions; and (e) provision of necessary personnel support by way of staff, supervisors and officers. COFMOW has performed well in its role of rationalizing the maintenance activity, acting as a procurement coordinator for the projects -27- and has provided leadership in some of the other areas originally assigned. It was proposed that it continue in this vital functional relationship for the workshop modernization component of the proposed project and that it be strengthened especially in the areas of training, preparation of specifications for machines and equipment and their procurement, process engineering (facility layout, etc.) and monitoring project implementation. During negotiations, GOI/IR confirmed this. Also, IR agreed to maintain COFMOW with adequate staff for implementation of the workshop modernization component of the project. 3.35 IR will be responsible for the implementation of the project as part of its ongoing works and manufacturing program. It has the necessary capability and competence to carry out the project. A detailed implementation program showing the phasing of the eLectrification work and trained manpower to complete this work and workshop modernization is shown in Chart 25799. This schedule, as well as progress reporting arrangements, including GOI preparation of a final report upon completion of the project, were discussed and agreed to during negotiations. G. Environment 3.36 The project has been designed with due regard to environmental and worker safety aspects. State laws for environmental and pollution control stipulates that all industrial enterprises must conform to environmental standards specified in the legislation relevant to the industry concerned. The proposed project meets these standards, and no significant adverse environmental impact is expected from the project. -28- H. Procurement 3.37 Procurement arrangements are summarized below: Procurement Arrangements (Estimated Coat in US$ Million) Pro ect Elements Procurement Method ICB LCB Other N.A. Total (Departmental (Borrower'asI Forces, Train- Other Donore' ing. etc.) Procedure) Civil Works - 67.1 57.0 1/ - 7.1 2/ 131.2 Signalling & Telecom Works 45.. 93.0 - 10.0 6/ 55.5 2/ 203.6 (45.1) 3/ (10.0) 3/ Electrical Works 74.1 267.5 - - 86,2 2/ 427.8 (74.1) 3/ (4.0) 3/ _ Recording/Testing Car 1.7 - 0.1 - 0.7 21 2.4 (1.7) 31 OHE Maintenance VehicLeas 4.3 - 0.4 - 1.7 2/ 6.4 (4.3) 3_ Radio for Banking Locos 0.6 - - - 0.2 2/ 0.8 (0.6) 3/ Plant and Machinery 74.7 21.4 6.1 1/ - 23.7 2/ 125.9 (74.7) 3/ (3.0) 31 Maintenance Depota 5L.6 71.1 7.7 1J 59.3 35.5 2/ 225.2 (51.6) 31 (3.0) 3/ Training 7.9 4/ - - 7.9 (7.9)3/ General/Miscellaneous - - - 81.0 5/ 81.0 TOTAL 252.1. 520.1 79.2 69.3 291.6 1,212.2 (252.1) 3/ (10.0) 3/ (7.9)3/ (10.0) 3/ (280.0) 3/ 1/ Railways forces will be used. 2/ Taxes and dutisa. 3/ Figures In parentheses indicate proposed financing by the Bank. 4/ According to Bank Guidelines. G Ceneral charges (Administration & Supervision)/Miscellaneous Works, viz. compensation to P & T, modification to power line crossings, replacement works, etc. 6/ Minor items to be procured by the installation contractor. 3.38 Items financed by the Bank will be procured by IR through international competitive bidding in accordance with Bank/IDA guidelines, -29- 3.38 Items financed by the Bank will be procured by IR through international competitive bidding in accordance with Bank/IDA guidelines, except for contracts of US100,000 equivalent or less, where the advantages of ICB would be clearly outweighed by the administrative burden thereof. This is estimated to represent a small portion (less than US$10 million equivalent) of the project. Such contracts will be placed using local competitive bidding procedures for procurement which are satisfactory. Also, minor items of material and equipment associated with contracts for installation/erection of signalling and telecommunication may be procured in accordance with the usual business practice of the Railways. This is estimated to amount to less than US$10 million equivalent. These procurement contracts will be reviewed during supervision. 3.39 Local manufacturers are expected to bid for items under the project and a domestic preference of 15% or the import duty, whichever is less, would be applied in bid evaluation. During negotiations, GOI clarified existing import procedures for procurement of goods which were found to be satisfactory. I. Disbursements 3.40 Subject to review and agreement with the Bank, savings in any category of the proceeds will be available to cover increases in any other category except proprietary items. Disbursements are expected to be completed by March 31, 1990 but to allow time for possible late payments, the closing date will be September 30, 1990. Disbursements under the project will be made against: (a) 100% of the cif cost of imported items; (b) 100% of the ex-factory cost of items procured from domestic suppliers; and (c) 100% of the cost of training, and installation and inspection of equipment requiring foreign expertise. A schedule of disbursements is shown in Table 11. The estimated disbursements are about one year ahead of disbursement profiles for Bank Group loans/credits in India. This divergence is a result of taking into account the experience of previous IR projects and the nature of goods to be financed under the proposed credit. During negotiations the disbursement schedule was discussed and agreed to with IR. -30- IV. ECONOMIC EVALUATION A. General 4.01 Indian Railways has a well-developed network which transports most of the bulk commodities and the majority of long distance passengers in the country. But a sustained growth in the economy and in the population poses a heavy challenge to the ability of IR to cope with the traffic demand, a task which has not always been successfully fulfilled. For example, in 1978-79 more than three million tons of coal was moved on the highways over a distance of 250 kms with an average lead of 585 km, and likewise about three million tons of foodgrain and 1.'. million tons of cement moved by road beyond 250 kms. 1978-79 was a low performance year (see Table 2) for IR, but these anomalies still exist and cause an increase in transport cost. Another example is the inability of IR to provide sufficient long-distance passenger transport, a situation which creates continuous criticism of IR by the public media. Therefore, one of the most pressing matters for IR to solve in the immediate futt:re is the increase in its capacity to adequately satisfy the ever-increasing traffic volumes. Since the early sixties, IR has concentrated on improving railway infrastructure and expanding the motive power and rolling stock fleet. At the same time, IR has moved from steam to diesel and electric traction (para 3.06). To increase its capacity, IR realized that it cannot continue relying only on increasing the size of the physical assets of the organization (network, motive power, rolling stock), and IR is now concentrating its efforts on improving its operational efficiency through a modernization program which, with the assistance of the Bank Group, was launched in the late seventies (para 2.20). 4.02 The proposed project fits well within the present strategy of IR, aiming to (a) increase track throughput by completing the electrification of the main lines; and (b) increase availability and reliability of rolling stock through a Workshop Modernization Program. Further, the railway electrification component represents a logical follow up of the research program, financed by the on-going Loan 2210/Credit 1299-IN of testing, under Indian operating conditions, up to 20 imported prototype AC electric locomotives of up to five different types for introduction of modern and efficient electric traction. 4.03 The railway electrification component will permit the completion of the electrification of the main trunk routes on IR, the quadrilateral formed by Delhi, Calcutta, Madras and Bombay and its diagonals. These main trunk routes together with a few other important lines like Mughalsarai-Lucknow-Amritsar, Delhi-Bhatinda, Delhi-Ambala and Kazipet-Secunderabad, carry about 75% of the freight traffic and 55% of the passenger traffic in the country. The total NTKNs moved on the -31- quadrilateral and diagonals as compared with the total NTKMs moved by the whole IR has been as follows: Quadrilateral Share of IR NTKM and Diagonals IR Network by Quadrilateral Year NTKM4 Increment NTKM Increment and Diaaonals (billion) illion)( 1966-67 64.27 116.61 55.1 1970-71 75.19 10.9 127.36 10.8 59.0 1976-77 104.21 29.0 156.76 29.4 66.4 1979-80 92.82 -11.4 155.99 - 0.8 59.5 1980-81 101.72* 8.9 158.44* 2.4 64.1 * Provisional It is interesting to notice that with the exception of the period 1979-81, the increment of traffic in the whole IR occurred mainly in the quadrilateral and diagonals. Currently, 5,345 route kms on IR are electrified but with the exception of Delhi-Calcutta, the sections are less than 800 route km long (see Map 17454), which requires frequent changes in motive power, and impedes the use of electric traction for long distance traffic where the benefit is larger (para 3.10). Another problem is that due to rather short electrified sections scattered all over the country, the maintenance facilities are either not fully utilized, or inadequate for electric traction. The completion of the electrification of the main system (quadrilateral and diagonals) will permit run through trains and reduce the difference of speeds between goods and passenger trains, with the subsequent increase in throughputs. 4.04 The strategy of the proposed project is to increase IR capacity through electrification, accelerated workshop modernization, together with improvements in IR organization and improvements in Indian industrial technology in selected key areas where current, locally manufactured equipment is outmoded and inhibiting the modernization effort. This is particularly evident in the electrical equipment industry. Moreover, the provision of an OHE recording/testing car, OHE maintenance vehicles, improvement of locomotive radio communication in the Ghat operation, modernization of workshop equipment, and general technical advisory services and training, will contribute ro technological improvements in IR. Alternative ways of increasing railway capacity such as construction of third track adjacent to existing double track lines, or construction of a new double-track line, were discarded on the basis of high estimated costs, operational difficulties and the lack of readily available land and construction resources (high quality rails and sleepers). -32- 4.05 The economic case for the proposed project rests, therefore, on a balanced package of components with the overall main objective of increasing the capacity of IR to efficiently cope with traffic demands. With the project, IR will be able to uake better use of its assets and to accelerate its improvement in performance in order to allow it to meet the increasing demands of the Seventh and subsequent Five-Year Plans, while avoiding a larger share of long haul goods being diverted to the more costly road transport system. 4.06 All the major physical components of the project have been evaluated individually: (a) the electrification of ten main line sections (accounting for 66% of total project financial costs); and (b) the modernization of six shops, ICF and maintenance depots (32%). No separate economic analysis has been carried out for the acquisition of OHE recording/testing car, OHE maintenance vehicles, locomotive radio communication for Chat operation, and technical advisory service and training, all of which amount to only 2% of total project costs. However, these costs were included without quantifying their benefits, in the calculation of the overall economic return of the project. B. Electrification of Main Lines (a) Traffic 4.07 The part of the quadrilateral (Delhi-Bombay-Madras-Calcutta) and its diagonals to be electrified has been divided in ten homogenous sections based on type of terrain, expected construction cost per route-kl, existing geometric characteristics, current and future traffic volume, traffic mix, etc. Table 12 shows the ten sections, their length in RKM, traffic in GTKM for passenger and goods in 1976/77 and 1981/82, and the resulting traffic density in GTKM/RICM per year. All sections are at present double track except Section 7: Itarsi-Nagpur and Section 10: Annuppur-Bilaspur. Doubling of Itarsi-Nagpur is now under construction, and it is assumed it will be completed by 1986-87. 1/ (b) Traffic Forecasts , 4.08 The expected development of railway freight and passenger traffic in the sections to be electrified for 1986/87, 1990/91 and 2010/2011 is outlined in Table 13. The forecast of freight traffic is based on the present traffic composition in each section by commodities, and in the railway traffic growth estimates of the main commodity groups 1/ Table 13 was developed under the assumption that Itarsi-Nagpur will be double track. -33- made in Annex C of the Staff Appraisal Report for the Railway Modernization and Maintenance II Project, dated October 26, 1982 (Loan 2210-IN/Credit 1299-IN), which is included in this SAR for information purposes. No significant changes have occurred in the economy of the country in the last year to justify the preparation of a new forecaut. For illustration purposes, the assumed commodity-wise forecast was the so-called Scenario 2 (intermediate case) in that report, and resulted in the following annual percentage growths: 1981/82 1985/86 until until Commodity 1984/85 1990/91 Coal 6.0 6.0 Foodgrain 2.3 2.2 Iron and Steel 3.6 2.4 Cement 1.1 1.3 Fertilizers 3.9 4.2 Petroleum Products 2.6 1.5 Others -2.0 -2.0 For the period 1991192 until 2010/2011, section traffic forecast estimates were made consistent with the forecasts for the decade of the eighties. The resulting annual traffic growth rates by sections during the period 1986/90 result in estimates as high as 5% for Section 9: Bina-Katni-Anuppur, with about 75Z of coal traffic, and as lcw as 2.1% for Section 1: Jhansi-Itarsi, where about three-quarters of the traffic is composed of foodgrains, cement and others. Given some fluctuations of coal traffic in recent years (see Table 4) and with the purpose of using them in sensitivity analysis, traffic growth rates by sections were also calculated assuming 3% growth rate for coal instead of the 6% mentioned previously. 4.09 The commodity-based railway traffic growths of Scenario 2 are considered to be realistic, possibly somewhat on the conservative side. These are slightly less than the forecast made in the same report using another methodology based on macroeconomic considerations, and are consistent with the revised IR traffic projections.l/ 1/ Scenario 2, Commodity-based forecasts: total all traffic 190.8 billion ton-km for 1984/85 and 231.8 billion ton-km for 1990/91, while the Scenario 1 (conservative) based on macroeconomic considerations, forecasts 192 and 239 billion ton-km, respectively, and IR forecasts 186.2 and 227.6 billion ton-km respectively. -34- 4.10 Based on the inter-urban projections made in Annex C of the above-mentioned SAR for Railways Modernization and Maintenance II Project, the passenger-km annual traffic growth for 1986-1990 was assumed to be a conservative 3.2% for all sections, and 2% thereafter. (c) Economic Evaluation 4.11 All the sectlons to be electrified have high traffic density, 2/ and, therefore, all alternative motive power without the project is diesel. Thus, the economic analysis should compare the total incremental cost of electrifying the present liues (civil engineering, signaLling and telecommuuication, and electrical engineering) with the incremental benefits of electric traction as compared with diesel traction performing the same function. These benefits include higher locomotive-km per day per locomotive in use, a substitution ratio of electric vs. diesel locomo- tives of less than one, lower locomotive maintenance costs, higher locomo- tive availability and reliability, higher average speed, higher initial cost but longer life, and energy savings. 4.12 The economic cost of electrifying each section has been obtained by deducting from the financial cost all relevant taxes, duties and price contingencies. Moreover, certain materials and labor component have been shadow-priced. This results in economic costs for each section which are about 80% of the corresponding financial costs. An economic life of 25 years has been assumed for the project, and no salvage value has been considered either for the infrastructure or for the motive power. 