FILE COPY RESTRICTED Report No. TO-620a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF THE BELGRADE-BAR RAILWAY PROJECT YUGOSLAVIA March 6, 1968 Projects Department CURRENCY EQUIVALENTS Currency Unit - Dinar-/ US$ 1 = Dinars 12. 50 1 Dinar = US$ 0. 08 Dinars 1, 000, 000 = US$ 80, 000 1/ Throughout the report the denotation "New Dinar" or "N. Din" has been used, which is usual in Yugoslavia, to distinguish from the "Old Dinar" (New Dinar 1. 00 = Old Dinar 100). WEIGHT AND MEASURES I m 3.Z8 ft 1 kmZ/ = 0.62 mi 1 km- 0. 386 sq mi 1 m ton 0.98 lg ton - 1. 1 U. S. sh ton Fiscal Year January 1 - December 31 Totals may not add up because of rounding. YUGOSIAVIA APPRAISAL OF THE BELGRADE BAR RAILWAY PROJECT Table of Contents Pages S4Ul4ARY i- i. INTRODUCTION 1 2. BACKGROUND 2 - 4 General 2 Transportation in Yugoslavia 2 Transport Co-ordination 3 3. THE RAILWAYS 5 - 9 Organization, Management and Staff 5 The Network 6 Physical Properties 6 Traffic 8 Operations 9 4. THE 1964-1970 & 1971-1975 RAILWAY INVETMENT PROGRAMS 10 5. THE PROJECT 1U - 15 Description 11 Estimated Cost 12 Financing of the Project 13 Administration and Execution 14 6. ECONOMIC JUSTIFICATION 16 - 22 Economic Geography of the Belgrade-Bar Line's Zone of Influence 16 Traffic on the Belgrade-Bar Railway 19 Benefits 20 7. FINANCIAL ASPECTS 23 - 29 Rates and Fares 23 Budgets, Accounting and Auditing Earnings 25 Finances 27 8. CONCLUSIONS AND RECORE ENDATIONS 29 This Appraisal Report is based on the findings of an appraisal mission in October 1966, consisting of Messrs. Lubbeke, McCunniff and Hughes, and a further mission in July 1967 consisting of Messrs. Lipkowitz, Hughes, von Gontard and Spears (FAO). Table of Contents (Cont'd.) Table 1 - Freight Transport by Mode of Transport 1956-1966 (millions of net-ton-km) Table 2 - Freight Traffic by Mode of Transport 1956-1966 (million of tons) Table 3 - Passenger Traffic by Mode of Transport 1956-1966 (million of pass-km) Table 4 - Passenger Traffic by Mode of Transport 1956-1966 (millions of passengers) Table 5 - Expenditure on Investments in Fixed Assets of the Socialized Sector,by Sector, Percentage of Total, Selected Years 1960-1965 Table 6 - Selected Operating Statistics 1961-1966 Table 7 - Railway Network and Traffic Density 1925-1966 Table 8 - Motive Power and Rolling Stock, Yearly-Averages 1961-1966 Table 9 - Age of Motive Power and Rolling Stock Table 10 - Principal Commodities carried by Yugoslav Railways, 1952 and 1962-1966 Table 11 - Yugoslav Railway System, Freight Traffic Projection, 1966-1975 Table 12 - Yugoslav Railway System, Passenger Traffic Projection, 1966-1975 Table 13 - Yugoslav Railways, Original and Revised Railway Investment Program 1964-1970 and Preliminary Program 1971-1975 Table 14 - Belgrade-Bar Railway Project, Cost Estimate and Schedule of Expenditure Table 15 - Belgrade-Bar Railway Project, Scope of Internation Competitive Bidding 1966-1972 Table 16 - Belgrade-Bar Railway Project, Ei3stimated Schedule of Foreign Exchange Expenditure 1968-1972 Table 17 - Belgrade-Bar Railway Project, Estimated Disbursement Schedules 1968-72 Table 18 - Community of Yugoslav Railways, Railway Transport Enterprises, Revenue, Expense and Net Income 1961-1966, and First 6 months of 1967 (millions of New Dinars) Table 19 - Yugoslavia, Railway Transport Enterprises, Revenues, Expenses and Net Income Actual 1966 and Six Months 1967, Estimated Six Months 1967 and Subsequent Years (millions of New Dinars) Table 20 - Community of Yugoslav Railways, Railway Transport Enterprises, Balance Sheet Data, 1964, 1965 and 1966 (millions of New Dinars) Table 21 - Community of Yugoslav Railways, Railway Transport Enterprises, Estimated Balance Sheet Data, 1967-1975 (millions of New Dinars) Table 22 - Community of Yugoslav Railways, Railway Transport Enterprises, Cash Flow Data, Actual 1966, Estimated 1967-1975 (millions of New Dinars) Annex A - Calculation of Benefits - Methodology Annex B - Agricultural Prospects of Zone of Influence Maps 1. Yugoslavia: Railway System (IBRD 2136R) 2. Yugoslavia: Belgrade-Bar Railway, Forestry Areas (IBRD 2137) 3. Yugoslavia: Belgrade-Bar Railway, Main Transport Routes in Zone of Influence (IBRD 213R) YUGOSLAVIA APPRAISAL OF THE BELGRADE BAR RAILWIAY PROJECT SUNARY i. The Federal Government of Yugoslavia, through the Yugoslav Investment Bank, has asked the Bank to assist in financing the completion of the 476 km railway from Belgrade to the port of Bar on the Adriatic Coast. The project, which would be the third Bank-financed railway project for Yugoslavia, consists of the construction of the line, and the procure- ment and installation of signalling, telecommuication and electric traction equipment. The project also includes the supply of motive power and rolling stock although Bank financing is not required for this part of the project, nor for any expenditure prior to 1968. The Federal Government has undertaken to expand the port facilities at Bar to the extent required to handle efficiently all traffic including that of the new railway line. ii The estimated cost of the project for which the Bank's help in financing has been requested is US$211 million equivalent, including contingencies, over the period from January 1, 1968 until completion, scheduled