China - Seventh Railway Project

Document of The World Bank Report No. 13795-CHA STAFF APPRAISAL REPORT CHINA SEVENTH RAILWAY PROJECT APRIL 14, 1995 Transport Operations Division China and Mongolia Department East Asia and Pacific Regional Office  CURRENCY EQUIVALENTS (as of October 1, 1994) Currency Name: Renminbi Currency Unit: Yuan (Y) = 100 Fen $1.00 = Y 8.70 $0.115 = Y 1.00 FISCAL YEAR January I - December 31 WEIGHTS AND MEASURES ctkm = converted tkm or traffic unit (I pkm 1 tkm) ha = hectare (= 2.47 acres) km = kilometer [= 0.621 mile (mi)] m = meter (= 3.281 feet) M2 = square meter (= 10.764 square feet) Mp = million passengers Mpkm = million passenger-klometers Mppy = million passengers per year Mt = million tons Mtkm = million ton-kilometers Mtpy = million tons per year mu = 0.1647 acre = 0.0667 hectare (ha) = 667 square meters pkm = passenger-kilometer (= 0.621 passenger-mile) tkm = ton-kilometer (= 0.621 ton-mile) ACRONYMWIS AND ABBREVIATIONS CETE = Cost-Effective Technology Evaluation CIF = Cost, Insurance, and Freight COSCO = China Ocean Shipping Group Company CPI = Consumer Price Index CRC = China Railway Container Company CTS = Coal Transport Study DECO = Diversified Economy Company EIA = Environmental Impact Assessment ERR = Economic Rate of Retum FCTIO = Foreign Capital and Technical Import Office FSA = Fuzhou Subadmirnistration GDP = Gross Domestic Product GNP = Gross National Product GRC = Guangzhou Railway Group Corporation ICB = Intemational Competitive Bidding IDC = Interest During Construction ISO = Intemational Standards Organization LCB = Local Competitive Bidding LIB = Limited International Bidding MIS = Management Information Systems MOC = Ministry of Communications MOF = Ministry of Finance MOR = Ministry of Railways MPT = Ministry of Post and Telecommunications NBF = Not Bank-financed NPV = Net Present Value PHRD = Policy and Human Resources Development (Fund) PID = Policy reform and Institutional Development PRS = Passenger Reservation System PSO = Public Service Obligations RCT = Rail-Based Container Transport RIS = Railway Investment Study RME = Railway Management and Economic Contract SAA = State Audit Administration SIPS = Strategic Issues in Ports and Shipping Study SIT = SinoRails Intermodal Transport Company SOE = State Owned Enterprise SPB = State Pricing Bureau SPC = State Planning Commission TA = Technical Assistance TEUs = 20-foot equivalent units TMIS = Transport Management Information System YEZTS = Yangtze Economic Zone Transport Study 7FYP = Seventh Five-Year Plan 8FYP = Eighth Five-Year Plan 9FYP = Ninth Five-Year Plan  CHIlNA SEVENTH RAILWAY PROJECT LoAN AND PRoJEcr SUMMARY Borrower: People's Republic of China Beneficiary: Ministry of Railways (MOR) Poverty: Not Applicable Amount: $400 million equivalent Terms: 20 years, including 5 years of grace, at the Bank's standard variable rate Commitment Fee: 0.75 percent on undisbursed loan balances, beginning 60 days after signing, less any waiver Financing Plan: See para. 3.37 Economic Rate of Return: 27 percent overall. Map: IBRD 26327   CONTENTS 1 Transport Bottlenecks and Reforms ...................... 1 A. Introduction ................................. 1 B. Traffic ..................................... 2 C. Past Transport Reforms ........................... 2 D. Bank Group Participation and Future Transport Reforms ..... . . 3 E. Outline of Report ............................... 5 2 The Railway System and Reform Opportunities. 6 A. The Railway System. 6 B. Rationale for Bank Involvement. 8 C. Reform Constraints and 30-point Action Statement. 9 This report is based on the findings of an appraisal mission that visited China in October/ November 1994. Members of the appraisal team included Messrs./Mmes. T. Watanatada (Transport Economist, Task Manager until negotiations), H. Deboeck (Financial Analyst, Task Manager from negotiations onwards), P. Anderson (Railway Specialist), J. Fraser (Financial Analyst, Consultant), M. Gill (Resettlement Specialist, Consultant), N. Holcer (Telecommunications Engineer), R. Kopicki (Transport Industry Specialist), M. Kuby (Transport Specialist, Consultant), U. Marggraf (Railway Engineer), R. McAfee (Information Systems Specialist, Consultant), W. Siemieniuk (Environmental Specialist, Consultant), A. Somani (Environmental Specialist), R. Spero (Transport Economist, Consultant), L. Thompson (Railway Advisor), W.H. Thompson (Container Transport Specialist, Consultant), S. Tsukada (Transport Specialist). Assistance was also provided by Messrs./Mme. Juemin Chen, Huikang Xu and Yan Zong, Operation Officers in the Resident Mission in China. Mmes. M. Dearborn and T. Ortega provided the word processing support for the documents. Peer reviewers for the project were Messrs./Mme. R. Bums (SA21N), R. Carruthers (LA2IE), J. Holt (EC3IV) and E. Vasur (EC2IN). The Division Chief is Mr. Richard Scurfield and the Department Director is Mr. Nicholas C. Hope.  - H1 - 3 The Project ..................................... 14 A. Objectives ................................... 14 B. Lessons Learned ............................... 14 C. Policy Reform and Institutional Development Initiatives ... .... 15 D. Investments for Expansion, Modernization and Reform ........ 15 E. Studies for Modernization and Reform .................. 18 F. Cost Estimates ................................ 20 G. Financing ................................... 21 H. Implementation and Risks .......................... 22 I. Procurement .................................. 23 J. Disbursements ................................ 25 K. Monitoring, Evaluation and Supervision ................. 25 L. Environmental Impacts and Resettlement ................ 26 4 Economic Evaluation and Risk Analysis of Project-Financed Investments 28 A. Introduction .................................. 28 B. Main Benefits ................................. 28 C. Expanding Corridor Capacity ....................... 29 D. Modernizing Information Systems ..................... 30 E. Upgrading Telecommunications Systems ................ 30 F. Commercializing Container Transport .................. 31 G. Expanding System Capacity ........................ 31 H. Overall Evaluation and Risk Analysis .................. 32 5 Flnancial Viability of Railway Transport Operation ...... ...... 34 A. Introduction .................................. 34 B. Past Financial Performance ......................... 34 C. Present Financial Position ......................... 35 D. Future Financial Performance: Base Case ............... 36 E. Sensitivity Analysis ............................. 37 F. Conclusions .................................. 39 6 Agreements Reached and Recommendation ...... .. ......... 41  - iii - TABLES General 1.1 Freight Traffic Intensities and Road and Railway Network Density in Selected Countries ....................... 43 1.2 Freight Traffic by Mode .......................... 44 1.3 Passenger Traffic by Mode ......................... 45 1.4 Transport Investment vs. Economic Output in China ..... . . . . 46 1.5 Investment in the Transport Sector .................... 47 1.6 Summary Statistics of Bank-financed Transport Projects ..... . . 48 2.1 Freight Traffic Carried by MOR ..................... 50 2.2 MOR's Freight Tonnage Originated ................... 51 2.3 Average Distance of Freight Traffic Carried by MOR ... ..... 52 2.4 MOR's Passenger Traffic and Average Passenger Travel Distance . 53 2.5 Selected Operational Statistics of MOR, 1980-93 .... ....... 54 2.6 Railway Asset Utilization in Selected Countries .... ........ 57 Investment Costs, Implementation Schedule, and Disbursements 3.1 Investment Costs and Loan Summary ........ .......... 58 3.2 Investment Costs of Corridor Capacity Expansion Component . . . 62 3.3 Investment Costs of Information Systems Modernization Component 63 3.4 Investment Costs of Telecommunications Upgrading Component . 64 3.5 Investment Costs of Container Transport Commercialization Component .65 3.6 Investment Costs of Pilot Environmental Protection Component . . 66 3.7 Investment Costs of System Capacity Component .... ....... 67 3.8 Costs of Technical Assistance ........ ............... 68 3.9 Implementation Schedule .......... ................ 69 3.10 Cumulative Disbursement Schedule .82 Economic Evaluation 4.1 ERR and NPV Calculation for the Corridor Expansion Component 83 4.2 ERR and NPV Calculation for the Information Systems Modernization Component .84 4.3 ERR and NPV Calculation for the Telecommunications Upgrading Component .85 4.4 ERR and NPV Calculation for the Container Transport Commercialization Component .86 4.5 ERR and NPV Calculation for the System Capacity Expansion Component .87  - iv - ANNEXES 1. Bank Group Participation in the Transport Sector ............... 89 2. Summary of Previous Railway Projects .................... 91 3. Summary of Completed, Ongoing and Proposed Programs of Cooperation between MOR and the World Bank ....................... 94 4. Reforming China's Railway System: Progress to Date ... ........ 100 5. Indicators and Targets for Monitoring the Progress and Effectiveness of Implementation of Investment Components ................... 110 6. Action Plans for Policy Reform and Institutional Development Components 114 7. Completion Dates for Study Components .................... 120 8. Environmental Impact Assessment: Wuhan-Guangzhou Electrification and Upgrading ....................................... 121 9. Resettlement Plan: Wuhan-Guangzhou Electrification and Upgrading ... 123 10. Supervision Plan ................................... 129 11. Documents Available in the Project File .................... 130 CEHARTS C.1 General Organization Chart of the Ministry of Railways ... ........ 133 C.2 General Organization Chart of the Government of China ... ....... 134 C.3 Long-Distance Telephone Network ........................ 135 C.4 Data Communications Packet Switching Network .............. 136 C.5 Route Map of China Railways Container Company (CRC) ... ...... 137 MAP IBRD 26327 China Railway System TABIEs IN TExT Chapter 3 Cost Summary .................................... 21 3 Financing Plan .................................... 22 3 Procurement Summary ............................... 24 4 Net Present Value and Economic Rate of Return by Component ... ... 29 4 Results of Sensitivity Analyses .......................... 33 S Actual Revenues and Expenses, 1988-93 .................... 35 5 Forecast of Revenues and Expenses, 1994-2000: Base Case ... ..... 38 5 Sensitivity Analysis-Key Ratios, 1994-20W .................. 39 FIGURES IN TEX 1 Intemational Comparison of Railway and Road Networks .........1  - 1 - 1. TRANSPORT BOTTLENECKS AND REFORMS A. INIRODUCTION 1.1 Since the mid-1980s, China's transport system-and especially the railway- has been unable to handle the country's spiraling growth of freight and passenger traffic (average annual growth rates of about 7 percent and 10 percent, respectively). Many key railway lines have developed bottlenecks where traffic in at least one direction reaches 95 percent of the design capacity or more. These bottlenecks occurred on less than 10 percent of the network in the mid-1980s, but reached nearly 40 percent by the end of the decade. This, in turn, causes the railway to ration service extensively. 1.2 The situation developed because the economy grew rapidly after the Government adopted the open-door policy in 1978 (averaging 9.4 percent a year from 1980 to 1993). And, although capacity was also expanded-with the network more than doubling in the last three decades-it still did not keep pace with economic growth. In fact, the network is one of the sparest in the world, compared with the area and population it serves (see the figure below; Table 1.1). Thus, China has not been well-served by either the rail or highway system and growth has been hampered (most severely in the hinterland). According to World Bank figures, this led to at least a 1 percent loss of GNP annually. INTERNATIONAL COMPARISON OF RAILWAY AND ROAD NETwoRKS Ralliwy Networks Road Networks * s h1w Le.slh h, bm 30000 T,.ak .mgIl, 5- cM _f - - | T ,# ~~~~~~.M5.L PSk h KS w 2100 l ) Fasd l..ghh IEn mpe | ~~~~~~~l LI l. KM P. Iso SOO am /A| 7ll5coo 0gPb bIm Ptl ClJna Russia ISA India SsaSm Jall1n CRloa Russi USA Ilndi Braln Japan  - 2 - 1.3 The railway system was unable to match economic growth for two reasons. First, the country underinvested in transport infrastructure-an annual average of 1.4 percent of GNP from 1980 to 1993, compared to 2 to 3 percent in Brazil and India (Tables 1.4 and 1.5). Second, authorities did not apply congestion pricing on routes with bottlenecks to moderate demand and raise more revenues to expand capacity. To correct the capacity problem, China has embarked on a massive investment program since 1992: it aims to build by the year 2000 some 16,000 route-km of new railway lines to add to the existing 54,000 route-km, and some 5,000 route-km of new high-capacity, high-speed expressways to add to the roughly 1,500 route-km of expressways built so far. 1.4 If China is to move to a market economy fully, another set of pressing issues also need to be resolved. These relate to regulations and the relationship between the railway system and the Government, the railway's management and organization, and its technology, operations and services. The railway recognizes that it must undertake reforms so as to operate in a market economy. MOR formulated its own vision of changes in a 30-Point Action Statement for Railway Reform, which was endorsed by the State Council in April 1994 (Chapter 2), and which the proposed project will support. B. TRAlc 1.5 The surge in traffic occurred despite capacity constraints and related bottlenecks. Highway freight traffic grew at the highest annual rate (14.2 percent), compared with 6.3 percent for railway traffic and 9.7 percent for coastal and inland waterway traffic (Table 1.2). Nevertheless, intercity passenger travel per capita remains very low-about two thirds the level in India. Civil aviation traffic, which grew at 17.7 percent a year (from a very low base) from 1982 to 1993, remains limited-with market share of 6 percent-while long-distance passenger rail traffic grew by 7.5 percent a year during the same period (Table 1.3). 1.6 Although the railway's share of total traffic declined over the past decade as the road network developed, rail transport still dominates: In 1993, about 55 percent of freight (Table 1.2) and about 44 percent of passengers (Table 1.3) moved by rail, and the rest moved by road, inland waterway, coastal shipping, pipeline and air. The dominance in freight transport is due partly to the economy's past dependence on heavy industry and partly to comparatively poor road conditions and small, inefficient vehicles. With passenger transport, it is partly due to inadequate intercity bus service, the virtual absence of private automobiles, and the limited use of civil aviation. However, the move to a market economy will increase demand for more responsive transport and thus shift the emphasis to road transport-although it will still leave a growing market for the relatively low-cost rail services. C. PAST TRANsPoRT REFoRMs 1.7 In the past decade, China attempted to increase economic efficiency with reforms designed to: (a) reduce Government intervention in the production and distribution process; (b) reduce its deficits and subsidies to state-owned enterprises (SOEs); and  -3- (c) open the economy by expanding trade and allowing greater participation of private and collective enterprises. 1.8 In transport, the country also launched various reforms. These included: (a) Eliminating almost all price distortions by (i) decreasing the volume of commodities produced under the state plan; (ii) raising the in-plan commodity prices closer to market levels; (iii) raising the tariffs charged by state transport enterprises for railways, highways and waterways; and (iv) reducing operating and capital subsidies for major infrastructure services through higher cost- recovery and user-funded capital construction funds; (b) Allowing private individuals and collective and township enterprises to provide passenger and freight services on roads and inland waterways, and encouraging provincial and national authorities to develop local railways and other transport projects with private sector financing; (c) Introducing structural reforms in the organization and management of the ports and civil aviation, which have increased financial autonomy and accountability, reduced central government controls, and paved the way for competitive services; (d) Encouraging the introduction of more modem transport technology, primarily by improving rolling stock; enhancing container and bulk handling capacity in the ports; improving road pavement design and geometric standards; and increasing the use of computerized data processing and planning techniques in all modes. D. BANK GROUP PARTICIPATION AND FuTURE TRANSPORT REFORMS 1.9 The Bank Group has supported government initiatives in transport through loans and credits of $4.53 billion for 29 projects (Table 1.6 and Annex I . These projects, which represent 6 to 8 percent of government-financed investments during 1982 to 1992, involved: (a) Expanding rail capacity; modernizirg locomotives and rolling stock, facilities, track maintenance, telecommunications and information systems; providing technical assistance (TA) and training programs ($1.78 billion in seven projects); (b) Constructing 2,180 km of high-quality national and provincial roads, upgrading 6,850 km of rural roads, improving the supervision and quality control of road construction; conducting studies of key issues in road safety, pavement management, user charges and methods of financing for road maintenance and construction; and upgrading roads and inland waterways in Jiangsu Province ($1.82 billion in 12 projects);  - 4 - (c) Constructing terminals, jetties and berths in six ports, dredging navigation channels, and providing TA and training for port planning, operations management and containerization ($715 million in eight projects); (d) Improving urban transport in Shanghai, including upgrading infrastructure and improving urban transport planning, finance and management ($210 million in two projects). 1.10 The Government-Bank dialogue has occurred through project preparation activities, project-financed studies and secto. studies done in collaboration with Chinese authorities, especially in the areas of multimodal transport investment and the setting of sectoral priorities. Eight studies explored multimodal pricing and investment issues. These included the Waterway Transport Sector Study, the Guangdong Comprehensive Transport Planning Study, the Yangtze Economic Zone Transport Study (YEZTS), the Coal Transport Study (CTS), the Railway Investment Study (RIS), the Strategic Issues in Ports and Shipping (SIPS) Study, the Price Reform Study, and the Road Freight Service Study. Further, the Bank and the Government prepared railway and highway strategies so as to provide broad, long-term recommendations on how the two largest transport subsectors should be developed and reformed. 1.11 Recommendations from all these efforts were used as inputs to transport planning, pricing and reforms. CTS and RIS results supported the Government's decision in 1992 to raise the economic growth rate for infrastructure investment planning from 6 percent a year to 8-9 percent; SIPS results supported the decisions to invest in container transport. The Price Reform Study Report was a basis for a major Government-Bank dialogue, with railway tariffs used as a key example of the need for price reform. The Ministry of Railways (MOR) drew on the railway strategy paper when preparing its 30-Point Action Statement, which was endorsed by the State Council in April 1994. 1.12 Six other studies funded under Railways IV, V and VI focused on technical improvements with systemwide implications, including its telecommunications and information systems, maintenance and rehabilitation of track and equipment (locomotives and rolling stock), electrification, and heavy-haul operations. MOR applied their findings when it modernized the railway. 1.13 Finally, eight other studies were launched under Railways VI to deal with costing, tariffs, and accounting issues, as well as regulations, management concerns, and restructuring. They provided a basis for: (a) rationalizing tariffs in the market framework; (b) redefining the Government-railway relationship; (c) restructuring the monolithic railway organization into a number of profit-oriented, market-focused enterprises; (d) bolstering the railway's treasury capability; (e) improving its labor productivity; (f) rationalizing its diversified businesses; (g) reforming its housing system; and (h) enhancing its human resources. Some of the studies' results underpin the Bank's reform assistance under Railways VII.  - 5 - 1.14 Still, the Government needs to take further measures to alleviate bottlenecks and rationalize the transport system, in particular: (a) Boost the level of transport investment relative to GNP to expand capacity to meet new demands and eliminate underinvestment backlogs; realize the most economic balance of investments among the major modes (railway, highway, waterway and civil aviation); (b) Further increase the productivity of existing transport assets through technological modernization and management reforms-for example by applying congestion pricing to selected bottleneck links to moderate transport demand and raise more revenues for transport capacity expansion, and by adding a premium for better services; and (c) Improve and expand the multimodal transport system, both across and within modes, particularly through more extensive use of containers. 1.15 The Bank will continue to assist the Govemment in designing and implementing transport reforms. For example, a Transport Logistics Study was launched with the Chinese authorities to establish a policy framework for market-oriented, intermodal freight transport, dealing with improving distribution of seabome containers and modernizing customs documentation and clearance processes. E. OUTLINE OF REPORT 1.16 Chapter 2 provides a background of the railway system and summarizes current constraints, past reforms, and the future agenda. Chapter 3 describes the project's components, Chapter 4 evaluates the investment components, Chapter 5 analyzes the railway's finances and Chapter 6 presents the covenants for the Bank proposed loan.  - 6 - 2. TIE RAILWAY SYSTEM AND REFORM OPPORTUNITIES A. TE RAmLWAY SYSTEM 2.1 The railway system is the dominant mode of transport in China, carrying about 55 percent of the country's total freight and about 44 percent of its passenger traffic in 1993. The national network comprises about 54,000 km of main routes (Map IBRD 26327), and is administered by the Ministry of Railways (MOR) an organization of some 1,000 employees. In addition, provincial and local govemment entities administer 4,400 route-km of local railways (Tables 2.1-2.6). 2.2 Organization. MOR is headed by a minister who is assisted by three vice- ministers, a chief dispatcher, a chief engineer and a chief economist (Chart 1). The Chinese railway system has a workforce of about 3.4 million, 51 percent of whom are engaged in rail transport. The remaining 49 percent work in nontransport activities: 17 percent in constructing railway infrastructure and facilities; 13 percent in manufacturing locomotives, rolling stock, signaling, and communications equipment and other various railway parts and components; 8 percent in the "diversified economy" which includes thousands of small business ventures (DECOs); and 11 percent in other activities. Through various measures MOR is expected to keep the number of employees constant over the next several years. 2.3 The rail transport system is organized into 12 regional administrations. MOR performs both regulatory and central transport management functions. It is also responsible for nontransport activities that include 35 factories, 20 construction companies, 7,000 DECOs, 4,700 hospitals and clinics, 11 universities, 14 research institutes, 140 technical schools plus numerous primary and secondary schools for the employees' children. The railway is a relatively well-managed organization. It has a disciplined workforce and the utilization rate of its track and equipment is among the world's highest: in 1993, the railway's average wagon turnaround time was four days, and the density of its freight and passenger traffic was about 29 million converted ton-km (ctkm) per route- km (ctkmi are defined as equal to the sum of freight tkm and passenger-km, pkm) (Table 2.5). 2.4 Trafric and Bottlenecks. Partly because of past underinvestment, rail transport demand far exceeds supply. In 1993, freight traffic grew at 4.5 percent and passenger traffic at 11.2 percent. Demand is projected to grow at similar rates through the year 2000. Thus, present capacity is stretched to the limit. Although total length of national and local railways are expected to increase to a total 70,000 km by 2000, capacity constraints are projected to continue into the next century.  - 7 - 2.5 Major bulk and semibulk commodities (such as coal, grains and construction materials) account for about 75 percent of total freight (Tables 2.1 and 2.2). The remaining 25 percent includes general merchandise and materials that can be moved in containers, traffic that has been increasing each year and for which the railway faces increasing competition from trucks. On average, roughly 20 percent of the railway capacity is for passenger transport. 2.6 Faced with rapidly growing demand, the railway rationed services by controlling wagon allocations to shippers and the number of train seats available for passengers. For example, in 1990, on average more than 40 percent of monthly wagon requests had to be denied. This inevitably led to higher operating costs for shippers who must schedule their activities around the availability of transport services. Also, on crowded routes, passenger trains compete for space with freight trains and are often delayed because of conflicts with freight train schedules. 2.7 Outlook of Rail Transport Demand. Besides the possibility that railway tariffs will increase, the next decade is likely to see highways, waterways, and civil aviation mount increasing competition with the railway. Highway transport is expanding rapidly with more high-quality roads and more modem trucks and buses that provide competitive services over short to medium distances. Waterway transport is modernizing to include container transport in the coastal and river delta areas to serve import and export traffic. Air transport is growing fast, with more modem aircraft and the birth of regional airlines to encourage competition. As a result, the railway is likely to lose market share: some long-distance railway passengers will likely switch to civil aviation while others and shippers of light manufactured products, usually shipped by rail over short to medium distances, are likely to shift to highways and waterways, especially in coastal areas or where modem highways run parallel to railways. Conversely, because of its low-cost services for medium and long distances, the railway is likely to retain its competitive edge, especially in long-distance bulk and semibulk freight transport as well as in long-distance passenger transport. Taling these various factors into account, future railway transport demand is forecast to be in the range of 4 to 6 percent per year for freight and 10 to 12 percent per year for passengers, according to the Bank's "China's Railway Strategy,' prepared in close cooperation with MOR (Report No. 10592-CHA). 2.8 Investments. Railway investment in new or upgraded lines and transport equipment is planned by MOR to rise (in current prices) to Y 350-400 billion in the 1996- 2000 period. This is a sharp rise from the Y 154 billion investment in the 1991-95 Eighth Five-Year Plan (8FYP), and the Y 52 billion investment in the 1986-90 period (7FYP). This substantial increase is due to the Government's recent focus on expanding China's transportation infrastructure to handle the projected economic growth rate of 8 to 9 percent per year through 2000. The main thrust will be to reduce bottlenecks in heavily trafficked routes, and increase the carrying capacity of the coal routes from north China to the coastal cities. 2.9 MOR/SPC and the Bank have had in the past several years a constructive dialogue on expenditures for expanding capacity (mainly through the Railway Investment  - 8 - Study), developing cost-effective technologies, and maintaining track and equipment. This dialogue is being strengthened under the proposed project. B. RATIONALE FOR BANK INvOLvEmENT 2.10 The railway has as its objective to become a market-oriented, commercially- operated entity. To give MOR a mandate, the State Council approved in April 1994 a 30- Point Action Statement of Railway Reform prepared by MOR, which provides the railway with a comprehensive agenda for this transformation. The Action Statement supports a 50- Point Agenda of Nationwide Economic Reform promulgated by the Government at the 14th National Congress in November 1993. [The 50-Point agenda aims to focus on enterprise reform to support commercialization of state-owned enterprises (SOEs) and participation of the private sector; this adds to price reform, which is now several years into implementation.] The Action Statement also conforms with the Bank's railway strategy paper and the Country Assistance Strategy (CAS) to be discussed at the Board in May 1995 in conjunction with this project. The CAS aims to assist China in alleviating infrastructure bottlenecks, reforming SOEs, and safeguarding the environment. Because the implementation of the Action Statement's agenda will have far-reaching ramifications not only for the railway but also for the economy, the restructuring of the railway into various self-accounting profit centers must be determined with great care, as must the new regulations and the relationship between the railway and Government. 2.11 Because of its limited familiarity with structures and operating practices of market-economy railways, MOR has asked the Bank to assist it in implementing the initial phase of the Action Statement through the proposed project. The Bank, given its extensive experience with railway reforms in other countries and its familiarity with the railway, is in a position to assist. Indeed, since 1984 the Bank has lent to China's railway sector $1.8 billion, through six national railway operations and one local railway operation (Annex 2!. Railways I to V were mainly for physical investments, which were or are being satisfactorily implemented. Furthermore, these loans supported MOR in undertaking several studies to develop plans to modernize the railway's information systems and its track and equipment technologies (Annex 3). Railways VI was designed as a transition project with the aim of establishing a foundation for policy reform through studies and the preparation of analytical tools. Its tariff, accounting and railway management and economic studies (covering, among other themes, the relationship between the Government and MOR, restructuring of the railway, and railway financial resource mobilization) have been completed or are near completion, a railway investment model and costing model have been developed, and a pilot program to modernize rail container transportation has been initiated (Annex 3). Railways VII builds on these studies, tools and pilot effort to continue tariff reform, railway restructuring, strengthening of MOR's investment decisions and their financing, and commercialization of container transport.  - 9 - C. REFORM CONStANSS AND 30-POINT ACnION STATEMENT 2.12 Although the railway is relatively well managed, it is still constrained in four main areas: (a) cumbersome regulations and government control over operations; (b) command-economy organization and management; (c) inadequate capacity, investment and finance; and (d) outdated technologies, operations and services. MOR has taken many corrective steps in recent years (Annex 4), but much remains to be done. MOR's 30-Point Action Statement describes a set of major objectives and many, but not all, of the required actions to ameliorate these constraints. 2.13 Government-Railway Relationship and Railway Regulations. MOR, which is part of the Government, exercises both regulatory and executive control over all aspects of the railway's operations. Other government agencies also engage in the microcontrol of selected key management decision-making. For example, the Ministry of Labor approves the size of total compensation. The State Planning Commission (SPC) not only approves tariffs but also assigns coal freight traffic quotas from three provinces that the railway must meet, sometimes at tariffs below costs. This is done without full compensation; thus, the railway furnishes these services at a loss. 2.14 To tackle these problems, the 30-Point Action Statement proposes to: (a) separate the roles of the Government and railway agencies-with the Government limited to developing and implementing macroregulations (for example as related to financial targets); (b) introduce compensation for public service obligations; and (c) create an enabling environment, by amending the Railway Law, in which modern railway enterprises can develop. Previous efforts have addressed some of these issues. These included: (a) Forming an Economic Contract. In 1986, MOR entered into an economic contract with the Government, which caused two major changes. First, the MOR would receive no direct Govemment subsidies and finance all of its operating expenditures and capital investments (through internally generated funds and borrowings). Second, the contract offered incentives: the MOR's total wage bill would be based on revenue per net tkm handled. This formula encouraged the railways to increase total outputs as well as to control the size of its workforce, but not to improve services, revenues and profits. In early 1994, the Government and MOR agreed to modify the contract to emphasize financial results; (b) Eliminating Price Subsidies. Until 1990, the MOR enjoyed indirect input price and loan rate subsidies from the Government equal to 20 to 25 percent of its total expenses for materials, fuel and electricity, because it bought a portion of these items at less-than-market prices. In 1990, prices were permitted to gradually rise to market levels and by late 1993, all price and loan rate subsidies were eliminated;  - 10 - (c) Enacting a Railway Law. In 1991, China's first Railway Law was enacted to provide a framework for regulating the railway's activities and establishing the rights and responsibilities of the various levels of govemment, MOR, its 12 administrations, and the public. However, several provisions in the 1991 Law do not conform with MOR's 30-Point Action Statement (such as the principle of separating MOR's operating and regulatory functions). Thus, the Law needs to be amended, and MOR has asked the Bank for assistance in drafting revisions. 2.15 Organization and Management. The 12 railway administrations are subject to MOR's central planning and control-although, since 1990, a series of incremental reforms have been introduced to give the administrations a modest increase in autonomy. As of 1994, the administrations were: (a) managing small-scale investment projects; (b) retaining profits from local transport (shipments that originated and terminated within the administration); and (c) deciding on their internal organizational structure, staff size and composition, and distribution of pay incentives. 2.16 Until now, the railway's objective was to maximize the physical transport of freight and passengers; its services have not been organized by line of business and its compensation systems have not focused on increasing revenues and profits. Also, it does not have management information systems (MISs) that are suitable for managing its transport operations by line of business or its nontransport operations in a Socialist market economy. In addition, its nontransport manufacturing and diversified economy activities need to be restructured to compete effectively in a Socialist market economy and to take advantage of economies of scale. Finally, like other SOEs, the railway has to shoulder the burden of providing welfare services (housing, pensions, health and education) to its staff. 2.17 To deal with these issues, the Action Statement proposes to: (a) increase the autonomy of the administrations and subadministrations; (b) form various profit-oriented transport enterprises organized along lines of business (for example, systemwide companies that provide specialized interregional transport services such as hauling containers); (c) allow these enterprises to interact through arms-length commercial relationships, such as operating and lease agreements; (d) regroup the equipment manufacturing companies to achieve competition and economies of specialization; (e) expose railway construction companies to international competitive bidding; (f) rationalize the diversified-economy companies; (g) divest the railway of its social welfare responsibilities; and (h) improve the staff compensation and manpower planning systems. Past efforts in these areas include: (a) Initiating Pilot Reform Programs. MOR began experimenting with railway restructuring and enterprise reform by setting up pilot programs aimed at evaluating "line-of-business" organizations for selected railway lines and subunits of regional administrations. These included (i) two railway lines (Datong-Qinhuangdao and Guangzhou-Shenzhen); (ii) two subadministrations (Fuzhou and Jinan), and (iii) one administration (Guangzhou). Technical assistance for some of these programs, which was started under Railways VI, would be supported under Railways VII also;  - 11 - (b) Increasing Labor Productivity. MOR decided to control the size of its workforce by (i) minimizing the staffing for new lines; (ii) penalizing managers for exceeding targeted staffing levels; (iii) reducing management in the administrations and MOR by 15 to 20 percent; and (iv) hiring almost all new employees on a contract, rather than lifetime, basis. These programs would be supported under Railways VII; (c) Refocusing the Diversified-Economy Program. MOR resolved to (i) separate the management of diversified-economy companies (DECOs) from that of rail transport; and (ii) expand the scope of its DECOs, which currently are profitable, to absorb additional redundant transport employees, from the present 200,000 to 400,000 by the year 2000. 2.18 MOR has not yet resolved, in its 30-Point Action Statement, the functions and organizational relationships of a possible central transportation management entity. This entity would assume network responsibility for overseeing (a) empty wagon distribution; (b) power assignments of through locomotives; and (c) day-to-day modifications of through train schedules. This is a difficult issue. Based on the experience of other freight-oriented railways in developed-market economies, there are inherent efficiencies in centralized management of trains, locomotive and freight wagons. However, strong political pressures persist in China to decentralize transportation decision-making to the administrations and subadministrations. MOR has asked the Bank to help resolve this issue under Railways VII. 2.19 Transport Capacity Investments and Fmancial Management. The Chinese railway system has chronically lacked the capacity to adequately support rapid economic growth. In addition, the current expansion program may not close more than 75 percent of the anticipated gap between transport demand and supply in 2000. This is partly due to MOR not regularly applying modern investment and financial planning tools to optimize the location, scale and timing of railway investments or to forecast its long-term needs for investments, borrowings and increases in tariffs and surcharges. Another reason is that the railway just began to adopt modern, cost-effective track and equipment technologies (such as using trains with a high ratio of payload to tare weight) to expand its capacity with less investment. Further, the railway has limited experience in raising capital and managing assets and liabilities. Last, it is not familiar with commercial practices commonly followed in market economies such as operational logistics and contract tariff negotiations. 