Romania - Land Transport Project

Document of The World Bank FOR OFFICIAL USE ONLY s 7t; > 7t Report No. 3344a-RO ROMANIA STAFF APPRAISAL REPORT OF A LAND TRANSPORT PROJECT June 15, 1981 Projects Department Europe, Middle East and North Africa Regional Office *~~~~~ 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 = Leu, Lei (plural) Lei 18 = US$1.oo up to December 31, 1980 Lei 15 = US$1.00 from January 1, 1981 WEIGHTS AND MEASURES Metric System British/US System '1 meter (m) = 3.2808 feet (ft) 1 kilometer (km) = 0.6214 mile (mi) I square kilometer (km2) = 0.3861 sq. mile (mi2) I metric ton (m ton) = 0.9842 long ton (lg ton) ACRONYMS AND ABBREVIATIONS (Romanian equivalent, used in legal documents, shown in parenthesis) CFR (DEPCF) Romanian Railways (Departamentul Cailor Ferate) DR (DD) Directorate of Roads (Directia Drumurilor) EDI Economic Development Institute ER Economic Return FTE Foreign Trade Enterprise FYR First Year Return GNP Gross National Product IB Investment Bank of Romania ICB International Competitive Bidding - (ICPTT) Technological Research and Design Institute for Transport (Institutul de Cercetari si Proiectari Technologice in Transporturi) LCL Less than Car Load MTTc (MTTC) Ministry of Transport and Telecommunications NdC Nota de Comanda RCC (CCCF) Railway Construction Central (Centrala de Constructii Cai Ferate) RDI (IPCF) Railway Design Institute (Institutul de Proiectari Cai Ferate) RoDI (IPTANA) Road Design Institute (Institutul de Proiectari Transporturi Auto Navale si Aeriene) RTC Road Transport Central RWC Railway Workshop Central SCP State Committee for Prices SPC State Planning Committee TU Traffic Unit SOCIALIST REPUBLIC OF ROMANIA FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY ROMANIA APPRAISAL OF A LAND TRANSPORT PROJECT Table of Contents Page No. I. THE TRANSPORT SECTOR. . . . . . . . . . . . . . . . . . . . 1 A. The Transport System . . . . . . . . . . . . . . . . . 1 B. Transport Planning, Policy and Coordination. . . . . . 3 C. Tariffs and Costs. . . . . . . . . . . . . . . . . . . 5 D. Previous Bank Involvement. . . . . . . . . . . . . . . 5 II. THE RAILWAY AND HIGHWAY SUBSECTORS . . . . . . . . . . . . 6 A. Traffic Trends and Forecasts . . . . . . . . . . . . 6 - General . . . . . . . . . . . . . . . . . . . . . . 6 -Freight .... . . . . . . . . . . . . . . . . . . 6 - Passengers. . . . . . . . . . . . . . . . . . . . . 7 B. Railways - Headquarters Organization . . . . . . . . . . . . . 7 - Regional Organization . . . . . . . . . . . . . . . 8 - Centralized Activities. . . . . . . . . . . . . . . 8 - Uneconomic Lines and Services . . . . . . . . . . . 8 - Railway Property. . . . . . . . . . . . . . . . . . 8 - Operations. . . . . . . . . . . . . . . . . . . . . 10 - Staff Quality . . . . . . . . . . . . . . . . . . . 11 - The Railway Investment Plan (1981-85) . . . . . . . 11 - Financing Plan. . . . . . . . . . . . . . . . . . . 14 C. Highways - Organization. . . . . . . . . . . . . . . . . . . . 15 - Planning. . . . . . . . . . . . . . . . . . . . . . 15 - Engineering . . . . . . . . . . . . . . . . . . . . 15 - Construction. . . . . . . . . . . . . . . . . . . . 16 - The Network .... . . . . . . . . . . . . . . . . 16 - Maintenance .... . . . . . . . . . . . . . . . . 16 - Road Transport. . . . . . . . . . . . . . . . . . . 17 - Highway Investments (1981-85) and Financing . . . . 18 This report was prepared by Messrs. L. L. Alston (Railway Engineer); R. J. Mulligan (Highway Engineer); M. K. Ganguli (Economist); R. W. MacDonald and 0. S. Murthy (Consultants) on the basis of an appraisal mission to Romania during September/October 1980, updated during April 1981. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents mav not otherwise be disclosed without World Bank authorization.  - ii3 - Page No. III. THE PROJECT .... . . . . . . . . . . . . . . . . . . . 19 A. Project Objectives. . . . . . . . . . . . . . . . . . 19 B. Project Preparation. 20 C. The Project Description and Cost Estimates. . . . . . 20 - Railway Components. . . . . . . . . . . . . . . . . 21 - Highway Components. . . . . . . . . . . . . . . . . 23 - Technical Assistance. . . . . . . . . . . . . . . . 24 D. Project Engineering . . . . . . . . . . . . . . . . . 24 E. Financing .....cae. . . 25 F. The Loan, the Borrower and Beneficiaries. .26 G. Project Implementation. . . . . . . . . . . . . . . . 27 H. Procurement ..28 I. Disbursements ... 29 IV. ECONOMIC EVALUATION ..30 A. General ..30 B. Project Costs and Benefits. . . . . . . . . . . . . . 31 C. Economic Return ... . . . . ...... . . . . . . 32 D. Project Risks . . . . . . . . . . . . . . . . . . . . 34 V. FINANCIAL EVALUATION FOR RAILWAYS . . . . . . . . . . . . 34 A. General . . . . . . . . . . . . . . . . . . . . . . . 34 B. Past Financial Performance. . . . . . . . . . . . . . 36 C. Future Financial Position . . . . . . . . . . . . . . 40 VI. AGREEMENTS REACHED AND RECOMMENDATIONS. . . . . . . . . . 44 ANNEXES 1. Traffic Trends and Forecasts . . . . . . . . . . . . . . . 45 2. Design Characteristics of Railway Works. . . . . . . . . . 48 3. Highway Component of the Project . . . . . . . . . . . . . 50 4. Outline of Terms of Reference for Traffic Optimization Study .... . . . . . . . . . . . . . . . . . . . . . . 54 5. Design Characteristics of Project Roads. . . . . . . . . . 57 6. Related Documents and Data Available in the Project File . 58 7. Main Accounting Assumptions (Railway Component). . . . . . 62 TABLES 1. Freight Traffic by Mode of Transport, 1960-80 . . . . . . 65 2. Passenger Traffic by Mode of Transport, 1960-80 . . . . . 66 3. Commodity Composition of Rail and Road Traffic - 1972, 1978-1980. . . . . . . . . . . . . . . . . . . . . . . . 67 4. Production, Consumption, Exports and Imports of Oil and Oil Products, 1970-79 . . . . . . . . . . . . . . . . 68  - iii - Page No. TABLES (con't) 5. Transport Tariffs for Railways and Road Transport (1980). . . . . . 69 6. Railway Freight and Passenger Traffic - Actual 1970-80, Plan 1981-85 .70 7. Modal Traffic Trends (1960-80) and Plan Forecasts (1981-85) . . . . 71 8. Selected Operating Statistics for Romanian Railways (1970-1980) . . 72 9. Traction and Rolling Stock: Age Statement . . . . . . . . . . . . . 73 10. Diesel and Electric Locomotive Acquisition During 1978-1980 and their Total Planned Procurement During 1981-85 . . . . . . . . 74 11. Freight Car Acquisition During 1978-1980 and Total Procurement of Cars for 1981-85. . . . . . . . . . . . . . . . . . . . . . . . 75 12. Comparison with Other European Railways Year 1977 . . . . . . . . . 76 13. Railways Staff and Productivity .77 14. Railway Investment Plan .78 15. Track Overhaul - Priority Sections for 1981-85. . . . . . . . . . . 79 16. Financing Plan for Railways Five Year 1981-1985 Capital Investments 80 17. Public Roads - 1977, 1978, 1980 . . . . . . . . . . . . . . . . . . 81 18. Modernization of the Highway System 1960-85 Actuals 1960-79: Forecasts 1980-85 . . . . . . . . . . . . . . . . . . . . 82 19. Highway Expenditures 1976-80. . . . . . . . . . . . . . . . . . . . 83 20. Average Daily Traffic on Selected National Roads - 1978 . . . . . . 84 21. Motor Vehicle Fleet 1972-1978 .85 22. Production of Motor Vehicles 1960-79. . . . . . . . . . . . . . . . 86 23. Transport Sector Investments. . . . . . . . . . . . . . . . . . . . 87 24. Details of Items on which Railway Part of the Loan could be Disbursed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 25. Quantities and Railway Component of the Project Costs at Romanian Investment Plan Prices ... . . . . . . . . . . . . . . . . . . . 