Zambia - Fourth Railway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 5256-ZA STA.FF APPRAISAL REPORT REPUBLIC OF ZAMBIA FOURTH RAILWAY PROJECT March 5, 1985 Eastern and Southern Africa Regional Office Transportation 1I Division This document has a re"tricted distribution and may be used by recipients only in the performance of their official duties. Its contents man not otherwise be disclosed w-ithout World Bank authorization.  CURRENCY EQUTVALENIS Currency Uriit = Kwacha K1.00 = US$0.53 US$1.00 K1.90 FISCAL YEAR 1/ April 1 to March 31 WEIGHTS AND MEASURES 1 meter (in = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 square kilometer (km2) = 0.386 square miles (sq ml) 1 metric tori (tonne) = 2.204 pounds (lb) 1 liter (1) = 0.22 Imp. gallor GLOSSARY OF ABBREVIATIONS CH = Contract Haulage, Ltd. CIDA = Carnadiarn International Developmerit Agericy CPU Contingerev Planning Unit FINNIDA Firinnsh Interriatiorial Developmerit Agency FRG = Federal Republic of Germany GNP = Gross National Product GOZ = Government of Zambia MA = Ministry of Agriculture iPIC = Ministry of Power. Transport arid Communications MWS Ministry of Works and Supply NCDP National Commission for Development Planning PTC Post and Telegraph Corporation RSA Republic of South Africa RIC Road lraffic Commissioner SIDA Swedish International Development Authority Tazara = Tanzania-Zambia RaLlway Authority TCC - ransport Coordination Committee ZA = Zambia Airways Corporation ZIMCO = Zambia Iridustrial arid Mining Corporation, Limited ZR Zambia Railways ZiRS = Zambia-Tanzania Road Services tkm lo=rire Kilometers cf = Conversion Factor 1/ Years given in this report refer to the 12 months ending orn March 31 of the year mentioried.  FOR OMCIL USE ONLY REPUBLIC OF ZAMBIA FOURTH RAILWAY PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. I. Credit and Project Summary .................. 1 II. The Transport Sector ..................................... 4 A. Economic and Geographic Background ................ 4 B. The Transport System ................................. 5 Ci) Railways ....... ................. 5 (ii) Zambia Railways ............................... 5 C. Foreign Trade Routes ................................. 6 D. Transport Policy and Planning ..... ............ 6 (i) The Competitive Environment ......... .......... B (ii) Regulation ................... ................. B (iii) Taxes and Duties .............. .. .............. B E. Past Bank Group Projects in the Sector . .............. 9 III. Zambia Railways and Proposed Project Description .... ..... 11 A. Zambia Railways ...................................... 11 Ci) General ....................................... 11 (ii) Organization. Management and Staff .... ........ 11 (iii) Manpower Development and Training .... ......... 12 Civ) Track ......................................... 12 (v) Signalling and Telecommunications .... ......... 14 (vi) Locomotive and Rolling Stock ..... ............. 14 (vii) Workshops and Depots .......................... 15 (viii) Operations ................... ................. 16 (ix) Freight Traffic ............................... 17 (x) Passenger Traffic ............................. 18 B. The Proposed Project ............... .. ................ 18 Ci) Rational for Bank Support ..................... 18 (ii) Identification and Preparation ................. 19 (iii) Objectives and Description of the Project 19 This report has been prepared by Messrs. Dick (Sr. Economist), Masthagen (Sr. Railway Engineer), Rollins (Sr. Financial Analyst), and Segerstrom (Technical Educator), on the basis of their findings during an appraisal mission in Zambia in February 1984. 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 disdosed without World Bank authorization.  -ii- Table of Contents (Cont'd) Page No. IV. Implementation ........................................... 22 A. Project Cost and Financing ........................... 22 B. Implementation . ...................................... 23 C. Procurement .......................................... 23 (i) Goods ......................................... 24 (ii) Technical Assistance ...... .................... 24 D. Disbursements ................................................. 24 E. Project Monitoring ............ ...................... . 25 F. Budget, Accounts, Audit and Evaluation ............... 25 G. Economic Costs and Benefits, and Project Risks ......... ............................. 26 H. Financial Evaluation ................................. 27 V. Agreements Reached and Recommendations ................... 30 ANNEXES 1 Organizations in Transport Planning and Policy 2 Traffic 3 Project Details 4 Overview of Technical/Vocational Education and Training 5 Implementation Schedule 6 Operational Targets (Action Plan for Achieving Operational Targets) 7 Economic Costs and Benefits 8 Financial Evaluation 9 Documents in Project Files MAPS IBRD 14252-Ri and 14253-Ri  REPUBLIC OF ZAMBIA FOURTH RAILWAY PROJECT SIAFF APPRAISAL REPORT I. CREDIT AND PROJECT SUMMARY Borrower: Republic of Zambia Amount: Development Credit of SDR 20.5 million (US$20.0 million equivalent) Terms: Standard On-Lending Terms: The credit will be on lent to Zambia Railways for 20 years including five years of grace at 12% per annum. Zambia Railways will bear the foreign exchange risk. Project Description: The proposed project is a continuation of the Third Railway Project which will be completed in June 1986. The project's orientation is firmly towards improved utilization of existing assets. The exceptions are the purchase of a small number of new wagons, to make up a deficit which cannot be filled by rehabilitation of the existing fleet, and the substitution of radio communications for "open-wire", which is essentially a changeover to improve technology. The project also contains studies leading to long-term improvements in the efficiency of the railway services, continued support of ZR training program and technical assistance in specific areas critical to the rai!way's operations, and for project implementa- tion. The project will enable the transport sector to fulfill its function of transporting domestic and external traffic at minimum cost, by enabling the railway to maintain and slightly expand its capacity and, thus, avoid the need of the productive sectors to have recourse to trucks for the movement of bulk commodities.  - 2 - The physical and economic risks of the project are minimal. The project concentrates on the highest priority items, and the most cost-effective means of maintaining, not expanding, the railways capacity to handle traffic on offer. There is little likelihood that traffic will not, on average, reach forecast levels. Equally, productivity improvements have been forecast at a modest level. Institutional and financial improvements could be slower than expected. Estimated Cost: Local 1/ Foreiqn Total (US $ Million) A. Track 0.7 5.2 5.9 B. Signalling & Telecommunication 1.8 9.2 11.0 C. Rolling Stock 1.9 7.6 9.5 D. Workshops and Equipment 0.4 1.2 1.6 E. Spare Parts 3.4 21.1 24.5 F. Operations Facilities 0.6 2.2 2.8 G. Training 0.7 2.7 3.4 H. Technical Assistance 1.4 5.2 6.6 I. Total Without Contingencies 10.9 54.4 65.3 J. Price Contingencies 5.4 12.4 17.8 GRAND TOTAL 16.3 66.8 83.1 1/ Taxes amounting at US$2.8 million included. Financing Plan: IDA - 20.0 20.0 AfDB - 20.0 20.0 SIDA - 5.2 5.2 USAID - 5.0 5.1 Belgium - 4 0 4 0 KfW - 1.6 1.6 ZR/GOZ 16.3 11.0 27.3 16.3 66.8 83.1  -3- Estimated Disbursement of IDA Credit: IDA FISCAL YEARS 86 B7 88 89 ---