for the end of 1972. The foreign exchange component is estimated to be between l1 and 33 percent depending on the results of international bidding. The cost estimate is based on final engineering, except for bridges, and actual unit costs experienced on similar projects in Yugoslavia. The loan amount of US$50 million equivalent, which would be 23.7 percent of the expenditure from 1968 to 1972, has been selected as the appropriate Bank contribution to the financing of the project. iii. Contracts to be let after January 1, 1968 would be awarded on the basis of international competitive bidding with the exception of track laying and buildings which, by their nature, are suitable only for local procurement. Execution of the project, which is located in the Republics of Montenegro and Serbia, would be the responsibility of the two Republics through authority delegated by the Federal Government. Engineering and construction supervision are within the capability of the Yugoslav Rail- ways' Organization, which has been entrusted with the work. In addition, the Railways intend to employ foreign consultants for design and supervision of certain civil engineering works such as tunnelling and bridge construc- tion. iv. The line will use about 14 Km of an existing line south of Belgrade; and a total of 90 Km of the line on two sections at each end has been constructed and is in operation. The remaining 371 km of line has still to be constructed, though some major works have been started. The completion of the line will provide an important transportation link between the developed central region and the coast and also help in the advancement of the underdeveloped zone of influence; the economic rate of return is estimated to be about 8-1/2 percent on the investment from January 1968 until completion. - ii - v. The Railwayst earning position has not been satisfactory. The disappointing results for 1964 and 1965 were due in the main to delays by Government in permitting rate adjustments to offset cost increases. The necessary increases were finally made effective during the course of 1965. Since then, wages and prices have been rising but no further increases in rates have been made. It has been agreed that the Government will in the future take all such action as may be required to enable the Railways to adjust their rates and fares promptly in relation to costs and promptly to make them effective; that the Railways will introduce an increase in rates and fares during the course of 1968 so as to produce additional gross operating revenues of N. Din lJJ million in 1969 based on agreed estimates of traffic for that year; and that the Railways will take whatever additional measures may be required, whether increases in rates or reductions in expenses or both, to earn a return of at least 3.5 percent in 1970 and at least 6.0 percent in 1972 and there- after. This would be satisfactory progress toward reaching a sound financial position. vi. The project provides a suitable basis for a Bank loan of US$500. million to the Yugoslav Investment Bank for a term of 25 years, including a six year period of grace which corresponds to the construction period and the first year of operation. YUGOSLAVIA APPRAISAL OF THE BELGRADE BAR RAILWAY PROJECT 1. INTRODUCTION 1.01 The Yugoslav Government, through the Yugoslav Investment Bank, has requested a Bank loan to help finance the completion of a railway from Belgrade to Bar, a port on the Adriatic Sea. The amount of the proposed loan has been set at US'$ 50 million equivalent. The Yugoslav Investment Bank was established in 1956 as the chief instrument of the Federal Government for providing investment funds for development and as the main channel for foreign loans. All Bank loans with the exception of those of 1951 and 1953 have been made to the Yugoslav Investment Bank, and in this case the proposed loan would cover part of the Federal Govern- ment's contribution to the cost of the project. 1.02 This would be the third railway loan from the Bank to Yugoslavia and the fifth in the transportation field. The first railway loan, US$35 million (361-YU of October 28, 1963) was for the constrUxtion of an electrified standard gauge line from Sarajevo to Ploce to replace a narrow gauge line generally on the same alignment. The new line is now in operation with diesel traction. The completion of the project was originally scheduled for the end of 1966 but, due to planning changes, electrification and signalling works are not yet completed. The new schedule calls for completion by the end of 1968, which is feasible. The second railway loan, of US.$70 million (395-YU of December 11, 1965) was for the railway modernization program. The execution of works for this project is not proceeding on the original schedule due to protracted tendering procedures and design modifications. Wgork is now proceeding satisfactorily according to an amended schedule which calls for completion by the end of 1970. 1.03 There have been two highway projects financed by the Bank in Yugoslavia. The first project, of US$35 million, (344-YU of June 21, 1963) was to complete the Adriatic Highway and parts of the Central High- way. The works have been satisfactorily completed and the loan fully disbursed. The second project, financed by a loan of US$10 million (485-YU of February 24, 1967), was to complete and improve to modern standards the highway between Zupanja and Opuzen, linking the Central Highway with the Adriatic. Contracts for the work were recently awarded. 