Report No. 1459a-SU FILE COPY Sudan CP Fourth Railway Project June 6, 1977 Regional ProjectsDepartment Eastern Africa Regional Office FOR OFFICIAL USE ONLY Document of the World Bank Thisdocument has a restricteddistribution and may be usedby recipients only in the performance of their official duties. Its contentsmay not otherwisebe disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Regional Projects DepartmentEastern Africa Regional Office
FOR OFFICIAL USE ONLY
Document of the World Bank
This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
CURRENCY EQUIVALENTS
Currency Unit = Sudanese Pounds (BS)US$1 B zS 0.400iS 1 = US$2.50
WEIGHTS AND MEASURES
1 meter (m) 3.28 feet (ft)1 kilometer (km) = 0.62 miles (mi)1 square kilometer (km2) = 0.386 square miles (sq mi)1 kilogram (kg) 2.2 pounds (lbs)1 metric ton (ton) = 2,205 pounds (lbs)1 feddan 1.038 acres (ac)
GLOSSARY OF ABBREVIATIONS
SRC - Sudan Railways CorporationSPC - Sea Ports CorporationICB - International Competitive BiddingILO - International Labour OrganisationUNDP - United Nations Development ProgrammeRTC - River Transport CorporationCAD - Civil Aviation DepartmentRBPC - Roads and Bridges CorporationSMTCR -- Southern Region Ministry of Transport and Communications
GOVERNMENT OF SUDAN
FISCAL YEAR -
July 1 - June 30
1/ Years given in this report refer to the 12 months ending June 30in the year mentioned.
FOR OFFICIAL USE ONLY
SUDAN
FOURTH BAILWAY PROJECT
Table of Contents
Page No.
SUMMARY AND CONCLUSIONS ........................... i-iii
A. Infrastructure ............................... 5B. Fleet and Fleet Maintenance .... .............. 6C. Operations ................................... 6D. Organization, Management and Staff .... ....... 7E. Training ...................................... 8F. Planning ..................................... 8G. Budget and Accounts; ............... ........... 9
4. TRAFFIC AND FINANCES .............................. 9
A. Introduction ................................. 9B. Past and Present Traffic ..................... 10C. Financial Performance ........................ 10D. Future Traffic ............................... 11
This report has been preparecl by Messrs. M.S. Parthasarathi (Economist),B. Rollins and 0. Fraisse (Fiinancial Analysts), R. Masthagen (Engineer)and J. Kesson (Consultant-Engineer), with the assistance of Ms. M. Garcia-Zamor (Editor).
rThb 4oumont ha a mtrcted distribution and may be used by recipients only in the perfon meof tho dib dutb Iu contenu may not otherwise be disclosed without World Dnk awhthsl on.
TAJ1Th OF CONTENTS (Continued)
Page No.
5. THE PROJECT .................. ,........ 12
A. Objectives and Scope .12B. Background .13C. Details of Project .14D. Cost Estimates .16E. Financing and Procurement .16F. Disbursements .17G. Execution .18
6. FINANCIAL EVALUATION .18
A. Projected Operating Statements .18B. Projected Balance Sheets .19C. Projected Cash Flow .19D. Future Financial Objective .20E. Financial Internal Rate of Return on
Project .21
7. ECONOMIC EVALUATION .21
A. Economic Setting .21B. Track Works .22C. Workshops .23D. Rolling Stock .23E. Other Items .23F. Economic Return .24G. Sensitivity and Risk Analyses .24
8. RECONMENDATIONS .24
ANNEXES
1. Project Performance Audit of Second Railway Project2. Past Bank Group Financed Transport Projects in Sudan3-A Roads and Road Transport3-B River Services3-C Ports and Shipping3-D Civil Aviation4. Sudan Railways Corporation: Property and Operations5. Maintenance Workshops6. Note on Operational Objectives7. SRC Freight Traffic Forecasts - Explanatory Note8. Notes on Proposed Project: 1978-19809. Locomotive and Freight Wagon Requirements to 1983
10. Social-Technical Study of Workshop Organization - Outline Terms ofReference
1. Public Sector Investment in Transport Sector2-A Fleet of Locomotives and Railcars2-B Fleet of Wagons and Coaches3. Summary of Operating Statistics4. Performance, Port Sudan/Atbara, 1974-19765. Accident Data: 1971-19756. Operational Objectives7. Staff Size Compared to Rcoute Length and Traffic Carried8. Comparative Statements of Profit and Loss - Railway Operations9. Comparative Balance Sheets10. Cash Flow for the Year Ended June 30, 197611. SRC Freight Traffic Forecast to 198312. SRC Passenger Traffic Forecast to 198313. Estimated Cost of Project:14. Estimated Schedule of Disbursements15. Projected Statement of Profit and Loss16. Schedule of Selected Financial Indicators17. Projected Balance Sheet18. Statements of Retained Earnings and Capital Reserve19-A Projected Cash Flow19-B Debt Service Deflated to 1977 Monetary Unit19-C Revised Cash Flow Giving Effect to Deflated Debt Service20. Projected Operating Statements without Project21. Projected Operating Statements with Project Investments Only22. Financial Internal Rate of Return23-A to23-E Cost-Benefit Analysis
24. Summary of Economic Return Analysis
CHARTS
1. Sudan Railways Corporation - Traffic Density Chart, 19762. SRC's Forecast of Traffic Density in 19833-A Sudan Railways Corporation Organization Chart - General3-B Sudan Railways Corporation Organization Chart - Regions4. Sudan Railways Corporation Diagram of Rail Weights
MAP
1. Sudan - Main Transportat:ion Infrastructure (IBRD 12615)
SUMMARY AND CONCLUSIONS
i. Sudan is on the threshold of a major breakthrough in its economicdevelopment due to a combination of favorable natural resources endowmentsthat make it a potential source of food supply to the rest of the worldincreasingly affected by food shortages, as well as geographical and culturalfactors, which make it an attractive place for some of the surplus funds ofits oil-rich neighbors. The pattern of development visualized will continuethe past emphasis on agriculture but focus on broadening the base to a greaternumber of agricultural and agro-based industrial commodities, whose productionwill principally be for export and to some extent for the replacement ofhitherto imported consumer goods.
ii. The principal areas of increasing agricultural production are ex-pected to be those immediately to the southeast and southwest of Khartoum,the country's capital. From these areas rail freight transport to Port Sudanfor export is estimated to increase from under 1.0 million tons in 1976 toclose to 2.5 million tons by 1983. During this period, internal commoditymovements are also expected to grow from the present 0.5 million tons to over1.5 million tons, while movement of imports, excluding petroleum products,will grow much more slowly - irom around 1.0 million tons to about 1.3 mil-lion tons. Thus, overall rail traffic is expected to increase from about 2.7million tons in 1976 to 5.3 m:Lllion tons by 1983.
-iii. In view of the long distances and the nature of the commoditiesinvolved - sugar, wheat, maize and millet, oilseeds and cotton, all idealfor bulk movement - the railway would be the preferred mode on cost groundsalone. With only 780 km of paved roads in the whole country and very poor orno roads in most regions, the railway offers the only viable means of trans-port, and therefore has a near-monopoly on long-distance freight transport,a situation likely to continue for the foreseeable future for dry cargo. Itis, therefore, vitally important and urgent to enable the Sudan RailwaysCorporation not only to carry the growing volumes of traffic, but also tocarry it at the lowest possible cost.
iv. The first two projects (approved by the Bank in 1958 and 1965)financed the modernization and extension of rail, river and port facilitiesand assisted in the gradual dieselization of the locomotive fleet. But, asthey did not provide simultaneously for modern diesel workshop facilities andas the design of the locomotives did not fully take account of the harshclimatic conditions in Sudan, SRC's efficiency suffered and traffic carrieddeclined from 1971 to 1975. The Third Project, approved in 1973, is financingfurther investments to improve SRC's capacity, and simultaneously UNDP finan-ced technical assistance by a team from the Australian National Railwaysduring 1973-74 to help improve efficiency. Several of the team's recommenda-tions have been implemented, although by themselves they have not had anysubstantial impact on operations.
v. Given the importance of the railway, the fact that its operationalefficiency is low and its capacity limited has so far had an especiallynegative impact on the economy. The proposed fourth railway project willseek to remedy this situation in several ways:
- ii -
(a) First, it will help to improve SRC's efficiency through-he provision of better and additional workshop facilities,improvement of track, completion of the communicationsnetwork, and establishment of a centralized modern trainingschool for railway staff.
(b) Secondly, it will help SRC acquire rolling stock - loco-motives and wagons - to carry the additional traffic fore-cast at gradually improving levels of operating efficiency.
(c) Simultaneously, a different form of work organization,which aims at improving the workers' motivation and com-mitment to work, will be designed and implemented as partof the project in a new locomotive workshop, also to beset up under the project.
If successful, this last item will have great potential for SRC and Sudan asa whole in raising the levels of worker efficiency, with possible applicationto a wide range of economic activities.
vi. The proposed project comprises SRC's investment requirements duringthe first three years (1978 - 1980) of the Government's Six-Year Devel-opment Plan. It includes the establishment of new diesel locomotive and wagonworkshops, sleeper renewal over 500 km of track, rail renewal over 344 km,completion of the rail communications network, purchase of 10 replacementdiesel locomotives and 400 wagons, completion of the Atbara railway trainingschool, and technical assistance in workshop design and organization. It isdesigned to enable SRC to carry the anticipated traffic up to about 1981.
vii. The total cost of the project is estimated at ES 56.62 million(US$141.6 million equivalent), of which ES 28.82 million (US$72.1 million)is the estimated foreign exchange component, LnS 15.42 million (US$38.6million) direct local costs and ES 12.38 million (US$30.9 million) localtaxes (LS 8.06 million customs duties and ES 4.32 million exchange tax).Of this, the Bank Group will finance US$20.0 million (US$8.0 millionIDA Credit and US$12.0 million Third Window Loan), FED about US$6.6 millionas grant, and the Kuwait Fund US$17.4 million, the Arab Fund US$17.4 million andthe Abu Dhabi Fund US$10.0 million in loans; the Government has agreed to meeta small balance of US$0.7 million in the foreign exchange cost. SRC will meetthe direct local costs and the exchange tax, and the Government will help meetthe customs duties by deferring their payment.
viii. The Bank Group financing will be made available to the Governmentof Sudan which will in turn make the funds available to SRC at an annualinterest of 8.0% for a term of 20 years. With only a few exceptions,contracts to be financed under the Credit/Loan will be awarded on thebasis of international competitive bidding in accordance with the "Guide-lines for Procurement under World Bank Loans/IDA Credits". The Credit/Loan will finance workshop, training school and telecommunicationsequipment and technical assistance for the workshops and the trainingschool.
- iii -
ix. Without the project, not only will SRC's freight carryingcapacity be grossly inadequate in relation to anticipated demands, butSRC's operating costs will continue to rise both in real terms and dueto inflationary factors. The internal financial return on the projectinvestments is 25%, while the economic return is 27% for the project asa whole, with the various components showing returns ranging from 15% to65%.
x. The financial projections show that SRC's finances as reflectedin its cash flow situation will show steady improvement starting in 1978due to implementation of the project. On the basis of forecast trafficand present tariffs, its operations will generate sufficient funds tocover the local project costs, excluding customs duties, service itslong-term debts, and finance the local component of further capitalinvestments beyond 1980.
xi. SRC's senior managers are technically well-trained and reasonablycompetent. The organization suffers from excessive concentration of powerat the top and a consequent failure to develop good middle managers,deficiencies it is at present trying to rectify through decentralizationof operational management and management training.
xii. The project provides a suitable basis for the proposed Bank Groupfinancing comprising an IDA Credit of US$8.0 million and a Third Window Loanof US$12.0 million. The IDA Credit will be on standard IDA terms and theThird Window Loan will be at 4.2%, with the first repayment due January 15,1983 and a final maturity datet of January 15, 2001.
SUDAN
FOURTII RAILWAY PROJECT
1. INTRODUCTION
1.01 In September 1976 the Government of Sudan requested Bank Groupassistance in financing a project to improve the Sudan Railways Corporation's(SRC) operational efficiency and productivity to enable the railway to meet
present and forecast traffic demands more efficiently and adequately.
1.02 The project appraised in this report comprises SRC's investmentrequirements for the first three years of the Government's Six-Year Develop-ment Plan (1978-83), and is directed to raising SRC's efficiency through
modern workshop facilities for diesel maintenance, improved track through railand sleeper renewal that can no longer be delayed, and completion of therailway telecommunications and training school facilities.
1.03 Total project cost is estimated at US$141.6 million, includingtaxes and duties, with a foreigni component of US$72.1 million, about 51%of project costs. The Bank Group will finance US$20.0 million of foreigncosts (US$8.0 million IDA Credit and US$12.0 million Third Window Loan)and the European Development Fund, US$6.6 million. The Kuwait Fund, the
Arab Fund for Economic and Social Development and the Abu Dhabi Fund areexpected to provide about US$44.8 million, and the Sudan Government thebalance of about US$0.7 million. For local costs, SRC will contribute US$49.4million, and the Sudanese Government a further US$20.1 million in deferredcustoms duties.
1.04 The proposed project will be the Bank Group's fourth railway lendingoperation in Sudan. The 1958 First Railway Project (Loan 202-SU, US$34.0million) assisted the Government in a program to modernize and extend rail,river and port facilities: this project was completed in 1964. A SecondRailway Project (Loan 440-SU, US$31.0 million), approved in 1965 to financefurther rail, river and port investments, was also satisfactorily completed in1972, although some three years later than originally scheduled, mainly due to(i) closure of the Suez Canal in 1967, which delayed deliveries, (ii) changesin the loan items to suit changes in traffic patterns, (iii) procurementproblems, and (iv) political circumstances in the country. A Project Perfor-mance Audit Report on the Second Project, issued in 1974, commented on theimplementation delays and on the shortfalls in traffic, operating efficiency,financial position and economic benefits. Its findings are reviewed in detailin Annex 1. (See also para. 3.06.)
1.05 In 1973, the Third Railway Project (Credit 457-SU, US$24.0 million)included investments and technical assistance for rail, river and port develop-ment and airport pre-investment studies. In general, physical implementationof this project has been qualitatively satisfactory, although there have beenconsiderable procurement delays attributable to (i) the Railways' use ofcomplicated Government procurement, evaluation and approval procedures; (ii)cost increases in the last few years, which have required revision of the listof goods; and (iii) insufficient response to some invitations to bid. About
- 2 -
US$13.4 million had been disbursed as of May 31, 1977, and most of thebalance airea1y committed. On other matters, SRC has set up a regionalmanagement system and revised tariffs periodically to reflect cost increases.However, it has not met either the operating targets or the financial targets,as its traffic-carrying capacity was severely constrained by mechanicalproblems. In order to improve its traffic performance, SRC purchased 50 mainline locomotives (as against 10 provided in the project) although the Associa-tion advised that priority should be given to existing fleet maintenance andutilization. In the event, this action has enabled it, in the short term, tocarry more traffic than would otherwise have been possible, an expensivealternative to lasting operational improvements.
1.06 The Bank was instrumental in arranging operational technicalassistance to SRC by a team from the Australian National Railways duringmid-1973/end-1974 with UNDP financing; it also acted as the executing agency.
1.07 There have been two other Bank Group-financed transport opera-tions in Sudan. The First Highway Project (Credit 331-SU, US$7.0 million),approved in 1971, included assistance with transport sector planning; theDomestic Aviation Project approved in 1976 (Loan 1287T-SU and Credit 643-SUfor US$20.0 million and US$9.0 million, respectively) will help finance thedevelopment and/or upgrading of four domestic airports. Details on BankGroup-financed projects in the sector are given in Annex 2. A TechnicalAssistance Credit, also approved in 1976 (Credit 614-SU for US$4.0 million),will provide aid in preinvestment work in all sectors, including transporta-tion.
1.08 This report is based on information from the Government, SRCand the 1976 Bank Group-financed study of SRC, and on the findings of anappraisal mission which visited Sudan in October-November 1976, consist-ing of Messrs. Parthasarathi (Economist), Rollins and Fraisse (FinancialAnalysts), Masthagen (Engineer) and Kesson (Consultant-Engineer).
2. THE TRANSPORT SECTOR
A. Effects of Geography and Economic Structure on Transport
2.01 Sudan, the largest country on the African continent, is essentiallyan enormous plain, with a large uninhabited desert in the northern thirdof the country and tropical forests and savannas in the south. It is traversedfrom north to south by the Nile River system (see Mtap), close to which livesa large part of the country's 16.3 million population, which is growing at arate of 2% p.a. Per capita GNP is US$290.
2.02 Agriculture dominates the economy, accounting for over 40% ofGDP and almost all export earnings. Economic activity is largely concentratedwithin the fertile and well-irrigated 400 km stretch south and east of Khar-toum. More than half the population depends for its livelihood directly onagriculture, and a substantial amount of farm production is exported through
- 3 -
Port Sudan, the only deep-water port. The lack of all-weather connections
between areas of production and consumption (mainly Khartoum), and the
point of export and import (Port Sudan), is a major obstacle to achieving
the full development potential in this sector.
2.03 Provision of inexpensive, efficient and reliable surface transport
is particularly difficult in view of Sudan's harsh climate and the long
distances involved. The Nile contributes very little relative to its apparent
potential: in the north it is repeatedly interrupted by unnavigable rapids,
while in the south the White Nile disappears into the Sudd, a vast swamp with
continually shifting channels. The sparse rail and road systems, which must
cross hot, arid deserts in the north, northeast and central zones and skirt
the Sudd in the south, are oriented for exports through Port Sudan. Since
there are heavy physical and financial constraints on the development of road
transport, the railway plays a central role in the Sudanese transport system,
as reflected in SRC's near-monopoly over inland transport, especially on the
important Port Sudan-Khartoum route connecting the country's only deep-water
port with the capital and the rest of the country. Given the importance of
the railway, its low efficiency hinders the country's economic development
considerably. Thus, substantial improvement of the railway's operational
efficiency is the major objective of the proposed project.