4.13 Under these circumstances, the electrifLcation of the proposed sections is well justified, with the following economic rate of returns (ER) for each section in the base case: Section ER X (Base case) 1. Jhansi-Itarsi 23.5 2. Itarsi-Bhusaval 23.5 3. Bhusaval-Nagpur 22.5 4. Wardha-Balharshah 26.0 5. Balharshah-Vijayawada 40.5 6. Bhopal-Nagda 27.0 7. Itarsi-Nagpur 16.0 8. Nagpur-Durg 14.5 9. Bina-Katni-Anuppur 38.5 10. Anuppur-Bilaspur 11.0 2/ As it can be calculated from the information presented in Table 13, all double line sections will have a density of more than 20 million GTKM per RKM per year by 1988-89, which is assumed to be the first year of energization of project lines. -35- Table 14 for Jhansi-Itarsi shows an example of the economic evaluation analysis made for each section. Similar Tables for the remaining sections can be found in the Project File. The opportunity cost of capital in India is estimated to be 12%, and all sections have higher ER, with the exception of section 10: Anuppur-Bilaspur, where ER is only marginally less by about 1%. 4.14 Given the small length of the Annupur-Bilaspur section (151 km), its location in the proposed electrified network (Map 17454), and the fact that electrification of other sections is well justified, the general assumptions made in the economic analysis for this section need modifica- tions. The values adopted in the general case for the without-project situation (diesel) reflect average conditions in the country, and in the case of this section, some of the values should be adjusted to reflect inefficiencies of operating a small section with diesel traction whiLe almost all adjacent sections are electrified. It is conservatively assumed that this situation would result in a reduction of 10% in the number of diesel locomotive-km per day, a reduction of 5% in the dieseL locomotive availability and an increase of 5X in diesel locomotive main- tenance cost. The resulting ER is an acceptable 14%. Therefore, it is concluded that the electrification component is clearly justified. 4.15 Cost and input prices included in the base case reflect the prevailing ones in India, shadow-priced to represent the real economic value to the economy. In any event, it was found that some of them differ with respect to average international prices, and for that reason another economic analysis was carried out for each section adjusting some cost and prices to reflect international values. 11 Under these circum- stances, the new economic rates of return resulted to be: Section ER Z (international prices) 1. Jhansi-Itarsi 24.5 2. Itarsi-Bhusaval 22.5 3. Bhusaval-Nagpur 18.5 4. Wardha-Balharshah 22.5 5. Balharshah-Vyayawada 33.0 6. Bhopal-Nagda 20.0 7. Itarsi-nagpur 16.0 8. Nagpur-Durg 16.0 9. Bina-Katni-Anuppur 32.0 10. Anuppur-Bilaspur 17.5 2/ With these international valuations, all projects remain economically feasible. 1/ International values were taken from TWD memorandum of June 14, 1983, on the subject: "Railways and Energy". 2/ This value was derived applying the methodology described in para 4.14. -36- (d) Sensitivity analysis 4.16 Table 15 presents the economic rates of return for several sensitivity cases analyzed for each of the ten sections to be electrified. As a general comment, and with the sole exception of the number of km per day run by electric locomotives on goods services (Run 1) which is analyzed in the following paragraph, the ER is only moderately sensitive with respect to the different cases. All sections remain above or very close to the opportunity cost of capital of 12%. 4.17 The ERs of the sections are very sensitive to changes in the assumed locomotive-km per day per locomotive in use for electric locomo- tives on goods services. Chart 25798 shows the variation of ERs with respect to values from 500 km/day (the value assumed for diesel traction) up to 700 km/day. Chart 25798 shows that, as an average, an increase of only 10 km/day for electric locomotives for goods, increases the ER by about 1%, which is a clear indication of the importance of this variable in the economic return of the project, and therefore it constitutes an element which has to be very carefully monitored by IR to ensure the best possible return. With the exception of 7, 8 and 10, Chart 25798 shows that all sections have ER higher than 12% even under the assumption that electric traction achieves no higher daily kilometrage than diesel. For Section 7, the break-even point is at about 540 km/day (8% increase over diesel) and for Sections 8 aud 10 at about 550 km/day (10% increase over diesel), which should be easy to achieve based on the relative advantages of electric traction (fuelLing, sanding, inspections, acceleration, adhe- sion, etc.) over diesel. 4.18 The sensitivity of ER with respect to traffic growth rates for goods by sections is analyzed in Run 3, Table 15, and the rates are more conservative than the rates based on a 3% growth rate for coal (see pdra 4.08). Several other sensitivity analysis were carried out to test the effects of changes in the values of different variables on the economic rate of return. Even under unfavorable assumptions (Table 15), the ERs remained within the range of about 10-45%, which is acceptable. -37- C. Workshop Modernization 4.19 The main objective of the Workshop Master Plan (para 3.22) is to develop an integrated maintenance and repair network on a national basis. The plan envisages rationalization of existing POH activities in order to derive the advantages of specialization and economies of scale, which are expected co result in higher productivity and improved quality of work. This component of the proposed project is a major step in this direction. Jagadhri workshop would expand wagon POH capacity. At Ajmer, coaching POH capacity would be substantially increased. Kharagpur workshop would be modified to take up the periodic overhauls of electric locomotives. Parel and Golden Rock workshops would be modified for the increased requirement of diesel POH. The proposed project also includes provision of machinery and equipment for maintenance depots to arrest further deterioration in their maintenance and manufacturing capability. The number of workshops *.n the IR system would be reduced from 47 to 37 by the year 2C3O. Out of the 37 remaining, 28 would deal with a single POH activity. The proposed project would also address the crucial problem of augmenting the capacity of coach production by modernizing the Integral Coach Factory (ICF). 4.20 The total economic cost of this element of the project would amount to about Rs 3,055 million (Table 16), after deducting import duties and price contingencies and assuming shadow prices for certain inputs such as labor, steel and cement. A residual value of 50% for civil works and 10% for mechanical and electrical components have been assumed after an economic life of 15 years. It has been estimated that the proposed project will (a) reduce the idle time of locomotives and rolling stock during POH and increase their reliability, which altogether will result in savings in the number of locomotives, coaches and wagons needed to carry the ever-increasing traffic and to replace existing fleet; (b) reduce the cost of POR through a more efficient maintenance operation; (c) increase the POH annual capacity thus preventing the accelerated deterioration of part of the fleet (15% of coaches, 24% of wagons, 15% of locomotives) which are currently overdue for POH; and (d) increase the annual production of coaches avoiding the likely need to import them. Under these circumstances, the proposed modernization of each sub-component is well justified (Table 16) with economic rates of return between 18% and 50%. Moreover, a sensitivity analysis indicates that under different situations (a cost increase of 20%, a benefit decrease of 20%, or a two-year lag in benefits) all projects remain above or very close to the opportunity cost of capital of 12%. D. Overall Evaluation 4.21 The project~s overall economic return is 25.0%, including the cost of components not separateLy evaluated. A sensitivity analysis indicates that a decrease in benefits of 20% would reduce the overall rate of return to 19.5%, while a 2U% increase in costs would reduce it to 20.5%; a combination of the two variations would yield a rate of return of 15.5%. -38- 4.22 The main beneficiaries of the project are the power, industrial and agricultural sectors, particularly the main public and private industrial enterprises, and inter-city passengers. Through the power and agricultural sectors, a large portion of small industries and rural population will also benefit from the proposed investment. E. Risks 4.23 All project components involve proven technology and therefore technical risks connected with the project are small. Additionally, in the past.IR has successfully implemented similar projects in a timely manner, and has built up competent managerial and technical expertise. Risks from inadequate project implementation are therefore negligible. V. FINANCE AND EARNINGS A. Introduction 5.01 GOI's financial policy towards IR is designed to allow it to earn net revenues sufficient to cover all expenses including depreciation and a dividend to GOI. Funds for capital expenditure,. which do no: pertain to replacement of assets, are provided by GOI and are added to a Capital-at-Charge account, which is a liability of IR in perpetuity and on which IR is expected to pay a dividend at a rate recommended by a Parliamentary Committee from time to time. The present rate of dividend on current investments is about 6.5X per annum. The dividend, in reality, is more like an interest payment as IR is expected to meet this obligation whether or not it generates sufficient net revenues. IR finances capital expenditure for asset replacement by a charge against revenues through the Depreciation aeserve Fund (DRF). IR proposes rates and fares increases at the beginning of a fiscal year based on its expected resources and forecast of traffic to be carried by it in the ensuing year. The assumption is that the rates and fares set at the traffic level forecasted would result in revenues sufficient to meet the financial policy. As IR is a departmental undertaking of GOI, the commercial freedom allowed IR is constrained by Government policy. 5.02 Financial arrangements with the Government and audit procedures are, with some improvements noted later, the same as when the first IR Modernization Project was appraised in 1978. The accounting function is efficient, well organized and well staffed with satisfactory budget control and operating systems. A formal traffic costing function has been established recently and IR is continually making improvements to this -39- important activity. In addition to a large and efficient internal audit, an exhaustive statutory audit is conducted under the direction of the Comptroller and Auditor General of India (C.&A.G), who reports to the Parliament through the Public Accounts Committee. Audit arrangements are thorough and satisfactory. Audit financial statements are finalized within eight months of year end and presented to Parliament within ten months. At the same time, IR-s revised estimaten for the current year and budget estimates for the following year are presented to Parliament for approval. IR has under previous credits consistently provided IDA with interim and completed (audited) accounts. IR also provides reports of project expenditure in a timely manner and to the satisfaction of IDA. During negotiations GOI confirmed that, in accordance with sound accounting and auditing principles and procedures approved by C.&A.G., it will ensure that IR maintains records and accounts to reflect their resources, expenditures and operations related to the project and have IR-s accounts for each fiscal year audited. B. Recent Changes in Financial Policies 5.03 Some beneficial changes in financial practices have been made in recent years and GOI is now considering measures which would give IR greater commercial freedom and set performance targets. The most important recent change relates to IRs obligation to pay a dividend to GOI in years when its earnings are insufficient to generate a net surplus. Prior to 1979 IR was required to take interest bearing loans from GOI to pay dividend, but at present, amount of dividend unpaid is carried forward as a deferred dividend liability without interest. This change is reasonable and removes an unnecessary financial burden placed on IR. The dividend liability as at March 31, 1983 amounts to Rs 4,163 million. 5.04 In 1977, the Government convened a high level independent committee - The Rail Tariff Enquiry Committee (RTEC) to review lR's freight rates, passenger fares and IRs operational efficiency. The Committee issued its reports in June 1980, and as part of its overall review, also covered areas of Government policy and practices, made comparisons of IR-s operations with both Western Railways and those of the USSR and China. The report is of an excellent standard and reflects a good professional examination of IR-s operations. It contains 386 recommendations and suggestions. 5.05 Key recommendations of RTEC include: (a) IR be allowed to earn a 10% rate of return on investment and the excess over 6% due GOI as dividend be used by IR for development purposes; (b) provision for repairs and maintenance in the past has been inadequate and IR should be allowed to catch up on arrears and more funds from now on should be provided for this critical activity; (c) funds for the Depreciation Reserve Fund (DRF) have been under-provided in recent years and should be substantially increased based on IR-s needs and an expert group be appointed to -40- recommend the appropriate methodology for calculation of depreciation; (d) tariff increases, rather than being assessed on "cost plus" basis, should be related to efficiency. A formula is suggested which uses 1976177, being the most efficient year of railways operations, as a yard-stick. Tariff fares would be increased annually by indexing the increase to the change in prices of the major inputs of IR-s costs, including labor, fuel and steel; (e) tariff rates should be set to cover the total costs attributable to that stream of traffic; cross subsidization, from freight to passenger, should not be allowed; (f) cost of social burdens such as lines built for strategic purposes, should be eliminated and IR be fully compensated when a decision is made for IR to provide a service which it would not normally do on commercial grounds; (g) other recommended reforms in operational, personnel, costing and marketing activities; and (h) IR's management structure and promotion practices should be reviewed and changed to support a greater degree of commercial freedom. The recommendations envisage financial reforms which provide a framework within which IR would be able to operate more like a commercial entity. 5.06 The most significant of the (RTEC) recommendations have been implemented with profound implications on IRCs finances. Consecutively for the four years 1980/81 - 1983/84, rates and fares have been adjusted upwards by GOI/IR exceeding percentage targets recommended by RTEC. These increases have meant total additional revenues to IR of Rs 1,500 million with some 67% accruing from freight and 33% from passenger, respectively, over the four-year period. In April 1983, IR introduced a revised rationalized tariff structure which is based on the principle of recovering the fully distributed cost of the commodity/class of travel. Consequently, no commodity is carried below its avoidable cost, losses on passenger operations are declining in percentage terms over previous years= losses and in percentage terms to total revenue. Season tickets in terms of single journey tickets have been adjusted to levels recommended in the RTEC report. Details of tariff adjustments are on project file. Appropriations to DRF have been significantly stepped up to a more adequate level (see para 5.16) and more intensive use of costing techniques are being made by IR. The thrust has been to enhance the ability of IR to generate internally financial resources for capital and maintenance requirements and to enable it to earn more than adequate rate of return on its average net fixed assets. RTEC recommendations on organizational changes have wider implications and GOI appointed a Railway Reforms Committee (RRC) in May 1981 to examine them in depth and to recommend appropriate action to be taken by the Government. This Committee will also examine IR's depreciation policy and is expected to issue its report in 1984. RTEC recommendations are complex and many are under constant review and updating. Progress to-date on implementation of the recommendations has been satisfactory and further action is being taken (para 5.10). -41- C. Rates and Fares 5.07 In the past, a tariff policy has been followed which has tended to subsidize large segments of freight (essential basic commodities) and passenger traffic (second class ordinary). Traffic costing is an integral part of tariff formulation and continual refinements to the traffic costing techniques are being made. No direct subsidies are involved, but GOI exempts IR from payment of dividend in respect of the capital invested in strategic lines, uuremunerative brauch lines and on construction of certain new lines. Subsidies on surburban traffic which does not cover its avoidable cost continues by other services. At negotiations, it was explained by GOI/IR that passenger fare increases granted in the recent past years have been significantly more than those recommended by RTEC, and further action will be taken to reduce losses on passenger traffic and in particular, on suburban traffic. D. Past Performance 5.08 IREs actual revenue and expenditure accounts for the period FY77 to FY83 are summarized below and detailed in Table 17. The balance sheet as of March 31, 1983 is shown in Table 18. -42- Account Head ----------------------Actual-------------------- L977/78 1978/79 1979/80 1980/81 1981/82 1982/83 (in Current Rs Million) Total Revenues 21,234 21,510 23,378 26,240 35,382 43,762 Total Working Expenses L5,706 16,540 18,607 22,162 27,191 31,793 Appropriation to DRF a/ 1,400 1,450 2,000 2,200 3,500 5,560 Appropriation to PF a/ 393 678 817 1,003 1,129 1,480 Total Operating Expenses 17,499 18,668 21,424 25,365 31,820 38,833 Net Revenue from Operations 3,735 2,842 1,954 875 3,562 4,929 Net Miscellaneous Expenditure 207 234 241 399* 469* 614* Net Revenues 3,528 2,608 1,713 1,274 4,031 5,543 Divideud on Capital-at-Charge b/ 2,266 2,241 2,375 3,252 3,565 4,360 Net Surplus (Deficit) 1,262 367 (662) (1,978) 466 1,183 Operating Ratio 82.4% 86.7% 91.6% 96.6% 89.4% 88.3% Ratio of Net Operating Revenue to Capital-at-Charge 7.4% 5.2% 4.1% 2.1% 6.0% 7.6% a/ Depreciation Reserve Fund (DRF); Pension Fund (PF). bl See Note 2 on Table 17. >Credit figure. 