1.04 This report has been prepared by Messrs. Lubbeke, M¢Cunniff, and Hughes, members of an appraisal mission in October 1966, and Messrs. Lipkowitz, Hughes, Spears (FAO), and Von Gontard who appraised development prospects in the zone of influence in July 1967. -2- 2. BACKGROUND General 2.01 Yugoslavia is about the same size as the Federal Republic of Germany or the United Kingdom with an area of 255,804¢ km2. The popu- lation is much smaller however, some 19.5 million, and is growing at an annual rate of 1 percent. 2.02 The Gross Social Producti/in 1966 was N.Din 98.5 billion or about US$7.9 billion equivalent; the rate of growth averaged 8.6 percent per year from 1953 to 1964. The rapid growth during this period was due mainly to the expansion of manufacturing industry, while agricultural output rose much more slowly. The low growth rate of 2.3 percent in 1965 was due to a poor harvest and dislocations resulting from economic reforms. In 1966 the growth was again 8.6 percent, due mostly to an 18 percent rise in agriculture, the result of unusually favorable weather and application of additional inputs. GNP per capita, on the basis of the customary national accounting concept, is estimated to be about US$500. 2.03 Yugoslavia has a federal constitution under which regional and local governments (republics and communes) have considerable authority. The organization of the economy is based on workers' self-management rather than state management of the various enterprises. There has been a substantial move towards decentralization and the economic reform of 1965 is shifting the main responsibility for investment decisions even further from the central to local governments and enterprises. Transportation in Yugoslavia 2.04 Yugoslaviats main communication routes have been determined by topography and follow a longitudinal axis along the Danube, Sava and Morava valleys. Mountain barriers have hindered communications between the central plains and the coast. The recently completed standard gauge railway between Ploce and Sarajevo, and the projected railway from Belgrade to Bar, will substantially complete the railway network. The completion of the road from Zupanja to Opuzen in 1969 and the extension of the Adriatic Highway to Skopje will add to the highway network. 2.05 The railways are the most important transport mode in Yugoslavia, accounting for 55 percent of the freight ton-km in 1966 (Table 1), which was a decline from 68 percent in 1963. In terms of tons carried, there was an increase from 72 million tons in 1963 to 76 million in 1964, falling again to 72 million tons in 1966 (Table 2). The causes of this decline are discussed in paragraph 3.13. Railways are also important in passenger 1/ The Gross Social Product in Yugoslavia is not comparable with the customary measure of Gross National Product in that Government adminis- tration and many consumer services are excluded, such as housing. GSP would be about 70 percent of the GNP if measured by Western Standards. transport, accounting for 62 percent of the passenger-km in 1964 and probably about 55 percent today (Table 3). Although the railways percen- tage share of the number of passengers by all modes of transport decreased between 1963 and 1966 the numbers actually travelling by rail increased in this period by 6% (Table 4). Passenger air transport has been growing rapidly in recent years but is still insignificant (Table 3). Scheduled air transport is provided by JAT, the national carrier, which not only serves domestic needs but also most of Europe and points in North Africa. Air freight is insignificant. 2.06 All forms of transport, particularly highways, have increased their share of traffic at the expense of the railways, as is common in many countries. Truck transport has been increasing in recent years by an average annual rate of over 20 percent, while river transport is becoming even more important than in the past. Even so, the railways will remain for many years a vital part of the transport network of Yugoslavia and will provide the most economical means of conveying many goods, particularly bulk commodities in full carloads ower relatively long distances. 2.07 Investment in transportation has been heavy over the last five years, accounting for 13 percent of expenditures on fixed assets in 1962 and nearly 12 percent in 1965 (Table 5). The main investments during the past five years have been the construction of the Central Highway, linking Austria and Greece, the Adriatic Highway from Rijeka to Bar, the conversion of the Sarajevo-Ploce line to standard gauge, as well as continuing progress on railway modernization and electrification of main lines. The Belgrade-Bar railway and continued work on electrification and modernization of stationary installations and of motive power, and the continuation of the Adriatic Highway to Skopje will account for most of the investment in land transport in the next period 1967-1970. Investment in sea transport will also be larger and is planned to account for 13.4 percent of transport capital expenditure in the period. As a result, Yugoslavia's merchant fleet will increase from about 1 million to at least 1.4 million gross registered tons. Transport Co-ordination 2.08 Yugoslavia has made deliberate efforts towards the co-ordination of policies with respect to transportation rates, taxation and investment in its recent move towards a market oriented econony. 