Document of

The World Bank

FOR OFFICIAL USE ONLY

s 7t; > 7t Report No. 3344a-RO

ROMANIA

STAFF APPRAISAL REPORT OF A

LAND TRANSPORT PROJECT

June 15, 1981

Projects DepartmentEurope, Middle East and North Africa Regional Office

*~~~~~This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = Leu, Lei (plural)Lei 18 = US$1.oo up to December 31, 1980Lei 15 = US$1.00 from January 1, 1981

WEIGHTS AND MEASURES

Metric System British/US System

'1 meter (m) = 3.2808 feet (ft)1 kilometer (km) = 0.6214 mile (mi)I square kilometer (km2) = 0.3861 sq. mile (mi2)I metric ton (m ton) = 0.9842 long ton (lg ton)

ACRONYMS AND ABBREVIATIONS

(Romanian equivalent, used in legal documents, shown in parenthesis)CFR (DEPCF) Romanian Railways (Departamentul Cailor Ferate)DR (DD) Directorate of Roads (Directia Drumurilor)EDI Economic Development InstituteER Economic ReturnFTE Foreign Trade EnterpriseFYR First Year ReturnGNP Gross National ProductIB Investment Bank of RomaniaICB International Competitive Bidding- (ICPTT) Technological Research and Design Institute for

Transport (Institutul de Cercetari si ProiectariTechnologice in Transporturi)

LCL Less than Car LoadMTTc (MTTC) Ministry of Transport and TelecommunicationsNdC Nota de ComandaRCC (CCCF) Railway Construction Central (Centrala de

Constructii Cai Ferate)RDI (IPCF) Railway Design Institute (Institutul de Proiectari

Cai Ferate)RoDI (IPTANA) Road Design Institute (Institutul de Proiectari

Transporturi Auto Navale si Aeriene)RTC Road Transport CentralRWC Railway Workshop CentralSCP State Committee for PricesSPC State Planning CommitteeTU Traffic Unit

SOCIALIST REPUBLIC OF ROMANIA

FISCAL YEAR

January 1 to December 31

FOR OFFICIAL USE ONLY

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Table of Contents

Page No.

I. THE TRANSPORT SECTOR. . . . . . . . . . . . . . . . . . . . 1

A. The Transport System . . . . . . . . . . . . . . . . . 1B. Transport Planning, Policy and Coordination. . . . . . 3C. Tariffs and Costs. . . . . . . . . . . . . . . . . . . 5D. Previous Bank Involvement. . . . . . . . . . . . . . . 5

II. THE RAILWAY AND HIGHWAY SUBSECTORS . . . . . . . . . . . . 6

A. Traffic Trends and Forecasts . . . . . . . . . . . . 6- General . . . . . . . . . . . . . . . . . . . . . . 6-Freight .... . . . . . . . . . . . . . . . . . . 6- Passengers. . . . . . . . . . . . . . . . . . . . . 7

B. Railways- Headquarters Organization . . . . . . . . . . . . . 7

- Regional Organization . . . . . . . . . . . . . . . 8- Centralized Activities. . . . . . . . . . . . . . . 8- Uneconomic Lines and Services . . . . . . . . . . . 8- Railway Property. . . . . . . . . . . . . . . . . . 8

- Operations. . . . . . . . . . . . . . . . . . . . . 10- Staff Quality . . . . . . . . . . . . . . . . . . . 11- The Railway Investment Plan (1981-85) . . . . . . . 11- Financing Plan. . . . . . . . . . . . . . . . . . . 14

C. Highways- Organization. . . . . . . . . . . . . . . . . . . . 15- Planning. . . . . . . . . . . . . . . . . . . . . . 15

- Engineering . . . . . . . . . . . . . . . . . . . . 15

- Construction. . . . . . . . . . . . . . . . . . . . 16- The Network .... . . . . . . . . . . . . . . . . 16- Maintenance .... . . . . . . . . . . . . . . . . 16- Road Transport. . . . . . . . . . . . . . . . . . . 17

- Highway Investments (1981-85) and Financing . . . . 18

This report was prepared by Messrs. L. L. Alston (Railway Engineer);R. J. Mulligan (Highway Engineer); M. K. Ganguli (Economist);R. W. MacDonald and 0. S. Murthy (Consultants) on the basis of anappraisal mission to Romania during September/October 1980, updatedduring April 1981.

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents mav not otherwise be disclosed without World Bank authorization.

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Page No.

III. THE PROJECT .... . . . . . . . . . . . . . . . . . . . 19

A. Project Objectives. . . . . . . . . . . . . . . . . . 19

B. Project Preparation. 20C. The Project Description and Cost Estimates. . . . . . 20

- Railway Components. . . . . . . . . . . . . . . . . 21- Highway Components. . . . . . . . . . . . . . . . . 23- Technical Assistance. . . . . . . . . . . . . . . . 24

D. Project Engineering . . . . . . . . . . . . . . . . . 24E. Financing ..... cae. . . 25F. The Loan, the Borrower and Beneficiaries. .26G. Project Implementation. . . . . . . . . . . . . . . . 27H. Procurement .. 28I. Disbursements ... 29

IV. ECONOMIC EVALUATION .. 30A. General .. 30B. Project Costs and Benefits. . . . . . . . . . . . . . 31C. Economic Return ... . . . . ...... . . . . . . 32D. Project Risks . . . . . . . . . . . . . . . . . . . . 34

V. FINANCIAL EVALUATION FOR RAILWAYS . . . . . . . . . . . . 34A. General . . . . . . . . . . . . . . . . . . . . . . . 34B. Past Financial Performance. . . . . . . . . . . . . . 36C. Future Financial Position . . . . . . . . . . . . . . 40

VI. AGREEMENTS REACHED AND RECOMMENDATIONS. . . . . . . . . . 44

ANNEXES

1. Traffic Trends and Forecasts . . . . . . . . . . . . . . . 452. Design Characteristics of Railway Works. . . . . . . . . . 483. Highway Component of the Project . . . . . . . . . . . . . 504. Outline of Terms of Reference for Traffic Optimization

Study .... . . . . . . . . . . . . . . . . . . . . . . 545. Design Characteristics of Project Roads. . . . . . . . . . 576. Related Documents and Data Available in the Project File . 587. Main Accounting Assumptions (Railway Component). . . . . . 62

TABLES

1. Freight Traffic by Mode of Transport, 1960-80 . . . . . . 652. Passenger Traffic by Mode of Transport, 1960-80 . . . . . 663. Commodity Composition of Rail and Road Traffic - 1972,

1978-1980. . . . . . . . . . . . . . . . . . . . . . . . 674. Production, Consumption, Exports and Imports of Oil

and Oil Products, 1970-79 . . . . . . . . . . . . . . . . 68

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Page No.TABLES (con't)

5. Transport Tariffs for Railways and Road Transport (1980). . . . . . 696. Railway Freight and Passenger Traffic - Actual 1970-80,

Plan 1981-85 .707. Modal Traffic Trends (1960-80) and Plan Forecasts (1981-85) . . . . 71

8. Selected Operating Statistics for Romanian Railways (1970-1980) . . 729. Traction and Rolling Stock: Age Statement . . . . . . . . . . . . . 7310. Diesel and Electric Locomotive Acquisition During 1978-1980

and their Total Planned Procurement During 1981-85 . . . . . . . . 7411. Freight Car Acquisition During 1978-1980 and Total Procurement

of Cars for 1981-85. . . . . . . . . . . . . . . . . . . . . . . . 7512. Comparison with Other European Railways Year 1977 . . . . . . . . . 7613. Railways Staff and Productivity .7714. Railway Investment Plan .78

15. Track Overhaul - Priority Sections for 1981-85. . . . . . . . . . . 7916. Financing Plan for Railways Five Year 1981-1985 Capital Investments 8017. Public Roads - 1977, 1978, 1980 . . . . . . . . . . . . . . . . . . 8118. Modernization of the Highway System 1960-85 Actuals

1960-79: Forecasts 1980-85 . . . . . . . . . . . . . . . . . . . . 8219. Highway Expenditures 1976-80. . . . . . . . . . . . . . . . . . . . 8320. Average Daily Traffic on Selected National Roads - 1978 . . . . . . 8421. Motor Vehicle Fleet 1972-1978 .8522. Production of Motor Vehicles 1960-79. . . . . . . . . . . . . . . . 8623. Transport Sector Investments. . . . . . . . . . . . . . . . . . . . 8724. Details of Items on which Railway Part of the Loan could be

Disbursed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8825. Quantities and Railway Component of the Project Costs at Romanian

Investment Plan Prices ... . . . . . . . . . . . . . . . . . . . 8926. World Bank Estimate of Project Cost - Railway Component . . . . . . 9027. Cost of Highway Component ... . . . . . . . . . . . . . . . . . . 9128. Traffic on Lines to Be Doubled and Electrified. . . . . . . . . . . 9229. List of Goods Eligible for Disbursement from Highway Portion

of the Loan .... . . . . . . . . . . . . . . . . . . . . . . . 9330. Project Implementation Schedule - Railway Components. . . . . . . . 9431. Project Implementation Schedule - Highway Components. . . . . . . . 9532. List of Goods Eligible for Disbursement from Railway Part of

the Loan .... . . . . . . . . . . . . . . . . . . . . . . . . . 9633. Estimated Schedule of Disbursements ... . . . . . . . . . . . . . 9734. International and Domestic Price of Basic Elements Considered

for Economic Analysis. . . . . . . . . . . . . . . . . . . . . . . 9835. Economic Returns and First Year Returns . . . . . . . . . . . . . . 99

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Page No.TABLES (con't)

36. Romanian Railways (CFR) Income Statements 1974 to 1985

Actuals 1974-80; Plan 1981-85. . . . . . . . . . . . . . . . . 100

37. Allocation of Expenses between Passengers and Freight 1977-79 101

38. Romanian Railways Cash Flow Statements 1976-1985(Actuals 1976-80; Plan 1981-85). . . . . . . . . . . . . . . . 102

39. Romanian Railways Balance Sheets as at December 31(Actuals 1976-80; Plan 1981-85). . . . . . . . . . . . . . . . 103

CHART

IBRD 22377: Organization of the Ministry of Transport and

Telecommunications (MTTc)

MAP

IBRD 15462R: Socialist Republic of Romania - Land Transport Project

ROMANIA

I. THE TRANSPORT SECTOR

A. The Transport System

1.01 Despite the existence of extensive mountainous areas, Romania has afairly well developed and evenly distributed transportation network (Map IBRD15462R) that provides access to all major centers of economic activity. Thetransportation network includes about 11,000 route-km of railways, 73,500 kmof roads, one major seaport, four main commercial river ports and a sizeablenetwork of inland waterways and pipelines. The Danube river, which is navi-gable, flows through 1,075 km of Romania, mainly along its southern border.Ninety percent of the foreign trade is handled through the port of Constantaon the Black Sea. Pipelines have been the principal carriers of petroleumand natural gas but have a limited and specialized role. Air and coastalshipping are relatively unimportant for inland transport.

1.02 Romania's economy has grown rapidly since World War II. Increasingeconomic activity and personal incomes have led to a high but declininggrowth rate in transport demand: 10.5% and 10.2% yearly for freight and pas-sengers in the 60s, down to 5.5% and 8.4%, respectively in the 70s (Annex 1).

1.03 The backbone of Romania's internal freight transportation is therailway network, which has the crucial responsibility for moving traffic overrelatively long distances from the various concentrated centers of manu-facture and trade to important consumption centers. Although road traffic isincreasing fairly rapidly in tonnage, it functions mainly as a short-haulmover. In 1960, railways carried more than 80% of freight (in ton-km) whichby 1980 declined to 67% (Table 1), with a corresponding increase in the per-centage carried by road. The Danube river transport and pipelines accountfor about 2% and 6% of ton-km respectively. It is significant that for pas-senger traffic, the railways' former dominance passed to roads in the late1960s and the current rail/road split is about 27/73 (Table 2).

1.04 A detailed breakdown of the transport of goods by commodity groupsshows that in terms of ton-km, the railways are still the main carrier of allcommodities without exception (Table 3). The volume of quarry and ballastproducts carried by road transport is, however, conspicuously high, sinceworking sites can mostly be reached by road only. Road transport is alsosignificant for the movement of higher value goods, such as machinery andequipment, chemical products and processed foodstuffs.

1.05 Romania's development efforts have been concentrated on heavyindustry as the basis for creating an industralized society. The transport

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sector has first of all, therefore, been required to meet the needs of heavyindustry and associated large construction projects. The needs of lightindustry, agriculture, and passenger transport have been secondary. Byinternational standards, Romania has a high number of employees per enter-prise and more than 80% of gross industrial production and the industriallabor force is concentrated in large enterprises, each employing more than1,000 persons. Such enterprises are dispersed country-wide in response to apolicy of uniform regional development. Distribution of industrial and con-sumer goods is made from distribution centers which have been established in

every "judet" (county). While transport to and from those centers within thejudet is by road, this pattern of geographically concentrated development ofproduction and consumption centers has favored railways because of theirability to handle dense freight traffic flows from one center to another. Tocope with such flows these centers are generally well equipped with sidingsand handling facilities for bulk traffic. About three-quarters of railwaytraffic moves from siding to siding. The present high technical efficiencyand quality of service of the railways is a further contributing factor totheir greater use. In particular, the Romanian Railways (CFR) have higherlabor productivity and make more intensive use of their capital assets, bothinfrastructure and rolling stock, than most other railways. Furthermore, theproduction of consumer goods and light manufacturing industries whichnormally favor the use of road transport, are less developed. As such indus-tries grow in the future, dependence on road transport may be expected toincrease.

1.06 The growth of the transport sector has been accompanied by more thana threefold increase in its employment during the last three decades.However, the share of the transport sector as a whole in the national laborforce has remained steady at about 6-7% during those years. There has been asubstantial shift in employment among transport modes; the share forrailroads declined from 76% of total transport employees in 1950 to about 40%in the late 70s, while the percentage share of road transport employeesincreased from 4% to more than 40%.

1.07 Sea transport has been used exclusively for foreign trade and thereis little coastal traffic. Over the last two decades an annual average of65% of all exports and about 40% of all imports have been carried by sea.

With the exception of crude oil, most movements to and from the Constantaport are by rail. Completion of the Danube-Black Sea Canal by the end of1984 will add significant transport capacity to serve the growing economy,and will facilitate movement of the projected traffic volumes to and fromConstanta. This canal is the major component of a larger program which alsoincludes construction of deep-water facilities at the port of SouthConstanta-Agigea, designed to handle large bulk carriers.

1.08 Overall, transport accounted for less than 10% of Romania's total

investments during 1960-80, while in other countries it generally accountedfor about 15-25%. Thus, Romania's transport investments have been low byinternational comparison. Transport agencies are granted only few resourcesfor expansion. Instead, efforts are made to intensify the use of existing

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facilities. In practice, efficient transport in Romania aims at low resourcecost movement primarily for bulk materials among the key industrial centers.

B. Transport Planning, Policy and Coordination

1.09 The planning process in the transport sector follows the basiciterative approach used for all of Romania's centrally planned economy.Transportation projects included in the Plan originate both at themicro-level through the enterprises and county authorities (especially formunicipal and local roads) and at the macro-level through the State PlanningCommittee (SPC). The demands for transport by the economic enterprises andsectors are reconciled by the SPC with the existing capacities and expansionplans of the transport enterprises. The latter are determined after a reviewof all expansion plans and the setting up of priorities within the allocatedinvestment budget. Review and coordination of new investment proposals arethe responsibilities of the Ministry of Transport and Telecommunications(MTTc) which submits its program to the SPC.

1.10 Responsibility for all transport modes other than aviation and pipe-lines rests with the MTTc. Aviation has a separate Ministry and pipelinesare the responsibility of the Ministry of Mines, Petroleum and Geology.MTTc's organization also includes construction and maintenance enterprises(Chart). The role of officers and staff of the Ministry's headquarters islimited mainly to planning, coordination, design, administration andbudgeting. For construction and actual transport operations, much authorityis delegated to regional units and to "Centrals"'/ and the enterpriseswithin them.

1.11 In Romania the principal objectives of transport policy are theefficient provision of services with the complementary development of thedifferent modes, the lowering of the share of transportation costs within thetotal costs of the economy, and reduction of energy consumption. To theseends, the authorities are fostering the use of rail and water transport forlong and medium distance commodity hauls, and of road transport for shorthauls, the development of integrated transport facilities (e.g., containers),and the use of common carriers in preference to transport on own account.

1.12 Energy has become a critical subsector for the Romanian economy.Having started to import oil in 1968, Romania became a net importer of energyby 1977, and in 1979 was expected for the first time to import more crude oilthan was produced (Table 4). In 1979, rail and road transport consumed about

1/ The Central is an economic unit subordinate to but separate froma ministry, with responsibilities for planning, supervising andcoordinating the operations of enterprises under its jurisdiction.It is also responsible through subordinate enterprises, for research,design and foreign trade.

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2.6 million tons of oil products (about 0.8 million tons of gasoline and about1.8 million tons of diesel oil/heavy oil) accounting for about 14% of thetotal domestic consumption of refined oil products. Special measures weretaken in July 1979 to curb fuel consumption, by raising gasoline prices forprivate cars to Lei 7.50 (US$0.50) a liter (the second increase in 1979),restricting weekend driving, reducing the number of taxis and official carsand requiring foreign tourists to pay for gasoline in convertible currency.Restrictions were also imposed on the movement of trucks, particularly "owntransport," while gasoline rations for state, cooperative and public propertycars were halved. Diesel fuel which was priced at about Lei 1.7 (US$0.11) perliter for railways and Lei 1.1 (US$0.07) per liter for public road transportwas increased to Lei 2.23 (US$0.15) per liter for both modes from January 1,1981,1/ still substantially lower than the imported price of crude oil(US$0.23 per liter). By comparison, in April 1980, the international price ofdiesel fuel was about US$0.42 per liter. Hence, although the role of publictransport is thus given dominance, the constant overcrowding of buses andtrains is evidence that passenger transport has not received the resources itdeserves (para. 1.08). Further, the revenue foregone by the Government due tolower fuel prices to the railways and road transport enterprises is recoveredto a substantial extent in the Romanian system through the benefits (profits)of these State-owned enterprises.

1.13 In order that the use of transport may be coordinated each major userof transport services is required to specify his transport needs approximatelya year in advance. The movements of bulk commodities, which account for 70%of traffic, are subject to an optimization process which links producers andconsumers in order to minimize transport costs. Producers of other com-modities are linked to specified regions. For each commodity (bulk or other)there is a coordinator at the Ministry responsible for its production/distribution, who determines these linkages, selects the transport mode, andinforms accordingly the beneficiaries (producers and consumers) who enter intocontracts. His selection is mandatory, subject, however, to appeal by thetransport beneficiaries.

1.14 To attain these ends, coordinators select transport modes on thebasis of a computer program which has been prepared by MTTc. The programtakes into account tariffs (as a proxy for costs), distance, transit time,and, reportedly, packaging costs, damage, energy consumption and transportcapacity constraints. However, it is not clear that the present traffic splitis optimal, because:

(a) capital for investment in transport facilities and in beneficiaries'inventories is available either free or at a very low rate ofinterest;

(b) the methods of recovery of infrastructure costs (both capital andmaintenance) differ between modes;

1/ Price changes made in context of new regulation (para. 2.24)

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(c) costs, and consequently tariffs, are assessed on a national orsystem-wide basis rather than on a route and service-specific basis;and

(d) there are major differences between Romanian and border prices.

1.15 The proposed project includes, therefore, as an important component,a study of traffic optimization, to be completed by the end of 1983. Thestudy would be designed to establish an appropriate basis for developing apolicy framework (including tariffs) for the economic development of thetransport sector, and for the efficient utilization and coordination oftransport facilities.

C. Tariffs and Costs

1.16 Rail, road and inland water transport tariffs are prepared by theMTTc and approved by the State Committee on Prices (SCP). Rail freighttariffs had been "ad valorem," high valued commodities subsidizing others,until 1974 when a cost-based system was introduced. The principal criteriafor rail freight rates are wagon type, net loading and length of haul. Basicmovement costs per km are calculated for each category on a system-wideaverage basis, without allowance for difficult terrain or other adverse con-ditions which are route-specific. A further margin is added to allow for a15% planned surplus for the system as a whole.

1.17 Road tariffs are also cost-based, the main criteria being truck type,net load and length of haul. However, road users, unlike rail users, do notmake a direct contribution to the maintenance of roads which are provided as apublic utility. For costing purposes, roads are divided into six categories,each with a coefficient ranging from 0.9 for a motorway to 1.6 for the worstconditions on construction sites. There are separate groups of tariffs forlocal services, intercity services, large parcel traffic, refrigerated/insulated vehicles and car transporters. A comparison of rail (wagon load andLCL) and road freight rates is given in Table 5.

D. Previous Bank Involvement

1.18 The proposed project will be the second in the transport sector andthe first for rail/road development. In January 1980 the Bank approved a loanof US$100 million equivalent to assist in the construction of a 64 km canalfrom Cernavoda on the Danube to South Constanta-Agigea on the Black Sea. Thisp'roject will provide an energy efficient and cost effective means of trans-portation, and enhance the role of inland waterways. The project is well inhand and progress to date is satisfactory.

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1.19 In addition to lending, the Bank (through EDI) and in collaborationwith the country's principal management training center, has assisted Romaniaby conducting training courses for local officials on economic and financialevaluation in the industry and transport sectors, first in Belgrade in 1973(industry only), and, since 1975, annually in Bucharest. MTTc staff who at-tended these courses, as well as EDI staff, have been prime movers inpreparing the proposed project.

II. THE RAILWAY AND HIGHWAY SUBSECTORS

A. Traffic Trends and Forecasts

General

2.01 Annex 1 provides a detailed analysis of surface traffic trends duringthe past 20 years (Tables I and 2) and of forecasts for the five-year planperiod, 1981-85 (Tables 6 and 7). These are discussed below.

Freight

2.02 Total freight traffic is forecast to increase by about 35% (or 6.3%p.a.) from 102 billion ton-km in 1980 to 138 billion in 1985. Over thisperiod the increase in tonnage is about 19% while the average haul lengthensby about 13% mainly due to the use of the canal by long-haul and transittraffic. At 21 billion ton-km in 1985 the share of river and canal trafficincreases from 2-15%. Rail traffic at 78 billion drops from 64-57% and roadtraffic at 32 billion drops from 28-23%, while pipelines at 7 billion fallfrom 6-5%.

2.03 For the five-year plan period 1981-85 the forecast growth rate (inton-km for all modes) of 6.3% p.a. is reasonable when compared to the overallgrowth rate of 6-7% p.a. expected for the economy as a whole. The railways'basic role in carrying about two-thirds of the present (and still increasing)industrial load is unlikely to change substantially except in those limitedareas and for those commodities in the zones of influence of the Danube-BlackSea Canal (paras. 1.07 and 1.18) which is scheduled to be opened during 1983.However, as emphasis in development continues to shift from heavy to thelighter industries, more low-volume, high-value traffic suitable to roadtransport is becoming available.

2.04 The 1980-85 growth rate of 3.8% p.a. for rail freight is consideredattainable because of assured bulk movements of such commodities as coal, inregions not served by the improved river and canal facilities. The forecastrate of 2.4% p.a. for road freight appears consistent with present energypolicies, but is likely to be exceeded as light and medium scale industriesdevelop and call for increased use of road transport. River and canal tonnage

is forecast to increase fivefold by 1985, consistent with earlier forecastsfor the canal project.

Passengers

2.05 Total passenger traffic is forecast to increase by about 21% (or 3.9%p.a.) from 85 billion passenger-km in 1980 to 103 billion in 1985. As theaverage journey length is not expected to change, this increase applies to thenumbers of passengers carried. At 78 billion passenger-km in 1985, the roads'share increases from 73-76% while rail, at 25 billion, drops from 27-24%. Theaverage total growth rate of 3.9% p.a. comprises 1.4% for railways and 4.7%for roads both of which are considered attainable in the light of a rapid andcontinuing urbanization (50% of 1980 population compared with 34% in 1965)augmenting both intercity and suburban passenger movements. With the increas-ing production of passenger cars (para. 2.51) the projected growth rate forroad traffic, in particular, may prove to be conservative.

B. Railways

Headquarters Organization

2.06 Under the Romanian system of centralized State control, the railways'headquarters organization is contained within MTTc under collective manage-ment. Of six groups within the Ministry, each headed by a MinisterialAssociate, four are concerned with railways. The First Ministerial Associate(Deputy Minister) is responsible for railway operations in the nine Regions.A second deals with the centralized Directorates for traction and rollingstock, fixed installations, revenue control, data processing and

restaurant-car and sleeping-car services. A third looks after finance andprices and oversees the Railway Workshops "Central" (RWC). The fourth isconcerned with the Railway Construction "Central" (RCC) and the Railway DesignInstitute (RDI). These latter two Ministerial Associates also share responsi-bility for the road subsector so that the machinery for coordination, ratherthan competition, between the two modes appears inherent in the Ministerialstructure. Two other Ministerial Associates are concerned with maritime andriver transport and with posts and telecommunications. The Council of theMinistry, its highest decision-making body, also intervenes in the coor-dination process. The Council and its Executive Bureau are chaired by theMinister and include all Ministerial Associates and certain heads ofdepartments and units. The Railway Department, the controlling body of CFR,consists of the units responsible to the first two Ministerial Associates(Chart).

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Regional Organization

2.07 Administration of the railways is deployed into nine Regions,managements of which are responsible to the First Ministerial Associate at theMTTc. A typical region is governed by a Workers' Assembly meeting annuallyand a representative Workers' Council meeting quarterly to review performanceagainst plan. The Council also establishes five-year development plans withinthe State framework. The Council has an Executive Board which meets every tendays for overall control of policy and operations. The General Manager chairsall meetings and exercises day-to-day control. Each Region produces its ownaccounts.

Centralized Activities

2.08 The RDI is responsible for feasibility studies and detailed engi-neering for railway works. The RCC, one of the principal entities for civilworks construction in Romania, executes works for railways, national roads,airports and the Danube ports, and also fabricates precast construction com-ponents such as pre-stressed concrete sleepers. Being part of MTTc, RCC'soperation is essentially a force-account one, although it executes work inaccordance with a bill of quantities and at unit rates discussed and agreedduring the planning process. RCC is capably managed, staffed and equipped.The Investment Bank (IB), the Borrower for the proposed loan (para. 3.28)exercises a general supervisory role over project implementation.

2.09 The RWC has six workshops carrying out periodic maintenance and majoroverhaul of traction and rolling stock beyond the capacity of regional work-shops. It also includes separate groups for manufacture of components for therepair and modernization of rolling stock and for assembly. RDI, RCC and RWCproduce separate accounts.

Uneconomic Lines and Services

2.10 Since 1974, three narrow-gauge lines and one standard-gauge line havebeen closed as a result of reviews made on the basis of line-specific costsand revenues. The next major review is expected about 1982 when theperformance of all standard gauge and narrow gauge branch lines will beexamined and evaluated.

Railway Property

2.11 Track. The CFR operates 11,110 km of route, 95% standard gauge, 22%double tracked and 21% electrified. The track is mainly 49 kg/m rail withwelded joints, laid on monoblock concrete or wooden sleepers with crushedstone ballast; 60-65 kg rails are being introduced on main lines duringoverhaul. Track is generally in good condition, although the very high

traffic density (typically 25 million gross tons per main line track) haslimited the time available for maintenance and overhaul; both are in arrearsand speed restrictions have had to be imposed for months at a time. Toimprove the situation, CFR are drawing up plans through collaboration with a

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reputed firm for the manufacture of heavy-duty track maintenance equipment,which would enable CFR to make full use of the limited time available formaintenance and overhaul. During loan negotiations agreement was reached withthe Borrower for the introduction of these machines during the project periodand for the prompt provision as needed of resources necessary for track main-tenance and overhaul.

2.12 Signalling and Telecommunications. About 70% of the network isequipped with color-light signalling and about 40% with automatic two-way

working on double lines. Although only 5% of lines have centralized trafficcontrol, in 71% of the stations signals and points are controlled from acentral location at each station. CFR plans to extend the use of automaticblock and to install points motors in about 100 more stations during 1981-85.The telecommunications system, though of limited capacity, is modern andadequate for the present needs, and is integrated with the national network.There is radio communication with all main line locomotives, and automatictrain stops at all signalled stations. On the whole, the signalling andtelecommunications system on the main lines is modern and adequate; however,the extension of automatic route setting at important stations and improvedsignalling on the branch lines would expedite train movements. CFR plans toinstall the necessary equipment at a few large stations during the plan period.