89 26. World Bank Estimate of Project Cost - Railway Component . . . . . . 90 27. Cost of Highway Component ... . . . . . . . . . . . . . . . . . . 91 28. Traffic on Lines to Be Doubled and Electrified. . . . . . . . . . . 92 29. List of Goods Eligible for Disbursement from Highway Portion of the Loan .... . . . . . . . . . . . . . . . . . . . . . . . 93 30. Project Implementation Schedule - Railway Components. . . . . . . . 94 31. Project Implementation Schedule - Highway Components. . . . . . . . 95 32. List of Goods Eligible for Disbursement from Railway Part of the Loan .... . . . . . . . . . . . . . . . . . . . . . . . . . 96 33. Estimated Schedule of Disbursements ... . . . . . . . . . . . . . 97 34. International and Domestic Price of Basic Elements Considered for Economic Analysis. . . . . . . . . . . . . . . . . . . . . . . 98 35. Economic Returns and First Year Returns . . . . . . . . . . . . . . 99  - iv - Page No. TABLES (con't) 36. Romanian Railways (CFR) Income Statements 1974 to 1985 Actuals 1974-80; Plan 1981-85. . . . . . . . . . . . . . . . . 100 37. Allocation of Expenses between Passengers and Freight 1977-79 101 38. Romanian Railways Cash Flow Statements 1976-1985 (Actuals 1976-80; Plan 1981-85). . . . . . . . . . . . . . . . 102 39. Romanian Railways Balance Sheets as at December 31 (Actuals 1976-80; Plan 1981-85). . . . . . . . . . . . . . . . 103 CHART IBRD 22377: Organization of the Ministry of Transport and Telecommunications (MTTc) MAP IBRD 15462R: Socialist Republic of Romania - Land Transport Project  ROMANIA I. THE TRANSPORT SECTOR A. The Transport System 1.01 Despite the existence of extensive mountainous areas, Romania has a fairly well developed and evenly distributed transportation network (Map IBRD 15462R) that provides access to all major centers of economic activity. The transportation network includes about 11,000 route-km of railways, 73,500 km of roads, one major seaport, four main commercial river ports and a sizeable network of inland waterways and pipelines. The Danube river, which is navi- gable, flows through 1,075 km of Romania, mainly along its southern border. Ninety percent of the foreign trade is handled through the port of Constanta on the Black Sea. Pipelines have been the principal carriers of petroleum and natural gas but have a limited and specialized role. Air and coastal shipping are relatively unimportant for inland transport. 1.02 Romania's economy has grown rapidly since World War II. Increasing economic activity and personal incomes have led to a high but declining growth rate in transport demand: 10.5% and 10.2% yearly for freight and pas- sengers in the 60s, down to 5.5% and 8.4%, respectively in the 70s (Annex 1). 1.03 The backbone of Romania's internal freight transportation is the railway network, which has the crucial responsibility for moving traffic over relatively long distances from the various concentrated centers of manu- facture and trade to important consumption centers. Although road traffic is increasing fairly rapidly in tonnage, it functions mainly as a short-haul mover. In 1960, railways carried more than 80% of freight (in ton-km) which by 1980 declined to 67% (Table 1), with a corresponding increase in the per- centage carried by road. The Danube river transport and pipelines account for about 2% and 6% of ton-km respectively. It is significant that for pas- senger traffic, the railways' former dominance passed to roads in the late 1960s and the current rail/road split is about 27/73 (Table 2). 1.04 A detailed breakdown of the transport of goods by commodity groups shows that in terms of ton-km, the railways are still the main carrier of all commodities without exception (Table 3). The volume of quarry and ballast products carried by road transport is, however, conspicuously high, since working sites can mostly be reached by road only. Road transport is also significant for the movement of higher value goods, such as machinery and equipment, chemical products and processed foodstuffs. 1.05 Romania's development efforts have been concentrated on heavy industry as the basis for creating an industralized society. The transport  - 2- sector has first of all, therefore, been required to meet the needs of heavy industry and associated large construction projects. The needs of light industry, agriculture, and passenger transport have been secondary. By international standards, Romania has a high number of employees per enter- prise and more than 80% of gross industrial production and the industrial labor force is concentrated in large enterprises, each employing more than 1,000 persons. Such enterprises are dispersed country-wide in response to a policy of uniform regional development. Distribution of industrial and con- sumer goods is made from distribution centers which have been established in every "judet" (county). While transport to and from those centers within the judet is by road, this pattern of geographically concentrated development of production and consumption centers has favored railways because of their ability to handle dense freight traffic flows from one center to another. To cope with such flows these centers are generally well equipped with sidings and handling facilities for bulk traffic. About three-quarters of railway traffic moves from siding to siding. The present high technical efficiency and quality of service of the railways is a further contributing factor to their greater use. In particular, the Romanian Railways (CFR) have higher labor productivity and make more intensive use of their capital assets, both infrastructure and rolling stock, than most other railways. Furthermore, the production of consumer goods and light manufacturing industries which normally favor the use of road transport, are less developed. As such indus- tries grow in the future, dependence on road transport may be expected to increase. 1.06 The growth of the transport sector has been accompanied by more than a threefold increase in its employment during the last three decades. However, the share of the transport sector as a whole in the national labor force has remained steady at about 6-7% during those years. There has been a substantial shift in employment among transport modes; the share for railroads declined from 76% of total transport employees in 1950 to about 40% in the late 70s, while the percentage share of road transport employees increased from 4% to more than 40%. 1.07 Sea transport has been used exclusively for foreign trade and there is little coastal traffic. Over the last two decades an annual average of 65% of all exports and about 40% of all imports have been carried by sea. With the exception of crude oil, most movements to and from the Constanta port are by rail. Completion of the Danube-Black Sea Canal by the end of 1984 will add significant transport capacity to serve the growing economy, and will facilitate movement of the projected traffic volumes to and from Constanta. This canal is the major component of a larger program which also includes construction of deep-water facilities at the port of South Constanta-Agigea, designed to handle large bulk carriers. 