B. The Transport Network
2.04 The railway is the primary mode, with road and river transport
serving as feeders to it (see Map). Comprising about 4,800 km of 1.067 m
gauge, single line track, the railway network emanates from Port Sudan and
extends west to Nyala and south to Wau. Of the 19,000 km of roads, only about
700 km are paved, mostly near Khartoum; the 6,000 km of gravel roads are
mostly located in the three southern provinces where laterite material is
available. Much of the road network, particularly in the more populated and
developed areas, passes over heavy clay soils which are generally impassable
during the rainy season (June-September). River services operate on two
sections of the Nile River System, Kosti-Malakal-Juba (1,400 km) in the south
and Karima-Dongala (290 km) in the north. Port Sudan, on the Red Sea, is
Sudan's only deep-water seaport. Twenty airports and airstrips in Sudan are
served by scheduled flights; the facilities range from the all-weather,
24-hour international jet airport at Khartoum to an unimproved field at
Dinder.
2.05 Important analyses of the investment needs of the sector have
recently been carried out by the Associates for the Development of Arab
Resources (ADAR) with Kuwait Fund financing and by the ILO Comprehensive
Employment Survey Mission. In the last three years the Government has under-
taken a very large investment program in this sector as the spearhead of its
national development efforts. This includes the construction of several
roads, most notably the pavedl road connecting Khartoum to Port Sudan via Wad
Medani, Gedaref, Kassala and Haiya, expected to be completed in 1978, the Wad
Medani-Sennar-Kosti road and the Sennar-Roseires road. The Port Sudan-Khartoum
white oil products pipeline built with Kuwait financing is expected to go into
- 4 -
operation sometime this year, and, when it does, white oil traffic to Khartoumand southern and western Sudan (amounting to some 400,000 tons in 1978 andrising gradually) will go by pipeline instead of by rail up to Khartoum. TheGovernment is also engaged in augmenting river transport capacity, the onlyreliable means of freight transport to and from the south, and the internalair transport system principally through better ground and navigation facili-ties. It is also planning to expand port facilities to handle the anticipatedgrowth in foreign trade to avoid Port Sudan from developing into a bottleneck.
2.06 Details regarding roads, river transport, ports, and aviationare given in Annexes 3-A to 3-D, and Chapter 3 contains a discussion ofthe railway.
C. Transport Policy, Planning and Coordination
Policy
2.07 A draft chapter of the Government's forthcoming Six-Year Develop-ment Plan, "National Objectives and Long Term Perspective", indicates thateconomic growth in the near future is expected to come principally from theagricultural sector, with increasing volumes of agricultural products ex-ported abroad to pay for rising imports of consumer and capital goods. Thiswill require more reliable transport facilities with increased capacity incorridors already served by transport facilities. Further, the Government'sstated objective of integrating hitherto isolated areas into the mainstreamof the country's economic life will entail development of reliable transportfacilities between these areas and the rest of the country. In recognitionof the magnitude of these undertakings, the draft plan provides about -S 660million or an annual average of over lS 100 million for transport and communi-cations sector investments over 1978-83, representing 25% of the total proposeddevelopment budget of -S 2.6 billion. By way of comparison, this sectoraccounted for less than ES 10.0 million a year in investments until 1974, whenthe Government, realizing the crucial role of transport in economic development,increased investments in the sector to almost bS 50 million a year in 1975-1977(see Table 1).
2.08 In addition to the substantial investments required to achievethe two-fold objective of meeting transport demands and economic integration,the operational problems which prevent some of the modes, mainly the railwayand river services, from providing reliable, efficient services must be over-come through well-conceived, concentrated and sustained long-term efforts.Substantial improvements, it must be recognized, will not be achieved easilyor quickly. The same is true of the lack of qualified professional staff,adequately trained and supervised subprofessional staff and poor maintenance,shortcomings shared by most of the transport organizations.
-5-
Planning
2.09 Sudan's 1971-75 Development Plan was not formulated on the basisof economic priorities but consisted largely of a list of proposals by thevarious Ministries to meet specific, known requirements. Since the draftingof the Plan in 1970, the planning system has been considerably improved withthe assistance of a planning team, financed by the UNDP, in the Ministry ofFinance, Planning and National Economy, which is responsible for intersectoralplanning, and through the training efforts of EDI which has conducted a numberof courses in Khartoum tailored to Sudan's needs. This Ministry also has awell-staffed Transport Section, responsible for ensuring that transportprojects are compatible with other sectors and responsive to their needs.Nevertheless, inter and intra modal planning still need improvement. The1978-83 Development Plan is expected to be approved by theGovernment shortly. However, paucity of data, principally on past trucktransport, is a major gap in the overall transport picture.
2.10 The Ministry of Transport and Communications is responsible forinter-modal planning. After almost two years' search, the Government hasrecently recruited an adviser for the planning unit, also with UNDP financing.There are also planning units of varying experience and depth in the modaldepartments and the corporations, which suffer from shortages of qualifiedstaff to varying degrees.
Coordination
2.11 Until recently, modal coordination had not been an issue becausemost transport services had been complementary. This will not be the casemuch longer since the Government is presently following a policy which willencourage rail/road competition. For instance, some roads which will offeran alternative to the railway are either being constructed (Khartoum-PortSudan) or are being planned (Sennar-Roseires), and truck imports are beingsubsidized. Thus, coordination of transport planning, investments and oper-ations is assuming importance and will require more careful consideration inthe future, although the railway will continue to be the principal mode forlong-distance freight movement for the foreseeable future.
3. SUDAN RAILWAYS CORPORATION
A. Infrastructure
3.01 SRC's main traffic route is between Port Sudan, Atbara and Khartoum(787 km) (Chart 1), but the alternative eastern route - Port Sudan, Haiya,Kassala, Sennar, Khartoum - will become increasingly important in the futurefor the transport of agricultural production from the south and west (Chart 2).There are branch lines, in the north to Karima and Wadi Halfa, and in thesouth to Damazin, Babanousa, Wau and Nyala. The rails, sleepers and sand orsoil ballast (details in Annex 4) have been adequate for the levels of traffic
so far carried, but the rapidly increasing tonnages now forecast (para. 4.10)
have made a re-assessment necessary. SRC has proposed a six-year program of
track improvement to increase the traffic-carrying capacity on the lines
affected. The first three-year phase of the work is included in the proposed
project. Track maintenance, especially on the main Port Sudan-Atbara-Khartoum
route, has been adequate, but much of the remainder of the network is quite old
and needs sleeper and/or rail renewal.
B. Fleet and Fleet Maintenance
3.02 The main line locomotive fleet comprises 152 diesel locomotives
and 56 steam engines (Table 2-A). However, SRC has not yet adapted the rela-
tively simple maintenance procedures of steam locomotives to maintaining its
diesel fleet, resulting in poor locomotive availability. Average availability
has improved as a result of the 50 new better designed diesel units added in
1976, but it remains poor with the older locomotives, due partly to technical
problems and partly to unsatisfactory maintenance (Annex 5), compounded by
lack of timely and adequate foreign exchange allotments to SRC for spare parts
procurement, causing shortages of essential items. If maintenance procedures
are not improved, average locomotive availability is likely to decline again.
Proposals for a new diesel workshop and for setting up improved maintenance
methods form part of the proposed project.
3.03 SRC's rolling stock includes some 5,500 wagons and 500 passenger
coaches (Table 2-B). Some 300 freight wagons purchased under Credit 457-SU
and 140 passenger coaches financed by a Hungarian credit are in the process
of being put into service. General wagon and coach maintenance standards
need improvement and new workshops are proposed for the future in Port Sudan
for wagons and in Khartoum for coaches.
3.04 The whole maintenance and workshop organization for locomotives
and rolling stock was reviewed during 1976 by a Bank Group consultant
and the proposals now made by SRC follow in general his recommendations.The Government has also taken steps to help SRC deal with the spare parts
problem. Since July 1976, the Government has directed the Bank of Sudanto provide SRC LS 200,000 of foreign exchange every month for the current
fiscal year. This or a similar arrangement should be continued for the
future, and an understanding to that effect was reached with the Government
during loan negotiations.
C. Operations
3.05 A summary of operating statistics for the past five years is given
in Table 3. From 1971 to 1975, SRC failed to meet the freight traffic
demand, resulting in accumulation of imports at Port Sudan and probably loss
of exports from the interior. The position improved in 1976 with the intro-
duction of the new locomotives; on the Port Sudan-Atbara section imports
- 7 -
carried increased by 20% (TabLe 4), with the time lost from locomotive linefailures decreasing considerably. Accidents and other causes of delay have,liowever, continued at a high 'Level (Table 5) and average train transit timesare still well above those in the time-table.
3.06 Overall, the operational targets set under Credit 457-SU wereoveroptimistic, did not allow sufficient time to introduce the basic changesneeded in the maintenance procedures and have therefore not been reached.While some progress has been made recently, they are not likely to be fullyachieved for some time yet. Following a detailed review with SRC, targets for1983, assuming gradual improvement over the intervening years, have beenagreed and are set out in Table 6. These provide the basis for assessingSRC's investment requirements to carry the expected traffic discussed inChapter 4, Section D, and were confirmed during negotiations. (See alsopara. 5.04 and Annex 6.)
D. Organization, Management and Staff
3.07 The SRC, incorporated in 1967, is run by a General Manager, based atAtbara, who normally reports to the Minister of Transport and Communicationsthrough a full-time Chairman in Khartoum. (At present the General Manageralso holds the post of Chairman). In addition to the Chairman, the Railways'Board of Directors includes representatives from the Government (3), the laborunion (2), and railway users (4) (Chart 3-A). Senior managers are technicallywell trained and reasonably competent, but SRC suffers from past failure todevelop good middle managers, which it is now trying to overcome (para. 3.09)
3.08 The operational management was regionalized in early 1976. Theprincipal operational responsibilities are now vested in five regional managerswith headquarters at Atbara (for the Northern region), Port Sudan (Eastern),Khartoum (Central), Sennar (Southern) and Babanousa (Western) (Chart 3-B).The regional set-up is intended to solve the perennial problems of the Railways'excessive centralization and overextended managerial lines, which had led toinefficiencies, lack of effective control, and lack of response to users'needs. It will take up to five years for the reorganization to have its fullimpact in the various regions. The Bank will monitor the situation closely.
3.09 Management quality should also benefit from the on-going managerialtraining program, which SRC bhas recently started with the assistance of theIndustrial Society of the United Kingdom. The Society has trained fourselected SRC staff members as trainers who, in turn, will train others. Thistraining will hopefully make all levels of SRC management aware of the needto alter some of their traditional ways. Among traditional practices whichdeserve close attention are: the existence within SRC of three differenthierarchies, frequently working at cross-purposes (the formal management, theunion, and the party); lack of effective supervision at most levels, possiblydue to excessive centralization at a very high level of career-orienteddecisions (promotions, salary increases, terminations and other sanctions)which deprive most middle managers of power and means to influence theirstaff; ill-defined duties and responsibilities for most positions; and,
- 8 -
finally, lack of adequate planning and scheduling of tasks, so that tasks aresometimes started even though all required inputs are not available and arenot planned to be available when needed.
3.10 The project will also attempt to improve staff motivation, commit-ment to work and feeling of responsibility, which have generally been lowamong SRC staff. A different form of work organization, relying on autonomouswork groups, will be tried out in the proposed maintenance workshop atSennar, and, if successful, will later be extended to other parts of theRailways.
3.11 SRC has a labor force of 30,000, rather large in comparison withsome other railways in terms of traffic per employee (Table 7). However,the labor union is strong, and staff reduction can come about only throughretirements and resignations, a slow process particularly since the retirementage was raised from 55 to 60 in 1976. However, SRC has a policy of limitingnew recruitment in any one year to an additional wage bill of not more thanES 100,000 per year.
E. Training
3.12 The Railways' need for trained technical staff is not being metadequately, although some facilities exist for training new recruits and lowergrade staff. Technical school graduates are given practical training inworkshops; engineering graduates receive one or two years of additionaltraining abroad. The Third Railway Project recognized the need for bettertraining facilities and provided US$1.0 million for assistance in planning andstarting construction of a Central Training School at Atbara. Blueprints forthe school have recently been prepared and it is estimated that US$4.0 millionin foreign exchange is needed to construct and fully equip the School,including advisory services for curriculum preparation, initial training ofinstructors, etc. The Bank Group has advised SRC to begin immediately withthe mechanical and workshop sections because these are urgently required andcan be financed from the Third Project. The Government and SRC intend toexplore bilateral sources for training advisors and instructors. AdditionalBank Group assistance in setting up this facility is included under theproject.
F. Planning
3.13 SRC planning is done by its Research and Statistics Section,headed by a Chief Research Officer, who reports to one of the Deputy Gen-eral Managers. Planning is centered on strategies to develop the capacityto carry forecast traffic and has been reasonably efficient in anticipatingdemand for transportation services. However, in the past forecast traffichas generally exceeded the actual, one reason being SRC's inadequate trans-port capacity arising partly from its low operational efficiency.
- 9 -
G. Budget and Accounts
3.14 The SRC Board is empowered to approve the Corporation's annual
capital and revenue budgets. Revised estimates are submitted for Board
approval as soon as possible afiter six months of the financial year have
elapsed. Annual accounts, which follow an acceptable commercial format,
are sent to the Minister of Transport and Communications together with an
auditor's report and a general report on SRC's activities for the year;
these are furnished to the national legislature.
3.15 Under the Auditor General Chambers Act, 1970, SRC's accounts are
audited by the Auditor General who is responsible to the President in Council.
This Act, which extended the Auditor General's responsibilities to all public
bodies and corporations, greatly increased his workload, and completion of
some audits, including those of SRC, had in the past been considerably delayed.
To alleviate the situation, additional staff were recruited, and some senior
officers took part in a training program arranged with the Egyptian Government.
Further training of personnel from the Auditor General's staff in the USA and
the UK was financed under Credit 457-SU and has been completed. The audit
situation is now satisfactory.
3.16 Like most railways, SRC is self-insured and claims, which have been
negligible, are met out of revenue.
3.17 SRC maintains a system of costing by classes of commodities and the
tariff structure is based on cost with the exception of upper-class passenger
fares and the tariffs on petroleum products. Costs are regularly updated to
serve as a basis for tariff revision.
4. TRAFFIC AND FINANCES
A. Introduction
4.01 The principal role of the Railways in the past has been to help
move the country's agricultural products to Port Sudan for export and to
transport from Port Sudan to Khartoum and the rest of the country imports
of consumer goods, foodstuffs and fuel. Exports mainly consisted of cotton,
groundnut, sesame, gum arabic and some of their byproducts, while imports
included petroleum products, foodgrains, sugar and other consumer goods.
SRC's role in the movement of traffic from one part of Sudan to another has
so far been relatively minor, although crucial to the national economy. This
pattern of traffic largely determined its operational orientation.
4.02 In recent years, however, imports of capital goods and equipment,
construction materials such as iron and steel and timber, as well as ferti-
lizers for farming, have begun to be increasingly prominent, a trend likely
to be accentuated in the future with the more systematic efforts at planned
development being made by the Government. But agricultural products still,
- 10 -
and will continue to, dominate export movements to Port Sudan, reflectingthe country's vast natural resources to support agricultural developmentof one form or another.
B. Past and Present Traffic
4.03 During 1971-75, SRC freight traffic steadily declined from almost3.2 million tons to just over 2.5 million tons (or from 2.75 billion ton-kmto 2.28 billion ton-km) as SRC's ability to meet demand was constrainedby frequent mechanical failures arising from inadequate maintenance of diesellocomotives whose design was also not well adapted to Sudan's climatic condi-tions. However, this trend was reversed in 1976, following the introduction of50 new diesel locomotives. For example, on the most heavily used Port Sudan-Atbara-Khartoum section, which carries 60% of all SRC freight, freight carriedincreased over 50% - from 110,000 tons a month in 1975 to 175,000 tons in1976. Total SRC freight traffic during the year was about 2.7 million tons(2.76 billion ton-km), some 20% more than in 1975 but still 25% below theThird Railway Project appraisal forecast.
4.04 During this period, passenger traffic has also declined somewhatin numbers but increased in passenger-km from 1.03 billion to 1.15 billion.This is close to the Third Railway Project Appraisal forecasts.
4.05 The decline in rail freight coincided with a rise in the volumeof goods moving by truck between Port Sudan and Khartoum from almost nothinga few years ago to some 300,000 tons last year. This development has beendue entirely to the Railways' inability to meet the demand, for the costof transport by truck is on the average 50% greater than the cost of railtransport. For example, the per ton-km costs given in the ILO Report "AComprehensive Employment Strategy for Sudan" (1975), are 0.75 piastre forrail and 1.1 piastre for trucks by paved road in 1974 prices. (On the sandtracks now used by trucks, the difference is much greater, and the truck routesome 400 km longer.) For many commodities, this would imply an additional costof IS 5-10 per ton at Khartoum. With the proposed project, the Railways'capacity should not be a constraint on the traffic it carries and should,therefore, help minimize the use of the more expensive truck transport onlong distance movements.