2.13 Marshalling Yards. There are 27 major marshalling yards, 14 of whichwere mechanized with conventional retarders about 30 years ago. Even in verylarge yards handling about 5,000-6,000 wagons a day, skids are used instead of

secondary retarders. The working of the marshalling yards judged by the totaltime for marshalling, is satisfactory (one hour on reception lines, 40 minutesmarshalling a 60-car train and two hours for train formation). CFR expects tofurther improve wagon movement as a result of the mechanization of the remain-ing 13 yards, during 1981-85.

2.14 Traction and Rolling Stock. In 1979, CFR owned 2,091 diesel and 530electric standard gauge locomotives, and 68 narrow and broad gauge diesels;70% of this fleet is less than 11 years old (Tables 8 and 9). Two hundred andfifty-one standard gauge steam locomotives are in service (all over 30 yearsold), 190 for shunting and the balance for emergency use. Locomotivemaintenance facilities are good and the standards of repair are high. To meetthe growing traffic demand, as well as to replace outmoded equipment, CFRintends to procure during 1981-85, 350 diesel locomotives and 400 electriclocomotives (Table 10).

2.15 In 1979, CFR had about 126,000 freight cars, 41% up from 1970. Fleet

capacity had increased by 73% during 1970-79, to 5.2 million tons, as a resultof the purchase of larger cars (Table 8). However, half the 1979 fleetconsisted of two-axle cars, and of these, the equivalent of 1,800 four-axlecars, generally over 40 years old, were scrapped during 1980 and a further

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8,500 cars are to be scrapped during 1981-85 (Tables 9 and 11). During theperiod, 1981-85, CFR will acquire 31,000 four-axle cars to meet rising trafficand to replace cars to be scrapped.

2.16 Of the 5,500 passenger coaches 1/ available in 1979, 1,200 wereover 40 years old (Table 9). Of the latter, 780 are to be scrappedduring 1981-85, while CFR will acquire 1,150 new coaches. As the averageoccupation ratio is about 105%, the additional seating capacity of new coaches

(84 in second class compared with 54 in the older two-axle coaches) will, tosome extent, relieve the chronic overcrowding.

Operations

2.17 In 1980 CFR performed 98.7 billion traffic units. Its trafficdensity, 15 million gross tons per route-km, is one of the highest in theworld. The operational efficiency of the railway has been steadily improvingand is generally high, comparing favorably with other European railways (Table12). Productivity in 1980 was 559,500 traffic units per employee, 14% up from1975 and expected to increase about 14% to 638,000 traffic units per employeeby 1985 (Table 13). Steam traction, which in 1975 hauled 6% of gross ton-km,has been virtually eliminated, except for some shunting and emergency use.Electric traction which hauled 18% of gross ton-km in 1975, has risen to 36%,and is expected to rise to 45% in 1985, partly as a result of furtherelectrification included in the proposed project.

2.18 Consequent to the acquisition of more bogie cars, average carcapacity rose by 9% during 1975-79 (to 41.3 tons) while net ton-km per carrose only 1% to 602,000. The difference between these increases is due, atleast in part, to a 18&o increase in turnaround time to 4.48 days in 1979.2/Turnaround deterioration is due to increased delays at terminals, and also togreater complexity of operations resulting from new production centers servedby additional industrial sidings. Delays at terminals have increased becausetraffic growth and the shortened work-week have increased pressure oncustomers' storage facilities especially at collieries, with resultant pro-tracted detention of wagons at terminals and loading points. Studiesregarding terminal detention of wagons and of measures to improve their turn-around time are being initiated. Again, CFR has developed a computerized carcontrol program which is being tested in one of its Regions. At negotiations,an understanding was reached with the Borrower that CFR will keep the Bankinformed of progress on all measures to improve wagon utilization and that carprocurement will be reviewed in the light of improvements in turnaround time.

2.19 Engine-km per engine/day for diesel locomotives shows a decreasingtrend: 419-383 for passenger and 309-257 for freight, during 1975-80.Although this is partly due to the increasing use of electric traction

1/ Including mail, baggage, restaurant and sleeping cars.

2/ k further increase to 4.57 days has occurred in 1980.

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superseding diesel on the more important routes carrying long distance throughtraffic, the introduction of a computerized system for locomotive scheduling,as adopted on some of the European railways, may improve utilization. Atnegotiations, the Borrower confirmed the intention to carry out a program ofstudies, through technical assistance, designed to improve locomotive utili-zation through appropriate measures including the introduction of computerizedcontrol systems.

2.20 The availability of diesel locomotives at 85.4% and of freight carsat 95.5% in 1979 was satisfactory. Availability of electric locomotives was85.4% in 1979, and is forecast at 85.6% for 1985. The availability ofelectric locomotives is acceptable for 1979, because they are of local andrecent manufacture, but should improve to about 88-90% by 1985 by which timeinitial teething troubles should have been overcome. During loan negotia-tions, an understanding was reached with the Borrower that the program ofprocurement of electric locomotives will be reviewed in the light ofavailability improvements.

Staff Quality

2.21 The management and staff of CFR are technically well qualified andcompetent. Planning staff have been quick to grasp Bank-style investmentanalysis (para. 1.19).

The Railway Investment Plan (1981-85)

2.22 CFR's 1981-85 Investment Plan (Table 14), prepared as part ofRomania's National Plan (para. 1.09), aims at providing the transportcapacities needed for Romania's expanding economy and for improving operatingefficiency. In the present stringent financial conditions emphasis is nowbeing placed on early completion of ongoing works with the consequent defer-ment, until later in the plan period, of some new projects. Although the Planis in an advanced stage of the approval process it is not expected to receivefinal approval before the end of June 1981.

2.23 All Romanian investments are subject to technical and economicscrutiny. However, their economic analyses are made at Romanian prices only,and hitherto there has been no attempt at border pricing. To rank theirprojects, they utilize a "payback period" approach. This payback period forinvestments is determined by dividing the gross undiscounted investment costby the estimated net benefits of a typical operational year. The merit orotherwise of a project is then determined by the length of the payback period,the shorter being the more desirable. This type of evaluation, however,favors projects with high early yields, consistent with a policy of accumu-lating profits at a high rate for reinvestment. While the transport invest-ments approved so far appear sound, a broadening of investment analysismethodology is an objective of the proposed project.

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2.24 Authority to proceed with an investment project is given by approvalof the "Nota de Comanda" (NdC), a document which summarizes the main projectfeatures including the total cost; current prices are used with a 5% physicalcontingency. The total cost may not be exceeded without approval of a new

NdC, but in practice it is exceeded only rarely. NdCs are prepared at"catalog" prices which are fixed by law for all tradeable items, includingimports. This pricing system is self-consistent in that all prices coverdomestic costs, themselves based on "catalog" prices, and yield a specifiedbenefit (profit). Imports which hitherto have been priced below border pricesare, under new pricing regulationsl, to be gradually adjusted nearer tocost. Investment costs both for the Five-Year Plan and for the proposedproject show no net increases following revisions of catalog prices for 1981.

2.25 The 1981-85 Investment Plan is available only in Romanian prices, butthe cost of all components proposed for inclusion in the proposed project hasbeen estimated in both Romanian and international prices (para. 3.04).

2.26 A summary of CFR's 1981-85 Investment Plan (Table 14) is given

below. As all costs are based on NdCs, they include a contingency allowanceof about 5% which has proved adequate in the past and is expected to continueto do so as a result of Romania's tight control over unit prices andquantities. Although inflation may increase somewhat in the future, it is notexpected to exceed 2% per annum, and any necessary revisions in the provisionof investment funds or in the content of the Investment Plan could readily beundertaken during the yearly updating.

1/ Official Bulletin Year XVI No. 110 dated December 23, 1980.The Import/Export Price Equalization Fund which has hithertooperated in balance, the *excess cost of imports over local pricesbeing broadly covered by the excess earnings of exports over thelocal production costs, is expected only to apply to some rawmaterials and other selected items.

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Table 2.1. 1981-85 RAILWAY INVESTMENT PLAN

% ofLei billion US$ million Total

Traction andRolling stock 19.71 1,314 53.8Line Doubling 3.96 264 10.8Electrification 2.89 193 7.9

New Lines 1.87 125 5.1Danube bridges 1.60 106 4.3MarshallingYards 2.70 180 7.4Miscellaneous 3.91 261 10.7

Total 36.64 2,443 100.0

2.27 Over half the total investment expenditures are for traction androlling stock; of these, one-quarter is for replacements (paras. 2.14-2.16)and three-quarters for additional capacity. The mission analyzed traction androlling stock proposals, as illustrated by Tables 10 and 11, for locomotivesand freight cars, and found that these investments are needed to enable CFR tocarry the forecast traffic (paras. 2.03-2.05).

2.28 It has been CFR's policy to implement line doubling in stages astraffic grows, and to avoid the development of bottlenecks. Further doublingis reasonable in view of the high traffic densities of 15 million grosston-km, on average (only 22% of the network is double track); 35% ofinvestments in line doubling have been included in the proposed project.Further electrification is also justified by the high traffic density (arelatively small proportion, 21% of the network, is electrified). Thesubsidization of diesel fuel (para. 1.12) and the execution of feasibilitystudies at Romanian prices (para. 2.23) are responsible, at least in part, forthe low rate of electrification hitherto. About 48% of electrificationinvestments have been included in the proposed project. Although theRomanians are aware of the need for increasing the pace for electrification,investment constraints (para. 2.22) are limiting progress.

2.29 Virtually all investments in new lines, and steel for one of the twoDanube bridges, (para. 3.11) have been included in the proposed project.Investments in marshalling yards consist of mechanization of 13 yards (para.2.13) and the construction of a new yard near Bucharest. About half themiscellaneous investments consist of infra- structure works, including in somecases the electrification of sidings needed to increase CFR's capacity tohandle growing traffic from major users.

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2.30 To sum up, the mission examined in detail the investment proposalsfor traction and rolling stock and for the proposed project; these account for75% of CFR's Investment Plan. Though the examination of the remaining 25% wasin more general terms, the mission is satisfied that the plan is responsive tothe needs of Romania's economy.

2.31 Capital overhaul of track is charged to operations and is not part ofCFR's Investment Plan. About 3,000 km are to be overhauled with new railduring 1981-85. This length includes eight high priority sections, totallingabout 610 km, which are to be overhauled during 1981-84 mainly with 60/65 kgrail (Table 15). During loan negotiations agreement was reached with theBorrower that CFR will overhaul these sections as programmed.

Financing Plan

2.32 The expected financing of CFR's 1981-85 Five-Year Investment Plan(para. 2.26) is shown in Table 16 and summarized as follows;

Table 2.2 FINANCING OF CFR'S 1981-85 INVESTMENT PLAN

Total Important OtherInvestments Investments/a Investments/a

Lei US$ us$million million % million % million %

Net own funds 19,890 1,326 54.3 813 44.0 513 90.4

State allocations- interest free 14,404 960 39.3 960 52.9 - -- at interest 967 65 2.6 10 0.5 55 9.6Proposed BankLoan /b 1,380 92 3.8 92 2.6 - -

Total external 16,751 1,117 45.7 1,062 56.0 55 9.6

TotalInvest-ments /c 36,641 2,443 100.0 1,875 100.0 568 100.0

/a For definition of "important" and "other" investments see para. 5.02./b Assuming railway component of loan to be $94 million of which $2 million

not disbursed until after December 31, 1985./c Including general contingencies of about 5%.

CFR's financing plans do not include price contingencies although a generalcontingency of about 5% is built into the cost estimates. The investments areexpected to entail very few direct imports and almost all costs are based on catalogor contract prices not subject to escalation (para. 2.24).

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C. Highways

Organization

2.33 The Directorate of Roads (DR), under MTTc, is responsible for theconstruction and maintenance of the national road network, which comprisessome 14,700 km, or about one-fifth of the country's total network. Theremainder, including district and village roads, is administered by the"judet" (county) authorities which receive planning and technical assistancefrom the Directorate.

2.34 To administer its functions of investment planning, project prepar-ation and implementation, procurement and maintenance, the Directorate dividesthe country into six regions and deploys staff accordingly. Each region isfurther subdivided into districts which provide and supervise the teamsexecuting the maintenance and improvement works needed for the national roadnetwork.

Planning

2.35 For national roads, a five-year plan is formulated on the basis ofimprovements identified by the enterprises, industries, and ministries who usehighway facilities extensively, and is coordinated at the Republic level.Detailed annual plans are prepared one year in advance and their implemen-tation is monitored by both DR in the physical sense, and IB which, as forrailways, keeps a watching brief on expenditures.

2.36 The planning of provincial and local roads is coordinated at theRepublic level and, as needed, technical advice is obtained from both DR andthe Road Design Institute (RoDI).k/ Provincial and local authorities bearthe responsibility for construction and maintenance and for meeting theplanned targets.

2.37 A particular aspect of planning which is now being emphasized is theprovision of grade-separated road/rail crossings. At present, most are atgrade, but since traffic on each mode has increased substantially in recentyears, the policy is now to separate the traffic streams. Here DR, inconsultation with the local authorities and CFR, determines the priorities forconstruction.

Engineering

2.38 DR and RoDI prepare the feasibility studies needed to determine thejustification of projects. They prepare also the final engineering ofprojects and utilize the resources of a comprehensive materials laboratory tofacilitate site investigations. Pavement design is one aspect of project

1/ This is part of IPTANA which is also the design institute for seaand air transport within MTTc.

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preparation which is treated exhaustively: considerable care is taken toselect the pavement structure which maximizes the use of locally availablematerials and minimizes cost commensurate with strength and durabilitycriteria.

Construction

2.39 For national roads, investment projects are executed by the RCC, theprincipal civil works authority in the country (para. 2.08). Road works arecompetently supervised by DR assisted by RoDI and by the services of thematerials laboratory. Minor works on national roads are generally carried outby DR's personnel with their own equipment. For provincial and local roads,construction works are generally carried out by their own forces, although forlarger works beyond their capacity they may call on the RCC.

The Network

2.40 Romania has about 73,500 km (Table 17) of roads of which about39,100 km are unpaved. The primary road network, for which DR, under theMTTc, is directly responsible, comprises some 14,700 km of which about 14,000km are paved. The total length of the modernized road network increased fromabout 5,900 km in 1960 to about 14,500 km in 1980 (Table 18). However, therate of modernization has not kept pace with the demands of vehicle usage.There is inadequate capacity on certain key links in the network. In somecases, lack of all-weather access to areas not served by other transport modeshas been a deterrent to progress and development. In others, poor surfaceconditions, plus narrow, winding alignments and in many cases excessivelysteep gradients, have imposed harsh cost penalties on vehicle usage.

2.41 Only one road, that between Bucharest and Pitesti (100 km), is builtto full expressway standards with limited access (dual carriageways separatedby a central median) and is part of the European "E" road network, whilstthere are about 230 km of four-lane undivided highways, in the main radiatingfrom Bucharest.

2.42 The bulk of the network (about 58,700 km) comprises district andcommunal roads which are administered by the provincial authorities. Ofthese, about 20,100 km only were paved as of the end of 1980 (Table 17).

Maintenance

2.43 The maintenance allocation for national roads is about 60% of thetotal for all highways (Table 19) and in absolute terms is about US$4,500 perkm, which is high compared with other European countries with similar con-ditions. For example, neighboring Yugoslavia spends about US$3,600 per km.

2.44 Although, to a limited extent, such a high cost reflects themaintenance needs of some of the older roads which had been improved orupgraded some years ago and whose old light pavements are subjected now toheavy traffic loads and are distressed, the expenditures also cover someasphalt overlay and betterment works which conventionally would be a debit tothe capital budget.

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2.45 Maintenance practices are in general labor intensive and sufferbecause labor is in short supply. Many of the routine tasks could be

performed more efficiently and better by machine and it is an objective of thetechnical assistance element of the proposed project that the study visits for

key DR personnel should include their exposure to latest maintenance practiceselsewhere.

Road Transport

2.46 The Road Transport Central (RTC) under MTTc is responsible for theoperation and maintenance of the public road transport fleets for the carriageof both passengers and freight. All transport users have access to RTCvehicles. However, certain economic units and other organizations have theirown transport fleets whose use is normally limited to meet the local needsonly of their enterprises, but may be extended to inter-city work subject toRTC's consent. Measures have been taken recently to transfer many of theenterprises' own fleets to RTC, and to consolidate the remainder into largertransport units under the control of the concerned ministries, and subject tothe national plan.

2.47 RTC's vehicles are normally used in intercity services and animportant objective is to minimize empty hauls. With the help of a network ofagencies which coordinate the requests for transport users and the collectionof goods, dead mileage is kept to a minimum. Drivers passing through adistrict without a load are obliged to contact the local agency and must notproceed empty unless the agency certifies that an onward load is not available.

2.48 Basic regulations controlling motor vehicle transportation are

contained in the Decrees of the State Council of Romania of December 1977 andJuly 1979. They are mainly safety oriented, and focus on speed and loadlimitations, and vehicle utilization, but certain measures have been takenrecently to curb fuel consumption (para. 1.12). As an additional energysaving measure, the use of horse-drawn carts in preference to motor vehiclesis being encouraged for farming needs, in spite of the congestive effects ofsuch slow-moving vehicles on traffic flows on main roads where they arefrequently encountered. Table 20 gives an indication of usage of selectedroutes of the primary network on the basis of 1978 average daily traffic.

2.49 Road transport is developing rapidly and the vehicle fleet hasapproximately doubled at an average rate of nearly 12% per annum from about538,000 in 1972 to 1,016,000 in 1978 (Table 21). The expectation is that thisannual rate of increase will itself increase further as domestic production ofmotor vehicles expands. In 1978, nearly 132,000 units were produced (Table22), but this output will be more than doubled by the end of 1981 when a newCitroen plant near Craiova is expected to add a further 150,000 units per year.

2.50 The annual export of vehicles has fluctuated around 25,000 unitsannually since 1975 (Table 22) and it is conjectural at this stage as to whatproportion of the new Citroen output will be sent abroad. It may be assumedthat much of this new production will go to the domestic market which has longbeen repressed through lack of vehicles to purchase, although high price andother disincentives to vehicle acquisition have in the past also restrainedgrowth of the private fleet.

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2.51 The indicators seem clear that the road fleet will increase,certainly in the short run, at a rate much greater than the 12% annual averagerecorded heretofore. As a result, traffic forecasts (paras. 2.02-2.05) maywell be exceeded, especially the 4.7% yearly growth estimated for road pas-senger traffic, and thus aggravate the congestion which already exists on keylinks.

Highway Investments (1981-85) and Financing

2.52 Roads and road transport accounted for nearly 25-35% of the totalinvestments in the transport sector during the 70s (Table 23). A similarsituation is expected during the next plan period also. However, in the1981-85 plan, special attention will be given to developing small scaleindustries, including light processing industries and handicrafts, by usinglocal resources. The overall production of this sector is expected to morethan double during the next plan period. Such a shift in emphasis wouldaccentuate the demand for additional investments in the regional, secondaryand feeder roads so necessary to stimulate economic development in outlyingareas of the relatively less developed regions.

2.53 These circumstances notwithstanding, MTTc's 1981-85 Investment Planwas cut back severely in mid-1980, following the Government's decision torestrict investment expenditures; the consequent sharply declining trend inhighway investments during the next five years could have resulted in thedevelopment of serious transport bottlenecks, especially as the sector suffersfrom past underinvestment. However, Government recently reviewed its earlierdecision and these cutbacks have been partially restored.

2.54 As evidenced by the following table, road investments (excludingroad transport) during the next plan period will be about 7,900 million lei

(US$527 million), about 6% above 1976-80 expenditures in real terms. Commentsmade in paras. 2.22 and 2.23 about investment in Romania are also relevanthere.

Table 2.3. ROAD INVESTMENT PROGRAM(1981-1985)

(in million lei)

1981-1985 1981 1982 1983 1984 1985

Local road 3,398 650 650 680 690 728National roads 4,500 895 828 897 900 980

Total 7,898 1,545 1,478 1,577 1,590 1,708

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The length of the modernized road in the entire network is expected to

increase from about 14,500 km in 1980 to about 15,500 km by 1985. The length

of lightly asphalted roads is expected to increase from about 19,700 km toabout 27,000 km during the same period. Special attention is proposed to begiven to overpass structures and the elimination of busy at-grade road/railcrossings (para. 2.37). Nevertheless, several main roads carrying consider-able traffic volumes will still remain unpaved. Much of the communal anddistrict road network needs to be upgraded to provide all-weather service andolder wooden bridges, which restrict vehicle loadings on many of these roads,need to be replaced.

2.55 The highway (national roads) expenses are financed mainly from thestate budget, whose income sources are a variety of taxes and payments fromthe benefits (profits) of the enterprises and the state economic organizationsat republic level and taxes and duties from the population. Similarly,expenses for district and local roads are met from the budgets of the statelocal units whose income sources are freight traffic tax, payments from thebenefits (profits) of the enterprises and the state economic organizations atlocal level, taxes on the benefits (profits) of cooperatives and handicrafts,and taxes levied on the population. With no rules governing the amounts to bechanneled into highway projects, the authorities can determine freely theamounts to be invested from year to year based on established priorities.Such a system, as in many other countries, offers flexibility in determiningthe amounts of highway expenditures to accord with public policy objectives.

III. THE PROJECT

A. Project Objectives

3.01 The objectives of the project are to assist Romania:

(a) to avoid transport cost increases by providing timely relief ofexisting traffic congestion through road and rail investmentsintended to widen and increase the capacity of transport links whichare approaching saturation;

(b) to provide all-weather access to a development area, which heretoforehas been served by only a fair weather track, and to providetransport for a new mine;

(c) to improve the economic evaluation of projects;

(d) to improve monitoring of the use of the road network;

(e) to improve resource allocation in the transport sector by transportpolicy analysis (especially in respect of the modal split); and

(f) to familiarize the railway and highway organizations with recentdevelopments and trends in operating, monitoring and maintenancetechniques utilizing the latest technology.

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B. Project Preparation

3.02 MTTc has set up special working groups, which have preparedBank-style feasibility studies, using both Romanian and international prices,for all components of the proposed project. This is the first time thatRomania has carried out transport studies based on a methodology customarilyused in Bank projects, and in this respect key roles were played by MTTc staffwho had attended the courses held with EDI's participation (para. 1.19).Bank-style analyses have also been made by MTTc for some projects which arenot Bank-financed. However, widespread use of such analyses requires a changein the law specifying investment criteria. Experience under the proposedproject should enable them to compare Bank-style analyses with those atpresent in use. As the latter have not yet been completed for all elementsproposed for the project, an understanding was reached during loannegotiations that comparison of the results obtained by the two methods shouldcontinue to be made by MTTc and reviewed during project supervision.

C. The Project Description and Cost Estimates

3.03 The proposed project would consist of high priority items included inthe railway and highway 1981-85 Investment Plans, preparation of which wassufficiently advanced. Project components (Map IBRD 15462R) are summarized inthe table below.

Table 3.1 PROJECT COST ESTIMATES

RomanianInvestment World Bank Project Cost EstimatesPlans x of Bank

Estimate Local Foreign Total Local Foreign Total Project Loan…------------lei billion ------------ ----US$ million ------ US m

Railway Component

New lines 1.87 1.30 0.59 1.89 86.4 39.3 125.7 19.9 8.62Line doubling 1.38 0.95 0.57 1.52 63.6 37.9 101.5 16.0 19.09Electrification 1.40 0.69 1.27 1.96 46.0 84.6 130.6 20.7 22.26Dznube bridges 1.60 1.14 0.75 1.89 75.8 50.3 126.1 20.0 5.88Freight cars 0.11 0.09 0.18 0.27 6.0 12.2 18.2 2.9 18.15

Rail Subtotal 6.36 4.17 3.36 7.53 277.8 224.3 502.1 79.5 74.00

Highway Component

Paving of 2-lanegravel roads 0.46 0.38 0.17 0.55 25.3 11.6 36.9 5.8 8.71

Widening 2 to4 lanes 0.04 0.03 0.02 0.05 1.7 1.2 2.9 0.5 0.90New Construction 1.21 1.06 0.27 1.33 70.6 L7.9 88.5 14.0 13.33

Highway Subtotal 1.71 1.47 0.46 1.93 97.7 30.7 128.4 20.3 22.94

Technical Assistance 0.02 0.01 0.01 0.02 0.7 0.3 1.0 0.2 1.00

Subtotal 8.09 5.65 3.83 9.48 376.2 255.3 631.5 100 97.94

Physical Contingencies - 0.55 0.36 0.91 37.0 24.3 61.3 9.7 7.88

Price Contingencies - 0.35 0.77 1.12 23.2 51.1 74.3 11.8 19.18

Total 8.09 6.55 4.96 11.51 436.4 330.7 767.1 121.5 125.00

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The first column shows the total costs as recorded in Romanian investmentplans. They are derived from NdCs where these are available or calculatedsimilarly. Thus they are based on "catalog" prices which do not cover thefull cost of imports; they include a 5% contingency, and no other contin-gencies are allowed (para. 2.24). The railway and highway components accountfor 17% and 22%, respectively, of the 1981-85 Investment Plan of the mode inquestion.

3.04 The second column shows the local component of total costs, and thethird column the foreign exchange component estimated at international prices;the sum of these two columns, about 11.5 billion lei (US$767 million), is theproposed project cost; the foreign exchange component is US$331 million. Themission identified items suitable for Bank financing totalling US$125 million,US$94 million for railways, US$30 million for highways and US$1 million fortechnical assistance. Table 24 contains details of railway items on whichthe loan would be disbursed, while Table 29 gives similar information forhighways. A US$125 million loan would thus represent about 16% of the totalcost of the project and 38% of the foreign exchange component. Project costsare detailed for the railway components in Table 25 (investment plan esti-mates) and Table 26 (World Bank project cost estimates) and for highwaycomponents in Table 27 (under similar headings).

3.05 Cost estimates for the civil works items are based on quantities fromsubstantially completed final designs, and unit rates based on mid-1981 prices.

3.06 Total Investment Plan costs include a 5% physical contingency al-lowance (para. 3.03). This 5% contingency was netted out to obtain the basicvalue of the local component of the cost faced by Government, and the foreignexchange component of that cost was calculated using international prices(para. 3.03-3.04). In accordance with Bank practice, contingencies were thenadded as follows: 10% physical contingency; 2% p.a. increase in local cost,and annual increases in foreign costs of 9%, 8.5% and 7.5% respectively, for1981, 1982, 1983 and later years.

Railway Components

3.07 New line construction. Two lines are to be constructed, totalling 77km. The first, from Vilcele to Rm. Vilcea, closes a 40 km gap between twoexisting lines, but traverses difficult mountain terrain and includes twotunnels totalling about 3 km, and about 3 km of bridges. Maximum gradientsare 1% and miminum curve radius 300 m. In the immediate future the line willprovide a much shorter route for regional traffic. A longer-term benefit willbe its role as a shorter through route from Bucharest to the Hungarian border,but as it is not yet electrified, operating costs will be higher than on theexisting longer, electrified routes. However, electrification from Bucharestto a point near the new line is included in the 1981-85 Investment Plan, andthe authorities propose in due course to continue electrification beyond the

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new line. This investment should yield substantial benefits because much ofthe heavy traffic on the alternative routes would ultimately divert to thismore direct route.

3.08 The other line will link a coal producing area at Berbesti to therailway network at Babeni, 37 km away. It traverses the Carpathian foothills,and will include 4 km of tunnels and 2 km of viaducts, with gradients of up to

2.1% and curves down to 250 m. Both lines will have 49 kg rails on concretesleepers, telephone block working and mechanical with key interlocking. Sincethis line will serve a new mine providing fuel for a power station being con-verted to coal operation, agreement was reached with the Borrower during loannegotiations that the complementary mining and electrical power investmentswill be made on time.

3.09 Line doubling. Three line sections totalling 124 km will bedoubled. Each is joined to at least one section which has already beendoubled, and carries at present about 15-25 million gross tons (Table 28).Tunnels, totalling about 2 km, will have to be constructed on only onesection, Rm. Vilcea-Podul Olt. Rails will be 49 kg on concrete sleepers, withautomatic block and electro-dynamic signalling, and in each station signalsand points will be controlled from a single location.

3.10 Electrification. Four hundred and seventy route-km of main lineswill be electrified on three sections, at 25 kV, 50 c/s. Except forDej-Cluj-Simeria which is already double track, electrification will beinstalled in conjunction with line doublings (Table 28). Telecommunicationsand signalling works needed in conjunction with electrification are part ofthe proposed project.

3.11 Danube bridges. CFR's busiest railway route starts at Constanta,crosses both arms of the Danube, at Cernavoda and Borcea, and then bifurcateswestward to Bucharest and northwestwards to Tandarei. All these lines,including the Cernavoda-Borcea link, are double track, but the intensivelyworked bridges over the two arms of the Danube are single track and constitutewhat is probably Romania's most critical transport bottleneck. These bridgesare 100 years old and are near the end of their useful lives. CFR isreplacing them by double track combined road and rail bridges, for which piersare now being built. However, contracts have yet to be awarded for the super-structure of the bridge at Cernavoda, and the high tensile steel for manu-facture of the components would be financed from the Bank loan.