2.20 To remedy these deficiencies, MOR's Action Statement proposes to: (a) employ modern investment and financial planning tools; (b) adopt more cost-effective technologies; (c) attract private sector funds to railway enterprises through both debt and equity financing; and (d) improve pricing-for example, by initiating congestion and contract pricing. Some changes were already introduced: (a) Applying Investment Planning Tools. In 1992, MOR applied the decision- support system it developed under the Bank-supported Railway Investment  - 12 - Study (RIS) to (i) determine priorities of railway investment projects, and (ii) support the Government's decision to augment railway investment. Further applications would be carried out under Railways VII; (b) Involving Foreign Investors. In 1992, new policies were issued to encourage some of MOR's nonrail entities to raise capital by creating joint ventures with private foreign investors. In 1994, a joint venture (with 25 percent foreign equity) was created to build and operate a new local railway line between Jinhua and Wenzhou (330 km); (c) Expanding Capacity More Efficiently. In 1994, MOR decided to implement recommendations of the Bank-supported Cost-Effective Technology Evaluation (CETE) study to expand railway capacity at significantly lower costs, notably by raising wagon axle loads from 21 tons to 25 tons in heavily trafficked corridors; (d) Introducing New Types of Tariffs. From 1993 to 1994, MOR received permission from the State Pricing Bureau (SPB) to introduce special tariffs, such as extra charges for congested passenger lines, higher tariffs for new lines, contract prices for oversized or extraheavy freight loads, and passenger fare surcharges for higher quality services. Some of these tariff initiatives would be supported under Railways VII. 2.21 Technology, Operations and Services. Although the railway utilizes its physical assets intensively, much of its technology is outdated and not always cost- effective. For example, although they are being phased out, some 35 percent of the railway's locomotives were steam-powered at end-1993. Also, the top-down approach to transport planning, combined with shortages of freight wagons, means shippers wait from 20 to 50 days to receive a wagon. This standard of service would be unacceptable in virtually all market economies. 2.22 To correct these problems, the Action Statement proposes to: (a) upgrade railway track and equipment technologies; (b) develop a more dynamic wagon distribution planning system; (c) adopt modem management practices to improve the use of track and equipment and the productivity of labor (using service as a criterion for rewarding staff performance); and (d) install modern management information systems to improve customer services. Changes already introduced include the following: (a) Modernizing Track, Equipment, and Telecommunications Technologies. During 1988 to 1992, MOR conducted Bank-supported studies to modernize the maintenance of railway track and transport equipment, upgrade the telecommunications system, and apply new electrification technologies. Many recommendations from these studies are being implemented; (b) Introducing Modern Information Systems. In 1992, MOR embarked on two complementary programs: (i) it installed a digital packet-switch telecommuni-  - 13 - cations network and (ii) it initiated the replacement of the hierarchical wagon- tracing system with a modem, computer-based transport management information system (TMIS). When fully implemented in 1997, the TMIS will provide the tools to decrease shippers' waiting times through better distribution of empty wagons. It will also permit transport managers to monitor and control the movement of trains, wagons, locomotives and containers on a network basis. This work would be continued under Railways VII; (c) Adopting Customer-Responsive Operating Practices. In 1993, MOR launched a Bank-assisted pilot program to provide container transport services that used unit trains running at passenger-train speeds north-to-south between Harbin and Guangzhou and east-to-west between Shanghai and Xian. This work would be extended under Railways VII. 2.23 The process of railway reform outlined above is expected to be difficult, lengthy and uneven because of: (a) the size and complexity of the railway system; (b) the reluctance of some government agencies and some railway management to relinquish their miicrocontrol over the railway; and (c) the ramifications to the entire economy of any changes to the railway in structure, staffing and pricing. For these reasons, the Government and MOR are following a cautious, gradual approach in testing reform initiatives in pilot experiments, which the Bank considers appropriate.  - 14 - 3. THE PROJECT A. OBJEcTrES 3.1 The proposed project is to support MOR's initial efforts to implement its 30-Point Action Statement of Railway Reform. The project's main objectives are to assist MOR: (a) redefine the relationship between the railway and the Government; (b) reshape the railway's organization and strengthen its internal management; (c) expand the railway's transport capacity, raise its investment efficiency, and enhance its finances; and (d) modernize the railway's technologies and bolster the efficiency and quality of its transport operations and service. To achieve these objectives, MOR formulated a series of components on policy reform and institutional development (PID), investments, and studies (Sections C-E below). B. LESSONS LEARNED 3.2 The project draws on lessons learned from Railways I to VI, and railway projects in other developed and developing countries. First, MOR wants to learn new skills from abroad and prepare its own projects, with Bank assistance; it hires foreign specialists only when absolutely necessary. This approach has generally created a sense of ownership, but learning by doing has sometimes delayed project preparation and implementation. Thus, to assist MOR at the earlier stage of reform, the Bank has provided it in the past five years with extensive technical assistance (TA) financed by grants of about $3 million under the Policy and Human Resources Development (PHRD) Fund. This source of TA funding, however, is less likely to be forthcoming in future. To avoid delays in implementing reform under the proposed project, MOR agreed to undertake more TA with its own funding including that from Bank loans. 3.3 Second, railway reform is slow due to the railway's lack of authority over rates, its lack of a commercial approach to the transport market, and resistance to change on the part of railway management and government institutions. Railways VII would also face these issues. Third, excessive reliance on loan covenants to achieve reform objectives is unrealistic. As the Bank enjoys a constructive dialogue with MOR, loan covenants have been kept to a minimum under this project. Fourth, it is advantageous to begin making advance procurement arrangements long before the loan becomes effective, have a well- prepared implementation plan, and develop a system for monitoring the performance of the project-financed investments. 3.4 Furthermore, MOR's reform agenda is broadly consistent with lessons from railway reform in developed market economies (World Bank Discussion Paper No. 269). First, there should be clear separation between the role of the Government and the role of  - 15 - the railway, and between market-driven activities and public-service-obligation activities. Second, railway organizations should be designed along lines of business, with clear financial goals (rather than physical output targets), adequate compensation for public service obligations, and sufficient authority in tariff setting. Third, major barriers such as excessive redundant labor and employee welfare obligations should be removed. C. POLICY REFORM AND INSTITONAL DEVELOPMENT INrITATIvEs 3.5 PID components would provide MOR with the TA to implement three elements of its 30-Point Action Statement: (a) railway enterprise reform, (b) railway tariff reform, and (c) labor productivity enhancement. 3.6 Railway Enterprise Reform. This component would support MOR's initial efforts to transform the railway into a group of geographically-based enterprises and systemwide, line-of-business specialized transport service companies. Specifically, it would help MOR: (a) prepare recommendations for improving the legal and regulatory framework so as to create an enabling environment for market-oriented railway enterprises to function; (b) undertake experimental programs of railway enterprise reform [including the proposed restructuring of the Fuzhou Subadministration (FSA) and the Guangzhou Railway Group Corporation (GRC)]; and, based on lessons learned from these experiments, prepare a comprehensive plan for railway restructuring; and (c) prepare a debt and equity financing strategy for selected railway services. 3.7 Railway Tariff Reform. This component would assist MOR in improving railway tariffs further, by: (a) justifying tariff adjustments on a cost recovery basis (using a costing model and a cost-index system to gear tariffs to price and productivity changes); (b) pilot-testing contract pricing to increase flexibility in tariff setting; and (c) further experimenting with passenger congestion pricing. 3.8 Labor Productivity Enhancement. This component would help MOR undertake measures to control the size of its workforce and boost labor productivity-by reducing management overlap, increasing contract employment, linking capital budgeting to human resources planning, transferring redundant staff to new diversified economy companies and adopting new labor productivity and service-quality methods. 3.9 Agreement was reached at negotiations that the Borrower, through MOR, will carry out the PID components in accordance with action plans acceptable to the Bank (para. 6.la, Annex 6). D. INVESTMENTS FOR EXPANSION, MODERNIZATION AND REFORM 3.10 The proposed six investment components would finance equipment, materials and TA for MOR to expand, modernize and reform the railway system. They have been accorded top priority by MOR, either because of their economic returns or because of their strategic importance to railway modernization. Their technical designs are based on results of various technological studies under Railways IV and V. Indicators has been developed  - 16 - for monitoring the effectiveness of the investment components (Annex 5). The components are: 3.11 Expanding Corridor Capacity. Financing would be provided for electrifying and upgrading the 1,044-km Wuhan-Guangzhou line (the last remaining section of the Beijing-Guangzhou trunk line to be electrified and modernized). The line represents only 4 percent of the total network but carries 15 percent of total traffic. Traffic volumes have been increasing at about 14 percent per year since 1990 compared to the railway's national average of about 9 percent. 3.12 The proposed electrification and upgrading would enable the line to accommodate longer and heavier trains, consistent with MOR's decision to raise the axle load from 21 tons to 25 tons for its core network. Its main design features are: (a) 1,050- meter siding lengths, (b) 25 kV/50 Hz electrification, (c) 110 kV power supply with improvements to the related power supply and distribution system, (d) upgraded signaling and telecommunication systems, (e) reconstructed bridges and tunnels, and (t) upgraded maintenance depot shops. The technical design conforms with recommendations of the Electrification Technology Study under Railways V. 3.13 The construction would produce economic benefits mainly as savings in rail operating costs. It would also have environmental benefits, particularly as it would: (a) eliminate the concentrations of particulates and carbon monoxide emitted by diesel engines in built-up areas; and (b) reduce soil contamination caused by the spills of diesel fuel and lube oil. The electric power would come mainly from large coal-burning plants, and to a lesser extent from hydropower plants, which serve general users, of which the railway use would represent less than 3 percent of total power consumption (Annex 8). Because large thermal plants control pollution more efficiently and hydro plants create no air pollution, the switch from diesel to electric locomotives would reduce net emissions of air pollutants. 3.14 To allay the Bank's concern over shortages of electricity, SPC has written to the Bank that power supply would be adequate for the electrified line, and that MOR would have priority, if necessary. 3.15 Modernizing Information Systems. Financing would be provided for acquiring computer hardware, software and related TA needed for: (a) the first phase of a computer-based management information system (MIS); (b) integrated TMIS for major marshalling yards, subadministrations and administrations; (c) a pilot passenger reservations system in one administration; and (d) management of funds under the treasury functions. This technology would help railway managers make better-informed decisions and improve railway operating efficiency and service quality. 3.16 Upgrading Telecommunications Systems. Financing would be provided for acquiring telecommunications equipment and related TA, including fiber-optic cables and digital microwave equipment, to enable MOR to expand and modernize the railway's trunk transmission and data telecommunications networks. This would be part of the Bank's  - 17 - ongoing effort to help MOR implement the railway's Telecommunications Master Plan. Specifically, the component would provide financing for: (a) expanding and digitalizing the railway's long-distance transmission network; (b) expanding the data communications network; (c) developing a video conference network, with a terminal for each subadministration; and (d) setting up a telecommunications network management system. 3.17 Commercializing Container Transport. Financing would be provided for purchasing container transport and handling equipment (e.g., rubber-tired gantry cranes, forklift container handlers, and highway tractors) and the TA and computer software needed to modernize and commercialize rail-based container transport operations. MOR would lease the equipment on commercial terms to at least two container transport corporations, which are expected to be: (a) the Chinese Railway Container (CRC) Company, a wholly-owned subsidiary of MOR; and (b) the SinoRails Intermodal Transport (SIT) Company, a joint venture among MOR, China Ocean Shipping Group Company (COSCO), and Sinotrans (a freight forwarder). Both corporations would be authorized to operate on any railway route and serve both domestic and foreign traffic as long as line capacity is available and the operations are profitable. 3.18 CRC and SIT would become prototypes of self-accounting enterprises that provide interregional, specialized rail-based transport services on a commercial basis. More specifically, the component would: (a) serve as pilot programs for MOR to test various aspects of railway enterprise reform; and (b) offer landlocked provinces access to international trade by providing them with fast and reliable transport service for high-value products to major seaports. 3.19 Agreement was reached at negotiations that the Borrower, through MOR, will: (a) select at least two container transport companies acceptable to the Bank to which the container transport and handling equipment to be procured under the project shall be leased, (b) employ consultants with terms of reference, qualifications and experience acceptable to the Bank to assist it in the preparation of contractual agreements between the Borrower and said container transport companies required for the leasing and operation of said equipment on a commercial basis; (c) furnish said agreements to the Bank promptly upon their preparation and afford the Bank a reasonable opportunity to exchange views with the Borrower thereon; (d) thereafter, take all measures required on its part to conclude said agreements with said container transport companies, taking into account the views of the Bank on the matter; and (e) ensure that no invitations to bid for contracts for container transport and handling equipment included in the project shall be issued unless and until the Borrower shall have concluded the agreements referred to in item (d) above (para. 6.lb). 3.20 Enhancing Environmental Protection. Railway environmental protection has historically received low priority because MOR has primarily focused on transportation. However, it now recognizes that to protect the environment over the long term, it must develop a comprehensive environmental strategy and strengthen its Environmental Protection Bureau. This component would finance the TA and equipment for MOR to: (a) undertake pilot programs to address pressing environmental problems; and  - 18 - (b) strengthen the capabilities of its environmental staff. These initiatives are consistent with the comprehensive long-term environmental strategy being prepared under Railways VI. 3.21 The pilot programs would involve: (a) testing noise barriers along a rail line traversing urban Beijing; (b) developing a solid waste management strategy for the Shenyang station; (c) assessing techniques for cleaning up contaminated soil at the Taopu freight yard; (d) treating oily wastewater at a locomotive depot; (e) upgrading the Beijing Anti-Epidemic Center; (f) developing locomotive and factory noise abatement programs; (g) training railway environmental staff in advanced environmental impact assessment techniques; (h) developing a fuel additive for diesel locomotives to boost combustion and reduce emissions; and (i) preparing an environmentally-sound strategy to dispose of more than 1 million styrofoam lunch boxes per day. 3.22 Expanding System Capacity. This component would support MOR's initial effort in its long-term plan to introduce heavy-haul operations-employing heavier trains with a higher ratio of payload to tare weight-to the core network. Financing would be provided for procuring three-phase AC electric locomotives, including equipment, tools, spare parts and training, and securing heavy-haul expertise to help MOR raise the axle load limit on the core network from 21 to 25 tons. The acquisition of these locomotives would involve importing fully-assembled locomotives and transferring technology for locomotive manufacture from a foreign locomotive builder to China (to be financed separately by MOR). This transfer would be either to a joint-venture manufacturer or to one of China's two electric locomotive works. The first use of AC electric locomotives would be on the heavy-traffic, 269-km single-track section between Baoji and Yangpingguan. This section, which is part of the Baoji-Chengdu main line, has gradients up to 3 percent. 3.23 The investment would reduce operating and maintenance costs and increase throughput capacity of congested main lines through the use of more powerful electric locomotives to pull the heavier freight trains. The investment would also contribute to MOR's strategy to: (a) develop for eventual manufacture in China a new generation of electric locomotives required on other electrified, high-volume main lines; and (b) upgrade the quality of its locomotive manufacturing, which would be an element of a study component under the proposed project. 3.24 The Borrower, through MOR, plans to implement the investment components according to the implementation schedule given in Table 3.9. E. STUDIES FOR MODERNIZATION AND REFORM 3.25 The following study components would provide MOR with the TA and software needed to prepare future railway projects or to develop and apply new railway technologies and management techniques.  - 19 - 3.26 Feasibility Study of Dedicated Passenger Rail. Foreign experts and training of MOR staff would be provided for the purpose of: (a) forecasting ridership on the new dedicated passenger rail line between Beijing and Shanghai and its competing modes; (b) comparing the life-cycle costs of the dedicated passenger rail line with those of other modes for different market segments; (c) assessing the economic, financial and technical feasibility of the line; and (d) optimizing the line's engineering and operating parameters (such as station spacings, train size, train speeds and operating patterns). 3.27 Application of the RIS Decision Support System. Expertise and computer software would be provided for helping MOR: (a) refine the decision support system developed under the Railway Investment Study (RIS) to make it more realistic; (b) develop and apply a new, fast-response model to help MOR optimize railway investment programs through 2005 under anticipated budget constraints (this would replace the existing trial-and- error procedure); and (c) apply the RIS system to determine the economic priority of the proposed dedicated passenger line relative to other major railway projects. 3.28 To strengthen the dialogue between the Government and the Bank on railway investment planning, MOR plans to apply appropriate methodologies (including the RIS system) and criteria to evaluate the proposed railway investments. The results of the evaluation would be presented in a report to be discussed by MOR and the Bank at the mid-term review. To make the review manageable, the evaluation would focus only on a few most important questions, in particular, those related to the adequacy of the investment programs for capacity expansion, maintenance and rehabilitation, and technological upgrading. 