C. Financial Performance
4.06 SRC's financial performance during the last few years has moreor less followed the traffic trends. Comparative statements of profit andloss for the fiscal years 1971 to 1976 are set out in Table 8. Despite tariffincreases over these years, the revenues earned remained approximatelyconstant from 1971 to 1974 due to the decline in net ton-km (Table 3).
- 11 -
Revenues did increase in 1975 despite the continuing decline in net ton-
km as a result of a tariff increase and the movement of more high-rated
goods. During the same period, working expenses increased 59% from ES 15.7
million (1971) to IS 25.0 million (1975) due primarily to increased fuel
costs. The effect of this was a steady decline in profitability from an
operating profit of iS 1.6 million (1971) to a loss of iS 3.1 million (1975).
For 1974 and 1975 the revenues did not cover the expenses excluding deprecia-
tion. During this period two tariff increases went into effect on February 1,
1974, and July 1, 1974, of 33% and 16% respectively. In short, from 1971 to
1975, working expense increases outstripped revenue increases, while output,
as measured in freight ton-kit, continued to decline.
4.07 A 19% increase in ton-km during 1976 coupled with a tariff increase
of 20% on July 15, 1975, resulted in a 42% increase in freight revenue and a
34% increase in total operating revenues. The increase in working expenses
was 9%. The net effect was that operating revenues covered all expenses,
including depreciation and interest, for the first time since 1972.
4.08 The improvement in operating results was attained primarily by
the acquisition of new locomotives. These assets were purchased by a corres-
ponding increase in long term debt (6S 14.2 million), deferred customs duties
(ES 11.0 million), and decrease in working capital (iS 0.3 million). Inter-
nally generated funds accounted for hS 6.3 million. Comparative balance
sheets for 1975 and 1976 are given in Table 9 and a cash flow for 1976 is
given in Table 10.
4.09 In summary the operating efficiency, as reflected in the profit
and loss statements, deteriorated through 1975 and then improved considerably
in 1976. The cost of the improvement is reflected in the balance sheet by an
increase in long-term debt and a negative working capital position which can
only be rectified by a continuation of the present upward trend of operations.
1). Future Traffic
4.10 SRC's Research Department had prepared a traffic forecast up to
1983 as a basis for estimating its investment requirements during the Six-
Year Development Plan for 1978-83. The forecast, based on known and planned
developments in the principal freight traffic generating sectors - agriculture
and industry, recognizes that a growing proportion of high-value, low volume
traffic will increasingly use highway transport, especially on the Port
Sudan-Khartoum route, and that almost all white oil traffic will use the
pipeline on this route from 1978 onwards. The forecast, shown in detail in
Table 11 with an explanatory note in Annex 7, was reviewed with SRC. Past
experience with project implementation in Sudan indicates a 20% shortfall as
probable, and hence a 20% reduction in the levels forecast by SRC has been
used as the basis for the appraisal, for arriving at the composition of the
proposed project and for evaluating the planned investments.
- 12 -
4.11 The appraisal forecast visualizes an increase in SRC freight trafficfrom 2.7 million tons (2.76 billion ton-km) in 1976 to 5.3 million tons (4.51billion ton-km) in 1983, an increase of 10% per year (7% per year), and isconsistent with the country's general economic growth expectations of over 5%per year. This rapid increase is due to the coming on stream, over the nextfour years, of a number of projects in agriculture, livestock and industry.Major developments include those at Kenana, North-West Sennar, Asalya, Melutand Mangala for sugar; at Rahad and the Blue Nile Scheme for cotton andgroundnuts; at Khartoum, Gezira and Port Sudan for textile manufacture; and atKhartoum and Wad Medani for leather tanning.
4.12 A notable feature of the traffic forecast is the increasing impor-tance of local freight traffic for SRC. It will go up from about 0.3 milliontons in 1976 to over 1.5 million tons in 1983, or from about 13% of freighttraffic to 28%. This reflects, in part, the substitution of imports ofcommodities like sugar, foodgrains and textiles by domestic production. Thevolume as well as share of traffic to Port Sudan will also increase dramati-cally, as Sudan's agricultural potential begins to be exploited on a broaderfront with growing exports of sugar, foodgrains and oilseeds. During thisperiod, the character and composition of traffic from Port Sudan to the restof the country (reflecting mainly imports) will undergo a major change. Withthe completion of the white oil products pipeline in 1977, this traffic willcease to be important to SRC. Fertilizers, iron and steel products andmachinery will record substantial increases, while imported sugar and foodgrainmovements will cease. Average haul is forecast to decline from 1,000 km to850 km.
4.13 Passenger traffic, on the other hand, is not expected to growas rapidly, reflecting a conscious policy decision that it should not beencouraged in order to provide maximum possible freight transport capacityon the railway. Total passenger traffic is expected to grow from 3.2million in 1976 to 5.6 million in 1983, an annual growth of 8% (Table 12).
5. THE PROJECT
A. Objectives and Scope
5.01 The proposed project is a further phase in the modernization andstrengthening of SRC and represents a major effort to improve operations,maintenance and procurement, and to add to its traffic-carrying capacity.The project comprises the investment requirements of SRC during the firstthree years (1978 to 1980) of the Six-Year National Development Plan. Theprincipal elements of the project are:
(a) expansion and reorganization of workshop facilities toundertake appropriate maintenance of locomotives androlling stock, particularly the former;
- 13 -
(b) completion of the telecommunications improvements needed
to improve reliability of service, particularly on the
western and southern sections;
(c) assistance to SRC in carrying out its program of track
renewal;
(d) provision of 10 diesel locomotives and 400 freight wagons,
for replacement and addition, respectively, to enable SRC
to handle the anticipated growth in traffic, in accordance
with an agreed set of improved operational norms; also spare
parts for maintenance of the present locomotive fleet and
completion of upgrading the wagon fleet;
(e) completion of the Central Railway Training School at Atbara;
and
(f) technical assistance for design of the new Sennar workshop
and for implementing new methods of work organization.
5.02 The total investment requirements during the three years are esti-
mated at ES 56.62 million, with a foreign exchange component of IS 28.82
million. The direct local cost is ES 15.42 million, plus iS 4.32 million
in exchange tax and iS 8.06 million in customs duties.
B. Background
5.03 As part of the Government exercise for the preparation of the
1978-1983 Six-Year National Economic Development Plan, SRC has prepared
a draft six-year investment plan of its own to meet the targets visualized
for it in the Plan Outline issued earlier by the Government. SRC estimates
its six-year investment requirements as LS 171.0 million in 1976 prices,
before provision for price contingencies. The exact scope of the over-
all National Plan as well as the SRC Plan is still under discussion among
the various Government Ministries involved. However, major elements of
SRC's plan - such as track renewal - are primarily in the nature of deferred
maintenance and minor upgrading which are overdue and cannot be postponed
much longer. Others - such as communications and training school - are de-
signed to complete ongoing works in order to derive full benefit from those
works. Also, SRC is badly in need of expanded and upgraded locomotive and
rolling stock maintenance facilities.
5.04 Based on the above considerations, an investment program for the
first three years (1978 to 1980) of the Six-Year Plan period has been worked
out by SRC and Government and constitutes the proposed Fourth Railway Project.
This project concentrates on items needing urgent action and on modest addi-
tions to capacity more than fully justified by the anticipated traffic growth,
after allowing for operational improvements used as the basis of their plan-
ning efforts by SRC staff. These improvements, reviewed in detail by Bank
staff jointly with SRC staff, were found to be satisfactory, and have been
agreed as operational norms to be achieved by 1983. These are shown in
Table 6, and were formally agreed with SRC during loan negotiations.
- 14 -
C. Details of Project
5.05 The principal components of the project are described inAnnex 8 in detail and are summarized below:
(i) Track Works
5.06 The timber sleepers on the eastern main line Haiya - Kassala -Sennar and on to Kosti and El Obeid towards the west, are 16 to 22 yearsold and are in poor condition. Much of the increasing export trafficwill in future be carried on this route and, for that purpose, therenewal of sleepers is essential. SRC proposes to renew the sleeperson some 1,090 km of track over a six-year period; the most urgent 500 kmare included in the proposed project.
5.07 Another line which will carry increasing volumes of traffic isthat from El Rahad to Babanousa; this route now has secondhand light50 lb/yd (25 kg/m) rail on steel and timber sleepers; the steel rail andsleepers are up to 70 years old and suffer from loose fastenings andoccasional rail breakages. The track needs upgrading to continue to carrytraffic in the future; this would also enable the carriage of heavier axle-loads and larger trains and at higher speeds. SRC has made a start withlaying used 75 lb/yd (37.5 kg/m) rail on timber sleepers from El Rahadtowards Abu Zabad (160 km) and the proposed project provides for the com-pletion of the relaying to Babanousa (another 194 km).
5.08 The stock of used 75 lb/yd rail with SRC (released from laying90 lb/yd rail on the Port Sudan - Khartoum section some years ago) will notbe sufficient for the whole of the requirements up to Babanousa, and alsoto meet the anticipated demand for sidings to new industrial and agricul-tural developments. Therefore, SRC proposes to continue the laying ofnew 90 lb/yd (45 kg/m) rail southwards from Khartoum towards Sennar (for150 out of 270 km) and to release 75 lb/yd from this section for theBabanousa relaying work (diagram of existing and proposed rail weightsat Chart 4).
5.09 Provision is also proposed in the project for (a) track mainte-nance machinery and tools as maintenance at present is purely manual andmechanical aids are needed for more effective use of the present manpower,(b) signals and communications (to continue installations started under theThird Project for improved train control, higher traffic densities and ade-quate communications between main centers), (c) additional crossing stationsfor increased train capacity and (d) improvements to bridges and flood pro-tection works (to reduce disruptions caused by floods).
(ii) Workshops
5.10 A complete new diesel locomotive workshop is planned for Sennar,so as to institute proper major overhaul routines, improved work methodsand new staff management techniques, for locomotives serving the southern
- 15 -
half of the system. The existing facilities at Atbara would thereafter
be reorganized for units in the north. A new wagon workshop at Port Sudan
is also planned to replace unsatisfactory facilities at Atbara. These pro-
posals are broadly in accord with the recent survey and report by the Bank
Group consultant.
(iii) Rolling Stock
5.11 No additional main-line diesel locomotives are proposed, but at
least the 15 Cockerill-Ougree units put into service in 1960/61 should
be replaced; these will be replaced by 10 new units of higher capacity and
better design. Additional freight wagons will be needed to cater for the
increased traffic forecast and, as a minimum, 400 units have been provided;
more may be needed, but this can be better judged later in the project period
as traffic develops (Annex 9).
5.12 Provision is also made for continuing the program for providing
stronger couplers and roller bearings on the existing stock of wagons and
coaches. As a result of the program to date, the number of on-line failures
from broken couplers, over-heated bearings, etc., has declined consider-
ably (Table 5). Provision is also made for locomotive spare parts to ensure
timely maintenance which would help to increase availability.
(iv) Training and Technical Assistance
5.13 Construction of a n,ew central training school has started under
the Third Project; completion of the classrooms and practical training facili-
ties are provided for in the new project. Some technical assistance, reques-
ted by SRC, for the initial establishment of the school, preparation of
syllabuses and training for operational and mechanical maintenance classes, is
also included.
5.14 Technical assistance, to design and implement a different form of
work organization in the new Sennar workshop, is provided for. The proposed
organization will attempt to correct some of the difficulties described in
Chapter 3, Section D - lack of effective supervision, lack of commitment to
work, low group norms for work and poor work quality. It will rely on:
(a) autonomous work groups to restore a feeling of respon-
sibility and improve discipline. Proper execution of
maintenance tasks will be the group's responsibility,
rather than the individuals'. Group members will be
rewarded according to group work quality. Faced with
this new set-up, the groups will hopefully create their
own quality control procedures, in addition to management's.
(b) a system of incentives linking rewards to good perfor-
mance of the locomctives serviced.
A team of consultants, bringing together management specialists of the Uni-
versity of Khartoum and expatriate experts, will be responsible for designing
and implementing this work organization. Their proposed terms of reference
(Annex 10) were reviewed and agreed during loan negotiations. If successful,similar organization schemes will be implemented in other parts of the Rail-
ways.
- 16 -
5.15 Provision is also made for technical assistance for workshopdesign, locomotive testing systems, communications and communications main-tenance.
D. Cost Estimates
5.16 Total project cost is estimated at LS 56.62 million (US$141.6million); of this LS 28.82 million (US$72.1 million) is in foreign exchange,LS 12.38 million (US$30.9 million) represents local taxes and duties and 1,S15.42 million (US$38.6 million) comprises other local costs. Details of thecost estimate are given in Table 13 and summarized below:
iS million US$ million equivalent Bank GroupLocal Foreign Total Local Foreign Total Financing
1. Track 13.43 10.68 24.11 33.58 26.70 60.28 8.74
2. Workshops 2.18 2.18 4.36 5.45 5.45 10.90 5.45
3. Rolling Stock 7.33 12.12 19.45 18.33 30.30 48.63 1.35
4. Training andTechnicalAssistance 0.44 0.54 0.98 1.10 1.35 2.45 1.35
5.17 The cost estimates are based on recent quotations and bids forsimilar equipment, updated for 1977 prices, together with estimated localtaxes. No physical contingency has been provided as the quantities for themajor items can be considered as fixed; but price contingencies have beenprovided on the basis of 10% per year on local costs, and 8% per year onforeign costs plus local taxes on imports.
E. Financing and Procurement
5.18 Of the foreign cost of the project amounting to US$72.1 millionequivalent, US$71.4 million will be met from external borrowings and thebalance of US$0.7 million by the Government. It is proposed that the BankGroup provide US$20.0 million (US$8.0 million as an IDA Credit and US$12.0million as a Third Window Loan). Of the remainder of the foreign costs, FEDis expected to provide US$6.6 million equivalent as a grant and the Kuwait,Arab and Abu Dhabi Funds US$44.8 million equivalent as loans. The financing
- 17 -
arrangements were reviewed during negotiations and have since been confirmedby the financing agencies and the Government. Their signing as well as thesigning of a Subsidiary Loan Agreement between the Government and SRC areconditions of effectiveness.
5.19 The local cost of the project includes direct local expendituresas well as customs duties and exchange tax on imports. Like all State andprivate enterprises in Sudan, SRC is required to pay customs duties and an"exchange" tax on all imported goods; the customs duties on railway equipmentvary between 12.5% and 45%, while the exchange tax is 15%. SRC willmeet the direct local expenditures and the exchange tax. The Government hasindicated its intention to defer payment of customs duties (as was done on theThird Project) as its contribution to the project.
5.20 Equipment and material financed by the Bank Group will be obtainedthrough international competitive bidding in accordance with Bank/IDA guide-lines except for:
(a) small orders under US$50,000 each, but not more thanUS$500,000 in total;
(b) radio communications equipment, so as to standardize withthat being provided under Credit 457-SU (after internationalbidding); the amount involved is about US$0.5 million; and
(c) spare parts and components for locomotives which are specificto each type of locomotive and critical to sat4sfactory in-stallation and operation; the amount involved is about US$1.5million.
The total amount involved in direct or negotiated procurement under (b) and(c) above is US$2.0 million equivalent. Items involved in Bank Groupfinancing will include rail fastenings, train control equipment, steel workand other imported material for workshop buildings, workshop machinery, andequipment for the training school. There is no domestic preference.
F. Disbursements
5.21 Disbursements from the IDA Credit and the Third Window Loan willbe made on the basis of the CIF (Port Sudan) cost of imported equipment andmaterials and, in the case of technical assistance, the estimated foreign costof foreign consultants/experts and the corresponding local costs of localconsultants/experts. The schedule of estimated disbursements is given inTable 14. Any savings on items to be financed by the Bank Group should beused to finance the foreign exchange cost of similar additional items, shouldthese be found necessary in subsequent reviews of the project, subject to arequest to that effect from SRC and approval by the Association.
- 18 -
G. Execution
5.22 SRC, which will have direct responsibility for execution of theproject, is competent to carry it out. The anticipated project implemen-tation schedule was discussed and agreed during negotiations (Annex 11).
5.23 Procurement delays under Credit 457-SU have arisen primarily from(i) SRC procedures and (ii) cost increases since 1973 necessitating frequentrevision of the list of goods to be procured. The former have been somewhatsimplified by combining the office of the Chairman with that of the GeneralManager and moving the former's offices in Khartoum to the Railways head-quarters in Atbara.
6. FINANCIAL EVALUATION
A. Projected Operating Statements
6.01 The financial projections assume that maintenance costs will continueto rise until the project is fully implemented at the end of 1981, at whichtime the costs will stabilize for the rolling stock to be maintained by thenew workshop facilities provided by the project. The maintenance costs forthe remainder of the fleet will continue to rise. The projections are statedin constant 1977 prices. Assumptions underlying the financial forecasts arecontained in Annex 12.
6.02 Despite the increase in maintenance costs of locomotives and wagonssince 1971, as calculated using a fixed monetary unit, and the increasein fuel prices, SRC achieved a breakeven position during 1976. This wasprimarily due to the introduction of new locomotives which increased carryingcapacity and resulted in a 19% increase in ton-km over 1975. The workingratio attained in 1976 was 83% which should improve to 79% in 1977 and showcontinued improvement through to the end of the projection period. Theoperating ratio of 93% in 1976 should also follow a similar pattern. Theimprovement will be mainly the result of increased capacity to meet the demandfor the movement of goods.
6.03 Revenue forecasts were calculated on the basis of the estimatedaverage haul for each commodity, and after reducing SRC traffic forecasts byapproximately 20% (Chapter 4, Section D). Passenger revenue is expected toincrease 8% per year. The rate of return on net fixed assets in use isprojected at 5.0% in 1978 and should rise to 7.7% by 1983. The detailedprojections are set out in Table 15 and a schedule of selected financialindicators is given in Table 16.