5.09 IR has earned revenues which are greater than its total operating expenses, which include depreciation. However, IR has not always been able to meet its full dividend liability. IR had its best results in FY78, generating a large surplus. The increase in revenues subsequent to FY78 was mainly attributable to tariff increases. The total working expense as a percentage of total revenues decreased from 74.0% in FY78 to only 72.8% in FY83. Fuel as a percentage of total working expenses increased from 19.0% in FY78 to 23.9% in FY83. While staff costs came down from 55.2% in FY78 to 49.1% in FY83 (Table 19), substantial increases in appropriation to DRF in FY83 were made over FY78; Rs 5,560 million, compared to Rs 1,400 million respectively (an increase of about 400%). Despite this increase, IR generated a surplus in FY83 covering fully its dividend payment. 5.10 For the reasons stated above and because the traffic carried fell short of the forecast, IR was not able to pay the full dividend in YY80 and FY81 as required by GOI policy and in agreement with Credit 844-IN. For FY82 and FY83, IR has met the financial covenant requirements of Credit 844-IN and Loan 2210-IN/Credit 1299-IN. The basic handicap in IR-s financial arrangement is dependence on an annual decision by GOI notably on the level of tariff (limitation of administrative prices) and capital investments. GOI has recognized that IR should be financially viable and generate sufficient financial resources to substantially meet -43- its development programs. Accordingly, in line with RTEC recommendations, GOI has and continues to take action as pointed out previously. Further action by GOI is contemplated when the findings of the Railway Reforms Committee are issued (para 5.06). 5.11 Historically, GOI has kept tariffs at levels much below the increases in the cost of IR's inputs or changes in general price levels (Table 20). In addition, IR has to absorb losses on such services as suburban and short distance travel, uuremunerative lines, etc. These are termed as "social burden" costs by IR and during FY80 and FY81 were estimated at Rs 2,400 million and Rs 4,200 million, respectively (about 10% and 16% of revenues, respectively). Had IR been compensated for these costs, it would have generated a large profit to cover the dividend payment for FY80 and FY81 and had a surplus about Rs 1,700 million and Rs 2,200 million, respectively. E. Future Prospects 5.12 Revenue and expenditure account forecasts of IR have been made using the conservative traffic forecast of "Scenario II" (see paras 2.14 and 2.15). Budget estimate of IR for FY84 has been used as a base year for developing forecast for FY86 to FY90. These are summarized below and shown in detail in Table 21. Balance sheets are shown in Table 22. -44- 83/84 84/85 85/86 86/87 87/88 88/89 89/90 IR's IR's Revised Budget ------ Bank Group Forecast- Estimate Estimate (in Current Rs Million) Total Revenues 49,980 54,570 57,461 60,380 63,326 66,300 69,305 Total Working Expenses 36,760 40,110 41,777 43,449 45,188 46,930 48,874 Appropriation to DRF a/ 8,500 8,500 9,200 10,000 10,800 12,000 13,000 Appropriation to PF a/ 1,825 2,210 2,250 2,500 2,750 3,000 3,250 Total Operating Expenses 47,085 50,820 53,227 55,949 58,738 61,930 65,124 'Net Revenues from Operations 2,895 3,750 4,234 4,431 4,588 4,370 4,181 Net Miscellaneous Credits 490 450 500 540 590 650 710 Net Revenues 3,385 4,200 4,734 4,971 5,178 5,020 4,891 Dividend on Capital-at-charge b/ 4,500 4,900 5,485 6,102 6,751 7,435 8,150 Net Surplus (Deficit) (1,115) (700) (751) (1,131) (1,573) (2,415) (3,259) Operating Ratio 94.2% 93.1% 92.6% 92.7% 92.8% 93.4% 94.0% Ratios of Net Operating Revenue to Capital-at-Charge 4.4% 5.0% 5.1% 4.8% 4.6% 4.1% 3.6% a/ Depreciation Reserve Fund (DRF); Pension Fund (PF). b/ See Note 1 on Table 17. Note: Forecast does not reflect tariff increases needed to enable full dividend coverage. The tariff increases required, in real terms, about 2% each year for the period FY86 to FY90. -45- 5.13 Revenue and expenditure account estimates for the period FY86 to FY90 have been projected using prices, rates, fares and expenses at April 1983 levels. Conservative assumptions on improvements in operating efficiency resulting from the proposed and ongoing projects have been included. The forecasts include provision for significant increases in DRF and PF, but do not include any provision for increase in tariffs, changes in the financial policies of GOI, or allowances for inflation. On these assumptions and using "Scenario II" traffic level, the above table indicates that tariffs would need to be raised from FY86 and onwards to generate revenues high enough to meet full dividend payment--and meet the covenant of the existing and proposed Bank Group projects. Also, IR was unable to cover full dividend payment required under Credit 844-IN and Loan 2210-IN/Credit 1299-IN for FY84 and is not expected to meet it in FY85 by a small amount. This situation, however, is considered to be temporary and has occurred because of economic recession in India and worldwide. Consequently, expected traffic levels did not materialize, resulting in IR not meeting the revenue covenant. GOI is committed to the financial viability of IR and during negotiations, it was agreed that GOI will maintain passenger fares and freight rates and take all other actions as may be necessary or appropriate, so as to provide to the Railways net revenue sufficient to enable the Railways to meet out of inter- nally-generated resources all operating expenses (including depreciation) and dividend payments on Capital-at-Charge. 5.14 By FY90 revenues are projected to increase by about 27% over FY85 as a result of tariff increases granted April 1, 1983 and traffic increases. Total working expenses are expected to increase by about 22% because of the high proportion of variable costs. Total operating expen- ses on the other hand are expected to register a much higher increase (about 28%) mainly because of increased allocations to depreciation (DRF). The likely levels of annual tariff revenue increases needed to pay full dividend with traffic at Scenario II levels for the period FY86 to FY90 have been estimated as follows: 'Y86 FY87 FY88 FY89 FY90 In real terms 2% 2% 2% 2% 27. 5.15 The DRF in IR is in effect a renewal and replacement fund and not a depreciation provision in the normal accounting sense. In the past, contribution of funds to DRF has proved to be insufficient to take care of need-based replacements as it has been determined on an annual basis, influenced by availability of financial resources and physical constraints in the form of productive capacity in the country (e.g., how many wagons can be manufactured) and the complexities in ascertaining the exact timing -46- of replacements. This has led to a situation where IR is burdened with a high percentage of overaged and obsolete assets which are a restraint on capacity and produce high costs. Increased allocation would permit more rapid replacement of old and obsolete assets, which would in turn improve operational efficiency (increase revenue) and would result in reduction of maintenance costs, which now constitute about 40Z of working expenses. Recognizing this and the need to catch up on arrears and in a sharp departure from the previous practice, IR has appropriated a sum of Rs 8,500 million to the DRF during FY84. It is expected that this trend will not only be continued but may be improved upon as IR has given high priority to "rehabilitation" of its assets. If the trend is maintained, IR should be making a substantial contribution to the DRF to cater to the large requirement for rehabilitation of its assets. Since the Seventh Five-Year Plan is in formulating stages, it was agreed during negotiations that appropriation to DRF for FY85 to FY89 will be at least equal to that of FY84 (Rs 8,500 million). 5.16 A sensitivity analysis using the alternative traffic forecasts Scenario I and III and at current tariff Levels indicates that IR would be able to cover all of its operating expenses, but would not be able to fully meet its dividend obLigation in years FY86 to FY90 (para 5.14). F. Financing Plan 5.17 Table 23 shows the Source and AppLication of Funds for the six-year period FY85 to FY90, during which the proposed project will be implemented, the funds required by IR and the anticipated source of such funds are summarized as follows: -47- Rs Million US$ Million Z Required Funds A. For Investment Program: Capital Expenditure 128,250 11,875 99 Inventories 1,351 125 1 129,601 12,000 100 B. For Other Purposes Dividend 38,825 3,595 95 Interest on Temporary Loans 1 921 178 5 40,4 3,-773 10o Required Funds - Total 170,347 15,773 Sources of Funds: A. For Investment Program: IR Internal Cash Generation 66,734 6,179 51 Government Funds a/ 57,600 5,333 45 Government Temporary Loans b/ 5,267 488 4 129,601 12,000 100 B. For Other Purposes: For Dividend 38,825 3,595 95 IR Internal Cash Generation for other 1,921 178 5 40,746 ;3,773 100 Sources of Funds - Total 170,347 15,773 a/ Of which the BDank would finance about Rs 3,032 million (US$280.7 million equivalent for this proposed project). bI To finance Development Fund (UJF) requirements. 5.18 It is estimated that IR would be able to finance about 51% of its total investment requirements out of internally-generated funds. The balance (49%) to be provided by the Government results in an increase in the Capital-at-Charge and temporary loans. This would be in sharp contrast to previous years when GOI financed 60% or more of development funds required by IR. Forecast financial statements have been prepared on the basis of IR-s preliminary estimates of planned investment for the period FY86 to FY90. -48- VI. AGREEMENTS REACHED AND RECOMMENDATIONS 6.01 During negotiations, agreements were reached with GOI on the following principal matters: (a) IR will be provided budget allocations sufficient to carry out an agreed training program (paras 3.27 and 3.28); (b) IR will ensure that at all times the electrification implementation unit and COFMOW will be adequately staffed for the implementation of the respective project components (paras 3.33 and 3.35); (c) GOI will maintain passenger fares and freight rates and shall take all other actions, as may be necessary or appropriate, so as to provide to the Railways net revenue sufficient to enable the Railways to meet out of internally-generated resources all operating expenses and dividend on Capltal-at-Charge (para 5.13); and (d) GOI will ensure that appropriation to DRF for FY85 to FY89 would at least be equal to that of FY84 (para 5.15). 6.02 It is recommended that condition of effectiveness for the proposed loan should be the selection of consultants who will be collaborating with GOI/IR in implementing the OIS (para 2.28). 6.03 Based on the agreements reached on the foregoing, the proposed project constitutes a suitable basis for a Bank loan of US$280.7 million equivalent. -49- Annex A Page 1 of 2 INDIA RAILWAY ELECTRIFICATION AND WORKSHOP MODERNIZATION PROJECT Selected Documents Available in the Project File 1/ Transport and Railways 1. Report of the National Transport Policy Cormitte, Planning Commission. GOI, May 1980 2. The Main Report of the Rail Tariff Enquiry Committee (Five Volumes). GOI, June 1980 Motive Power 3. Study of the Relative Economics of Diesel and Electric Traction on Indian Railways. IR, June 1978 4. Report of the Committee on Motive Power. IR, December 1978 5. Modernization Project for 1500V DC Banking Locomotive. IR, June 1979 6. Accelerated Electrification. IR, January 1981 Rolling Stock 7. Report of the Committee on Capacity Augmentation for Coach Production. IR, January 1979 8. Interim Report on Techno Economic Study of New Coach Building Factory. IR (ICF), October 1979 9. Project Report of Box "N" Wagon. IR, January 1981 Workshops and Maintenance 10. Master Plan Study for Workshops. Inception Report. RITES, April 1980 1/ Additional documents pertaining to most components of this project are available in the Project File for Credit 844-IN and are listed in Annex A of Report No. 2020-IN (SAR dated July 24, '-980). -50- Annex A Page 2 of 2 11. Master Plan Study for Workshops: Volume I, POll System; Volume II, MRUE and Related Systems; Volume III, Inventory of Facilities and Activities. RITES, November 1980 12. Workshop Modernization Project, Phase I. IR, December 1977 13. Workshop Modernization Project, Phase II. IR, August 1982 Management Information System 14. Real-Time Computer System for Freight Operations Control and Passenger Reservations. IR, August 1979 15. Installing Operating Information and Telecommunicatior System on Indian Railwa'-.. Robert McAfee and John Albertson (Consultants), May 1980 16. Freight Operations Management System. IR, March 1982 Rail Taxiff Enquiry Committee 17. Estimates of Financial Impact Arising from Implementation of RTEC Recommendations. 18. 3chedule Showing Adjustment of Freight Effected Compared to Recommended Freight in RTEC Report. -51- Annex B Page 1 of 3 INDIA RAILWAY ELECTRIFICATION AND WORKSHOP MODERNIZATION PROJECT Notes on IR-s Motive Power and Rolling Stock Traction Policy 1. IR-s traction policy has been under continuous review in the last two decades. The two most important studies on traction policy were a "Study of Electrification and Dieselization on Indian Railways" in 1963 (known as the Sahai Committee Report), and the National Council of Applied Economic Research Study of 1970. These studies set the 1970s policy for a moderate pace of electrification of railway lines in the country coupled with an effort for rapid replacement of steam traction by diesel and electric. Various other studies on traction have been recently carried out by GOI/IR, these are listed in Annex A and included in the Project File. Diesel Electric Locomotives 2. The standard main line diesel electric locomotive manufactured by IR is WDM2, which is a L6-cylinder, 6-axle BG mixed traffic locomotive rated at 2600 grossI2400 net hp. 1/ WDNIZ manufacture began in India in 1964 iu collaboration with ALCO, United States, and the design is about 32 years old. WDM2 has an adequate operating and maintenance performance and is the prime mover of IR-s rapidly growing freight traffic. However, IR will benefit substantially from introducing into the present and future WDM2 fleet technology developed since the present designs were acquired. Also the continued increase in IR's need for imported diesel fuel and rising costs have made it even more important for the railways to improve the efficiency of its motive power in general and diesel locomotives in particular. There is significant potential for improved fuel efficiency of the existing fleet of DLW-built diesel engines. In addition, IR requires a medium range horsepower main line diesel electric locomotive for work train, branch line operation and other light duties in order to eliminate steam traction completely from trunk routes. 