1.08 Overall, transport accounted for less than 10% of Romania's total investments during 1960-80, while in other countries it generally accounted for about 15-25%. Thus, Romania's transport investments have been low by international comparison. Transport agencies are granted only few resources for expansion. Instead, efforts are made to intensify the use of existing  - 3 - facilities. In practice, efficient transport in Romania aims at low resource cost movement primarily for bulk materials among the key industrial centers. B. Transport Planning, Policy and Coordination 1.09 The planning process in the transport sector follows the basic iterative approach used for all of Romania's centrally planned economy. Transportation projects included in the Plan originate both at the micro-level through the enterprises and county authorities (especially for municipal and local roads) and at the macro-level through the State Planning Committee (SPC). The demands for transport by the economic enterprises and sectors are reconciled by the SPC with the existing capacities and expansion plans of the transport enterprises. The latter are determined after a review of all expansion plans and the setting up of priorities within the allocated investment budget. Review and coordination of new investment proposals are the responsibilities of the Ministry of Transport and Telecommunications (MTTc) which submits its program to the SPC. 1.10 Responsibility for all transport modes other than aviation and pipe- lines rests with the MTTc. Aviation has a separate Ministry and pipelines are the responsibility of the Ministry of Mines, Petroleum and Geology. MTTc's organization also includes construction and maintenance enterprises (Chart). The role of officers and staff of the Ministry's headquarters is limited mainly to planning, coordination, design, administration and budgeting. For construction and actual transport operations, much authority is delegated to regional units and to "Centrals"'/ and the enterprises within them. 1.11 In Romania the principal objectives of transport policy are the efficient provision of services with the complementary development of the different modes, the lowering of the share of transportation costs within the total costs of the economy, and reduction of energy consumption. To these ends, the authorities are fostering the use of rail and water transport for long and medium distance commodity hauls, and of road transport for short hauls, the development of integrated transport facilities (e.g., containers), and the use of common carriers in preference to transport on own account. 1.12 Energy has become a critical subsector for the Romanian economy. Having started to import oil in 1968, Romania became a net importer of energy by 1977, and in 1979 was expected for the first time to import more crude oil than was produced (Table 4). In 1979, rail and road transport consumed about 1/ The Central is an economic unit subordinate to but separate from a ministry, with responsibilities for planning, supervising and coordinating the operations of enterprises under its jurisdiction. It is also responsible through subordinate enterprises, for research, design and foreign trade.  - 4 - 2.6 million tons of oil products (about 0.8 million tons of gasoline and about 1.8 million tons of diesel oil/heavy oil) accounting for about 14% of the total domestic consumption of refined oil products. Special measures were taken in July 1979 to curb fuel consumption, by raising gasoline prices for private cars to Lei 7.50 (US$0.50) a liter (the second increase in 1979), restricting weekend driving, reducing the number of taxis and official cars and requiring foreign tourists to pay for gasoline in convertible currency. Restrictions were also imposed on the movement of trucks, particularly "own transport," while gasoline rations for state, cooperative and public property cars were halved. Diesel fuel which was priced at about Lei 1.7 (US$0.11) per liter for railways and Lei 1.1 (US$0.07) per liter for public road transport was increased to Lei 2.23 (US$0.15) per liter for both modes from January 1, 1981,1/ still substantially lower than the imported price of crude oil (US$0.23 per liter). By comparison, in April 1980, the international price of diesel fuel was about US$0.42 per liter. Hence, although the role of public transport is thus given dominance, the constant overcrowding of buses and trains is evidence that passenger transport has not received the resources it deserves (para. 1.08). Further, the revenue foregone by the Government due to lower fuel prices to the railways and road transport enterprises is recovered to a substantial extent in the Romanian system through the benefits (profits) of these State-owned enterprises. 1.13 In order that the use of transport may be coordinated each major user of transport services is required to specify his transport needs approximately a year in advance. The movements of bulk commodities, which account for 70% of traffic, are subject to an optimization process which links producers and consumers in order to minimize transport costs. Producers of other com- modities are linked to specified regions. For each commodity (bulk or other) there is a coordinator at the Ministry responsible for its production/ distribution, who determines these linkages, selects the transport mode, and informs accordingly the beneficiaries (producers and consumers) who enter into contracts. His selection is mandatory, subject, however, to appeal by the transport beneficiaries. 1.14 To attain these ends, coordinators select transport modes on the basis of a computer program which has been prepared by MTTc. The program takes into account tariffs (as a proxy for costs), distance, transit time, and, reportedly, packaging costs, damage, energy consumption and transport capacity constraints. However, it is not clear that the present traffic split is optimal, because: (a) capital for investment in transport facilities and in beneficiaries' inventories is available either free or at a very low rate of interest; (b) the methods of recovery of infrastructure costs (both capital and maintenance) differ between modes; 1/ Price changes made in context of new regulation (para. 2.24)  -5- (c) costs, and consequently tariffs, are assessed on a national or system-wide basis rather than on a route and service-specific basis; and (d) there are major differences between Romanian and border prices. 1.15 The proposed project includes, therefore, as an important component, a study of traffic optimization, to be completed by the end of 1983. The study would be designed to establish an appropriate basis for developing a policy framework (including tariffs) for the economic development of the transport sector, and for the efficient utilization and coordination of transport facilities. C. Tariffs and Costs 1.16 Rail, road and inland water transport tariffs are prepared by the MTTc and approved by the State Committee on Prices (SCP). Rail freight tariffs had been "ad valorem," high valued commodities subsidizing others, until 1974 when a cost-based system was introduced. The principal criteria for rail freight rates are wagon type, net loading and length of haul. Basic movement costs per km are calculated for each category on a system-wide average basis, without allowance for difficult terrain or other adverse con- ditions which are route-specific. A further margin is added to allow for a 15% planned surplus for the system as a whole. 