2.09 The Railway Law stipulates that railway rates must be based on the operating costs of moving traffic,and with minor exceptions previously subsidized rates, such as for lignite, fertilizers and passengers, have been abolished. Road transport firms set their own rates and the conditions of entry to the industry are liberal. There is a high degree of competition in transport among public carriers, who also face competition from busi- nesses carrying their own goods. Danube and Sava river traffic is also competitive and rates cover ship and port operating costs. 2.10 The policy of the government is to tax road and rail on the same bases per ton-km. Railways pay taxes related to the value of motive power, rolling stock and fixed installations (except tunnels and substructures), while road transport enterprises pay a similar tax on vehicles and equipment, but not on land occupied for terminals. Road vehicle license fees are collected, and fuel taxes are paid by all users of fuel. The end result is that both road and rail enterprises pay taxes approximating N.Din 0.03 per ton-km. 2.11 Coordination of investment in transport is primarily the concern of the Federal Government in the course of preparation of economic development plans. These take into account the rationalization of the economic structure and major transport investments are planned accordingly. The main criterion is to provide for transportation needs at the lowest cost to the economy. 2.12 In spite of these efforts toward coordination there remain some imperfections. In order to alleviate the effects of the economic reform subsidies to railways are provided during a transitional period ending December 31, 1970. If, for example, costs are higher than freight rates in 1967, the Federal Government will reimburse 80 per cent of the difference. The percentage of the subsidy will decline each year until it is eliminated in 1971. At the present time only the railway enterprises at Skopje and Titograd are being subsidized in this way and the total sum disbursed is small for the railway as a whole, but amounted to 63 per cent and 113 per cent of earned freight revenues for these enterprises, respectively. 2.13 Other subsidies are given to rail and road transport in the provision of new lines and roads. For example, the major part of the cost of new railway lines is financed by the Federal Government by outright grants; no repayment or interest being required , while the Republics finance the rest. Depreciation is in turn recovered by the enterprises in their rates and fares but the funds are then used for rehabilitation of other lines and equipment. New national highways are financed in a similar manner but the investment is not recovered from road users. When the basic highway network is completed in 1971 the responsibility for financing will pass to the Republics. At the present time road users do not fully cover the costs of road maintenance but the Government increased fuel taxes in 1967 and is considering an increase in the road tax for heavy vehicles so that maintenance costs will be fully recovered from users by 1970. 2.14 In spite of the imperfections noted above the Government is aware of the need for transport coordination, and though highway and railway construction will probably remain subsidized at the Federal and Republic levels, the situation is generally improving. 3. THE RAILWAYS Organization, Management and Staff 3.01 The organization of the Yugoslav Railways is based on the Yugoslav concept of the workers participating in the management and sharing in profits. The organization has changed several times in recent years; the latest change, by the Law on the Organization of the Yugoslav Railways, became effective on January 1, 1966. This Law established six Railway Transport Enterprises, each with responsibilities generally co-extensive with the republics served: five are consolidated, one each at Belgrade, Zagreb, Sarajevo, Skopje and Titograd, and one is an association at Ljubljana, consisting of three regional enterprises in Slovenia. The Railway Transport Enterprises operate the fixed assets in their area and the motive power and rolling stock. Rates and fares are established for each enterprise separately as explained in detail in paragraph 7.04. 3.02 Each Enterprise is managed by a Workerst Council of 20 to 50 members, depending on the size of the Enterprise, a M1anagement Board of 5 to 12 members, and a Director, as lilanager, who is a member of the Board, but cannot be its Chairman. The 'Workers' Council meets every twro months, the Board more frequently, as necessary. The Director is nominated and dismissed by the Republican Executive Council. Only professionally qualified people are eligible for nomination. 