3.29 Information Systems Studies. TA would be provided to MOR for conducting studies to: (a) develop a marketing information system built on a systemwide waybill file; (b) prepare plans for expanding TMIS beyond 1997; and (c) conduct feasibility studies for new operating information systems, including one for locomotive and rolling stock maintenance and a material stock control system. 3.30 Telecommunications Network Systems Study. MOR would receive TA and training for undertaking a study on network management and optimization, to monitor the performance and improve the reliability of the railway telecommunications network. 3.31 Diesel Engine Design. Financing would be provided to MOR for: (a) acquiring the expertise needed to design high-efficiency, high-power, low-emissions diesel engines for heavy-haul freight operations and higher-speed, higher-capacity passenger services; and (b) importing the critical parts needed to develop a prototype engine. 3.32 Restructuring the Railway's Manufacturing and Overhaul Sector. MOR would obtain TA to prepare an action plan to restructure and modernize the railway manufacture and overhaul sector. The restructuring part of the proposed TA would deal with (a) rationalizing MOR's 35 factories into appropriate groups of companies, to strike a better balance between specialization and competition; and (b) forming joint ventures to transfer management expertise and manufacturing technologies to the railway. The  - 20 - modernization part would deal with upgrading the quality of railway equipment manufacturing to international standards. 3.33 Strengthening MOR's Treasury Functions. Foreign experts and training of MOR staff would be provided for the purpose of: (a) strengthening its treasury functions, and (b) establishing a framework for issuing railway bonds. 3.34 Agreement was reached at negotiations that the Borrower, through MOR, will (a) undertake the studies summarized above according to action plans acceptable to the Bank (Annex 7J, (b) exchange views with the Bank on the studies' recommendations; and (c) implement the recommendations taking into account the Bank's comments (para. 6. 1c). F. COST ESTIMATES 3.35 The project is estimated to cost $1.75 billion, including physical and price contingencies (see Tables 3.1-3.8 and the cost summary table below). The foreign exchange costs of the project are estimated at $619.9 million, representing about 35 percent of project costs. Base costs were originally estimated at January 1994 prices; they have been adjusted to January 1995 prices. Physical contingencies are calculated at 10 percent of the base costs of civil works and 5 percent of the base cost of equipment (7 percent for the container transport component). Price contingencies were calculated both for foreign and local costs according to Bank guidelines, for each year from 1995 to 2002, when expressed in US dollars: 1.5, 1.8, 2.6, 2.5, 2.5, 2.5, 2.5, and 2.5 percent; and when expressed in Yuan: 14.0, 10.5, 8.5, 7.0, 6.5, 6.2, 6.2, and 6.2 percent. The exchange rate of Y 8.7 to the US dollar was used for converting foreign exchange costs. MOR is currently exempt from import taxes, customs duties and local taxes, but will be subject to import taxes from 1996 onward. Identifiable taxes and duties amount to about $130 million equivalent. The costs of the goods financed under this project were estimated on the basis of unit costs of similar equipment, machinery and materials procured in 1993. The costs of TA and training were based on current average fees per month in China and on current costs for travel and subsistence for foreign consultants.  - 21 - COST SUMMARY (January 1995 prices) Formign Y million S niullion as % of Bank loan Local Foreign Total Local Foreign Total total (S milion) Expandingcorridorcapacity 5,884.7 2,426.1 8,310.8 676.4 278.9 955.3 29.2 151.8 Modernizinginforaationsystemn 759.4 1,123.1 1,882.4 80.6 119.0 199.6 59.6 38.9 Upgrading teleconmunications 872.3 375.2 1,247.5 92.2 39.7 131.9 30.1 39.7 Commercializingcontainertranap. 1,199.1 249.4 1,448.5 126.8 26.3 153.1 17.2 26.3 Enhancing environmental protection 22.1 41.2 63.3 2.3 4.4 6.7 66.5 4.4 Expanding system capacity 272.6 804.5 1,077.1 31.3 92.5 123.8 74.7 92.5 Technical asistnce 1.5 63.1 64.6 0.2 7.2 7.4 96.3 7.2 Subtotal 9011.7 50826 140943 10098 568.0 1j77 36.0 360.8 Physical contingencies/a 759.6 269.7 1,029.3 85.8 30.6 116.4 26.3 20.7 Baseline Estimate 9,771.3 5,352.3 15 123.6 1i0956 598.6 1 694.2 35.3 381.5 Price contingencies 2,030.7 1,248.3 3,279.0 32.0 21.3 53.3 39.9 18.5 Total /b 11 802.0 6,600.6 18 402.6 1,127.6 619.9 1,747.5 35.5 400.0 /a Ten percent for civil work. and 5 percent for equipment. /b From 1996 onward, MOR will not be exempt from import taxes, customi duties and local taxes. Identifiable taxes and duties are estinated at $130.1 nillion equivalent. 3.36 The accuracy of cost estimates for the proposed corridor expansion was difficult to assess because the Bank received insufficient details on the goods and labor to be funded domestically. To address the Bank's concern, MOR provided the Bank with cost estimates for the preliminary and final designs, which differ by less than 3 percent. G. FINANCING 3.37 A Bank loan of $400 million would be made to the People's Republic of China, representing about 23 percent of total project costs and almost 65 percent of the foreign costs. MOF would allocate the funds to MOR. MOR would cover the remaining costs and, if needed, local cost overruns, including contingencies. MOR does not capitalize interest expenses during construction, and interest expenses relating to implementation would be covered by its operating revenues. MOF would allocate the loan proceeds to MOR on the same terms as those of the Bank loan, with MOR bearing the foreign exchange risk.  - 22 - PROJECT FINANCING PLAN ($ million equivalent) Works Equipment Consultancies Resettlement Total MOR 294.0 1,035.0 - 18.5 1,347.5 Bank loan - 392.5 7.5 - 400.0 Total 294.Q 1,427.5 7 5 18 5 1.747.5 Foreign exchange - 612.4 7.5 - 619.9 3.38 Implementation of the investment components depends on availability of counterpart funds, which became an issue in 1993 when local funds originally allotted to Railways VI were temporarily diverted to another project, thereby delaying Railways VI. This implementation risk would be mitigated by MOF's newly issued policy that ensures the availability of counterpart funds up front. H. IMPLEMENTATioN AND RLsKs 3.39 MOR, through its Foreign Capital and Technical Import Office (FCTIO), would be the executing agency responsible overall for implementing the project under similar arrangements to those for the previous loans. Procurement of goods under International Competitive Bidding (ICB) would be handled by tendering companies appointed by MOR. The acquisition of TA, training, computer software, and equipment would be handled by MOR with consultants' help as needed. 3.40 Preparation of general, commercial and technical specifications has already begun with the intention to complete the bidding process for procurement in 1995 and to have contracts signed when the loan becomes effective. Implementation is expected to spread over six years. The project would be completed by December 31, 2001 and closed by December 31, 2002 (Table 3.9-Implementation Schedule). 3.41 The physical investments in the proposed project pose minimal risks in view of the railway's past experience in implementing such components. The risks relate to the policy reform component because of MOR's lack of familiarity with reform and its dependence on endorsement from core government agencies in undertaking reform initiatives. However, the Government and MOR are committed to reform, and are clearly moving in the right direction. The risk would be reduced by a continuous dialogue among MOR, other Govemment agencies, and the Bank on the substance and timing of reforms, by funding TA and training for sector policy reform, and by intense Bank supervision of the project. Additionally:  - 23 - (a) MOR has prepared action plans for the various technical assistance programs under the proposed project; and (b) the government agencies concerned, especially SPC, plan to give top priority to supporting MOR in undertaking reform initiatives proposed under the project. I. PROCUREMENT 3.42 Except as noted, all Bank-financed goods would be procured under ICB, according to the Bank's Guidelines for Procurement under IBRD Loans and IDA Credits dated May 1992. The bidding documents would conform with model documents prepared by the Government based on the Bank's standard bidding documents. Contracts worth $200,000 or less each and totaling no more than $10 million may be purchased by either local or international shopping, based on at least three quotations from potential suppliers. Contracts valued at $500,000 or less each and totaling no more than $20 million may be procured by Local Competitive Bidding (LCB) according to procedures acceptable to the Bank (see the procurement summary table below). Contracts for goods above the threshold of $2 million would be subject to the Bank's prior review procedures. In bid evaluation under ICB, Chinese manufacturers would be allowed a preferential margin over the CIF costs of competing imports equal to the lesser of 15 percent or customs duties and local taxes MOR would have to pay (expressed as a percentage of the CIF costs).  - 24 - PRtOCuREMENr SUMMARY La (S million) Total Procurement method project Project component ICB LCB OtherLk NBFL& cost Works - - - 294.0 294.0 Equipment and machinery 1,297.5 20.0 110.0 - 1,427.5 (262.5) (20.0) (110.0) (392.5) Consultancies - - 7.5 - 7.5 (7.5) (7.5) of which: PID components - - 0.6 - 0.6 (0.6) (0.6) Investment components - - 0.9 - 0.9 (0-9) (0.9) Study components - - 6.0 - 6.0 (6.0) (6.0) Resettlement - - - 18.5 18.5 iQoal 1.297.5 20 117.5 312.5 1.747.5 *262.5! (20 0 (117.5) (400.0) La Figures in parentheses are the amounts to be financed by the Bank loan. lb Includes Limited Intemational Bidding (LIB), local and intemational shopping, and consultants' services. & NBF = Not Bank-financed. 3.43 The three-phase AC locomotives for $100 million equivalent would be procured by Limited Intemational Bidding (LIB) from reputable electric locomotive builders in the world. The bids would be evaluated on the basis of criteria that conform with the Bank's Guidelines for Procurement dated May 1992; a margin of preference, however, would not be applicable. Bidders would be requested to quote for transfer of technology, although this would not be financed by the Bank. The bidding process would be subject to the Bank's prior review. 3.44 Bank-financed consulting services would be provided by qualified consultants appointed according to the Bank Guidelines for the Use of Consultants dated August 1981.  - 25 - The Bank's prior review would be required for all contracts over $100,000 for consulting firms and $50,000 for individual consultants, all single-source contracts, and terms of reference for all contracts. 3.45 Items not financed by the Bank-including civil works, miscellaneous local materials and equipment-would be procured according to Chinese government procedures. J. DISBURSEMENTS 3.46 Disbursements under Bank financing would be for: (a) 100 percent of the foreign expenditures for imported goods; (b) 100 percent of the local expenditures (ex-factory costs) for goods purchased direct from factories; (c) 75 percent of the local expenditures for other goods procured locally; and (d) 100 percent of the costs of services. Domestic transport costs from the border, a port or factory would not be eligible for Bank financing. 3.47 Disbursements against contracts for goods valued less than $2 million each, consulting contracts valued less than $100,000 each for firms and $50,000 each for individuals, and expenses on training and study tours would be made on the basis of Statements of Expenditure. To facilitate disbursements, a Special Account would be established with an authorized allocation of $20 million representing about four months of expected expenditures on average. Replenishment would be made monthly or whenever the Special Account is drawn down by 50 percent of its initial deposit, whichever occurs first. Documentation supporting Statements of Expenditure would not be submitted to the Bank, but would be kept in MOR's project office in Beijing and made available for review by the Bank's supervision missions. 3.48 Disbursement projections (Table 3.10) assume that the loan would become effective by September 1, 1995 and be fully disbursed by December 31, 2002. The projections are conservative with regard to the positive effects of advance procurement arrangements. K. MONrrORING, EvALUATION AND SUPERVISION 3.49 Monitoring. To monitor the progress and effectiveness of implementation, MOR would provide the Bank with periodic reports during each year of project implementation (beginning with the year after loan effectiveness) on: (a) Audits of the Project Accounts, the Special Account, the Statements of Expenditure, and the consolidated financial statements for the railway, CRC and SIT by end-June; (b) The status of implementation for each PID component with respect to the target dates shown in Annex 6 by the end of June and December;  - 26 - (c) The status of implementation for each investment component as specified in the implementation schedule (Table 3.9) by the end of April, July, October and January; (d) The performance of each investment component relative to the indicators described in Annex 5 during the period of operation by end-March; (e) The status of resettlement under the corridor expansion component by the end of March; (f) The results of resettlement monitoring and evaluation and environmental impact mitigation for the corridor expansion component by end-March. 3.50 Mid-term Review. Given the complexity of the project, agreement was reached at negotiations that the Borrower, through MOR, will undertake, jointly with the Bank, a mid-term review ofproject implementation no later than November 30, 1998 (para. 6.1d). 3.51 Supervision. Two Bank supervision missions per year are planned, but more missions may be needed depending on implementation progress. Because of its size and complexity, the project would require above-average supervision staff-weeks, especially in the first two to three years of implementation involving the PID components. Over the project's six-year implementation period, the supervision staff time is estimated to total about 94 staff-weeks or average about 13 staff-weeks per year (Annex 10). This estimate incorporates staff-week savings expected from combining the supervision of this and other railway projects in China. MOR would submit a Project Completion Report to the Bank six months after loan closing. L. ENVIRONMENTAL IMACS AND RESETELEMENT 3.52 Envirommental Impacts. This is a Category B project. The proposed Wuhan-Guangzhou electrification and upgrading has an impact on resettlement; none of the investment components would significantly harm the environment. In fact, the electrification would reduce air pollution and soil contamination by diesel fuel and lube oil. Agreement was reached at negotiations that the Borrower, through MOR, will carry out the project according to health, safety, and environmental standards acceptable to the Bank (Annex 8; para. 6. le). The pilot environmental protection programs would acquaint MOR with up-to-date technologies and practices, and thereby help MOR develop a comprehensive environmental action strategy for the railways (Annex8). 3.53 Resettlement. Under the proposed electrification, resettlement would result from land acquisition along the Wuhan-Guangzhou line, to make land available for the extension of stations, and the construction of substations and power supply depots. It would affect about 13,200 individuals (4,300 due to housing demolition). No sites of notable historical or cultural value are in or near the land to be acquired, nor are they  - 27 - known to contain habitats of endangered species. MOR has submitted a resettlement plan satisfactory to the Bank (Annex 9!. 3.54 While resettlement activities would be funded by MOR, the villages and townships in rural areas and the city district government in urban areas would be responsible for planning and implementing them. The local branches of the land administration offices at the county level are charged with monitoring resettlement activities to ensure they comply with the Land Management Law, and the State Audit Agency is charged with auditing the use of resettlement funds. Experience under previous railway projects has shown this arrangement to be satisfactory. To ensure a continuous satisfactory resettlement process, MOR has contracted with the Social Sciences Research Institute (SSRI) of Southwest Jiaotong University to monitor resettlement activities and alert MOR to problems. MOR would make available to the Bank annual monitoring and evaluation reports prepared by the university. Agreement was reached at negotiations that the Borrower, through MOR, will ensure that land acquisition and resettlement will be done according to a plan acceptable to the Bank (para. 6. le).  - 28 - 4. ECONOMIC EVALUATION AND RISK ANALYSIS OF PROJECT-FINANCED INVESTMENTS A. INTRODUCTION 4.1 The following five investment components have undergone economic evaluation: expanding corridor capacity, upgrading telecommunications systems, modernizing information systems, commercializing container transport, and expanding system capacity. Monetary inputs and outputs used in the evaluations were obtained by converting financial costs to economic costs using economic shadow prices and their related conversion factors in two key areas. For local labor costs, a conversion factor to account for the value of fringe benefits was applied to the amount associated with basic wages. For locomotives and rolling stock, the analysis used a conversion factor based on the nonsubsidized prices charged by MOR to third-party buyers. Details on the assumptions are in the Project File. B. MAiN BENEFTs 4.2 The estimated net present values (NPV) and economic internal rates of return (ERR) for each investment component are summarized in the table below (special attention was devoted to avoiding double accounting both between and within component categories). The table also indicates the NPVs for the five components in terms of three major benefit categories: (a) By increasing throughput capacity, both the system capacity expansion component and the telecommunications component would facilitate the production and distribution of new bulk and manufactured goods. As a consequence, these components would produce value added to the economy. (b) Upgrading and electrifying the Wuhan-Guangzhou line (corridor capacity expansion component) and handling more container traffic by rail rather than road (container transport commercialization component) would reduce the cost of transport services. (c) Improvements made possible by the telecommunications and information systems components would enable MOR to make more efficient use of existing rolling stock and fixed plant, thereby creating savings in capital investment outlays.  - 29 - NET PRESENT VALUE AND EcoNoMIc RATE OF RETuRN BY COMPONENT (in Y million) Type of Benefits Value Added to Reduction in the Avoided Capital Total ERR the Economy Cost of Transport Investments NPV (%) Component (% Benefits) Services (% Benefits) (% Benefits) _ Expand Corridor Capacity 4,123 - 4,123 26.1% (100%) Modernize Infornation Systems - 4,042 4,042 42.2% (100%) Upgrade Telocommunications Systems 2,436 - 2,525 4,961 30.2% (49.1%) (50.9%) Commercialize Container Transport - 956 956 29.0% (100%) Expand System Capacity 3,714 22 - 3,736 20.5% (99.4%) (0.6%) Total NPV 6,149 5,101 6,567 17,818 26.7% (34.5%) (28.6%) (36.9%) _ 4.3 Besides the benefits quantified above, several components-particularly the expansion of system capacity and commercialization of container transport-would help spur development of interior provinces by expanding transport services into these areas. C. EXPANING CORRIDOR CAPACrrY 4.4 Over the next decade, rail freight demand on the Wuhan-Guangzhou corridor is expected to grow substantially. By the year 2000, the line will be called upon to handle more than 203 million tons-two thirds more than the 123 million tons transported in 1991. In 2005, demand is anticipated to approach 245 million tons-a doubling of current levels. Passenger traffic also is projected to expand rapidly: compared to the 29 billion pkm handled by the line today, personal travel will increase 40 percent by the turn of the century and 75 percent by 2005. 