1/ There are two other versions of this locomotive built for main line NG service and heavy duty BG shunting: YDM4 and WDM6. -52- Annex B Page 2 of 3 Electric Locomotives 3. The present AC electric locomotive manufactured in India, designated the WAM4, was derived by IR-s own Research, Design and Standards Organization (RDSO) from an Alsthom design of the 50 Hz Group and is approximately 27 years old. The only major change made to the design was the replacement of the original mono-motor bogie by axle-hung motors and the three-axle bogie of the WDM2 diesel electric locomotive manufactured by IR. When the WAM4 locomotive was first introduced, there were numerous performance problems. Although problems of the traction motors have been gradually eliminated, the electrical controls and transformer are still unable to provide adequate power for the motors. Obsolescence of WAM4 design and features has resulted in lower availability and higher operating and maintenance costs. 4. A geographically specific problem of electric traction occurs at the major industrial center and port of Bombay which are connected to the rest of the IR network by two 1,500 V DC electrified lines. These two lines are Bombay-Igatpuri on the northeast section and Bombay-Pune on the southeast section. The northeast approach to Bombay includes a heavy-graded 14 km section, known in India as the ghat section, with a gradient of 1 in 33 (compensated) and a 67 km hilly section with a gradient of I in 37.5 (compensated). The southeast approach has a 28 km ghat section with a gradient of 1 in 37 (compensated). The present classes of locomotives manufactured by IR and used on the ghat sections have proved unsatisfactory for the specific requirements of banking duties, causing frequent wheel slips, stalls and partings of trains. In addition, due to inadequate capability of the existing locomotives, the train load limits on the graded DC sections are lower than load limits on adjacent AC electrified sections. Thus, the train loads have to be reduced prior to entering the DC ghat sections. As a result, operating costs and line-capacity utilization are adversely affected, indicating a need for special duty DC electric banking locomotives or partial conversion to AC traction for these sections. Wagons 5. During 1950-s practically all freight was being carried in general purpose wagons - the covered, open high sided and open low sided wagons. To be able to cope with the pattern of traffic, the proportion of the special type of stock has been increasing over the years. Now a number of new bogie wagons, with emphasis on higher payload and specialized facilities for loading and unloading, have been put into service and the number of such wagons is increasing. 6. The present high capacity open-wagon design used by IR is an eight-wheeler wagon (box) with a plate-fabricated bogie, an over-buffers -53- Annex B Page 3 of 3 length of 13.73 meters and a net capacity of 56 tons. With the existing loop length on IR, this wagon design limits the maximum gross tonnage of the freight trains to about 3,500 tons and a net of 2,400 tons on the Broad Gauge. Tests have shown that with a cast bogie, presently manufactured in India in limited numbers, and equipped with cartridge-type tapered roller bearings, the capacity of the open top wagon can be increased to 58 net tons with an over-buffers length of 10.71 meters. This new higher-capacity design has been labeled by IR, Box N wagon and is in the process of being introduced on IR. The introduction of type N wagon in IR would increase the gross train loads to about 4,500 tons with 3,200 net tons within the existing loop length. In addition, since such wagons will be put into dedicated unit train operation for major users, they will be equipped with air brakes. This will enable an increase in the allowable speed of Box N wagons to 100 km/h without increasing the braking distance, as compared to IR-s present vacuum brake fleet, creating a potential for increased line capacity and service improvements to the users. 7. In conclusion, since the acquisition of designs and start up of manufacture of locomotives in India, considerable improvements and innovations have taken place elsewhere in diesel and electric traction technology which have resulted in reduced manufacturing, operational and maintenance costs and improved operating performance. These improvements have yet to be incorporated into locomotives manufactured by IR. At the same time, major design changes in rolling stock area are urgently needed to tap a very large potential source for improving asset utilization and reduced transport costs. Alas, these potentials might go unexploited because of the painstakingly slow and uncoordinated technical decision-making process in IR and GOI's policies which discouraged introduction of new technologies which will increase the country-s dependence on imports of parts and components. -54- Annex C Page 1 of 2 INDIA RAILWAY ELECTRIFICATION AND WORKSHOP MODERNIZATION PROJECT Extract from Workahop Modernization & Maintenance Project I (Credit 844-IN) Summary Terms of Reference - Workshop Master Plan The objectives of the Workshop Master Plan Study will include but not necessarily be limited to: (a) carrying out a complete inventory of maintenance, manufacturing and other activities of all workshops, sheds and manufacturing units, with a view to arriving at the optimum assignment of activities and workload to each unit in order to minimize duplication of facilities and efforts; (b) developing a plan for location, organization, capacity, layout and equipment required to establish facility(s) needed for remanufacturing of parts and components required to effect a unit exchange maintenance and periodic overhaul program for motive power, coaches and electric multiple unit fleet; Cc) developing the required level of parts and components, new and remanufactured, to implement unit exchange maintenance and improved periodic overhaul practice for rolling stock and motive power; (d) developing the required plant and machinery for Phase II and Phase III of the workshop modernization program; (e) developing the additional facilities and equipment required by the manufacturing units to supply the new parts and components needed for maintenance; (f) developing an optimum and integrated materials management system for the unit exchange maintenance and periodic overhaul program; (g) recommending the organizational changes, staffing, accounting and management information system needed to institute and control integrated maintenance and periodic -55- Annex C Page 2 of 2 overhaul of motive power and rolling stock including an integrated materials management system; and (h) developing the timetable and technical and economic analysis of Phase II and Phase III of the workshop rationalization and modernization program. -56- Annex D Page 1 of 14 INDIA RAILWAY ELECTRIFICATION AND WORl;SHOP MODERNIZATION PROJECT Railway Traffic Forecasts I. Macroeconomic Considerations 1.01 The growth of the country's economy during the Fourth-Year Plan (1968/69-1973/74) was slower than predicted. Instead of the targetted 5.5%, GDP grew at a real rate of about 3.4% per annum. The end of the Plan period was marked by a number of adverse events, internal (the 1972/73 drought) as well as external (the Bangladesh conflict and the steep rise in world grain and petroleum prices of 1973). After a period of difficult adjustment, however, the GDP (at factor cost) grew at an annual average rate of 5.3% between 1975/76 and 1978/79. This performance was slightly below the Fifth Year Plan's target of 5.5% p.a., 1/ but it compares very favorably with a long-term trend of growth rate of GDP at 3.7% p.a. from 1950/51 to 1978/79. 1.02 1979/80 was a year of serious economic decline, underscored by a severe drought which produced a fall of about 16% in agricultural production, and by a deterioration of industrial production, which registered a decline of 1.4% after four years with an average rate of growth of about 7%. The decline in industrial production was largely due to shortfalls in the production of major inputs such as coal, steel and cement, as well as constraints in the provision of infrastructure, notably power and transportation. GDP declined by about 5%. As a consequence of these developmerts, the remarkable price stability that characterized the Indian et aomy after 1975 gave way to a sudden rise in the level of prices after 1979/80. 1.03 During 1980/81, the economy started to recover. Weather was normal, which allowed a recovery in agricultural production, which rose by more than 15%. Close attention to the performance of infrastr ':...ural services and the availability of basic goods improved their supp?.y beginning in the middle of the year, resulting in a growth in industrial production by 4%; GDP rose by 7.5%. 1/ The Fifth Plan was originally envisaged to cover the period 1974/75-1979/80, but it was cut short by the defeat of the Congress party during the elections of 1978. -57- Annex D Page 2 of 14 1.04 During 1981/82, the economy largely completed the recovery phase, resulting in a year of soLid growth on top of the rebound of 1980/81. Even though the 1981 monsoon withdrew early and foodgrain production was only 2X-3% higher than in 1980/81, production of other crops was better. The total agricultural output grew by about 4%. Industrial output continued to recover from the supply problems which earlier had constrained the economy and grew by over 8%. GDP grew by around 5.5%. Inflation is cLearly decelerating as wholesale prices rose by about 10% on average annual basis, compared to 17% in 1979/80, and 18Z in 1980/81. 1.05 In the 1980-s, the country's economy is shifting from a situation of resource surplus which characterized the last half of the 1970-s, to one of resource scarcity. The economy is facing basic infrastructural and supply constraints whose relaxation requires substantial domestic investments and an unprecedented mobilization of foreign resources. In the current Sixth Five-Year Plan (1980-85), GOI gives high priority to expansion of irrigation and rural development and to investments in the energy sector. The share of investment in the transport sector dropped from 14% of the total in the Fifth Plan to 12.7% in the Sixth. The financing of this ambitious Plan relies heavily on raising the domestic savings rate from its already high level and in reducing a rapidly rising import bill while boosting the traditionally weak export sector. To attain these targets, India must avoid imports that can be produced economically at home, must accelerate exports, mobilize and then utilize aid at a faster rate than hitherto and borrow more on non-concessional terms. 1.06 The final size of the public sector outlay under the Plan has been fixed at Rs 975 billion (US$90.3 billion equivalent) at 1979/80 prices but this figure could be raised duriug the mid-term Plan review). This is, in real terms, 80% higher than the outlay in the Five-Year Plan. The mobilization of the large volume of domestic and foreign resources required to finance this plan will no doubt take some time to materialize. The Plan advocates an average annual growth rate in GDP of 5.3% between 1980/81 and 1984/85. The Bank Group-s Economic Report 1/ projects a real growth rate of 6% in 1981/82, followed by a 5% per year for the period 1982/83 to 1984/85. 1/ Economic Situation and Prospects of India, Report No. 3872-IN. April 7, 1982; Table 2.4. For brevity, this report will be referred to as WB-s Economic Report in the rest of this Annex. -58- Annuxx D Page 3 of 14 II. Traffic Forecasts (a) Freight 2.01 Railways and road transport account for about 96% of India"s freight traffic. Traffic carried by these modes increased from 50 to 269 billion ton-km8 between 1950/51 and 1979/80, or by 5.4 times during this period. The change in the ahare of each of the two main transport modes in the total and the comparison of their growth with that of GDP at factor cost (at 1970/71 prices) is shown below: Land Freight Traffic (Billion TKms) GDP in TKms per Year Rail Z Road % Total billion Rs UTnit GDP (f-g) aTY (b) (c) (d) (e) (f) (g) (h) 1950/51 44.1 89 5.5 11 49.6 175.36 0.28 1955/56 59.6 87 8.9 13 68.5 208.70 0.33 1960/61 87.7 71 35.0 29 122.7 255.34 0.48 1965/66 116.9 68 55.0 32 171.9 290.23 0.59 1970/71 127.4 66 66.9 34 193.4 367.36 0.53 1975/76 148.2 67 73.0 33 221.3 426.33 0.52 1976/77 156.8 67 76.0 33 232.8 432.48 0.54 1977/78 162.7 68 77.0 32 239.7 469.73 0.51 1978/79 154.8 62 93.6 38 248.4 497.23 0.50 1979/80 156.0 61 101.0 39 257.0 469.48 0.54 1980/81 158.5 64 88 36 246.5 504.80 0.49 1981/82 174.0 65 92 35 266 533.26 0.50 Sources: 1950/51-1977/78 traffic figures: Report of the National Transport Policy Committee, Planning Commission, May 1980. Table 2.2. L978/79-1979/80 traffic figures: Indian Railways and Planning Commission. GDP figures: WB's Economic Report, Table 2.1(b). 2.02 As has long been established, there is a close correlation between growth of ton-km and GDP for most countries. In the case of Intia, the ratio of ton-km to GDP shows considerable stability over time, par.icularly after 1965/66. This indicator of the link between economic development and the transport sector has been used as a criterion to establish a boundary to expected future growth in railway traffic. This criterion is used in this analysis as one of the guidelines in establishing expected rail traffic. 2.03 Given the uncertainty which traffic forecasts entail, and particularly bearing in mind the state of transition of the country-s -59- Annex D Page 4 of 14 economy, three scenarios have been tested to obtain estimates for the eighties. The first one assumes an economic rate of growth of 3.7% p.a. in line with the historical trend. The second scenario assumes an annual rate of growth of GDP of 4.5%, as expected in WB-s Economic Report (see para 1.06 above), but extended to cover the period 1980/81 to 1990/91. The third alternative contemplates an annual growth of GDP in accordance with the Sixth Plan (5.2% p.a.), also used as an average for the entire decade. Basic assumptions used to establish an upper boundary in traffic volumes are that: (i) the share of rail traffic in the transport sector would be around 60%, prevalent value for the last few years (energy conservation policy and latest improvements in operations support the assumption of no further decline of railway share); and (ii) the ratio of ton-km to GDP (at 1970/71 prices) would remain at 0.53, the average for the period 1965/66-1981182. Given these assumptions, the forecast of total overland and railway traffic would vary as follows: Estimated GDP in Total Overland Rail Traffic Share billion 1970/71 Rs Transport (BTKMs) /a % BTKMs /a Tear Si S2 S3 Si S2 S3 S1 S2 S3 1981182 533.26 533.26 533.26 282.6 282.6 282.6 61.0 173 173 173/b 1982/83 553.0 557.3 561.0 293.1 295.4 297.3 61.0 179 180 181 1983/84 573.5 582.3 590.2 304.0 308.6 312.8 61.0 185 188 191 1984/85 594.7 608.5 620.9 315.2 322.5 329.7 61.0 192 197 201 1990/91 739.5 792.5 841.6 391.9 420.0 445.7 61.0 239 256 272 Notes: Si = Scenario 1; S2 = Scenario 2; S3 = Scenario 3. /a BTKms = Billion ton-kms. In this Annex the analysis has been focused on this parameter as the relevant unit of traffic rather than originating tons, or equivalent four-wheeler wagons or other similar units used by IR. /b Provisional value given by IR for 1981/82. 2.04 Since 1965/66 until 1977/78, the railway share of traffic has been almost invariably around 67%. After that, (see Section H of Chapter II) IR has had several problems that severely affected its production with a consequent drop in its traffic share at the level of about 60%, but in the last two years the recovery has been significant. The NTPC report forecasted a possible share of railways in the order of 70%, but this figure seems to be optimistic. The assumed 617. seems to be realistic, possibly on the conservative side. 2.05 A more accurate forecast, of course, entails a detailed examination of growth estimates for the main commodity groups moved by the -60- Annex D Page 5 of 14 railways. As indicated by Table 4, in 1981/82 seven groups of commodities made up 80.4% of revenue tonnage and 75.0% of revenue ton-kms. These commodities are coal, steel inputs and products, foodgrains, POL, iron ore for export, cement and fertilizers. A detailed forecast per commodity group follows. (i) Coal 2.06 Coal constitutes the main domestic source of commercial energy in India. The country's potential for hydroelectriLcity is estimated to be 100,000 MW of which 70,000 MW is economically exploitable. Only about L1,000 MW is currently developed. Production of coal kept pace with planned targets and was well ahead of demand between 1973/74 and 1975/76. However, output increases could not be sustained after 1976/77 and coal production stagnated around 100 million tons for the next three years, falling behind the reduced demand for these years. During 1979/80 coal production increased by 2% to 104 million tons and in 1980/81 the total production was 114 million, a significant 10% annual growth. In 1981/82 the production is estimated to be about 124 million. 