1.17 Road tariffs are also cost-based, the main criteria being truck type, net load and length of haul. However, road users, unlike rail users, do not make a direct contribution to the maintenance of roads which are provided as a public utility. For costing purposes, roads are divided into six categories, each with a coefficient ranging from 0.9 for a motorway to 1.6 for the worst conditions on construction sites. There are separate groups of tariffs for local services, intercity services, large parcel traffic, refrigerated/ insulated vehicles and car transporters. A comparison of rail (wagon load and LCL) and road freight rates is given in Table 5. D. Previous Bank Involvement 1.18 The proposed project will be the second in the transport sector and the first for rail/road development. In January 1980 the Bank approved a loan of US$100 million equivalent to assist in the construction of a 64 km canal from Cernavoda on the Danube to South Constanta-Agigea on the Black Sea. This p'roject will provide an energy efficient and cost effective means of trans- portation, and enhance the role of inland waterways. The project is well in hand and progress to date is satisfactory.  - 6 - 1.19 In addition to lending, the Bank (through EDI) and in collaboration with the country's principal management training center, has assisted Romania by conducting training courses for local officials on economic and financial evaluation in the industry and transport sectors, first in Belgrade in 1973 (industry only), and, since 1975, annually in Bucharest. MTTc staff who at- tended these courses, as well as EDI staff, have been prime movers in preparing the proposed project. II. THE RAILWAY AND HIGHWAY SUBSECTORS A. Traffic Trends and Forecasts General 2.01 Annex 1 provides a detailed analysis of surface traffic trends during the past 20 years (Tables I and 2) and of forecasts for the five-year plan period, 1981-85 (Tables 6 and 7). These are discussed below. Freight 2.02 Total freight traffic is forecast to increase by about 35% (or 6.3% p.a.) from 102 billion ton-km in 1980 to 138 billion in 1985. Over this period the increase in tonnage is about 19% while the average haul lengthens by about 13% mainly due to the use of the canal by long-haul and transit traffic. At 21 billion ton-km in 1985 the share of river and canal traffic increases from 2-15%. Rail traffic at 78 billion drops from 64-57% and road traffic at 32 billion drops from 28-23%, while pipelines at 7 billion fall from 6-5%. 2.03 For the five-year plan period 1981-85 the forecast growth rate (in ton-km for all modes) of 6.3% p.a. is reasonable when compared to the overall growth rate of 6-7% p.a. expected for the economy as a whole. The railways' basic role in carrying about two-thirds of the present (and still increasing) industrial load is unlikely to change substantially except in those limited areas and for those commodities in the zones of influence of the Danube-Black Sea Canal (paras. 1.07 and 1.18) which is scheduled to be opened during 1983. However, as emphasis in development continues to shift from heavy to the lighter industries, more low-volume, high-value traffic suitable to road transport is becoming available. 2.04 The 1980-85 growth rate of 3.8% p.a. for rail freight is considered attainable because of assured bulk movements of such commodities as coal, in regions not served by the improved river and canal facilities. The forecast rate of 2.4% p.a. for road freight appears consistent with present energy policies, but is likely to be exceeded as light and medium scale industries develop and call for increased use of road transport. River and canal tonnage  is forecast to increase fivefold by 1985, consistent with earlier forecasts for the canal project. Passengers 2.05 Total passenger traffic is forecast to increase by about 21% (or 3.9% p.a.) from 85 billion passenger-km in 1980 to 103 billion in 1985. As the average journey length is not expected to change, this increase applies to the numbers of passengers carried. At 78 billion passenger-km in 1985, the roads' share increases from 73-76% while rail, at 25 billion, drops from 27-24%. The average total growth rate of 3.9% p.a. comprises 1.4% for railways and 4.7% for roads both of which are considered attainable in the light of a rapid and continuing urbanization (50% of 1980 population compared with 34% in 1965) augmenting both intercity and suburban passenger movements. With the increas- ing production of passenger cars (para. 2.51) the projected growth rate for road traffic, in particular, may prove to be conservative. B. Railways Headquarters Organization 2.06 Under the Romanian system of centralized State control, the railways' headquarters organization is contained within MTTc under collective manage- ment. Of six groups within the Ministry, each headed by a Ministerial Associate, four are concerned with railways. The First Ministerial Associate (Deputy Minister) is responsible for railway operations in the nine Regions. A second deals with the centralized Directorates for traction and rolling stock, fixed installations, revenue control, data processing and restaurant-car and sleeping-car services. A third looks after finance and prices and oversees the Railway Workshops "Central" (RWC). The fourth is concerned with the Railway Construction "Central" (RCC) and the Railway Design Institute (RDI). These latter two Ministerial Associates also share responsi- bility for the road subsector so that the machinery for coordination, rather than competition, between the two modes appears inherent in the Ministerial structure. Two other Ministerial Associates are concerned with maritime and river transport and with posts and telecommunications. The Council of the Ministry, its highest decision-making body, also intervenes in the coor- dination process. The Council and its Executive Bureau are chaired by the Minister and include all Ministerial Associates and certain heads of departments and units. The Railway Department, the controlling body of CFR, consists of the units responsible to the first two Ministerial Associates (Chart).  -8 Regional Organization 2.07 Administration of the railways is deployed into nine Regions, managements of which are responsible to the First Ministerial Associate at the MTTc. A typical region is governed by a Workers' Assembly meeting annually and a representative Workers' Council meeting quarterly to review performance against plan. The Council also establishes five-year development plans within the State framework. The Council has an Executive Board which meets every ten days for overall control of policy and operations. The General Manager chairs all meetings and exercises day-to-day control. Each Region produces its own accounts. Centralized Activities 2.08 The RDI is responsible for feasibility studies and detailed engi- neering for railway works. The RCC, one of the principal entities for civil works construction in Romania, executes works for railways, national roads, airports and the Danube ports, and also fabricates precast construction com- ponents such as pre-stressed concrete sleepers. Being part of MTTc, RCC's operation is essentially a force-account one, although it executes work in accordance with a bill of quantities and at unit rates discussed and agreed during the planning process. RCC is capably managed, staffed and equipped. The Investment Bank (IB), the Borrower for the proposed loan (para. 3.28) exercises a general supervisory role over project implementation. 