3.12 Freight Cars. The requirements for freight cars for the 1981-85Investment Plan as a whole are based on system-wide traffic and operatingneeds and include the cars for additional traffic allocable to transportfacilities created or improved by the works included in the project.I/ Theproject provides for the acquisition of 330 cars initially needed for suchtraffic.

1/ Mobile asset costs allocable to such facilities are included in theeconomic evaluation in Chapter IV.

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Highway components (Annex 3)

3.13 Paving of two-lane gravel roads. Three gravel roads, totalling 110km, are to be paved. Two are in difficult terrain in the Carpathianfoothills. The first, 37 km long, between Schitu Golesti and Curtea de Arges,carries considerable coal traffic from mines near Schitu Golesti. Theproposed alignment will be 4 km longer, to avoid areas of instability and toreduce excessive gradients; pavement construction will be staged to followtraffic growth. The second will upgrade a 29 km track linking Adjud andBirlad and will attract most of the traffic from the existing alternativeroute which involves a 40 km detour. The track which is the only means ofaccess to several villages, traverses a highly friable loess soil which, afteronly a little rain becomes slick and negotiable only by four-wheel-drivevehicles. It is virtually impassable for about six months in the year.Availability of an all-weather road will have important developmental effects,especially as substantial food processing investments being made at PodulTurcului could not otherwise be adequately exploited. Finally, the 40 kmCraiova-Balcesti road is in such poor condition that travellers prefer to makean extra journey of 30 km to avoid it. Seven sections of this road, totalling16 km have been improved, and the proposed project includes the remaining fivesections.

3.14 Widening from two to four lanes. One of Romania's busiest roadsextends northwards from Bucharest, to Ploiesti, Cimpina, Brasov and beyond.Its area of influence contains Romania's main oil fields, refineries, heavy

and chemical industries, vehicle assembly plants, and a rich agriculturalarea. The Bucharest-Ploiesti section is already four-lane and the roadeastwards from Brasov is four-lane for 4 km. The proposed project includesthe widening of the next 6 km to Harman, to accommodate growing commuter,industrial and agricultural traffic.

3.15 New Construction. Construction of the railway bridges at Borcea andCernavoda 7para. 3.11) now offers the opportunity to shorten by about 60 kmthe main highway connection between Bucharest and the Black Sea in Romania'smost heavily trafficked corridor. Cantilevers are being added to the two newbridges to provide four-lane road crossings; however, most of the highway istwo-lane at present. It is proposed to include in the proposed project theconstruction of the intervening 17 km road between Borcea and Cernavoda; theapproaches to the bridges will be four-lane, to ensure symmetrical bridgeloading, but the remaining 11 km will be two-lane with provision for wideninglater to four lanes.

3.16 The Cernavoda-Constanta highway is being improved at present and, toensure that full benefit is obtained from the new construction, during loannegotiations the Borrower agreed that improvements on the Bucharest-Fetestiroad will be made, as needed and co-terminal with the completion of theproject road. The Borrower also confirmed that no improvements should be madeto the longer highway without adequate study of the traffic assignments in theBucharest-Constanta corridor.

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Technical Assistance

3.17 Traffic Optimization Study. This study (paras. 1.14 and 1.15) hasthe principal objectives of promoting energy conservation, improving inventorycontrol and more closely defining the relationships between tariffs andservice-specific costs. It will entail reviewing the existing criteria andprocedures for determining transport linkages and the modal split in order torecommend improvements. Terms of reference for the study (Annex 4) have beendiscussed with the authorities and are acceptable.

3.18 The authorities have insisted that the study be undertaken byRomanian consultants since foreign consultants are not familiar with theRomanian system. Romanian institutes, such as the Technological Research andDesign Institute for Transport (ICPTT), have competent staff which couldundertake this study, and their employment on the project would contribute tothe development of Romania's consulting industry. Tt is therefore proposed toaward the study, which is expected to require about 150 man-months of expertservices, to Romanian consultants and to finance their services in full fromthe proposed loan at a cost of about US$825,000. Average man-month rate isestimated at US$5,500 based on individual's fees and reimbursable expenses.Inclusion of the study in the proposed project and the use ofconsultants, under terms and conditions acceptable to the Bank, was agreedwith the Borrower during loan negotiations.

3.19 Employment of foreign experts and training abroad. It may bedesirable, however, to use foreign consultants for specialized methodologicaltasks, or to enable Romanian experts to visit foreign organizations engaged insimilar work. The visits of foreign consultants or study travel abroad byRomanians would also be useful in connection with improvements in car controland locomotive utilization (paras. 2.18-2.19) as well as familiarization withmodern highway maintenance practices (para. 2.45). The estimated foreign costof such technical assistance would be about US$175,000 which would includeabout 30 man-months covering individual's fees, international travel and localallowances at about US$5,800 per man-month. During loan negotiations theBorrower confirmed the intention to prepare by June 1982 a program for suchvisits for discussion and agreement with the Bank.

D. Project Engineering

3.20 Highway engineering standards, which are adequate, are given in Annex5. Engineering, according to these design standards, has been carried out bythe DR in conjunction with the Design Institute, RoDI, and the materialslaboratory. The design standards for the railway works are shown in Annex 2.These standards are defined by the Railway Design Institute (RDI) for eachitem. In the case of new lines the principles of economic railway locationare followed in respect of ruling gradients, minimum curvature, bridge andaxleloads, track structure, etc. For line doubling the profile generally

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follows the existing alignment except where deviations offer economic andengineering advantages. Standards for electrification follow broadly inter-national practices. On the whole the specified standards are satisfactory.

3.21 Although detailed engineering is substantially complete for the 14

construction subprojects which would be included in the project, NdCs (para.2.24) have been finally approved for only two. The remainder are still beingreviewed by beneficiaries, and final approval is expected at the end of June1981. According to IB and MTTc representatives, significant changes areunlikely. During negotiations, cost estimates were discussed and confirmedwith the Borrower. The data used in the preparation of the project and thesource material are listed in Annex 6.

E. Financing

3.22 Project costs in U.S. dollars, as estimated by the Bank (para 3.04),would be broadly met from the following sources:

Table 3.2: PROJECT COSTS AND SOURCES OF FINANCINGWORLD BANK PROJECT COST ESTIMATES

Railways Highways Total /ax of X of Z of

Lei (m) US$ (m) Total Lei Cm) US$ (m) Total Lei (m) US$(m) Total

Foreign Exchange Costs:State Resources_/ 2944 196.2 68 153 10.2 25 3097 206.4 62Proposed Bank Loan 1410 94.0C/ 32 450 30.0 75 1865 124.3 38

Subtotal 4354 290.2 100 603 40.2 100 4962 330.7 100

Local. Exchange Costs:CFR Net Resources 2800 186.7 58 - - - 2800 186.7 43

State Resources/b 2050 136.7 42 1685 112.3 100 3735 249.0 57Proposed Bauk Loan - - - - - - 10 0.7 -

Subtotal 4850 323.4 100 1685 1i2.3 100 6545 436.4 100

Total CostsCFR Net Resources 2800 186.7 31 - - - 2800 186.7 24

State Resources/b 4994 332.9 54 1838 122.5 80 6832 455.4 60Proposed Bank Loan 1410 94.0/c 15 450 30.0 20 1875 125.0 16

Total 9204 613.6 100 2288 152.5 100 11507 767.1 100

/a Totals include technical assistance of 15 million lei (US$1 million)to be financed in full from the proposed loan.

/b State Resources include interest-free State Budget Allocations, interestbearing State Credits and differences between Bank estimated costs ofimported items (both direct and indirect) and catalog or contractprices charged to MTTc which are otherwise absorbed by the State pricingmechanisms.

/c Although $2 million for railway component may not be disbursed until after December 31, 1985it is included in the table to match corresponding expenditure in project forecasts.

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3.23 From its own resources, CFR would provide about US$187 million.1 1The proposed Bank loan of US$94 million meets about one-third of the foreigncosts of the railway component of the project (Table 26). The balance ofproject funds amounting to US$333 million would be met by the State.

3.24 For the highways component the proposed loan allocation is US$30million which meets about three-quarters of the foreign exchange costs. Theremaining foreign costs together with the local costs (US$122.5 million intotal) would be met by the State.

3.25 All project costs including cost overruns as well as funds in excessof those budgetted in MTTc's investment plans would be met by the Governmentof Romania in terms of the Guarantee Agreement. In addition during loannegotiations agreement was reached with the Borrower that design standards mayonly be modified by agreement with the Bank.

3.26 Items suitable for Bank financing are analyzed in detail by sub-projects for railways totaling US$94 million (Table 24) and for highways,US$30 million (Table 29).

Co-financing

3.27 The Bank should continue to assist the Government in obtainingco-financing from appropriate sources, but, regardless of the amount ofco-financing available, Romania is considered capable of financing the balanceof foreign exchange costs, as well as the local costs. Also, it would not bepossible for all offers of co-finance to be made, approved and effective untilafter Board approval of the proposed Bank loan. Therefore, approval of theproposed loan should not be deferred on this account, or made conditional onthe obtaining of co-finance.

F. The Loan, the Borrower and Beneficiaries

3.28 The Borrower for the proposed loan would be the IB and the loan wouldbe guaranteed by the Socialist Republic of Romania. The IB is the specializedagency, under the Ministry of Finance, for dealing with investment projects inall sectors of the economy, except in agriculture (including water resources)and food processing. It has a large technical and economic staff at itsHeadquarters, and branch offices throughout the country. The IB's involvementin investment projects commences in the preparation phase; it appraises allmajor projects technically and financially according to Romanian proceduresand, in the case of the proposed Land Transport Project, has facilitated theeconomic analysis, by the appropriate agencies, of all subprojects accordingto Bank methodology.

I/ The railways contribution is assumed to be 44% of the railway projectcost at Romanian prices, (Table 25), the percentage for "importantdevelopments" was derived from the 1981-85 Plan (Table 2.2 inpara. 2.32).

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3.29 The IB makes recommendations to the Council of State on majorprojects and their financing, and all investment funds for an approved projectare channeled through the IB which authorizes payments for work performed inaccordance with the approved plan. It is IB's responsibility to ensure that aproject is executed according to the financial and technical data included inthe final approval (Project de Executie), and its inspectors superviseprojects to ensure progress according to the approved schedule.

3.30 The IB will supervise the execution of the proposed project with theparticipation of MTTc, which will be responsible for the overall coordinationof the project and project-related activities within the MTTc. The railwayand highway components of the loan will be channeled through IB respectivelyto the Railway Department and the Road Directorate, which will be responsiblefor the coordination of project components in their subsectors. MTTc will beresponsible for the technical assistance element including the traffic optimi-zation study (paras. 3.18 and 3.19). The immediate beneficiaries from theproposed project will be the railway and highway regional organizations, andultimately, the users.

G. Project Implementation

3.31 For railways, MTTc has within its organization the RDI and the RCCwhich together constitute the two main implementing agencies for creating newfacilities (para. 2.08). While the RDI undertakes field surveys and investi-gations (with some input from the railway regional staff), prepares designsand drawings, estimates, feasibility studies as well as all documentationpreparatory to the execution of a project, the RCC (one of the biggestconstruction organizations in Romania, employing 55,000 people) executes allrailway construction works including new lines, line doubling, electri-fication, signalling, etc. Both these organizations are well staffed bycompetent people; RDI has 1,350 employees of whom 400 are graduate engineers.The physical execution of the project items will be entrusted to RCC underfirm contracts for each subproject. The supervision and acceptance of thework will be by regional staff supported by senior engineers from the RDI whennecessary. Thus, while the overall responsibility for the implementation ofthe project will rest with the MTTc, the devolution of the responsibility tothe executing agencies within the MTTc is well defined and the agencies'competence satisfactory, judged by the timely completion of similar railwayfacilities in the past.

3.32 DR would be responsible for executing the road works under theproject. That Directorate, with the assistance of the personnel and resourcesof the materials laboratory of the Transport Research and Design Institute,and of the RoDI, would also be responsible for supervising the roadconstruction.

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3.33 Construction of the project roads will be executed by the RCC'sdepartmental forces on the basis of prices, unit rates, and quantities of workdetermined and agreed prior to loan negotiations.

3.34 Agreement was reached at negotiations that IB would supervise theexecution of the project including the procurement of goods and services.

3.35 Project Implementation Schedule. With the possible exception of thecantilevers to carry the roads over the two Danube bridges at Fetesti andCernavoda, all the project roads are scheduled to be completed by the end of1984 and the railway works by the end of 1985. At negotiations the projectimplementation schedules (Tables 30 and 31) and progress reporting procedureswere discussed and confirmed. The Borrower also agreed to prepare a projectcompletion report within six months of the Loan Closing Date. That reportshall cover separately each project rail and road section and shall outlinealso the evaluation of the road and rail subsectors.

3.36 The process of acquiring the land needed to build or extend theproject roads has already commenced. No difficulties are foreseen that mightdelay construction. The process has not yet started for most railway works.At negotiations the Borrower agreed that measures needed for prompt acquisi-tion of all lands would be taken by the appropriate departments of theguarantor.

3.37 Allowing for some slippage, the project completion date should beJune 30, 1986. The Loan Closing Date should be March 31, 1987, allowing forabout nine months for the release of security deposits on supply contractswhere performance guarantees are specified.

H. Procurement

3.38 Procurement will be by International Competitive Bidding (ICB) inaccordance with the Bank's guidelines, on the basis of a list of equipment and

materials agreed between Government and the Bank for purchase under the loan.On the basis of a US$125 million loan (para. 3.04), the goods on which therailway component (US$94 million) of Bank loan would be disbursed wouldconsist of rails, steel for concrete sleepers, points and crossings, trackfittings, copper contact wire and substation equipment used for electri-fication, cables for signalling and telecommunications required for new lines,doubling of track and electrification, special steel for the Danube bridge atCernavoda, telecommunication equipment (including radio-telephone systems) anda limited number of freight cars (Table 32). For the highway component ofUS$30 million, the goods to be procured would comprise road construction and

maintenance equipment, bitumen, and reinforcing steel (Table 29). However,the Bank would not directly finance the equipment and materials for road worksbut would disburse funds equivalent to about 75% of the foreign exchange costs

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of civil works construction under the proposed project. These works would becarried out by RCC (para. 3.33) which is experienced and familiar with localconditions, methods and regulations. This practice has been acceptable to theBank for previous projects in order to "stay with" the project for effectivesupervision after equipment procurement.

3.39 Almost every type of equipment required for the project is manu-factured in Romania. It is expected that Romanian bidders will be successfulfor all ICB items with the exception of bitumen (about US$5 million)especially as Romanian manufacturers and suppliers would be allowed a prefer-ence of 15% or the applicable customs duty, whichever is the lower.

3.40 The responsibility for initiating procurement action for itemsfinanced by the proposed Bank Loan rests with the IB. At the request of IB,MTTc's Foreign Trade Enterprise (FTE) (called CONTRANSIMEX in Romania)consults with the Design Institute, the Railway Department and the DR, andprepares the bidding documents for approval by the Bank through IB. All thefurther procedures, until the final stage of placing the contract for thesupply of material and equipment, are processed through the IB. During loannegotiations, the Borrower and the Bank reviewed and agreed the lists of goods(Tables 29 and 32) to be purchased mainly through ICB. A few items such asremote control equipment for railway electrification and some minor items ofhighway machinery would be procured through prudent shopping amongst inter-national suppliers; the total value would not exceed $1.5 million with a limitof $200,000 for individual contracts.

I. Disbursements

3.41 For railway equipment and materials the loan would be disbursedagainst the full cost of foreign contracts, including insurance and freight ifcontracted with non-Romanian organizations, and against the full ex-factorycost of contracts won by Romanian organizations.

3.42 For highways, the proceeds of the loan would finance about 75% of theforeign costs or about 25% of the Investment Plan costs of the subprojects;disbursements would be made at that proportion (25%) of total expenditures,which may be varied by agreement between the Bank and the Borrower.Statements of Expenditures, against which the Bank will disburse, will besubmitted at regular intervals by the DR through the IB in respect of workcompleted on each project road. In this respect the DR's accounting branch iscompetently staffed and routinely maintains records adequate to meet theBank's requirements for disbursement under this procedure. However, nodisbursements shall be made from the loan allocation for Civil Works until theBank has received satisfactory evidence from the Government that ICB procure-ments have been made for highway construction equipment and materials in an

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aggregate amount sufficient to cover anticipated withdrawals. During loan

negotiations, the Government's agreement to the foregoing disbursementarrangements was obtained.

3.43 The loan would finance, in full, technical assistance expenditures,both foreign and domestic.

3.44 Assuming the loan becomes effective late 1981, a schedule ofdisbursements has been prepared and is shown in Table 33. The schedule ofestimated disbursements was discussed and confirmed during loan negotiations.

IV. ECONOMIC EVALUATION

A. General

4.01 Increased emphasis is being given to the development of Romania's ownnatural resources, including coal and lignite, in the 1981-85 Development

Plan. Relatively high growth rates, about 9-10% per annum are envisagedwithin metallurgy, machine building, chemical and a number of other basicheavy industries, as compared with an overall growth rate of 6-7% per annumfor the economy as a whole. In general, these economic priorities will resultin increased transport requirements by rail of heavy and bulky raw materialsand semi-finished products, although increasing efforts are also being made tolocate processing industries at raw material sources using road transport forshort hauls. As in the past the railway investment programs will remainclosely related to the transport needs of high priority industries.Furthermore, the railways are likely to assume renewed significance in the eraof energy consciousness.

4.02 Parallel to the overall economic growth objectives, the plan aims toreduce inter-regional disparities in development levels and to generateemployment opportunities in rural areas with the development of small scaleprocessing units. Considerable emphasis is, therefore, being given toselected road developments which would solve some pressing socio-economicproblems and which would also catalyse development within their zones ofinfluence.

4.03 Many important links in the transport networks are already overloadedand with the projected growths in traffic would become even more congested.The proposed project aims at relieving transport bottlenecks and mountingcongestion on some of the most heavily trafficked railway and road sections.These lines and road sections connect several large cities and industrialareas and are of critical importance both for the transport network and thecountry. Some of the project road sections would also provide directall-weather paved road connections between several growing commercial centers,and would also open up some areas which are now isolated for much of the year.

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4.04 The ultimate beneficiaries of the proposed project would be rail/roadusers who, due to the diversity of traffic using the rail/road networks, comefrom a wide range of sectors and income groups. The proposed project willbenefit long distance as well as local traffic. The important commoditiesthat would be affected by the modernization and improvement of the proposedrail/road sections are raw and processed industrial materials includingmining, wood and wood products, other manufactured goods, constructionmaterials, and agricultural commodities. The favorable impact of the proposedproject will also be felt by the rail/road passengers from the higher qualityof service and travel comfort.

B. Project Costs and Benefits

4.05 The economic evaluation of the different subprojects is based on thefeasibility studies undertaken by the Railways and the Roads Directorates inthe MTTc. These studies were reviewed and discussed with the concernedagencies and a number of marginal subprojects were either reformulated orpostponed as a result of the review.

4.06 The traffic projections for the different subprojects are based onpast traffic trends, recent origin-destination studies and planned increasesin production and consumption in the zones of influence. The forecasts takeinto account normal traffic growth and, wherever appropriate, the additionaltraffic generated by the proposed project over the normal project life.

4.07 Overall, the rail sections considered for doubling and electri-fication are at present carrying about 15-25 million gross tons per km perannum (Table 28). The projected growth in traffic volumes on these railsections range from 3-5% per annum. These growth rates are low when comparedwith past rates. Traffic justification (about 4 million net tons per annum)of a new short railway line (Babeni-Berbesti) in the proposed project dependson the mining and thermal power generation ventures which it serves. Three ofthe road sections (Podul Turcului-Birlad, Craiova-Balcesti and SchituGolesti-Curtea de Arges) in the project, on which traffic flows are estimatedbetween 500 and 1,000 vehicles per day at present (Annex 3), would provideimportant direct links to the railways. Of these roads, two sections, PodulTurcului-Birlad, and Craiova-Balcesti, would afford sizeable distance savingsfor through traffic and would provide better access and thereby promotedevelopment in their zones of influence. The other road included in theproject requiring widening is heavily congested with about 8,000 vehicles perday with a high proportion (about 60%) of heavy commercial vehicles.

4.08 For calculating the economic benefits and costs, international priceshave been used for imported equipment and materials, and other tradeablecommodities. In Romania, prices of railway traction and rolling stock, rails,

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road trucks, diesel fuel, electricity and many other important componentsinfluencing transport activity are significantly below the border prices(Table 34). Labor, land, and other nontradeable items like "ballast andstones", have been valued at local prices. Prices were translated at theofficial trading rate of 18 Lei per U.S. dollar prevailing at the time ofproject appraisal. Adjustment of the exchange rate to the current US$l = Lei15 affects both cost and benefit streams in the same direction. Further theproportion of foreign exchange in both cost and benefit streams are verysimilar. Current adjustments, therefore, do not change the economic andfinancial viability of the subprojects to any significant extent.

4.09 Quantified benefits due to the proposed project will result mainlyfrom reduced maintenance and operating costs, and improved utilization oftraction and rolling stock. For road sections where traffic congestion isheavy or where substantial distance saving is involved, the economic analysistakes into account savings in passenger travel time.11 Savings in transportcosts, excluding passenger time savings, account for about 80% of the totalbenefits on these heavily congested roads. Benefits due to increased comfort,convenience and safety have not been considered.

4.10 In selecting the proposed investments, several alternative solutionswere evaluated such as doubling and/or electrification, improving or recon-structing the existing road, constructing a new one, construction of theultimate four lanes at once or by stages, construction of aerial cableway,etc. For each project section, the most economic solution has been adopted.

C. Economic Return

4.11 Based on the most probable estimates of construction costs, operatingand maintenance costs and time costs, the proposed investments on the projectrail/road sections produce economic returns (ERs) ranging from 13-70% (Table35). All investments would yield first-year benefits of 10% or more. Theweighted average ERs of all civil works components, which account for about99% of total project cost are 20% for the project as a whole, and 24% and 15%respectively for its railways and highways components. The above ERsunderstate the full economic benefits of the project by excluding reductionsin accidents and the greater comfort and convenience of travellers on the

1/ To take social overhead and indirect costs into account, timesavings were valued at 1.1 times the average hourly wage rate oftravellers in the influence area of journeys made for businesspurposes and at 1/4 the average wage rates for other journeys.

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improved railway and highway facilities. Sensitivity analyses were carriedout to test the effects of variations in construction costs and users'benefits on the above estimates. Even under the unfavorable assumptions of15% higher construction costs combined with a 15% reduction in users' benefitsthe ERs remained within the range of 10-55% with an overall weighted ER of 16%which is still an acceptable level.

Railway Subprojects

4.12 Doubling of the Ilia-Arad and Faurei-Tandarei lines would yieldrelatively high benefits (Table 35) as the expenditures are for completingongoing works, yielding full benefits on completion.

4.13 The ERs of railway electrification of the three lines, namelyDej-Cluj-Simeria, Mintia-Arad and Faurei-Tandarei are 20% and above (Table 35)though financial returns of the railways on these electrifications in terms ofRomanian Investment Plan prices are estimated around 10-12%. The differencebetween the economic and financial rates of return results largely from thedifferences in the economic and financial costs of diesel fuel and electricalenergy. Although Romania is at present importing substantial quantities ofcrude oil, diesel oil is still being made available to the railways at muchbelow resource costs. As a result, financial returns to the railways onelectrification are less attractive than the ERs based on resource costs,which amply justify electric traction.

4.14 The new line Vilcele-Rm. Vilcea (para. 3.08) is interlinked with thedoubling of Rm. Vilcea-Podul Olt section and yields an ER of 22% by savingconsiderable distances for about 3 million tons of freight per annum. The ERof 13% on the other new line Babeni-Berbesti is based on the planneddevelopment of a new lignite mine at Berbesti with a production capacity ofabout 4 million tons in 1984 and the gradual switch over by the Govora thermalpower station from oil/gas to coal during the same time (para. 3.09). Theproject variants considered included transport by road.

4.15 The Constanta-Bucharest transport corridor is the most important inthe country. At present, the two old single track railway bridges over theDanube on the double track Bucharest-Constanta electrified railway act as aserious impediment to smooth traffic flow. The freight traffic on thissection is about 40 million net tons per annum. The proposed newrail-cum-road bridges across the Danube, therefore, are of crucial signi-ficance in Romania's transport system and yield a satisfactory ER of about 14%compared with the ferry alternative.

Highway Subprojects

4.16 The paving of three gravel roads would provide all weather routeswhich would act as important distributors/collectors of a considerable volume

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of railway traffic, particularly of coal, forest, produce and agriculturalcommodities. Two would shorten the average journeys for through traffic fromAdjud/Podul Turcului to Birlad and from Craiova to Balchesti by about 40 kmand 30 km respectively. The link proposed between Podul Turcului and Birladis an entirely new one which would help to provide necessary medical, educa-tional and essential facilities in this remote area and would open up otherpossibilities for the future. Savings in vehicle operating costs amplyjustify the proposed investments, with ERs ranging from 13-19%.

4.17 The proposed addition of two new lanes and the improvement ofalignment on one short section, from Brasov to Harman, is expected to yield ERof about 25% mainly on account of the reduction of congestion costs asquantified in time and operational cost savings.

4.18 Construction of a new road between Fetesti and Cernavoda on the mainroute between Bucharest, the capital, and Constanta, the Black Sea port, wouldsubstantially lower transport costs due to distance savings of about 60 km(paras. 3.16-3.17). The new section is estimated to yield an ER of 15%.

Other Project Elements

4.19 Benefits could not be quantified for other project elements, namely,techlnical assistance and training which are necessary for the project as awhole and whose benefits will permeate the entire investment plan.

D. Project Risks

4.20 The clear economic justification for the project and the plannednature of the Romanian economy which helps to ensure that traffic forecastsand construction programs will be realized would indicate that no specialrisks are expected in the execution and implementation of the proposed project.

V. FINANCIAL EVALUATION FOR RAILWAYS

A. General

Accounts

5.01 The national accounting code and the standard accounting package(operating results, balance sheet and annexes) were revised in 1979 toaccommodate the new economic and financial measures generally effective from

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January 1, 1979. The accounts appear to be well-kept and promptly prepared onan increasingly computerized basis. Fourteen days are allowed for monthly, 20days for quarterly and 25 days for annual presentations.

Capital Investment

5.02 Under the new economic and financial measures investments in produc-tive assets are financed either from the "Fund for New Enterprises andImportant Development", or from a unit's "Fund for Economic Developments".Important developments are defined by law and in the case of railways aredesignated as; (a) procurement of locomotives and cars; (b) new lines; (c)doubling existing lines; (d) electrification of lines; and (e) bridges overthe Danube and Borcea. About 75% of railways' investments fall within thiscategory of important investments and these remain tightly controlled by theState. Railways, in common with other economic units, are to be given morecontrol over the remaining 25% of investments to be financed from their "Fundsfor Economic Development". The "Fund for Important Developments" is financedpartially from railways' "own funds" (depreciation and benefit) and partiallyfrom State allocations repayable, but interest free. The State allocationsmay be reduced to the extent to which foreign loans are obtained. The "Fundsfor Economic Development" are financed mainly from "own funds" but can besupplemented by repayable, interest-bearing State credits.

Plans (Budgets)

5.03 The railways' subsector, in common with other sectors of the economy,is subject to the strict discipline of the centrally prepared and controlledfive-year plan, for cperations and investments. Within the framework of thefive-year plan, detailed annual plans are prepared for one year ahead andperformance is measured against these detailed plans on a quarterly and annualbasis, with improved workers' bonuses for profits in excess of forecasts andpenalties for shortfalls.

Audit

5.04 Romania has an elaborate audit system under which enterprises submitperiodic operational and financial reports to their "Central", the appropriateMinistry and the Investment and National Banks. These reports serve primarilyto ensure achievement of plan targets and proper use of and accounting forfunds. Though the contents and presentation of these reports differ fromthose normally received by the Bank they can be adapted to provide adequateinformation for the Bank to monitor the progress of project implementation andoperations. During negotiations agreement was reached that the accounts ofthe railways audited by the Ministry of Finance in accordance with appropriateauditing principles consistently applied should be furnished to the Bankthrough the IB not later than six months after the end of each year.

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Insurance

5.05 Normal business risks are not insured in Romania. Although enter-

prises set aside a small share of benefit to cover unforeseen events, this is

only sufficient to meet minor loss or damage. The State acts as its own

insurer, reimbursing enterprises which suffer major losses arising from events

beyond their control or making specific provision for replacement of major

assets in the next State Budget.