3e03 The Railway Enterprises form the Community of Yugoslav Railways, which has an Assembly, a Board of Directors, and a General Manager who is appointed by the Federal Executive Council. The main functions of the Community are to ensure uniformity of operating standards, to coordinate train schedules, to set rates for inter-enterprise and international traffic, to ensure adequate car distribution and to collect statistics. There are several auxiliary enterprises directly attached to the Community of Yugoslav Railways. 3.04 The Railways staff is competent. The management is capable and the handling of traffic, operations and technical matters is efficient. 3.o5 The number of staff has fluctuated during the last ten years, because some maintenance and workshop enterprises (now working units) at one time separated themselves from the Railways, but some of them later merged again. The performance of the staff in terms of traffic-units and gross ton-km per employee has improved in recent years (Table 6). The number of employees per route-km increased slightly, due mainly to extensive work carried out under the Railway Modernization Program. All performance figures compare reasonably well with the railways in other European countries with similar traffic and operating conditions. * Te Railways intend that, even with traffic increases as estimated, the labor force will be reduced progressively from 140,951 at the end of 1966 to 121,000 by the end of 1975. This reduction will result from modernization of signalling, marshalling yards and traction; from the abandonment of some 2,000 km of low traffic un- economic lines; and from mechanization and general increases in productivity. The results would be achieved largely through normal wastage and the laying off of unskilled and semi-skilled workers. -6- The various stages in the reduction of the total force between 1968 and 1975 are show below: End of Year Employment 1968 132,300 1970 128,800 1971 124,000 1975 121,000 The Network 3.06 The Railway system is the main artery connecting the northwest with the southeast. The network is not extensive compared with other European countries, Yugoslavia having only 3.6 km of standard gauge line per 100 km2, compared with Austria 6.5, France 6.9, Hungary 9.3 and Poland 7.6. The density of the railway system varies from 6.2 km of standard gauge lines per 100 km2 in Slovenia to 2.8 km in Southern Serbia, and 0.4 km in Montenegro. 3.07 In 1966 the Railways operated 9,437 route km of standard gauge and 2,1h3 route km of narrow gauge (see Table 7); 733 route km of standard gauge are double track and 483 route km are electrified with 3,000 V, D.C. The standard gauge system has expanded continuously since the establishment of the Railways after the First World War; the total increase is about 2,700 km. The narrowJ gauge system grew by about 1,000 km between World War I and 1950, but since then decreased by 969 km due to conversion to standard gauge and abandonment of unremunerative lines. About another 300 km will be discontinued as a result of the construction of the Belgrade-Bar line, and studies on closing more lines are under way. Physical Properties 3.08 Track, structures and buildings are well maintained. About 40 per cent of the standard gauge tracks are laid with rails heavier than 45 kg per m; the main line Jesenice-Ljubljana-Belgrade-Skopje has been relaid with 49 kg rails. Track relaying of other lines with heavy traffic is progressing. Ballast, ties, points and crossings on mainlines are in satisfactory condition. 3.09 Most of the station yards were about 40 years old at the beginning of the Railway Modernization Program in 1964, which includes the construc- tion or remodeling of four major marshalling yards at Ljubljana, Zagreb, Belgrade and Skopje and of two medium size yards at Doboj and Nis. Progress of construction is satisfactory after initial delays due to changes in planning. The marshalling yards will be put into operation during 1970 and substantially improve the efficiency of freight transport. Improvement of other yards and mainline junctions is under way. 3.10 The signalling system on most lines also remained unchanged for about 40 years; however, substantial modernization has been made in recent years. About 150 km of automatic block with color light signals was installed from 1961 to 1963. The installation of modern signalling and automatic block equipment on a further 1,800 km of mainlines is part of the Nodernization Program. - 7 - 3.11 The composition of motive power and rolling stock from 1961 to 1966 is shown in Table 8 and data for 1966 are summarized below. Number of Units Average of 1966 Standard Narrow Gauge Gauge Locomotives, Steam 1,573 468 Diesel 243 - Electric 55 Railcar sets,Diesel 248 4 Electric 22 - Passenger Car Stock 4,624 849 Freight Car Stock 63,532 7,706 The motive power and rolling stock is generally well maintained, but a substantial portion is far beyond its useful economic life. The 1965 percentage of steam locomotives and rolling stock in excess of 35 years is shown below: Standard Narrow Gauge Gauge Steam locomotives 55% 77% Passenger cars 31% 88% Freight cars 56% 95% A breakdown by age groups is shown in Table 9. The number of steam loco- motives will be reduced during the Railways' 1964-1970 investment program