2.09 The RWC has six workshops carrying out periodic maintenance and major overhaul of traction and rolling stock beyond the capacity of regional work- shops. It also includes separate groups for manufacture of components for the repair and modernization of rolling stock and for assembly. RDI, RCC and RWC produce separate accounts. Uneconomic Lines and Services 2.10 Since 1974, three narrow-gauge lines and one standard-gauge line have been closed as a result of reviews made on the basis of line-specific costs and revenues. The next major review is expected about 1982 when the performance of all standard gauge and narrow gauge branch lines will be examined and evaluated. Railway Property 2.11 Track. The CFR operates 11,110 km of route, 95% standard gauge, 22% double tracked and 21% electrified. The track is mainly 49 kg/m rail with welded joints, laid on monoblock concrete or wooden sleepers with crushed stone ballast; 60-65 kg rails are being introduced on main lines during overhaul. Track is generally in good condition, although the very high traffic density (typically 25 million gross tons per main line track) has limited the time available for maintenance and overhaul; both are in arrears and speed restrictions have had to be imposed for months at a time. To improve the situation, CFR are drawing up plans through collaboration with a  - 9 - reputed firm for the manufacture of heavy-duty track maintenance equipment, which would enable CFR to make full use of the limited time available for maintenance and overhaul. During loan negotiations agreement was reached with the Borrower for the introduction of these machines during the project period and for the prompt provision as needed of resources necessary for track main- tenance and overhaul. 2.12 Signalling and Telecommunications. About 70% of the network is equipped with color-light signalling and about 40% with automatic two-way working on double lines. Although only 5% of lines have centralized traffic control, in 71% of the stations signals and points are controlled from a central location at each station. CFR plans to extend the use of automatic block and to install points motors in about 100 more stations during 1981-85. The telecommunications system, though of limited capacity, is modern and adequate for the present needs, and is integrated with the national network. There is radio communication with all main line locomotives, and automatic train stops at all signalled stations. On the whole, the signalling and telecommunications system on the main lines is modern and adequate; however, the extension of automatic route setting at important stations and improved signalling on the branch lines would expedite train movements. CFR plans to install the necessary equipment at a few large stations during the plan period. 2.13 Marshalling Yards. There are 27 major marshalling yards, 14 of which were mechanized with conventional retarders about 30 years ago. Even in very large yards handling about 5,000-6,000 wagons a day, skids are used instead of secondary retarders. The working of the marshalling yards judged by the total time for marshalling, is satisfactory (one hour on reception lines, 40 minutes marshalling a 60-car train and two hours for train formation). CFR expects to further improve wagon movement as a result of the mechanization of the remain- ing 13 yards, during 1981-85. 2.14 Traction and Rolling Stock. In 1979, CFR owned 2,091 diesel and 530 electric standard gauge locomotives, and 68 narrow and broad gauge diesels; 70% of this fleet is less than 11 years old (Tables 8 and 9). Two hundred and fifty-one standard gauge steam locomotives are in service (all over 30 years old), 190 for shunting and the balance for emergency use. Locomotive maintenance facilities are good and the standards of repair are high. To meet the growing traffic demand, as well as to replace outmoded equipment, CFR intends to procure during 1981-85, 350 diesel locomotives and 400 electric locomotives (Table 10). 2.15 In 1979, CFR had about 126,000 freight cars, 41% up from 1970. Fleet capacity had increased by 73% during 1970-79, to 5.2 million tons, as a result of the purchase of larger cars (Table 8). However, half the 1979 fleet consisted of two-axle cars, and of these, the equivalent of 1,800 four-axle cars, generally over 40 years old, were scrapped during 1980 and a further  - 10 - 8,500 cars are to be scrapped during 1981-85 (Tables 9 and 11). During the period, 1981-85, CFR will acquire 31,000 four-axle cars to meet rising traffic and to replace cars to be scrapped. 2.16 Of the 5,500 passenger coaches 1/ available in 1979, 1,200 were over 40 years old (Table 9). Of the latter, 780 are to be scrapped during 1981-85, while CFR will acquire 1,150 new coaches. As the average occupation ratio is about 105%, the additional seating capacity of new coaches (84 in second class compared with 54 in the older two-axle coaches) will, to some extent, relieve the chronic overcrowding. Operations 2.17 In 1980 CFR performed 98.7 billion traffic units. Its traffic density, 15 million gross tons per route-km, is one of the highest in the world. The operational efficiency of the railway has been steadily improving and is generally high, comparing favorably with other European railways (Table 12). Productivity in 1980 was 559,500 traffic units per employee, 14% up from 1975 and expected to increase about 14% to 638,000 traffic units per employee by 1985 (Table 13). Steam traction, which in 1975 hauled 6% of gross ton-km, has been virtually eliminated, except for some shunting and emergency use. Electric traction which hauled 18% of gross ton-km in 1975, has risen to 36%, and is expected to rise to 45% in 1985, partly as a result of further electrification included in the proposed project. 2.18 Consequent to the acquisition of more bogie cars, average car capacity rose by 9% during 1975-79 (to 41.3 tons) while net ton-km per car rose only 1% to 602,000. The difference between these increases is due, at least in part, to a 18&o increase in turnaround time to 4.48 days in 1979.2/ Turnaround deterioration is due to increased delays at terminals, and also to greater complexity of operations resulting from new production centers served by additional industrial sidings. Delays at terminals have increased because traffic growth and the shortened work-week have increased pressure on customers' storage facilities especially at collieries, with resultant pro- tracted detention of wagons at terminals and loading points. Studies regarding terminal detention of wagons and of measures to improve their turn- around time are being initiated. Again, CFR has developed a computerized car control program which is being tested in one of its Regions. At negotiations, an understanding was reached with the Borrower that CFR will keep the Bank informed of progress on all measures to improve wagon utilization and that car procurement will be reviewed in the light of improvements in turnaround time. 2.19 Engine-km per engine/day for diesel locomotives shows a decreasing trend: 419-383 for passenger and 309-257 for freight, during 1975-80. Although this is partly due to the increasing use of electric traction 1/ Including mail, baggage, restaurant and sleeping cars. 2/ k further increase to 4.57 days has occurred in 1980.  - 11 - superseding diesel on the more important routes carrying long distance through traffic, the introduction of a computerized system for locomotive scheduling, as adopted on some of the European railways, may improve utilization. At negotiations, the Borrower confirmed the intention to carry out a program of studies, through technical assistance, designed to improve locomotive utili- zation through appropriate measures including the introduction of computerized control systems. 