4.5 The Wuhan-Guangzhou line, as currently configured and operated, lacks the capacity to handle all the contemplated growth in freight demand (as priority has been given to passenger trains). Consequently, without the project, as least 15 percent of the anticipated freight volume would need to be rerouted to the more circuitous and nonelectrified Beijing-Jiulong rail line (for through traffic the Beijing-Jiulong route is 1,32'7 km compared to the 1,044 km of the Wuhan-Guangzhou line). In addition, without this investment component, some of the projected Wuhan-Guangzhou freight traffic also would be diverted to more costly road transport. 4.6 The benefits were estimated in terms of transport operating costs savings attributable to the lower fuel and maintenance outlays made possible by shifting from diesel  - 30 - to electric traction. These savings, in turn, relate to the passenger and freight traffic that, without the project, would be moved over the Wuhan-Guangzhou line by diesel traction, and to the freight traffic that would be redirected to the longer, diesel-operated Beijing- Jiulong route. Because the unit costs of trucking in China are over 10 times higher than comparable rail outlays, the diversion to trucks that would be avoided by this component would produce further benefits. These savings are properly classified as reductions in transport operating costs. Electricity was not shadow-priced to reflect shortages because electricity for the line would not be taken from industry, but would be provided through investment earmarked for expansion of power generation capacity. Still, sensitivity analysis showed that the project would still be economically justified even with the price of electricity doubled. 4.7 Complementary investment costs are quantified as the difference between the costs of the with- and without-project scenarios. The with-project scenario costs include capital costs for a generating plant with the requisite capacity to supply the Wuhan- Guangzhou line with electric power; the cost of maintaining the overhead catenary system; the cost of new locomotives and rolling stock less the cost of comparable equipment that would otherwise be required if diesel service continued; and the costs of population resettlement. Under the without-project scenario, freight traffic would be diverted to the Beijing-Jiulong route. To accommodate this traffic, certain fixed plant capital costs would be incurred (e.g., the double tracking of the Xiangtang-Longchuan section at an earlier date than now planned, and double tracking lines connecting the alternative route to both Wuhan and Guangzhou). The resulting NPV discounted at 12 percent is Y 4.1 billion and the ERR is 26.1 (Table 4.1). D. MODERNIZING INFORMATION SYSTEMS 4.8 From the experience of railways in other countries, modernized information systems produce significant investment savings. The Canadian National, for example, attributes freight car savings of 3.4 percent annually to the introduction of information systems. The consequences for British Rail-large gains in the utilization of rolling stock -are similar. Acknowledging the large capital outlay contemplated by MOR, even conservative estimates of improvement in plant and equipment efficiency stemming from a better information system would yield relatively large savings. (The savings in plant and equipment tabulated for this component are separate from and in addition to the capital investment savings quantified for the telecommunications component.) The information systems component is anticipated to yield an NPV of Y 4.0 billion and an ERR of 42.2 percent (Table 4.2). E. UPGRADING TELECOMMUNICATIONS SYSTEMS 4.9 The expansion and modernization of MOR's telecommunications networks by this component would make more productive use of existing capital assets. Thus, two major types of benefits can be anticipated. First, better telecommunications would enable MOR to improve car tumaround times and reduce the downtime for locomotive maintenance. This, in turn, would raise the freight-hauling capacity of the system. This  - 31 - is because an improved telecommunications system would allow freight wagons to be dispatched more efficiently, and thereby enable the average wagon to make more trips. When a wagon makes only one additional trip per year, its effective annual freight capacity increases by 1.5 percent annually. Calculated on a systemwide basis, this amounts to nearly 23 million tons in incremental freight capacity and associated benefits in the form of value-added to the economy. At the same time, the more intensive use of existing plant and equipment made possible by upgraded telecommunications also defers the need for new capital expenditures, which MOR presently estimates at about Y 70 billion per year. Thus, the gains in efficiency stemming from improved telecommunications would create additional benefits by postponing the need for near-term capital investment outlays. The NPV of this component is estimated at Y 5 billion and the ERR at 30.2 percent-a rate that is well in line with other Bank-funded telecommunications projects. Not quantified here are other benefits including higher worker productivity, greater service quality, and more reliable communications (Table 4.3). F. COMMRCIALIZING CONTAINER TRANSPORT 4.10 Following the pilot container transport project funded by the Bank under Railways VI, this component would further enhance MOR's efforts at moving larger quantities of higher-valued goods in containers. This merchandise is now handled either by truck or rail in break-bulk form. For traffic diverted from trucks, economic benefits stem from: (a) the much lower unit cost of container rail transport; and (b) the shorter trip distances of rail compared with truck. Based on the lengths of haul for the five highest- volume rail container routes in service today (Shanghai-Xian, Shanghai-Tianjin, Guangzhou-Zhengzhou, Beijing-Guangzhou, and Guangzhou-Wuhan), the long-run variable cost of transporting goods by rail is nearly Y 860 per ton less than the comparable cost via truck. For traffic diverted from break-bulk rail service, savings in handling costs are estimated by MOR at Y 106 per ton. The resulting NPV of this investment is Y 956 million and the ERR is 29.0 percent (Table 4.4). G. EXPANDING SYSrEM CAPACrrY 4.11 While they would eventually be used systemwide, three-phase AC electric locomotives would be deployed first on the mountainous Baoji-Chengdu route in western China. At present, this line-utilizing standard SS4 electric locomotives-operates at capacity and cannot sustain any growth in freight volume. By comparison, the AC units can haul about 20 percent more than the SS4s. Further, due to their greater power, higher speed and more effective braking systems, the AC units permit more trains to be run over the line than do the SS4 units. Taken together, these capacity-enhancing features of the AC locomotives would greatly increase the amount of traffic that can be carried over the route, from 20.2 million tons today to 37 million tons-a gain of 78 percent. 4.12 Given this increase, the project would foster the production and consumption of new products that would result in value-added benefits to the economy (especially in the interior western region). These benefits have been calculated based on the anticipated yearly growth in incremental traffic using a methodology for valuing induced traffic.  - 32 - Further, compared to the SS4s, the AC units are expected to cost less to maintain and have a much lower failure rate. Consequently, benefits in the form of annual operating savings of about 16 percent per year also are anticipated. 4.13 MOR proposes to import 32 locomotives over the three-year period 1997-99. In calculating the economic costs of this component, a unit price representing the average of initial quotations already obtained by MOR has been employed. Since the locomotives are to be manufactured and assembled abroad, there are no pertinent local costs. The initial quotations also include a three-year spare parts guarantee; accordingly, it is not necessary to specify this cost element separately until 1999. Finally, an allowance for tools, instruments, and training is included as a part of the total project investment. Because import duties and value added taxes are not regarded as economic costs, they have been excluded from this analysis. Including the complementary costs for expanding mine and factory capacity needed to produce the incremental traffic, the NPV of this component is estimated at Y 3.7 billion and the ERR at 20.5 percent of the incremental investment of replacing SS4s with new locomotives (Table 4.5). H. OVERALL EVALUATION AND RISK ANALYSIS 4.14 As summarized in the table above, each of the components has an ERR of at least 20 percent and taken together, all components as a group yield an overall ERR of 26.7 percent. The NPVs of most components exceed Y 3.7 billion (the NPV of the comparatively lower-cost container transport component amounts to almost Y 1.0 billion). The investments would expand rail capacity and thereby create more value added of goods and services-particularly in the interior provinces. Moreover, the more efficient rail service afforded by these investments would produce additional benefits in the form of lower capital outlays and reduced transport operating expenses. Therefore, the proposed investment is well justified. 4.15 Execution of the investment components would entail certain risks. Several of the components-the AC locomotives, information systems and telecommunications- involve newer technologies. As such, they are subject to delays in procurement and implementation that could retard the flow of expected benefits. By contrast, with respect to the Wuhan-Guangzhou corridor capacity expansion component, the technologies are well known to MOR. One concern, though, pertains to the failure rate of electric catenary systems and whether MOR's statement of electric locomotive operating expenses fully reflects these outlays. To compensate for possible shortfalls, an additional complementary cost for catenary maintenance is included in the economic analysis. The risks and potential benefits of the container transport component largely depend on the pricing and logistics policies adopted by CRC and SIT. Rates that adequately cover rail long-run variable costs and properly take into account the pricing and service offerings of trucks should succeed in diverting substantial volumes of higher-value traffic from trucks. At the same time, however, unreliable and erratic rail delivery schedules would fail to attract the desired business, while below-cost rail tariffs would yield unacceptable losses.  - 33 - 4.16 To assess the above-mentioned risks, two separate sensitivity analyses were conducted on each of the investment components. First, the economic cost (including all complementary costs) of each component was increased by 20 percent. Second, the total value of all economic benefits associated with each component was reduced by 20 percent. In no case did any of these tests reduce the ERR to less than 15 percent. The results of both sensitivity tests, along with the base-case values, are presented in the table below. RESULTS OF SENsrnrPv ANALYSIS (Y million) Increase in Decrease in Benefits Base Case Investment Costs COMPONENT NPV NPV NPV (ERR %) (ERR %) (ERR %) Expand Corridor Capacity 4,123 3,561 2,752 (26.1%) (23.1) (22.4%) Modernize Information Systems 4,042 3,793 2,984 (42.2%) (37.7%) (36.7%) Upgrade Telecommunications Systems 4,961 3,239 2.247 (30.2%) (21.9%) (20.2%) Commercialize Container Transport 956 746 555 (29.0%) (23.6%) (22.5%) Expand System Capacity 3,736 2,199 1,451 ________________________________ (20.5%) (16.2%) (15.4%)  - 34 - 5. FINANCIL VIBILITY OF RAILWAY TRANSPORT OPERATION A. INTRODUCTION 5.1 Since entering into an economic contract with the Government in 1986, MOR has been financing all of its operating and capital expenditures through internally generated funds and borrowings. This chapter examines the past and present financial performance (1988-94) of the railway's transport operation (comprising the 12 regional administrations but not including the diversified economy companies) and forecasts its future financial performance (1995-2000). B. PAS FINANCL PERFR NCE 5.2 By Government decree, gross revenue from the railway's transport operation is divided into two parts: the first is from base tariffs, which covers operating expenses and contributes to the net income of the railway's transport operation; the second comes from a Railway Construction Fund freight surcharge earmarked for capital investments and cannot be used to meet operating expenses. This separation has served the Government's effort to control operating costs. Adjustments of the base tariffs and freight surcharge require SPC/State Council approval, which limits MOR's flexibility in setting tariffs. 5.3 During 1988-92, the railway was profitable, although an increasing operating ratio since 1990 indicates that base tariffs did not keep pace with inflation and the complete phasing out of input subsidies. Since 1988, operating costs per ctkm escalated 99 percent, while revenues grew only 70 percent (the latter exclude freight surcharge revenues earmarked for capital investments). From 1992-93, the cost of previously subsidized inputs such as electricity, energy and materials increased 77, 58 and 41 percent, respectively. Nonoperating expenses (i.e., interest) also grew 75 percent during this time due to more borrowing for capital investment and to the phasing out of interest subsidies by the Government. At the same time, the freight surcharge increased from 0.2 fen/tkm in 1991 to 2.7 fen/tkm in 1993. 5.4 When it was introduced in 1991, the Railway Construction Fund was not leveraged, i.e., funds had to be used 'yuan for yuan' for capital investments. However, starting in 1993, the fund could be used to pay the interest on debt incurred for these investments, and the railway showed a net loss of Y 0.7 billion in 1993 (after paying Y 3.2 billion interest from surcharge revenues). Had the surcharge revenues been included with base tariff revenues, the railways would have shown a profit of Y 20.4 billion in 1993 (see the table below).  - 35 - ACTUAL REVENUES AND EXPENSES, 1988-93 (Y million, in current prices) /a /a Annual 1988 1989 1990 1991 1992 1993 Growth OveratineRevenue 28 062 31607 41.105 46.704 56.471 80.294 23% of which surcharge revenue - - - 1,996 8,604 24,347 - Operating Expenses 20.272 24 982 27.807 32 509 35 811 47 641 19% Operatine Income 72790 6.625 13.298 14 195 20 660 32653 33 % Net Income /b 6,414 3,558 7,370 7,630 10,626 20,385 26% of which: Inc./(loss) from trpt oper. /c 4,952 2,258 5,870 4,111 3,907 (734) - TransfertoRwyConstr. Fund/d - - - 1,889 6,719 21,119 Transfer to Special Fund 1,462 1,300 1,500 1,630 - - - Workinz Ratio (%) /e 60 67 57 59 64 75 Operating Ratio (%) /f 72 79 68 70 75 85 Unit operating revenue /e 2.14 2.36 3.14 3.28 3.29 3.63 70% incr. (fenlctkm) aince 1988 Unit operating expense 1.55 1.86 2.13 2.39 2.46 3.09 99% incr. (fen/ctkm) since 1988 /a 1992-93 operating expenses and income are not directly comparable to previous years due to changes in the accounting guidelines. /b Operating income less net nonoperating expenses, interest and taxes. /c Capital Construction Fund under old accounting guidelines, i.e., balance of net income after allocations to the Railway Construction Fund and the Special Fund (which was eliminated under new accounting guidelines). /d Revenues from the freight surcharge less business taxes (and less interest expense in 1992 and 1993). /e Operating expenses, less depreciation, expreswed as a percentage of operating revenue less surcharge revenue. If Operating expenses expressed as a percentage of operating revenue leu surcharge revenue. /g Operating revenue from base tariffs Ci.e., excluding freight surcharge revenue). C. PRESENT FINANCIAL PERFORMANCE 5.5 MOR projects (based on unaudited figures) an operating ratio approaching 100 percent and a loss of Y 2.9 billion (based on base tariffs and after paying Y 6.5 billion interest from surcharge revenues) in 1994. If freight surcharge revenues were treated as fungible with base tariff revenues, MOR would project a profit of about Y 26.0 billion. MOR is now in a situation that it has funds to build new railway lines, but is having trouble maintaining the railway's physical assets and replenishing pension and welfare funds because of the segregation of base tariff and freight surcharge revenues. Protracted deferment of maintenance could impair the safety of railway operations, especially by heightening the risk of derailments. 5.6 As to financial self-sufficiency (see definition in table in para. 5.14), MOR projects that the railway will internally generate 67 percent (compared to 75 percent in 1993) of average capital investments including equipment replacements, other than normal repairs and maintenance. The decline is due to higher capital investments (Y 45.0 billion  - 36 - in 1994 compared to Y 40.0 billion in 1993) and to the absence of across-the-board tariff increases in 1994 [i.e., in 1994, only selective tariff increases (see para. 5.8) compared to an across-the-board freight surcharge increase in 1993 took place]. 5.7 The self-financing ratio in the railways is relatively high because 80 to close to 100 percent of internally generated funds is from freight surcharge revenues that are earmarked for capital investments. The remainder of the internally generated funds are noncash expenses (i.e., depreciation) and the difference between base tariff and operating (excluding depreciation) and nonoperating expenses. 5.8 MOR is trying to sustain the railway's profitability (i.e., the excess of book tariff revenues over expenses) by containing costs, raising productivity, and proposing tariff hikes. With regard to freight, MOR initiated in 1993 a "new line, new tariff" policy to achieve full cost recovery for newly built lines. Applying the policy to the new Daqin, Lanwu and Zhenwu lines raised the average base freight tariff from 2.7 fen/tkm in 1992 to 2.9 fen/tkm in 1993 (a 6.7 percent increase). With regard to passenger traffic, two new policies were introduced. First, a "higher price for higher-quality service" policy was applied to 12 pairs of passenger trains in 1993 and to 26 train pairs in 1994. Second, passenger tariffs were raised in Guangdong province during peak demand periods. These measures increased the average passenger fare from 4.4 fen/pkm in 1992 to 4.6 fen/pkm in 1993 (a 3.4 percent increase). Still, these initiatives were insufficient to keep the railway profitable (excluding freight surcharge revenues) in 1994. 5.9 To restore profitability, MOR has proposed to SPC a cost-index methodology for justifying future tariff adjustments. In addition, MOR has developed a costing model. Once data are available, the costing model will have the capability to track specific point- to-point costs that, combined with a centralized waybill file (to be developed along with management information systems), can calculate revenues and costs for the origin- destination movements of major commodities, and thus, determine profitable and loss- making lines and traffic categories. MOR is also preparing a plan in which concrete measures for reductions of operating costs over the next two to three years would be set forth. D. FUTURE FINANCIAL PERFORMANCE: BASE CASE 5.10 The base case reflects the most likely increases in base tariffs and freight surcharge from 1995 to 1997 and MOR's proposed capital investments from 1995 to 2000. In the base case and all scenarios (except the medium scenario, which assumes a surcharge increase in 1998), under the sensitivity analysis, it was assumed that no tariff increases would take place from 1998 to 2000. This approach was taken because discussions with the client on tariff increases beyond 1997 were inconclusive. Key assumptions for the base case financial projections for 1995-2000 are given below. Detailed financial assumptions are in the Project File. (a) A capital investment program of Y 61 billion in 1995 and Y 418 billion from 1996 to 2000 (including Y 350 billion of new investments and Y 68 billion of  - 37 - equipment replacement) based on a real GNP growth rate of 8 to 9 percent, which corresponds to a combined freight and passenger traffic (ctkm) growth rate of 6.6 percent per year; (b) About 50 percent of the capital investment plan to be implemented in 1995-97 and the remaining 50 percent in 1998-2000; (c) An increase in average passenger fares from 4.77 fen/pkm to 6.77 fen/pkm in 1995 (about 42 percent increase); (d) An increase in average base freight tariffs from 2.85 to 4.35 fen/tkm in 1996 (about 53 percent increase); (e) An increase in the freight surcharge from 2.7 to 4.2 fen/tkm in 1997 (about 57 percent increase). 