- 19 -
B. Projected Balance Sheets
6.04 The project covers the first three years of the Government'sSix-Year Plan which becomes effective July 1, 1977 (FY78). For the purpose
of financial evaluation, an estimate has been made of capital asset re-
quirements for the second three-year phase of the Six-Year Plan and thefirst three years of the subsequent Plan. These requirements are based on
the continuation of existing and recurring programs and estimated needs
to meet growing traffic demands.
6.05 SRC ended 1976 with the best operating results since 1972, but prior
years' losses, coupled with the transfer of the profitable Port Sudan opera-tions to the Sea Ports Corporation and the purchase of new capital assets,has raised problems of liquidity. Current liabilities exceeded current
assets by 1S 3.1 million. The major current obligation is the overdraft
with the Bank of Sudan. Starting from this negative position, it will take
SRC until approximately 1984 to attain a liquid position with a current ratio
of 1:1. However, from 1980 onwards, the position should improve each year.
The Government has agreed to explore various means of injecting additional
capital into SRC, or guaranteeing continuing overdraft facilities, in order to
help it to meet obligations for some years to come.
6.06 During negotiations it was agreed that the proposed IDA Credit andThird Window Loan would be onlent to SRC for a period of 20 years, including a
grace period of four years, wi.th interest at 8.0%. A 20-year term has been
assumed for the Kuwait, Arab and Abu Dhabi Fund Loans but with interest at 4%
in line with existing Government policy. The FED grant has been treated as an
increase in equity capital.
6.07 Further long-term debt, commencing in 1981 and captioned as "Future
Requirements", has been treated in the same manner as the onlending terms of
IDA and Third Window funds. ])ividends on Government capital have been provided
at the rate of 5% and have been charged to retained earnings annually.
6.08 Provision for depreciation has been charged in accordance with therates used by SRC which are considered adequate. The provision commencesin the year following the acquisition of the asset. The projected balance
sheets are set out in Table 17, and the projected statements of retainedearnings and capital reserve in Table 18.
C. Projected Cash Flow
6.09 The annual cash flows are expected to be positive throughoutthe projection period. SRC's operations will provide sufficient inter-nally generated funds to cover the local project costs, excluding customs
- 20 -
duty, pay interest on and amortize long-term debts, and finance the localcomponent of new capital investments when required. In addition a slowreduction in the Bank of Sudan overdraft will be possible commencing in 1978.Details of the projected cash flow are shown in Table 19-A.
6.10 The projections assume that all freight accounts will be collectedwithin 45 days of date of billing. In the past, however, there have beensubstantial amounts due to SRC from Government departments/organizationsfor long periods of time. The Government has confirmed that all accounts willbe kept on a current basis and that all arrears will be paid in full by June30, 1977, as required under the Third Railway Project (Credit 457-SU).
6.11 SRC's financial targets, according to its legislation, are to generatefunds adequate to cover its operating expenditure and debt service obligationsand to finance a reasonable part of investment needs, including replacements.The investment plan envisages SRC meeting LS 28.06 million, or 49 % ofinvestment requirements. This includes ES 8.06 million for deferred importduties. SRC's cash position should improve during the projection period atthe rate forecast. During the period of implementation of the proposed project,the Government and SRC have agreed to consult the Association whenever invest-ments beyond those included in the ongoing and proposed projects are esti-mated to exceed ES 500,000 (US$1.25 million equivalent) per annum intotal.
6.12 SRC should maintain a reasonable relationship between net cashrevenue and debt service requirements. During negotiations it was agreedthat, unless otherwise agreed with the Association, SRC will not incurany debt if its net cash revenue for the fiscal year or the 12 consecutivemonths immediately before the date of the occurrence, whichever is greater,would be less than 1.5 times the maximum debt service requirements of anysucceeding fiscal year.
6.13 The projected cash flow is stated in constant 1977 values exceptfor the amortization of long-term debt, both principal and interest, whichis shown in the actual current monetary values which will be paid each year.As the impact of these payments on the cash flow will decrease with inflation,a separate calculation has been made to determine the amounts involved. Thetotal debt service payments over the projection period of ES 75.6 millionin current values, will be reduced by inflation to LS 49.2 million in 1977values. The details are given in Table 19-B and the revised cash flow showingthe effect of inflation is set out in Table 19-C.
6.14 If actual traffic growth is, say, 25% less than the projectedgrowth, the impact on SRC for the project period would be a reduction inrevenues (ES 9.2 million), offset slightly by a reduction in working ex-penses (ES 2.5 million) and possible deferment of wagon purchases (ES 4.8million), resulting in a net reduction in cash flow of only MS 1.9 million.However, if the traffic growth rate were only half that projected, thecash flow reduction would be LS 8.7 million, requiring compensatory tariffincreases or further borrowings from Government to enable SRC to meet thelocal project costs.
- 21 -
D. Future Financial Objective
6.15 All projections are stated in constant 1977 prices. This assumesthat freight tariffs will be adjusted to reflect future cost increases.The forecasts do not assume any other tariff increases. In terms of a returnon net fixed assets in use, a financial target of at least 6% per annum in1981 and subsequent years would be appropriate. It was agreed during negotia-tions that SRC will take such measures as may be necessary to achieve thisobjective.
E. Financial Internal Rate of Return on Project
6.16 In order to assess the financial soundness of the proposed project,the financial internal rate of return was calculated by projecting the opera-ting statements of SRC with and without the project setting out the profitbefore depreciation and interest. The projections are done in constant 1977prices.
6.17 Without the project, SRC will reach its traffic carrying capacityin 1978 assuming no improvement in operating efficiency beyond 1976 levels.The total revenue for the future has hence been held constant at the 1978amount. Salaries and wages and parts usage will increase without the projectdue to increased maintenance requirements and the lack of proper workshopsand facilities. To determine the amount of the increase, actual maintenancecosts were examined for the period 1971-1976, from which the future trend hasbeen projected. As the number of locomotive-km would remain constant at the1978 level, the annual fuel cost has been held constant. Details are shownin Table 20.
6.18 Projected operating statements with the project setting out theprofit before depreciation and interest are given in Table 21. Revenuesremain constant from 1981 on as SRC would reach its traffic carrying capacityat that point in the absence of further investments.
6.19 The financial internaL rate of return for the project investmentsis 25%; the calculations are given in Table 22.
7. ECONOMIC EVALUATION
A. Economic Setting
7.01 In order to serve the traffic forecasts discussed in Chapter 4and promote the further economic development of Sudan, it is essential thatadequate rail transport facilities be provided, as road transport whereavailable would be more expensive for the relatively long-distance bulk
- 22 -
movements involved. The proposed railway project will seek to do this by (i)
improving the track in selected priority sections of the network needing
improvement; (ii) providing improved workshop facilities for locomotives and
rolling stock in order to increase availability; (iii) assisting SRC in
completing its telecommunications network and training school to help improve
operations through better communications and better trained staff; (iv)
financing replacement locomotives; and (v) providing 400 additional wagons.
It will thus prevent a further deterioration of SRC efficiency, and increase
its transport capacity to the level needed to meet the forecast demand for
rail services.
7.02 Of the total project investments, it is worth pointing out, more
than 80% is directed to improving SRC efficiency and less than 20% (namely,
purchase of wagons) to increasing the size of the fleet. The economic benefits
expected from the major project items are discussed below.
B. Track Works
7.03 Track improvements -- relaying or resleepering -- allow for higher
speeds and quicker turnaround, fewer accidents and lower track maintenance
costs for the first few years. Heavier rails allow for higher axleloads,
which reduce average net cost per ton-km. In addition,
(a) resleepering of the Haiya-Kassala-Sennar - El Obeid line will
permit a higher traffic density on the shorter route from PortSudan to Sennar, which can then carry the forecast 2 million tons
of traffic a year. 120 fewer wagons and 2 fewer locomotives
will be needed, a reduction of LS 1.8 million in equipmentpurchases, and iS 0.6 million per year in operating costs;
(b) rail upgrading on the Khartoum-Sennar line will permit higherspeed and lower maintenance costs. A gain of 10 km per hour in
train speed will result in improved turnaround time, reducingrolling stock needs by one locomotive and 42 wagons, or iS 0.8
million in investment costs. Furthermore upgrading both theKhartoum-Sennar and the El Rahad lines simultaneously will reduceproject costs, as used rails can be transferred from one section to
the other; the Khartoum-Sennar line would otherwise have to be
rebuilt within the next 10-15 years, and both the costs of track
materials and labor would have to be incurred at that time; and
(c) relaying of the El Rahad-Babanousa line will prevent a completeshutdown of this route within the next ten years, unless traffic
is greatly reduced or prohibitive maintenance costs are incurred.The line is presently in very poor condition, but it will berequired to carry 33 million ton-km a year for the Savannah
- 23 -
livestock project, whiile other traffic will almost double.Transport of livestock cannot suffer delays and, unless theRailway is able to provide reliable and timely services, thetraffic would go by truck (or would not move at all). Roadtransport cost per ton-km would be bS 0.0057 (about 50%)higher, excluding road building costs. With the proposedworks, operating expenses for other traffic would also bereduced because average freight volume per train will belarger, and because locomotives will be better utilized,a change to lighter ones being no longer required on thisroute. Benefits from reduced operating expenditures wouldamount to bS 1.6 million per year.
C. Workshops
7.04 The construction of new locomotive and wagon workshops will resultin:
(a) reduced costs in rolling stock and locomotive maintenance,because a more adequate design of the workshops will helpincrease labor productivity. iS1.2 million for locomotives andITS 0.7 million for wagons can thus be saved for labor and partsin 1985, rising to a total of bS 2.8 million per year in the1990's; and
(b) increased availability of locomotives and rolling stock,because better maintenance will reduce the incidence ofon-line mechanical failures, an important cause of traindelays. In addition, the modern modular approach to main-tenance reduces the average servicing time for locomotives, sothat more locomotives from the existing fleet are available tohaul traffic. Both factors combined are expected to increaseavailability of locomotives serviced at Sennar by 25%, thusreducing the number of locomotives needed by about 20; thecorresponding savings would amount to hS 6.4 million in equip-ment costs.
D. Rolling Stock
7.05 The 400 wagons, 10 locomotives and locomotive spare parts to bepurchased as part of the project will provide a transport capacity of 600miLlion ton-km a year, thus allowing SRC to meet forecast demand for transportservices. The traffic would otherwise have to be carried by road, at anadditional cost of IS 0.005-0.0057 per ton-km, or at least IS 3.4 million peryear. (Furthermore, some 2,000 trucks with an average of life of 8-10 years
- 24 -
would have to be imported at a foreign exchange cost of bS 15 million or socompared with the same amount for wagons and locomotives with an average lifeof 20-40 years.)
E. Other Items
7.06 The benefits attributable to other items to be provided underthe project -- communications equipment, signalling, technical assistance,etc. -- accounting for about 5% of the total project cost, cannot beaccurately singled out or quantified. However, these investments areessential to improve the general level of SRC's operational efficiencyand to help SRC realize optimum benefits from other investments beingundertaken under the project.
F. Economic Return
7.07 On the basis of the benefits described above, the economic returnon the project as a whole is 27X. For calculating the return, taxes andprice contingencies have been excluded from project costs. The variouscomponents of the project discussed above have returns ranging from 15% to65%. Details are shown in Tables 23-A to 23-E. With a shadow price forforeign exchange 25% higher than the market rate, the return is 24%.
G. Sensitivity and Risk Analyses
7.08 The sensitivity of the return to changes in the principal para-meters such as costs and benefits was also analyzed. The results, shown inTable 24, indicate that, with a 10% increase in costs combined with a 10%decrease in benefits, the return would still be a satisfactory 21%.
7.09 The economic return calculations are based on two critical assump-tions: (i) that the traffic will materialize as forecast and (ii) thatthe operational objectives given in Table 6, and the implied improvementsin SRC efficiency, will be achieved by 1983. As regards the first assumption,since less than 20% of project investments relate to expected traffic growthup to 1980, the error will be one of timing, for even with a traffic growth ofonly about 6% p.a. (4% p.a. in ton-km), for instance, the additional wagonswould be needed by 1983. The economic return would still be about 12%. Thesecond assumption is supported by the judgement that conditions are more pro-pitious now than at any time in the past for realising the planned operationalimprovements, as the norms have been suggested by SRC itself and the projectincludes a number of measures to help SRC achieve them.
- 25 -
8. RECOMMENDATIONS
8.01 During negotiations, agreement was reached with SRC and the Govern-ment on the following matters:
(a) operational targets (paras. 3.06 and 5.04);
(b) investments outside project (para. 6.11);
(c) debt limitation (para. 6.12); and
(d) financial targets and future tariff adjustments (para. 6.15).
8.02 Agreement was reached with the Government on:
(a) allocation of foreign exchange to SRC for spare parts(para. 3.04);
(b) additional capital for SRC (para. 6.05); and
(c) relending of IDA Credit/Third Window and other loanproceeds to SRC (para. 6.06).
8.03 The following are conditions of effectiveness (para. 5.18):
(a) the signing of loan agreements with the Kuwait, Arab andAbu Dhabi Funds;
(b) the effectiveness of the FED grant; and
(c) the signing of the Subsidiary Loan Agreement.
8.04 Project progress reporting requirements have been agreed withSRC in line with those for the ongoing Credit 457-SU.
8.05 On the basis of the above, the proposed project provides a suitablebasis for an IDA Credit of US$8.0 million and a Third Window Loan of US$12.0million to the Government of Sudan. The IDA Credit will be on standard IDAterms and the Third Window Loan will be at 4.2%, with the first repaymentdue January 15, 1983 and a final maturity date of January 15, 2001.
ANNEX 1Page 1
SUDAN
FOURTH RAILWAY PROJECT
Project Performance Audit of Second Railway Project
I. INTRODUCTION
1. The Operations Evaluation Department issued a "Project PerformanceAudit: Sudan Second Railway Project" on April 12, 1974. The general objectiveof the project, as stated in the audit, was to increase the efficiency andcapacity of the Railways by providing additional diesel locomotives and rollingstock, improving existing equipment and facilities, and implementing severalinstitutional and financial improvements. The main comments included in theaudit are summarized below:
(i) the project was successfully physically completed at about theestimated cost but only after a delay of three and a half years;
(ii) most of the institution-building measures in the Loan covenantswere adhered to;
(iii) some of the financial covenants had not been implemented;
(iv) actual traffic growth proved to be much less than forecast;
(v) operating efficiency did not improve as expected;
(vi) the financial position deteriorated; and
(vii) actual economic benefits were lower than expected.
II. LESSONS LEARNED AND ACTION TAKEN
2. The Reasons for the Delay in Completion were:
(a) disagreement between the Bank and SPC on certain specificationsfor locomotives which the Bank thought to be too restrictivefor international competitive bidding (ICB). As a result of ICB,the contract was awarded for locomotives which proved unsatis-factory for the climatic conditions of the Sudan. The Bankshould not finance under ICB specialized equipment where thelowest bidder may not necessarily supply the best equipment forthe prevailing circumstances;
(b) the stoppage of track relaying to avoid traffic interruptionsduring peak shipping periods and the late arrival of sleepersand rails. The stoppage resulted from poor planning which hassince been improved, and the late delivery was beyond thecontrol of SRC; and
(c) the lengthening, by about three months, of supply lines due tothe closing of the Suez Canal, also beyond the control of SRC.
MThTEX IPage 2
3. The Institution-Building Measures were Successfully implemented But
With One Change. The Loan called for the appointment of qualified accountants
to audit SRC. The Auditor General Chambers Act extended the Auditor General's
responsibiiities to all public bodies and corporations, greatly increasing his
workload. To alleviate the situation, training of personnel from the Auditor
General's staff in the USA and the UK was financed under Credit 457-SU and
successfully completed.
4. Seven Financial Measures Included as Covenants are Discussed Below:
(a) The settlement of Government accounts on a current basis: Thiscovenant was also included in the Third Railway Project which
extended the settlement date from July 1, 1966, to July 1, 1977.
In response to requests for implementation of this covenant from
both SRC and the-Bank, the Government took the intermediate stepof arranging compensatory overdraft facilities in lieu thereof.While helpful in the short term, it added an interest burden
(at 9%) to SRC's deteriorating financial condition. During theappraisal of the fourth railway project, the Government agreed toreduce the amount outstanding by approximately 50% immediately and
the balance before June 30, 1977, in order to meet the covenantunder 457-SU. The Government has since directed all govJer=entorganizations to settle SRC bills on a current basis.
(b) The reduction of Government equity capital: The invested caDitalwas to be reduced from ES 21.5 million to ES 6.0 million. In factit has been reduced to iS 11.4 million, but any further reductionwould be undesirable as the liquidity of SRC has been drasticallyreduced since the date of the Project Performance Audit.
(c) Increase in interest rate payable to the Government from &% to
6.5%: This was deferred during negotiations of Credit 457-SU.
(d) Transfer of funds to the post office account: No transfers havebeen made as there have been no cash surpluses, nor wl'l there befor some time.
(e) Amendment of depreciation methods: This has been inaplemented.
(f) Consultants tc formulate changes in tariff structure: This hasbeen implemented.
(g) Raising of salaries: This has been implemented.
5. Traf-fic Growth Less than Forecast. The Audit report emphasizes that
the economic assumptions used in the forecasts were too optimistic. Theproblem, however, was not primarily one of forecasting demand but rather the
lack of capacity to meet demand due to poor operating efficiency. This isdiscussed in the following paragraph.