2.20 The availability of diesel locomotives at 85.4% and of freight cars at 95.5% in 1979 was satisfactory. Availability of electric locomotives was 85.4% in 1979, and is forecast at 85.6% for 1985. The availability of electric locomotives is acceptable for 1979, because they are of local and recent manufacture, but should improve to about 88-90% by 1985 by which time initial teething troubles should have been overcome. During loan negotia- tions, an understanding was reached with the Borrower that the program of procurement of electric locomotives will be reviewed in the light of availability improvements. Staff Quality 2.21 The management and staff of CFR are technically well qualified and competent. Planning staff have been quick to grasp Bank-style investment analysis (para. 1.19). The Railway Investment Plan (1981-85) 2.22 CFR's 1981-85 Investment Plan (Table 14), prepared as part of Romania's National Plan (para. 1.09), aims at providing the transport capacities needed for Romania's expanding economy and for improving operating efficiency. In the present stringent financial conditions emphasis is now being placed on early completion of ongoing works with the consequent defer- ment, until later in the plan period, of some new projects. Although the Plan is in an advanced stage of the approval process it is not expected to receive final approval before the end of June 1981. 2.23 All Romanian investments are subject to technical and economic scrutiny. However, their economic analyses are made at Romanian prices only, and hitherto there has been no attempt at border pricing. To rank their projects, they utilize a "payback period" approach. This payback period for investments is determined by dividing the gross undiscounted investment cost by the estimated net benefits of a typical operational year. The merit or otherwise of a project is then determined by the length of the payback period, the shorter being the more desirable. This type of evaluation, however, favors projects with high early yields, consistent with a policy of accumu- lating profits at a high rate for reinvestment. While the transport invest- ments approved so far appear sound, a broadening of investment analysis methodology is an objective of the proposed project.  - 12 - 2.24 Authority to proceed with an investment project is given by approval of the "Nota de Comanda" (NdC), a document which summarizes the main project features including the total cost; current prices are used with a 5% physical contingency. The total cost may not be exceeded without approval of a new NdC, but in practice it is exceeded only rarely. NdCs are prepared at "catalog" prices which are fixed by law for all tradeable items, including imports. This pricing system is self-consistent in that all prices cover domestic costs, themselves based on "catalog" prices, and yield a specified benefit (profit). Imports which hitherto have been priced below border prices are, under new pricing regulationsl, to be gradually adjusted nearer to cost. Investment costs both for the Five-Year Plan and for the proposed project show no net increases following revisions of catalog prices for 1981. 2.25 The 1981-85 Investment Plan is available only in Romanian prices, but the cost of all components proposed for inclusion in the proposed project has been estimated in both Romanian and international prices (para. 3.04). 2.26 A summary of CFR's 1981-85 Investment Plan (Table 14) is given below. As all costs are based on NdCs, they include a contingency allowance of about 5% which has proved adequate in the past and is expected to continue to do so as a result of Romania's tight control over unit prices and quantities. Although inflation may increase somewhat in the future, it is not expected to exceed 2% per annum, and any necessary revisions in the provision of investment funds or in the content of the Investment Plan could readily be undertaken during the yearly updating. 1/ Official Bulletin Year XVI No. 110 dated December 23, 1980. The Import/Export Price Equalization Fund which has hitherto operated in balance, the *excess cost of imports over local prices being broadly covered by the excess earnings of exports over the local production costs, is expected only to apply to some raw materials and other selected items.  - 13 - Table 2.1. 1981-85 RAILWAY INVESTMENT PLAN % of Lei billion US$ million Total Traction and Rolling stock 19.71 1,314 53.8 Line Doubling 3.96 264 10.8 Electrification 2.89 193 7.9 New Lines 1.87 125 5.1 Danube bridges 1.60 106 4.3 Marshalling Yards 2.70 180 7.4 Miscellaneous 3.91 261 10.7 Total 36.64 2,443 100.0 2.27 Over half the total investment expenditures are for traction and rolling stock; of these, one-quarter is for replacements (paras. 2.14-2.16) and three-quarters for additional capacity. The mission analyzed traction and rolling stock proposals, as illustrated by Tables 10 and 11, for locomotives and freight cars, and found that these investments are needed to enable CFR to carry the forecast traffic (paras. 2.03-2.05). 2.28 It has been CFR's policy to implement line doubling in stages as traffic grows, and to avoid the development of bottlenecks. Further doubling is reasonable in view of the high traffic densities of 15 million gross ton-km, on average (only 22% of the network is double track); 35% of investments in line doubling have been included in the proposed project. Further electrification is also justified by the high traffic density (a relatively small proportion, 21% of the network, is electrified). The subsidization of diesel fuel (para. 1.12) and the execution of feasibility studies at Romanian prices (para. 2.23) are responsible, at least in part, for the low rate of electrification hitherto. About 48% of electrification investments have been included in the proposed project. Although the Romanians are aware of the need for increasing the pace for electrification, investment constraints (para. 2.22) are limiting progress. 2.29 Virtually all investments in new lines, and steel for one of the two Danube bridges, (para. 3.11) have been included in the proposed project. Investments in marshalling yards consist of mechanization of 13 yards (para. 2.13) and the construction of a new yard near Bucharest. About half the miscellaneous investments consist of infra- structure works, including in some cases the electrification of sidings needed to increase CFR's capacity to handle growing traffic from major users.  - 14 - 2.30 To sum up, the mission examined in detail the investment proposals for traction and rolling stock and for the proposed project; these account for 75% of CFR's Investment Plan. Though the examination of the remaining 25% was in more general terms, the mission is satisfied that the plan is responsive to the needs of Romania's economy. 2.31 Capital overhaul of track is charged to operations and is not part of CFR's Investment Plan. About 3,000 km are to be overhauled with new rail during 1981-85. This length includes eight high priority sections, totalling about 610 km, which are to be overhauled during 1981-84 mainly with 60/65 kg rail (Table 15). During loan negotiations agreement was reached with the Borrower that CFR will overhaul these sections as programmed. Financing Plan 2.32 The expected financing of CFR's 1981-85 Five-Year Investment Plan (para. 2.26) is shown in Table 16 and summarized as follows; Table 2.2 FINANCING OF CFR'S 1981-85 INVESTMENT PLAN Total Important Other Investments Investments/a Investments/a Lei US$ us$ million million % million % million % Net own funds 19,890 1,326 54.3 813 44.0 513 90.4 State allocations - interest free 14,404 960 39.3 960 52.9 - - - at interest 967 65 2.6 10 0.5 55 9.6 Proposed Bank Loan /b 1,380 92 3.8 92 2.6 - - Total external 16,751 1,117 45.7 1,062 56.0 55 9.6 Total Invest- ments /c 36,641 2,443 100.0 1,875 100.0 568 100.0 /a For definition of "important" and "other" investments see para. 5.02. /b Assuming railway component of loan to be $94 million of which $2 million not disbursed until after December 31, 1985. /c Including general contingencies of about 5%. CFR's financing plans do not include price contingencies although a general contingency of about 5% is built into the cost estimates. The investments are expected to entail very few direct imports and almost all costs are based on catalog or contract prices not subject to escalation (para. 2.24).  - 15 - C. Highways Organization 2.33 The Directorate of Roads (DR), under MTTc, is responsible for the construction and maintenance of the national road network, which comprises some 14,700 km, or about one-fifth of the country's total network. The remainder, including district and village roads, is administered by the "judet" (county) authorities which receive planning and technical assistance from the Directorate. 2.34 To administer its functions of investment planning, project prepar- ation and implementation, procurement and maintenance, the Directorate divides the country into six regions and deploys staff accordingly. Each region is further subdivided into districts which provide and supervise the teams executing the maintenance and improvement works needed for the national road network. Planning 2.35 For national roads, a five-year plan is formulated on the basis of improvements identified by the enterprises, industries, and ministries who use highway facilities extensively, and is coordinated at the Republic level. Detailed annual plans are prepared one year in advance and their implemen- tation is monitored by both DR in the physical sense, and IB which, as for railways, keeps a watching brief on expenditures. 2.36 The planning of provincial and local roads is coordinated at the Republic level and, as needed, technical advice is obtained from both DR and the Road Design Institute (RoDI).k/ Provincial and local authorities bear the responsibility for construction and maintenance and for meeting the planned targets. 2.37 A particular aspect of planning which is now being emphasized is the provision of grade-separated road/rail crossings. At present, most are at grade, but since traffic on each mode has increased substantially in recent years, the policy is now to separate the traffic streams. Here DR, in consultation with the local authorities and CFR, determines the priorities for construction. Engineering 2.38 DR and RoDI prepare the feasibility studies needed to determine the justification of projects. They prepare also the final engineering of projects and utilize the resources of a comprehensive materials laboratory to facilitate site investigations. Pavement design is one aspect of project 1/ This is part of IPTANA which is also the design institute for sea and air transport within MTTc.  - 16 - preparation which is treated exhaustively: considerable care is taken to select the pavement structure which maximizes the use of locally available materials and minimizes cost commensurate with strength and durability criteria. Construction 2.39 For national roads, investment projects are executed by the RCC, the principal civil works authority in the country (para. 2.08). Road works are competently supervised by DR assisted by RoDI and by the services of the materials laboratory. Minor works on national roads are generally carried out by DR's personnel with their own equipment. For provincial and local roads, construction works are generally carried out by their own forces, although for larger works beyond their capacity they may call on the RCC. The Network 2.40 Romania has about 73,500 km (Table 17) of roads of which about 39,100 km are unpaved. The primary road network, for which DR, under the MTTc, is directly responsible, comprises some 14,700 km of which about 14,000 km are paved. The total length of the modernized road network increased from about 5,900 km in 1960 to about 14,500 km in 1980 (Table 18). However, the rate of modernization has not kept pace with the demands of vehicle usage. There is inadequate capacity on certain key links in the network. In some cases, lack of all-weather access to areas not served by other transport modes has been a deterrent to progress and development. In others, poor surface conditions, plus narrow, winding alignments and in many cases excessively steep gradients, have imposed harsh cost penalties on vehicle usage. 2.41 Only one road, that between Bucharest and Pitesti (100 km), is built to full expressway standards with limited access (dual carriageways separated by a central median) and is part of the European "E" road network, whilst there are about 230 km of four-lane undivided highways, in the main radiating from Bucharest. 2.42 The bulk of the network (about 58,700 km) comprises district and communal roads which are administered by the provincial authorities. Of these, about 20,100 km only were paved as of the end of 1980 (Table 17). Maintenance 2.43 The maintenance allocation for national roads is about 60% of the total for all highways (Table 19) and in absolute terms is about US$4,500 per km, which is high compared with other European countries with similar con- ditions. For example, neighboring Yugoslavia spends about US$3,600 per km. 2.44 Although, to a limited extent, such a high cost reflects the maintenance needs of some of the older roads which had been improved or upgraded some years ago and whose old light pavements are subjected now to heavy traffic loads and are distressed, the expenditures also cover some asphalt overlay and betterment works which conventionally would be a debit to the capital budget.  - 17 - 2.45 Maintenance practices are in general labor intensive and suffer because labor is in short supply. Many of the routine tasks could be performed more efficiently and better by machine and it is an objective of the technical assistance element of the proposed project that the study visits for key DR personnel should include their exposure to latest maintenance practices elsewhere. Road Transport 2.46 The Road Transport Central (RTC) under MTTc is responsible for the operation and maintenance of the public road transport fleets for the carriage of both passengers and freight. All transport users have access to RTC vehicles. However, certain economic units and other organizations have their own transport fleets whose use is normally limited to meet the local needs only of their enterprises, but may be extended to inter-city work subject to RTC's consent. Measures have been taken recently to transfer many of the enterprises' own fleets to RTC, and to consolidate the remainder into larger transport units under the control of the concerned ministries, and subject to the national plan. 2.47 RTC's vehicles are normally used in intercity services and an important objective is to minimize empty hauls. With the help of a network of agencies which coordinate the requests for transport users and the collection of goods, dead mileage is kept to a minimum. Drivers passing through a district without a load are obliged to contact the local agency and must not proceed empty unless the agency certifies that an onward load is not available. 2.48 Basic regulations controlling motor vehicle transportation are contained in the Decrees of the State Council of Romania of December 1977 and July 1979. They are mainly safety oriented, and focus on speed and load limitations, and vehicle utilization, but certain measures have been taken recently to curb fuel consumption (para. 1.12). As an additional energy saving measure, the use of horse-drawn carts in preference to motor vehicles is being encouraged for farming needs, in spite of the congestive effects of such slow-moving vehicles on traffic flows on main roads where they are frequently encountered. Table 20 gives an indication of usage of selected routes of the primary network on the basis of 1978 average daily traffic. 