5.11 For 1995, MOR estimates a loss of Y 4.4 million; after a brief recovery in 1996 to 1998 (due to projected tariff increases in 1995, 1996 and 1997), it projects losses in 1999 and 2000 because no tariff increases were assumed beyond 1997 (see para. 5.10) (see table below). The operating ratio (net of freight surcharge revenue) approaches 100 percent in 1995, recovers to 82 percent in 1996, but deteriorates to 98 percent by 2000. Aside from the projected loss/profit, MOR would have net surcharge revenues ranging from a low of about Y 29 billion in 1995 to a high of about Y 62 billion in 2000. The surcharge revenues are net of interest; since 1993 SPC and MOF have allowed MOR, on a year-to-year basis, to use surcharge revenues to cover some nonoperational expenses. Thus, a first step has been set in the direction of fungibility of revenue sources. If surcharge revenues were fungible in their entirety, the net result would be a profitable MOR (see table below). The self-financing ratio is projected at 67 percent in 1994 (based on unaudited figures), 52 percent in 1995, 63 percent in 1996 and over 80 percent from 1997 to 1999. E. SENsrnwvr ANALYSIS 5.12 The ability of the railway to increase the base tariffs and freight surcharge is crucial to the upkeep of its infrastructure, the welfare of its workforce, and the realization of its capital investment program. Two scenarios, a low and high case, are examined in comparison with the base case, where the low case implies no tariff increases for the period forecast and the high case implies the full tariff increases as proposed to the State Council in June 1994. In addition, a medium case is tested to determine the implications of delaying all tariff increases, assumed in the base case, by one year. The purpose is to evaluate the implications for: (a) the level of the self-financing ratio, (b) the amount to be borrowed, and (c) coverage of debt service. The detailed financial results under each of the scenarios are in the Project File. 5.13 The results are given in the table below. The low-case scenarios assume no tariff increases from 1995 to 2000 and can be rejected because it implies that MOR either  - 38 - FoREcAST OF REVENUES AND ExPENSES, 1994-2000: BASE CASE (Y million, in current prices) Annual 1994 1995 1996 1997 1998 1999 2000 Growth Oneratinr Revenue 92.328 104.637 130,.533 161,033 171.977 184.063 197.520 14 of which: Surcharge Revenue 33,507 35,181 36,450 60,900 65,100 70,140 75,600 15% OperatingExpenses 57.146 68489 77475 86935 97.103 107.747 119.112 13% Oeratinir come 35.182 36.14 7 5 7 74.874 76.36 78408 14% Net Inco le/a 25981 24.294 36.928 55.147 55.922 56.089 56. 14% of which: Inc./(loo) from trpt oper. /b (2,911) (4,355) 9,907 6,324 2,489 (1,549) (5,381) - Net tanafer to Railway Construction Fund /c 28,893 28,649 27,021 48,823 53,433 57,638 62,089 14% Workine Ratio (%) Id 86 87 72 75 78 81 83 Ooerating Ratio (%) /e 97 99 82 87 91 95 98 Unit operating revenueIf 3.67 4.13 5.32 5.30 5.29 5.27 5.26 43% incr. (fenlctkm) since 1994 Unit operting expense 3.57 4.07 4.38 4.60 4.81 4.99 5.13 44% incr. (fen/ctkzn) since 1994 /a Operating income less net nonoperting expenses, interest and taxes. /b Reflects net income after taxes but excludes interest and freight surcharge revenue. /c Revenues collected from the freight surcharge les businew taxes and interest. a Operatung expenses, les depreciation, expresed as a percentage of operating revenue less surcharge revenue. /e Operating expenses expresed as a percentage of operating revenue from base tariffs only. Tf Operating revenue from base tariffs (i.e., excluding freight surcharge revenue). has to: (a) reduce its capital investments by almost 15 percent in 1995 and by over 70 percent during the 1996 to 2000 period; or (b) borrow substantial amounts to implement its investment plan in 1995 to 2000, and run its operations from 1995 onward. Option (a) is contradictory to a national investment policy to increase investments in transport; option (b) is infeasible because MOR could not service its debt from 1997 onward. Both low-case scenarios result in increasing operating losses (due to base tariffs and freight revenues not being fungible), evidenced by an operating ratio of 111 percent in 1995, deteriorating to 141 percent by 2000. 5.14 The high-case scenario assumes that the railway receives approval for the full tariff increase as submitted to the State Council in June 1994: average base freight tariffs increase in 1996 from 2.85 fen to 5.55 fen per tkm, while increases in passenger tariffs and surcharges remain the same as under the base case. In addition, the 1996 to 2000 capital investment program is assumed to increase by Y 50 billion to reflect the high end of the Y 350-400 planning range. The high case should also be rejected because it assumes that the proposals MOR submitted to SPC in June 1994 for increases in freight tariffs, freight surcharge and passenger rates would be approved in their entirety with  - 39 - SENsrnvyrY ANALYSIS-KEY RATIOs, 1994-2000 1994 1995 1996 1997 1998 1999 2000 Base Case, Railway's current plans Operating Ratio, % /a 97 99 82 87 91 95 98 Self-Financing Ratio, % /b 67 52 63 82 84 84 - Debt Service Coverage c 2.9 3.4 3.4 3.3 4.2 4.5 4.7 Low Case (1). no tariff increases, reduction in capital investment Operating Ratio, % 97 111 1is 125 131 136 141 Self-Financing Ratio, % 71 50 43 42 52 50 - Debt Service Coverage 2.9 2.3 1.7 1.1 1.4 1.4 1.3 Low Case (21. no tariff increases, increase in borrowines Operating Ratio, % 97 111 118 125 131 136 141 Self-Financing Ratio, % 67 40 25 14 6 -4 - Debt Service Coverage 2.9 2.8 1.5 0.7 0.6 0.4 0.3 HiMh Case. full tariff increases and increase cavital investment to high range Operating Ratio, % 97 99 70 74 77 80 83 Self-Financing Ratio, % 67 52 76 93 91 89 - Debt Service Coverage 2.9 3.4 4.0 3.8 5.0 5.4 5.7 Medium Case, delay each tariff increase by one year. increase borrowings Operating Ratio, % 97 111 105 37 91 95 93 Self-Financing Ratio, % 67 40 36 52 77 77 - Debt Service Coverage 2.9 2.3 1.9 1.7 2.4 2.8 3.0 /a Operating expenses expressed as a percentage of operating revenue. Freight surcharge revenues are not included in this percentage. /b Defined as internal cash generation (including net revenue lou, railway surcharge revenues and depreciation) as a percent of the average capital investment and equipment replacenent in years (x-1), x and (x+ 1). /c Defined as inconme after taxes plus interest and depreciation divided by interest and repayment on long-term to be paid in the same year. regard to timing and level of increase. Based on experience since 1990, this is unlikely to happen. 5.15 The medium-case scenario assumes a one-year delay in tariff increases, i.e., average passenger tariffs increase by 2 fen/pkm in 1996, average base freight tariffs increase by 2.7 fen/tkm in 1997, and the freight surcharge increases by 1.5 fen/tkm in 1998. As a result of decreased revenues, MOR would need to mobilize Y 97 billion in additional borrowings during 1995 to 2000 to maintain positive cash flow. The loss in 1995 would increase from Y 4 to Y 12 billion and a loss of Y 9 billion would be incurred in 1996. MOR would become profitable in 1997. Including surcharge revenues, MOR would be profitable in each year from 1995 to 2000. F. CONCLUSIONS 5.16 The base case is the most desirable scenario because it limits the period of transitional losses (the latter not including surcharge revenues). The low case is a worst- case scenario because it would either not enable the railways to carry out the much-needed  - 40 - capital investments, or it would result in a nonviable railways from 1999 if it borrows the funds needed to implement the capital investments program. The medium case represents a possible altemative to the base case. It is less desirable because it lengthens the period of transitional losses by one year. 5.17 To effectively serve an increasingly market-driven economy, the railway requires, among other things, to increase its base tariffs by at least an amount that would allow it to phase out its transitional losses. Agreement was reached at negotiations that the Borrower, through MOR, will produce or cause to be produced in respect of MOR's railway transport operations, for each of its fiscal years, finds from internal sources equivalent to not less than the following percentage of the annual average of the capital expenditures incurred, or expected to be incurred, for that year, the previous fiscal year and the next followingfiscal year: (a) for itsfiscal year ending on December 31, 1995 and its fiscal year ending on December 31, 1996: 50 percent; and (b) for each of its fiscal years thereafter: 55 percent (para. 6. 1f).  - 41 - 6. AGREEMENTS REACHED AND RECOMMENDATION 6.1 During negotiations, agreement was reached with the Borrower that it, through MOR, will: (a) Implement the PID components of railway enterprise reform, railway tariff reform, and labor productivity according to action plans acceptable to the Bank (para. 3.9); (b) (i) select at least two container transport companies acceptable to the Bank to which the container transport and handling equipment to be procured under the project shall be leased; (ii) employ consultants with terms of reference, qualifications and experience acceptable to the Bank to assist it in the preparation of contractual agreements between the Borrower and said container transport companies required for the leasing and operation of said equipment on a commercial basis; (iii) furnish said agreements to the Bank promptly upon their preparation and afford the Bank a reasonable opportunity to exchange views with the Borrower thereon; (iv) thereafter, take all measures required on its part to conclude said agreements with said container transport companies, taking into account the views of the Bank on the matter; and (v) ensure that no invitations to bid for contracts for container transport and handling equipment included in the project shall be issued unless and until the Borrower shall have concluded the agreements referred to in item (iv) above (para. 3.19); (c) Carry out the study components of (i) dedicated passenger rail feasibility, (ii) application of the RIS decision-support system, (iii) railway information systems development, (iv) railway telecommunications systems management, (v) diesel engine design, (vi) strengthening of MOR's treasury functions, and (vii) restructuring the railway's manufacturing sector, according to action plans acceptable to the Bank; then, exchange views with the Bank on the studies' recommendations; and, finally, implement the recommendations, taking into account the Bank's comments (para. 3.34); (d) Undertake, jointly with the Bank, a mid-term review of project implementation no later than November 30, 1998 (para. 3.50); (e) Ensure that (i) the project will be implemented according to health, safety, and environmental standards acceptable to the Bank and (ii) the resettlement of people affected by the corridor expansion component will be carried out according to the plans acceptable to the Bank (paras. 3.52, 3.54); and  - 42 - (f) Produce or cause to be produced in respect of MOR's railway transport operations, for each of its fiscal years, funds from internal sources equivalent to not less than the following percentage of the annual average of the capital expenditures incurred, or expected to be incurred, for that year, the previous fiscal year and the next following fiscal year: (i) for its fiscal year ending on December 31, 1995 and its fiscal year ending on December 31, 1996: 50 percent; and (ii) for each of its fiscal years thereafter: 55 percent (para. 5.17). 6.2 Subject to the above, the proposed project would be suitable for a loan of $400 million to the People's Republic of China. The loan would be for a term of 20 years, including a grace period of 5 years, at the Bank's standard variable interest rate.  Table 1.1: FREIGHT TRAFFIC INTENSnTIES AND ROAD AND RAELWAY NETwoRK DENSrTy IN SELEcTED CouNTRIEs Country Country Area Tons Originated/a Ton-km/a Average Estimated GNP Tons/$1,000 Ton-km/$ GNP Name (million kn2) (millions) (billions) Distance (i)/a ($ billion) of GNP China 9.6 10,347 2,018 195 546 18.9 3.7 Russia 17.1 21,147 3,766 178 374 56.5 10.1 USA 9.4 6,938 5,259 758 5,935 1.2 0.9 India 3.3 1,043 634 608 274 3.8 2.3 Brazil 8.5 1,210 507 419 426 2.8 1.2 Japan 0.4 6,919 559 81 3,510 2.0 0.2 /a Includes rail, highway, inland waterway, pipeline, and air freight only. RoAD AND RAILWAY NETWORK DENsmY IN SELEcTED CouNTRIES Country Population Area Rail Length Rail Density Road Length Road Densitv Name (million) (million km2) ('000 km) kn/'000 pop km/'000 kmZ ('000 ki) km/'000 pop km/'000 km China 1,162 9.6 53.6 0.05 5.6 1,057 0.9 110.5 Russsia 149 17.1 87.2 0.59 5.1 879 5.9 51.5 USA 255 9.4 270.3 1.06 28.8 6,366 24.9 679.1 India 884 3.3 62.5 0.07 19.0 1,970 2.2 599.1 Brazil 154 8.5 28.8 0.19 3.4 1,662 10.8 195.2 Japan 125 0.4 27.3 0.22 72.3 1,112 8.9 2,941.7 Sources: China: Statistical Yearbook of China 1993 (Data for 1992), pp 460-68. Russia: "The Former Soviet Union in Transition," vol. 2-Study papers submitted to the Joint Economic Committee, Congress of United States, February 1993, p. 1162. Jane Holt: 'Transport Strategies for the Russian Federation," World Bank, 1993, Chapter 1 (1992 data). USA: World Faabook 1992 (Central Intelligence Agency), pp 358-9; World Road Statistics 1988-93 (International Road Federation) (data for 1991). National Transportation Statistics: Annual Report, June 1992, pp 54, 105; ENO Transportation Foundation: Transportation in America, PP 44-46. India: Indian Railways Ycarbook-1992-93, p. I 1; cIndia: Transport Sector Long-Term Issues, " Internal Document no. 13192-IN, Annex 1 (data for 1992). Brzil: World Road Statistics 1988-1992, International Road Federation, 1993, Section V; Kessides,I: Brazilian Railroad Industry: Options for Organizational Restructuring, p 41 (data for 1991). Japan: World Road Statistics 1988-1992, International Road Federation, 1993, Section V (data for 1991). Area & GNP: World Bank: The World Development Report 1994, pp 162-3 (GNP in 1992 US dollars). Population: World Bank: The World Development Report 1994, pp 162-3.  - 44 - Table 1.2: FREIGHT TRAmC BY MODE (in billion ton-km) Domestic Pipe- Civil Ocean Rail Road waterwayLa line aviation Total Shipping 1952 60.2 1.4 11.8 - 0.002 73.4 2.8 Modal split (X) 2.0 16.0 - - 18.0 - 1977 456.9 25.1 102.1 38.7 0.076 622.9 174.1 Modal split (9) 73.4 4.0 16.4 6.2 - 100.0 - 1979 559.9 74.5 139.3 47.6 0.123 821.4 317.1 1980 571.7 76.4 152.1 49.1 0.141 849.4 353.2 1981 571.2 78.0 150.7 49.9 0.170 850.0 364.3 1982 612.0 94.9 170.8 50.1 0.198 928.0 376.9 1983 664.7 108.4 181.1 53.4 0.229 1,007.7 397.7 1984 724.8 153.6 196.1 57.2 0.311 1,132.0 437.4 1985 812.6 169.3 237.1 60.3 0.415 1,279.7 532.9 1986 876.5 211.8 270.0 61.2 0.481 1,419.9 594.8 1987 947.1 266.0 288.9 62.5 0.650 1,565.2 657.6 1988 987.8 322.0 310.4 65.0 0.730 1,686.0 696.6 1989 1,039.4 337.5 349.8 62.9 0.690 1,790.2 768.9 1990 1,062.2 335.8 345.1 62.7 0.820 1,806.6 814.1 1991 1,097.2 342.8 396.5 62.1 1.010 1,899.6 899.0 1992 1,157.6 375.5 422.2 61.7 1.342 2,018.4 903.4 1993 1,195.5 407.0 472.6 60.8 1.661 2,137.6 913.4 Modal split (%) 55.9 19.0 22.1 2.8 0.1 100.0 Growth rate % 1.a. 1952 - 77 8.4 12.1 9.0 - 15.7 8.9 18.0 1983 - 84 9.0 41.7 8.3 7.1 35.8 12.3 10.0 1984 - 85 12.1 10.2 20.9 5.4 33.4 13.0 21.8 1985 - 86 7.9 25.1 13.9 1.5 15.9 11.0 11.6 1986 - 87 8.1 25.6 7.0 2.1 35.1 10.2 10.6 1987 - 88 4.3 21.0 7.5 4.0 12.3 7.7 5.9 1988 - 89 5.2 4.8 12.7 (3.2) (5.5) 6.2 10.4 1989 - 90 2.2 (0.5) (1.3) (0.3) 18.8 0.9 5.9 1990 - 91 3.3 2.1 14.9 (1.0) 23.2 5.1 10.4 1991 - 92 5.5 9.6 6.5 (0.6) 32.9 6.3 0.5 1992 - 93 3.3 8.4 11.9 (1.5) 23.8 5.9 1.1 1982 - 93 6.3 14.2 9.7 1.8 21.3 7.9 8.4 L/ Excludes oceangoing trnsprt from 1979 to 1993; includes oceangoing trasport in 1994. Source: Statistical Yearbook of China-1994, Table 14-7, p. 461.  - 45 - Table 1.3: PASSENGER TRAFFC BY MODE (in billion passenger-km) Civil Rail Road Waterway Aviation Total 1952 20.1 2.3 2.5 0.024 24.8 Modal split(X) 80.9 9.1 9.9 0.1 100.0 1977 102.3 44.8 9.7 1.834 158.7 Modal split (X) 64.5 28.2 6.1 1.2 100.0 1979 121.6 60.3 11.4 3.5 196.8 1980 138.3 73.0 12.9 4.0 228.1 1981 147.3 83.9 13.8 5.0 250.0 1982 157.5 96.4 14.5 6.0 274.3 1983 177.7 110.6 15.4 5.9 309.5 1984 204.6 133.7 15.4 8.4 362.1 1985 241.6 172.5 17.9 11.7 443.7 1986 258.7 198.2 18.2 14.6 489.7 1987 284.3 219.0 19.6 18.7 541.6 1988 326.0 252.8 20.4 21.4 620.7 1989 303.7 266.2 18.8 18.7 607.5 1990 261.3 262.0 16.5 23.0 562.8 1991 282.8 287.2 17.7 30.1 617.8 1992 315.2 319.3 19.8 40.6 694.9 1993 348.3 370.1 19.6 47.8 785.8 Modal split (%) 44.3 47.1 2.5 6.1 100.0 Growth rate % g.a. 1952 - 77 6.7 12.7 5.7 18.9 7.7 1983 - 84 15.2 20.9 0.0 41.6 17.0 1984 - 85 18.1 29.0 16.1 40.1 22.5 1985 - 86 7.1 14.9 1.9 25.1 10.4 1986 - 87 9.9 10.5 7.6 27.8 10.6 1987 - 88 14.7 15.4 4.1 14.7 14.6 1988 - 89 (6.8) 5.3 (7.7) (12.9) (2.1) 1989 - 90 (14.0) (1.6) (12.4) 23.1 (7.4) 1990 - 91 8.2 9.6 7.3 30.9 9.8 1991 - 92 11.5 11.2 12.1 34.9 12.5 1992 - 93 10.5 15.9 (1.2) 17.7 13.1 1982 - 93 7.5 13.0 2.8 20.9 10.0 Sourcc Statistical Yearbook of China-1994, Table 14-5, p. 460.  - 46 - Table 1.4: TRANSPORT INVETMFNr vs. ECoNoMIc OuTpur IN CHNA (in Yuan billion) Annual GNP Transport transport (current investment Year investment prices) as % of GNP 1966-70 3FYP 15.0& 935.0 1.6 1971-75 4FYP 31.81a 1,323.0 2.4 1976-80 5FYP 30.28a 1,758.0 1.7 1981-85 6FYP 41.9 3,130.5 1.3 1986-90 7FYP 89.1 6,875.3 1.3 1980 5.9 447.0 1.3 1981 3.6 477.3 0.8 1982 5.2 519.3 1.0 1983 7.2 580.9 1.2 1984 10.0 696.2 1.4 1985 15.9 856.8 1.9 1986 16.7 969.6 1.7 1987 17.4 1,130.1 1.5 1988 19.0 1,406.8 1.4 1989 18.0 1,599.3 1.1 1990 18.0 1,769.5 1.0 1991 30.0 2,023.6 1.5 1992 39.3 2,437.9 1.6 1993 63.9 3,134.2 2.0 1980-93 average 1.39 & Investment of FYPs includes Post and Telecommunications (about 4 percent of total). Source: Statistical Yearbook of China-1994, Table 5-2, p. 149, Table 2-10, p. 32. Statistical Yearbook of China-1993, Table 5-22, p. 135, Table 2-12, p. 28. Statistical Yearbook of China-1991, Table 5-22, p. 160. Other data based on SAR of China Fifth Railway Project, Table 1.5, p. 88.  Table 1.5: INVESTMEN iN THE TRANSPORT SECTOR (INCLUDING POST AND TELECOMMUNICATIONS) (in Yuan billion) Ist FYP 2nd FYP 3rd FYP 4th FYP 5th FYP 6th FYP 7th FYP 1953-57 195S-62 1963-65 1966-70 1971-75 1976-80 1981-85 1986 1987 1988 1989 1990 1991 1992 1993 Trasprt Railway 5.9 10.4 3.4 11.3 17.3 4.0 21.8 8.5 8.7 10.2 9.0 12.1 12.6 31.7 Highway - - - - - - 5.9 2.7 3.3 4.2 4.3 5.5 - 15.8 Waterway - - - - - - 11.0 3.7 3.9 3.2 3.6 4.8 - 6.1 Aviation - - - - - - 2.9 1.3 1.4 1.3 1.0 1.5 - 10.0 Pipclizia - - - - - - 0.1 0.5 0.1 0.1 0.1 0.1 - 0.0 Subotal 41.7 16.7 17.4 19.0 18.0 24.0 30.0 39.3 63.6 Pg & Tlccom. - - - - - 3.6 1.3 1.6 1.8 2.3 2.7 3.1 5.5 1.3 TOW 9.0 16.3 5.4 16.0 31.8 30.2 45.3 18.0 19.0 20.S 20.3 26.7 33.1 44.8 64.9 Total Capital ihve cniait 58.8 120.6 42.2 97.6 176.4 234.2 341.0 117.6 134.3 152.6 155.2 170.4 211.6 301.3 301.3 Tranuport as % of Tol investznat /a 15.3 13.5 12.7 16.4 18.0 12.9 12.2 14.2 13.0 12.5 11.6 14.1 14.2 13.0 21.1 la Invoetmnt of FYPr, befobr 1980, includes Poe and Tcleconmnnicationa (about 4 percent of total). sourc: samsFcai Yearbook of caina-1993, Table 5-22, p. 135, and Table 5.5, p. 122. SMdcal Yeabo of CQina-1994, Table 5-S, p. 149.  