6. Onerating Efficiencv Did Not Improve as Expected. The Bank hasrecognized that poor maintenance is the crux of the problems of SRC. It is
ANNEX 1Page 3
reflected in low availability, on-line failures, poor turnaround time and,hence, lower revenues and higher operating expenses. This, in turn, leads tolow (or negative) cash flows and the resultant inability to meet financialobjectives (and covenants). This was recognized in the Third Railway Project(457-SU) when provision was made for consultants (Australian National Railways)and a start on the establishment of a central training school at Atbara. Inaddition, the maintenance and workshop organization for locomotives and rollingstock was reviewed during 1976 by a Bank Group consultant and the proposals nowmade by SRC follow in general his recommendations. The proposed fourth railwayproject also includes the expansion and reorganization of workshop facilitiesand technical assistance to design and implement a different form of work organiza-tion in the new Sennar workshop. All of these measures are aimed at increasingoperating efficiency to enable SRC to meet not only its operational targets butother objectives as well.
7. The Deterioration of the Financial Position. The decline in profitabilityand the cash position can be mainly attributed to SRC's inability to meet thedemand for service for the reasons set out in the preceding paragraph. Whileoperating costs, particularly fuel, have increased rapidly in the past few years,tariffs have been adjusted upwards to compensate for it. The traffic carriedhas consistently fallen below forecasts for some years. The problem is notbasically financial but operational, stemming from poor maintenance.
8. Economic Benefits. The dieselization program and the track renewalprogram accounted for 54% of the Second Railway Project. The major benefitswere to be better utilization of locomotives and rolling stock. As previouslyindicated, better utilization did not, in fact, occur because of maintenanceproblems and the purchase of unsatisfactory locomotives (under ICB). Thisdecreased the benefits expected from the project (in the case of locomotives,almost 50%) and hence the rate of return. The Bank has recognized the over-riding problem of maintenance and both the Third Railway Project and, to agreater extent, the proposed fourth railway project address this problem.
January 1977
ANNEX 2
SUDAN
FOURTH RAILWAY FRCJECT
Past Bank Group Financed Transport Projects in Sudan
Credit/Year Loan Amount Status
(US$ million)
1958 Loan 39.0 (i) the acquisition and operation of diesel locomotives and rolling Satisfactorily202-SU stock; completed in 1964
(ii) the improvement, modernization and expansion of various railwayfacilities, including repair shops, workshops, marshalling yards,station loops and signialling equipment;
(iii) the relaying with 75-pound rail of approximately 400 km of theSennar-Haiya line and the use of the rails and other salvageablematerials taken up from such line in carrying out items (iv) and (v)below;
(iv) the completion of construction of the Western extension, fromBabanusa to Nyala, and installation of necessary operating facilities;
(v) the construction of the Southern extension, from Babanusa to Wau,and installation of necessary operating facilities;
(vi) the modernization and expansion of Port Sudan by the construction oftwo cargo berths for ocean-going vessels, installation of necessaryoperating facilities and dredging for a third berth; and
(vii) the acquisition of passenger and cargo barges, diesel engines andequipment and materials for the improvement and modernization ofriver transport services.
1965 Loan 31.0 (i) the procurement of mainline and shunting diesel locomotives and of Satisfactorily440-SU diesel railcar sets; completed in 1972
(ii) the procurement, construction, and improvement of rolling stock;(iii) the relaying with 90-pound rails of about 500 km of the Khartoum-
Atbara-Port Sudan line;(iv) the acquisition of one dredger, and of equipment and materials for
the improvement of river transport services; and(v) the completion of two cargo berths and the construction of a cargo
shed at Port Sudan, and the procurement of tugs, barges, cranesand cargo-handling equipment.
;"72 Credit 7.0 (i) cunsulting services to the Department of Roads for: In progress, com-331-SU a) improving its organization and operations (with emphasis on pletion expected
highway betterment and maintenance); in June 1978b) identifying high priority road construction projects; andc) carrying out feasibility studies of about 500 km of roads
identified under b) above, followed by detailed engineering ofabout 350 km of the highest priority roads;
(ii) purchase of spare parts for highway maintenance, workshop and labora-tory equipment; new equipment in these categories with related spareparts; and materials and supplies for highway betterment works andworkshop construction; and
(iii) technical assistance to the Ministry of Transport in transport planningand coordination, as well as staff training.
1973 Credit 24.0 (i) financing of Sudan Railways Corporation's investment program up to In progress, com-457-SU 1975, including: pletion expected
a) for the railway: track renewal, structures and communications, in June 1978locomotives and rolling stock, and a central training school;
b) for Port Sudan: cargo-handling equipment, facilities andstructures, and technical assistance;
(ii) equipment and technical assistance for the River Transport Corporation;(iii) preinvestment studies for future airport development; and(iv) training for the staff of the Auditor General.
1976 Credit 4.0 Technical assistance to increase the capacity of Sudanese institutions Credit became614-SU to execute preinvestment work in all sectors. effective in
October 1976
1976 Loan 20.0 (i) the construction of two regional airports, at Wau and Port Sudan, Loan/credit became1287-SU/ and upgrading of Juba and Malakal Airports; effective inCredit 9.0 (ii) supervision of the construction/reconstruction in (i) above; January 1977643-SU (iii) the provision of maintenance, and navigational and communications
equipment to the project airports; and(iv) technical assistance and staff training for the Civil Aviation
Department.
May 1977
ANNEX 3-APage 1
SUTDAN
FOURTH RAILWAY PROJECT
Roads and Road Transport
1. Of the 19,000 km of roads in Sudan, only about 700 km are paved,mostly near Khartoum, The 6,000 km of gravel roads are located mostly in thethree southern provinces where laterite material is available. Much of theroad network, particularly in the more populated and developed areas, passesover heavy clay soils which are generally impassable during the rainy season(June-September) .
Densit
2. Road density, 7 km per 1,000 km2, is the lowest in East Africa.There are 1.1 km of roads per 1,000 persons, only slightly higher than inEthiopia which has the lowest ratio in the whole region.
Vehicle Fleet
3. In 1974, to encourage modal diversity away from the railway, theGovernment began subsidizing the import of commercial vehicles, which has hada considerable impact on the size of the fleet, although detailed statisticsare not available. In Sudan in 1972, the latest date for which there are datathere were some 60,000 motor vehicles, about half of which were passengercars; the remainder were trucks and buses. On average, fleet density was lessthan 4 vehicles per 1,000 persons, but actual density for most of the countrywas much lower because, in 1972, 60% of the fleet was, and undoubtedly still is,concentrated in the Khartoum region.
Traffic
4. The main road network is principally a feeder to the railway system;exports are transported by road to the nearest railhead and imported consumergoods are moved from the railway by road to the scattered towns and settlements.Sudan's three most important and heavily-travelled roads are Khartoum-Wad Medani,Khartoum-Kassala and Port Sudan-Haiya. Data collected on these roads over a25-day period (May-June) in 1975 showed average traffic volumes of 1,600vehicles per day (Vpd) on the 186 km, paved Khartoum-Wad Medani road (75% trucksand buses), an increase of about 50% over 1973 flows. Traffic on the 450 km,unpaved Khartoum-Kassala route av-eraged 890 vpd (99% trucks and buses). Although280 vpd were recorded on the 225 km, unpaved Port Sudan-Haiya road, presenttraffic flows are thought to be much higher as a result of the paving of 58 kmof this road in 1976.
5. A rough indication of traffic growth can be obtained from statisticson road user fuel consumption, which increased an average of 6-7% annually during1963-73, the latest years for which data are available. This increase took placeduring a period in which GDP rose in the range of 3-5% per year.
ANNEX 3-APage 2
Trucking Industry
6. The trucking industry is concentrated in Kassala, Blue Nile and
Khartoum Provinces, although the 740 km Juba-Wau road also carries consider-
able truck freight. Operators dispatch their trucks in response to known
demands. Trucks are privately owned and most operators have only one vehicle.
Administration
7. The Roads and Bridges Corporation (RBPC) is legally responsible for
construction and maintenance of all trunk roads. In practice, RBPC maintains
only the paved roads in the north and other northern roads are left to the
Provincial Authorities. In the south, the Southern Region Ministry of Trans-
port and Communications (SMTCR)maintains the trunk roads; other roads are
looked after by the Provincial Authorities. RBPC at present lacks the skilled
manpower and funds necessary to plan and prepare highway investment programs
and to construct and maintain roads adequately.
Financing
8. Highway expenditures are financed from general revenues and by ex-
ternal aid, the latter accounting for almost all major construction. A break-
down of RBPC's budget showing domestic and foreign sources of funds is not
available. In 1970-73, the latest years for which information is available,
IS 17.2 million was allocated to RBPC, but only iTS 9.1 million, or 53%, was
spent. Until 1972, no funds were allocated to road maintenance and rehabili-
tation. In each of 1972-73, only LS 150,000 was expended in this category,
and although LS 2.2 million was allocated to maintenance in 1974, by the end
of December of that year only IS 44,000 had been spent, mostly due to the lack
of equipment. The highway budget in the south is controlled by the SMTCR; in 1973,
LS 190,000 was allocated to highways, all of which was earmarked for road
maintenance; information on actual expenditures is not available.
9. Licer.se fees are collected by Provincial Governments, while excise
and import duties on fuel, lubricants, engine oil and spare parts accrue to
the Central Government; these user charges are estimated to have generated
LS 2.5 million in 1973. The Southern Regional Government has its own revenue-
raising power and can allocate the funds collected, but information about the
source and disposition of its revenues is lacking. License and registration
fees are collected by the Provincial Authorities and, in 1973, amounted to an
estimated LS 23,000.
January 1977
ANNEX 3-B
Page 1
SUDAN
FOURTH RAILWAY PROJECT
River Services
Infrastructure
1. The principal inland waterway used for transport is the Kosti-Malakal-Juba (1,450 km) section of the Nile system, which is the major surface trans-port link between southern and central Sudan, and the Karima-Dongola (290 km)section in northern Sudan. Also used, sporadically, is the 350-km stretch ofthe White Nile between Khartoum-Kosti, the usefulness of which is severely con-strained by a small, manually-operated lock at the Djebel Aulia Dam 50 km southof Khartoum. For several months of the year, the Dam serves as a barrier tothe downriver spread of water hyacinth. For the most part, the Nile system isnot utilized to its maximum transport potential because of physical constraints,principally limited navigational conditions during several months of the year,and the inefficient services of the River Transport Corporation (RTC).
2. Port facilities exist at Kosti, Malakal and Juba, but these aremostly old and obsolete. Although various improvements were planned undera 1973 Phased Program of Action, they were not implemented because the RiverTransport Corporation (RTC) was awaiting the results of studies underway.RTC is currently acquiring new barges, which arrive unassembled. At least oneadditional slipway is required for vessel maintenance. The Government isnegotiating with Poland for such a facility in Kosti and also for a constructionslipway in Khartoum.
Fleet
3. A major consideration in making optimal use of the Nile system fortransport is that fleet characteristics be compatibe with the river's physicalparameters, which are shallow water (especially during the 3-4 low-water months)a huge swamp, the Sudd,water hyacinth encroachment, sharp bends and shoals. Thus,the river transport fleet should be shallow draft and composed of relativelysmall craft. Currently, however, RTC is acquiring 28 500-ton barges, with asupplier's credit from the Federal Republic of Germany, which will be limitedto 40% capacity utilization during the low-water season.
4. In addition to the 28 new barges mentioned above, four new oil bargesare now being delivered, financed under the Third Railway Project. Total fleetcapacity appears adequate for present needs.
Traffic
5. About 70% of river traffic flows on the Kosti-Juba section (with 30%on the Karima-Dongola stretch). Southbound freight is generally transferred fromrail to river at Kosti because the small lock between Khartoum and Kosti severelyconstrains traffic movement. Some 90% of freight traffic on the Juba reach flowsfrom north to south.
ANNEX 3-B.Page 2
6. Over 1964-74, the volume of freight transported fluctuated, butthe overall trend was downward, largely due to the disturbances in the south.In 1974, the volume moved was only 60% of the amount transported in 1964. However,the downward trend was reversed in 1975 and traffic increased 11% over the pre-vious year. Passenger traffic has followed a similar fluctuating pattern. Trafficvolumes carried are dictated by fleet availability and do not reflect actual de-mand, which is considered to be much higher.
Administration
7. Until 1973, river services were provided by SRC. In that year,RTC was established, with exclusive right to carry passengers, baggage, cargo,mail and livestock by river. The Corporation has a full-time Chairman,assisted by a General Manager for day-to-day operations. RTC continues tobe the weakest of the three Corporations to which assistance was providedunder the Third Railway Project, but it faces the toughest rehabilitationtask because river services were almost completely inoperative during the10 years (1962-72) of political unrest in the south. Further, ever sinceits establishment, RTC has been handicapped by poor operational planning andmanagement and shortages of barge capacity and qualified staff. To helpalleviate this, the Federal Republic of Germany is providing three technicaladvisors, for two years each, in dockyard work, traffic and barge operations,and accountancy.
Operations
8. Operational difficulties constrain the efficiency and reliabilityof river services. Waiting time for shipments, other than oil products, isabout six months. Pusher boats and self-propelled units have a low level ofavailability because of poor maintenance. Low fleet utilization (30.4%) in freighttraffic, 46% in passenger traffic) is compounded by low load factors (about 60%for freight lighters and motor ships). The latter is largely a result of thedirectional imbalance of traffic and the necessity to underload on shallowriver sections. As the new 500-ton barges come into use, the freight loadfactor will probably fall even lower, as they will require underloading forgreater periods due to their deeper draft requirements.
9. The best prospect for early increased capacity and efficiency isthrough improving RTC's capability to make better use of its-fleet. This wouldentail strengthening RTC's management, fleet maintenance, channel maintenance/improvement, and staff training and supervision.
Financial Position
10. Even the limited data available clearly shows RTC's poor financialposition. Operating costs in 1973, the latest available figures, amounted to140% of operating revenue, which is typical of river service performance since1964. RTC has a long way to go to achieve financial viability, which will re-quire not only revised tariffs but also increase productivity of the availablefleet.
January 1977
ANNEX 3-CPage 1
SUDAN
FOURTII RAILWAY PROJECT
Ports and Shipping
Infrastructure
1. Existing facilities at Port Sudan are approaching maximum utili-zation. To accommodate forecast traffic through the year 2000, additionalport development will be necessary. Two recent port feasibility studies havebeen carried out, one recommendling substantial expansion of Port Sudanfollowed by development of a new port at Suakin for use in the early 1990s;the other, no major investments at Port Sudan but immediate development ofSuakin. No firm decision on these alternative approaches has been taken bythe Government yet.
Traffic
2. Before closure of the Suez Canal in 1967, approximately 1,200 shipscalled at Port Sudan annually, in contrast to 750 ships per year while theCanal was closed, from 1967-75 (although during these years the size of thevessels calling at the port increased, as well as their cargo volumes). Withthe re-opening of the Canal, traffic seems to be reverting to the pre-closurepattern. Traffic is expected to grow substantially through the year 2000 inline with expected economic development in the country. Unless port capacityis increased by the early 1980s, traffic requirements will exceed capacity.
Administration
Organization
3. The Sea Ports Corporation (SPC) was established in July 1974,under the Ministry of Defense, with responsibility for administering all Sudanseaports (presently only Port Sudan). SPC is headed by a full-time Chairmanand assisted by a Managing Director for day-to-day operations. The neworganization requires considerable strengthening, especially in port management,personnel and training, and planning; the proposed First Port Project isexpected to include technical assistance and training for this purpose.
Staffing
4. All five Department Directors in the recently-reorganized portmanagement have now been appointed. In addition, 12 recent university graduatesare being brought into the Corporation as management trainees. The effective-ness of all administrative and professional staff, and labor forces must be in-creased through appropriate training.
AANEX 3-C
Page 2
Operations
5. Port Sudan is basically a rail port, with little or no provisionfor the growing role of truck transport. Cargo handling is generallycharacterized by low productivity and inefficiency as a result of the heavyuse of manpower rather than equipment. A start on the introduction ofincreased-capacity cargo handling equipment (fork lifts, tractors, andmobile cranes) has been made under the Third Railway Project. (Given in-creasing volumes of cargo, it is not anticipated that employment would begreatly affected by a shift to more capital-intensive methods.) The portis not equipped to handle bulk or unitized cargo, except for oil and wheatimports, although such increased capacities would be justified by existingand forecast traffic. The operational productivity of present port facilitiesmust be improved, in addition to finalizingplans to expand facilities.
Financial Position
6. SPC's financial position is satisfactory despite its operationaldeficiencies because it has few capital investments to amortize and trafficvolume is substantial. During 1975, SPC had revenues of LS 7.15 million,operating expenditures of ES 2.69 million and, after providing for depre-ciation and interest, a net operating surplus of ES 3.80 million. (Comparablefigures for the previous year are not available as Port Sudan was then a partof SRC.) For the current year, the financial situation should continue tobe satisfactory.
Shipping Fleet
7. The Sudan Shipping Line, originally a joint venture of the Govern-ments of Sudan and Yugoslavia, has been wholly owned by the Sudan Governmentsince 1967. It operates seven ships which provide services to North Sea andAtlantic Ocean ports in Europe, Yemen, Saudi Arabia, and the Far East. TheLine's share in Sudan's foreign trade is increasing gradually. The company isoperated on a sound commercial basis and was very profitable during theclosure of the Suez Canal because it did not have to compete with shipstransiting the Canal and serving Port Sudan en route. The effect of theCanal's reopening on the company's operations has not begun to be felt fully,although it is likely to be temporarily adverse.