Accounting Assumptions

5.06 The principal assumptions made in the following presentations of Past

Financial Performance and Future Financial Position are set out in Annex 7.

B. Past Financial Performance

Operating Results

5.07 Table 36 includes operating results for the seven years 1974-80

combining the nine operating regions and the centralized activities included

in the railways' accounts. Excluding interest, which was negligible during

this period, and capital overhaul of track (normally capitalized but, in

Romania, charged to operations) the results for alternate years are summarized

as follows:

Table 5.1: CFR'S OPERATING RESULTS

1974 1976 1978 1980-- lei million------------- US$ million/a

RevenuePassengers 3,044 3,186 3,694 4,070 226

Freight 9,046 9,933 10,732 11,069 615

Total 12,090 13,119 14,426 15,139 841

Working Expenses/b 7,654 9,017 9,715 10,021 557

Depreciation 2,175 2,524 1,754 1,981 110

Total OperatingExpenses 9,829 11,541 11,469 12,002 667

Net Operating Income 2,261 1,578 2,957 3,137 174

Working Ratio 63 69 67 66

Operating Ratio 81 88 80 79

Return on assets/C 6.1 3.8 5.7 5.8

/a At 18 Lei to US$1, the rate appropriate to 1980.7i Excluding expenditure on capital overhaul of track.

/c Total net income (operating plus auxiliary activities) as %

of average total net fixed assets (Table 39).

- 37 -

Revenue

5.08 Although passenger volume increased by less than 4% during the period,revenue per passenger-km rose by nearly 30%, mainly due to the 1977 fareincrease. Freight rates were last increased in 1974, but revenue increasedwith volume by about 26%. The proportion of passenger revenue to total revenueconsequently increased from 25-27%.

Working Expenses

5.09 Wage increases of about 15% in real terms were absorbed withoutdifficulty in 1978. Fuel expenses have been slightly reduced during theperiod, increased costs of fuel being offset by progress with dieselisation andelectrification. Charges for other materials show no increase since 1976 andthis may be linked with some inadequacies in maintenance, particularly of thetrack (para. 2.11). Periodic repair costs have increased steadily as mid-termoverhauls have become due on locomotives obtained within the past 10-15 years.The working ratio has not exceeded 69 in the past six years.

Operating Expenses

5.10 The operating ratio has exceeded 85 only once, in 1976. A ratio of 88in that year was improved to 78 in 1977, mainly by the national policy ofretaining assets in use for maximum periods with correspondingly lowerdepreciation charges and by the rate increase for passenger traffic. Averagerail asset lives are now about 50 years (locomotives 35-40 years). However,the depreciation charges, together with benefit, generate adequate internalresources for investment (para. 5.13).

Net Operating Income ("Benefit")

5.11 In the planned Romanian economy, the target for the railways is toproduce for all activities combined a "benefit" of about 15% of expenditure.This has been well exceeded for the past four years, 1977-80, and the return onaverage net fixed assets in use during the 1976-80 plan period has been about5%. These results are due to the high density of traffic, about 15 milliongross ton-km per km per year on the average, and the high productivity peremployee of about 560,000 operating traffic units per year.

Costing

5.12 Annually all costs are allocated on a computer program to passengerand freight traffic, both on a subjective (financial sub-heads) and anobjective (types of work) basis, to provide average system-wide costs. Themethodology has been developed in detail and is revised at not less than fiveyearly intervals while the coefficients used to apportion expenses which cannotbe directly allocated are revised annually. A summary of the analyses for

- 38 -

1977-79 is given in Table 37. The cost per traffic unit increased by lessthan 5% during the period although wages increased by about 15%.

Cash Flow

5.13 Table 38 includes cash flow data for 1976-80 which are summarized asfollows for the five-year period.

Table 5.2: CFR'S CASH FLOW!/

--------------- 1976-80lei million % of Total US$ million /b

Sources of FundsInternal ResourcesNet Income 10,386 30 577

Depreciation 9,987 29 555Other Sources 452 1 25

20,825 60 1,157

State Allocations/CreditsNon-repayable (net) /c 4,848 13 269Repayable (net) withoutinterest /d 8,678 25 482

Repayable with interest 572 2 3114,098 40 783

Total Resources 34,923 100 1,940

Application of FundsCapital Investment 30,388 87 1,688Debt Service Interest 24 1

Principal 561 585 2 32 33Increase in Working Capital 16 - 1Net Income (Benefit) paidto State or used for othernon-capital purposes 3,934 11 218

Total Application 34,923 100 1,940

/a Some 1980 movements are estimated where full details are notavailable.

/b At 18 Lei to US$1, the rate appropriate in 1980./c For 1976-77.vh For 1978-80.

Of the total (five-year plan) capital investment of US$1,688 millionequivalent, US$783 million or approximately half was financed from StateAllocations/Credits and the other half from net internal resources.

- 39 -

Balance Sheets

5.14 Table 39 presents balance sheets for the past five years, 1976-80,and alternate years are summarized as follows;

Table 5.3: CFR'S BALANCE SHEET

1976 1978 1980------- lei million ------- US$ million/a

Fixed assets in use 92,154 103,295 114,368 6,353Less depreciation 41,616 44,789 48,005 2,667Net fixed assets in use 50,538 58,506 66,363 3,686

Work in progress 2,294 3,692 5,310 295

Total fixed assets 52,832 62,198 71,673 3,981

Current Assets 2,095 2,514 2,463 137Less current liabilities 1,107 1,519 1,480 82

Net current assets 988 995 983 55

Total assets 53,820 63,193 72,656 4,036

Financed by:long-term debt 318 3,892 8,611 478equity 51,213 55,920 58,950 3,275funds (net) for work inprogress 2,289 3,381 5,095 283

53,820 63,193 72,656 4,036

Debt/Equity Ratio 0.6/99.4 6.5/93.5 13/87Current Ratio 1.9 1.7 1.7Liquid Ratio 0.7 0.9 0.8

/a At 18 Lei to US$1, the rate appropriate to 1980./b Including w.e.f. 1978 the net repayable State allocations.

5.15 The need to revalue fixed assets is recognized in principle butbecause of the low rate of inflation!/ in Romania, such revaluations havetaken place only at the end of 1963 and 1976, and the change in net fixedasset values resulting from the latter was negligible. Up to 1978, nodistinction was made in the accounts between State equity and amounts providedfrom railways' own funds because the latter were paid over to the State andsubsequently included in the gross repayable State allocations. Long-termdebt was virtually non-existent and a debt/equity ratio was therefore notmeaningful. From 1979 and at least through the plan period 1981-85,

1/ Averaging 0.8% p.a. in recent years.

- 40 -

the net repayable State allocations will steadily increase because investmenton "important developments" will exceed the depreciation charges and 10% ofbenefit which the CFR would otherwise be required to repay to the State forprior years' allocations. The current ratio has ranged between 1.6 and 2.0since 1974 and the liquid ratio is consistently around 0.8. These are satis-factory in view of short-term borrowing arrangements which can be utilized tosupplement working capital as necessary.

C. Future Financial Position

Operating Forecasts 1981-85

5.16 Table 36 includes CFR's operating forecasts for 1981-85 and alternateyears are summarized below.

Table 5.4: CFR'S OPERATING FORECASTS

1981 1983 1985/a--------- lei million ------ -US$ million-

RevenuePassenger 4,134 4,211 4,308 287Freight 11,949 12,498 13,149 877

Total 16,083 16,709 17,457 1,164

ExpenditurePersonnel Costs 6,052 6,105 6,168 411Fuel & Electricity 1,351 1,333 1,302 87Materials & Expenses 1,240 1,240 1,240 83Periodic Repairs/b 2,291 2,351 2,403 160

Working Expenses 10,934 11,029 11,113 741

Depreciation 2,117 2,304 2,573 172

Operating Expenses 13,051 13,333 13,686 913

Net Operating Income 3,032 3,376 3,771 251

Working Ratio 68 66 64Operating Ratio 81 80 78Return on Net Fixed

Assets/C 4.8 4.9 4.7

/a At Lei 15 to US$ - exchange rate applicable from January 1, 1981./b Excluding capital overhaul of track (see para. 5.07 and

footnote /4 to Table 36)./c Total net income (operating plus auxiliary activities) as %

of average total net fixed assets (Table 39).

- 41 -

5.17 These forecasts are prepared within the context of the Five-Year Planfor 1981-85 on the basis of 1981 prices including the second tranche of thewage increase (in real terms) authorized during the 1976-80 plan, which waseffective from December 1, 1980. Price changes authorized, effective January1, 1981, include a 30% increase for diesel fuel and electricity used byrailways and a consequential increase in rail freight rates of 5.7% has beenauthorized from the same date. If further price or wage increases areauthorized during the 1981-85 Plan period tariffs would again have to bereviewed at that time.

5.18 Meanwhile, at current rates, revenue per passenger-km is forecast toreduce by only 1% through the period but revenue per freight ton-km falls byabout 2% due to changes in the commodity mix, principally increases in bulkcoal movements and an increasing proportion of small-volume higher-ratedtraffic moving by road. Working expenses (including periodic repairs) aregenerally held to 1981 levels by increased staff productivity and betterenergy utilization and the costs per traffic unit reduce by nearly 10%. Whilerecognizing the general merit of the exacting targets being set for theFive-Year Plan, concern was expressed about constraints on track maintenance

(para. 2.11).

5.19 Depreciation will rise about 30% and the charge per Traffic Unit (TU)about 15% as the ongoing 1976-80 and further 1981-85 investment plans mature.The combined effect of these trends would improve the working ratio from 68 to63 and the operating ratio from 81 to 78 and the overall rate of return on netfixed assets should hold at about 5.0% despite the increase in net fixed assetvalues.l/ The net cash generated by depreciation and the anticipatedoperating surpluses should finance more than 50% of investments and anyfurther price changes (para. 5.17) are not expected to affect thesesatisfactory prospects adversely.

Cash Flow Forecasts 1981-85

5.20 Table 38 includes cash forecasts for 1981-85 which are summarized asfollows for the five-year period.

1/ The increases in net fixed asset values include substantialreplacements of fully depreciated traction and rolling stock.

- 42 -

Table 5.5: CFR'S CASH FORECASTS

1981-85lei million % of Total US$ million/a

Source of FundsInternal ResourcesNet Income (Benefit) 12,396 30 826Depreciation 12,284 29 819Other Sources 520 1 35

Subtotal 25,200 60 1,680

State Allocations/CreditsRepayable w/out interest 14,404 35 960

Repayable w/interest 967 2 65

Subtotal 15,371 37 1,025

External LoansProposed IBRD Loan 1,380/b 3 92/bOther Loans -- -- --

Subtotal 1,380 3 92

Total Resources Available 41,951 100 2,797

Application of FundsFixed Assets 36,641 87 2,443Debt Service 670 2 44Working Capital 117 -- 8Benefit Distribution 4,523 11 302

41,951 100 2,797

Financing SummaryCFR Resources (net) 19,890 54 1,326External Resources 16,751 46 1,117

36,641 100 2,443

/a Assuming 1981 exchange rate of 15 Lei = US$1 continues through 1985.b Assuming $94 million (1,410 million lei) for railway component of

loan of which $2 million (30 million lei) would not be disburseduntil after December 31, 1985.

- 43 -

5.21 CFR should to be able to finance 54.3% of its US$2.5 billion 1981-85capital investment from its net internal resources, slightly better than the53.6% achieved for 1976-80 for a comparable level of investment. For theimportant developments which the proposed bank loan will principally support,the net internal resources would provide about 43% of the finance required andabout 90% for the other less important items. The financing plans for theplan and project are discussed in paras. 2.32 and 3.22-3.26. About half ofCFR's forecast gross internal resources consist of depreciation and half isnet income which is reasonably assured by the pricing mechanism (para. 5.17).

Balance Sheet Forecasts

5.22 Table 39 includes balance sheet forecasts for 1981-85; alternateyears are summarized below:

Table 5.6: CFR'S BALANCE SHEET FORECASTS

1981 1983 1985 1985------- lei million ------ US$ million-/a

Fixed Assets in-use 120,179 130,615 146,792 9,786Less Depreciation 49,749 53,332 57,126 3,808

Net Fixed Assets in-use 70,430 77,283 89,666 5,978Work in progress 5,637 6,205 5,814 387

Total Fixed Assets 76,067 83,488 95,480 6,365

Current Assets 2,531 2,711 2,901 193Less Current Liabilities 1,510 1,655 1,801 120

Net Current Assets 1,021 1,056 1,100 73

Total Assets 77,088 84,544 96,580 6,438

Long Term Debt/b 11,802 16,800 25,069 1,671Equity/C 59,927 63,849 69,379 4,625Funds (net) forwork in progress 5,359 3,895 2,132 142

Total Liabilities 77,088 84,544 96,580 6,438

Debt/Equity Ratio 16/84 21/79 27/73Current Ratio 1.7 1.6 1.6Liquid Ratio 0.8 0.8 0.8

/a Assuming 1981 exchange rate of 15 Lei to US$1 continues through 1985./b Includes repayable State allocations (net) since 1978.7c Including non-repayable State allocations prior to 1978.

- 44 -

5.23 Net repayable State allocations continue to increase (para. 5.15)

with a consequential increase in the debt/equity ratio to 27:73 by 1985. Thistrend will persist while the costs of "important developments" exceed the netinternal resources allocable. However, excluding the net repayable Stateallocations, the commercial-type debt outstanding at the end of 1985 would beabout 2 1/2% of total debt and equity and the Bank loan would represent lessthan 1 1/4%. Annual servicing of the Bank loan would absorb less than 1% ofCFR's gross internal resources.

VI. AGREEMENTS REACHED AND RECOMMENDATIONS

6.01 During loan negotations agreement was reached on the followingprincipal matters:

(i) the implementation of a technical assistance program including atraffic optimization study (paras. 2.19, 3.17-19);

(ii) the resources needed for track maintenance and overhaul including theintroduction of heavy track maintenance equipment would be providedpromptly as needed (paras. 2.11, 2.31);

(iii) the complementary investments needed for the project including thosein other sectors would be made on time (paras. 3.08, 3.16); and

(iv) no improvements would be made to other routes parallel to theBucharest-Fetesti road without adequate study (para. 3.16).

(v) the equipment listed in Tables 29 and 32 for the highway and railcomponents of the loan would, except for some minor items, beprocured by ICB, but for the highway part of the loan, disbursementswould be made against Statements of Expenditure in line with progressof the project roads (paras. 3.40 and 3.42).

6.02 With the agreements indicated above and others recorded in the textthe project would be suitable for a Bank loan of US$125 million to IB for a 15year term including a three-year grace period.

- 45 -

ANNEX 1

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Traffic Trends and Forecasts

General

1. Detailed analyses of surface traffic trends for the period 1960-80are shown in Tables 1 and 2. Commodity analyses for 1972 and 1978-80 aregiven in Tables 3 and 6 and traffic growth is forecast in Table 7. Principalfeatures of these analyses are summarized below.

Freight

2. In 1970, railways carried 73% of freight (in ton-km) and they remainthe dominant mode although their share had declined to 64% by 1980, with acorresponding increase in the percentage carried by road. The following tableshows the further reduction to about 57% forecast by 1985, assuming theDanube-Black Sea Canal opens in 1983.

1960 1970 1980 1985million million million milliont/km % t/km % t/km % t/km %

Rail/a 18,019 82 43,721 73 64,982 64 78,390 57Road/b 2,121 10 12,878 22 28,446c/ 28 32,040 23River (andCanal) 865 4 1,346 2 2,351 2 21,040 15

Pipeline 1,019 4 1,841 3 6,4 6 7c/ 6 7,070 5

Total 22,024 100 59,786 100 102,246 100 138,540 100

/a Chargeable (or tariff) ton-km, which are less than operating ton-km./b Including public services and industries "own transport."_c Latest forecasts 1980 actuals not yet available for pipelines and

road "own transport".

3. The changes in the modal shares of traffic are reflected in the ratesof growth shown as follows:

- 46 -

ANNEX 1

1960-1970 1970-1980 1980-1985-annual percentage growth (%) …------

Rail 9.3 4.0 3.8Road 19.8 8.2 2.4River (andCanal) 4.5 5.7 55.0Pipeline 6.1 13.4 1.8

Total 10.5 5.5 6.3

The forecast 3.8% for railways for 1980-85 is considered realistic as itincludes long-haul imports and exports growing at 7.9% p.a. and increasedinternal movements of bulk commodities, particularly coal, in areas not servedby the improved river and canal facilities. The overall forecast growth rateof 6.3% p.a. includes substantial canal traffic and is reasonable in view ofthe overall growth rate of 6-7% p.a. forecast for the economy as a whole(para. 4.01).

4. In terms of tons, road transport is dominant but tonnages move overrelatively short distances. The total for all modes in 1980 was 2,103 milliontons'/ of which the railways hauled 275 million tons, or 13%, an averagechargeable distance of 237 km. Public road services hauled 451 million tons,or 21%, an average of 26 km, of which construc- tion and building materials(for which access to sites is in many cases restricted to road) comprisedabout 270 million tons hatuled an aveprage of 19 km. The heaviest road tonnage,1,335 million tons, or 62%, was hauled an average of only 12 km by industries'own transport. Only 41 million tons, or 2% was carried by river and pipelinesover an average of 212 km. The impact of the canal both on tonnages and ratesof growth is shown in the following table.

1980 1985/aMillion Avge Haul Million Avge Haul Annualtons % km tons x km growth (%)

Rail 275 13.0 237 335 13.4 234 4.0Road 1,787 85.0 16 2,077 83.0 15 3.1River (andCanal) 12 0.6 191 61 2.4 343 38.5Pipelines 29 1.4 221 31 1.2 227 1.2

Total 2,103 100 2,504 100 3.5

la Latest forecasts.

1/ The total tonnages are overstated to the extent to which some tonnage ismoved sequentially by one or more modes, e.g., road/rail/road.

- 47 -

ANNEX 1

The forecast 4.0% p.a. rate of tonnage increase for railways is consideredattainable. Of the 60 million extra tons, about 28 million tons or nearlyhalf will be imports and exports, and most of the remainder will be internalbulk movements principally coal.

Passengers

5. Railways' former dominance passed to roads in the late 1960s, and thecurrent split of 27:73 is expected to decline further to 24:76 by 1985 as thefollowing table shows:

1960 1970 1980 1985million million million millionp/km % p/km % p/km % p/km %

Rail 10,737 74 17,793 47 23,220 27 24,930 24Public Bus 1,419 10 7,858 20 24,016 28 30,000 29OtherRoad/a 2,260 16 12,518 33 37,936 45 48,000 47Subtotalroad 3,679 26 20,376 53 61,946 73 78,000 76

Total 14,416 100 38,169 100 85,166 100 102,930 100

/a Including private buses and cars, estimated for 1980.

6. The current average journeys of about 67 km by rail, 23 km by publicbus and 12 km by other road vehicles are not expected to change significantlyand the passenger-km rates of growth shown below, therefore, also correspondbroadly to the growth in numbers of passengers:

1960-1970 1970-1980 1980-1980-------------annual percentage growth M3…---------…-----

Rail 5.2 2.7 1.4Road 18.7 11.8 4.7

Total 10.2 8.4 3.9

7. Rail passenger traffic is predominantly domestic, internationaltraffic being less than 0.5% in terms of passengers and about 3% inpassenger-km. Suburban traffic is about 60% of domestic passenger-km. Thus,the domestic growth rate of 1.6% p.a. (out of the average 1.4%) depends uponincreasing patronage of commuter services and of services linking the maincenters. Rapid and continuing urbanization (50% of 1980 population comparedwith 34% in 1965) should make this growth rate attainable.

- 48 -

ANNEX 2

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Design Characteristics of Railway Works

Bridges TrainMaximum Minimum Rail Sleeper Maximum ControlGradient Curvature Weight Type Axle Load Equipment

New Lines

Vilcele -

Rm Vilcea 1% 300 m 49 kg/m Concrete 25 ton Telephoneblockworking.Mechanicalwith keyinter-locking.

Berbesti- 2.1% 250 m 49 km/m Concrete 25 ton TelephoneBabeni block

working.Mechanicalwith keyinter-locking.

Line Doubling

Rm Vilcea - 1% 300 m 49 kg/m Concrete 25 ton AutomaticPodu Olt block and

electro-dynamicsignalling.Stationsignalsand pointscontrolledfromsingle

location.

Ilia - Arad 0.3% 350 m 49 kg/m Concrete 25 ton "

Faurei - 0.6% 500 m 49 kg/m Concrete 25 tonTandarei

* The design standards are defined from the technical-economicdocumentation of the Project prepared by MTTc.

- 49 -

ANNEX 2

Bridges TrainMaximum Minimum Rail Sleeper Maximum ControlGradient Curvature Weight Type Axle Load Equipment

Electrification: 25 kv, 50 c/s system

Dej - Cluj - 1.3% 300 m 49 kg/m Concrete 25 ton Automatic

Simeria block andelectro-dynamic

signalling.Stationsignalsand pointscontrolledfrom singlelocation.

Mintia - 0.3% 350 m 49 kg/m Concrete 25 tonArad

Faurei -Tandarei 0.9% 350 m 49 kg/m Concrete 25 ton

- 50 -

ANNEX 3

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Highway Component of the Project

Paving of Two-Lane Gravel Roads

(a) Schitu Golesti-Curtea de Arges (41 km)

1. The present route, 36.5 km long, traverses broken terrain withgradients of up to 14% and with many short radius curves. The road crossesmany areas of instability where recurrent slides have necessitated frequentand costly reinstatement works. Romania's comprehensive rail network providesno alternative access to the area, although both termini are connected to thesystem. The substandard geometry, excessive gradients and poor surface con-dition of the present alignment impose severe penalties on vehicle use, whilstin winter many of the steeper sections remain impassable because of snow andice. There is considerable coal mining activity along the first 11-1/2 kmfrom Schitu Golesti with about half a dozen mines having access to the road.An aerial cableway carries some of the production of the nearest mines toSchitu Golesti, but the bulk of production is carried by road.

2. The proposed alignment is some 4 km longer than the existing road.The additional length permits gradients to be flattened to an absolute maximumof 8% with most being less than 6%. Moreover, the worst areas of instabilityhave been avoided although some cannot without excessive realignment. Inthese cases, adequate provision is made for retaining walls to be built todepths below the slip circles.

3. The construction of the pavement will be staged so that the forecasttraffic for ten years from opening the road can be accommodated, after which asecond stage of an additional asphalt carpet will be applied.

4. The pavement for the first 11-1/2 km will be stronger than theremainder in order to carry the heavy coal transporters.

5. Present traffic is about 1,000 vehicles-day (about 40% trucks) and isprojected to grow at 10% over the first five years from opening, 6%-year forthe next five years, and 2%-year thereafter.

- 51 -

ANNEX 3

(b) Adjud (Podul Turcului)-Birlad (29 km)

6. The present track across rolling to hilly terrain provides the only,but unreliable, means of access to the several villages it serves. A journeyby road between the termini Adjud and Birlad, both of which are on the railwaynetwork, by other than this direct alignment, involves a 40 km detour to thesouth.

7. For the most part, the soil encountered on the route is a highlyfriable loess, which after only a little rain becomes slick and, particularlyon gradients, impassable to all but four-wheel-drive vehicles. Local infor-mation indicates that the track is impassable for about 150 days in the year.The loess material has the added disadvantage of being highly erodable, andthere is ample evidence along the present track where surface run-off fromhaphazard drainage has created gullies which are eating back into the hills.There are no bridges on the present route, all streams being crossed atunpaved fords.

8. Podul Turcului is the center of a development area where substantialinvestments being made in the food processing industry will depend for theirviability on good access to the crops and produce raised in the hinterland.All weather access provided by the construction of the proposed two-lane pavedroad, will promote the planned regional development.

9. If the road were open now, about 500 vehicles-day would use it.Traffic growth is estimated at 12%-year for the first five years from opening(taking into account generated traffic) and 4%-year for the next 15 years.

(c) Craiova-Balcesti (39.7 km)

10. The improvement of this direct link between Craiova and Balcestiwould enable traffic between the two centers to enjoy a distance saving ofsome 30 km. The present road is in such poor condition that travelers preferthe longer journey on a good road rather than take this, the direct route.Prior to its being declared a national road in 1978, the provincial adminis-tration over the previous few years had carried out selected improvements onsix sections totalling about 13.2 km. Although present traffic levels are nothigh, the pavements of all six sections are showing signs of distress indica-ting that an asphalt overlay will be needed in the near future. The RD hasincluded this work in its program, but outside the context of this project.The Municipality of Craiova is at present reconstructing the first 3 km whichfall within its boundaries, but the remaining 23.5 km in five separatesections, which include the most adverse terrain on the whole road, would bereconstructed under this project.

- 52 -

ANNEX 3

11. Present traffic is about 800 vehicles-day (40% trucks) and isexpected to grow at 6%-year over the next ten years and 3%-year thereafter.

Widening from Two to Four Lanes

Brasov-Harman (6 km)

12. The existing two-lane road from Brasov to the northeast is animportant corridor for transit traffic from Bucharest to the north ofRomania. In addition, it provides a conduit for considerable commuter trafficbetween Brasov and Harman as well as catering for Harman's textile industryand agricultural development, and the heavy industry of Brasov.

13. The present road has been doubled to four lanes up to a point 4.15 kmeast of Brasov. The present project provides for doubling the next discretesection from km 4.15 to km 10.15 where a major junction with National Road No.10 occurs, and where much of the local traffic dissipates.

14. The terrain is flat and the road is straight. Construction of theadditional two lanes should be relatively straightforward. A deficiency ofthe existing road, inadequate cross drainage, will berectified by theconstruction of eight additional box culverts, and the existing pavement willbe strengthened.

15. Present traffic is about 8,000 vehicles-day (60% heavy) and isexpected to grow at 6%-year for the next decade and 3%-year thereafter.

Stage 1 (Two lanes) of Eventual Four-lane Road:

Fetesti-Cernavoda (17 km)

16. Romania's principal transport corridor is that between Bucharest andthe Black Sea port of Constanta. The Black Sea coast is also a prime tourismarea, and seasonally attracts holiday makers up to the capacity of its hotelsand camping grounds. Transport needs are presently served by a double-trackelectrified railway, and by the main road (National Roads No. 2 and 2A) whichbears northeast from Bucharest to Urziceni, then follows the Ialomita rivereastward to a crossing of the Danube at Giurgeni and finally bears southeastto Constanta. This road is essentially two-lane throughout with only rela-tively short lengths being widened to four lanes. In parts, it is reachingcapacity.

17. A more direct route, however, and one which would avoid the dog-legto the north, is that followed by the rail. Paralleling the railroad,

- 53 -

ANNEX 3

National Roads 3, then 3A bear due east from Bucharest via Lehlui to Fetestiat the west bank of the Danube. Here the river is divided into two streams by

an island 17 km wide on the east/west axis. Although rail bridges span eachbifurcation of the stream, there are no road crossings or ferries. From theeast bank of the river, Cernavoda is linked directly to Constanta by NationalRoads 22C and 3. Thus, there exists a 17 km gap between Fetesti and Cernavodain what would otherwise be a preferred route, reducing by some 60 km thepresent 260 km Bucharest/Constanta journey by the northern road.

18. Primarily to increase rail capacity, two major bridges are to bebuilt over the Danube at Fetesti and Cernavoda. The opportunity is beingtaken therefore to provide road crossings by adding cantilevers to the twobridges so that a two-lane road deck can be supported on each side.

19. To ensure symmetrical loading of the bridges, it is necessary todivide the traffic so that each side carries the flow in one direction. Thusthe approaches to each bridge will be four-lane construction to a total of 6km, the intervening 11 km will be two-lane only, but with embankment andstructures built to full four-lane width in anticipation of its futurewidening.

20. The cost of the additional structural work to accommodate the roadpavements amounts to less than 5% of the total construction cost of thesebridges, and the railway component of this project provides for theprocurement of special steel for this purpose.

21. However, the road between Bucharest and Fetesti does require someminor pavement rehabilitation works and some local betterments to improvesubstandard geometry on curves and to provide adequate shoulders throughout.The DR is fully aware of the needs, but nevertheless, at loan negotiations,the Government should agree to a timetable for this work which would ensureits completion at or before the completion of this project element.

22. The road between Cernavoda and Constanta is currently being improvedand work thereon should be finished by the end of 1981.

23. The opening of this major link to Constanta should postpone for manyyears the need for additional capacity on the northern route (National Roads 2and 2A).

24. If the road and bridges were open to traffic now the road would carry

about 9,000 vehicles-day, a substantial portion of which (about 5,000) wouldbe diverted from the present longer route to Constanta. Growth is estimatedat 5%-year for the next ten years, and 3%-year thereafter.