Table 1.6: SUMMARY STATISnCS OF BANK-FINANCED TRANPoRT PROJEC (T OUGH FY94) Actua Ltn Amount, SM $ million (net of tanl Board Effective Closng (baSud on SAR) canCellations) Subsector/Project Nam (Credit) No. Date Date Date IBRD IDA IBRD IDA Status RML Railway 1 2394 03/27/84 07/10/84 12/31/90 220.00 219.25 Closed Railway 11 2540 05/14185 11/22f85 06130194 235.00 220.00 Closed Railway III 26781(1680) 04/15/86 01/14/87 06/30/95 160.00 70.00 160.00 70.00 Ongoing Railway IV 2968 06/23/88 04/25/89 12/31/96 200.00 200.00 Ongoing Inner Mongolia Railway 3060(2014) 05/12189 01/16/90 12/31/96 70.00 80.00 70.00 80.00 Ongoing Railway V 3406 09/24/91 01/26/92 12/31/98 330.00 330.00 Ongoing Railway VI 3581 03/25/93 07/14/93 06/30/99 420.00 420.00 Ongoing Subtotal 1.635.00 150.00 1.619.25 150.00 oo Total Loan & Credit Amount in S million 1,785.00 PORTS Ports 1 2207 11/02/82 02/02/83 06/30/88 124.00 67.97 Closed Tianjin Port 2689 05/06/86 04/16/87 10/31/94 130.00 130.00 Ongoing Huangpu Port 2877/(1845) 10/06/87 10/20/88 12/31/93 63.00 25.00 63.00 25.00 Ongoing Dalian Port 2907/(1875) 02/09/88 10/13/88 12/31/93 71.00 25.00 70.25 25.00 Closed Ningbo & Shanghai Ports 3006 12/13/88 05/09/89 12/31/93 76.40 76.40 Ongoing Xiamen Port 3007 12/13/88 02/07/89 03/31/95 36.00 36.00 Ongoing Ship Waste Disposal (2391) 06/17/92 12/31/92 06/30/96 15.00 15.00 Ongoing Shanghai Port Restoration & Dev. 3552 12/22/92 05/14/93 06/30/99 150.00 150.00 Ongoing Subtotal 650.40 65.00 593.62 65.00 Total Loan & Credit Amount in $ million 715.40 ... Continued  Table 1.6: (CONT'D) Actual Loan Amount, $M $ million (net of Loan/ Board Effective Closing (based on SAR) cancellations) Subsector/Project Name (Credit) No. Date Date Date IBRD IDA IBRD IDA Status ROADS Roads I 2539/(1594) 05/14/85 12/04/85 06/30/91 42.60 30.00 29.60 30.00 Closed Beijing-Tianjin-Tanggu Expressway 2811/(1792) 05/12/87 12/14/87 12/31/94 25.00 125.00 25.00 125.00 Ongoing Highway III-Sichuan Highway 2951/(1917) 06/09/88 05/31/89 12/31/94 75.00 50.00 75.00 50.00 Ongoing Highway IV-Shaanxi Highway 2952 06/09/88 05/31/89 12/31/94 50.00 50.00 Ongoing Highway VI-Jiangxi Prov. (1984) 02/07/89 06/14/89 12/31/95 61.00 61.00 Ongoing Highway V-Shandong Provincial Highway 3037/(2025) 05/25/89 12/07/89 06/30/95 60.00 50.00 60.00 50.00 Ongoing Zhejiang Provincial Highway Project 3471 05/19/92 09/17/92 06/30/98 220.00 Ongoing Guangdong Provincial Highway Project 3530 11/17/92 04/16/93 06/30/99 240.00 240.00 Ongoing Henan Provincial Transport 3531 11/17/92 04/16/93 06/30/98 120.00 120.00 Ongoing Fujian Provincial Highway 3681 12/14/93 07/24/94 06/30/00 140.00 140.00 Ongoing Hebei/Henan National Highways 3748 06/07/94 10/18/94 06/30/88 380.00 380.00 Ongoing I Subtotal 1.352.60 316.00 1.119.60 316.00 Total Loan & Credit Amount in $ million 1,668.60 URBAN TRANSPORT Shanghai Metro Transport (2296) 09/10/91 01/26/92 06/30/98 60.00 60.00 Ongoing Shanghai Metro Transport 11 3652 10/14/93 02/14/94 12/31/98 150.00 150.00 Ongoing Subtotal 150.00 60.00 150.00 60.00 Total Loan & Credit Amount in $ million 210.00 MULTIMODAL Jiangsu Provincial Transport 3316/(2226) 04/09/91 09/10/91 06/30/96 100.00 53.60 100.00 53.60 Ongoing Subtotal 100. 53.60 100.00 53.60 Total Loan & Credit Amount in $ million 153.60 Sector Total Loan & Credit Amount in $ 4.532.60  Table 2.1: FREIGIT TRAmC CARRED BY MOR (in billion ton-kIn) 19S0 1911 1932 1983 1934 1915 1916 1987 1938 1939 1990 1991 1992 1993 X (93) Cool 176.70 13.20 199.76 213.15 233.55 259.59 277.00 285.74 299.51 316.18 344.64 341.42 357.71 358.36 30.1 runber 51.20 49.50 49.32 53.15 57.49 62.93 66.23 64.39 53.32 57.89 53.64 51.52 51.10 53.30 4.5 bee ASteel Products 46.80 42.40 44.59 49.43 56.83 64.81 74.94 75.61 69.86 72.62 30.59 30.62 81.61 93.61 8.3 Coaouction Materials 33.30 30.40 39.63 41.97 42.11 45.69 46.55 48.32 49.49 52.02 44.17 43.66 46.64 61.16 5.1 Petoleum 30.10 28.70 28.35 29.96 31.26 34.07 37.53 39.69 39.12 39.99 42.00 43.77 46.13 49.90 4.2 NonmtAaUic Ores 24.60 24.20 24.17 23.06 31.42 33.37 35.45 35.39 33.22 43.99 41.58 40.08 43.98 56.31 4.7 Grain 22.10 24.70 24.03 26.32 28.36 42.59 42.41 57.33 55.54 53.61 56.55 66.S6 71.70 77.69 6.5 Mcaic Ofts 18.10 16.40 16.96 13.73 21.33 25.32 28.39 29.53 32.11 33.11 44.23 42.95 44.96 47.08 3.9 Feriizer 15.70 17.90 18.69 13.06 19.33 16.55 16.10 19.98 22.58 25.81 26.31 32.21 32.33 23.34 2.0 Coment 9.00 9.60 10.30 11.00 11.53 13.42 14.42 15.20 14.31 17.22 15.41 16.34 19.53 24.83 2.1 Coke 6.90 6.90 6.49 7.30 7.68 9.59 10.33 12.61 15.36 17.28 19.46 18.06 19.40 24.65 2.1 Salt 5.10 5.40 5.56 6.23 6.60 7.36 9.27 10.32 11.90 15.43 12.45 13.40 12.15 11.23 0.9 Coton 1.30 1.60 1.94 2.19 1.82 1.88 2.39 3.50 2.31 2.46 2.32 2.83 2.95 3.35 0.3 Mideeniaeoua 129.10 129.30 140.52 157.39 174.06 192.99 213.46 247.41 276.41 284.68 276.21 301.06 324.61 301.03 25.2 0 Total 570.70 570.20 610.91 663.44 723.47 311.16 875.02 945.57 986.02 1.037.29 1.060.11 1.094.78 1.154.85 1.192.34 100.0 Soaane: Mini"y of Railways.  Table 2.2: MOR's FREIGHT TONNAGE ORIGINATED (in million tons) 1980 1931 1982 1983 1934 1935 1936 1987 19S8 1989 1990 1991 1992 1993 % ('93) Coal 414.9 412.0 438.5 460.2 487.1 518.6 531.1 543.4 564.8 608.9 628.7 626.0 641.1 653.4 41.7 Timbr 42.4 40.3 41.0 43.0 45.3 47.1 48.1 46.0 42.5 41.2 36.5 34.9 34.1 35.3 2.3 hIm & Steel Products 60.8 55.2 53.8 62.4 67.6 74.5 85.2 U4.9 79.4 79.4 33.0 33.1 84.9 98.5 6.3 CoasructionMaterials 158.5 139.5 162.3 161.3 158.7 158.4 149.8 147.3 149.0 146.7 124.8 119.7 119.2 129.3 8.2 Petroleum 55.6 49.8 50.4 53.3 56.1 5S8.1 62.5 65.7 64.6 64.6 65.3 65.5 67.0 70.4 4.5 Nonnistalc Ores 59.8 57.9 58.6 63.0 65.9 70.6 72.5 71.8 75.4 32.0 78.6 78.2 81.7 98.4 6.3 Grain 31.5 34.3 34.7 35.6 35.9 45.0 46.5 55.4 54.6 53.2 54.3 62.2 64.1 66.1 4.2 Metcllic Ores 59.0 53.4 56.5 60.3 64.3 67.2 70.0 72.6 74.2 79.9 36.7 83.7 93.5 98.3 6.3 Fctilizer 22.1 24.5 25.0 25.5 26.3 23.1 22.7 26.7 29.0 31.6 33.7 37.5 33.2 29.3 1.9 Coemn 23.6 24.3 25.1 26.1 27.8 30.1 34.1 34.6 32.9 35.3 34.3 37.1 40.8 43.5 3.1 Coke 14.0 13.0 12.2 13.0 13.3 15.8 16.3 19.2 20.8 23.1 25.5 24.2 25.2 30.9 2.0 Saft 9.3 9.0 9.0 9.0 9.3 9.5 10.8 10.4 11.2 13.2 11.2 11.2 11.6 12.3 0.8 Comm 1.6 1.8 2.1 2.0 1.6 1.5 2.2 2.7 1.8 1.4 1.2 1.4 1.5 1.8 0.1 Micianou 132.8 133.5 136.2 145.6 151.3 155.5 169.9 138.9 205.2 207.6 197.7 209.3 220.4 194.9 12.4 Tzd 1.085.9 1.048.5 1.110.5 1.160.7 L212.2 1.275.2 1.322.2 1.369.5 1.405.6 1.468.0 1.462. 1.478.9 1.523.3 1.567.5 100.0 Somme: Ministry of Railways.  Table 2.3: AVERAGE DlSTANCE OF FREIGHT TRAFC CARRED BY MOR (in kilometers) 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Coal 426 445 456 463 479 501 522 526 530 519 548 545 558 549 Timber 1,208 1,228 1,204 1,237 1,255 1,335 1,377 1,410 1,371 1,404 1,469 1,473 1,499 1,524 Iron & Steel Products 770 768 759 792 841 870 879 890 879 914 971 970 961 1,001 Construction Materials 210 218 244 260 265 288 311 328 332 355 354 365 391 473 Petroleum 541 576 572 557 557 586 620 604 605 619 643 668 689 709 Nonmetallic Ores 411 418 412 446 477 478 489 493 507 537 529 513 538 572 Grain 702 720 695 739 791 946 912 1,034 1,016 1,008 1,041 1,076 1,119 1,175 Metallic Ores 319 307 300 310 332 384 406 408 433 477 510 484 481 479 Fertilizer 710 731 748 710 724 715 709 750 780 817 796 859 846 814 Cement 381 395 411 422 417 446 423 440 450 488 443 442 479 512 Coke 493 531 534 561 555 609 618 658 738 749 764 746 770 797 Salt 548 600 619 691 710 773 859 991 1,065 1,173 1,114 1,201 1,047 910 Cotton 813 889 946 1,101 1,175 1,250 1,331 1,323 1,542 1,755 1,869 2,030 1,967 1,861 Miscellaneous 972 969 1,032 1,084 1,147 1,242 1,256 1,310 1,347 1,371 1,397 1,438 1,473 1,544 Average 526 544 550 572 597 636 662 690 702 707 725 740 758 761 Source: Ministry of Railways and Statistical Yearbook of China-1992, Table 12-17, p. 519.  Table 2.4: MOR's PASSENGER TRAFFC AND AVERAGE PASSENGER TRAVEL DISrANCE 1980 1981 1982 1983 1984 1915 1916 1987 1938 1989 1990 1991 1992 1993 pNyeans" (million) Suburban 195.0 192.5 208.7 212.5 202.4 168.3 154.7 152.1 163.9 157.1 135.9 120.2 120.4 118.2 Odier 717.5 749.9 780.2 836.9 920.3 940.8 918.7 962.1 1,052.1 970.9 813.0 821.9 867.5 927.6 Totl 912.5 942.4 988.9 1.049.4 1.122.7 1.109.1 1.073.4 1114.1 1.216.0 1.128.0 948.9 942.1 9S7.9 1.045.8 Pasenezr-km (billion) Suburban 4.6 4.6 5.0 5.2 5.1 4.1 3.8 3.8 4.7 4.4 3.9 3.0 3.1 3.0 Other 133.4 142.4 152.2 172.1 199.2 237.1 254.5 280.1 321.1 299.0 257.1 279.5 311.7 344.9 ToW l 138.0 147.0 157.2 177.3 204.3 24U 2St. 2U. 325.7 303.4 261.0 282.5 314.8 347.9 Averc. Diance (km) Suburban 24 24 24 24 25 24 25 25 28 28 29 25 26 25 Other 186 190 195 206 217 252 277 290 305 308 316 340 359 372 Weighted Avc. 151 156 159 169 182 218 241 255 268 269 275 300 319 Smoe: MiniMq of RaiHways.  Table 2.5: SELECFED OPERATIONAL STATISCS OF MOR, 1980W93 19S0 1931 1932 1913 1914 1915 1916 1937 1981 1919 1990 1991 1992 1993 A. Route Lenrth (km. at year end) Standard gauge (1.435 m) 49,225 49,474 49,333 50,905 51,041 51,419 51,717 51,911 52,067 52,412 52,673 52,711 52,895 53,131 Nerrow gauge (1.Om and 0.6m) 710 703 703 694 695 695 695 695 695 700 700 700 666 666 Wide puge 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Toul 49.940 50.1S1 50.541 5160 51741 52.119 52.47 52611 52767 53.17 53.378 541 . 53.02 Of which: Double track 8,119 1,263 3,613 9,183 9,671 9,919 10,013 11,186 11,771 12,523 13,024 13,330 13,653 14,315 Ileetrified 1,667 1,667 1,737 2,334 3,014 4,151 4,430 4,643 5,733 6,372 6,941 7,804 1,434 3,935 D. Staff (at Year-end) Enyloy-e ('000) 2,615 2,710 2,763 2,344 3,053 3,124 3,200 3,247 3,293 3,300 3,331 3,420 3,414 3,409 C. Rollinr Stock (averate of number at berinnin, and end of vear) Steam locomotives Nunber in fleet (exrl. rewerver) 7,801 n.a. n.e. n.a. 7,551 7,674 7,542 7,331 7,130 6,637 6,279 5,936 5,498 5,109 Available, % n.a. n.a. n.a. n.e. n.a. n.a. n.a. n.e. n.a. na. n.a. n.a. n.e. n.a. Diewel locomotives Nunber in fleet 2,190 n.a. n.m. n.c. 3,102 3,511 4,017 4,400 4,336 5,256 5,630 6,111 6,581 7,092 Available, % n.m. n.a. n.s. n.a. n.m. n.e. n.e. n.a. n.a. n.a. n.a. n.e. n.c. n.a. Electric locomotives, nmin line Number in fleet 287 n.a. n.a. n.m. 484 587 707 748 1,197 1,430 1,623 1,809 2,002 2,196 Available, b n.a. n.a. n.a. n.m. n.m. n.m. n.a. n.a. n.s. n.a. n.a. n.s. n.c. n.c. Parwenger cars 16,157 n.m. n.e. n.m. 19,600 20,872 22,138 23,474 24,917 26,304 27,261 27,612 23,464 29,395 Freight care ('000) Box cars 40.4 n.a. n.m. n.m. 49.6 52.7 54.6 55.5 58.0 62.2 66.7 70.3 73.1 75.8 Gondolas 165.4 n.m. n.a. n.m. 173.7 185.7 197.7 209.9 219.2 226.8 233.0 231.1 228.9 240.2 Flat cars 20.8 n.m. n.s. n.m. 19.1 18.8 18.5 17.8 13.2 18.5 18.8 19.3 20.6 21.1 Tank cars 33.5 n.m. n.a. n.m. 32.2 31.8 31.4 32.1 32.5 33.3 33.6 34.1 34.8 35.5 Refrigerated 2.5 n.s. n.a. n.m. 3.7 4.0 4.0 4.3 4.4 4.7 5.2 5.6 5.8 6.2 Others 3.S n.m. n.m. n.c. 7.9 7.9 8.4 3.6 8.0 7.5 7.3 9.6 10.1 11.3 Total fleet 266.4 n.m. n.a. n.a. 291.2 300.9 314.6 328.2 340.3 353.0 364.9 370.0 373.3 390.1 Available, b n.a. n.m. n.e. n.C. 99.0% 100.0% 100.0% n.a. n.m. n.a. n.s. n.a. n.a. n.m. ... Continued  Table 2.5: (cONT'D) 1980 1981 1982 1983 1984 1985 1936 1937 193U 1939 1990 1991 1992 1993 D. Traffic Pauenger traffic Pasengers of CentralfRailway(million) 913 942 989 1,049 1,123 1,109 1,074 1,114.0 1,216 1,228 949 942 933 1,046 Pasengers of Local Railway (million) 9.5S 10.61 10.34 10.93 10.33 11.97 12.21 10.65 10.50 10.09 3.24 3.72 9.05 3.73 Pasuenger-km of Central Railways (million) 133,037 146,937 157,200 177,339 204,315 241,251 253,311 234,000 325,731 303,437 261,000 262,414 314,300 347,900 Passenger-km df Local wailways (millon) 279 293 234 312 323 363 360 306 301 304 253 321 395 392 Average journey (km) 151 156 159 169 12 218 241 255 268 247 275 300 319 333 Freight traffic Net tons of cental railway (million) 1,035.3 1,043.4 1,110.5 1,160.7 1,212.2 1,275.2 1,322.2 1,370 1,406 1,463 1,462 1,479 1,523 1,567 Net tons of Local Railway (million) 2.70 2.34 2.43 2.71 2.36 3.19 3.42 3.70 4.40 4.69 4.47 5.00 5.31 6.00 Netton-kmofCentmalRailway(bil.) 571 570 611 663 724 S11 375.0 946 936 1,037 1,061 1,095 1,155 1,192 Netton-kmof Local Railway (bil.) 0.96 1.07 1.08 1.21 1.29 1.41 1.47 1.53 1.74 2.12 2.12 2.39 2.70 3.12 Average haul (km) 526 544 550 572 597 636 662 691 701 707 725 740 753 761 Converted tdn (ctkm - pkm + thn) (billion) 709 717 763 341 923 1,052 1,133 1,230 1,312 1,341 1,321 1,377 1,470 1,554 Traffic densities (miUlion) pkim per route km 2.90 3.10 3.28 3.70 4.24 4.79 5.06 5.43 6.17 5.71 4.39 5.29 5.33 6.47 tkn per route km 12.00 11.90 12.76 13.83 15.00 16.12 17.13 13.07 18.68 19.50 19.86 20.50 21.56 22.16 etkm per route km 14.90 15.00 16.05 17.52 19.24 20.91 22.19 23.52 24.35 25.21 24.75 25.79 27.43 23.33 E. Operations Total locomotive-km (million km) a.m. n.a. n.e. n.s. 1,099.9 1,183.0 1,230.6 1,273.0 1,317.0 1,341.0 1,358.1 1,335.0 1,426.0 1,471.0 - By type of train: Pasenger n.a. n.a. n.a. n.a. 266.5 290.2 301.7 310.0 324.0 324.3 323.4 334.0 342.4 358.3 Frmight n.a. n.a. .A. na.. 320.9 380.6 913.9 954.0 978.0 1,002.1 1,019.2 1,033.7 1,066.4 1,096.7 - By type of traction: Steam n.a. n.a. n.a. n.a. 702.9 633.6 636.2 595.0 562.0 516.2 472.3 431.7 509.4 337.2 Diesel n.a. n.s. n.a. ca. 348.8 433.2 507.6 570.0 622.0 657.5 699.2 754.5 808.5 855.5 lectric n.e. n.a. n.a. na.. 48.1 68.2 36.9 113.0 133.0 163.1 186.1 207.6 301.0 279.4 Main loco-km (train-km) (million km) n.a. n.a. 1.1. n.a. 784.1 848.8 331.9 922.0 956.0 983.3 993.6 1,019.7 1,054.2 1,087.2 - By type of traction: Steam n.s. n.a. n.c. n.a. 491.4 463.9 434.2 389.0 361.0 324.4 296.5 267.0 233.0 201.3 Diesel n.a. n.a. n.a. nA.. 254.7 325.9 386.6 442.0 487.0 51.0 550.3 583.4 619.4 659.7 Electric u.s. na. n.a. na.. 3S.0 54.0 71.2 91.0 108.0 136.9 151.3 169.4 196.S 226.2 ... Continued  Table 2.5: (CONT'D) 1980 1981 1982 1913 1934 1985 19S6 1987 1988 1919 1990 1991 1992 1993 Freight car-km (nil.) Loaded rn.-. n.S. n.s. n.S. 20,115 22,779 18,390 19,493 20,004 20,779 21,053 21,690 22,319 22,957 Eipty, inchlde caboose n.r. n.a. n.M. n.&. n.e. n.e. 5,061 6,216 5,354 5,358 5,940 5,915 6,590 S,257 Total n.a. n.S. n.. n.a. n.a. n.a. 23,451 25,709 25,358 26,137 26,993 27,605 23,909 31,214 Loaded fmright cars forwarded per day 61,29S 58,620 61,300 63,149 64,856 67,221 63,911 70,000 70,400 72,919 72,369 72,911 74,109 7S,462 Averg fieih ce tutrnaound tian (days) 3.02 3.21 3.22 3.30 3 3 4 4 4 4 4 4.2 4.2 4.2 Avenge freight Cat turnaround diance (kn) 747 770 770 791 121 870 901 934 952 952 993 1,006 1,025 1,032 F. Performace Indicacr Paserr per p _t rerttmim n.e. n.e. n na. na. U.S. n.e. n.a. n.a. n.a. n.m. na. n.m. n.S. n.a. Freight traffic: Averg usin sii: loaded cars pec train n.e. na.. n.a. n.a. n.s. n.c. n.m. n.S. n.a. n.a. n.a. n.a. na. n.a. Empty cars per trin n.e. n.e. n.e. n.1n. n.a. n.c. n.e. n.a. n.e. n.e. n.. n.a. n.a. n.S. Tol ca tpe ttrain na.. n .a. n.e. n.e. n.a. n.e. n.e n.A. n.e. n.e na. n.a. n.S. LA Avenge train weight Grom ton 1,994 1,996 2,021 2,073 2,131 2,211 2,291 2,343 2,365 2,409 2,414 2,444 2,483 2,519 Net tons n.e. n.a. n.s. n.a. n.e. n.a. n.a. na. na.. n.a. n.a. n.e. n.a. n.s. Average ld per loaded feight car (net tons) 43.0 49 49 50 51 52 52 53 54 55 56 5S 56 56 Avenge %ped of freight trains (kmnh) 29 29 28.0 28 27 23 29 23 28 29 29 30 30 30 Averge nunber of employces per operational km 32 34 35 33.0 34.2 35 36 37 36 36 36 36 36 36 Yearly disance covered per available loco ('000): Diesel, main line n.e. n.a. na. n.a. n.S. n.a. na.. n.e. n.a. n.a. n.a. n.m. n.a. n.a. Electric, main line n.a. n.a. n.a. n.s. n.a. n.a. n.e. n.e. n.a. n.r. n.s. n.c. n.a. n.a. Steam n.c. n.e. n.a. n.e. n.e. n.m. n.a. n.m. n.r. n.e. n.e. n.e. n.a. n.a. Net ton-kmper available feiht car (million) n.S. n.m. n.e. n.r. n.e. n.a. n.S. n.a. n.a. n.e. n.a. n.a. n.S. n.e. Sbwve: Ministry of Railways.  - 57 - Table 2.6: RALWAY ASSEr UTILIATION IN SELECrED COUNTRIES China India USA La Indicators (1993) (1992/93) (1993) Freight ton-km/route-km (million) 22.2 4.1 9.1 Passenger-km/route-km (million) 6.5 4.8 Freight ton-km/freight wagon owned (million) 3.1 0.8 1.4/b Average net tons/wagon loaded (tons) 56.1 19.3/c 58.4 Average freight wagon turnaround time (days) 4.2 10.8/c Average length of freight haul (km) 761 721 1,281 Average number of staff per route-km 63.36 26.39 0.67 Traffic units per route-km (million)/d 28.63 8.93 9.12 Traffic units per employee (000)/d 451.82 335.01 8,433.15 /a Figures converted into metric system. /b Includes wagons owned by wagon companies and shippers. /c Broad gauge. /d Traffic units = ton-km + passenger-km. Sources: China: Ministry of Railways. India: Indian Railways Yearbook, 1992-93. USA: AAR, Railroads Fads, 1994 edition (includes Class I railroads only).  Table 3.1: INVFsTmENT Com AND LoAN SUMMARY (in $ million) 19)94 1995 1996 1997 Local Foreign Total Loian Local Foreign Totali Loain Local Foreign Total Loan Local Foreign Total Loan t'Crtidor Capacity Expansion Insetrnentcosts 3443 12.11 46.54 0.00 213.53 89.99 303.52 4.37 244.80 107.72 352.52 76.19 132.41 49.94 182.35 43.32 PhN ical contingencies 3.44 0.94 4.38 0.00 21.35 7.02 28.37 0.34 24.48 8.40 32.88 5.94 13.24 3.90 17.14 3.38 Price contingencies 0.00 0.00 0.00 0.00 1.76 0.72 2.48 0.04 6.49 2.80 9.29 1.98 6.79 2.51 9.30 2.18 Intormation Systenis 37.87 13.05 50.92 0.J0 236.64 97.73 334.37 4.74 275.77 118.92 394.69 84.11 152.44 56.35 208.79 48.88 Information Systems Investment costs 11.59 10.61 22.20 0.00O 18.19 26.53 44.72 0.00 21.93 32.59 54.52 7.02 26.68 49.03 75.71 31.60 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 000 0.00 0.00 0.00 0.14 0.20 0.34 0.00 0.53 0.78 1.31 0.17 1.24 2.28 3.52 1.47 11.59 1061 22.20 0.00 18.33 26.73 45.06 0.00 22.46 33.37 55.83 7.19 27.92 51.31 79.23 33.07 Telecommunicauons Investment costs 0.00 0.00 0.00 0.00 0.00 000 0.00 0.00 50.97 13.78 64.75 13.78 39.34 24.07 63.41 24.07 P'hNical contingencies 0.00 0.00 0.00 0.00 000 0.00 0.00 0.00 5.10 0.69 5.79 0.69 3.93 1.20 5.13 1.20 Price contingencies 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.35 0.35 1.70 0.35 2.02 1.18 3.20 1.18 0.00 0.00 0.00 OO 0.00 0.00 0.00 0.00 57.42 14.82 72.24 14.82 45.29 26.45 71.74 26.45 tContainer Transport Commercialization Investmentcosts 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 67.19 25.14 92.33 25.14 59.57 1.24 60.81 1.24 1 Phl.ical contingencies 000 0000 000 000 000 0.00 000 0.00 4.70 1.90 6.60 1.90 4.17 0.00 4.17 0.00 IPrice contin"encies 0.00 000 0.00 0t00 0.00 0.00 0.00 0.00 1.73 0.65 2.38 0.65 2.97 0.06 3.03 0.06 0.00 0.00 0.00 0.00 0.00 000 0.00 0.00 73.62 27.69 101.31 27.69 66.71 1.30 68.01 1.29 Pihit i nironmental Protection lnscstntentcosts 0.00 00 0.00 0.00 0.00 0.00 0.00 0.00 0.93 2.70 3.63 2.70 1.23 1.65 2.88 1.65 Pli!sical contingencies 0.00 0.00 000 0.00 0.00 0.00 0.00 0.00 0.00 0.07 0.07 0.07 0.00 0.04 0.04 0.04 Price contingencies 000 0.00 000 0.00 0.00 0.00 0.00 0.00 0.02 0.07 0.09 0.07 0.06 0.08 0.14 0.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 00 0.95 2.84 3.79 2.85 1.29 1.77 3.06 1.78 S stenm Capacity Expansion Investnentcosts 000 0.00 0.00 0.00 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.60 15.00 18.60 15.00 Ph% sical contingencies 0.00 0.00 00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Irice contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.17 0.70 0.87 0.70 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.77 15.70 19.47 15.70 1 cchnical Assistance, Trainin". Softssare Inses inenteosts 0.00 0.00 0.00 0.00 0.00 0.84 0.84 0.84 0.06 3.17 3.23 3.17 0.06 1.72 1.78 1.72 P'hx sicai contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.00 0.08 0.08 0.08 0.00 0.08 0.08 0.08 0.00 0.00 0.00 0.00 000 0.85 0.85 0.84 0.06 3.25 3.31 3.24 0.06 1.80 1.86 1.80 Touil - Baink Finan,in' Ijisesinientcosts 46.02 22.72 68.74 0.00 231.72 117.36 349.08 5.20 385.87 185.10 570.97 128.00 262.89 142.65 405.54 118.60 Ph\ sical contingencies 3.44 0.94 4.38 0.00 21.35 9.72 31.07 3.04 34.28 13.26 47.54 10.80 21.34 5.14 26.48 4.62 1'rice contingencies 0.00 0.00 0.00 0.00 1.89 0.97 2.86 0.08 10.12 4.80 14.92 3.37 13.25 6.89 20.14 5.74 Total 49.46 23.66 73.12 0.00 254.96 128.05 383.01 8.32 430.27 203.16 633.43 142.17 297.48 154.68 452.16 128.96 Source: Ministry of Railways and micsion esumates  Table 3.1: (CONT'D) (in $ million) 1998 1999 Total Local Foreign Total Loan Local Foreign Total Loan Local Foreign Total Loan Corridor Capacitv Expansion InNestmentcosts 51.26 19.11 7037 27.89 0.00 0.00 0.00 0.00 676.43 278.86 955.29 151.76 Physical contingencies 5.13 1.49 6.62 2.18 0.00 0.00 0.00 0.00 67.64 21.76 89.40 11.85 Price contingencies 4.13 I.51 5.64 2.20 0.00 0.00 0.00 0.00 19.17 7.54 26.71 6.39 60.52 22i 1 82 63 32.27 0.00 0.00 0.00 0.00 763.24 308.16 1,071.40 170.00 Iilformation Systems Investment costs 2.14 0.12 2.26 0.12 0.03 0.12 0.15 0.12 80.57 119.01 199.58 38.87 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 0.16 0.01 0.17 0.01 0.01 0.01 0.02 0.01 2.08 3.28 5.36 1.66 2.30 0.13 2 43 0.13 0.04 0.13 0.17 0.13 82 65 122.29 204.94 40.53 Telecommunications Investment costs 1.88 1.83 3.71 1.83 0.00 0.00 0.00 0.00 92.19 39.68 131.87 39.69 Physicalcontingencies 0.19 0.09 0.28 0.09 0.00 0.00 0.00 0.00 9.22 1.98 11.20 1.98 Price contingencies 0.15 0.14 0.29 0.14 0.00 0.00 0.00 0.00 3.52 1.67 5.19 1.67 2.22 2.06 4.28 2.07 0.00 000 0.00 0.00 104.93 43.33 148.26 43.35 Container Trainsport Commercialization Investmentcosts 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 126.76 26.38 153.14 26.38 X Physical contngencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8.87 1.90 10.77 1.90 t4, Price contingencies 0,(K 0.00 0.00 0.00 0.(0 0.00 O.(0 0.00 4.70 0.71 5.41 0.71 0.00 0.