2.07 WB-s Economic Report finds GOI coal demand estimates generally sound, although the assumed production targets, especially for steel and cement, appear optimistic. GOI's estimates indicate an average annual growth of demand of 10.1% for the period 1980/81-1985/86 and of 7.9% for the whole period 1980/81-1989/90. On the supply side, GOI-s coal production targets assume a 12.5% avera&, annual growth during the 1980/81-1984/85 period (from 112.71 to 179.19 million tons) and 9.7% between 1984/85-1989/90 (up to 260.45 million tons). These production targets are also deemed to be ambitious, particularly for the 1980/81-1984/85 period. IDAs Economic Report forecasts that for the coal sector as a whole, output in 1984/85 should be in the region of 160-165 million tons 1/ which represents an annual growth of 8.8X as compared with 1980/81 production. Accordingly, it has been conservatively assumed that coal availability would yearly grow by about 4.1%, 6.0% and 8.8% until 1984/85 and 7.5% thereafter during the period 1981/82 to 1990/91, and that the railway share would remain fairly constant, taking into consideration IR plans to increase the number of high capacity wagons (historicaL growth from 1970/71 to 1979/80). 2.08 Average haul distances are expected to increase during the Sixth Plan period due to the location of some new mines which are expected to come into operation in the next few years, and the location and tonnage of additional users, particularly the new cement and power plants in western 1/ See para. 5.90 of WB-s Economic Report. -61- Annex D Page 6 of 14 India, several of which are expected to be operating by 1984/85. However, towards the end of the decade, the new high-power thermal stations are expected to be in operation. Since they will be located closer to the coal fields than previous ones, the average lead for coal will decrease. Future traffic has been estimated to range between 49.4 and 56.4 billion ton-kms in 1984/85 and between 62.9 and 87.0 billion ton-kms by the year 1990/91 (see Table 5). (ii) Steel Plant Traffic 2.09 From 1970/71 to 1979/80 the average increase in output of both ingot and saleable steel was over 3% per annum. However, the variations in production throughout the decade were erratic with a very low increase between 1970/71 and 1974/75 (1.17 for ingot and 2.1% for saleable steel) followed by an upsurge in 1974/75-1976/77 of 16.0% and 19.27. annual rates of growth for ingot and saleable steel, respectively, which gave way to a decline of 5.1% p.a. for ingot and 13.5% p.a. for saleable steeL between 1977/78 and 1979/80. Production tonnages of pig iron, ingot and saleable steel stood at 1.1 million, 8.0 million and 6.0 million, respectively, during 1979/80. Current indications are that overall output for 1980/81 remained at about the 1979/80 level but a significant annual growth of about 14% is expected for 1981/82. Consumption of finished steel during the seventies grew faster than production, at a rate of about 5.5% p.a., the deficit being compensated by curtailing exports (India has been a net exporter on and off for a number of years) and stepping up imports. 2.10 Total ingot steel capacity in integrated plants (the public sector accounts for about 82% of large plant capacity in India) is expected to be raised from 11.4 million tons in 1979/80 to 14.6 million tons in 1984/85 and 22.6 million tons in 1989/90. The growth during the Sixth Plan period would be from expansion, modernization and rehabilitation of existing plants, while growth in the second half of the decade would stem mostly from the addition of two new plants of 3.5 million tons and 3.0 million tonLs at Vishakapatnam and Paradip, respectively. WB's Economic Report (paras 3.39-3.40), however, considers these production targets difficult to achieve in view of the constraints of power shortages and decline in the quality of coking coal in India, combined with a number of technical difficulties relating to the quality of raw materials and the choice of production processes, all of which affect productivity. As a result, it is likely that net imports of steel will be required through the end of the Eighties. 2.11 The transport requirements for steel plants comprise raw materials and finished products. Coal used for steel production process has already been analyzed in paras. 2.06-2.08 of this Annex. Iron ore for steel production is included in the present analysis, while iron ore for export is discussed in para 2.18 below. The average haul for raw -62- Annex D Page 7 of 14 materials has remained fairly constant, while that for finished products has Increased gradually 1.n the last two decades. Until the new plants begin operations towards the end of the elghties, however, no major varLations are expected in average haul. The transportation requlrement of the import/export trade of fLnished steel has also been taken into account; assuming, however, that a major pnrtion of the imported steel would be destined for the urban centers and industrial areas around the main ports (Bombay, Calcutta and Madras), which would be transported by road. Further, it has been assumed that modal shares for steel plants would remain fairly atable. Based on these assumptions, the traffic estimates for 1984/85 range between 16.5 and 17.5 billion ton-kms, and for 1990/91 between 18.5 and 20.5 blllion ton-kms, respectively. (iiI) Foodgrains 2.12 Agriculture is the mainstay of India'a economy, employing over two-thirds of the labor force. Foodgrains, in turn, dominate the country's agriculture. The supply/demand balance of foodgrains in recent years suggests a reduced and possibly eliminated need to import large quantities of foodgrains, and if present trends continue, India could become a significant foodgrain exporter. These developments have already had a profound effect on the country's transport sector, mainly by lengthening the average haul distances. 2.13 Production of foodgrains between 1967/68, a year of high yields, and 1977/78, an unusually good year, grew at 2.37% per year. A longer term trend (1960/61-1978/79) indicates an annual growth of 2.74%. The Sixth Plan targets imply a substantial acceleration of the growth rate to about 3.8% per annum. Assuming that the export/import element in the foodgraiu global picture continues shrinking gradually, average haul distances are expected to continue growlng faster than total tonnages due to a combination of long hauls from the production centers in the North to all deficit areas including the South, and to a larger proportion of short to medium loads being captured by road transport. If, as it is also assumed here, the policy of self-sufficiency for the various regions continues to meet with success, a reversing trend would occur towards the second half of the decade--average travel distances would tend to decrease due to self-sufficLency at regional and national levels, while export of foodgrains in significant volumes of diversification of agricultural production, or both, may take place. As a consequence, total traffic volumes are expected to stagnate. Accordingly, assuming a growth in foodgrain production ranging from 2.5% to 3.0% p.a., traffic projections (assuming a decrease in railway share of about 0.5 percentage points per year) lead to estimated traffic volumes varying from 29.8 to 30.2 billion ton-kms in 1984/85 and from 33.5 to 35.1 billion ton-kms in 1990/91. -63- Annex D Page 8 of 14 (iv) Petroleum Products (POL) 2.14 Demand for petroleum products rose quite rapidly in India (8.9% p.a.) between 1950 and 1973, the time of the oil price hike. A substantial increase in the real domestic price of POL after 1973 has moderated the growth in demand to an average annual rate of 5.1%, between 1973/74 and 1979/80. In 1980/81, consumption was constrained by the labor petroleum in Assam, which resulted in a loss of production of about 3.5 milLion tons of crude. During 1981/82 demand grew by about 7%. Estimating future demand, however, is uncertain because, as individuals and firms adjust their habits of POL consumption, historical relationships no longer apply. On the other hand, it is difficult to sharply reduce demand in the near future because most PGL products are used as intermediate products. World Bank estimates a growth of about 7.6% p.a. between 1979180 and 1984/85. 2.15 The transport picture is also going to be affected by the structure and regional pattern of production and supply and by the availability of alternative transport modes. India is largely unexplored regarding hydrocarbons. The exploration activity undertaken during the Seventies, however, paid off in the discovery of one giant oil and gas offshore field (Bombay High) and several smaller commercial fields, both offshore and onshore. The number of good prospective areas exceeds the number that the state-owned organizations can reasonably explore during the next five years; therefore, the Government has recently decided to open selective prospective areas to foreign exploration firms under production-sharing contracts. These arrangements will considerably accelerate exploration of hydrocarbons, although exploitation of any commercial reserves is not likely to happen until the second half of the eighties at the earliest. 2.16 Crude production in 1981/82 was about 16.4 million tons which represents a little less than one-half of Indian POL demand. India-s refining capacity, on the other hand, was of 31.8 million tons of throughput capacity (mttc) in 1980. This is enough to process about 29 million tons of crude into 27 million tons of petroleum at 90% capacity utilization and 93% outturn of products from crude. There is a new refinery under construction at Mathura, which should being operating in 1981, adding 6 mttc. Moreover, the Government plans to meet the growing demand both by expanding existing refineries and by building new ones. The new refineries would be located at Mangalore (6 mttc) and Karnal (3 mttc). Altogether, India is expected to have 13 mttc more than at present by 1984/85. 2.17 Concerning transport facilities, in addition to road transport and existing pipelines, a new pipeline is expected to be commissioned in the near future, from Bombay High to Mathura, and more pipelines are -64- Annex D Page 9 of 14 planned to be built during the sixties. The share of POL by rail will thus be reduced, and fairly moderate increases in transport volumes are estimated, except in the third alternative, where, in addition to an annual rate of growth of demand of about 7.6% p.a., a smaller reduction in the share of the railways is assumed. Traffic forecasts range between 11.5 and 12.6 billion ton-kms in 1984/85 and between 12.4 and 19.4 billion ton-kms by 1990/91. (v) Iron Ore for Export 2.18 Despite occasional surges in export volumes in a few years in response to world market conditions, iron ore has presented a stable pattern of traffic with relatively minor fluctuations from one year to the next. After experiencing a world-wide slump in demand of iron ore, the market is beginning to recover. On the supply side, a switch of production has been completed from lumps to fines to better suit the world market. Accordingly, a moderate traffic increase has been estimated, ranging from 7.5 to 7.6 billion ton-kms in 1984/85 and from 7.7 to 7.9 billion ton-kms in 1990/91. (vi) Cement 2.19 During the past 20 years, India has suffered an almost chronic shortage of cement. As a result, cement is rationed administratively. The annual rate of growth of installed capacity averaged about 8.9% during 1950/51-1971/72 and declined to about 2.1% between 1971/72-1978179 due to restrictive Government pricing and licensing policies. Production growth, meanwhile, averaged about 3.7% per year as a result of increases in. capac-ity utilization between 1971/72 and 1977/78. Thenceforth, capacity utilization declined, however, from 88% in 1977/78 to less than 75% in 1979/80 and 1980/81. The most critical constraints on the operation of cement plants were coal and power shortages. In 1981/82 the total production was 21.5 million tons an increase of 15% over the previous year. 2.20 India is planning a major expansion of its cement industry from 32.7 million tons of installed capacity in 1981/82 to about 42.5 million tons in 1984/85. About 80% of the additional capacity will be in new production units and the remaining 20% will result from expansion of existing plants. If the investment targets are met, the planned expansion would roughly meet the projected demand for cement in the next four years, although shortages are likely to continue for some time. 2.21 These shortages, combined with the necessity to supplement the domestic production through imports, the concentration of consumption in the country-s northern region, and an increasingly rapid erosion of traffic in the shorter distances, are expected to continue aiding to the -65- Annex D Page 10 of 14 average haul of cement by the railways. Of the three alternatives tested, the first two (with growth/rates of 3.0% p.a. and 4.0% p.a.) straddle the average growth in production of cement during the 1971/72-1977178 period. The third alternative assumes a jump in production of 7% p.a. between 1980/81-1984/85, followed by 5.5% p.a. through the end of the decade. Assuming a decrease in railway share of tonnages of about 3% per year, the total traffic moved by the railways is expected to range from 8.8 billion ton-kms to 9.9 billion ton-kms in 1984/85 and from 10.5 to 13.7 billion ton-kms in 1990/91. (vii) Fertilizer 2.22 The consumption of nitrogenous fertilizers in India increased at an average annual rate of 22% in the decade 1962-72. In the next three years, consumption declined. However, as a result of improved agricultural conditions and a reduction in the price of nitrogen, consumption picked up again, resulting in a growth of about 15% p.a. between 1975 and 1980. Phosphatic and potassic fertilizers followed a consumption pattern similar to nitrogenous fertilizers, but did not begin to recover until 1976/77. By 1981/82, India-s total fertilizer consumption was 5.9 million nutrient tons, of which 67% was nitrogen, 22Z phopshates and 11% potash. 2.23 1 ndia produces nitrogenous and phosphatic fertilizers. Installed capacity has grown from 0.15 million nutrient tons per year in 1952 to about 6.8 mill ion in 1981/82. The utilization of available capacity has been relatively low, however. Although it showed substantial improvements between 1974175 and 1978/79, it has declined sharply in 1979/80 and 1980/81, largely as the result of shortages of power, fuel oil and naphtha, coupled with equipment and operating problems, particularly in several of the older public sector plants. In 1981/82 the utilization improved but the level is still low about 60% of installed capacity. In 1981/82, India produced 3.1 million tons of nitrogenous fertilizers and 0.9 million tons of phosphatic fertilizers. 2.24 The high rates of growth in consumption of fertilizers of recent years are not sustainable in the long run. Consumption in 1980/81 increased at a more moderate rate of about 6% as a result of price increases. The installed capacity is expected to increase from 6.9 million tons in 1981/82 to 8.5 million tons in 1984/85. Additionally, the Government is placing considerable emphasis on measures to increase capacity utilization of existing plants. Even after taking into consideration the large projects underway at Thal and Hazira and those firmly planned, fertilizer consumption is expected to exceed domestic output significantly. To estimate future transport demand, fertilizer consumption has been estimated to grow at annual rates of 8.5%, 10.1% and -66- Annex D Page 11 of 14 12.5% in line with the analysis provided in connection with the Hazira Fertilizer Project. 1/ 2.25 Bearing in mind the location of existing and projected plants, and assuming that the railways' share would continue decreasing by about 3% annually as the main inter-regional flows are concentrated along the principal railway corridors, while road transport handles intra-regional distribution flows, in line with the modal-point transport strategy being developed by GOI/IR, 2/ railway traffic volumes are projected to reach between 10.7 and 11.37billion ton-kms in 1984/85 and from 12.5 to 16.0 billion ton-kms by 1990/91. (viii) Other Commodities 2.26 In line with a historical pattern of concentration of railway traffic in the main seven commodities discussed above, the remaining traffic is estimated to continue decreasing in tonnage. As road transport continues capturing the shorter distance traffic in these other commodities, however, the average haul will increase, leading to a stagnation or even a small decrease in ton-kms from 41.1 billion in 1980/81 to a range between 38.0 and 38.3 billion in 1984/85 and their growth between 39.6 and 43.4 billion by 1990/91. (b) Passengers (i) Suburban 2.27 The following table summarizes the gTowth in population and in suburban railway passenger traffic for the three largest urban centers in India. 3/ 1/ Staff Appraisal Report, March 6, 1981. Para 4.08. 2/ Under the Fertilizer Industry Credit, financed partly by IDA, Rail India Technical and Economic Services Ltd. has carried out a study to optimize rail fertilizer movements. 