and the preliminary program 1971-1975 by progressive dieselization and electrification, and the passenger car position will be improved by the planned procurement of an adequate number of cars. The number of freight cars to be procured by 1975 seems sufficient to meet the requirements of increasing traffic and replacement of overage stock. However, it has been agreed during negotiations that the Railways will undertake a study of future freight car requirements, considering (i) the need to replace obsolete stock, (ii) traffic increases, (iii) improved utilization of rolling stock due to electrification, new marshalling yards, and increased efficiency of operations, and (iv) changes in the length of hauls related to the Sarajevo-Ploce and the Belgrade-Bar lines. The procurement program for the years 1971-1975 will be adjusted if this is shown to be necessary, to ensure that an adequate number of serviceable freight cars will be available to carry the expected traffic of the Belgrade-Bar line as well as for traffic increases throughout the system. 3.12 Maintenance and repair facilities are adequate. Most of the facilities for maintenance and running repairs of steam locomotives and some for rolling stock are old and obsolete; they are to be phased out of service or modernized. Traffic 3.13 The freight traffic of the railways increased by 22 percent between 1962 and 1964 but then declined in the following two years by 6.5 percent in spite of a greater volume of traffic being moved by aJJ forms of transport in Yugoslavia (Tables 2 and 10). The decline in tonnage continued into 1967, the railways experiencing a 4.1 percent decline in the first nine months of the year compared with the same period in 1966. The greatest decreases were in coal, building materials, cement and wood. This trend reflected the economic reform of mid-1965 when the principle was established that all prices should be based on costs. As a result, the prices of industrial products were increased by an average of about 13 percent and of raw materials by about 20 percent. As inventories were run down the railways were affected more than any other form of transport. However, during the fourth quarter of 1967 industrial production as a whole in Yugoslavia had generally recovered: major railway traffics such as ores, metals and chemicals were back to earlier, higher levels, while the production of building materials and cement surged well ahead of levels set in any previous year. By September, coal production was only slightly lower than in the same month of the previous two years and its rate of growth was rapidly accelerating. The outlook for the year 1968 is that overall traffic will be higher than that of 1967 as an upturn in industrial production has begun and is expected to continue for some time. 3.14 The traffic forecast (Table 11) indicates that coal is expected to continue as the most important commodity for the railways. Its fore- cast growth is based on the general expansion of heavy industry in Yugoslavia, rather than on domestic use. Particularly important in this respect are the lignite requirements for the production of cement, ferti- lizers, refined ores and chemicals. The new railway line will help to lower transport costs for lignite, which will remain a very important input for basic industry for many years to come. Other major commodities in the traffic forecasts are cement and building materials. At the present time most cement plants are unfavorably located in relation to the centers of demand. In the future it is expected that new construction of industrial plants, power, and other infrastructure projects and housing will be major economic activities, which, combined with relocation of plants, will increase demand for building materials. The production and refining of ores is also exqpected to be of continuing importance in Yugoslavia. All these activities are reflected in the traffic forecasts. Coal, ores, building materials, wood and other basic traffic as forecast in Table 11 cannot economically be shifted to highways. Traffic has been forecast by commodity at moderate rates of growth, averaging 3.1 percent per year from 1967 to 1973 when the line will be opened. From 1973 to 1975 growth will be higher reflecting the opening of the new line before again settling down to more normal rates. 3.15 It is expected that the average length of haul will increase from 238 km in 1966 to 241 km in 1967. This is a continuation of a trend established some years ago when highway transport made inroads into short haul traffic. The decline in 1967 was temporary, due to the draw down of local inventory stocks, mainly coal. From 1971 the average haul will fall slightly due to new oil and cement plants (Table 11). - 9 - Although the Belgrade-Bar line will result in shorter hauls for part of the traffic served, average railway hauls will then increase until 1975, reflecting increased long haul international traffic, the continued abandonment of short narrow gauge lines, expansion of long distance agricultural traffic and phosphate rock moving from the ports to inland plants. 