- 54 -

ANNEX 4

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Outline of Terms of Referencefor Traffic Optimization Study

A. Objectives

I. The main objectives of the study are:

(i) to evaluate and improve as needed the computer programs used fordetermining, on the basis of costs, linkages between suppliers andconsumers and the resulting traffic flows; and

(ii) to acquire a more in-depth knowledge of factors affecting the modalsplit, and hence to establish an operational model for minimizing thesocial costs of door-to-door transport.

2. The study would cover railway, road, coastal shipping, river andcanal, pipelines and domestic air transportation. While it will focus on theRomanian transport sector, its methodology should be adaptable for use inother countries.

B. Scope of the Study

3. The study shall establish an operational model for freight trafficflows and their modal distribution, on the basis of several criteria, mainlysocial expenses of transport including capital cost, the relationship betweentariffs and service-specific costs, energy consumptions (also on aservice-specific basis) and total transport time. The social expenses oftransport will take into account fully distributed costs of the entire trans-portation process including the packaging of goods, the damage risk duringtransportation, inventory and storage costs. For all main commodities, thestudy should aim at maximizing the price to the producers net of distributioncosts. Furthermore, if local prices (costs) are significantly different fromborder prices, the study should indicate the likely change in modal split byadopting border prices.

4. The operational model shall permit the use of one or several criteriafor the optimization and distribution of goods by different transport modes,depending on their priority (manpower, energy, investments, inventories, etc.).

- 55 -

ANNEX 4

5. The study shall take into account both conventional transportationmodes and their combinations (containers, piggy back, RO-RO, etc.). Thesystem shall provide the basis for effective, long-term planning of thetransport activity, related development of transport projects and conse-quential investments on different transport modes based on discountedcash-flow analyses.

6. The focus of the study at the final stages shall be on such factorsas:

(i) development of algorithms for the determination of the optimumfreight transport flows, as well as intermodal economic distancelimits with particular application to Romania;

(ii) formulation of appropriate computer programs to ensure flexibilityand to allow adoption of alternative strategies by the user country;

(iii) the dependence of diverse categories of goods (as appropriate for theuser country) on different transport modes for specific distanceranges (such as 50-100; 100-150; 150-200 and 200-250 km); and

(iv) establishmenL of a data base and programs for its administration.

C. Time Schedule

7. The work shall commence within 30 calendar days of the effective dateof contract (tentatively fixed at October 1, 1981). The different stages ofwork will be as follows:

(i) Stage I - Report - Determination of the system requirementsand of the detailed methodology for thestudy.Completion: December 31, 1981

(ii) Stage II - Report - Models and algorithms for thedetermination of the optimum transportflows and of the intermodal economicdistance limits.Completion: July 31, 1982

(iii) Stage III - Report - Model for adapting the system to thespecific character of the user country.Completion: December 31, 1982

- 56 -

ANNEX 4

(iv) Stage IV - Report - Computer programs.Completion: June 30, 1983

(v) Stage V - Tests, experiments, identification of market segmentswith various levels of dependence on transport modes,determination of economic distance limits based onthe methodology developed in Stage I and establish-ment of the data base.Completion: November 30, 1983

8. The consultants will submit reports, in English, for each of theintermediary stages, to the Government and to the Bank, which, within 30 daysof receipt of the reports, will comment and make suggestions for improvementof the study.

9. On completion of the study, the consultants will submit the draftfinal report(s), in English, to the Government and to the Bank for review andcomments and shall finalize the report(s) within 45 days of receipt ofcomments.

ANNEX 5

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Design Characteristics of Project Roads

Schitu Golesti Craiova Adjud BrasovLi Fetesti/L

Unit Curtea de Arges Balcesti Birlad Harman Cernavoda

Terrain Type -- Hilly Rolling- Hilly Flat FlatHilly

Design Speed kph 40 60 /3 60 /3 120 120

Max. Gradient % 8.00 6.50 /4 6.50 /4 3.00 5.00

CarriagewayWidth m 6.00 6.00 6.00 7.50 7.50

ShoulderWidth m 1.00 1.00 1.00 2.50 2.50

Min. Rad. HorCurve m 125 /5 125 /5 125 /5 650 650

Min. Rad.Vert. Curve mSummits m 1,600 1,600 1,600 18,000 18,000Sags m 1,500 1,500 1,500 6,500 6,500

Max. SingleAxle load ton 10 10 10 10 10

Type ofPavement - Asphaltic Portland Asphal. Asphal. Portland

Concrete Cement Concre. Concre. CementConcrete Concrete

StructuralDesign - That of Council for Economic Cooperation (Similar toStandard DIN standards)

/1 Adding second two-lane carriageway to an existing two-lane road./2 First two-lane stage of an ultimate four-lane divided highway.7T But for short lengths in adverse terrain, 40 kph./4 But for short lengths in adverse terrain, 8.00%./5 But for short lengths in adverse terrain, 80.0 m.

Source; DR

November 1980

- 58 -

ANNEX 6

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Related Documents and Data Availablein the Project File

A. General Report and Studies on the Transport Sector

1. Romania - A World Bank Country Study - The Transport Sector, pp304-330, 1979.

2. Programme of Romania's Economic and Social Development byTerritorial Units in the 1981-85 Period - Draft, Oct. 1979.

3. An Act to Amend and Complete Act No. 8/1972 Concerning the PlannedEconomic and Social Development of Romania - July, 1979.

4. Decree of the State Council on Organization and Operation of MotorVehicle Transportation - Bulletin Official No. 136, Pt. I, December21, 1977, Decree No. 468.

5. Romania - Documents - Events - Romanian News Agency - 9th year No. 39July 1979.- Meeting of the Executive Political Committee of the CC of the RCP- Decree of the State Council of Romania on Measures for Apportion-

ing Fuel Consumption and Judicious Husbanding of Car Fleet.

6. Buletinul Oficial Al Republicii Socialisti Romania, Vol XV - No. 59,Pt I, Friday, July 13, 1979.

(a) Law Amending and Supplementing Finance Law No. 9/1972.

7. Legislatie Economica Si Financiara - Legea Finantelar Nr. 9/1972-16Consiliul de Stat - September 20, 1979.

8. Legislatie Economica Si Financiara - Legea Nr. 21/1978 - 28 Consiliude Stat 1979.

9. Buletinul Oficial Al Republicii Socialiste Romania - Measures forimproving utilization of rail, road and water transport, April-May 1975.

10. Law Nr. 68/1968 concerning depreciation of fixed assets.

B. General Reports and Studies Relating to the Project

1. Feasibility studies on:

(a) New railway line Vilcele-Rm. Vilcea;

- 59 -

ANNEX 6(b) Doubling of Golesti-Pitesti railway line;

(c) Doubling of Rm Vilcea-Podul Olt railway line;

(d) New railway line Babeni-Berbesti; and

(e) Track overhaul Golesti-Vilcele.

2. Feasibility studies on:

(a) New railway line Carbunesti-Albeni;

(b) Doubling of Livezeni-Simeria railway line;

(c) Electrification of Dej-Cluj-Simeria-Hunedoara railway line;

(d) Track overhaul Simeria-Hunedoara railway line; and

(e) Track overhaul Simeria-Pestis railway line.

3. Feasibility studies on;

(a) Railway and Road Bridges over the Danube;

(b) Doubling of Ploiesti-Urziceni-Tandarei railway line;

(c) Doubling of Faurei-Tandarei railway line;

(d) Electrification of Ploiesti-Urziceni-Tandarei line; and

(e) Electrification of Faurei-Tandarei-Fetesti railway line.

4. Comparison of the feasibility studies at local and internationalprices.

5. Computer sheets incorporating detailed analyses of the differentprojects at local prices.

6. Feasibility studies on:

(a) Curte-de-Arges-Schitu Golesti highway;

(b) Podul Turcului-Birlad highway;

(c) Craiova-Balcesti highway;

(d) Ploiesti-Cimpina highway;

(e) Brasov-Harman highway;

(f) Turda-Cluj highway;

- 60 -

ANNEX 6

(g) Bucharest-Oltenita highway;

(h) Bucharest-Giurgiu highway; and

(i) Fetesti-Cernavoda highway.

7. Feasibility studies on:

(a) Doubling of Ilia-Arad-Curtici line;

(b) Electrification of Mintia-Arad line;

(c) Track overhaul Ilia-Birzava;

(d) Track overhaul Arad-Curtici; and

(e) Track overhaul Arad-Oradea.

C. Design Plans, Specifications, Estimates

1. Catalog De Preturi Unitare Pe Aticlole De Deviz Pentru Lucrari DeDrumuri Editia - 1977, Institutul Central De Cercetare, ProiectareSi Directivare in Constructii.

2. Catalog De Preturi Unitare Pe Articole De Deviz Pentru Lucrari De

Poduri Editia 1977, Institutul Central De Cercetare, Proiectare SiDirectivare in Constructii.

3. Indicator De Norme De Deviz Comasate Pentru Lucrari De Poduri,October 1974.

4. Legislatie Privind Organizarea De Stat

Legea Nr. 13/1974Legea Nr. 43/1975Legea Nr. 37/1975

Consiliul De Stat, Sectorul Buletinului Oficial Si Al PublicatiilorLegislative, 1976.

5. Normativ Tehnic De Intretinere Si Reparatii Currente (Periodice)Ale Liniilor Ferate.

D. Financial and Accounting Documentation

1. Romanian Railways Accounts for 1974 and 1976-78 (with translationfor 1976).

2. Romanian Railways 1979 Accounts package with translation.

3. Analytical list of Summary Accounts for Industry with translation.

- 61 -

ANNEX 7

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Main Accounting Assumptions (Railway Component)

General

1. The actual and forecast Income Statements, Cash Flow Statements andBalance Sheets included in this report are based on those prepared by CFR,adjusted to correspond more closely to the Bank's usual formats and to includea railway component of US$64 million out of the present proposed Bank loan ofUS$95 million.

Exchange Rates

2. A foreign exchange rate of 18 Lei to US$1 has been used up toDecember 31, 1980 and 15 Lei to US$1 thereafter.

Income Account (Table 36)

3. Income Accounts are analyzed in detail for the basic railwayactivities but, for the auxiliary activities which account for less than 5% oftotal activities, only the total revenue, expenditure and net benefit areshown. Certain centralized activities such as the RCC which executes worksnot only for railways but also for primary roads, airports and Danube ports,produce separate accounts which are not incorporated with those of CFR.

Revenue

4. Revenue estimates are based on traffic forecasts established for theFive-Year Plan (1981-85), by the SPC evaluated at current tariffs. Railpassenger traffic is forecast to grow at about 1-1/2% p.a. and freight trafficat about 4% p.a. No change in passenger fares (last increased in 1977) isexpected during the plan period but freight rates (last increased in 1974)have been increased by 5.7% from January 1, 1981 (For causative costincreases, particularly in fuel prices, see para. 6, below).

Working Expenses

5. Working expenses have to conform strictly to State planning targetsand limitations. No increase in wage rates is incorporated, except for

- 62 -

ANNEX 7

the full-year effect of the second tranche of the previous five-year plan

increase, effective from December 1, 1980. Wage cost increases are therefore

limited to 1% corresponding to the permitted increases in staff. Any further

increases in wage rates authorized during the plan period would be incorpor-

ated in annual plan revisions. Taxes on wages and salaries are assumed to

continue at 16.5% of wages and salaries and social security contributions at

15% of wages and taxes combined.

6. Fuel and electricity costs are forecast to reduce slightly at current

rates, increased traffic and train-km being offset by increased electric

haulage and elimination of steam traction. Increases of about 30% in both

fuel and electricity rates in 1981 are included in the forecasts.

7. After an increase of about 10% assumed for prices of other materials

in 1981 these and other expenses controlled by Regions are forecast to remain

constant, as achieved in the previous five years. These limitations, coupled

with the strict control of personnel expenses, demand further improvements in

already high productivity for both operations and routine maintenance.

8. Maintenance other than routine is strictly controlled through the

railway Headquarters' budget. All regionally-collected revenue is channelled

to Headquarters which assures priority for funds for centralized expenditures

before allocating funds for regionally-controlled expenditures. The two

principal items of centralized expenditure (both assumed to be subject to 5%

materials price increases in 1981) are periodic repairs of traction and rol-

ling stock, which are planned to increase in volume by approximately 1-1/2%

p.a. during the plan period, and capital overhaul of track, planned to

increase by approximately 1% p.a. Capital overhaul of track, normally

capitalized in other countries, is charged in Romania to operations and has

consequently been excluded when calculating working and operating ratios and

rates of return on net fixed assets in use.

Depreciation

9. Asset lives, for depreciation purposes, are published in the Official

Gazette for all sectors of the economy and those for railway assets were last

revised in 1977. For mobile assets they range from 8-40 years, most loco-

motive and wagon types being 35 or 40 years. Immovable asset lives are

generally longer and the average for all assets is about 50 years. No changes

in asset lives are forecast for 1981-85.

Interest Charges

10. In the Romanian system interest on long-term borrowings is charged to

construction funds but has been transferred to the Income Accounts in the Bank

presentation. Interest on short-term borrowings is included in "other

- 63 -

ANNEX 7

expenses". Interest on the railway component of the proposed Bank loan hasbeen included at 9.25% and on repayable State credits at 2%. Repayableallocations are interest free.

Cash Flow Statements (Tables 16 and 38)

11. Cash Flow Statements prepared by CFR have been adapted to the Bank'snormal format. Under the Romanian system the amounts are kept in three main,self-balancing sections for fixed assets in use, fixed assets in course ofconstruction (work in progress) and operations (which has a further sub-division to show the utilization of net income or "benefit"). Movementsbetween sections are not recorded by direct bookkeeping transfer but throughparallel entries in each of the sections concerned, e.g., in the case oftransfer from operations to fixed assets in course of construction (ofdepreciation, "benefit" reinvested, etc.) bank transfer payments record themovement of funds generated by operations (which are held on deposit with theNational Bank) to funds required for investments (which are kept on depositwith the IB.

12. The total benefits (basic and auxiliary activities) and their al-location as forecast by CFR are detailed in Table 22.2 (in the Project File)and summarized in Tables 16 and 38. Depreciation of basic activity assets andother assets is similarly detailed in Table 22.1 (in the Project File) andsummarized in Tables 16 and 38.

13. External resources include State Allocations/Credits as forecast byCFR and adjusted for changes in the amount of the railway component (atpresent US$64 million) of the proposed Bank loan and by revision of CFR debtservice schedules made by the mission. The Bank loan is assumed to berepayable in 25 semi-annual installments commencing in July 1984.

14. The division of State support between "Allocations" repayable withoutinterest and "Credits" repayable with interest was established by CFR afteranalyzing the investment plan into "important investments" chiefly attractingState Allocations and "other investments" attracting only the State Credits.Subsequent changes resulting from adjustments of plan totals and amounts ofthe Bank loan have been made only in the total of State Allocations and theoriginal assessment of 967 million lei (US$65 million) for State Credits hasbeen retained. State Credits are repayable over 15 years. State Allocationsare repayable from depreciation and benefit but in the case of CFR theserepayments are less than the gross allocations required for investment sothat, at least for the plan period there are net annual additions to thefigure of allocations repayable.

15. No foreign loans are expected other than the proposed Bank loan.Some items of equipment and materials are expected to continue to be

- 64 -

ANNEX 7

obtained under the barter arrangements which Romania has with its COMECONpartners but sufficient information is not available to show such sourcesseparately in the financing plan.

Balance Sheets (Table 39)

16. CFR presented a two-part Balance Sheet which has been adapted to asingle presentation in the Bank's normal format. CFR's first part comprisesthe sections for fixed assets in use and for operations; the second partconsists only of fixed assets in course of construction (see also para. 11).

17. Fixed assets in use are shown by CFR as being fully financed from"own funds". Prior to 1979 State Allocations were not repayable and no

distinction was made between "own funds" generated by railways operations and"own funds" derived from non-repayable State Allocations. For 1979 StateAllocations, although now repayable are still shown in CFR's Balance Sheet as"own funds" but in the Bank presentation a distinction is made betweennon-repayable and repayable allocations so that for 1979 and subsequent yearssomething approaching a debt/equity ratio becomes increasingly meaningful. Areconciliation between capital expenditures and additions to fixed assets inthe Balance Sheets and a similar reconciliation for depreciation are availablein the Project File (Tables 23.1 and 22.1).

18. In certain circumstances fixed assets may temporarily be recordedtwice in the Balance Sheet, e.g., where assets are taken into use before finalapproval of the construction or before applicable outstanding loans are repaid(repayments of principal, like, interest payments (see para. 10) are chargedto construction funds. Such duplications are not at present significant andfixed assets in progress during the 1981-85 plan period are not expected toexceed 5% of the gross fixed assets in use.

19. Capital assets in course of construction (work in progress) for whichCFR produces a separate self-balancing section of the Balance Sheet arefinanced partly by loans and credits and partly by short-term interim financepending longer-term arrangements through State Allocations and usage of "ownfunds". In the Bank presentation work in progress is shown as financed, tothe extent identified by CFR, by long-term debt and, for the remainder, byinterim finance.

20. Working capital is included on the basis of CFR's estimates andallows for an increase of about 3% p.a. for inventories and 2% p.a. overall.

CD O ,. n 01 . IC-fnOlCa._ CDI C.I

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fs.r. I 0.2.30 7 05 0.1 2 2335 6,02 03 22 o- o " 3(60 0.204. 002 9~.4 (63.))la 2.0. 0.. 4u.S 0 0944.5.00 (3.)) (0,0) (3.7) (0.8)~~~~~~~ ~~ (0.0 (3.)73) (.0) (8.5) ((2.6) (0.3) ((.2.) I.) i.4 04 -)

4. )2~~.0 7204,73. (~15.0 4.40 234 4.) 0.209 4 (7.0 4.1 322 (3.0 0( 0 6. .4 36 42 02 43 (0. .3I I8 61.3 0.2280I4000 (0.01 (0.4) (a ( 9.3) 10.0 (4)7.) 31(.) (6)(.) 33V (.2 (.)3.4(.8

3. P--. 1.0 (.4 la 026 (82. 0.22 44 20.7 43378 578 2-04. 3.10 (SIi 4.02 307 0I.2 (307),(30.8) (0.0) (8.4

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(3.0) (2.2) (0.0) (30.8( (*37 (2.21 (24.0) (23.0) (0.3) (1.30 4.4 038.06 (0.1) (2.3).(68.0) (14.8

~'0* 20,.2,. (.0 (.0 (.0 (-0 (.0 (3.)(8.9) (25.) (.9) (35 0.) (30

(32.2) (20.47 ((8.8) (25.6) ~~~~~~~ (28.0) (0.3) (34.1) !Ai.~~~~~~!) (20.3) (23.0) (30.8) i 1.85 i5

(00.6) (1.87 (36.5)6 1

... . D I I. (034.71) ( 20.7) 1(0.0) (0.) 200.0)MA I200 (30.0 (8.0) (300 . .0) ((00 38.) 33.05 2300.0) (300.0) ((00.0) (300.0)

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/3 0sIO0o4o3,0.22o5(9o-s" ~ heo(.S*7I0 rl ... 0200t1C00n0b0m07). 2103 O..455505t07 035 .10.05.0 rots; 7c60s O1.2-5 0)on 535 30 028 53) 2*

4o.r-.- COO L509" 942..295815 3

22.7 (002:9 ,:, II 11 I1

Table 4

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Production, Consumption, Exports and Imports of Oil and Oil Products, 1970-80

Crude Oil Total Refined ProductsDomestic Domestic

Production /1 Import Consumption Production Export Consumption Export Import

('000 tons) us$ millions

1970 13,759 2,291 16,050 15,835 5,370 10,465 123.1 24.0

1971 14,176 2,858 17,034 16,647 5,368 11,279 143.0 36.6

1972 14,483 2,873 17,356 17,059 5,096 11,963 137.8 47.9

1973 14,642 4,143 18,785 18,568 4,938 13,630 275.7 106.1

1974 14,839 4,538 19,377 18,866 6,502 12,364 535.3 434.7

1975 14,945 5,085 20,030 19,791 6,176 13,615 538.5 400.1

1976 15,052 8,475 23,527 23,039 7,842 15,197 735.2 717.1

1977 15,002 8,844 23,846 23,328 6,742 16,586 688.1 875.4

1978 14,061 12,937 26,998 25,534 7,559 17,975 746.0 1,218.8

1979 12,663 14,298 26,961 26,666 7,239 19,427 n.a. n.a.

1980/2 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

/1 Includes a small amount of by-products from natural gas wells.

/2 Information for 1980 could not be released at time of post-appraisal mission.

Source: Romanian Government

May 1981

- 69 -

ROMANIA Table 5

APPRAISAL OF

A LAND TRANSPORT PROJECT

Transport Tariffs for Railways and Road Transport (1980) L

Lei per tonDistance in Km Less than car load /2 Wagon load /3 Road

Meat (Fresh)30 107.0 64.1 30.850 107.0 71.2 44.3

100 122.8 95.0 77.7150 139.6 118.8 112.2

200 156.4 142.6 147.2300 190.0 187.8 207.3

Gasoline30 107.0 28.2 22.550 107.0 32.0 32.8100 122.8 44.3 57.6150 139.6 56.5 83.3200 156.4 68.8 109.2300 190.0 92.0 154.0

Cereals, Cement30 107.0 20.8 19.750 107.0 23.4 28.7

100 122.8 32.3 50.6150 139.6 41.1 73.2200 156.4 49.9 96.0300 190.0 66.6 135.0

Timber30 107.0 17.2 19.750 107.0 19.6 28.7

100 122.8 27.5 50.6150 139.6 35.4 73.2200 156.4 43.3 96.0300 190.0 58.4 135.5

Sand, Ballast, Minerals, Calcium Rock30 107.0 17.2 19.750 107.0 19.6 28.7

100 122.8 25.2 50.6150 139.6 32.4 73.2200 156.4 39.7 96.0300 190.0 53.5 135.5

Furniture30 107.0 20.8 19.450 107.0 23.4 28.2

100 122.8 32.3 49.6150 139.6 41.1 71.7200 156.4 49.9 94.0300 190.0 66.6 132.5

Clothes and Shoes30 107.0 26.4 19.450 107.0 29.8 28.2

100 122.8 41.0 49.6150 139.6 52.2 71.7200 156.4 63.4 94.0300 190.0 84.7 132.5

/1 All freight rates were increased in January 1981 by 5.7% for railways and5.3% for roads.

/2 Maximum admitted weight in parcel traffic is 5,000 kg.13 Based on 10-ton load.

Source: Romanian Government.

May 1981

t 0*o

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ft o 000 ao a 0. 0 Ma 3104-. 00.0.000.000.00100 00001000 0000000. 000 00

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hOKANIA Table 7

APPkAISAL OF

A LAHNI ThANSPORT PROJE:T

Huial Traffic Trends (1960-80) and Plan Forecasts (1981-85)

_ _r_ _ gi __ PassengersHigthway _ __ _ _

Trucking - - HighwayKavllay /I LE3trprinsc Ow!n Account /I bl_btotal River/Canal Pipelinles Total Railway Public Bus Other /3 Subtotal River/Canal total

Voluni in million ton-k. (Z in brackets) ___ __Volume in million pass-km (2 in brackets)

19( 18019 /4 93St 1185 2121 865 1019 22024 10737 1419 2260 3679 41 14457(81.8) (4.3) (5.4) (9.7) (3.9) (4.6) (100.0) (74.3) (9.8) (15.6) (25.4) (0.3) (100.0)

19/0 43721 515b 7722 12818 1346 1841 59786 17793 7858 12518 20376 76 38245(73.1) (8.6) (12.9) (21.5) (2.3) (3.1) (100.0) (46.5) (20.6) (32.7) (53.3) (0.2) (100.0)

19gO 64982 11156 16690 /5 28446 2351 6467/5 102246 23220 24016 37936 /5 61952 79 85251(63.b) (11.5) (16.3) (27.8) (2.3) (6.33 (100.0) (27.2) (28.2) (44.5) (72.7) (0.1) (100.0)

19iJ 69890 11545 17447 28992 3260 6760 108902 23570 24800 39643 64443 ioO A 8113(o4.2) (10.6) (16.3) (26.6) (3.0) (6.2) (100.0) (26.8) (28.1) (45.0) (73.1) (0.1) (100.0)

19bZ 71850 11800 17805 29605 4500 6830 112785 23870 26100 41467 67567 100 91537(bJ.7) (10.4) (15.8) (26.2) (4.0) (6.1) (100.0) (26.1) (28.5) (45.3) (73.8) (0.1) (100.0)

19d3 73780 1115 17880 29995 17237/7 6960 127972 24190 27400 43457 70857 100 95147(5).7) (9.4) (14.0) (23.4) (13.5) (5.4) (100.0) (25.4) (28.8) (45.7) (74.5) (0.1) (100.0)

1964 75992 12630 19170 30800 19042 7100 132934 24540 28700 45630 74330 100 98970(57.2) (9.5) (13.7) (23.2) (14.3) (5.3) (100.0) (24.8) (29.0) (46.1) (75.1) (0.1) (100.0)

19d7 78390 13100 18740 32040 21040 7070 138540 24930 30000 48000 78000 100 103030 (7r.6) (9.6) (13.5) (23.1) (15.2) (5.1) (100.0) (24.2) (29.1) (46.6) (75.7) (0.1) (100.0)

____ _________ Average Haul (km) Average Jou.rney (km)

196b 2J2.5 16.5 11.0 12.9 455.3 181.9 88.3 50.O 19.8 12.0 14.2 35.4 30.41970 2755.2 21.5 13.0 15.4 395.8 162.9 58.6 54.2 21.9 12.0 14.5 39.7 22.11980 236.6 26.0 12.5/5 15.9 19S.I 220.7 /5 48.6 66.7 23.2 12.5 /5 15.2 46.5 19.31981 241.0 22.3 12.5 15.2 210.0 219.0 48.4 65.1 22.3 12.5 15.0 50.0 /6 19.019b2 2i9.7 22.3 12.6 15.2 220.0 218.0 49.2 65.4 22.3 12.6 15.1 50.0 18.91983 23b." 22.2 12.6 15.3 3b5.2 /7 220.0 54.4 65.6 22.2 12.6 15.1 50.0 18.81984 2J6. 0 22.2 12.7 15.4 353.9 226.0 55.2 65.8 22.2 12.7 15.2 50.0 18.81985 234.0 22.1 12.7 15.4 343.2 227.0 55.3 66.0 22.2 12.7 15.2 50.0 18.7

__T__nnag_X e (milltolns) Passengers (millions)

19 1 71.5 56.7 107.7 164.4 1.9 5.6 249.4 214.7 71.7 188.3 260.0 1.2 475.99/( 171.3 239.8 594.0 833.8 3.4 11.3 1019.8 328.3 358.8 1043.2 1402.0 1.9 1732.2

1980 i/4.6 451.3 1335.2 /5 1786.5 12.3 29.3 /5 2102.7 347.9 1033.7 3034.9 /5 4068.6 1.7 4418.21981 290.0 517.7 1395.8 1913.S 15.5 30.9 2249.9 362.0 1112.1 3171.4 4283.5 2.0 /6 4647.51982 211.o 529.1 1413.1 1942.2 20.5 31.3 2294.0 365.0 1170.4 3291.0 4461.4 2.0 4828.4198 .3100 545.7 1419.0 1964.7 47.2 // 31.6 2353.5 369.0 1234.2 3449.0 4683.2 . 2.0 5054.2I '84 J22.0 5b8.9 1430.1 1999.0 53.8 31.4 2406.2 373.0 1292.8 3592.9 4885.7 2.0 5260.71985 J35.(1 bl)l.8 1415.6 2077.4 61.3 31.1 2504.8 377.2 1351.4 3779.5 5130.9 2.0 5510.1

I/ "l.l'rg-ule ( taii) toW-k- wth,ch are len than operating ton-kus d.e to diversions avoiding saturated line sections./2 i-lik. perateu by M1Rf sLt r- (-jid their agi,c ies) other Lhar. Ministry of Transport./3 l'ivatre cdrs andi noii-Mflc-operated bones./4 F-r 196U ciiargcabil kois were not available but ale calulatE-d by dividinSg operational ton-kg, by 1.1./5 LatesL 1-reaSt; CiaL.is In yeL availabl../b EtIa,lsten ny mlssioli tun 1901-95./7 AsainuzzIg Onobc-Black sea Canal uopets 1983.