3/ These statistics, regarding passenger traffic, must be viewed with some caution since ticketless passengers are not included and their proportion varies from one city to another and through time, as law and order deteriorated, particularly in Calcutta. -67- Annex D Page 12 of 14 Population Passengers Pass-Km (Million) (Billion) (Billion) Year B C M T B C M T B C M T 1951/ 1952 3.11 3.30 1.82 8.23 0.28 0.09 0.04 0.41 3.96 2.42 0.45 6.83 1960/ 1961 4.15 4.83 2.32 11.30 0.42 0.20 0.06 0.68 6.36 4.61 0.80 11.77 19701 1971 5.97 7.03 3.17 16.17 0.85 0.27 0.10 1.22 15.12 6.44 1.42 22.98 1977/ 1978 7.87 8.19 3.92 19.98 1.32 0.45 0.16 1.93 25.77 11.29 2.37 39.43 Note: B = Bombay; C = Calcutta; M = Madras; and T = Total. Source: Rail Tariff Enquiry Committee, Ministry of Railways. April, 1980. Main Report, Volume IV. Statement (Appendix) 6.1. 2.28 As shown above, while the population of Bombay, Calcutta and Madras grew by 3.5% annually between 1951/52 and 1977/78, the total suburban traffic moved by the railways in the three cities increased by 6.1% per year in terms of number of passengers and by 7.0% annually in terms of passenger-kms. When analyzed decade by decade, the traffic in passengers and passenger-kmas grew by 5.8% p.a. and by 6.2% p.a. iu the fifties, by 6.0% p.a and 6.9% p.a. in the Sixties and by 3.1% p.a. and 8.0% p.a. between 197U171 and 1977/78. In 1979/80 the traffic decreased by 10% (passengers) and 11% (passenger-kms) in the face of fare increases, which took place in July 1980. The fare increases included a raise of 5X on passenger traffic up to 100 kms and of 15% on quarterly and monthly season tickets. Preliminary estimates for 1980/81 indicate a recovery of traffic growth of about 5% in number of passengers and of 4.8% in passenger-kms (see Table 3 for total traffic statistics after 1977/78). 2.29 As a result of the spread of urban centers, average lead for the three cities has increased from 17.3 kms in 1960/61 to 17.8 kms in 1970171 and then to 20.4 kms in 1977/78. A careful study of the various parameters having a bearing on suburban passenger traffic (urban population, service sectors, land use pattern, per capita income and prices for railway services) was carried out by the Rail Traffic Enquiry Committee and they concluded--based principally on urban population growth--with a projected rate of growth of about 5.8% annually between 1977/78 and 1999/2000, which would increase to around 6.7% annually if the population increase in the three cities continues growing at the average rate of the Seventies. Assuming a gradual increase in average lead from 20.4 kms in 1977/78 to 25.1 kms in 1999/2000, the study concludes that the growth in traffic demand in terms of pass-kms would range from 6.8% annually to 7.9% annually throughout this period. -68- Annex D Page 13 of 14 2.30 A closer look at the price elasticity of suburban passenger travel, based on the 1980 experience, suggests that the high growth in demand could be uampened, by implementing a gradual increase in fares. Alternatively, it would be necessary to limit the available capacity on the main suburban corridors, to avoid excessively large investments. Assuming either of the two solutions, growth in suburban passenger traffic has been estimated at about 4.5% per year in terms of passengers or 5.1% per year in terms of passenger-kms, during the period 1980/81-1990/91. This would generate a total number of around 2,380 million passengers in 1984/85 and 3,100 million passengers in 1990/91 and of 49.5 billion pass-kms in 1984/85 and 66.8 billion pass-kms in 1990/91. (ii) Inter-urban 2.31 Inter-urban passenger traffic has grown at an average of about 2.0% per year (in terms of number of passengers) and at 3.3% per year (in passenger-kms) during the last three decades. The rate, however, has increased gradually, decade after decade. Thus, in the Fifties total number of passengers and passenger-kms increased by 0.5% p.a. and 1.0% p.a., respectively; in the sixties they went up by 2.8% p.a. and 3.7% p.a.; and in the seventies by 2.5% p.a. and 5.3% p.a., respectively. Hence, only the growth in the total number of passengers decreased somewhat from the sixties (2.8% p.a.) to che Seventies (2.5% p.a.). This increasing trend reflects mainly the 'ncrease in the country's population throughout the period (the popvulation roughly doubled from about 360 million to some 644 million in these 30 years), the increased economic activity of the various regions and of the country in general (growth in GNP) and the ratio of increases in income per capita to increases in passenger fares. Of all these variables, the Rail Tariff Enquiry Committee (RTEC) found the best correlation in the case of population and the service sector. 2.32 Using the population projections for India presented in Table A.9 of previous WB Economic Report, which assume a net reproduction rate of one in the year 2000, and using the growth rate relationships established by the RTEC (Appendix 6.7 to Volume IV), the following estimates of population and inter-urban traffic levels are obtained: -69- Annex D Page 14 of 14 Inter-Urban Passenger Traffic Volumes Population Million Passengers Billion Pass-Kms Year (millions) Si S2 S3 Si S2 S3 1980/81 672 1,550* 1,550* 1,550* 159* 159* L59* 1984/85 739 1,720 1,833 1,946 187 202 224 1990/91 803 1,884 2,124 2,377 215 249 303 S1 = Scenario 1; assumes a growth rate relationship based on 1950/51 to 1977/78 long term trends. S2 = Scenario 2; assumes a growth rate relationship based on 1970/71 to 1977/78 trends. 53 = Scenario 3; assumes a growth rate relationship based on actual increase in the relation between 1960/61-1970/71 and 1970171-1977/78. * Provisional figures. 2.33 The figures in the preceding table represent an annual rate of growth which ranges from 2.6% to 5.9% for total number of passengers and from 4.2% to 8.9% for passenger kilometers between 1980/81 and 1984/85. For the entire decade (1980/81-1990/91) these annual rates would vary from 2.0% to 4.4% for passengers and from 3.1% to 6.6% for passenger kilometers. III. Summary and Conclusions 3.01 Different studies carried out in India in recent years have arrived at various railway traffic forecasts. As shown in Table B-1, concerning freight, the 1984/85 World Bank estimates are lower than previous ones, although not significantly lower than IR's own estimates. The railway traffic forecast based on macroeconomic considerations (paras. 2.01 to 2.04) is somewhat higher, but as indicated before, the results of applying that methodology are not so accurate. In any case they represent a small increase in the order of 1-3%. 3.02 Comparing with the upper boundaries suggested by expected GDP growth (see table in para. 2.03 of this Annex C), the Bazk-s estimates vary within reasonable limits. The resulting annual rates of growth in terms of ton-kus range from 2.3 for the low, to 3.1 for the medium and to 4.4 for the high alternative, between 1981/82 and 1984/85. Between 1981/82 and 1990/91, the corresponding annual rates of growth are 2.2%, 3.3% and 4.4%. -70- Annex E Page 1 of 8 INDIA RAILWAY ELECTRIFICATION AND WORKSHOP MODERNIZATION PROJECT Description of Main Line Sections to be Electrified and Other Components ke) Main Line Sections to be Electrified (i) Jhansi-Itarsi 1. This section (381 RKM) lies on the main north-south trunk route connecting Delhi with the Metropolitan cities of Bombay and Madras. This is almost a double line section except for small patches of single track over some major rivers. There are 50 railway stations, including two important stations, i.e., Bina aud Bhopal. 2. The section being on the north-south main trunk route, caters to very heavy passenger and freight traffic. The main commodities moving over this section comprise food grains from north to south and towards Bombay in the up direction and in the Oown direction fertilizers and coal from Central India coal fields for thermal power plants in the north, i.e., Bhatinda, Panipat, Faridabad, etc. There is a separate stream of coal traffic from Pench Valley fields from Itarsi to Bhopal enroute to stations on the Western Railway. Some major deveLopments like expansion of thermal power plants at Bhatinda, Faridabad, as well as setting up of giant fertilizer plant based on Bombay High and numerous cement plants around Manickgarh on S.C. Railway, will contribute to increases in the volume of freight traffic. The traffic density on the section is 29.0 million GTKM/RKM/Annum at present and estimated to increase to 35.8 GTKH/RKM/Annum by 1990/91. (ii) Itarsi-Bhusaval 3. This section (301 RKM) lies on the Delhi/Lucknow-Bombay and Howrah/Allahad-Bombay trunk routes and is a double line section. There are 37 stations on this section, including an important junction station. 4. The section carries very heavy passenger and goods traffic. There is also a preponderance in coal movement from Pench Valley to the stations reached via Itarsi, Bhusaval and for power stations and other coal-based industries in Western Railway and Bombay. A sizable north-south bound traffic, which normally seeks movement over -71- Annex E Page 2 of 8 Itar3i-Amla-Nagpur section, moves over this section due to difficulties in the capacity on that section. Main traffic in the up direction comprises of coal and general goods, while in down direction the traf_ic stream includes POL, fertilizers, etc. The increase in the projected level of traffic includes coal for power houses and coal-based industries for destinations reached via Jalgaon and south of Jalgaon from C.I.C. fields/Singrauli and Pench valley coalfields. The increase in the tran- sport of other general goods, food grains, etc. in the up direction and that of POL, fertilizers traffic in down direction are anticipated. The present day traffic is 28.3 million GTKMIRKMIAnnum and projected anticipated traffic by 1990/91 is 31.6 GTKH/RKM/Annum. (iii) Bhusaval-Nagpur 5. This section (393 RKM) lies on Bombay-Howrah trunk route. This is a double line section and there are 35 stations on this section. 6. This section, being on the main trunk route, carries very heavy passengers as well as goods traffic. A number of important commercial centers are located on this section. A big power house is located at Puras and coal for this power house is mostly moved from Mahesol coal fields over this section. This section passes through a region rich in cotton and coal. North-south traffic also transverses over a part of this section between Wardha and Nagpur. Due to passage difficulties over north-south route, i.e., Itarsi-Amla-Nagpur, a few of the north-south traffic is diverted via Itarsi/Bhusaval-Wardha which accounts for two to three loads per day. The traffic density on the section is at present 20.2 GTKM/RKM/Annum and estimated to 23.9 GTKM/RKM/Annum by 1990/91. (iv) Wardha-Balharshah (v) Balharshah-Vijayawada 7. These two contiguous sections (133 RKM, 454 RKM) are part of the main north-south trunk route connecting Delhi with Madras. Most of the sections are double-lined, except for a short stretch of a single line portion north of Bellampalli, where doubling is in progress. There are 14 stations in Wardha-Balharshah and 53 stations in Balharshah-Vijayawada. 8. The traffic over these sections consists of through traffic of industrial as well as agricultural products from both northern and southern sides. These sections traverse through the coal belt of Andhra Pradesh which is also enriched with other minerals like dolomite, lime- stone, etc. Coal from Singareni collieries, Bellampalli, Mandamari and others, moves through these sections for feeding thermal power stations in the southern states, i.e., Tamiluadu, Andhra Pradesh, Karnataka and southern part of Maharastra. Likewise, there is a heavy movement of cement traffic over these sections. With the emphasis of the super ther- mal stations being located at Ramagundam, as well as Kothagudam -72- Annex E Page 3 of 8 in Andhra Pradesh, the production of coal in Singareni collieries is expected to be increased considerably. The present traffic densities on these sections are 19.5 million GTKM/RKM/Annum for Wardha-Balharshah and 30.1 million GTKM/RKM/Aunum for Balharshah-Vijayawada. By 1990/91, they are expected to increase to 28.4 million GTKM/RKM/Annum for Wardha-Balharshah and 44.0 million GTKM/RKM/Annum for Balharshah-Vijayawada. (vi) Bhopal-Nagda 9. This section (239 RKM) is mostly of a single line aud connects two important trunk routes, i.e., Delhi-Madras and Delhi-Bombay. There are 28 stations on this section. 10. This section carries heavy freight traffic. The coal loads from coal belts of Central India feeding thermal power plants and other industries on the Western India move over this section. A good deal of steel and iron, as well as fertilizer traffic, moves over this section. The traffic density on the section is 19.7 million GTKM/RKM/Annum at present and estimated to increase to 26.2 million GTKM/RKM/Annum by 1990/91. (vii) Itarsi-Nagpur 11. This section (298 RKM) at present is predominantly of a single line and doubling of the section is being progressively under way. There are 35 stations on this section. Since this line traverses over ghat section with heavy gradients and lies on the main north-south trunk route from Delhi to Madras, it certainly requires elimination of the iufrastructural weaknesses, e.g., steam traction, stretches of single line and locomotives with medium power. The electrification of the section will also provide a short distance chord line to the route Itarsi-Bhusaval-Nagpur, which is presently being utilized for a large part of goods traffic in view of the constraints on this route. 12. Besides through traffic, this section also caters to a considerable originating traffic in coal, charcoal, forest products, etc. Coal traffic, to the exteut of two to three loads daily, are worked to Koradi power house and Bhilai Steel Plant via Godhani and Nagpur, respectively. This section, being the principal north-south traffic route, there is a heavy demand for introduction of passenger services. Of late, a number of fast and super-fast passenger services have been introduced. With the opening of new lines in Nandani fields in Pench Valley area, substantial increase in freight movement over this section is also anticipated. Additional cement traffic from new plants proposed near Manikgarh requires to be moved over this section. The traffic density on the section is 14.4 million GTKM/RKM/Annum at present and is estimated to increase to 22.0 million GTKM/RKM/Annum by 1990/91. -73- Annex E Page 4 of 8 (viii) Nagpur-Durg 13. This section (265 RKM) is part of the important trunk route connecting Calcutta with Bombay. This is a double line section having 33 stations. 14. This section, being on the trunk route, serves mainly through passenger traffic between East and West. The originating goods traffic are mostly bamboos, forest products, manganese, foodgrains, finished products of steel plants and textile goods. Wlth the setting up of a super thermal plant, a fertilizer plant (under construction) and a new coal mine being opened out, movement of freight traffic over this section is anticipated to increase substantially. The traffic density on the section is at present 16.8 million GTKM/RKM/Annum and estimated to increase to 22.6 million GTKM/RKM/Annum by 1990/91. (ix) Bina-Katni-Anuppur (x) Anuppur-Bilaspur 15. Bina-Anuppur (429 RKM) is a double line section, whereas Anuppur-Bilaspur (151 RKM) is mostly a single line section, except for a short length of double track portion in-between. In these sections are 59 stations. 16. Bina-Anuppur section connects the rich coal belts of C.I.C. fields/Singrauli located in Eastern region to the industrialized areas in the Western part of the country around Ahmedabad. There is a heavy coal movement over this section. A sizable stream of steel traffic also seeks movement via New Katni from steel plants located in Eastern section to destinations on Western and Northern Railways. There have been proposals to set up several new cement plants and to expand a steel plant alongside the section. With these developments, goods traffic on this section is likely to increase considerably. The present traffic densities on these sections are 26.2 million GTKM/RKM/Annum for Bina-Katni-Anuppur and 9.1 million GTKM/RKM/Annum for Anuppur-Bilaspur. By 1990/91, they are expected to increase to 40.2 million GTKM/RKM/Annum for Bina-Katni-Anuppur and 11.9 million GTKM/RKM/Annum for Anuppur-Bilaspur. (b) OHE Recording and Testing Car 17. At present there is no overhead equipment recording/testing scar with IR. With an increase in traffic on the electrified route, it is becoming more and more difficult to give long power blocks for maintenance and overhauling of OHE. However, various parameters like height, stagger, wear of the contact wire, condition of OHE at the crossovers are manually checked in a time-consuming manner. Current collection is observed by -74- Annex E Page 5 of 8 noticing the sparks at night. These methods naturally suffer from errors in measurement and individual judgement resultlng in a low standard of maintenance. 