3.16 Passenger traffic has grown considerably over the last ten years (Tables 3 and 4). A decline was experienced in 1966, continuing into 1967, reflecting the fare increases of late 1965 when general subsi- dies ceased. While passenger traffic is not expected to grow substan- tially some recovery is expected in 1968 and later years and there will be traffic promoted by the new line in 1973 (Table 12). 3.17 The traffic forecasts supplied by the Yugoslav Railways have been carefully reviewed and are reasonable. Operations 3.18 The Railways are well operated although they have difficulties during peak periods in meeting the traffic demands. The main deficiecmies which limit the system3sscapacity are: (i) the still predominant steam traction; (ii) the largely outmoded mechanical signalling and interlocking installations; and (iii) the obsolescence and insufficient capacity of the marshalling yards at major traffic centers. Conditions will improve sub- stantially after completion. f the Railway Modernization Program (paras 3.09 and 3.10). 3.19 Table 6 gives- a summary of operating statiStic8s from 1961 to 1966. It shows that the operating efficiency improved from 1961 to 1965, but declined slightly in. 1966 due to a decline in traffic. 3.20 Average availability- of motive- pwer declined -slightly in 1966 but is still satisfactory, making allowance for the existence of electric locomotives and railcars..which are more than 30 years old and the unsatis- factory design of some of the older dieseL locomotives. Availahility of paasenger and-freighL.cars.is-satisfactory. 3.21 The utization-of diese4. and electric loooaotives fluctuates but is- i general satisfactory (Table 6). Tlh average performance of diesel. locomotives droppad from a high of 428 engine km per engine-day to a still satisfactory 370 ngine =-per engine-day in 1966, due to 120 diese. shunting locomotives vitb_ lower. daily mileage being put into operation since 1964. The utilization of stem -locomotives is- decreasing as the system is diese- lized and electrified,- The utilization of passenger and freight cara is satisfactory. - 10 - 4. THE 1964-1970 AND 1971-1975 RAILIAY INVESTMENT PROGRAMS 4.01. At the time of the appraisal of the Second Railway Project in 1964, the Railways had prepared an Investment Program 1964-1970 of which the Modernization Plan of Mainlines, partly financed from Loan 395-YU, was a part. The program was under consideration by the Federal Executive Council in 1964, but it was not approved due to the devaluation of the Dinar, related price increases, and shortage of funds. Investments in 1964 and 1965 were carried out mainly with the Railways' own funds, and from budget appropriations authorized by the Government. 4.02 A revised Investment Program, 1964-1970, including the Modernization Plan, has now been approved by the Government. The actual expenditures 1964-1966, the estimated expenditures 1967-1970, and the original and revised Investment Program 1964-1970, are shown in Table 13. The physical size of the program has been curtailed to cover price increases. The combined effect of price increases and the devaluation of the Dinar has been that the reduced program increased in Dinar cost by 9 per cent while its approximate UsX equivalent decreased by 30 per cent. The Modernization Plan and the provisions for track renewal have not been curtailed but major reductions have been made particularly in the procure- ment of motive power and rolling stock(as shown in Table 13). The Rail- ways intend to offset the effect of these reductions by (i) improving utilization of existing stock and (ii) keeping obsolete stock in service. 4.03 The Railways have drafted a preliminary Program 1971-1975 under which they intend to procure rolling stock at a higher and more satisfactory rate. The matter is further discussed in para. 7.22. The original and the revised program 1964-1970 and the preliminary program 1971-1975 are shown in Table 13 and summarized below: Original Revised Preliminary Program Program Program Item 1964-1970 1964-1970 1971-1975 Track renewal, km 3,021 3,021 2,350 Electric locomotives, units 250 215 125 Diesel locomotives, units 328 218 260 Passenger carrying stock (coaches, vans, motor cars, and tra-lers) units 2,029 1,531 790 Freight cars 22,000 10,117 P9,500 - 11 - 5. THE PROJECT Description 5.01 The Project is the completion of the standard gauge, single track electrified line betwfeen Belgrade and Bar (Map 1) comprising construction works, and the procurement and installation of signalling, telecommunication and electric traction equipment during the period from January 1, 1966 to completion, scheduled for the end of 1972. Included in the Project, but excluded from the cost estimates and Bank financing is the supply of motive power and rolling stock. Responsibility for supp4ying this equipmeut-is dealt with in paragraph 5.15. 5.o2 The project will connect the main railway junction, Belgrade, with the Adriatic Port of Bar and provide a more direct standard gauge connection with South Western Serbia and Mlontenegro, replacing the present circuitous, high cost, narrow gauge lines. 