-OIJk,': HMir ann aitduisib ait 8i,Lae-

May 1981

-72 -

APPLAISAL. 3F

A LAND TRANSPORT PROJ'ECT,

Unto 7975 L1 2977 7972 1973 7974 197$ [976 73 77 17 19b

A.LEWASh OF _I71 71012 77012 11022 7L109 777086 :1039 11080 III"7 111719 71113 10A1JfldSt Od8C. 10341 70358 10369 101Ar 70431 7,0403 10467 10515 10575 711059 :0506Noo.'ocoo o35 o18 616 117 679 591 568 567 559 0159 579

Arood game on ~~~ ~~~ ~~~ ~~ ~ ~~~36 06 36 3r 36 45 45 0 .3 ~ 5 .3

million 328.3 0338 362 367 378 367 373 317 355 351 348net tot,s m~~~~~~ ~ ~~~~~ilLion 171.3 785 194 706 218 228 238 748 26 273 771tdc.onger-nn S~~~~~~ ~ ~~~itlion 171.8 16.8 70.72 21.2 22.c 22.4 23. 1 73.2 72.0:2.71 .3..Net too-in ~~~~~~~~~~~~billion 49.0 50.8 53.3 57.1 91.6 6n.8 67.6 70. 3.7 '6... 71.r

T-clftonKmE billion 44.1 46.4 48.0 51.2 55.1 57.7 60.9 91.5 93.1 65.3 65.OZ-f- ~~~~~~~~bilIon- 61.8 69.6 73.5 78.3 04.0 97.2 90.7 93.1, 96.5 98.7 98.7

A--1p.... 1-Journey km Sn.2 55.7 33.8 (7.8 59.3 61.0 61.8 b2.5 6n-3 04.8 nR.7Aonmge erncgnt no..1 ~~~~~~km 255.2 231.3 747.6 749 .6 052.8 252.6 253.9 255,5 244.7 239.4 236.0

nilloon 7~~~~9.5 27.6 23.6 23.9 24.8 25.8 27.6 78.2 28.5 78.- 78.2to-k billion 8.2 94.0 9 8. 105.1 713.0 178.5 724.2 128.6 135.4 139.3 039.5

.otal 6roen ron-tm n~~~~ ~ ~~~~Ilo 707.8 713.6 220. 7 29.0 137.81 744.3 757,.8 176.8 763.9 I67., 167.3

roo otkmPerro, se 100 Line million 9.7 77.5 77.1 17.7 12.4 13.1 137 14.1 14.7 15.1 15.1

nillion ~~~20.5 77.0 16.3 12.m 9.1 6.0 2 .5 1.5 0.9 0.6 0.7Ooso billio 79.9 00.2 9-.1 101.5 107.9 171.7 118.1 179.7 179.7 717.2 109.5

billion 6.3 9.4 71.7 14.1 19.9 25.9 29.5 24.9 43.2 in9.) 57.5btlli.n 0." 0.7 7,7 0.7 0.7 3. 6 0.1 2.5 0.5 3.4 0.4

oteon moll~~~ ~ ~~~~~ion 62.2 67.9 67.8 13.8 43.2 33.3 21.7 18.8 77.8 19.5 18.0

Icons I m~~~~~~~~~~~~~xio 200.0 208.0 207.9 230.0 199.7 222.2 210.5 206.2 193.2 191.2 192.2

orten lon- - -e n-ber 2333 22653 7223 7270 1962 73 788 1842 1795 1672In er.i.i 35.0 52 .0 46.3 38 .3 36 .1 76.6 25.6 18. 15.2 15.0 7

Oiteooleoti-C locomtto- aomb- 668 752 940 913 1201 1075 '1118 1202 1280 1401 7-n -ilaoi.oy i 86.9 87.7 97.3 87.4 83.1. 95.n 85.8 87 .7 87.3 87.2 7.1coc ....... i Incea- -e 1uoe 76 270 325 390 452 326 571 627 687 690

roiotcy m 64.0 64.1 68.3 60.8 75.1 74.3 76.7 76.0 82.5 61.7 1loolroo loonononnee number ~~~ ~~~~81 708 730 181 249 388 345 412 437 570

necciitpy I 78.3 78.3 79.3 79.1 81.6 80.4 77.9 79.8 83.3 85.4 3oat) comes nnmbsr ~~~~ ~~~~ ~~~~146 I46 146 146 146 746 I143 143 743 I744 7annilaoicc iy 4 ~~~~~ ~~~~~ ~~~85 .3 85 .0 35O 85.7 8.0 65.0 83.0O 80.0 75.0 70.0 70 .0

oceom nc- -i-o nuber 01 80o 8 73 48 41 4 3 39 39 1cntonoo.c 1 ~ ~~~~~~~~~ 13 .0 15 .0 15.0 8.0 - - - - - - I

octeelnsdronlcc 7oo~~~~~~tines oombnr 7~~4 24 24 31 38 38 38 38 38 4 1onoil.uilits 0 ~ ~~~ ~~~~~~ NA 66.2 86.7 86.0 86.4 96. 86.5 86.: 86.7 87.0

oteum lonomocione tumose~~~~~1 29 32 32 32 31 320 7 2: 26 79 190 .0 83.0 03.0 80.0 75.0 30.3 50.0 50.2 40.0 Li<j

Iide Woomti number- 2 4 3 75 7 20 20 1onoilebi7tcy I - - - 93.0 92.0 67.2~ ~~~~~~~~~~~~~~~~~~~ ~ 96. 86-o 86.7 86.8

D. -toN470 5rR00_______________ ~~~~~ ~~~~~ ~~~~5248 5576 3727 5027 n022 9893 60134 n033 394 57 ocanoord googe cunoen ~~~~~ ~~~~~~5016 5295 571.1 $813 5826 5700 58415'86 3 87360 118

baro.. io.&me 200 229 782, 210 :03 189 79 69 157 15078rooo~~~~~aigs robed 4 ~~~~~ 4 4 4 m 4 4 0 0 7

N.. oO teststbnosno 275.7 790.7 7-21.6 244.6 336.2 058.9 2373.89 8. 374.8 357.8 7So. -tOCOiO ..G. fbh.... 269.1 292.7 017.5 338.7 150.3 254.o 068.4 376.1 770.2 353.7 So. non..i. N.G. coons..o. 3.8 5.8 1.9 5.7- 5.7 5.3 5.2 5.2 4.6 4,5 79o. -t eIl-. B.G. tnn.....ds 0.2 0.2 3.2 3.7 3.2 <.2 0.2 0.2 0

-to ottt nme 89444 94247 99061 701646 753909 109475 772810 110730 122458 1263587o-1 corooirj h....o.dnn 3000 3247 73713 3714 3843 4103 o332 -659 4991 5194

-ta-od douce 8obe8413 03218 90045 130874 102997 707568 711915 717844 121672 177186 1_ Onoal -ipsitty eboo....d eons 2998 3233 3521 1199 3829 4089 41318 464 4990 378d

-orgs no -opa-iy tos35.8 34.7 i5. 7 36.7 37.2.79.0 38.6 39.. i0.l 41.3

____________ anbest ~~~~~ ~~~~~1005 7203 9 74 099 331 870 620 974 758 749 7TotaucaPacinocoosn tone 77I.0 7.n 71.3 17 .3 10 .0 70.7 0m 730.3 9.8 9.

Arooagetenapatty ton 71.5 :7.1 77.6 12.6 i1.6 777 727.7 7 2.9 7.

jeo.n .a.e ORoner'I 26 4 38' 2 830 9 70 39. 23 -Total -epocy rltad om 34 . . 3. 3.7 I.,' 3.6 3.3 0.0 .cv-ngen-lnoPai-iy cosI5 15 78 46 46 46 nO 45 21 22 7

E. UTILIZA4TION OF TRHACTIoN S60LLI00 STOCK

o"eI loooink 253 280 757 265 751 235 223 21 :1 2 717Dlio... loo.ncek 533 45 477 470 4u2 419 415 404 399 397 797Electric 7o-mti-o km 672 657 648 560 481 478 o

79 .77 51il 513 77

utman boiomoeinss km ~~~~ ~~~~~~153 7o7 7 50 751 1 53 J"4 728 85 97 9Diesel cocoentinee in 2~~~~~~~ ~~48 31 377 377 712 509 70 773 159 257 157£ dettric locomotion. 40 .~~~~~~~60 443 n27 378 352 371 341 329 317 727 377

.aine-m Pe p.... etn ilino 3.i9 3.nO 3.52 3.52 7.1 3.oO 3.02 3.85 3.90 .1 P.....or kmp-rsa eo n pa.--m 64.7 r3.D 60.7 61.6 62.9 62.2 41.7 62.8 nO.3 53.4 Ne o-mP-e tre-0o ohr...ea. to-km 137 539 5538 561 593 597 599 590 902 602 to neU on: eP. .000... ofi kle toeadA 16.0 75.7 15.2 15.4 1. 256 15. 15.0 1. 14.

uromload ter ceigo carloded __ng..L. 13.06 3.9" 70.74 70.20 70.30 70.5 78.36 0.79 704 10.50 Tua uoen onSG. :eeg-e cent days 3.31 3.5 2.69 7.b 3.79 3.81 5.80 1.7.9 4.23 4.48 4.57

P. cIAFFF......e oube . 169100 7477730 173880 177000 1770000 :77200 775300 1750t7 175300 r-_oc _ne e omIop, tidd- 'A t1..3 -20.5 450.7 477.7 o90.3 5111.5 537.7 549.0 563-

oPlort ro ooiteapoye c 1.3 7.5.0 15.8 15.9 75.1 76.3 75.7 15.9 lS.r

,rooa -o o .900 ttijt Setion_ 77 and P_arto 0 c.oId n- be -I-ned ,tn 0P.n-prcaIeoin

roace acoy

_ 73 -

ROMANIA Table 9

APPRAISAL OF

A LAND TRANSPORT PROJECT

Traction and Aoln Stock: Age Statement(As on December 31, 1979) P

Total in AgeFleet 0-10 years 11-20 21-30 31-40 over 40 years

Locomotives

Steam /2Standard gauge 251Narrow gauge 39Broad gauge 19

Diesel (Standard gauge) 2091 1417 669 5" Other gauge 68

Electric 530 485 45Rail Buses 144

Coaches (all gauges)

Passenger I class2 axle 69 694 axle 683 506 31 45 101

Passenger I and II class4 axle 83 35 14 2 32

Passenger II class2 axle 430 1 4294 axle 3431 1931 730 527 61 182

Baggage cars2 axle 45 1 444 axle 359 171 48 27 113

Sleeper cars4 axle 104 59 45

Tourist cars4 axle 5 1 1 3

Buffet cars4 axle 30 30

Restaurant cars4 axle 54 50 2 2

InspectionSaloon cars

2 axle 139 1394 axle 85 3 82

Total for Coaches 5517of which

2 axle 683 2 6814 axle 4834 2782 868 528 141 515

Freight Cars (all gauges)

Covered cars2 axle 21951 4072 7127 4556 1129 50674 axle 13632 7421 6023 157 31

Open cars2 axle 22078 4305 7008 2539 1693 65334 axle 7504 4411 1595 1250 167 81

Gondola cars4 axle 38209 24884 13325

Tank cars2 axle 6724 742 148 23 211 56004 axle 6820 4855 1641 301 20 3

Cement cars2 axle 6330 4668 1660 2

Refrigerator cars2 axle 2493 146 2185 83 64 15

Cars for operational use2 axle 276 13 17 4 2424 axle 341 43 94 24 21 159

Total for freight cars 126358of which

2 axle 59852 13933 18141 7220 3101 174574 axle 66506 41614 22678 1732 208 274

/1 Revised age-grouping as at December 31,1980 was not requested.75 Age parciculars of steam locomotives not available: CFR holds 1672 steam locomotives

standard gauge of which 251 are in use; 190 for shunting.

Source; CFR.

May 1981

_ 74 -

ROMANIA Table 10

APPRAISAL OF

A LAND TRANSPORT PROJECT

Diesel and Electric Locomotive Acquisition During 1978-1980 and their Total Planned Procurement During 1981-85

Diesel Locomotives Electric Locomotives1978 1979 1980 1985 1978 1979 1980 1985

Items Actual Forecast Actual Forecast

L. Gross Trailing ton-km 117.48 117.40 115.00 101.00 42.41 51.50 56.89 82.10of which:

Passenger (billions) 20.65 21.65 22.70 20.00 7.71 8.90 9.59 14.37Freight (billions) 96.83 95.75 92.30 81.00 34.70 42.60 47.30 67.73

2. Average Gross Load per TrainPassenger (tons) 408 405 401 388 475 477 480 490Freight (tons) 1404 1396 1390 1390 1544 1547 1550 1570

3. Train kmsPassenger (millions) 50.61 53.46 56.61 51.55 16.23 18.66 19.98 29.33Freight (milliona) 68.97 68.59 66.40 59.73 22.47 27.54 30.52 43.14

4. Average km per Loco in service p.a.Passenger (millions) 145.27 144.91 143.81 143.81 186.52 187.25 187.98 193.45Freight (millions) 94.36 91.50 87.60 88.33 115.71 116.80 120.45 127.75

5 Average No. of Locos needed for servicePassenger (units) 349 369 394 358 87 100 107 152Freight (units) 731 750 756 677 195 236 254 338Shunting, multiple headed 6 other duties /1 (units) 572 591 709 810 118 121 130 240Total (units) 1652 1710 1859 1845 400 457 491 730

6. Coefficient for peak load allowance 2 91.0 91.0 91.0 91.0 91.0 91.0 91.0 91.07. No. of locos required at peak load (units) 1816 1879 2043 2028 440 502 540 8028. Availability 2 85.2 85.3 85.4 85.5 85.3 85.4 85.5 85.69. Locomotive fleet required (units) 2132 2203 2392 2372 516 588 632 937

10. Locomotives to be scrapped (units) - - - - - - -

11. Locomotives to be procured (units) 122 87 75 350 /3 45 70 80 400 /312. Net locomotive fleet (units) 1863 1950 2025 2375 400 470 550 95013. Surplus or deficit /2 (units) -269 -253 -367 +3 -116 -118 -82 +13

/I The number of locomotives for shunting, multiple headed and other duties was analyzed separately./2 Deficit of locomotives during 1978-1980 was made good by utilizing old steam locomotives kept in reserve for emergency use./3 Relates to 1981-85.

Source; CFR.

June 1981

ROMANIA Table 11

APPRAISAL OF

A LAND TRANSPORT PROJECT

Freight Car Acquisition During 1978-1980 and Total Procurement of Cars for 1981-85(in equivalent four axle cars)

------ Actual ---- - Forecast ----1978 1979 1980 1/ 1985

1. Traffic (million net tons) per annum 259.6 272.9 280.0 335.02. Average car load per loaded cars (tons) 41.8 42.3 42.4 42.73. Average number of cars loaded per day 17015 17675 18114 215154. Turn round of cars 4.23 4.48 4.48 4.485. Average cars needed for traffic 71973 79184 81150 963876. Availability 0.955 0.956 0.951 0.9557. Coefficient for car cleaning 2/ 0.968 0.974 0.973 0.9738. Coefficient for excess of Romanian cars on

foreign railways 0.961 0.959 0.962 0.9609. Coefficient for peak traffic 0.910 0.910 0.910 0.90010. Total cars required 89026 97445 100179 12005711. Car fleet on January 1st 87066 91143 95858 9960812. Cars to be scrapped 1093 1371 1800 8500 3/13. Cars to be procured 5170 6086 5550 31000 3/14. Car fleet on December 31st 91143 95859 99608 12210815. Average cars available during the year 89105 93501 97733 120057

16. Surplus or deficit of cars +79 -3944 -2446 -

1/ Actual figures for 1980 could not be released at time of post-appraisal mission.2/ Includes an allowance for coal-carrying cars which remain idle due to

collieries being closed at weekends.3/ Relates to 1981-85

Source: CFR.

May 1981

ROMANIA Table 12

APPRAISAL OF

A LAND TRANSPORT PROJECT

Comparison with Other European Railways Year 1977 1'

Unit of

Index Measurement Romania Yugoslavia U.K. Italy France Poland Greece W. Germany

Total line length km 11127 9967 17990 16178 34214 23911 2461 28564

Passenger-km million 23206 10459 29290 38361 51577 44312 1623 37348

Pass.-km per km of line thousand 2086 1049 1628 2371 1507 1853 659 1308

Pass.-km per train-km passengers 331 138 90 172 185 232 123 98

Net ton-km million 70035 22225 22724 17767 67561 135453 855 57015

Net ton-km per

km of line thousand 6294 2230 1263 1098 1975 5665 347 1996

Net ton-km per a%

train-km tons 748 432 202 249 2/ 288 569 205 300 2/

Staff thousand 175.3 137.9 241.8 225.0 268.8 360.8 13.3 365.7

Traffic units (net ton-

km + pass.-km)

per employee thousand 532.5 237.0 215.1 249.4 443.2 498.3 186.3 258.0

No. of staff per km

of line number 15.7 13.8 13.4 13.9 7.9 15.1 5.4 12.8

Wagon turnaround time days 3.9 - - 16.3 11.9 5.0 - 8.1

1/ Latest available year.

2/ Includes departmental traffic.

Source: UIC

May 1981

ROMANIA Table 13

APPRAISAL OF

A LAND TRANSPORT PROJECT

Railways Staff and Productivity

Traffic Units (TUs) /1 Number of TUs per Employee

Year Chargeable Operational Ratio (3:2) /1 Employees Chargeable Operational

1 2 3 4 5 6 (2 5) 7 (3+5)…billions -------- ---------------thousands--------------

1971 65.3 69.6 1.07 168.1 388.5 414.3

1972 68.2 73.5 1.08 174.7 390.4 420.5

1973 72.5 78.3 1.08 173.8 417.1 450.7

1974 77.5 84.0 1.08 175.9 440.6 477.7

1975 80.0 87.2 1.09 177.8 449.9 490.3

1976 84.0 90.7 1.08 177.2 474.0 511.5

1977 86.8 93.2 1.07 175.1 495.7 532.5

1978 86.3 96.5 1.11 175.6 491.5 549.81979 88.1 98.7 1.12 175.3 502.6 563.3

1980 88.2 98.7 1.12 176.4 500.0 559.51981 /2 93.5 103.0 1.10 175.8 531.9 586.1

1982 95.7 105.5 1.10 176.1 543.4 598.91983 98.0 107.6 1.10 176.4 555.6 609.9

1984 100.5 110.2 1.10 176.7 568.8 623.6

1985 103.3 113.0 1.09 177.0 583.6 638.6

/1 Traffic Units (TUs) are the sum of net metric ton-kms (nmtkm) and passenger-kms (pkm).Nmtkm chargeable are based on the tariff (shortest) distance between origin and

destination. Nmtkm operational may be greater because some traffic is routed circuitouslyto avoid saturated lines or to utilize better facilities, e.g., electrified and/or

double-tracked lines./2 5-year plan figures for 1981-85.

Source: CFR.

May 1981

ROMANIA Table 14

APPRAISAL OF

A LAND TRANSPORT PROJECT

Railway Investment Plan

Investment

Total Cost of Works and Investment During 1981-85 as t of

otnal Cost of Works Investment During 1981-85 Total Plan

Quantity Local Foreign Total Local Foreign Total Investment

-------------------- (Lei Million)--------------------

1. Collstruction of new lines 223.5 Km 4273.2 1612.8 5886.0 1360.5 513.3 1873.8 5.1

2. Dou,bling of lines 869.4 Km 3547.2 1345.5 4892.7 2871.5 1089.2 3960.7 10.8

3. Electrification including 1637.4 1781.0 3418.4 1501.5 1391.5 28Q3.0 7.9

(i) Route km 806.0 Km

(ii) No. of points

(iii) Automatic block 506.8 Km

4. Conversion of narrow gauge to standard gauige 34.0 Km 159.0 125.0 284.0 81 .4 66.3 150.7 0.4

5. Improvement of capacity for production units involving 1330.3 886.8 2217.1 689.1 485.5 1174.6 3.2

(i) DoubliOg 20.2 Km

(ii) Electfic traction 62.2 Km

(iii) Automatic block 35.2 Km_

6. Marsthal1iIlg yard (new) 1554.9 589.8 2144.7 1548.0 587.2 2135.2 5.8

7. Central traffic conrtrol 313.6 223.4 537.0 313.6 223.4 537.0 1.4

(i) pointS 3000

(ii) Automatic block 1500 Km

8. Marshalling yards 408.2 154.8 563.0 408.2 154.8 563.0 1.5

9. Bridges across Danube 1589.2 747.8 2337.0 1197.0 399.0 1596.0 4.3

10. Cunstructil'l of new and rehabilitation of old bridges and tunnels 363.7 121.3 485.0 363.7 121.3 485.0 1.3

11. Freight handling and container facilities and equipment 576.8 247.2 824.0 576.8 247.2 824.0 2.2

12. Improvement to depots 430.4 107.6 538.0 430.4 107.6 538.0 1.4

13. Data processing 101.0 101.0 202.0 101.0 101.0 202.0 0.5

14. Motive power and rolling stock 14931.6 4776.4 19708.0 14931.6 4776.4 19708.0 53.7

of which:(i) Electric locomotives 400 2318.7 1391.3 3710.0 2318.7 1391.3 3710.0 9.8

(ii) Diesel lOcOmotives 350 750.4 395.3 1145.7 750.4 395.3 1145.7 3.1

(iii) EMJ stock 26 325.0 195.0 520.0 325.0 195.0 520.0 1.4

(iv) Wagons 31000 8452.5 2047.5 10500.0 8452.5 2047.S 10500.0 28.6

(v) Coaches 1150 2737.0 663.0 3400.0 2737.0 663.0 3400.0 9.3

(vi) ot 1iers 348.0 84.3 432.3 348.0 84.3 432.3 1.2

15. l'otal Li 31216.5 12820.4 44036.9 26377.3 10263.7 36641.0 100.0

16. TOIAI, (2S$ million) 2081.1 854.7 2935.8 1758.5 684.2 2442.7

/I Excludes capital track overhaul charged to reveniue account.

Source: CFr

Ju)ne 1981

ROMANIA Table 15

APPRAISAL OF

A LAND TRANSPORT PROJECT

Track Overhaul - Priority Sections for 1981-84

1979 Traffic Rail TypeRail Year of Total Traffic Since Rail Year in to be Cost of Rail Life

Length Type Last Last Overhaul Life Overhaul Overhaul Overhaul Cost/km After Overhaul(km) (kg) Overhaul million gross tons to Commence (kg) Lei millions (million gross tons)

1. Golesti-Vilcele 30.0 40-49 1894 10.0 180-240 1982 49 89.10 3.06 360222.0

2. Ilia-Birzava 64.0 49 1966 21.7 240 1982 60 187.92 2.93 360 1211.8

3. Videle-caracal 11 105.0 49 1968 23.9 240 1981 65 283.14 2.78 360229.9

4. Brasov-Deda 228.0 49 1967 22.8 240 1981 60 676.64 3.00 360251.8

5. Tecuci-lasi 100.0 49 1963 13.7 240 1982 65 482.22 2.88 360193.0

6. Simeria-Htineduara 9.0 49 1971 /a 5.0 240 1981 49 45.00 3.04 240233.3

7. Si,lleria-pestis 10.0 49 1971 25.7 240 1982 60 29.88 3.15 360176.5

8. Alexenli-Tandarei 81.8 49 1966 16.7 240 1981 65 234.36 2.87 360228.5

Total - 8 Tracks 611.0 2026.26

/a (verhauled with uised rail.

Soorce; CFR

Juine 1981

Table 16

ROMANIA

APPRAISAL Op

A LAND TRANSPORT PROJECT

Financing Plan for Railways Five Year 1981 - 1985 Capital Investments

1981 1982 1983 1984 1985 Total Investments Important tnvestments Oth'er Investments

Lei million Lei us$ Lei US1 Lei US$Million Million % Million Million X Million Million

SourcesInternal (railwava) ResourcesNet Income (Benefit 2,149 2,310 2,461 2,641 2,835 12,396 826Depreciation 2,241 2,338 2,435 2,560 2,710 12,284 819Other sources I/ 90 88 100 117 125 520 35

Total Internal (Gross) 4,480 4,736 4,996 5,318 5,670 25,200 1,680

Use of Internal ResourcesDebt Service 35 70 122 154 289 670 45

Workiuig Capital 38 25 10 35 9 117 8Other uses 2/ 935 1,493 643 732 720 4,523 301 1

Sub-Total 1,008 1,588 775 921 1,018 5,310 354 1

Net Internial Resources 3,472 3,148 4,221 4,397 4,652 19,890 1,326 54.3 12,188 813 43.3 7,7026/ 513 90.4

External ResourcesState Allocations

(repayable)withouit interest 3,123 1,754 2,132 3,471 3,924 14,404 960 39.3 14,404 960 51.3 - -

with interest 61 45 59 66 736 967 5/ 65 2.6 147 10 0.5 820 55 9.6

Sub-Total 3,184 1,799 2,191 3,537 4,660 15,371 1,025 41.9 14,551 970 51.8 820 6/ 55 9.6

Proposed IBRO loan 3/ 90 570 480 150 90 1,380 92 3.8 1,380 92 4.9 - - -Possible other loans 4/ _ - _ - - - - - - - _ _

Total External Resources 3,274 2,369 2,671 3,687 4,750 16,751 1,117 45.7 15 ,931 1,062 56.7 820 55 9.6

TOTAI. INVESTMENTS FINANCED 6,746 5,517 6,892 8,084 9,402 36,641 /4 2,443 100.0 28,119 1,875 100.0 8,522 6/ 568 100.0

1/ Sales of scrap equipment materials, etc.2/ For details see Table 38.2 in Project File.3/ Assuming railway component of Bank Loan is $94 million (1410 million lei) of which $92 million

(1380 million lei) are disbursed in 1981-85 and balance of $2 million (30 million lei) in 1986-87.4/ Romanian authorities not yet decided on extent, if any, of co-financing.5/ State allocations with interest as forecast by CFR July 1980 (their Table 21).6/ Estimation and financing of other investments as forecast by CFR July 1980 (their Table 21).

Source: CFR and Bank mission

Junse 1981

Table 17

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Public Roads - 1977, 1978, 1980(in km)

1 9 7 7 1 9 7 8 1 9 8 01District & District 6 District &

National Communal National Communal National CommunalRoads Roads Total Roads Roads Total Roads Roads Total

Modernized 10,942 2,799 13,741 11,114 2,922 14,036 11,310 3,202 14,512

Lightly asphalted 2,862 13,026 15,888 2,797 14,353 17,150 2,833 16,908 19,741

Others (includinggravel) 872 42,860 43,732 765 41,410 42,175 533 38,575 39,108

14,67b 58,685 73,361 14,67b 58,685 73,361 14,676 58,685 73,361

1/ Preliminary estimate

Source: MTTc

November 1980

-82- Table 18

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Modernization of the Highway System 1960-85Actuals 1960-79; Forecasts 1980-85

Annual Increase Total Lengthof Modernized-I Road 5 Year Plan of Modernized I/Road

Year Network (km) Totals (km) Network (km)

1960 - 58831961-b5 2980 88631966-70 - 2228 110911971 359 114501972 526 119761973 344 123201974 379 126991975 401 13100

1971-75 - 20091976 370 134701977 271 137411978 295 140361979 333 143691980 143 14512

1976-80 - 14121981 120 146321982 130 147621983 190 149521984 227 151791985 305 15484

1981-85 - 972

1/ Excludes lightly asphalted roads,

Source: Ministry of Transportation.