18. In view of the above, it is considered essential to have an OHE recording/testing car to measure and record the various parameters of OHE and pantograph under dynamic conditions ln monitoring current collection for laying down a rational maintenance and overhaul schedule. 19. Such a car could also be used for the research purpose. The behaviour of the different types of OHE against different types of pantographs at different speeds could be evaluated both qualitatively and quantitavely under dynamic conditions. The speed potential of the existing OHE has to be ascertained and if necessary, improvement in the design of the OHE and/or the pantograph should be done. 20. The OHE recording/testing car should be designed to be hauled by a locomotive or a regular train, and to cater for future needs, it should be capabLe of operation at speeds up to 160 km/h. The car should be provided with an observation dome, closed circuit television and visual display units to study the behavior of OHE/pantograph. It should be provided with various measuring devices and appropriate dLgital computer equipment for on-board preparation of defect and alignment repots. The provision of Ludigenous development of such a car for this purpose was once approved by the Railway Board in 1979. However, since domestic development of such a car would be remote, it is now proposed to import a complete OHE recording/testing car wlth all the necessary measuring/monitoring equipment. (c) OHE Maintenance Vehicles 21. IR now owns a large number of indigenously-manufactured OHE inspectlon/maintenance tower wagons which are used for carrying out inspection and breakdown attention of OHE on the electrified tracks. The tower wagon is a 4-wheeler rail vehicle, self-propelled by a diesel engine having a horsepower of 83 and an axle load of 6.8 t. The total carrying capacity for the tower wagon is 3.1 t and the maximum speed is 45 kmph. However, due to the obsolete design and the inadequate horsepower of the engine with the consequent low speed, these tower wagons presently used have a lot of disadvantages, including: (a) it takes an unduly long time to reach the site of an accident in case of OHE breakdown and the section controllers find difficulty in permitting path to these vehicles; (b) it is impossible to couple to the tower wagon an additional vehicle carrying spare components of ORE; (c) availability is very low owing to, among other problems, weak transmission system leading to frequent failure of gear boxes and other parts; and (d) it is not suitable to operate the tower wagons on the heavy gradient sections, since the brake power is insufficient and the vacuum brakes equipped are not fail safe. -75- Annex E Page 6 of 8 22. It is, therefore, suggested to develop high speed OHE maintenance vehicles to overcome the above defects. The following three types of modern OHE maintenance vehicles are proposed: a) Road-rail vehicles for attending minor breakdowns: In order not to block the line for a long period, these vehicles should be capable of travelling to the scene of a fault by road at the speed of 80-100 Km/h and mounting on the rails for repairing the fault using a lift "bucket" or platform. b) 4-wheeler self-propelled tower wagons for attending normal scheduled inspections and maintenance: These cars should be capable of running at 75-80 Km/h and carrying load up to 5 t. c) Bogie-type 8-wheeler self-propelled tower wagons for attending medium/major breakdowns and heavy maintenance work: Since the heavy maintenance/repair of OHE is done during common power/traffic blocks, it is extremely important to complete the work expeditiously to minimize traffic repercussions. Therefore, these wagons should be capable of carrying at 100 Km/h approximately 20 t of heavy repairing materials and large manpower in order to increase productivity to maximum possible level by using a number of gangs simultaneously. 23. It is proposed that each OHE depot, spaced at every 50/60 kms, be provided with one road-rail vehicle and a 4-wheeler tower wagon or a 8-wheeler tower wagon for scheduled maintenace and heavy repairs. With the increased pace of energization as much as 1,000 route km annually, it is expected that about 40 maintenance vehicles will be required per year. 24. The first ten vehicles comprising five road-rail vehicles, three 4-wheelers and two 8-wheelers are to be imported completely in assembled conditions so that they are available in time to keep pace with the proposed energization program. Next ten vehicles (five road-rail vehicles, three 4-wheelers, two 8-wheelers) are proposed to be imported in completely knocked-down condition. The assembly and testing will be done in India. By this time, it is expected that most of the components will be indigenousLy developed and only a few components will need to be imported. The import contents will come progressively down. -76- Annex E Page 7 of 8 (iii) Improvement of the North-East Ghats Operation 25. The main line DC electrified routes, Bombay-Kalyau-Igatpuri and Bombay-Kalyan-Pune sections run over steep Ghat sections having ruling gradients up to 1 in 33 on the Ncrth-East section and 1 in 37 on the South-East section. Both sections are serious bottlenecks in train operations. 26. Freight trains on these sections are worked by WCG-2 locomotives which are also used for banking service. There are severe problems both in the ascending and descendiug directions and WCG-2 locomotLves have not proved satisfactory for banking operations on these Chats due to the following deficiencies in their operational capabilitLes: (a) For ascending load, there is a tendency to slip due to unreliable adhesion causLng excessive stalling and parting of load; (b) As the regenerative braking is not effective at speeds less than 28 Km/h, regeneratLon is not available at the maximum permissible descending speed of 19 Km/h on the North-East Ghat section. Thus, the locomotives depend on rheostatic dynamic braking causing tremendous heat; and (c) There are several design/manufacturing deficiencies in the equipment. 27. The severe gradients on the section impose serious load limitations on the Ghat sections. The permissible load of goods trains in the ascending direction is 1,250 tons with a single banker And 1,600 toni with double bankers. These loads have to be further reduced during monsoons. In view of the likely traffic growth in the future and the existing capacity constraints, it was proposed, in April 1979 by the multi-disciplinary Directors" level committee appointed by the Railway Board, to urgently import from abroad improved type of DC banking locomotives adopting latest technology in this field. However, for several different reasons, this proposition has never been realized until today and there are no prospects of getting heavy duty DC bankers in the near future. 28. In order to increase the line capacity, the third railway line on North-East Ghats between Kasara and Igatpuri has been completed and commissioned Lately. In the past, before and when work on the third Ghat line was to be commenced in 1977, three different committees had gone into questions of changing over DC traction to AC traction on the North-East Ghat section. While distinct advantages were seen in converting the North-East Ghat line into AC traction, the decisions were always to continue DC traction over the Ghats mainly due to the following argument: (a) Bulk of the DC locomotives and EHU fleeta would require premature replacement; -77- Annex E Page 8 of 8 (b) Najor modifications to the OHE and subs.ations at heavy costs would be involved; (c) Conversion to AC of the OHE in built-up areas would be extremely difficult; (d) A number of tunnels in the Ghat section would call for modification; (e) Kasara yard, as an actual point of DC/AC change-over, was ruled out as space-bound; (f) A suitable design of AC/DC locomotive was noc available for working on the Ghats; and (g) All the signalling and telecommunication works would have to suit the AC traction. 29. However, the situation changed considerably since then and the TRANSMARK team, which visited India in 1979, recommended conversion of North-East Ghats into 25iV AC with suitable change-over facilities at Kasara. The Bank mission, together with consultants looking into the adoption of high horsepower AC locomotives for hauling 4,500 ton trains on IR (para 2.23), also visited the North-East Ghat section in February 1981, with a view to determining the utility of the AC locomotives as bankers for the Ghats instead of heavy duty DC bankers. The Bank mission conveyed the view at that time that it would be advantageous even at that stage to go in for conversion of the Ghats into AC rather than importing heavy duty DC banking locomotives to improve throughput. 30. With the completion of the third track between Kasara and Igatpuri, the time is appropriate to commence a new study based on a cost-benefit anilysis for conversion of this electrified line from the old 1500 volt DC to a modern AC system for a major and long term operational improvement. The study should cover: (a) the method of carrying out the conversion (i.e., changing insulators to 25 kV types but retaining the existing contact wire and catenary); and (b) must include some alternative solutions to operations of the ENU passenger commuter trains up to or over the converted section. If, as a result of the study, conversion of the system from DC to AC is found viable, it would be desirable to carry it out at this stage, i,e., before the third track reaches its saturation point ln :'!e 1990s. 31. An immediate priority is the introduction of communications between the leading locomotives and the banking locomotives to provide for voice communications between the drivers at the front and the rear of the train to improve line operations and reduce delays. The communications system would include special purpose 25 watt locomotive radios, a "leakv" coaxiaL cable transmission system for radio reception on the tunnels and the radio transmitter/receiver base stations ct Kasara, Igatpuri and the intermediate signal cabins. -78- Annex F Page 1 of 6 INDIA RAILWAY ELECTRIFICATION AND WORKSHOP MODERNIZATION PROJECT Details of the Six Workshops and ICF and Maintenance Depots Selected for Modernization 1. Parel Workshop. Parel Workshop which is over 100 years old, is the only locomotive workshop on the Central Railway system. The workshop was initially pLanned for POH of steam locomotives. While the shop layout and equipment provided were suited to the maintenance of steam locomotives, the workshop has, in the course of time, undergone drastic changes consequent to diversification of POH activities. Due to progressive repLacement of steam traction by Diesel and Electric traction, the need for setting up maintenance facilities for diesel and electric locos was felt and Parel shops had to gradually cater to the maintenance demands of these new locomotives. Presently, the workshops have a strength of 6,300 personnel and is required to undertake POH of steam, diesel and electric locomotives. Capacity demands for diesel locos -ontinue to grow and have to be met by Parel shops. IR-s rationalization plan provides for expansion of diesel POH capacity in Parel shops to 12 locos per month by 1990 at tue same time tapering off the capacity for steam locos from 8 to 5 in the same period with the ultimate am of eliminating steam loco POH from this shop completely by the turn of this century. 2. Liluah Workshop. Liluah Workshop was originally set up in 1863 near Howrah Station for overhaul of coaches and wagons. The shop was shifted to its present location at Liluah, about 5 km from Howrah in 1900. The facilities provided in the shop were designed to cater to conventional technology relevant to wooden-bodied coaches and 4-wheeled plain bearing wagons. ;. Employing about 11,000 men, Liluah is amongst the largest C&E workshops of Indian Railways. Apart from coping with growth in work oad over the years, the shop has been, in recent years, called upon to tace radical changes in product mix with the advent of steel-bodied coaches and roller-bearing and CBC-fitted freight cars. Workshop infrastructure has remained more or less unchanged since its inception. The shop is, however, called upcz to tackle more sophisticated rolling stock in larger volume. The infrastructure is outmodpd and bulk of machinery and plant is cveraged and obsolete. There is urgent need to revamp and modernize this workshop. -79- Annex F Page 2 of 6 4. Since the shop is located on the outskirts of the metropolis of Calcutta, which is a major industrial center of the country, it will continue to play an important role in the maintenance of coaches and wagons. Situated in a congested area, the shop does not lend itself to physical expansion and, therefore, any modernization plan has to basically aim at optimising inputs within the existing physical confines. 5. A detailed project study has been conducted to identify the limitations of the shop, the inputs required to eliminate them and to adapt the shop to the changed product mix and the present technological needs. The major thrust of this modernization program is to equip Liluah shops with means to tackle present day coaches and wagons and to achieve reduced down time and reduced unit POH cost, at the same time achieving improved quality of product for higher service reliability. Towards this end, the facilities envisaged pertain to replacement of overaged machinery by modern high precision, high productivity machines, rationalization of work place layouts and processes, improvement in material handling, technological inputs to improve quality of product, provision of rotational spares to reduce down times, provision of better roads and shop flooring for smoother flow of materials etc. 6. Jagadhri Workshop. Jagadhri Workshop was set up thirty years ago in 1952. Necessity for this workshop was felt after the partition of the country in 1947 when East Punjab Railway, a portion of the erstwhile North Western Railway was left with no workshop maintenance facility for broad gauge rolling stock. Jagadhri Shop, employing 4,500 men is located near Khanalampura, a major marshalling yard and is ideally suited for periodical overhaul of goods stock. This workshop is now a part of the Northern Railway System of Indian RaiLways. 7. The workshop was originally planned to undertake periodical overhaul of coaches and wagons for a monthly out-turn of 75 coaching units and 225 wagon units. From time to time, the capacity has been i._rc^sed with marginal inputs to cater to the growing maintenance needs. In 1963, the capacity was increased to 200 coaching units 220 units per month in 1980. Keeping in view the increased needs, it is already programmed to increase the coaching capacity to 300 units per month by 1984/85. 8. In the interest of rationalization of workload between two major carriage and wagon workshops on the Northern Railway System, namely, Ja,adhri and Alambagh, it is proposed to increase the wagon POH capacity of Jagadhri Shc- from the existing 1,200 to 1,500 units per month and to eliminate wagon POt! from Alambagh altogether thereby converting Alambagh into a single activity shop. Simultaneously, there is need to reduce coaching POH repair cycle time and update repair technology to imprive t.e quality of repairs which will result in increased reliability and availability of stock. -30- Annex F Page 3 of 6 9. Golden Rock Workshop. This workshop was set up in L926 as a central unit for repairs to both BG and MG steam locomotives, coaches and wagcns on the South Indian Railway system. As a result of rationalization of workload, following integration of Indian Railways, the BG POH activity was shifted to Perabur and the workshop continued to POH only MG locowotives and C&W stock. Subsequently, in 1961, wagon POH was shifted to Mysore Workshop. 10. With progressive dieselization on the Southern Railway System, diesel POH activity was introduced in Golden Rock Workshop in 1969 with only marginal investments due to resource constraints. The basic structure and equipment remained the same which was engineered for steam loco POH. Infrastructure for diesel loco POH was, therefore, not optimal. Over the passage of time, diesel POH activity gradually increased calling for augmentation of supporting facilities. Consequently, traction motor rewinding facility was set up in 1976, coil manufacturing unit was started in 1979 and reclamation of cylinder liners by hard chrome plating in 1977. 