2.49 Road transport is developing rapidly and the vehicle fleet has approximately doubled at an average rate of nearly 12% per annum from about 538,000 in 1972 to 1,016,000 in 1978 (Table 21). The expectation is that this annual rate of increase will itself increase further as domestic production of motor vehicles expands. In 1978, nearly 132,000 units were produced (Table 22), but this output will be more than doubled by the end of 1981 when a new Citroen plant near Craiova is expected to add a further 150,000 units per year. 2.50 The annual export of vehicles has fluctuated around 25,000 units annually since 1975 (Table 22) and it is conjectural at this stage as to what proportion of the new Citroen output will be sent abroad. It may be assumed that much of this new production will go to the domestic market which has long been repressed through lack of vehicles to purchase, although high price and other disincentives to vehicle acquisition have in the past also restrained growth of the private fleet.  18 - 2.51 The indicators seem clear that the road fleet will increase, certainly in the short run, at a rate much greater than the 12% annual average recorded heretofore. As a result, traffic forecasts (paras. 2.02-2.05) may well be exceeded, especially the 4.7% yearly growth estimated for road pas- senger traffic, and thus aggravate the congestion which already exists on key links. Highway Investments (1981-85) and Financing 2.52 Roads and road transport accounted for nearly 25-35% of the total investments in the transport sector during the 70s (Table 23). A similar situation is expected during the next plan period also. However, in the 1981-85 plan, special attention will be given to developing small scale industries, including light processing industries and handicrafts, by using local resources. The overall production of this sector is expected to more than double during the next plan period. Such a shift in emphasis would accentuate the demand for additional investments in the regional, secondary and feeder roads so necessary to stimulate economic development in outlying areas of the relatively less developed regions. 2.53 These circumstances notwithstanding, MTTc's 1981-85 Investment Plan was cut back severely in mid-1980, following the Government's decision to restrict investment expenditures; the consequent sharply declining trend in highway investments during the next five years could have resulted in the development of serious transport bottlenecks, especially as the sector suffers from past underinvestment. However, Government recently reviewed its earlier decision and these cutbacks have been partially restored. 2.54 As evidenced by the following table, road investments (excluding road transport) during the next plan period will be about 7,900 million lei (US$527 million), about 6% above 1976-80 expenditures in real terms. Comments made in paras. 2.22 and 2.23 about investment in Romania are also relevant here. Table 2.3. ROAD INVESTMENT PROGRAM (1981-1985) (in million lei) 1981- 1985 1981 1982 1983 1984 1985 Local road 3,398 650 650 680 690 728 National roads 4,500 895 828 897 900 980 Total 7,898 1,545 1,478 1,577 1,590 1,708  - 19 - The length of the modernized road in the entire network is expected to increase from about 14,500 km in 1980 to about 15,500 km by 1985. The length of lightly asphalted roads is expected to increase from about 19,700 km to about 27,000 km during the same period. Special attention is proposed to be given to overpass structures and the elimination of busy at-grade road/rail crossings (para. 2.37). Nevertheless, several main roads carrying consider- able traffic volumes will still remain unpaved. Much of the communal and district road network needs to be upgraded to provide all-weather service and older wooden bridges, which restrict vehicle loadings on many of these roads, need to be replaced. 2.55 The highway (national roads) expenses are financed mainly from the state budget, whose income sources are a variety of taxes and payments from the benefits (profits) of the enterprises and the state economic organizations at republic level and taxes and duties from the population. Similarly, expenses for district and local roads are met from the budgets of the state local units whose income sources are freight traffic tax, payments from the benefits (profits) of the enterprises and the state economic organizations at local level, taxes on the benefits (profits) of cooperatives and handicrafts, and taxes levied on the population. With no rules governing the amounts to be channeled into highway projects, the authorities can determine freely the amounts to be invested from year to year based on established priorities. Such a system, as in many other countries, offers flexibility in determining the amounts of highway expenditures to accord with public policy objectives. III. THE PROJECT A. Project Objectives 3.01 The objectives of the project are to assist Romania: (a) to avoid transport cost increases by providing timely relief of existing traffic congestion through road and rail investments intended to widen and increase the capacity of transport links which are approaching saturation; (b) to provide all-weather access to a development area, which heretofore has been served by only a fair weather track, and to provide transport for a new mine; (c) to improve the economic evaluation of projects; (d) to improve monitoring of the use of the road network; (e) to improve resource allocation in the transport sector by transport policy analysis (especially in respect of the modal split); and (f) to familiarize the railway and highway organizations with recent developments and trends in operating, monitoring and maintenance techniques utilizing the latest technology.  - 20 - B. Project Preparation 3.02 MTTc has set up special working groups, which have prepared Bank-style feasibility studies, using both Romanian and international prices, for all components of the proposed project. This is the first time that Romania has carried out transport studies based on a methodology customarily used in Bank projects, and in this respect key roles were played by MTTc staff who had attended the courses held with EDI's participation (para. 1.19). Bank-style analyses have also been made by MTTc for some projects which are not Bank-financed. However, widespread use of such analyses requires a change in the law specifying investment criteria. Experience under the proposed project should enable them to compare Bank-style analyses with those at present in use. As the latter have not yet been completed for all elements proposed for the project, an understanding was reached during loan negotiations that comparison of the results obtained by the two methods should continue to be made by MTTc and reviewed during project supervision. C. The Project Description and Cost Estimates 3.03 The proposed project would consist of high priority items included in the railway and highway 1981-85 Investment Plans, preparation of which was sufficiently advanced. Project components (Map IBRD 15462R) are summarized in the table below. Table 3.1 PROJECT COST ESTIMATES Romanian Investment World Bank Project Cost Estimates Plans x of Bank Estimate Local Foreign Total Local Foreign Total Project Loan