January 1977
ANNEX "-DPage 1
SUDAN
FOURTH RAILWAY PROJECT
Civil Aviation
Infrastructure
1. Sudants 20 airports range from the all-weather 24-hour internationaljet airport at Khartoum to a completely unimproved field at Dinder. ExceptKhartoum and Juba, all airports are subject to closing during seasonal rainsbecause of soft runways. Only Khartoum has electronic landing aids, whichare being upgraded with new equipment provided under a UK loan. Under theDomestic Aviation Project, two new regional airports are to be constructed,at Port Sudan and Wau; Juba and Malakal Airports will be upgraded to accommodatemodern jet aircraft.
2. There are virtually no aeronautical communications within the country.Most traffic information is passed by telephone, if at all. Most of the air-ports with scheduled services are equipped with VHF radio for airport controlair/ground communications, but these units have a range of only 50-100 km.While most airports have non-directional radio beams for navigation, it tendsto be very old. The above-mentioned project provides for the necessarycommunications and navigational equipment for the four project airports.
Traffic
3. Air traffic in Sudan has grown relatively rapidly over the pastfew years despite seriously constrained domestic services. Thus, from 1969to 1974, the number of domestic air passengers more than doubled from52,000 to 107,000 and domestic air cargo increased from 774 tons to 1,296 tons.The most important individual route, Khartoum-Port Sudan, accounts for 20%of passenger movements followed by airports in the west, 32%, and south, 26%.The four project airports - Port Sudan, Wau, Malakal, and Juba - account for46% of the domestic passenger flow.
Administration
4. Sudan's airports are the responsibility of the Civil AviationDepartment (CAD) which, although part of the Ministry of Defence and partlymanned by military personnel, functions as a civilian government department.Most senior CAD officials are military officers transferred to a civilianstatus while with the Department. All the airport commandants and firefighting personnel are specially-assigned military personnel.
5. To upgrade its small outLying airports, the CAD has recently orga-nized an Airport Engineering Design and Construction Unit. For large projects,consultants and contractors are to be engaged, but their work will be super-vised by this new unit. To date, the unit has completed the reconstruction
ANNEX 3-DPage 2
of Atbara airport and is now working on New Alfa airport, with equipment pro-vided by a loan from the Federal Republic of Germany, Additional strengtheningrequired to make this unit fully self-sufficient is being provided for underthe Domestic Aviation Project, consisting of the services of six experts.CAD is also receiving technical assistance financed by the UNDP, under whichthe electronics section will receive four Operational Assistance (OPAS) tech-nicians.
Financial Position
6. CAD is currently financially viable, primarily because its capitalinvestments are relatively insignificant. After completion of the DomesticAviation Project, it will still be viable, but the four project airportsthemselves will not be able to pay all of their operating expenses. CAD willgenerate sufficient funds internally after project completion for debt ser-vicing and to replace equipment when required.
Sudan Airways
7. The Sudan Airways Corporation, owned by the Government, owns andoperates two Boeing B-707-32OG aircraft with wide-body interiors, two Boeing B-737aircraft, five Fokker F-27 and two DeHavilland DHC-6 aircraft, all maintainedto required airline operational standards. It serves all 20 domestic airportswith Khartoum as the hub. It also provides international services to neigh-boring African countries, the Middle East and Europe.
January 1977
ANNEX 4Page 1
SUDAN
FOURTH RAILWAY PROJECT
Sudan Railways Corporation; Property and Operations
Tracks and Structures
1. The principal route Port Sudan - Atbara - Khartoum is provided with90 lb/yd (45 kg/m) rail on timber sleepers. The other principal routesKhartoum - Sennar, Haiya - Kassala - Sennar, and Sennar - Kosti - El Obeid,have 75 lb/yd (37.5 kg/m) rail also on timber sleepers. Branch lines - toDamazin , Nyala, Wau and to the north - have lighter second-hand 50 lb/yd(25 kg/m) rail partly on steel and partly on timber sleepers (see Map and Chart 4).All tracks are laid on sand or earth as the case may be; there is no stone'ballasting.
2. These facilities have so far been adequate for past levels of trafficand service, but for the future, particularly in view of the rapidly increasingtonnages, now forecast, arising from the new agricultural developments, have made im-provements on several sections necessary. Much of the traffic will originate to theeast, south and west of Sennar and will lead to increasing usage of the railwav linesserving these areas and to heavier traffic on the El Obeid - Sennar - Kassala - Haivaeastern main line. SRC has drawn up a six-year program of track improvement to takeheavier loading and to increase the traffic carrying capacities of these lines; thefirst phase of the work is included in the proposed project.
3. Wayside crossing stations have also been adequate so far, but on theroutes mentioned additional stations will be needed as numbers of trains increase.Communications have been poor but a start has been made, under Credit 457-SU, toinstall radio HF and VHF equipment at main centers and at the remoter stationsto the south-west. It is planned to complete this program under the proposedproject.
4. The maintenance of track is wholly manual and has up to now beengenerally adequate. With increasing traffic and heavier materials, mechanicalaids will be desirable.
5. Most of the bridges and culverts on principal lines are in reasonablestate, but all lines suffer interruptions from flash floods during rainy seasonsand work on improved drainage and flood protection needs to be carried out,especially in the south and the wrest. Also some bridges on the branch linesneed to be strengthened to enable heavier axle loadings.
Motive Power and Rolling Stock
6. SRC has recently added 50 new units to its fleet of main line diesellocomotives to give a total of 15i2 (details at Table 2-A). As a result, availabilityhas improved but is still rather low (at 70% average, November 1975 - October 1976).
ANNEX 4Page 2
The older locomotives, some with continuing technical problems and all withcontinuing unsatisfactory maintenance standards, have a present availability ofabout 60%. If maintenance procedures are not improved, the overall availabilitymay decline again, as the new locomotives fall due for routine maintenance andoverhaul.
7. The augmented diesel fleet should, in theory, be adequate to meet alltrain requirements, but in fact branch line services, Babanousa - Wau and Sennar -Damazin, are still operated by steam units; this is mainly due to continuingproblems with the 22 Hitachi (Japan) light locomotives (average availabilityNovember 1975 - October 1976, 37%), but a team from the suppliers is now modi-fying a first batch of the locomotives and improved performance should beginto be feasible, hopefully next year.
8. Rolling stock data, given at Table 2-B, show that SRC now has about5,850 freight wagons (including about 700 tank wagons) for public service andsome 500 passenger and baggage coaches. Additional freight wagons (out of305 supplied under Credit 457-SU) and passenger coaches (out of 140 suppliedunder a Hungarian credit) are still being put into service. Freight wagons aremostly steel bodied, while passenger coaches are mostly timber bodied; all newunits have steel bodies. New stronger coupler and roller bearings (in placeof plain friction bearings) are being installed as wagons and coaches passthrough the shops; material is being supplied under Credit 457-SU and com-pletion of the program is proposed under the new project.
9. About one-fourth of the wagons and coach underframes are over 40 yearsold, but due to the dry climatic conditions deterioration is slight and con-tinuation in service is possible. The general maintenance standards forrolling stock, however, need improvement and the recent consultant's report 1/has made proposals for new improved workshops to be provided at Port Sudanand Khartoum.
Workshops
10. The main workshops for motive power and rolling stock are concentratedat Atbara. The conversion of the Atbara locomotive shops to full diesel main-tenance has not yet been completed. With the increasing size of the diesellocomotive fleet, SRC now proposes to establish a new workshop at Sennar.The whole workshops situation was reviewed in the consultant's report referredto above; further comment on the workshops and running sheds is given atAnnex 5.
Operations
11. A summary of statistical data for 1971 - 1976 and a comparison with1966 is given in Table 3. Passenger traffic and performance have been
1/ Report on a Study of Sudan Railways Corporation - S. Kasy Aiyar, World Bank,June 1976
ANNEx 4
Page 3
gradually improving, but freight traffic and operations have declined from197.1 to 1975. SRC has not been able to meet the freight traffic demand,which has resulted in accumulation of imports at Port Sudan and loss of exportsfrom the interior. Thns was caused largely by poor diesel locomotiveavailability and line failures, but there were also other contributory weak-nesses in traffic operations.
12. Following the provision of technical assistance (from AustralianNational Railways) under UNDP financing and the introduction of 50 new loco-motives, the freight traffic performance, in 1976, improved to the levelpreviously attained in 1971. On the key Port Sudan - Atbara section, im-ports carried in October 1975 - September 1976 increased by about 20% overthe previous year. Monthly data, given at Table 4, indicate that in the lastsix months lost time through locomotive on-line failures declined considerably.Other data, Table 5, show that with the increasing use of stronger couplersand roller bearings on wagons, systemwide delays due to coupler and bearingfracture are also declining. There is still, however, a high level of delaysfrom accidents and other causes (Table 5) and a continuing high average transittime for Port Sudan - Atbara (Table 4), about 50% above the timetable transittime.
13. The average number of freight trains operated per day in each directionon the section during the past twelve months (October 1975 - September 1976) was4.75; the number possible with the main line locomotives allocated should be,according to the Operating Department, 6 per day. The SRC timetable shows amaximum of 13 freight trains per day to be programmed and, if a normal averageoperating ratio of 70, to allow for delays, accidents, washouts, etc., isassumed, up to about 10 trains per day should be feasible, with additionallocomotives allocated. Compared with imports in 1975-1977, of about 1.6 milliontons, a service of 6 trains per day either way would give about 2.1 million tonsand 10 trains per day about 2.9 million tons annually.
14. Overall, the operational targets set under Credit 457-SU have notbeen achieved and, while some progress has been made in recent months, thetargets are not likely to be reached for some time yet. Detailed discussionswith SRC showed that, in drawing up the Six-Year Plan for the Railways, im-proved operational norms have been assumed by SRC. These were reviewedwith the concerned staff and, with some minor modifications, they have beenagreed as the operational targets for 1983.
January 1977
ANNEX 5
SUDAN
FOURTH RAILWAY PROJECT
Maintenance Workshops
1. Maintenance of diesel locomotives consists of complete overhaul -every 200,000 km, 10,000 hours or about every 2 to 2.5 years - yearly over-haul, and monthly, weekly and daily maintenance. In addition, locomotiveshave to be repaired in case of mechanical failure. Major repairs and com-plete overhaul are carried out in the Atbara workshop, and other maintenanceand small repairs in the locomotive home depots, at Atbara, Khartoum, Kassala,and Babanousa.
2. Maintenance of rolling stock consists of a complete overhaul everyfour years for coaches and every six years for wagons. Maintenance and inspec-tions of specific components are also carried out at scheduled intervals. Com-plete overhaul and major repairs for boxcars are done in the Khartoum workshop;for other wagons, in the Atbara workshop. Other servicing is carried out atdifferent places; in one of these, Port Sudan, imported wagons are alsoassembled.
3. The new organization of SRC has increased the regional managers' main-tenance responsibilities, although main overhauls will still be done in Atbaraand Khartoum as before. The shops and home depots surveyed are in reasonablecondition, but lack adequate equipment and space to cope with a growing fleetof locomotives.
4. The Atbara workshop for diesel locomotives was initially built forsteam locomotives. It is poorly designed, poorly equipped, and poorly run. Thephysical set-up of the workshop is irrational, crowded with equipment, dark anddusty and generally unsuitable for proper maintenance of diesel locomotives.Many items of testing equipment are lacking. The quality of maintenance work isgenerally poor.
5. Although generally better than the locomotive workshop, the Atbaraworkshop for coaches and wagons is not adequate. It will need complete recon-ditioning, combined with decentralization of some maintenance operations tobetter located workshops in the SRC network.
6. As a first step toward improving maintenance, a new wagon shop willbe built at Port Sudan to relieve Atbara and make its reorganization possible.Similarly a new diesel workshop will be built at Sennar, to service all loco-motives based at Khartoum, Kassala and other southern depots. The shop willbe designed to accommodate 80 locomotives, and possibly 150 later. Currentmaintenance approach, which requires the idling of each locomotive until allrepairs are completed, will hopefully be changed to a modern modular approach,in which faulty sub-assemblies are removed, replaced, and repaired later with-out holding up the locomotive itself. This new approach should reduce servicingtime for a complete overhaul from about 40 days to a maximum of 10 days, thusresulting in substantial increase in availability.
January 1977
ANNEX 6
Page 1
STDAN
FOURTH RAILWAY PROJECT
Note on Operational Objectives
Diesel Locomotive Availability-
1. The availability of diesel locomotives in 1976 was on the average64%. A detailed study of the different types of locomotives shows thatavailability of some old locomotives is only 40% but over 90% for those de-livered most recently. The reason for this is mainly inadequate maintenancewhich affects locomotives which have been in service for some years. A rea-sonable overall availability is 80% for heavy main line locomotives and 70%for other types. This, however, can only be achieved through proper main-tenance.
2. The workshop at Atbara is presently unsuitable for maintenance ofd:iesel locomotives and lacks sufficient capacity. The new workshop at Sennarwill have all the facilities necessary for maintaining diesel locomotives inaccordance with modern methods. The workshop will also have a well trainedstaff. This will not only result in properly maintained locomotives but alsoin less idle time in the workshop.
3. When approximately 80 locomotives are transferred from Atbara toSennar for maintenance in about 1980, the Atbara workshop could also be mademore suitable for maintaining the remaining locomotives. The more systematictraining of staff at the Atbara Central Training School, expected to be fullyoperational by January 1979, will also help SRC to perform better maintenancework at the Atbara workshop.
4. These four stages - (i) setting up a new workshop at Sennar, (ii) up-grading the workshop at Atbara, (iii) maintenance in accordance with modernmethods, and (iv) better traiining of staff - will Lake it possible to increasethe availability to at least 80% for heavv main line locomotives and 70% forother types. It is expected that these will be achieved fully by 1983. Availa-bilities of 70% and 65% respecti4vely are expected by 1981.
Productivity of Locomotives
5. The productivity per available locomotive in 1972 was an average of72,000 km. Productivity decreased in the following years and in 1976 was only63,000 km for heavy main line locomotives and 54,000 km for light main linelocomotives. The reason for this was deterioration in train operation, causedpartly by deferred track maintenance, partly by slackness in management at alllevels, and partly by the unsatisfactory s gnalling and telecommunication systems.Deferred track maintenance resulted in speed reduction on increasingly greaterportions of the railway system, plus track more sensitive to adverse weatherconditions, heavy rains, sand-storms, etc. Unsatisfactory signalling and tele-communication systems created train delavs and interrupted train operations.
ANNEX 6Page 2
Investment in track rehabilitation including rerailing, resleepering andprotection work will improve the speed in some sections of the railway system.Investment in signalling and telecommunication systems would also improve trainoperation. A productivity level of 100,000 km for heavy main line locomotivesand 75,000 km for light main line locomotives is realistic and should be achieved by1983. By 1981, productivity is expected to be 75,000 km and 60,000 km respectively.
Availability of Wagons
6. The availability of wagons has increased from 90% in 1972 to 91%in 1976. The availability is satisfactory but can still be improved somewhatto about 92% by the end of 1983 with the completion of the investment programin new couplers and roller bearings in the new project. Without the invest-ments, the availability of wagons will probably worsen.
Average Wagon Turnaround Time
7. The average turnaround time for general freight wagons was 13.1 daysin 1972. The turnaround time has gradually worsened, and was 16.5 days in 1976.Poor train operation, for the reasons mentioned above, poor supervision ofloading and unloading, and poor follow-up of wagon utilization, explain thedeterioration in wagon turnaround time. It is expected that the turnaround timewill improve to about 13 days by 1981 and at least 11 to 12 days by 1983, becauseof the regionalization of management, increased speed in some sections of the rail-way, less interruptions in train operation, and improved train operation in general.
8. The turnaround time for oil tank wagons is expected to improve mar-ginally from 9.2 days in 1976 to 9.0 days in 1983, also as a result of theproject.
Average Wagon Load
9. As a result of staff training and the introduction into service oflarger, new wagons, the average load per wagon is expected to increase. Theaverage load was 23 tons in 1972 and 24 tons in 1976. It is reasonable toassume an average load of 25 tons for 1983.
Productivity per Available Wagon
10. The productivity per available wagon was 540,000 ton-km in 1972,decreasing to 520,000 ton-km in 1976. Improved train operation will result inshorter turnaround time and increase wagon utilization. The average load perwagon is also expected to increase. It is therefore considered realistic toassume productivity levels of 595,000 ton-km by 1981 and 650,000 ton-km by 1983.
Staff Productivi.y
11. Staff productivity was 130,000 traffic units per employee in 1972 and125,000 in 1976. SRC is overstaffed for the present traffic handled, and manage-ment is well aware of this situation. With the forecast traffic growth and SRC'spolicy of restricting recruitment, staff productivity levels of 180,000 trafficunits per employee by 1981 and 220,000 by 1983 are considered realistic.
February 1977
ANNEX 7Page 1
SUDAN
FOURTH RAILWAY PROJECT
SRC Freight Traffic Forecasts - Explanatory Note
I. ENTRODUCTION
1. The forecast is based on economic data available as at the end of1976 in the various agencies of the Government of Sudan involved in the pre-paration of the Six-Year Development Plan. It reflects expected changes inthe pattern of traffic arising from the implementation of the plan and reali-zation of its underlying policy goals. The forecasts also take into accountthe prospective and imminent diversion of white petroleum products from railto pipeline on the Port Sudan - Khartoum route and the effects of road compe-tition on high-value, low-volume traffic, particularly import traffic, on theRailways.