11. While there has been diversification of various activities from time to time, matching infrastructural support has not been provided. For the pattern of activities required to be handled, the shop layouts are sub-optimal. To make things worse, 70% of the machinery and equipment is overaged having frequent breakdowns resulting in low productivity and poor work quality. Material handling facilities are also insufficient. POH arisings of diesel locomotives are rapidly increasing and this workshop will be required to POH 12 diesel locomotives every month as against the existing capacity of 6. This workshop also undertakes corrosion repairs to coaches with an annual capacity of 360 units. Due to heavy incidence of corrosion on coaches, this capacity needs to be augmented to 600. Besides, there is need to streamline the coaching POH activity to reduce the POH cycle time and to improve the quality of repairs. Need to expand the capacity and the imperative of improvement in the quality of repairs, makes it necessary to modernized this workshop. 12. Kharagpur Workshop. It was establised in the year 1898. It is the largest integrated maintenance set up on the Indian Railways employing 15,600 personnel. It was planned for maintenance of steam locomotives, timber-bodied passengers coaches and 4-wheeler freight wagons. On account of change in the mode of traction and the type of the rolling stock, this workshop was modified from time to time to take on the additional workload of diesel electric locomotives, electric locomotive bogies, rewinding of traction generators and traction motors and periodic overhauls/corrosion repair of all steel integral design pssenger coaches. The development of these diverse activities on a patch work basis at different times over the last two decades has seriously affected the productivity of the workshop. 13. Kharagpur Workshop was selected for modernization in Phase I of the modernization program wiLn the objective of reducing POH cycle time -81- Annex F Page 4 of 6 for diesel locomotives and wagons. The project proposal for Phase II is to develop capacity for overhaul of electric locomotives to the rune of 40 locomotives per year which, for want of capacity have to be sent all the way to Bhusaval on Central Railway. In addition, the shop will cater for special repairs to 8 electric locomotives annually. It is expected that 3 days would be saved in overall repair cycle for each loco. Investments are proposed in machinery and plant, material handling equipment, unit exhcnage spares, layout changes and for rehabilitation of inhouse power plant. Simultaneously, the locomotive shops at Kharagpur will be totally evacuated of steam locomotive workload. 14. Ajmer Workshop. The Ajmer Workshop complex was set up over a century ago, in 1876 by the erstwhile Rajputana Mewar Railways. The complex comprises two workshops, namely, Loco Workshop and Carriage and Wagon Workshop with attached stores depot and a standby power house. Both workshops deal with meter gauge stock. Since the integration of the railways in 1952, this complex forms part of the Western Railway System of Indian Railways and now employs 5,200 men. 15. The Carriage and Wagon Workshop does not have adequate capacity to handle the present PtH needs of coaching stock. Besides, over the years, there have been radical changes in the design of the rolling stock required to be handled by this shop. Instead of 7 ft. wide coaches for which the facilities were originally created, the shop is now required to handle 9 ft. wide coaches, thereby leaving very little space for movement and for efficiently carrying out repairs in the existing bays. Therefore, the existing carriage shop layout is not conducive to proper maintenance of coaching stock. Majority of machinery, plant and equipment are also overaged and obsolete, and are not compatible with present day needs. 16. According to the future projections of traffic, POH arisings of coaching stock will increase substantially. It is therefore necessary to step up the coaching POH activity in Ajmer Workshop from existing 210 units in terms of four wheelers per month to 360. Changes in the existing structures are also resuired to handle the present day coaches with simultaneous increase in berthing facilities for the additional load required to be handled. Streamlining of POH activity in various sub-shops is equally necessary to eliminate criss-cross movemeuts and idle time at various stages. It has, therefore, become necessary to modernize the existing carriage and wagon workshop at Ajmer. 17. Although the two workshops, namely, Carriage and Wagon and Loco Shops are independent entities in respect of POH repairs, in the sphere of manufacturing activity, which supplements the PO repair activity they are interdependent. For example, Grey Iron and Nou-Ferrous Foundry situated in Loco works caters to the need of both the shops. Similarly, the Wheel shop of loco shop supplements the requirements of the Carriage -82- Annex F Page 5 of 6 and Wagon Works. Keeping this interdependence in view, the modernization of C&W workshops has to esseutially include modernization of certain elements like Foundry, Machine Shop, Spring Repair Shop and Forge Shop situated in Loco works. 18. Integral Coach Factory (ICF) was established in late 1955 to manufacture all-steel light-weight passenger coaches. It was set up in Madras in collaboration with Swiss Car & Elevator Manufacturing Corporation of Switzerland for design technology. The coaches were produced as unfinished shells at a rate of 350 per year and were shipped to zonal railway workshops for outfitting of interiors. In 1962, a Furnishing Division was added. By 1973/74, production reached 750 uuits and 775 in 1982/83. 19. The factory meets the varied requirements of the Indian Railways. Besides the conventional coaches for BG and MG, special stock like BG AC composite, AC 2-tier sleepers, EMUs, track recording cars, double-deckers, dining cars, pantry cars, cushioned 3-tier sleepers, etc., are also manufactured. In addition, ICF has executed orders for coaches from other countries in a limited way. 20. The Railway Reforms Committee, in their Report on Production and Maintenance of Rolling Stock (December 1982), has made specific reference to "the present crisis in passenger movement convoluted in a vicious circle whose identifiable starting point is shortage of passenger-carrying capacity, accentuated by poor ways and means position". On an assessment of the estimates of stock requirements, the Committee underlined the need for creation of additional capacity of a magnitude which would be at least equivalent to the present available annual capacity of 1,500 coaches per annum. In the view of the Committee, the situation called for a 'quantum jump-. 21. In the context of the need for enlarged production capacity underlined by successive committees, a proposal for: (a) stepping up the outturn of ICF from the existing level of 750 coaches per year to 850 has been submitted by ICF and approved by the Board, and is under implementation; and (b) modernization of ICF workshops and stepping up its capacity up to 1,000 coaches per year has been submitted by ICF in the preliminary Works Program for 1984. 22. Maintenance Depots perform day-to-day inspection and servicing (renew brake bLocks, add engine lube oil, add water, refuel, etc.) and do necessary running repairs. These depots also perform weekly, monthly, and annnal inspections and maintenance. Maintenance depots play a major role in the availbility, performance and operational safety of the railways. This is due to the fact that aside from periodical overhaul (complete stripping down of equipment, replacing and/or remanufacturing parts and -83- Annex F Page 6 of 6 components, and reassembling), all other maintenance works are undertaken in such facilities. Therefore, it is imperative that particular attention be given to these facilities. Consequently, a selective process was established, along the lines of that for major workshops, for supporting units needing immediate attention. As a result, 37 major facilities were selected for modernization. The bulk of the investment is for machinery. However, the emphasis will be on: (i) machinery and equipment to achieve precision, proper testing and quality control required for maintenance of modern motive power and rolling stock, which has been lacking, resulting in unsatisfactory quality of work performed, abnormally high frequency of breakdowns in operation and lower-than-normal life of parts and components; and (ii) material-handling equipment to reduce frequent interruptions in work flow and reduce damage to material in transport, both having a major impact on output, quality and cost of repairs. INDIA RAILVAT ELECTIIFICATIOI AND UOBSWP MODERNIZATION PROJECT A&e Inventory et rollima Stock - Mareb 31, L983 1/ (Units) I to 5 yr. 6 to lO yr.. 11 to 15 yr.. 16 to 20 yr.21 to 25 7r. 26 to 3U yra. 31 to 35 yrn Above 35 Its. TOTAL Diesel Locomotlve (II^In .Lue) Broad Gauge 445 375 335 399 134 - - - 1,68e Ntet. Cauge 71 143 97 156 - - - 447 Narrow Gauge 23 5 13 28 11 - - - 80 Olease Shuntere Broad Gauge 122 139 t 7 - 29 2 10 373 Moter Gauge - 2 - - 7 13 7 1 30 Narrow Gauge - - - - - - - Elaetric Locomotive. Broad Gauge 328 279 177 219 86 - - - 1,11I Meter Gauge - - 2 IS - - - - 20 Narrow Gauge - - - - Rail Cars DredGeuge - - - - 21 - 1 - 22 Meter Gauge - 5 4 S e 6 2 3 30 Narrow Gauge - - 4 - - - 4 10 l1 EIIU (oteOL COeChea) Broad Gauge 213 225 143 L4 84 43 - - 657 Meter Gauge - - 20 25 - - - - 45 ENV (Trailer.) broad Gauge 238 428 450 359 105 135 1 - 1,11 Ibter Gauge 30 36 30 27 14 10 - - 147 Coaches Broad Gauge 2,893 3,291 2,927 3,007 3,139 779 34 693 1S,950 Meter CGage 899 1,392 1,867 1,776 1,694 1,124 154 703 9,708 Narrow Gauge 86 98 70 2S la8l LOS 9 703 1,280 Stae LocoeotliVa Broad Gaens *26 6 322 790 542 551 583 404 3,523 Meter Gauge *20 1 21 41 287 326 766 339 357 293 2.435 Narrow Gauge - - - - 1s 93 14 I9S 334 Freight Vageua Broad Gauge 42,981 39,300 56,611 8E,306 49,848 11,613 5,739 7,031 293,742 eteur Gauge e,022 4,027 18,123 14,946 18,794 13,510 1,343 1,261 60,028 Marrow Gauge 868 228 - 1,356 949 8"4 2 4,325 4,777 I/~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I 1/ 1rowleiee.al Sources lndiae lilwaey April 1984 -85- ' Table 2 PaRe 1 of2 IAILVAT KLECTfIVCATION AND WORUSHOP HODERNIZATION PROJICT S_orv of Opoeating Statiatice LI ---------------------------- B---Brod Cogu - -------------------_ _ 1973)74 1974/75 1975/76 1976/77 1977/78 1978/79 1979150 1950181 1981/82 1985283 2/ 1. Percentage of serviceable locootlves (Z) 3/ - Ste_m 4.91 54.39 55.63 56.61 85.58 84.77 84.52 83.6 83.5 53.4 - Diease 54.44 82.24 82.93 82.92 53.15 85.52 85.51 85.8 53.3 53.4 - Electric - Total 41 80.78 78.77 79.95 79.40 N.A. V.A. 54.18 83.8 79.1 76.4 - AC 4j/ N.A. N.A. N.A. N.A. 82.78 83.853 85.20 85.0 50.6 77.2 . DC TI N.A. N.A. N.A. N.A. 73.55 74.5b 77.60 75.9 71.9 69.5 2. Percentage of 6erviceablo passenger vehicles (Z) 86.55 b4.02 84.29 87.26 5-.59 86.56 86.111 85.5 85.5 54.9 3. Percentago of servicable wagons 95.44 95.52 95.59 96.01 96.02 95.66 95.57 94.4 93.3 92.5 4. Engine - Ke per day per e%ine In use (Ka) -Passenuger - Stems 2358 13 238 233 228 228 215 210 209 201 - Diesel 694 452 641 721 735 628 630 610 683 6b4 - Electric 405 408 450 697 fzl 459 452 453 504 457 - FreLght - Steao 105 112 114 I14 111 too 94 89 a5 53 - Diesel 307 306 321 37S 353 317 307 300 370 3e4 - Electric - Total 372 296 331 11; N.A. N.A. 289 274 339 350 - AC N.A. N.A. N.A. T.A. 410 322 300 253 370 393 - DC N.A. N.A. N.A. N.A. 337 171 175 160 169 183 5. Grone trailing load per freight train (ton) 1,525 1,563 1,577 1.607 1638 1.648 1,694 1.721 1,795 1,766 b. Net Tonnage per freight train (ton) 745 778 752 7f 618 826 863 854 932 598 7. Wagon - km per day per wagon In use (kh) 67.2 70.3 76.5 51.1 51.9 75.9 73.3 73.4 83.0 84.4 S. Net ton km per wagon per day 537 907 952 1,019 1.045 976 972 596 1.130 1,123 9. GCmas ton km per freight-traln hour 260.1 26,754 27.663 30,222 30,238 30.366 351168 31,550 34.849 35,885 10. Net ton ka per freight-train hour 13,96b 14.599 15,015 16,292 14,444 16.541 17,171 17.677 19.6b4 19,601 11. Percentage of pacee4ter traist arriving on the (2) 79.47 52.1 8b.5 93.1 91.3 53.3 56.U 44.3 55.4 85.5 12. Average wagon load (ton) 17.9 18.5 18.9 18.9 19.0 15.9 19.1 19.5 19.3 19.3 LJ. Locomotive utilization (Z) 51 - Steam 47.9 46.7 48.3 48.3 47.9 45.8 45.0 47.1 43.3 41.5 - Dicel 75.0 76.7 80.0 80.0 79.2 76.7 76.7 73.3 75.0 80.0 - Electric - Total 67.5 72.1 7f 7T 50.4 76.3 72.9 70.0 50.4 a4 - All TractLon 53.1 54.2 56.7 55.4 57.9 56.3 55.8 57.1 56.7 Not 14. Average aped of all freight PubLished trains (kaph) - Stem 11.8 12.0 11.8 11.9 11.5 11.2 10.8 10.2 9.59 9.6 - Diesel 22.2 22. 22.1 23.1 22.5 21.3 21.3 21.3 22.4 22.6 - Electric Total 2Z.5 22.4 23.5 25.2 N.A. N.A. 23.5 22.8 Z3.1 33.7 - AC N.A. N.A. N.A. N.A. 25.0 24.2 23.4 23.0 23.4 N.A. - DC W.A. N.A. N.A. H.A. 2615 19.5 18.7 18.0 17.4 17.9 - All Traction 18.3 18.4 18.5 20.1 19.7 19.6 19.5 19.37 20.8 21.4 15. Average epeed of through freight trains (kaph) - Stem 15.6 15.5 15.9 16.5 16.3 15.8 15.2 15.0 14.9 14.6 - Diesel 22.4 22.3 22.3 23.3 23.3 21.9 21.4 21.5 22.7 23.0 - Electric Total 22.6 22.5 23.7 m37C N.A. N.A. 23.6 23.0 23.4 23.9 - AC N.A. N.A. N.A. N.A. 25.1 24.3 23.9 23.2 23.7 - - DC N.A. N.A. N.A. N.A. 21.0 19.6 18.9 15.6 17.2 15.2 - All Traction 21.1 21.0 21.6 2'.2 22.5 22.1 21.7 21.7 22.7 23.1 16. Average lead of a ton of freight (km) o30 651 636 626 659 663 691 695 687 472 17. Wagon turnaround (days) 15.0 14.6 13.5 13.0 13.3 14.3 15.1 15.4 13.3 12.5 Notes: Underscored figures represent the teat perforacle dirLn g the nsie year perlod. Waons ..re beed on standard 4-wbhel eqoivalent. 22 tes for NC and 14-4 tone for eC. 2/ Proveidonal figures. 2/ Baginning In 1978179 the matbd of calculatieg avaitability baa hoes ch-agd, thue the atatietica arm nOt comparable to the poet. Note Importantly. percent availability does _ot reflect actual reliability and effectivenese of the IocinLtvoa. 4/ UntiL 1976177 eleCtriC loCative PerformaCe statietic were compiled fOr the entire locomotve fleet. Beglnnig Lin 1977/75, teby bhe bean separated Into AC end DC typo of locetivee to abDw tbher amparative mrito. 3/ Numbere of bhurs esnine avallable ad woretd p4r day. Source: Indian ailnay April 1984 -8e- Table 2 Pam. 2 of 2 . t luwoar,t oflCT11 OeAtiD StetieticsW A101/ IIJC rw t 9t-Meta tre Ga/ g 197374 i lt7/VS 1975/75 1916/77 till/fl 1975/li 1979/5 1950/81 Lilt/az 1952/53 }/ 1. Perntags of aevioeble - Steam 53.25 85.25 1.45 56.37 55.42 85.88 53.53 83.5 53.2 54.3 - DLesel 7.71 56.35 65.33 88.35 87.12 87.23 55.57 67.9 54.3 63.1 - lectric 5.43 37.90 83.00 53.00 80.00 80.00 54.30 53.1 U4.5 85.0 2. Percentae of serevieabls passeeger veshiale (2) 55.41 57.13 88.43 59.39 *i.50 59.5I 85.45 87.2 55.3 59.1 3. Percatage of servfosbla usenm 94.96 94.51 13.65 96.00 96.o9 93.56 95.27 94.1 i2.9 91.3 4. Ensue * 10K per day par engine in use (Ka) -Passenger - Sten 214 205 215 23 213 206 200 200 160 US - Diestl 361 556 533 575 561 374 350 541 565 553 - Zlecttri 375 361 401 431 419 411 403 400 421 - Freight - Broew 115 117 120 125 123 113 113 107 109 110 - Diesal 239 272 285 344 305 285 277 277 334 333 - Elect1U 248 232 223 II 211 211 207 206 213 214 5. Gross trailing Load per freight train (ton) 753 800 500 785 SoD 535 e41 871 591 905 6. Iet Tonnage per freight trais (ten) 405 422 413 413 423 451 467 457 304 520 7. Vage - per day per ago. to use (ha) 50.9 53.7 36.4 36.1 37.5 52.7 49.7 47.3 47.5 50.4 5. Net ton ha psr wasg per day 482 28 545 370 570 343 534 322 334 576 9. Cross ton km per freight-trin hour 1I,336 11,300 11.109 11.097 11,164 11,495 11,780 12,233 13,493 1U.233 10. neot ton h per freight-train hour 5,516 65669 6423 6,3356 6,615 6,915 7,113 7,362 6.413 8,987 XI. Prcentag of paseenger traino arriving on tie (1) 54.44 83.61 58.7 94.1 92.3 91.7 83.3 85.9 58.3 59.6 12. Average waon load (ton) 12.7 13.2 13.3 13.6 13.7 13.8 14.1 15.1 15.3 13.4 13. Locomotive utilUecton (C) 4/ - Stem 35.6 33.5 41.7 41.3 40.8 35.0 36.9 26.3 34.7 36.2 - Dledse 66.3 68.8 74.2 74.5 72.9 72.1 70.5 72.1 76.3 50.4 - zlectric 47.5 43.0 33.3 38.3 61.7 39.2 53.5 54.3 33.3 3171 - All Traction 41.6 39.4 45.4 45.4 W4E0 42.5 41.5 41.5 41.2 l.A. 14. Avrage apeed of all freight traiue (kph) - *Sea_ 12.9 12.5 12.1 12.2 11.9 11.4 11.2 10.5 10.9 11.5 - Diesel 19.0 11.7 15.3 19.1 18.5 18.4 18.3 15.4 15.7 18.7 - Zlectric 21.3 22.5 20.0 19.4 16.5 1.1 15.0 16.8 17.8 U8.1 - All Tractlon 13.5 13.2 14.9 13.2 15.0 14.5 14.8 15.1 16.1 16.5 13. Average speed of through freight trati (Ckmpb) - Stem 15.5 14.4 14.1 14.1 13.7 12.7 12.1 11.3 11.3 11.7 - Diesel 19.3 19.0 18.8 19.2 19.0 18.6 18.3 19.5 19.1 19.2 - Electric 7 22.5 20.0 19.4 16.8 17.1 1U.0 16.a 17.5 18.1 - ALI Traction 15.1 17.4 17.3 17.4 17.4 16.9 14.7 16.2 17.9 15.2 16. Average lead of a ten of freight (ha) 462 512 499 4538 473 507 521 536 - 535 17. vagon turaround (days) 12.3 12.0 11.6 11.1 11.5 12.8 14.1 15.2 14.1 13.8 Nonets Underscore! figurs repre-et the beat perforance during the ne year period. 1/ Yoe ae base on standard 4-wheat equivalent, 22 tos for mg and 14-6 tons for NC. 2/ Proeioemal fianre.
Groupe de la Banque mondiale · Staff Appraisal Report
India - Railway Electrification and Workshop Modernization Project
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