November 1980

Tabie 19

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Highway Expenditures 1976-80

(In Lei m)

National Roads District 6 Communal Roads All Roads

New Paving of New Paving of New Paving of

Year Const. Reconst. Gravel Roads Maint. Total Const. Reconst. Gravel Roads Maint. Total Const. Reconst. Gravel Roads Maint. Total

1976 113.7 206.0 227.0 621.0 1,167.7 - 563.0 28.0 1,030.0 1,621.0 113.7 769.0 255.0 1,651.0 2,788.7

1977 107.8 312.6 188.5 837.0 1,445.9 - 719.0 33.0 1,181.0 1,933.0 107.8 1,031.6 221.5 2,018.0 3,378.9

1978 186.7 305.8 187.9 1,014.0 1,694.4 - 750.0 79.5 1,437.5 2,267.0 186.7 1,055.8 267.4 2,451.5 3,961.4

1979 104.4 604.5 123.1 943.4 1,775.4 - 832.8 55.2 1,557.0 2,445.0 104.4 1,437.8 178.3 2,500.4 4,220.4

1980 153.0 533.0 110.8 958.1 1,754.9 - 881.0 64.0 1,506.0 2,451.0 153.0 1,414.0 174.8 2,464.1 4,205.9

I

Source: MTTc

May 1981

84 -

ROMANIA Table 2u

APPRAISAL OF

A LAND TRANSPORT PROJECT

Average Daily Trafficon Selected National Roads - 1978

Number ofNational Roads Cars Buses Trucks

Bucuresti-Urziceni 3686 219 3157Urziceni-Hirsova 3026 673 3872Hirsova-Constanta 2471 119 3052

Bucaresti-Lehliu 1609 428 1396Lehliu-Calarasi 1320 191 1979Calarasi-Basarabi 988 112 1285Basarabi-Constanta 2623 725 3402

Lehliu-Fetesti 477 54 1175Cernavoda-Basarabi 1390 156 2052

Bucaresti-Pitesti 6525 1087 2987Pitesti-Rm.Vilcea 3128 711 2457Rm.Vilcea-Sibiu 2301 206 2173

Bucuresti-Ploiesti 5694 539 2482 1Ploiesti-Predeal 5467 477 2385Predeal-Brasov 3066 414 2979Pitesti-Craiova 2761 723 2713Craiova-Tr.Severin 1347 112 1385Tr.Severin-Caransebes 1986 255 1760Caransebes-Timisoara 2279 159 1772Bucuresti-Rosiori 3324 285 3596Rosiori-Craiova 1230 119 2193Urziceni-Rm.Sarat 2923 322 2560Ploiesti-Buzau 3311 481 3180

Bucuresti-Alexandria 3695 1272 5342Bucuresti-Giurgiu 3745 748 3380Bucuresti-Oltenita 1916 875 2196Urziceni-Buzau 3349 371 2961Buzau-Focsani 2382 113 2943Brasov-Harman 3354 5731 3020Bucuresti-Pitesti 3763 1079 3735(Old Road)

Sibiu-Sebes 3095 245 2052Sebes-Alba .ulia 3095 262 1923Alba Iulis-Turda 3251 452 4241Turda-Cluj 3281 301 1278Cluj-Huedin 4032 638 2325Cluj-Dej 2897 441 2388Tg.Mures-Reghin 1775 151 1614Tg.Jiu-Petrosani 2362 654 3225Ploiseti-Buzau 3311 481 3180Albesti-Urziceni 1520 86 1762Baia Mare-Baia Sprie 1556 564 1951Suceava-Botosani 1388 303 1792Barcau-Piatra Neamt 2485 1413 2552Braila-Galati 3651 804 3345Cimpulung-Suceava 2250 417 2899Tg.Frumos-Iasi 2518 476 1835Schitu Golesti-C. Arges 50 450

1/ Mission Estimate

Source: MTTC

November L980

Table 21

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Motor Vehicle Fleet1972 - 1978

0C

Year Cars Buses and Trucks Tractors TotalMinibuses

1972 215,305 22,355 211,246 89,013 537,9191973 240,888 25,150 230,089 95,361 591,4881974 282,326 28,299 237,793 101,687 650,1051975 334,006 30,425 262,530 109,196 736,1571976 308,891 33,799 286,232 109,851 738,7731977 449,509 35,955 310,562 107,400 903,4261978 524,455 37,986 335,959 118,017 1,016,417

Source: MTTC

November 1980

- 86 -

Table 22ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

A. Production of Motor Vehicles1960-1979

(No. of Vehicles)

1960 1965 l17O 1975 1976 1977 1978 1979

Motor Cars -/ 1,200 3,653 23,604 68,013 71,107 77,470 81,375 75,020Vans & Station Wagons& Micro Buses 1,725 3,165 6,188 11,394 12,078 15,005 12,880 16,555Autobuses 700 1,571 2,073 3,342 3,928 4,016 3,616 3,236Trolley Buseq -- 115 100 15 55 150 160 160 155Trucks, Tippers 2/ 8,383 14.306 35,018 35,965 33,875 34,716 33,877 33,880

Total 12,123 22,795 66,898 118,769 121,138 131,367 131,908 128,847

B. Import of Motor Vehicles

(No. of Vehicles)

1960 1965 1970 1975 1976 1977 1978 1979

Buses 151 127 396 460 659 579 542 300Motor Cars 1,186 11,880 11,451 3,898 4,069 6,514 13,199 13,658

Total 1,337 12,007 11,847 4,358 4,728 7,093 13,741 13.958

C. Export of Motor Vehicles

(No. of Vehicles)

Trucks & Tippers 555 2,546 9,452 7,118 6,036 6,346 8,079 9,769Passenger Cars - - 4 17,526 9,571 .13,120 11,880 19,365Landrovers - 328 5,405 4,085 6,456 6,182 4,755 6,777

Total 555 2,874 14,861 28,729 22,063 25,648 24,714 35,911

1/ Of which, 16,250; 55,511; 60,682; 68,055; and 72,846 private passenger motor vehicleswere produced in the years 1970,'1975, 1976, 1977 and 1978,respectively. Thebalance produced were landrovers/jeeps.

21 Of which, 14,830; 21,018; 24,728, 26,419 diesel trucks were produced inthe years 1975, 1976, 1977 and 1978. respectively.

Source: Anuarul Statistic, Romania 1979 and MTTc.

April 1981

- 87 -

ROMANIA Table 23

APPRAISAL OF

A LAND TRANSPORT PROJECT

Transport Sector Investments(in lei million)

ACTUAL

1972 1975 1976 1977 1978 1979 1980

Railways 4,816 6,201 5,334 5,883 6,094 6,536 7,261(54.0) (43.9) (36.8) (37.2) (33.2) (35.4) (n.a.)

Highways ( 1/ 1/ 1,138 1,361 1,510 1,704 1,742( (7.9) (8.6) (8.2) ( 9.2) (n.a.)

Road Motor Vehicles ( l/ 1/ 3,835 4,042 3,177 3,360 n.a. 2/( _____ (26.4) (25.6) (17.4) (18.2) _

Subtotal 2,363 5,123 4,973 5,403 4,687 5,064 n.a.(26.5) (36.2) (34.3) (34.2) (25.6) (27.4)

River 351 316 984 992 2,321 2,776 4,216(3.9) (2.2) (6.8) (6.3) (12.7) (15.0) (n.a.)

Maritime 938 1,907 2,752 3,033 4,402 3,317 2,461(10.6) (13.5) (19.0) (19.2) (24.0) (18.0) (n.a.)

Aviation 450 505 293 320 516 332 n.a. 2/(5.0) (3.6) (2.0) (2.0) (2.8) ( 1.8)

Pipelines 4 82 157 166 308 440 n.a. 2/- (0.6) (1.1) (1.1) (1.7) ( 2.4)

Total 8,922 14,134 14,493 15,797 18,328 18,465 n.a.(100.0) (100.0) (100.0) (100.0) (100.0) (100.0)

1/ Breakdown not available.2/ Data for vehicles, aviation and pipelines not available at time of

post-appraisal mission

Note: figures within brackets denote percentage.

Source: Romanian Government

May 1981

Tahla 24

tORASASL

A lASS T06A1SPO60 P&ECC!

Octil.of ree owhich !.il-y Pert o the Loan -ootd h Disbursed

oAnbppli-eti-

T-.n- Ci-roi- Ci-ioi- Cabn. ogf Teln.- /1 Cable.

Pojiote lo- - b-ek-o b-ek... 0.lt- Co- t.t T..oeit. C.bIn. Sob- F.3

.ip. Eqoip. I-or Spo-ie1 ToteI

fII.- Cr.. V 16006 1250A Iota tot Tee- Ten- C.ontor .. d T..kl end bIl. for Copper S&T Eqoip. todjo Contol for tpo for RoieeY/2 Ste-

te,le note i., l6 nVA 6000 1106 400 KVA 110 kV 35 kV f-r-r f--e Wi- SOrt 131. P te- C-o- C.erteto Cont-n tot Ifr end Ifor Lion. D . oobr Frtight o

Oorkt ~~~~~ ~~~~~ ~~~~Too. Too. So._ So. .o. N-5 N-. .. Mo. to. Tor t. Uja. i... ilog Slaaar Sr i-rr Elnft. T.lop. gieter. RR!!bla. _!Eidge Cars lftt

0~~~- J9.6 k 4150 798 17 so ~~~~~~~~~~~~~~~~~~2.34 0.51 0.63 05.1 0.20 0.26

1.2 b,btoj- Bonloe 35.0 b 3090 770 40 SI) 2.19 0.30 1.00 0.69 .3

Soblolel 0~~~~~ ~~6.6 4e 0040 l1 5Y 41.53i 1.01 1.43 1.00 0.03 0.16 .6

2.1 teC VjltnO-P~04 1 39.0 be 4200 287 120 250 2.6 05 .0 0.1 0.10 0.080

2. II o- -t-i 64. 632 16 04 20 3.79 0.83 5.60 0.03 0I.0 1.3

2 F ... n-aior 20.0 _2 1.00 389 _50 200 1.20 0.20 1.20 0.26 0.00.61

OobtoOal 2~~~~~~23.6 6. 13020 2442 234 770 2.35 .5.9 0.83 1.60 0.22 2.68 19.09

.. d 11 2IObO 4000 291 ~~~ ~ ~~~~~~~~~~~~~~900 11.B 0.60 2.20 2.60 0.45 2.90 27.21

Ml. FU.CTR IPI CATIONIiF02-Col0ee . 236.0 6. 10 lf 38 40 3 2t 34 650 g00 1.30 1.08 4.06 3.13 0.10

3.2 tinrie-Oted ~~~~~142.0 k: 7 12 tO 3 I f1 26 3116 50 0.26 0.16 Z.73 1.16 0.41

~~.3 peoteiPatneta 00.2 be 3 ~ ~ ~~~ ~~~~~~ ~ ~~ I I0 12 13 I 1 I6 0 0.489 0.97 1.26 2.28 0.27

OtbIotOl 6~~~~~~67.0 k. 20 35 66 09 21 06 22 1281 1100 2.51 3.71 8.03 6.50 1.40 22.20

[V. 06A066 0k1001

5.8 S.'"

4.1 ~nelSrltoO bli4gnat C ...... e 16610 IO..

V. tAILOOS P1611480 CAtS /01 330 0

TOALl. 1320 I T- V 21000 0000 291 20 35 06 09 21 54 12 1287 7030 II.8" 2.611 7.28 2.60 2.57 2.01 30.0 1.00 1.66 2.90 3.00 100 16.800

Y1. CO8TlOECtt ES 1.19 0.26 0.13 0.26 8.26 0.37 0.80 0.70 0.16 0.39 0.39 0 .09

Obyarr, at. 200 /3- 2.38 .0 2 1.46 0.01 0.00 0.74 1.61 1.40 8.28 0.08 6.1 3.22 14.41

P'4. L4 L5~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1.40 3.38 9.67 3.30 3.35 1.82 10.44 9.10 1.82 3.17 2.05 21.37 96.00

I1 lA-lod- 500 tttlboO yeolt-o oi1h -eq.i-d ltt-... 120 lood.Peobk- at netle end ettoe.12 obe....l NaOi. T.leph...loliea 92

lo_tnte. Ioo-oceli, tnl"h.t.bonele. . ad niec-i ..... ....... re...

/2 I.,1.4.. 330 talt Itniht ce... being alt ioiltal frojer- related qorntotr.

/4 All _nce .ate0

91

ON. ,e19 d

Table 251108881A

APPRAISAL OF

A UA83 TRANSPORT PLOJRCT

Q..ntitl- .nd R.itway Comp.nent of the Pro-ect Cotta an Ranin In-etIanet Pl-n Pri...

Runt 1981 1982 1983 1984 1985 POctTotalPtojc Total Inn a

I n in 8 Ukn Local Pnneign /I Total Local _o 7igo /1 Total LcnI T -I -otl / T,-a tl Loco Fotel I L_otl 1 _ .. is. Total Lo-l ore-gn /I Tonal Lol F.o /1t Tot1 I f

------------- ------- ------------------------ L.i iIIi --- -------------------Lei---ll-----------_________________________________________________________ =-----US ill-------___

I. NEW LINESM.7 vilte . 39.6 I- 58.1 21.9 80.0 58.i 21.9 80.0 128.1 48.3 176.4 145.2 54.8 200.0 215.9 81.5 297.4 005.4 228.4 833.8/2 40.36 15.23 55.59 13.1

1.2 labni-ln 0 beno 37.0 o 108.0 11.2 260.0 217 . 82.2 300.0 232.3 87.7 320.0 116.2 43.8 160.0 _ _ - 755.1 284.9 1040.0 50.34 18.99 69.33 16.3

TOTAL I 76.6 k6 246.9 93.1 340.0 275.9 104.1 380.0 360.4 136.0 496.4 261.4 98.6 360.0 215.9 81.5 297.4 1360.5 513.3 1873.8 90.70 34.22 124.92 29.4

11. IMB001 I1L OF LINESf2. iaVlco-Podu .lt 39.6 6, - - - 30.8 11.7 42.5 117.5 44.5 162.0 141.3 53.6 194.9 176.6 67.0 243.6 466.2 176.8 643.0 31.08 11.78 42.8A 10.1

2.2 IlI-A-od 64.0 k - - 134.0 50.8 184.8 123.2 46.8 170.0 145.0 55.0 200.0 35.7 13.5 49.2 437.9 166.1 604.0 29.19 11.07 40.26 9.5

2.3 F...e -T-cd...i 20.0 k. _ _- _ 97.9 37.1 1350 31 135 0 6.53 .48 9.01 2.1

rOTAL 11 123.6 k. - - - 164.8 62.5 227.3 338.6 128.4 467.0 286.3 108.6 394.9 212.3 80.5 292.8 1002.0 380.0 1382.0 66.80 25.33 92.13 21.7

111. ClECOiFCOIIA N3.1 oeI-cln;j-oimeiia . ...... .236.0 kt 62.2 57.8 120.0 77.7 72.3 150.0 129.5 120.5 250.0 119.1 110.9 230.0 - - - 388.5 361.5 750.0 25.90 24.10 50,00 11.8

3.2 1inOla-A0 142.0 k. - - - - - 67.3 62.7 130.0 77.7 72.3 150.0 77.7 72.3 150.0 222.7 207.3 430.0 14.85 13082 28.67 6.8

3.3 Farcr,-I.,,-ca 89.0 k6w - 54.4 50.6 105.0 59.6 55.4 115.0 114.0 106.0 220.0 7.60 7.07 14.67 3.4

TOTAL Ill 467.0 ke 62.2 57.8 120.0 77.7 72.3 150.0 196.8 183.2 380.0 351.2 233.8 485.0 137.3 127.7 265.0 725.2 674.8 1400.0 48.35 44.99 93.34 22.0

IV. 068)1BE k!I),oe 4/ t9,.0 2313.0 932.0 498.0 166.0 664.0 - - - - - - - - 1197.0 399.0 1596.0L3 79.00 26.60 106.40 25.1

V. 18114111 rAba 5/ 330 No. . - _ _ _ - 89.6 224 112.0 89.6 22.4 112.0 5.97 1.49 7.46 1.8

60AN62 070IA b/ i(108.1 383.9 1392.0 1016.4 404.9 1421.3 985.4 470.0 1455.4 798.9 441.0 1239.9 5b5.5 289.7 855.2 4374.3 1909.5 6363.8 291.62 132.63 424.25

/2 Porlnno o tasngo natiniatna include butll direct and ondiroct costt SPocbangn rtae * Let I5 - OS$l3 boo at cata IOn priun./2 f.oclo.lJog Inl 152.2 wkil i<n allotted doting onac 1980 lnl AO lt. 0 .1 i 986.0 million)./3 Ec,-de- L.i 141 nlli-un lloltd dooi.9 19801 (loal coal Lei 2337 7illon)./4 About 16810 Lon. ot pecil .teel iaceqoite.l Icc tI.e Sn.be bridga .nd i included in tIe liit of tood. eligible for

di-bu1e-edl-tru obte t,0k,.

'5 I 1121111 req,,irco..,,i o1 pOolect ilotyrd to 11,08 mtOl.. Situ Oct01 Ira,iuol 0mni rollic etu srcO la broil indluled in tIntonKu,i,il0cres1uaO n (Toble 51) oul. -A -he h nacur-- o..-d -ul in- .tOCb copoucl ot 1981-h5 In PIatneut II,. (Tabl 14).

!Ic knnn,,iancumo rOLtOdic 1110u0,r 0 cuoOIusgnCocO prunisiol ot CAh.l 5S.

L.'r ;(iI

ROMANIA Table 26

APPRAISAl. OF

A LANI) TRANSPORT PROJECT

World Bank Estimate of Project Cost 1/ - Railway Component

SuKges tedForeign Asonnxt of

Local Foreign 2/ Total local Foreign 2/ Total as I of Bank LoanIteum Lei Million USt million each item tlSS Millin

i. NEW LINES

1.1 Vilcele-Rm Vilcea 576.57 263.13 839.70 38.44 17.54 55.981.2 Iabeni-Berbesti 719.14 327.05 1046.19 47.94 21.81 69.7S

TOTAL 1 1295.71 590.18 1885.89 86.38 39.35 1?5.73 31.3 8.62

11. 1 NE DOUBLING

2.1 Rm Vilcea-Podu Olt 444.00 258.92 702.92 29.60 17.26 46.862.2 ilia-Arad 417.05 248.73 665.78 27.80 16.58 44.382.3 Faurei--Tadoderei 93.24 60.74 153.98 6.72 4.0S 10.27

TOTAI. tL 954.29 568.39 1522.68 63.62 37.8r 10.SI 37.3 27.71

iI1. Fl.ECTRI FICA'I'ION

3.1 Dej-Cluj-Simeria 370.00 647.53 1017.53 24.67 43.17 67.843.2 Ninitia-Arad 212.10 429.93 642.03 14.14 28.66 42.803.3 Faurei-Tanderei--fecesti 108.57 191.24 299.81 7.24 12.75 19.99

TOTAL 111 690.67 1268.70 1959.37 46.05 84.58 130.63 64.7 22.26

IV. DANUBE BRIDGCE 1137.15 755.16 1892.31 75.81 50.34 126.15 40.4 5.88

V. FREICHT CARS 89.60 182.65 272.25 5.97 12.18 18.15 67.1 18.15

TOI'AI. Of rIrES 1 rO V 4167.42 3364.86 7532.28 277.83 224.34 502.17 44.7 74.00

VI. CONTI NENCIES

6.1 Physical: 10% 4/ 407.78 318.24 726.02 27.18 21.22 4R.40 - 5.596.2 Price;

Local cOst: 22 anou.1l;Foreign cost; 9% for 1981;8.5% for 1982; 1.5% lotr 1983and later years 274.51 671.06 945.57 18.30 44.74 63.04 - 14.41

GRANI) TOTAL 4849.71 4354.16 9203.87 323.31 290.30 613.61 94.00

1/ Pri,es at mid-1981.2/ Foreign exchange est'.,sates i,,clude botih direct asod indirect costs (exchange rate. Iei 15 15l51) at international prices.3/ Initial reg.,irement of project related rolling stock (see Note 4 in Table 25).4/ Physical coitingencies nor provided for freight cars as the number of cars to he acqnired is firm.

S orce; CFR

logno 1981

- 91 -

Table 27ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Cost of Highway Component

Investment World Bank Estimate of Proiect Cost - Righway Component 2/ Share ofItem Plan Prices 1/ Local /3 Foreign Total Local Foreign Total Bank Loan

- - - - - - - - - Lei Million - - - - - - - - - - - - - - - - US$ Millio…n- - - - - - - -

A. Paving of Two-Lane Gravel Roads:

1. Schitu Golesti-Curtea de Arges 260 216 84 300 14.40 5.60 20.00 4.18

2. Craiova-Balcesti 74 61 34 95 4.07 2.27 6.34 1.69

3. Adjud-Birlad 125 102 57 159 6.80 3.80 10.60 2.84

B. Widening fromTwo to Four Lanes:

4. Brasov-Harman 34 26 18 44 1.73 1.20 2.93 0.90

C. Stage 1 (2 lanes)of Eventual 4-lane Roadz

5. Fetesti-Cernavoda 1,212 1,0 60 268 1,328 70.67 17.86 88.53 13.33

Subtotal 1,705 1,465 461 1,926 97.67 30.73 128.40 22.94

D. Contingencies:

(a) Physical (10%) -- 147 46 193 9.77 3.07 12.84 2.29(b) Price 4/ -- 73 96 169 4.88 6.39 11.27 4.77

Subtotal -- 220. 142 362 14.65 9.46 24.11 7.06

Total 1,705 1,685 603 2,288 112.32 40.19 152.51 30.00

1| Project cost as quoted in Nota de Comanda, and based on Romanian prices, includes 5% physicalcontingency, but no allowance for price escalation is permissible.

2/ Allows for depreciation based on international prices of foreign equipment used, and internationalprices of fuels and bitumen, of which Romania is a net importer. Locally-produced tradeables havenot been border priced here. Five percent physical contingency included in Investment Plan columnhas been netted out.

3/ Local components for highways consist essentially of labor and materials such as crushed stone whichare not traded internationally. Their price was taken as equal to the local component of costsbased on Romanian catalog prices.

4/ Based on a three-year construction period 1982 through 1984, local costs escalating at 2% per yearwould increase by 5%. Foreign costs are assumed to increase by 9Z in 1981; 8.5% in 1982; and 7.5%in 1983 and thereafter. Thus over the three-year period from 1982-1984, foreign costs wouldincrease by 20.8Z. Estimates are based on May, 1981 prices.

Source; DR and Mission Estimates.

May 1981

ROMANIA Table 28

APPRAISAL OF

A LAND TRANSPORT PROJECT

Traffic on Lines to Be Doubled and Electrified

Traffic/km '

Total Traffic (Gross ton-km Traffic/km per Track

Length of (Gross ton-km) per route-km) (Gross ton-km per track-km)

Line Route (km) 1980 1985 1980 1985 1980 1985 % Increase

-ililion Tons per route-km

Dej-Cluj-Simeria 236 7812 8594 33.1 36.4 16.6 18.2 + 9.6

(electrification)

Ilia-Arad 125 2920 4892 23.4 39.1 23.4 19.6 + 67.5

(doubling of Ilia-

Birzava - 64 kin)

Mintia-Arad 142 3317 5558 23.4 39.1 23.4 19.6 + 67.5

(electrification)/L

Faurei-Fetesti 89 2625 2941 29.5 33.0 29.5 16.5 + 12.0

(doubling of Faurei-Tanderei

20 km and electrificationof Faurei-Fetesti 89 km)

Rm Vilcea-Podu Olt 40 636 783 15.9 19.6 15.9 9.8 +23.0

(doubling 39.6 km)

Sou,rce: CFR

June 1981

- 93 -

Table 29ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

List of Goods

Eligible for Disbursement fromHighway Part of the Loan

Estimated CostItem No. (us$ x 1,000)

1. Excavators (0.5 cm) 9 9002. Bulldozers (180 hrp) 8 9203. Rollers (10-12 t) 26 1,0404. Motorgraders (180 hp) 10 1,0005. Concrete Batch Plant 2 4006. Mobile Crane (120 hp) 9 1,6207. Central Stabilizing Plant 1 408. Universal Concrete Vibrator 4 109. Loaders (180 hp) 11 1,10010. Dump Trucks (16.5 t) 90 4,95011. Concrete Paver 2 5012. Bitumen (81-100 pen) 27,000 ton 5,41013. Steel 44,000 ton 13,860

31,300

94 _

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Project Implementation ScheduleRailway Components Table 30

1981 , _ l , 1912 183 119 9 5 lstl2nd 3rd 4th lls13h2nd 3rd 2d3 4 th 2ndl3rdl4th

Coranda

Vilcele- Approval- Final Design 1/Rm Vilcea Land Acquisition I/

(14ev Line) Signature

Contract mobilizationConstruction // M /,'/ 1 / / '/,'1,'/ / ///1 M111(II/ 1It,

I f 1 i

Approval- Nota da Com. 1/ ± __| i…

Babeni- Approval- Final Design l/Perbesti Land Acquisition | I(Nowv Line) Contract neg's and

Sigr,atureContract mobilization |/I/III /1/ I/IConstruction / un,/I//,/I/I//II

IConttractmblztion ... 'I j.I I " ' 't" 'I " 't"T"T'"' t t"' 'Approval- Nota da Com. l/IIm Vlcea- |Approval- Fin. Design

Podul Olt Land Acquisition 1,I

(Line DOubling)Contract neg's and ( Signature I 'I/I

|Contract mobilization| j j ////// i i t i iConstruction | /WIM/lllf/slslsl!/s/l///lllll/l

Approval- Nota da Com. | ,Iia-Arad - Approval- Fin. Design ///,///I/// 'i1 i(Lin-e a Duln)Land AcquisitionI/II(Line Doubling) Contract Neg's. and

SignatureContract mobilization I j/b//j

Construction I M .1/1{/8/

Approval- Nota da Com. 777t1,/, j t r - -1Faurei- Approval- Fin. Design II/l

Land Acquisition I I/ LI/I'

(Lindae Duln)Contract nag's and

|Contract mobilization /|/8i i

tCoastruction I I I ! I I I i 1'X't/t'IItSISI/{/{///

iApproval- Nota da com.Ii I / I IIM4iatia-Arad Approval- Final Design ll'/ ,

(Electrifi- Land Acquisition ll// '/II* |

Contract mobilizationConstruction Ii/ |

Approval- Nota da Co. III j - j j

Approval- Fin. Design |/IClj-Simeria LadIcuiito

Cluj _ _ _ _ _ _ _and1

(Electrifi- Contract neg' andcation) Signature Contract mobilizationjConstruction I _ I _ I III

Approval- Nota da Com. I/I|/| t 1| 1 j t

Faurei- Approval- Fin. DesignI/II///

Ftesti lLand Acquisition MII I1teriesti Contract neg's and i

cation) Contract mobilization j I I/IConstruction 1 '

/Approval- Nota da C I/

Bandges Land Acquisition I/I

Contract neg's and

Contract mobilization ~1/construction

1/ Completed.

- 95 -

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Project Implementation Schedule Table 31Highway Components

191 19 2 l83 194lste2ndl 3rdt4t list2ndl3rdl4th lstt2ndl3rdl4th lstt2nd33rdl4thl

Contract mobilizationt nd3r14hlstind3rt4-h

Approval- Nota da Com. -

CornandaI

Approval- Final Design I/I .ScituGolesta - Land Acquisition 11/////!/// ICurtea de Arges Contract neg's and

Signature

Contract mobilization l l j " ////iConstruction I//I

Approval- Nota da Comn. 111Tl 111A- - --

Craiova - Approval- Final Design //////Balcesti Lana Acquisition //////I///I IContract neg's ann e,,,I

Signature I/Contract mobilization I I/i/fConstruction I I

Approval- Nota da Com.|/// ////(Poda |Approval- Fin. Design |//I//////

Adjud Pd Land Acquisition I///I I I/ITurcului)-Birlad ConLract neg's and 1

Signature |Contract mobilization |Construction I | | |I//./I/ ///.'I/'//////I'/A'/H

Approval- Nota da Com. |l/I1 - -.

C raov d |Land Acquisition I/// '///,Harman Contract neg's and ,,,,

SignatureContract mobilizationConstruction

Approval- Nota da Corn.m'iit~t

Fetesti - Approval- Fin. Design ICernavoda Land Acquisition II I

Contract neg's andSignatureContract mobilization

Construction~~~~~~~~~~~~*

- 96 -

-ROMANIA Table 32

APPRAISAL OF

A LAND TRANSPORT PROJECT

List of Goods Eligible for Disbursement from Railway Part of the Loan(in US$ Millions)

Item Quantity Amount

I. RAILS 21,060 tons 11.88

II. COPPER CONTACT WIRE FOR ELECTRIFICATION 1,287 tons 2.57

III. CABLES FOR TELECOMMUNICATIONSAND SIGNALLING FOR ELECTRIFICATION 1,150 km L1 3.71

IV. SPECIAL STEEL FOR DANUBE BRIDGE 16,810 tons 5.88

V. SUBSTATION EQUIPMENT FOR ELECTRIFICATION 357 pieces 8.03

VI. POINTS AND CROSSINGS 291 No. 7.28

VII. TRACK FITTINGS 4,000 tons 2.60

VIII. CABLES FOR TELECOMMUNICATIONS ANDSIGNALLING ON NEW LINES AND DOUBLING 900 km 2.90

IX. EQUIPMENT FOR REMOTE CONTROL ONELECTRIFICATION 319 pieces 1.40

X. EQUIPMENT FOR TELEPHONE AND RADIOCOMMUNICATION 2/ 7.00

XI. HIGH TENSILE STEEL FOR REINFORCEMENTFOR CONCRETE SLEEPERS 4,000 tons 2.60

XII. RAILWAY FREIGHT CARS - 4 AXLE 330 No. 18.15

SUBTOTAL I TO XII 74.00

XIII. CONTINGENCIES /3Physical 5.59Price 14.41

GRAND TOTAL 94.00

/1 For 467 route-km of double line railway electrification./2 Item includes a variety of equipment such as 12 channel radio telephone

sets, automatic telephone exchanges, telecommunication control panels,telephone line installations, loudspeaker sets in railway yards andmiscellanous accessories. (Note 1 on Table 25)

/3 Contingencies: Physical: at 10%. except for freight carsPrice; Estimates based as in mid-1981Escalated 9% for 1981; 8.5% for 1982; 7.5% for 1983 and later years.