2. Because of the planned and anticipated reduction or elimination ofthe country's dependence on imports for such items as wheat and textiles,and the emergence of Sudan as a major sugar exporter, both export and localrail traffic are expected to increase more rapidly than import traffic. Somedetailed notes follow.
3. The Bank mission reviewed SRC's original traffic forecasts and sug-gested a number of changes, mostly in the downward direction, which wereaccepted by SRC as reasonable. For appraisal purposes, past experience ofthe Railways' actual traffic in comparison with forecasts indicated a 15 -20%lag. A 20% lag has been assumed as highly like49 in the future, again withthe tacit agreement of SRC, and forms the basis of the economic and financialevaluation.
II. TO PORT SUDAN
Cotton
4. Short Staple: Production of short staple cotton during 1976amounted to 114,000 tons of which 8,000 tons were for local comsumption and106,000 tons for export. The amount actually railed to Port Sudan was 71,000tons. Thus about one-third of the total production is stored upcountrv.This ratio is expected to be maintained in the future. The year 1978 marksthe beginning of the first stage of the Rahad Project with an estimated pro-duction of 21,000 tons of cotton. A similar quantity will be produced in thesecond stage which will start in 1979. Estimates of railed quantitiesallow for the expected increase in local consumption of the commodity to about34,000 tons as a result of the planned establishment of textile factoriesin Sudan.
ANNEX 7Page 2
5. Long Staple: Present agricultural policy aims at reducing thearea allocated for long staple cotton. This area has been reduced in1975 by about 400,000 feddans which were transferred to the productionof wheat and short staple cotton. To assess future production and exportof the commodity, a growth rate of 5% per year i3 assumed attributablesolely to increase in yield per feddan.
Cotton Seed
6. Quantities transported during the years 1976 to 1978 repre-sent the amounts used by the edible oil processing mill at Port Sudan. From1978, which marks the beginning of the production of the first stage ofthe Rahad Project, the amounts represent the surplus after subtracting thequantities required locally.
Groundnuts
7. The increase in the volume of exports reflects the increase inproduction as a result of the Rahad Project.
Sesame
8. The increase in annual production is attributable to the expectedincrease in productivity per feddan. Local consumption is estimated at180,000 tons for both processing as edible oil and for other food purposes.
Oilcake
9. Due to the expansion in the production of cotton and groundnutsand the setting up of several edible oil processing mills, production ofoilcake is expected to increase considerably. Thus amounts exported aftersatisfying local needs will also show considerable increase.
Maize and Millets
10. The production of dura (maize) is subject to wide fluctuationssince it depends on rainfall for water. Also the amounts exported dependon Government policy and conditions in world markets. For planning purposes,exports have been estimated at 120,000 tons annually, with deficits in leanyears covered by surpluses from previous years.
Wheat
11. As a result of the increase in the areas allocated for the productionof wheat in the Gezira and Khashm El Girba schemes, the country is soon expectedto achieve self-sufficiency in wheat. The increase in the consumption of thecommodity reflects the increase in urbanization and standards of living. Thequantity to be moved to Port Sudan is about 30,000 tons to meet the estimatedneeds of the Red Sea Hills Province.
ANNEX 7Page 3
Sugar
12. As a result of the construction of several sugar mills, the countrywill attain self-sufficiency in sugar in 1977. It is expected that asmall surplus will be exported in that year. This amount will increase asthese projects are completed and become fully operational.
Molasses
13. Export of this commodity is expected to increase as a result of theconstruction of several sugar mills.
III. FROM PORT SUDAN
Petroleum Products
14. With the completion of the pipeline, the railway will no longercarry bulk white petroleum products from Port Sudan, with the exception ofquantities destined for the Kassala region. Black oils will continue to berailed from Port Sudan to the interior of the country. Estimates of bulkpetroleum traffic have been prepared by the Ministry of Industry and the oilcompanies based on forecast requirements.
Fertilizers and Insecticides
15. Imports of these commodities will increase from 1978 as a resultof the expansion in the agricultural sector and particularly the completionof the Rahad Project.
Jute Goods
16. With the completion of the Kenaf projects at Abu Na'ama in 1976 andat El Tong in 1977, the country will be self-sufficient in the production ofsacking. Thus jute goods imports are not anticipated from 1978 onwards.
Timber
17. Imports of timber are expected to increase as a result of theexecution of the various development projects and other construction activi-ties.
Asphalt
18. The increase in the import of asphalt is the result of plannedincrease in road construction work. This is in addition to the growingmaintenance needs of paved highways and city roads and streets.
Rice, Wheat and Flour
19. These are not included in imports from 1977, as this year marksthe beginning of the stage of self-sufficiency in their production.
ANNEX 7Page 4
Sugar
20. Sugar imports will be eliminated from 1978 since the countrywill become self-sufficient in the commodity.
Cement
21. The Development Plan includes the construction of two cementfactories in the eastern part of the country. The first plant is locatedsome 60 km to the north of Port Sudan and is expected to go into productionin 1977 with a capacity of 400,000 tons, of which 300,000 tons will beexported and 100,000 tons is for local use. The second plant will be con-structed at Derudeib with an initial capacity of 0.5 million tons annually;production will start around mid-1978. Cement traffic from Port Sudan re-presents the quantities railed from the Port Sudan factory to the differentlocal markets.
IV. LOCAL TRAFFIC
Petroleum Products
22. With the expected completion of the pipeline project, the Railwayswill concentrate on the distribution of bulk white petroleum products fromKhartoum to the west and south and from Atbara to the north.
Maize
23. Since maize (dura) is a staple food item for the majority of thepopulation, the increase in the local transport of the commodity reflectsthe increase in population.
Wheat and Flour
24. From 1976, which marks the beginning of the stage of self-sufficiency in the production of wheat, the local transport of these twocommodities involves movements from production to consumption areas. Theestimates are based on present average per capita consumption and the ex-pected increases in per capita income and consequently in consumption.
Sugar
25. The local transport of sugar will increase as a result of thecountry's attainment of self-sufficiency in its production.
Cement
26. The increase in the local transport of cement is attributed to theexecution of various development projects and other construction activities.
ANNEX 7Page 5
Sacking
27. The local transport of sacking will increase considerably as aresult of the completion of the Kenaf projects at Abu Na'ama and El Tong.
V. LIVESTOCK
28. A steady increase in livestock traffic is anticipated, as severalprojects to exploit the country's livestock potential are in various stagesof preparation/implementation.
VI. SERVICE
29. Service traffic reflects estimated operational requirements forfuel and spares as well as the requirements for new capital projects suchas rail and sleeper renewal, etc.
January 1977
ANNEX 8Page 1
SUDAN
FOURTH RAILWAY PROJECT
Notes on Proposed Project: 1978 - 1980
I. TRACK
(i) Haiya - Kassala- Sennar - Kosti- El Obeid
1. This line, 1240 km long, is provided with 751b/ yd (37.5kg/m)rail on timber sleepers. The sleepers were laid in the Haiva-Sennar (800km)section in 1957-1960 and in the Sennar - El Obeid (440 km) section In 1954-1957.Their life to date has thus been 16-22 years. The usual life for timbersleepers (locally pressure impregnated with creosote) is given by SRC as15-20 years. The number replaced in the period has been about 277,000 (orabout 220km), which gives an average of about 14,000 per year; if a fullannual replacement basis had been adopted the number needed would havebeen 1240km x 1274
17 years average
= 1,580.00017
= 93,000 per year
2. The majority of the sleepers are now in poor condition.Although the traffic carried on the line has up to now been comparativelylight, a major part of the forecast increase in export traffic from thesouth and west will use the route. By 1983, the traffic on this routeis expected to be about 2 million tons per year. To carry the increasedtraffic adequately and safely, the timber sleeper support of the trackshould be in good condition. SRC plans to replace about 1,090 track kmof sleepers over a six-year period. During the first three years coveredby the proposed project, replacement of sleepers over 500km is proposed.
3. Details of materials and costs for resleepering are givenlater in this annex.
(ii) Khartoum- Sennar and Abu Zabad - Babanousa
4. The existing track material on the lines from El Rahad toBabanousa and on to Wau in the south and Nyala in the west, consistsof used light 501b/yd (25kg/m) rail laid partly on steel and partly ontimber sleepers, all on sand and earth ballast. The rail and steel sleepersare up to 70 years old; there are problems with loose fastenings and occa-sional rail breakages. The track material would be adequate for a few years forpresent axle loads (using light locomotives and restricted loading of freightwagons), slow speeds (40 kph maximum and 25 kph average) and traffic levelof about three freight trains each way daily between El Rahad and Babanousa,
ANNEX 8Page 2
but will not be able to carry the future traffic, expected to increasefrom about 200,000 tons per year now in the export direction to about 400,000 tonsper year in 1984 and further thereafter. The track will have to be upgraded tocarry heavier trains at higher axle loads and at greater speeds, and SRC proposesto relay with second hand 75 lb/yd (37.5kg/m) rail on timber sleepers, instead ofproviding more and longer passing loops now, with track upgrading in a fewyears' time.
5. SRC has at present about 300 track km of used 751b/yd rail instock released from the relaying with 901b/yd rail in the Dast of thePort Sudan - Atbara - Khartoum line. It has already completed relaying30km from El Rahad towards Babanousa but is awaiting the supply of furthertimber to proceed further. SRC intends to complete on its own relaying upto Abu Zahad, a distance of 160km, during 1977-1978. The continuationof the work up to Babanousa, another 194km, is proposed for inclusion inthe project.
6. The total of 324km of rail relaying remaining to be done, plusadditional track for station yards and sidings, cannot be met from the SRCstock of 751b/yd rail. In addition SRC wishes to retain an adequate supplyof 751b/yd rail on hand for sidings for industrial and agricultural develop-ments already under way and others planned for the Six-Year Plan. SRC, therefore,proposes to relay 150 km of the Khartoum-Sennar section with 90 lb/yd (45kg/m) railas this section now carries the heaviest traffic, after Port Sudan - Atbara - Khar-toum, and will also carry in future a portion of the increasing export traffic. Theopportunity will be taken to provide new timber sleepers on this section and to makea start with stone ballasting and some rail joint welding to assess the benefitsof higher speeds and lower maintenance costs. The 751b/yd rail so releasedwill then be used for the completion of the relaying to Babanousa.
7. Any excess 751b/yd rail can be reused on the Sennar - Damazinebranch where the present track material is 501b/yd, in poor condition, andis scheduled by SRC for relaying during the second half of the six-yearplan.
8. Details of materials and costs for relaying 751b/yd and 901b/ydtrack are given later in this annex.
(iii) Other items
9. Track maintenance: This has been wholly manual until now butwith increasing traffic and heavier materials, mechanised aids for trans-portation, material handling and maintenance works will be desirable.Items proposed are motor trollies, bulldozers, mobile cranes, power toolssuch as rail saws and drills, and machines for coach screwing, fishbolttightening, resleepering, etc..
10. Signal ling and comaunications: Signalling will consist mainlyof double wire installations (used as standard by SRC) to existing andadditional crossing stations. Communication installations will be mostly (a) anextension of the VHF radio system (at present being installed Khartoum - Port Sudanand Haiya - Kassala) to Kassala - Sennar - Khartoum and El Obeid, (b) improved
ANNEX 8Page 3
station-to-station connections on the Wau and Nyala branch lines and(c) teleprinters to transmit traffic data over the radio network.
11. Additional crossing stations: Required to increase capacityon the eastern main line, and also from Sennar to Babanousa and on thebranch lines to Wau and Nyala. During the proposed project, priority willbe given to additional station sites on the sections to be resleepered andrelaid so that the work can be carried out at the same time.
12. Also, while resleepering and relaying, additional bridges andculvert openings will be provided and protection works will be constructedwhere past flooding or washouts have indicated these to be desirable andnecessary. Strengthening of some bridges on the branch lines to carry theheavier axle loads, possibly with keavier track matexial, will also benecessary.
II. WORKSHOPS
13. The first priority is to provide a new diesel locomotiveworkshop at Sennar so as to institute proper major overhaul routines,improved work methods and new staff management techniques, for locomotivesservinR mainlv the southern part of the system. Details as regards thesize of the shop and the facilities to be provided have to be agreed withSRC. The mission believes that a smaller building using a componentsubstitution approach would be more suitable than SRC's plan for a largebuilding holding more locomotives out of service while components arebeing prepared. The proposed project includes machine tools and initialmajor component stocks for the workshop.
14. Provision is also made for a new wagon shop at Port Sudan toreplace the unsatisfactory facilities at Atbara, as recommended by theconsultant's report referred to earlier.
III. EQUIPMENT
15. No additional main-line diesel locomotives should theoreticallybe required in the project period if availability (and also utilization)can be improved (Annex 9). However, by 1980 the first 15 of the EnglishElectric locomotives and the 15 Cockerill Ougree units will be about20 years old. The latter, although modified subsequently, have neverbeen satisfactory under Sudan conditions. Therefore, a start shouldbe made with replacements and 10 are proposed in the project. Replacedlocomotives could still be retained in service on light duties, if thevolume of traffic and operations should require this. In order to increasethe availability of the other locomotives, spare parts for these are alsoincluded in the project.
16. Freight wagon requirements to meet forecast traffic to 1983are estimated in Annex 9. For the time being, 400 additional
ANNEX 8Page 4
wagons are proposed in the new project to meet the minimum requirementsto 1980, assuming a slippage of UI) to 20% on the SRC traffic forecast.
If the slippage is not as large as assumed, there would be good reason
to provide more wagons later in the project period.
17. SRC is pursuing a program of providing stronger couplers and
replacing plain bearings by roller bearings on wagons and coaches. Origi-
nally it was intended to confine the change-over to stock less than 20
years old, but in view of their long life in Sudan's dry climate, and
the need to avoid unnecessary investment in new stock, SRC is substitutingcouplers and roller bearings on all stock used on through train operations;
the number of on-line fractures from broken couplers and overheatedbearings is as a result declining considerably (Table 5). Provision is,
therefore, made under the project for a completion of the program.
IV. TRAINING AND TECHNICAL ASSISTANCE
18. Construction of a new central training school is being started
under the third railway project, with the first batch of equipment being
supplied from Credit 457-SU. Completion of the classrooms and equipmentis proposed under the project (leaving residential accommodation to follow
at a later stage). In addition, technical assistance to SRC is included
for the initial establishment of the school, preparation of syllabuses, and training
of instructors for operational and mechanical maintenance classes.
19. Provision is also made in the proposed project for other tech-
nical assistance, for (i) Sennar workshop design,(ii) testing section for
locomotive shops and running sheds, (iii) radio communications and communi-cations maintenance,and (iv) workshop staff management.
ANNEX 8Page 5
SRC - Cost of Resleepering 75 lb/yd Track
A. Per Km. - LS (000)Local
Unit Quantity Cost Tax Total Foreign Total
Hardwood sleepers
- imported No. 1019 - 1.29 1.29 4.29 5.58
- local " 255 2.99 - 2.99 - 2.99
Bearing plates -/ " 1274 - 0.34 0.34 1.15 1.49
Screw spikes 1/ " 2548 - 0.21 0.21 0.70 0.91
Local materials Sum - 0.65 - 0.65 - 0.65
Labor Km. 1 0.28 - 0.28 - 0.28
Total for resleepering per km. 3.92 1.84 5.76 6.14 11.90
B. 500 Km. - 'S (million)
Complete resleeper Km. 500 1.96 0.92 2.88 3.07 5.95
1! New units only. In addition an equal number of second-hand units will
be used.
ANNEX 8Page 6
SRC - Cost of Relaying with Second-hand 75 lb/yd Rail
With the forecast improved availability and utilisation, the existingnumber of main line locomotives should be able to meet traffic needs untilalmost 1983. However, if actual traffic is higher, additional locomotiveswill be needed.
If traffic is, say, only 10% below the SRC forecast, additionallocomotives required in 1983 (assume average utilisation of 87,000 km per year)
- 10,936,000 - 9,580,000 1-356.00087,000 87,000
16Add for maintenance (80% availability) 4
Total 20
ANNEX 9Fage 3
.Alternatively, if availability and utilisation do not improve,then freight 1c omoLive km with existing fleeL
= 102 x 0.7 x 70,000 = 5.0 million
+ 27 x 0.6 x 70,000 1 113 million
Total 6.13 million
Number of additional locomotives then required for 1983
10,936,000 - 6,130,000 4,806,00070,000 70,000
69
Add for maintenance (70% availability)) 29
Total = 98
Increased cost of investment at US$800,000 (ES 320,000) plus taxes (60%) each
- (98 - 20) x IS 512,000 E - S 40 million
II. General Freight Wagons
(i) Actual Performance 1976:
General Oil Total
Number of wagons in fleet 4,950 700 5,650Deduct for maintenance 9% 440 60 500
Balance available for traffic 4,510 640 5,150
Deduct for SRC service (average) 160Deduct for livestock 150 /
Available for general traffic 4,200
1/ 50% use of the 300 livestock wagons assumed for general traffic.