()0 0.00 0.00 0.00 0.00 0.00 0.00 140.33 28.99 169.32 28.98 Pilot Environmental Protectipon Investment costs 0.18 0.00 0.18 0.00 0.00 0.00 0.00 0.00 2.34 4.35 6.69 4.35 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.11 0.11 0.11 Price contingencies 0.01 0.00 0.01 0,00 0.00 0.00 0.00 0.00 009 0.15 0.24 0.15 0.19 0.00 0.19 0.00 0.00 0.00 0.00 0.00 2.43 4.61 7.04 4.61 System Capacity Exparision Investment costs 17.41 34.47 51.88 34.47 10.33 43.00 53.33 43.00 31.34 92.47 123.81 92.47 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 00 0.00 0 00 0.00 0.00 Price contingencies 1.27 2.53 3.80 2.53 1.03 4.31 5.34 4.31 2.47 7.53 1000 7.53 18.68 37.00 55.68 37.00 11.36 47.31 58.67 47.31 33.81 1(K)00 13381 100.00 Technical AssisLance, Training. Software Investment costs 0.06 1.41 1.47 1.41 0.00 0.12 0.12 012 0.18 7.26 7.44 7.26 Physical contngencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Pricecontingencies 0.00 0.10 0.10 0.10 0.00 0.01 001 0.01 O0.0 0.28 0.28 0.28 0.06 1.51 1.57 1.51 0.00 0.13 0.13 0.13 0.18 7.54 7 72 7.54 Total - Bank Financin' Investment costs 72.93 56.95 129.88 65.73 10.36 43.24 53.60 43.24 1,009.81 568.00 1,577.81 360.77 Physical contingencies 5.31 1.58 6.89 2.27 0.00 0.00 0.00 0.00 85.72 30.65 116.37 20.73 Price contingencies 5.73 4.29 10.02 4.98 1.05 4.33 5.38 4.33 32.04 21.27 53.31 18.50 83.97 62.82 146.79 72.9 1141 47.57 5 47.57 1.127.57 619.92 1,747.49 400. UM - 95-44-0K6  Table 3.1: (CONT'D) (in Yuan million) 1994 195 1996 1997 I Local Foreign Total L.oan I.oail F oreign Total Loan Local Foreign Totail Loain Local Foreign Total Loan Corridor Calpacits I:xpansion Insestnient costs 29953 105.35 404.88 0.00 1.857.70 782.89 2.640.60 38.00 2.129.73 937.05 3.066.78 662.81 1.151.88 434.50 1.586.38 376.89 Plh s%ical contingencies 29.95 8.22 38.17 000 185.77 6107 246.84 2.96 212.97 73.09 286.06 51.70 115.19 33.89 149.08 29.40 Pric contingencies 000 011) 0.00 0.00 13836 57 14 195.5( 0.31 464.69 200.37 665.06 17.22 395.51 146.21 541.72 18.94 329.48 II 57 443.0)5 (((K 2.181.83 901 10 .082.94 41.27 2.807.39 1.21(.51 4.017.90 711.72 1.662.58 614.60 2.277.18 425.22 Information Systems Insmesnent costs 106.69 97.66 204.35 0.00 172.0( 251.00 423.10 0.00 207.57 308.38 515.95 61.11 252.41 463.79 716.20 274.91 PItsical contingcncies 000 0O(1) 0.00 0.00 0.00 0.00 00(0 0.00 0.00 0.00 0.00 0.00 0.00 00 0.00 0.00 Price contingencies 0.00 0.(0 0(1) .O0 11.65 16.99 2865 000 41.17 61.17 102.31 1.47 78.79 144.77 223.56 12.81 1(06.69 97.66 20435 000 I183.75 2h8.(0 451.74 0.00 248.74 369.56 618.3(1 62.58 331.18 608.56 939.74 287.72 Telecommunications Insersmrnt costs O 0.00 0.00 0.00 0.0( 0.00 0.00 0.00 482.22 130.28 612.50 119.90 372.23 227.62 599.85 209.42 Phssical contingencics 0.00 0.00 0.00 0.00 0.00 0.00 0 0.00 48.22 6.51 54.74 5.99 37.22 11.38 48.60 10.47 1'rice contingencies 0.00 0(10 00X) 0.00 0.00 0.00 0.00 0.00 105.22 27.1,3 132.35 3.03 127.81 74.60 202.41 10.25 0.00 0.00 O.)) 0( 0.00 0.00 0.00 0.00 635.66 16392 799.58 128.92 537.26 313.60 850.87 230.14 (onlat!ncr Transporl Conrnserciali7ation Inestment costs 0.00 00 00 0.00 0.00 0.00 0.00 0.00 635.60 237.75 873.35 218.74 563.50 11.69 575.20 10.75 I'Phsicalcontingencies 0.00 000 0 000 00 0.00 0.00 000 0.00 4449 I8.03 62.52 16.50 39.45 0.00 39.45 0.00 O I'rice continencie (X) 0.00 000 000 O(X) (0.0 0.00 0.00 13490 50.73 185.63 5.67 188.21 3.65 191.86 0.50 00) O(X) 00. 000 0.0( 00(X) (00 0.00 814.99 30f.51 1.121 50 240.91 791.16 15.34 806.50 11.25 Iilot Ii nsimntnienIlt ProLtection Ilsesimtentcosts 000 0.00 000 000 000 000 0.00 0.00 8.74 25.58 34.33 23.52 11.64 15.65 27.29 14.39 Ph%sical continettcics 000 000 0.00 000 000 000 000 0.00 0.00 0.61 0.61 0.65 0.00 0.38 0.38 0.36 P'rice contingencies 0.00 000 0-0O 0.00 0.00 0.00 000 0.00 1 73 5.20 6.93 0.58 3.63 5.00 8.64 0.68 0.00 000 O(Xi 000 O0 0.00 000 0.00 10,47 31.39 41.87 24.75 15.27 21.04 36.30 15.45 SssternCip.icits Expansion Insesimentcosls 0.00 000 O(X) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 31.35 130.50 161.85 130.50 Phssical contingencies 0.00 0.00 0.00 0()0 0.00 0.00 0.00 0.00 00 0.00 000 0.00 0.00 0.00 0.00 0.00 P'rice cotltincencies (0 000 0.00 0o00 0.00 ooo o 0.00 0.00 0.00 0o00 0o00 0.00 9.78 40.72 50.51 6.08 000 O(X) OX 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 41.13 171.22 212.36 136.58 echtnical Assistance. Training. Sofltware In\estnment cost 000 0X) 0.00 0.00 0.00 7.28 7.28 7.28 0.51 27.55 28.07 27.55 0.51 14.95 15.46 14.95 Piissicalcontincencies 000 00 0000 0.00 00 0.00 0.00 0.00 0.00 0.00 0) 0.00 0.00 0.00 0.00 0.00 Price contingcriies 000 ((X) 000 0.00 0.00 0.49 0.49 0.05 0.10 5.46 5.57 0.66 0.16 4.67 4.84 0.70 0.00 000 O() 000 0.00 7.76 7.76 7.33 0.61 33.02 33.63 28.21 0.67 19.61 20.28 15.64 Toted - B;anh Fi nnciii Inestmentcosts 406.23 203.01 609.24 0.0(0 2.029.80 1.041.17 3.07097 45.27 3.464.36 1.666.59 5.130.95 1.113.61 2.383.52 1.298.70 3.682.22 1.031.81 Physical cotiiticLencies 29.95 8.22 38.17 0.00 185.77 8456 270.33 26.45 305.69 117.39 423.08 93.99 191.86 45.65 237.51 40.23 Price contin.gencies 0.00 00(0 0()X) O. 150.01 74.98 224.99 0)71 747.81 350.75 1.098.56 29.33 803.89 419.62 1.223.51 49.96 Total 43618 211.23 647.41 0.00 2,365.58 1,200.71 3.56.29 72.44 4.517.86 2,11373 6 , S2.59 1,236.93 3,379.27 17h63.97 5.143.24 1,122.10 Siuar(e: Ministry of Railways and mission estinates  Table 3.1: (CONT'D) (in Yuan million) 1998 1999 Total Local Foreign Total Loan Local Foreign Total Loati Local Foreign Total Loan Corridor Capacity Expansion Investment costs 445.89 166.27 612.16 242.65 0.00 0.00 0.00 0.00 5,884.74 2,426.08 8,310.82 1,320.34 I'hysical contingencies 44.59 12.97 57.56 18.93 0.00 0.00 0.00 0.00 588.47 189.23 777.70 102.99 Price contingeacies 202.96 74.17 277.13 19.17 0.00 0.00 0.00 0.00 1,201.52 477.89 1,679.41 55.64 693.44 253.41 946.85 280.75 0.00 0.00 0.00 0.00 7.674.73 3,093.20 10.767.93 1,478.97 Information Systems Investment costs 20.30 1.16 21.46 1.07 0.32 1.16 1.48 1.07 759.37 1,123.16 1,882.53 338.15 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 8.40 0.48 8.88 0.08 0.16 0.59 0.75 0.11 140.18 224.00 364.18 14.46 28.72 1.64 30.36 1.14 0.48 1.75 2.23 1.17 899.55 1,347.16 2,246.71 352.62 Telecommunications Investment costs 17.82 17.25 35.07 15.95 0.00 0.00 0.00 0.00 872.27 375.15 1,247.42 345.26 Physical contingencies 1.78 0.86 2.64 0.80 0.00 0.00 0.00 0.00 87.22 18.75 105.97 17.26 Price contingencies 8.11 7.49 15.61 1.23 0.00 0.00 0.00 0.00 241.14 109.22 350.36 14.51 27.72 25.60 53.32 17.97 0.00 0.00 0.00 o0o 1,200.63 503.12 1,703.75 377.03 Container Transport Commercialization Investment costs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,199.10 249.44 1,448.54 229.49 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 83.94 18.03 101.97 16.50 Pricecontingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 323.11 54.38 377.49 6.17 0.00 000u- 000 0.00 0 00 0.00 0.00 0.00 1,606.15 321.85 1,928.00 252.16 Pilot Environmental Protection Investment costs 1.68 0.00 1.68 0.00 0.00 0.00 0.00 0.00 22.06 41.23 63.29 37.91 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.99 0.99 1.01 Price contingencies 0.70 0.00 0.70 0.00 0.00 0.00 0.00 0.00 6.06 10.20 16.26 1.26 2.37 0.00 2.37 0.00 0.00 0.00 0.00 0.00 28.12 52.42 80.54 40.20 System Capacity Expansion Investment costs 151.40 299.89 451.29 299.89 89.86 374.10 463.96 374.10 272.61 804.49 1,077.10 804.49 Physical contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 O.00 0.00 0.00 Price contingencies 62.65 124.09 186.74 21 98 45.76 190.50 236.26 37.46 118.19 355.32 473.51 65.53 21405 423.98 638.03 321.87 135.62 564.60 700.22 411.56 390.80 1,159.81 1,550.61 870.02 Technical Assistance. Trainine. Software Investment costs 0.51 12.26 12.78 12.26 0.00 1.05 1.05 1.05 1.53 63.09 64.62 63.09 Physical conOngencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Price contingencies 0.21 5.07 5.28 0.90 0.00 0.53 0.53 0.10 0.47 16.23 16.70 2.41 0.73 17.33 18.06 13.16 0.00 1.58 1.58 1.15 2.00 79.32 81.32 65.50 Total - Bank Financing Investment costs 637.61 496.83 1,134.44 571.81 90.18 376.31 466.49 376.21 9,011.68 5,082.64 14,094.32 3,138.72 Physical contingencies 46.37 13.83 60.20 19.72 0.00 0.00 0.00 0.00 759.64 269.65 1,029.29 180.40 Price contingencies 283.03 211.31 494.34 43.36 45.92 191.63 237.55 37.67 2,030.66 1,248.29 3,278.95 161.03 967.01 721.97 1,6989 634.90 136.10 567!964 704.03 413.89 IL,80198z CW6.60f&. 18.42056 3 UM - 95-1)4 06  Table 3.2: INVESTMENT COSTS OF CORREDOR CAPACrrY ExPANSION COMPONENT (in $ million) 1994 1995 1996 1997 1998 Total US$ mill Local Foreign Total Local ForeigLn Total Local Foreign Total I ocal Foreign Total Local Foreign Total Local Foreign Total Preparation 3.21 0.70 3.91 5.43 1.19 6.62 2.17 0.48 2.65 0.00 0.00 0.00 0.00 0.00 0.00 10.81 2.37 13.18 Roadbed 4.73 2.55 7.28 11.20 6.03 17.23 11.20 6.03 17.23 4.80 2.58 7.38 0.00 0.00 0.00 31.93 17.19 49.12 Blridees and cul crts 0.65 1.66 2.31 2.63 6.75 9.38 2.63 6.75 9.38 0.66 1.69 2.35 0.00 0.00 0.00 6.57 16.85 23.42 Tunilsis 0.49 0.33 0.82 2.00 1.34 3.34 2.00 1.34 3.34 0.50 0.33 0.83 0.00 0.00 0.00 4.99 3.34 8.33 Track 1.91 5.17 7.08 7.76 20.98 28.74 7.76 20.98 28.74 .94 5.24 7.18 0.00 0.00 0.00 19.37 52.37 71.74 Communications 0.00 0.00 0.00 9.20 6.13 15.33 19.01 10.18 29.19 15.48 7.85 23.33 1.15 0.77 1.92 44.84 24.93 69.77 Signalling OM0 0.00 0.00 20.30 13.53 33.83 24.66 16.24 40.90 20.68 10.82 31.50 27.01 13.53 40.54 92.65 54.12 146.77 Electric power 1.69 1.13 2.82 6.85 4.57 11.42 6.00 4.00 10.00 2.57 1.71 4.28 0.00 0.00 0.00 17.11 11.41 28.52 Flectnfication o.0 0.00 0.00 37.39 24.93 62.32 75.65 37.39 113.04 29.65 16.62 46.27 7.32 4.15 11.47 150.01 83.09 233.10 Buildings 000 0.) O 0.00 17.94 2.22 20.16 20.93 2.59 23.52 17.94 2.22 20.16 2.99 0.37 3.36 59.80 7.40 67.20 Mtiscellaneous 21.7i 0.57 22.32 89.64 2.32 91.96 66.21 1.74 67.95 33.11 0.87 33.98 11.04 0.29 11.33 221.75 5.79 227.54 Re,etiflieiet 00 0.(0o 0.00 3.1I 9 O0.0 3.19 6.SS 0.00 6.58 5.08 0.00 5.08 1.75 0.00 1.75 16.60 0.00 16.60 C Subtotal 34.43 12.11 46.54 213.53 89.99 303.52 244.80 107.72 352.52 132.41 49.93 182.34 51.26 19.11 70.37 676.43 278.86 955.29 Ph\sical ContinLencies 3.44 0.94 4.38 21.35 7.02 28.37 24.48 8.40 32.88 13.24 3.90 17.14 5.13 1.49 6.62 67.64 21.76 89.40 Baweline EstimaIe 37.87 13.05 50.92 234.88 97.01 331.89 269.28 116.12 385.40 145.65 53.84 199.49 56.39 20.60 76.99 744.07 300.62 1,044.69 Price Contingencies: ' per Year O.) 0O. L1.50 1.50 1.80 1.80 2.60 2.60 2.50 2.50 Comnpounlided 0.00 0.o0 0.75 0.75 2.41 2.41 4.66 4.66 7.33 7.33 2.58 2.51 2.56 ATIIoaUi 0.00 0.00 0.00 1.76 0.72 2.48 6.49 2.80 9.29 6.79 2.51 9.30 4.13 1.51 5.64 19.17 7.54 26.71 Total 37.87 13.05 50.92 236.64 9773 34.37 275.77 118.92 394.69 152.44 . 208.79 60.52 22.11 8263 763.24 308.16 1.071.4 Soirt e: NM inistiy of Rail wa s and mission estimates UM - 95-04-06  Table 3.3: INVEsTMENT COsTs OF INFORMATION SYSrEmS MODERNIZATION COMPONENT (in $ million) 1994 1995 1996 1997 1998 1999 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total TMISEq.ipment 11.59 10.61 22.20 18.19 26.53 44.72 20.10 29.28 49.38 22.00 37.63 59.63 0.00 0.00 0.00 0.00 0.00 0.00 71.88 104.05 175.93 MIS-PhaselIEquipment o.o o.oo 0.00 0.00 0.00 0.00 1.52 2.16 3.68 4.51 10.76 15.27 2.11 0.00 2.11 0.00 0.00 0.00 8.14 12.93 21.07 PTRS Infomration Systems 0.00 0.00 0.00 0.00 0.00 0.00 0.28 1.03 1.31 0.14 0.52 0.66 0.00 0.00 0.00 0.00 0.00 0.00 0.43 1.55 1.98 Comp. System to Manage Funds 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.12 0.15 0.03 0.12 0.15 0.03 0.12 0.15 0.03 0.12 0.15 0.12 0.48 0.60 Subtotal 11.59 10.61 22.20 18.19 26.53 44.72 21.93 32.59 54.52 26.68 49.03 75.71 2.14 0.12 2.26 0.03 0.12 0.15 80.57 119.01 199.58 Physical Contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Baseline Estimnate 11.59 10.61 22.20 18.19 26.53 44.72 21.93 32.59 54.52 26.68 49.03 75.71 2.14 0.12 2.26 0.03 0.12 0.15 80.57 119.01 19958 Price Contingencies: % per Year 0.00 0.00 1.50 1.50 1.80 1.80 2.60 2.60 2.50 2 50 2.50 2.50 % Compounded 0.00 0.00 0.75 0.75 2.41 2.41 4.66 4.66 7.33 7.33 10.01 10.01 2.58 2.76 2.68 Amount 0.00 0.00 0.00 0.14 0.20 0.34 0.53 0.78 1.31 1.24 2.28 3.52 0.16 0.01 0.17 0.01 0.01 0.02 2.08 3.28 5.36 lolal 11.sr of R s s0 1MD3 26,73 4L0% 22A6 33.37 55J 27.22 sLin 1 230 IA 013 2,A3 0.04 OJ3 0.L1 82a. 122.29 204.94 Source:- Ministry of Railways anddmission estimates tIm . 9504-04  Table 3.4: INVESTM COS OF TELECOmmuNICATNS UPGRADING COMPONENT (in $ million) 1996 1997 1998 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Fiber Optic Systems 32.11 3.50 35.61 18.32 6.18 24.50 0.00 0.00 0.00 50.43 9.68 60.11 Digital Microwave 5.15 1.65 6.80 3.23 2.88 6.11 0.00 0.00 0.00 8.38 4.53 12.91 Satelite Stations 2.89 3.30 6.19 2.90 4.64 7.54 0.00 0.00 0.00 5.79 7.94 13.73 Data Communications Network 5.77 1.55 7.32 7.45 2.06 9.51 0.00 0.00 0.00 13.22 3.61 16.83 Video Conference Network 4.85 3.57 8.42 4.50 6.04 10.54 0.00 0.00 0.00 9.35 9.61 18.96 Telecom. Management Network 0.00 0.00 0.00 2.74 2.06 4.80 1.68 1.62 3.30 4.42 3.68 8.10 Service and Training 0.20 0.21 0.41 0.20 0.21 0.41 0.20 0.21 0.41 0.60 0.63 1.23 Subtotal 50.97 13.78 64.75 39.34 24.07 63.41 1.88 1.83 3.71 92.19 39.68 131.87 Physical Contingencies 5.10 0.69 5.79 3.93 1.20 5.13 0.19 0.09 0.28 9.22 1.98 11.20 Baseline Estimate 56.07 14.47 70.54 43.27 25.27 68.54 2.07 1.92 3.99 101.41 41.66 143.07 Price Contingencies: 'k per Year 1.800 1.800 2.600 2.600 2.500 2.500 'k Compounded 2.409 2.409 4.662 4.662 7.330 7.330 3.47 4.00 3.63 Amount 1.35 0.35 1.70 2.02 1.18 3.20 0.15 0.14 0.29 3.52 1.67 5.19 Total 57.42 14.82 72.24 45.29 26.45 71.74 2.22 2.06 4.28 104.93 43.33 14X.26 Source. Ministry of Railways and mission estimates UM - 95-03-28  Table 3.5: INVESTMENT COSTS OF CONTAINER TRANSPORT COMMERCIALIZATION COMPONENT (in $ million) 1996 1997 Total Local Foreign Total Local Foreign Total Local Foreign Total Containers 20-foot 12.88 0.00 12.88 12.88 0.00 12.88 25.76 0.00 25.76 Containers 40-foot 4.12 0.00 4.12 4.12 0.00 4.12 8.24 0.00 8.24 Rubber Tired Gantry Cranes 0.60 1.75 2.35 0.00 0.00 0.00 0.60 1.75 2.35 Forklift Handler 3.42 9.90 13.32 0.00 0.00 0.00 3.42 9.90 13.32 Reach Stacker 3.75 10.86 14.61 0.00 0.00 0.00 3.75 10.86 14.61 Highway Tractors 0.91 2.63 3.54 0.00 0.00 0.00 0.91 2.63 3.54 Highway Chassis 0.31 0.00 0.31 0.00 0.00 0.00 0.31 0.00 0.31 X6B Flatcars 20.60 0.00 20.60 20.60 0.00 20.60 41.20 0.00 41.20 Expand/Upgrade 2 Terminals 20.60 0.00 20.60 20.60 0.00 20.60 41.20 0.00 41.20 Information System 0.00 0.00 0.00 1.37 1.24 2.61 1.37 1.24 2.61 Subtotal 67.19 25.14 92.33 59.57 1.24 60.81 126.76 26.38 153.14 Physical Contingencies 7.6% 4.70 1.90 6.60 4.17 0.00 4.17 8.87 1.90 10.77 Baseline Estimate 71.89 27.04 98.93 63.74 1.24 64.98 135.63 28.28 163.91 Price Contingencies: % per Year 1.80 1.80 2.60 2.60 % Compounded 2.41 2.41 4.66 4.66 3.47 2.51 3.30 Amount 1.73 0.65 2.38 2.97 0.06 3.03 4.70 0.71 5.41 Total 73.62 27.69 101.31 66.71 1.30 68.01 140.33 28.99 169.32 Source: Ministry of Railways and mission estimates UM - 95-03-28  Table 3.6: INVESTMENT COsTs OF PELOT ENVIRONMENTAL PRoTECTIoN COMPONENT (in $ million) 1996 1997 1998 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Noise Barrier Barrier Construction 0.24 0.52 0.76 0.18 0.00 0.18 0.06 0.00 0.06 0.48 0.52 0.99 Nlonitoring Equipment 0.04 0.15 0.19 ()(X) 0.00 0.00 0.00 0.00 0.00 0.04 0.15 0.19 Shenyano Waste 0.05 0.21 0.26 ) 1' 0.00 0.18 0.00 0.00 0.00 0.23 0.21 0.43 Taopu Waste 0.00 0.00 0.00 0. 17 0.31 0.48 0.00 0.00 0.00 0.17 0.31 0.48 Oily Water Treatment 0.22 0.41 0.63 0.24 0.00 0.24 0.12 0.00 0.12 0.57 0.41 0.98 Beijing Anti-Epidemic Center 0.26 0.82 1.08 0.18 0.00 0.18 0.00 0.00 0.00 0.43 0.82 1.25 Noise Control Projects Noise Criterion 0.01 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.01 Train Noise Transmission 0.04 0.00 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.00 0.04 Loco/VIleel Noise 0.01 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.01 Factorv Noise Control 0.02 0.00 0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.00 0.02 In\ ironinentail Assess Training 0.00 0.00 0.00 0.01 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.01 Diesel Additive Proorami 0.02 0.08 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.08 0.10 ILunchi Box Management 0.02 0.10 0.13 0.29 1.19 1.48 0.00 0.00 0.00 0.31 1.29 1.60 Techinical Consultation 0.00 0.41 0.41 0.00 0.15 0.15 0.00 0.00 0.00 0.00 0.56 0.56 Subtotal 0.93 2.70 3.63 1.23 1.65 2.88 0.18 0.00 0.18 2.34 4.35 6.69 Physical Contingencies 0.00 0.07 0.07 0.00 0.04 0.04 0.00 0.00 0.00 0.00 0.11 0.11 Baseline Estimate 0.93 2.77 3.70 1.23 1.69 2.92 0.18 0.00 0.18 2.34 4.46 6.80 Price Contingencies: -I per Year 1 .80 1 .80 2.60 2.60 2.50 2.50 'k Compounded 2,41 2.41 4.66 4.66 7.33 7.33 3.97 3.25 3.50 Amount 0.02 0.07 0.09 0.06 0.08 0.14 0.01 0.00 0.01 0.09 0.15 0.24 Total 0.95 2.84 3.79 1.29 1.77 3.06 0.19 0.00 0.19 2.43 4.61 7.04 Sourice: Ministry of Railways and miission estimates UM - 95-03-28  Table 3.7: INVMESNT COSs OF SYSrEM CAPAcrTy COMPONENT (in $ million) 1997 1998 1999 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Locomotives 3.60 15.00 18.60 6.01 25.00 31.01 9.61 40.00 49.61 19.22 80.00 99.22 Spare parts 0.00 0.00 0.00 0.00 0.00 0.00 0.72 3.00 3.72 0.72 3.00 3.72 Tools, equipments & instrunents 0.00 0.00 0.00 11.40 7.67 19.07 0.00 0.00 0.00 11.40 7.67 19.07 Training 0.00 0.00 0.00 0.00 1.80 1.80 0.00 0.00 0.00 0.00 1.80 1.80 Subtotal 3.60 15.00 18.60 17.41 34.47 51.88 10.33 43.00 53.33 31.34 92.47 123.81 Physical Contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Baseline Estimate 3.60 15.00 18.60 17.41 34.47 51.88 10.33 43.00 53.33 31.34 92.47 123.81 Price Contingencies: % per Year 2.60 2.60 2.50 2.50 2.50 2.50 %Compounded 4.66 4.66 7.33 7.33 10.01 10.01 7.88 8.15 8.08 Amount 0.17 0.70 0.87 1.27 2.53 3.80 1.03 4.31 5.34 2.47 7.53 10.00 3.77 j&15 19.47 18.68 37 00 M 11.36 47.31 58.67 33.81 100.00 133.81 Source: Ministry of Railways and mission estimates UM - 95-03-27  Table 3.8: COSMS OF TEcENICAL ASSANcE (in $ million) 1995 1996 1997 1998 !999 Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total Local Foreign Total PID C'mornUjDt5 Railway Restructuring and Enterprise Reform 0.00 0.07 0.07 0.00 0.31 0.31 0.00 0.00 000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.38 0.38 RailwayTariff Reform 0.00 0.00 0.00 0.00 0.05 0.05 0.00 0.05 0.05 0.00 0.00 0,00 0.00 0.00 0.00 0.00 0.10 0.10 Labor Productivity 0.00 0.08 0.08 0.00 0.08 0.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.15 0.15 Investment Components Container Transport Consulting Support 0.00 0.00 0.00 0.00 0.41 0.41 0.00 0.41 0.41 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.82 0.82 Study Comoonents Feasibility Study Dedicated Passenger Rail 0.00 0.21 0.21 0.00 0.10 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.31 0.31 ApplicationofRIS Decision Support System 0.00 0.07 0.07 0.00 0.03 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.10 0.10 Feasibility Study for new Information System 0.00 0.00 0.00 0.00 0.52 0.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.52 0.52 Expanding'TMISSystem 0.00 0.00 0.00 0.00 000 0.00 0.00 0.21 0.21 0.00 0.00 0.00 0.00 000 0.00 0.00 0.21 0.21 Telecommunications Network Study 0.00 0.00 0.00 0.00 0.26 0.26 0.00 0.26 0.26 0.00 1.03 1.03 0.00 0.00 0.00 0.00 1.55 1.55 Diesel Engine Design 0.00 0.00 0.00 0.06 0.72 0.78 0.06 0.62 0.68 0.06 0.21 0.26 0.00 0.00 0.00 0.18 1.55 1.72 Restructuring Manufacturing Sector 0.00 0.41 0.41 000 0.52 0.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.93 0.93 Resource Mobilization 0% 00 Strengthening of Treasury Function 0.00 0.00 0.00 0.00 0.05 0.05 0.00 0.05 0.05 0.00 0.05 0.05 0.00 000 0.00 0.00 0.16 0.16 1 Issuingof Bonds 000 0.00 000 0.00 0.12 0.12 0.00 0.12 0.12 0.00 0.12 0.12 0.00 0.12 0.12 0.00 0.48 0.48 Subtottal 0.00 0.84 0.84 0.06 3.17 3.23 0.06 1.72 1.78 0.06 1.41 1.47 0.00 0.12 0.12 0.18 7.26 7.44 Physical Contingencies 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Bttseline Estimate 0.00 0.84 0.84 0.06 3.17 3.23 0.06 1.72 1.78 0.06 1.41 1.47 0.00 0.12 0.12 0.18 7.26 7.44 Price Contingencies: % per Year 1.50 1.50 1.80 1.80 2.60 2.60 2.50 2.50 2.50 2.50 % Compounded 0.75 0.75 2.41 2.41 4.66 4.66 7.33 7.33 10.01 10.01 0.00 3.83 3.72 Amount 0.00 0.01 0.01 0.00 0.08 0.08 0.00 0.08 0.08 0.00 0.10 0.10 0.00 0.01 0.01 0.00 0.28 0.28 0.00 0.85 0.85 0.06 3.25 3.31 0.06 1.80 1.86 0.06 LSI 1.57 0.00 0.13 013I 0.18 7.54 7.72 Smer(c NUinilry lR;ai wiys ad missionrsimatcs lNi 95 04(06  Table 3.9: IMPLEMEWrAAnON SCHEDULE 1995 1996 J 1997 ID Name Duration Scheduled Scheduled F 041Q1|02 Q3 04 01 02 Q3 04 01 02 03 04 Q1 1 CHINA: Seventh Railway Project 356.8w 94/3/1 00/12/29 _ . 2 Loan effectiveness 0.2w 95/9/1 95/9/1 I 3 Wuhan - Guangzhou Line 252.4w 94/3/1 98/12/30 _ _ 4 Survey and Design Equipment 105.4w 94/12/1 96/12/6 5 ICB procurement 79.4w 94/12/1 96/67 _7 6 FCO instruction to 4. Design In 50d 94/12/1 95/2/8