Source; CFR and mission estimates

June 1981

- 97 -

ROMANIA Table 33

APPRAISAL OF

A LAND TRANSPORT PROJECT

Estimated Schedule of Disbursements /1(US$ Million)

TechnicalRailways Highways Assistance Total

IBRD Fiscal Quar- Cumu- Quar- Cumu- Quar- Cumu- Quar- Cumu-Year and Quarter terly lative terly lative terly lative terly lative

1982I September 1981 - - - - - - - -II December 1981 6.0 6.0 - - 0.1 0.1 ',.1 6.1III March 1982 8.0 14.0 3.3 3.3 0.1 0.2 11.4 17.5IV June 1982 10.0 24.0 0.6 3.9 0.1 0.3 10.7 28.2

1983I September 1982 10.0 34.0 1.2 5.1 0.1 0.4 11.3 39.5II December 1982 10.0 44.0 1.8 6.9 0.1 0.5 11.9 51.4III March 1983 10.0 54.0 2.4 9.3 0.1 0.6 12.5 63.9IV June 1983 8.0 62.0 3.3 12.6 0.1 0.7 11.4 75.3

1984I September 1983 8.0 70.0 3.6 16.2 0.1 0.8 11.7 87.0

II December 1983 6.0 76.0 3.3 19.5 0.1 0.° 9.4 96.4III March 1984 4.0 80.0 3.6 23.1 0.1 1.0 7.7 104.1IV June 1984 2.0 82.0 3.3 26.4 - 1.0 5.3 109.4

1985I September 1984 2.0 84.0 2.4 28.8 - 1.0 4.4 113.8

II December 1984 2.0 86.0 1.2 30.0 - 1.0 3.2 117.0III March 1985 2.0 88.0 - 30.0 - 1.0 2.0 119,0IV June 1985 2.0 90.0 - 30.0 - 1.0 2.0 121.0

1986I September 1985 1.0 91.0 - 30.0 - 1.0 1.0 122.0II December 1985 1.0 92.0 - 30.0 - 1.0 1.0 123.0

III March 1986 0.5 92.5 - 30.0 - 1.0 0.5 123.5IV June 1986 0.5 93.0 - 30.0 - 1.0 0.5 124.0

1987I September 1986 0.4 93.4 - 30.0 - 1.0 0.4 124.4II December 1986 0.4 93.8 - 30.0 - 1.0 0.4 124.8

III March 1987 0.2 94.0 - 30.0 - 1.0 0.2 125.0IV June 1987 - 94.0 - 30.0 - 1.0 - 125.0

/1 Loan effective date not later than October 31, 1981.

Source: Mission estimates

May 1981

-98-

ROMANIA Tsble 34

APPRAISAL OF

A LAND TRANSPORT PROJECT

International and Domestic Price of Basic Elements ConsideredFor Economic Analysis

International/ Domeatic/2Serial Price Price

No. Items Unit (in Lai) (in Lei)

I. Equipment and Material

1 Copper ton 54,000 98,0002 Cement ton 900 2703 Cable (resistance) ton 22,770 22,7704 Prestressed reinforcing

Steel ton 12,510 12,500S Metallic products ton 19,800 15,5006 Insulators each 216 2207 Different copper

cables middle section(10 sq. mm) km 54,000 22,480

8 Different aluminuscables, middle section(16 sq. me) km 45,000 8,910

9 Signalling and tele-comunication cables(CS'PBI, 48 x 1 _ orCCHPBI 24 x 2.5 sq.and TIHA2YA8Y19 x 4 x 1.2 ) km 48,060 50,650

10 60 kg rails ton 7,740 3,72011 49 kg rails ton 7,740 3,72012 Track fastenings ton 14,400 4,00013 Reinforced concrete

sleepers each 270 24914 Ballast ton 216 21615 Switches each 504,000 120,00016 Diesel electric loco

2100 HP and electricloco 5100 KW each 18,000,000 7,000,000

17 Freight car (2 axles) each 450,000 150,00018 Dumper lorry - 16 ton

net load each 630,000 486,000

II. Annual Maintenance Costs

1 Electric loco each 468,000 200,0002 Diesel electric loco each 1,010,000 475,0003 Wagon (2 axles) each 56,300 26,5004 Railway track (single) km 73,000 45,0005 Fixed installation for

electrification km 31,600 30,500

III. Operational Variable Costs

1 Variable operatingcost of dieselelectric loco 1,000 gross ton-km 62.18 31.28

2 Variable operatingcost of electricloco 1,000 gross ton-km 41.78 25.46

IV. Fuel and Energy Costs

1 Diesel fuel kg 6.0 1.72 Electric power Kwh 0.5 0.14

V. Miscellaneous

I Operating staff expense Per loco 480,000 480,0002 Motor transport

operational expense 1,000 net ton-km 1,172 850

/1 International price in 1980 converted to Lai at the then prevailingexchange rate US$1 - 18 Lei

/2 Domestic prices are 1980 "catalog" prices. A revision of catalogprices now in progress indicates that some increases in civil workscosts are being offset by reductions in materials and equipment prices.

Source: CFR Feasibility Studies

May 1981

_ 99 _

ROMANIA Table 35

APPRAISAL OP

A LAND TRANSPORT PROJECT

Economic Returns (ERB) and First Year Returns (FYRs)

Costs /s Percentage of SensitivityRomanian intern7t2onwl Ratio of Inter- Totel Project Analysis Nost'Catalog" Price national Price Inveatment in most Lowr Id igher /e Probable

Distance Price to lonitn International Probable Estimat Estimate FRProiect Component in kIm in .illion Ici) "Catalog' Price Price ERz /c _ X X

RAILWAYS

I. New Line1.1 Eabani-Berbesti 37 1040.0 1216.4 1.17 10.2 13 10 16 11

(14)II. Doublin!,of Lines

2.1 Ili. - Ar-d 64 604.0 790.1 1.31 6.6 40 29 51 30

(26)2.2 Feurei - Taaderei 20 135.0 194.9 1.44 1.6 70 55 85 50

(40)III. New Lin, Doubling of Lin

3.1 Vilcele - R Vilcea & 40) 1629.0 1980.3 1.22 16.5 22 17 27 20Ra. Vilcea - Podul Olt 40) (17)

IV. Electrification4.1 Dej-Cluj - Simeria 236 750.0 1133.0 1.51 9.5 21 16 26 IS

(10)4.2 Kintia - Ared 142 430.0 752.3 1.75 6.3 20 16 24 17

(12)4.3 laurei - Tandermi 89 220.0 334.9 1.52 2.8 24 20 28 20

Subtotal 668 4808.0 6401.9 1.33 53.5 24 / 18 LI 29 LI 20 LI

HIGHWAYS

V. Paving of Two Lane Gravel Roads5.1 Schitu Golesti-Curtea d-

Arges 41 260.0 300.0 1.36 2.5 13 10 16 105.2 Crainva - Baleasti 23 L 74.0 95.0 1.28 0.8 19 15 23 165.3 Podul Turcului - Birlad 29 125.0 159.0 1.27 1.3 17 13 21 14

VI. Widening from Two-to-Four Lanes6.1 Brasov - HarNan 6 33.8 43.5 1.29 0.4 25 22 28 20

VII. First Two Lanes of Eventual FourLanes7.1 Fetesti - Cernavoda 17 1212.0 /f 1576.2 /f 1.31 13.2 15 12 18 11

Subtotal 116 1704.8 2173.7 1.27 18.2 15 al 12 LI 18 IL 11 La

COMBINED RAIL/ROAD

VIII. Rail/lRoad Bridge8.1 Danube bridges 2337.0 3388.0 1.45 28.3 14 11 17 10

Total 8849.8 11963.6 1.35 100.0 20 La 15 La 24 fs 1.

6/L

la Includes 1980 expenditures.lb Total length is 40 km. 23 km of which will be nodernixed as part of this Project.ic Figures within parenthesis indicate most probable financial returns for railvays at Romanian Catalog price. Since roads are not revenue earning

agencies similar financial returns have not bean calculated./d Assus 152 increase in construction costs combined with 152 decrease in benefits./e Assumes 152 decrease in construction costs combined with 152 increase in benefits.7? Includes coats of road bridges and improvements from (a) Bucharest to Fetesti and (b) Cernavoda to Constanta.

Ze weighted average.

Note: Domestic and international prices shown against the sub-projects differ frqm those shown in Tables 25-27 because project costs in thesetables do not include investments made in 1980 and complementary investments in non-project items and have been updated taking exchange rate as

US$1 L i 15.

Source; CPR Feasibility Studies and Mission Estimates.

June 1981

- 100 -

ROKANIA Tshbe IA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Romenian Railways (CYP) Incow Stateents 1974 to 1985Actuals 1974-80; Plan 1981-85

Actual Plan /11974 1975 1976 1977 1978 1979 1980 1481 1982 IQ83 t984 1t9'

BASIC ACTIVITY Lai 11illion

INCOME1. Passenagers 3044 3067 3186 3264 3694 3893 4070 4134 4170 4211 4257 '3082. Freight 9046 9385 9933 10261 10732 11039 11069 11949 12252 12498 12i908 1137'3. Total 12090t 14525 t I42 1432 T2 MM 15139 683 16422 =1704 =7AS 17457

EXPENDITURES4. dage and Salaries 2878 3080 3465 3509 4095 4187 4249 4517 4542 4557 4 ; 8 4 4604S. Taxes on Wages and Salaries 475 508 572 579 676 691 711 746 749 751 756 7606. Social Security Contributions 503 538 606 613 716 731 744 789 794 796 801 AR0'7. Sub-total Personnel Costs /2 3856 4126 4643 4701 5487 5609 5704 6052 6085 610$ 6141 114I 98. Fuel and Electricity 1124 1087 1336 1053 1053 1041 1025 1351 1351 1333 1314 13029. Other aterials 748 789 882 892 875 891 798 883 883 883 883 883

10. Other Expenses 340 344 347 350 327 340 366 357 357 357 357 3S711. Sub-total carried on Regional A/Cs 6068 6346 7208 6996 7742 7881 7893 8043 8676 8678 8665 871012. Periodic Repairs on R8 A/C Traetion

and Rolling Stock 1586 /3 1436 /3 1809 1899 1973 2035 2128 2291 2332 2351 2372 2410313. Sub-total wrking expenses 7654 7782 9017 8d895 9715 9916 10021 10934 11008 11020 11072 1111314. Capital Overhaul of Track /4 950 900 956 970 959 996 1092 1163 1174 1197 1209 122"15. Sub-total Period Repairs 2356 2336 2765 2869 2932 3031 3220 - 3454 06 3548 4i86 162316. Depreciation 2175 2341 2524 1636 /5 1754 1866 1981 2117 2211 2304 2426 2S7317. Total Expenditures 10279 T23 T2497 11501 - 12428 12778 1304 T14214 14393 1 4530 147307 TE418. Net Operating Income (Benefit) 1311 1429 622 2024 1998 2154 2045 1869 2029 2179 2358 2S51

AUXILIARY ACTIVITIES19. Income 860 961 757 759 777 881 857 751 779 780 781 78220. Expenditure 598 683 472 475 481 525 535 471 498 498 498 40821. Net Auxiliary Income (Benefit) 262 278 28S 296 356 322 280 it ITY l 84

TOTAL ACTIVITIES22. Income 12950 13413 13876 14284 15203 15813 15996 16834 17201 17489 17846 1821Q23. Expenditure 11377 11706 12969 11976 12909 13303 13629 14685 14891 15028 15205 1540424. Total Net Income (Benefit) 1573 1707 907 2308 2294 2510 2367 2149 2310 2461 2641 2835

INTEREST CHARGES25. Domestic Loans no nO 15 - - 4 5 2 3 4 5 2126. Proposed Bank Loan /6 4 - - - - _ - 3 3 119 12127 Sub-total Interest Charges n n 15 - - 4 5 5 46 94 124 14128. Net Income sfter Interest Charges 1573 1707 892 2308 2294 2506 2362 2144 2264 2387 2517 76a4

RATIOSWorking Ratio (Line 13 - Line 3) 63 62 69 66 67 66 66 68 67 66 65 44Operating Ratio (Lines 17-14 - Line 3) 81 81 88 78 80 79 79 81 80 80 79 7RReturn on net fixed assets in use

(Lines 24 * 14 - Line 26 Table 39) 6.1 5.7 3.8 6.2 5.7 5.8 5.4 4.8 4.9 4.9 4.8 4.7

Personnel costs as 7 of totel costs(Line 7 - Lines 17-14) 39 41 40 44 48 48 47 46 46 46 46 45

Depreciation as 7 of Revenue(Line 16 - Line 3) 18 19 19 12 /4 12 12 13 13 13 14 14 1I

/1 Revisions of the Five-Year Plan forecasts, resulting from 1981 price changes, could not be given in detail by CFR until after June 198t when theirinpact could be better assessed. The Plan forecasts shown are therefore based on those originally prepared by CFR, adjusted as follows:

(a) passenger income is increased snd freight income reduced by 200 million lei (UWSW3 million) each -fear to reflect 1980 results. The reduced *nnualfreight revenues are then enhanced by the 5.72 freight rate increase effective January 1, 1981.

(b) expenditure each year is increased in total to metch the extra revenues frm the freight rate increase and expenditure for esch subhead iscalculated as follows.

(i) fuel and electricity. original forecasts for each year adjusted by ratio of 1980 actual to 1980 forecast and then enhanced hy 302 priceincreases effective January 1981.

(ii) other materials; as in (i) but price increase of 10%.(iii) other expenses: as in (i) but no price increase.(iv) periodic repairs and capital overhaul as in (i) but price increase of 52.(v) depreciation. original forecasts retained as investmnt costs are substantially unchanged.(vi) personnel costs increased by residue of total expenditure incresse after amounts applied to (i)-(iv).

Personnel costs thus increased appear to meet only about half of the second tranche (152 effective December 1, Iq0) of the uaoe increases authorizedunder the 1976-80 Plan, the balance being sought frov further improved productivity and other economies. Further price chbnges which nav c asothoricedduring-the 1981-85 Plan would have to be similarly a*comodsted.

/2 Taxes are 16.5X of wages and salaries; Social Security contributions are 152 of combined wages and taxes./3 Estiated figures./4 Capital overhaul of track, normally capitali.ed, is in Roenia charged to Operations./5 Asset lives were increased in 1977.(6 Asuming Bank loan of $94 million for railway component of project, See Table 33 for disbursements and Table 19.3 (in Project Fil.I for deit -- rvic-

calculations.

Source: Ronanian Railways as adjusted by Bank mission (see lote 1)

IMay 1981

Table 37

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Allocation of Expenses between Passengers and Freight 1977-791!

1977 1978 1979Passenger Freihbt Total Passenger Freight Total Passenger Freight Total

Type of Expenses Lei zmillion

Financial Heads1. Staff remuneration 908 2,600 3,508 1,045 3,052 4,097 1,031 3,146 4,1772. Tax on remuneration 150 430 580 172 503 675 173 528 7013. Contribution to Social Services 159 454 613 182 533 715 180 551 7314. Fuel 245 605 850 230 598 828 209 581 7905. Electricity 54 149 203 62 163 225 67 184 2516. Materiala 253 639 892 246 .629 875 220 671 8917. Depreciation 382 1,254 1,636 393 1,361 1,754 402 1,464 1,8668. Capital Overhaul (track) 214 1,126 1,340 208 1,211 1,419 224 1,254 1,4789. Capital Overhaul (rolling stock) 593 936 1,529 621 892 1,513 627 926 1,55310. Other Expenses (including interest) 96 254 350 87 240 327 85 255 340

Cost Heads11. Central activities, research, etc. 22 60 82 23 65 88 23 68 9112. Regional Management 90 253 343 83 240 323 87 263 35013. Operating & Commercial Staff 465 1,450 1,915 535 1,663 2,198 521 1,693 2,21414. Traction - Running Expenses 686 1,735 2,420 730 1,906 2,636 704 1,967 2,67115. Traction - Repair 6 Depreciation 301 676 977 301 689 990 311 751 1,06216. Rolling Stock - Running Expenses 228 390 618 240 460 700 235 476 71117. Rolling Stock - Relair & Depreciation 585 1,140 1.725 626 1,187 1,813 608 1,269 1,87718. Elec., Signalling & Telecommunications 187 386 574 217 447 664 235 546 78119. Track & Building Meintenance 268 1,231 1,499 277 1,309 1,586 261 1,273 1,53420. Capital Overhaul (Track) 214 1,126 1,340 208 1,211 1,419 224 1,254 1,47821. Miscellaneous 8 - 8 9 - 9 9 - 9

22. TOTAL 3,054 8,447 11,501 3,246 9,182 12,428 3,218 9,560 12,778

23. Million Unit-km (operating) 23,206 70,035 93,241 22,811 73,738 96,549 22,724 76,031 98,75524. Lei per unit-km 0.132 0.121 0.123 0.142 0.125 0.128 0.142 0.126 0.12925. US cents per unit-mile 1.17 1.07 1.09 1.26 1.11 1.14 1.26 1.12 1.15

26. Revenues 3,264 10,261 13,525 3,694 10,732 14,426 3,893 11,039 14,93227. Surplus on operations 210 1,814 2,024 448 1,550 1,998 475 1,479 2,15428. Revenue-Lei per unit-km 0.141 0.147 0.146 0.162 0.146 0.149 0.171 0.145 0.151

LI The analysis for 1980 had not been completed at the time of the post-appraisal mission.

Source: Romanian Railways

May 1981

- 102 -

ROMANIA Table 38

APPRAISAL OF

A LAND TRANSPORT PROJECT

Romanian Railways Cash Flow Stateuents 1976-1985

(Actual. 1976-79; Forecast 1980; Plan 1981-85)

5-year 5-vearPlan Plan

Actual 1976-80 Plan 1°81--51976 1977 1978 1979 1980 Total 1981 1982 1983 1984 1q95 Total

Lai million

SOURCES OF FUNDSCash available from ril"ayy activities1. Total Net Income (Benefit) /1 907 2308 2294 2510 2367 10386 2149 2310 2461 2641 2835 173q62. Depreciation (basic activityT /2 ) 2301 1739 1860 1985 ( 1981 ) 9987 ( 2117 2211 2304 2426 i571 111313. Depreciation (other assets) /2 ) ( 121 ) ( 124 127 131 134 137 6534. Other Sources (scrap sales, etc.) /3 84 290 25 ( 92) 145 452 90 88 100 117 17 5'05. Subtotal internal funds 3292 4337 4179 4403 4614 20825 4480 4736 4996 5318 s670 220n

State Allocation./Credits

6. Non-repayable 2323 2525 - - - 4848 - - - - - -7. Repayable ithouc interest /4 - - 3411 2847 2420 8678 3121 1754 2132 3471 3074 1"4048. Repayable vith interest 144 174 64 25 165 572 61 65 59 66 736 qA79. Subtotal state allocations/credits 2467 2699 3475 2872 2585 14098 3184 1799 2191 3537 4660 15371

External Loans10. Proposed 1UBD Loan /5 - - - - - - 90 570 480 150 90 138011. Other Loans _- - - - -12. Subtotal External Loans - - - -_90 _ I -z50 150 9 0 TRO13. Total Resourcee Available 5759c 7036 7654 7275 7199 34923 7754 7105 7667 9005 10420 41151

APPLICATIONS OF FUNDSFixed Assets14. Additions to Fixed Assets in Use 4574 5943 4852 5335 5964 26668 6419 5192 6649 8062 9815 36I3'15. Increase (Decrease) in Work-in-Progress 704 125 1273 1179 439 3720 327 325 243 22 ( 413) 50416. Subtotal capital investments 5278 6068 6125 6514 6403 30388 6746 5517 6892 8084 9402 36641 '6

Debt Service17. nterest Payents /7 IS - - 4 5 24 5 46 94 124 141 41018. Repayment of Principal /8 87 133 163 78 100 561 30 24 28 30 14R 267019. Subtotal Debt Service 102 1.33 163 782 105 585 35 70 122 154 289 670

Working Capital

20. Net Increase (Decrease) 21 (19) 26 (3) (9) 16 38 25 10 35 9 117

Benefit fiscribution21. Net Income (benefit) used for

non-capital purposes /9 358 854 1340 682 700 3934 935 1493 643 732 770 452322. Total Resources Applied 5759 7036 7654 7275 7199 34923 7754 7105 7667 9005 10420 41°SI

FINANCING OF INVESTMENT FROM RAILWAYSRESOURCES23 Capital Investment (line 16) 5278 6068 6125 6514 6403 30388 6746 5517 6892 8084 9402 36A4124 Lens External Resources (lines 9 * 12) 2467 2699 3475 2872 2585 14098 3274 2369 2671 3687 4730 1679125. Railways Resources (net) /10 2811 3369 2650 3642 3818 16290 3472 3148 4221 4397 467.7 1599526. 7 of Cap. nv. financed from

internal resources 53.3 55.5 43.3 55.9 59.6 53.6 51.5 57.1 61.2 54.4 u9.7 s

/I TotaL Benefit for basic and auxiliary activities (Table 36) ( See also Note 9).)2 From 1980 depreciation is shown separately for basic and auniliary activities. Analysis of depreciation charges and reconciliation with Balance Sheet

figures is shown in Schedule 38.1 in the Project File.,/3 AmOunts for "Other Sources" incluod amounts credited by CFR in their Table 22 dated July 1980.,4 CFR's July 1980 forecast of 12472 million lei for 1981-85 is increased to 14404 million lei by reduction in IBR0 loan Amounts (1320 million lei--see

Note 5), inclusion of full loan servicing charges (523 i.e. an increase from 147 to 670 sillion lei), increase in 1981-85 investments (72 million lei)and 17 million lei shortfall in vorking capital for 1980 restored in 1981.

/5 CFR's estimate of 6150 million (2700 million lei at 18 to S) of the Bank loan for the railway component is reduced, to 294 million (3410 million lei at15 lei to $) of which $2 million (30 million lei) wuld not be disbursed .nril after December 31. 1985 - net reduction 1320 Ici.

6 Latest (May 1981) 1981-85 5-year Plan forecast is 36641 million lei.73 CFRna interest forecasts amended to include amounts for State Allocations repayable at interest and for IURD loan component of S94 million./S Includes first repayments on IBRD loan in 1985 (119 million lei per annum).'9 Distribution of Benefit is shown in Schedule 38.2 in Project File./10 Net resources also calculable by deducting total of lines 19-21 fro. line 5.

Source: CFR and Bank Mission

Nay 1981

- 103 - Table 39

ROMANIA

APPRAISAL OF

A LAND TRANSPORT PROJECT

Romnian Railways Balance Sheets as ac December 31Actuals 1976-80; Plan 1981-5

Actual Plan1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

Lei million

ASSETS

Fixed Assets1. Fixes Assets in use /L 92154 98280 103295 108404 114368 120179 124702 130615 137867 1467922. Less Depreciation /2 41616 43147 44789 46294 48005 49749 51537 53332 55194 571263. getFixed Assets in use 5381 55i3 58506 62110 6 3 70430 7T67 77283 82673 M4. Work-in-Progreas 2294 2419 3692 4871 5310 5637 5962 6205 6227 58145. Subtotal Fixed Assets 52832 57552 62198 66981 71673 76067 79127 83488 88900 95480

Net Current Assets

Current Assets6. Inventories 1277 1248 1190 1238 1316 1320 1360 1400 1450 15007. Cash and Bank Balances 517 587 924 851 812 640 660 680 700 7008. Debtors /3 195 113 183 125 129 341 371 391 421 4519. Current Accounts 106 215 217 186 204 230 235 240 245 25010. Subtocal Current Assets 2095 2163 2514 2400 2461 2531 2626 2711 2816 2901Less Current Liabilities11. Creditors 791 763 995 1066 1223 1080 1110 1140 1170 120012. Current Accounts 84 179 150 160 165 170 175 18013. Other items 232 252 374 342 257 270 305 345 380 42114. Subtotal Current Liabilities 1107 1l94 1519 1408 1480 1510 1580 1655 1725 1801

15. Subtotal Net Current Assets 988 969 995 992 983 1021 1046 1056 1091 1100

16. TOTAL ASSETS 53820 58521 63193 67973 72656 77088 80173 84544 89991 96580

LIABILITIES

Long Term Debt17. Domestic Loans/Credits /4 318 578 481 163 228 206 232 268 309 102018. Proposed IBRD Loan /5 - - - - - 90 660 1140 1290 1262

19. Other foreign loans - - - - - - - - - -20. Subtotal Long Term Debt 318 578 481 163 228 296 892 1408 1599 2282

21. REPAYABLE STATE ALLOCATIONS /6 - - 3411 6280 8383 11506 13260 15392 18863 2278722. Subtotal Debt and Repayable

Allocations 318 578 3892 6443 8611 118Q2 14152 16800 20462 2506923. EQUITY (including non-repayable

State Allocations prior to 1978) /7 51213 55831 55920 56787 58950 59927 61258 63849 66278 6937924. NTERIM finance for Work-in

Progress /8 2289 2112 3381 4743 5095 5359 4763 3895 3251 2132Z5. TOTAL LIABILITIES 53820 58521 63193 67973 72656 77088 80173 84544 899a1 96580

26. AVERAGE NET FIXED ASSETS IN USE 49193 52836 56820 60308 64237 68397 71798 75224 79978 86176RATIOS: Debt/Equity 0.6/99.4 1.0/99.0 6.5/93.5 10/90 13/87 16/8!. 19/81 21/79 24/76 27/73

Current Assets/CurrentLiabilities 1.9 1.8 1.7 1.7 1.7 1.7 1.7 1.6 1.6 1.6

Current Assets less Inventories/Current Liabilities 0.7 0.8 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.8

/I See Schedule 39.1 in Project Files for reconciliation with annual investments.'2 See Schedule 38.1 for reconciliation with annual depreciation charges./3 Including I million lei per annum for "external participation."/4 Including loans for work in progress (see also Note 8)./5 Assuming a loan of 594 million (1410 million lei at 15 to S) for the railway component with repayments

of 118 million lei (US57.9 million) per annum, commencing 1985. Disbursements 1981-85 total 1380 millionwith balance of 30 million lei in 1986-7 (see Table 33).

/6 Repayable State Allocations, interest-free, utilized mainly for "important developments" after 1977./7 State Allocations prior to 1978 assumed to be non-repayable and therefore treated as equity./8 Excluding long term loans and State Allocations at interest, repayable 10-15 years.

Source: CFR and Bank Mission

June 1981

----------------------- ______K Train Timetables, Services and

Revenue Planning Directorate

ca X Traffic and Commercial Directorate

D BD Safery / 2 g

, Regions ( Bucharest Metro Enterprise

-- Special Transports _.-i -- - - -- - - -- - - ---- --

u Traction and Rolling Stock Directorate $

r ic X Fixed Installations Driectorate

E Revenue Control Directorate -c

m Restaurant and Sleeping Cars Entprs. ci ,

r Newspaper

- 4Data Processing Off ice…---------- --- ------o 0 i_Naval Transport Department

Maritime Fleet NAVROM Entprs.

Constanta Port Operations Enterprise c3 0. 0

River Operations Enterprise Galati > 0

NAVROM Galati R. Nav. Entprs. en 0 0 _o. 0.- .

Orsova Shipyard C1L 0 o i

Lover Danube Administration Galati O

Romanian Naval Register T Constants TRANSMAR Enterprise

Technical Directorate |i i

Finance and Prices Directorate Z

Directorate for Intemational _Economic Cooperation and Trade m 1 >

Procurement Directorate > O

Republican Vehicle Inspectorate > c ° >

RoadTransport Central f c - >

Road Vehicle Repair Centrais ZRailway Workshop Central ci

Transport Research and Design 02 g mInstitute o 3 -4

ContransimexlEnserpriset(Foreign Trade) |n

Computer Center

Directorate for Investment, |Construction and Energy Supplies

Road Directorate | >

Railway Construction Central_ r/

Railway Design Institut'/ I/|

Road, Naval and Air Transport Design L o

InstitutekI

Generat Directorate for Posts andTelecommunications ,

Secretarial - Administration

Telecoms Research and Design Institute

District Post and Telecoms Directorate |

Radio and TV Directorate

Telecom Directorate for Bucharest |

Postal Transport Directorae for / q iBucharest S. |

Directorate for Bucharest Postal 3Dispatch

_

co Special Editing Office for Stamps and

Postal Orders

Construction and Repair Enterprise

-J Philately Enterprise

I

_L _ F ' TAa mev id IBRD 154,2R

J S S-V P g / X SOCIALIST REPUBLIC OF ROMANIA

LAND TRANSPORT PROJECT

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