ANNEX 9Page 4
Revenue ton km 2,708 million
Deduct oil traffic= 543,000 tons x 850 km = 462 million
Deduct livestock traffic= 20,000 tons x 500 km = 10 million 472 million
Balance general traffic 2,236 million
Productivity per general freight wagonavailable = 533,000 ton km
Number of wagons required = 4,196
(ii) Future Requirements up to 1983:
Assuming gradual progress towards the operating targets for 1982/83(Table 6), the average loads and turnaround times (agreed with SRC) are:
1978 1979 1980 1981 1982 1983
Average loads (tons) 23 23 24 24 25 25
Average turnaround (days) 15 14 13 12.5 12.0 11.5
Average haul (km) 950 900 850 850 850 850
Average distance per day (km) 63 64 66 68 70 72
(a) For 1980 (end first three-year period);
Freight net ton km forecast (SRC) = 4,556 millionDeduct service and livestock = 192 million
4,364 million
Deduct bulk liquids - import 469,000 x 850 km 399 million
- local 405,000 x 600 km 243 million
- export 110,000 x 850 km 94 million
Total 984,000 tons 736 million
ANNEX 9Page 5
Balance general freighLt traffic = 3,628 million
Reduce for 20% slippage on forecast - 726 million
2,902 million
Forecast productivity per general freight wagon
= 24 tons x 66 km x 365 days = 578,000 ton km
Number of wagons required = 2,902 milliQn = 5,021578,000
Add for maintenance (92% availability) = 437
5,458
Deduct-available 1976 (4,950 - 310) - 4,640
- new in service 1977 = 300
Total available in 1977 4,940
Additional wagons required = 518
(b) For 1983 (end second three-year period):
Revenue net ton km forecast (SRC) - 5,624 million
Deduct service and livestock (approx.) = 255 million
5,369 million
Deduct bulk liquids - import 565,000 x 850 km = 480 million
- local 470,000 x 600 km = 282 million
- export 110,000x 850 km = 94 million
Total 1,145,000 tons 856 million
Balance general freight traffic = 4,513 million
ANNEX 9Page 6
Reduce for 20% slippage on forecast= 4,513 - 903 = 3,610 million ton km
Number of wagons required = 3,610 mi lion = 5,554650,000
Add for maintenance (92% availability) 483
6,037
Deduct - available 1977 4,940
Additional wagons required = 1,097
(iii) Alternatively - if operational performance with wagons remains at aboutpresent level, that is:
Productivity per general wagon = 523,000 ton km
Number of wagons required in 1983 (with 20%
slippage on SRC forecast) = 3,610 million = 6,902523,000
Add for maintenance (92% availability) = 600
7,502
Deduct - available 1977 4940
Additional wagons required 2,562
Increased cost of investment at US$30,000 (ES 12,000)
plus taxes (45%) each = (2,562 - 1,097) x IS 17,400 ' ?S 27 million
Less slippage on trafficforecast - 20% 67 72 76 80 84 89
Balance required 537 572 603 639 673 713
Tank wagons in fleet1977 700 700 700 700 700 700
Number of additional wagonsrequired: 10% slippage 0 0 0 19 57 102
2 0% slippage 0 0 0 0 0 13
Aril 1977
ANNEX 10Page 1
SUDAN
FOURTH RAILWAYS PROJECT
Sudan Railways CorporationSocial-Technical Study of Workshop Organization
Outline Terms of Reference
Background
The Sudan Railways Corporation is the major provider of transportin Sudan. With a work force of over 30,000, it carries some 3.0 million tonsof freight per year -- about two-thirds of all long distance freight -- overan average distance of 850 km, and one-half of all passenger traffic.
The efficient running of the Railways is vital to the Sudaneseeconomy, as no alternative is available to most parts of the country forheavy or bulky cargo. So far, however, the Railway has had difficultyachieving satisfactory standards of maintenance. Part of the cause is con-sidered to stem from work relationships which are not conducive to highstandards.
To alleviate these difficulties, the Railway has decided to focuson improving maintenance through a two-pronged strategy:
(1) a new maintenance workshop will be built at Sennar;
(2) a different work organization, meeting the objectivesoutlined below, will be designed for the new workshop.The work force of this workshop will probably be about500.
Objectives
The consultants shall help design and implement a work organizationfor the Sennar workshop which shall aim at the following objectives:
(i) achieve improvements in productivity at Sennarover that achieved hitherto in Sudan;
(ii) improve quality of maintenance work;
These objectives shall be achieved through improving staff morale and com-mitment to work and increasing the feeling of responsibility among staff.
Scope of Work
The work shall be carried out in three phases. Prior to eachphase, the consultants shall obtain both approval from SRC management and
ANNEX 10Page 2
support from the labor unions. If a climate of goodwill and active supportcould not be established, management shall be free to terminate the study.
Phase 1 - Diagnosis
(a) The consultants shalll assess, in association withrepresentatives of management and labor unions, thecauses for the present low productivity and poorquality of maintenance work, with special focus onthe present form of work organization, incentivesystems and staff response to them, and generalorganization climate.
(b) The consultants shall present to management andlabor unions -- through a SteeringCommittee to be set up for the study -- theirfindings and recommendations.
Phase 2 - Organization Design and Implementation Planning
(a) With the participation of SRC management and laborunions, the consultants shall propose alternativeforms of work organization in line with the study'sobjectives, findings and recommendations. Amongthe alternatives, the consultants shall evaluatethe merits of an autonomous work group approach,(c.f. Trist's study in the Durham coal-mines, Rice'sstudy at Ahmedabad, etc.) which would appear suitablein view of the deep feelings of egalitarianism inSudanese society, and of supervisors' reluctance toassume their role. The consultants, however, shouldnot limit themselves to this single approach withoutconsidering alternatives.
(b) After SRC management and the labor unions have se-lected one form of work organization from among theproposed alternatives, the consultants shall preparethe detailed design, an implementation plan, anincentive system and so forth to support the newscheme.
Phase 3 - Implementation and Follow-up
(a) The consultants will assist SRC in staffing the newworkshop, will provide necessary training, staffb.riefing, etc. to ensure motivation and willingnessto participate in the new approach, and, finally,will assist in the start-up of the workshop.
ANNEX 10Page 3
(b) The consultants will periodically monitor the workingof the shop to determine whether corrective actionsare required. This monitoring shall not take placeless than three times a year, for at least two years.
Special Requirements
The management and organization behavior specialists of theUniversity of Khartoum shall participate in all phases of the study, toprovide the necessary continuity of effort and knowledge of local conditions.The expatriate consultants shall assume the major responsibility at thediagnosis and design stage, and shall later assist in the implementation.
SRC shall provide two staff members,one specialist in mechanicalengineering and one in training, to ensure adequate communication betweenthe Railway and the consultants in all phases of the study.
Reporting Requirements
(To be agreed)
January 1977
A}NEX 11Page 1
SUDAN
FOURTH RAILWAY PROJECT
Project Implementation Schedule
I. Track
Advertisement for bids for- track material Aug. 1977 1/- material for protection work Aug. 1977- track maintenance equipment Aug. 1977- signals and communications Aug. 1977
Placing of orders for- signals and communications Dec. 1977- track material Jan/May 1978 2/- material for protection work Jan/May 1978 3]- track maintenance equipment Jan. 1978
Protection works and bridge strengthening Nov. 1977
Resleepering Haiya-El Obeid starts Jan. 1979
Signalling and communications installation starts Jan. 1979
Relaying Khartoum-Sennar starts Jan. 1979
Relaying Abu Zabad-Babanousa starts Jan. 1980
All track work completed Jun. 1982
II. Workshops
Recruiting of consultant for workshop design, constructionand start-up Aug. 1977
- listing of components needed for locomotivemaintenance Nov. 1977
Design of workshop for locomotives and wagonscompleted Dec. 1977
Advertisement for bids for machinery and equipment forthe new workshops Mar. 1978
Inquiry for bids for locomotive components Dec. 1978
1/ Except for track material for Abu Zabad-Babanousa which will have tobe deferred three months.
2/ Material financed by Kuwait, Arab and Abu Dhabi Funds will be ordered in the laterpart of the period.
ANNEX 11
Page 2
Building of locomotive and wagon workshops starts Jul. 1978
Ordering of maciinery and equipment for workshops Sep. 1978
Ordering of locomotive components Jan. 1979
Delivery of machinery and equipment completed Jul. 1979
Delivery of locomotive components completed Jun. 1980
Production start at wagon workshop Apr. 1980
Production start at locomotive workshop Jun. 1980
III. Equipment
Advertisement for bid for- locomotives and spare parts Aug. 1977- freight wagons Aug. 1977- roller bearings and couplers Aug. 1977
Contracts awarded for- locomotive spare parts Feb. 1978- roller bearings and couplers Feb. 1978- freight wagons May 1978- locomotives May 1978
Roller bearings and couplers delivered andinstallation starts Jan. 1979
Locomotive spare parts delivered Feb. 1980
Freight wagons delivered and assembled Sep. 1980
Locomotives delivered Sep. 1980
Installation of roller bearings and couplers completed Jan. 1981
IV. Training and Technical Assistance
Design of training school - second phase concluded Sep. 1977
Advertisement for bids for equipment Oct. 1977
Building work starts Jun. 1978
ANNEX 11Page 3
Contracts for equipment awarded Feb. 1978
Recruiting of technical assistance fortraining school Jun. 1978
Equipment delivery completed Dec. 1978
Training school taken into service fully Jun. 1979
May 1977
SUDAN ANNEX 12
Page 1FOURTH RAILWAY PROJECT
Financial Assumptions
1. Revenues and expenses are stated in a constant monetary unit (1977).
2. Capital costs include price contingencies.
3. It is assumed that the proposed project will be implemented duringthe three-year period 1978 to 1980. Investments required to meet thegrowing traffic demand beyond 1980 are included in the projections. Theirestimated costs are set out below:
4. The foreign costs of the foregoing have been treated as 20 yearJloans,including a grace period of 4 years, with interest at 8%. Included in thecosts are customs duties of LS 16.75 million which have been deferred.
5. Salaries and wages have been taken at the 1977 level and adjustedfor increases which will result from the regionalization and the increase inretirement age from 55 to 60. In addition, labor costs related to rolling
stock maintenance have been increased for that part of the fleet not affected by
the workshop facilities provided by the proposed project. To determine theamount of the increase, actual maintenance costs were examined for the period1971-76, from which the future trend has been projected.
6. Parts usage for locomotives and wagons has been calculated on aprojected kilometer basis using the 1976 actual cost per kilometer as a base(adjusted to 1977 price levels). In addition, parts costs related to rollingstock maintenance have been increased in the same manner as the labor costs.
7. Fuel consumption has been calculated on a locomotive kilometer basis.
8. The portion of miscellaneous operating expense which applies torolling stock has been related to the forecast kilometer usage. The balanee
has been assumed to remain constant.
9. Accounts Receivable represent 45 days billings.
ANNEX 12Page 2
10. Inventories for 1978 and 1979 include track material on handwhich should be in place by 1980. From 1981 on the inventory represents1-1/2 years' requirements plus iS 6.0 million in transit.
11. Trade Accounts Payable are expected to rise in direct relation to theincreased need for parts and fuel.
12. Commitments represent the difference between orders placed for
investment requirements and disbursements made.
May 1977
SUDAN
FOURTH RAILWAYS PROJECT
Public Sector Investment in Transport Sector(LS million)
Annual Average Annual Average Annual Average EstimateMode 1966-1970 1971-1974 1975-1976 1977
Railways 3.2 2.6 13.7 16.0
Roads 1/ 0.4 3.0 22.0 29.0
River Transport 0.1 0.4 2.2 0.9
Ports 0.3 - 0.7 2.5
Aviation 0.4 2.5 8.9 2.6
Total 2/ 4.4 8.5 47.5 51.0
1/ Excludes expenditure on the Chinese-financed Wad Medani-Gedaref road.
2/ Excludes expenditure on pipeline.
February 1977-I-
TABLE 2-A
SUDAN
FOURTH RAILWAY PROJECT
Fleet of Locomotives and Railcars
(As of Nov. 8, 1976)
Locomotives and Railcars SRC Make Horse No. AgeClass Power (years)
Main line diesel - heavy-!/ 1,000 English 1,850 55 14-17
Electric
1,000 " 1,850 10 8
1,200 Cockerill 1,850 15 15-16Ougree
1,900 Henschel 2,250 20 1
1,800 G.E. 2,250 20 1
120
- light 2/ 1,500 Hitachi 1,400 22
1,700 G.E. 1,650 10
32
Total 152
Main line steam Various 76 3/ 20-50
Shunting - diesel 400 English 350 5 25Electric
450 Henschel 370 4 19
100 Baguell 340 6 15-16
460 Henschel 600 21 13
600 KSK 525 23 9
- Henschel 540 10 1
Total 69
Shunting - steam Various 31 25-50
Railcars - diesel 4/ - Hitachi 3 9
1/ Heavy - used on 90 lb/yd & 75 lb/yd rail.2/ Light - used on 50 lb/yd rail.3/ 20 of the 76 used for shunting duties only.-4- Three sets each consisting of one power coach and two trailers.
1/ Age refers to underframes; most coach bodies are timber and renewed at about 20 year intervals;140 new steel bodied coaches in process of delivery from Hungary.
Source: SRC
January 1977
SUDAN
FOURTH RAILWAY PROJECT
Summary of Operating Statistics
1966 1971 1972 1973 1974 1975 1976Provisional
I SYSTEM
Route km 4,747 4,757 4,757 4,757 4,750 4,751 4,784
II TRAFFIC
Passenger numbers (000) 3,365 3,417 3,242 3,382 2,807 2,947 3,166Passenger km (mill,) 886 1,033 1,041 1,085 1,048 1,102 1,151Freight net tons (000) 2,838 3,169 3,034 2,901 2,693 2,528 2,708Freight net ton km - revenue (mill.) 2,175 2,683 2,636 2,520 2,324 2,176 2,672
- service (mill.) 146 102 116 104 102 99 84- total (mill.) 2,321 2,785 2,752 2,624 2,426 2,275 2,756
Passenger - km per passenger train km 495 714 655 890 848 989 985Passenger - km per car km 25 32 32 35 34 37 40Freight - net ton km per freight train km 409 552 567 540 503 473 518
- gross " " " " " " 927 1,065 1,123 1,120 1,023 989 984Freight - net ton km per available car per year (000) 444 474 472 450 411 381 461Freight - car km per available car per day 67 77 69 66 63 63 71Ratio of loaded to total freight car km 81 78 80 81 80 78 76
11 "1 gross ton-km to net ton-km 2.2 2.1 2.4 2.1 2.0 2.1 1.9Locomotive km per available mainline
1/ After improvement, an additional 2 million tons can be carried to and fromSennar by this route, because it is 52 km shorter than the present route viaAtbara and Khartoum. Alternatively, this traffic could otherwise go by truck,at an additional cost of ES 0.0057 per ton-km over 1,000 km. The Atbara -Khartoum route will involve purchase of 120 additional wagons and 2 locomotivesfor ES 1.8 million and ES 0.6 million in annual operating costs.
May 1977
TABLE 23-B
SUDAN
FOURTH RAILWAYS PROJECT
Cost-Benefit Analysis(in ES '000)
(ii) Upgrading of Khartoum - Sennar Line
20 years, 1 cost stream, 2 benefit streams
TrackAvoided1 / Maintenance
Project!' Rolling Stock 21 Capital CostYear Cost Savings Costs Savings
1/ Project costs include the cost of labor for rail renewal and the extracost of transporting used 75 lb. rail to Rahad - Babanousa.
2/ Increased speed results in shorter turn-around time for locomotives andwagons which means that less rolling stock is needed.
3/ The Khartoum - Sennar line would need relaying within a 10-15 year periodin any case. Full costs - labor and track material - would then have to beincurred.
1/ Improved maintenance at Sennar will increase by 25% the availability of loco-motives served there, so that 20 fewer locomotives are needed to haul the sametraffic. At 1S320,000 per locomotive, LS6.4 million in rolling stock costs are saved.
2/ Maintenance costs are also reduced because of improved physical layout andhigher labor productivity. Savings are conservatively estimated at hSO.016 perlocomotive km.
January 1977
TABLE 23-E
SUDAN
FOURTH RAILWAYS PROJECT
Cost-Benefit Analysis(in ES '000)
(v) Wagons and Locomotives
Year Rolling Stock. Costs Operating Cost Savingsl/
1978 2,492 0
1979 3,365 570
1980 3,930 1,140
1981 3,555 1,710
1982 0 3,400
1983 0 3,400
1984 0 3,400
1985 0 3,400
1986 0 3,400
1987 0 3,400
1988 0 3,400
1989 0 3,400
1990 0 3,400
1991 0 3,400
1992 0 3,400
1993 0 3,400
1994 0 3,400
1995 0 3,400
1996 0 3,400
1997 0 3,400
Rate of Return = 23%
1/ Rolling stock and spare Darts procured undpr tla nrolpet v411 nroviAe for a
traffic capacity of up to 600 million ton-km, which would otherwise have to
go by truck, at an additional cost of ES0.0057 per ton-km.
May 1977
SUDAN
FOURTH RAILWAY PROJECT
Sunnary of Economic Return Analysis
Economic Return (Z) Sensitivity Analysis of Rate of Return (7) at Market Prices
Economic Cost/ at market at *hady 2 101 increase 107 decrease 107 increase in cost plus one-year delayProject Item (in million LS) prices prices in costs in benefits 107 decrease in benefits in benefits
i) Resleepering Ha-ya - El Obeid Line 5.0 39 40 31 31 25 24
Manager E~~~~~~~~~~~~~~astge ACcountanth stb C. rinn* er Manager Manager Mane Manager Aci f c Stores |h lishe. Esb C. Traffice n
M g West Region Central North Controller lishm, Offic OfficerSo. Regon Region Moh. El Research El Sir Ab- Ali AhmahVaca Abdel Salam Region Badri Region Hassan Osman Kha|as Officer dalla Abdel
Vaca ~ ~ ~ alh II Vacant adiVacant IasbrsanAhidmam dla be-'~' - I _ Ibrahim Obeidalla Ahmed Fahmi Gahalla Rahim