5.03 The Belgrade-Bar line will have a junction at Pozega with the line to Kraljevo-Nis and Skopje, a rail link to South Eastern Serbia and Macedonia which will carry considerable traffic to and from the Belgrade- Bar line. The 32 km section Pozega-Cacak of this link is being con- verted from narrow to standard gauge. There will be a junction at Priboj with the narrow gauge line to Sarajevo which is to be retained for some time. At Titograd there is a branch line to Niksic, recently converted from narrow to standard gauge, that extends with narrow gauge to Capljina on the recently completed Sarajevo-Ploce line. 5.04 The total distance from Belgrade to Bar is 476.1 km. The new line branches from an existing line at Resnik, 14.2 km south of Belgrade. Thus, from Resnik to Bar is 461.9 km of which the sections Resnik-Vreoci (37.3 km) and Titograd-Bar (53.0 km) have been in operation since 1959. This leaves 371.4 km of line from Vreoci to Titograd to be constructed, including some sections which have been under construction since 1964. The project includes the final signalling and telecommunication, and the electric traction installations of the othenrwise complete sections from Resnik to Vreoci and from Titograd to Bar. The project "also includes the extension of the telecommunication installation on the Belgrade-Resnik section, as needed for the Belgrade- Bar line. 5.05 The alignment has been determined by studies and geological surveys carried out by the Railways' Engineering Organization. The final engineering is almost complete and is satisfactory. The line is largely in mountainous terrain, part of w-rhich is very rugged and difficult of access, resulting in the need for 353 tunnels, of which 12 are from 2 to 6 ma long, and numerous bridges and viaducts. An outstanding civil engineering work will be the MIala Rijeka viaduct which is to span a gorge, 450 m wide and 195 m deep. - 12 - 5.o6 Design standards are adapted to the mountainous terrain. The maximum gradient is 2.5 percent on the descent from Kolasin to Titograd over a distance of 59 km. Between Valjevo and Kolasin the maximum gradient is 1.8 percent, and 1.2 percent between Belgrade and Valjevo; minimum radius will be 300 m, and maximum speed 80 km/h on mountainous sections and 120 km/h on sections with easier conditions. 5.07 The line will have electric traction with 25,000 V., A.C. of 50 cycles, the same system as is being installed on the Sarajevo- Ploce line and the lines Dobova-Zagreb-Belgrade-Skopje and Vrpolje- Sarajevo. The electrification of the Belgrade-Bar line is justified in view of (i) the high traffic density in gross ton-km per route-km per day, (ii) the heavy power consumption in kwh per route km per year and (iii) the availability of low cost electrie power from nearby hydroelectric plants. 5.08 Completion of the Belgrade-Bar line will lead in the regions served to the gradual dismantling of about 300 km of narrow gauge lines. 5.09 Completion of the project and beginning of operations is scheduled in the following stages: (i) Vreoci-Valjevo (40.2 km) without electric traction and final signalling by the end of 1968; (ii) Resnik-Vreoci-Valjevo-Titovo Uzice (163.8 km) without electric traction, but with final signalling by the end of 1970; (iii) Electric traction between Resnik and Titovo Uzice by the end of 1972; and (iv) Titovo Uzice-Titograd-Bar (298.1 km) with electric traction and final signalling, i.e., the completion of the whole project, by the end of 1972. Estimated Cost 5.10 From 1952 to the end of 1965 N. Din 300 million was expended on the Belgrade-Bar line which would represent US$ 24 million at the present exchange rate, or a considerably larger-amount if converted at the exchange rates prevailing at the time. From January 1, 1966 to completion at the end of 1972 the total estimated costs are N. Din 2,818.5 million (Us$ 225.5 million equivalent). Estimated expenditure from January 1968 to completion is N. Din 2,637.1 million (US$ 211.0 million equivalent). A detailed cost estimate and a schedule of expenditures is given in Table 14. The estimate includes a N. Din 462.6 million (us$ 37.0 million equivalent) contingencies provision, consisting of 10 percent for possible increases in quantities and unforeseen items, and 3 percent per annum for price increases during the period 1968 to 1972. - 13 - 5.11 The estimate has been prepared by the Railways' Engineering Organization and is based on final engineering except for some bridges for which only preliminary designs have been prepared. Unit prices correspond to those actually paid for construction of the Sarajevo-Ploce line and other similar projects since early 1966. The estimate is considered realistic. 5.12 The foreign exchange component will depend on the results of international competitive bidding. The scope of international competi- tive bidding for construction works and for supply and installation of equipment is shown in Table 15. The range of the minimum and maximum foreign exchange components under various assumptions and a schedule of foreign exchange expenditure (1968-1972) is shown in Table 16. The mini- mum foreign exchange component represents the cost of equipment which has to be imported in any case and the cost of the services of foreign consul- tants. The maximum foreign exchange component includes in addition to the minimum component the foreign exchange cost of contracts subject to inter- national competitive bidding, assuming that foreign contractors would be successful in bidding (see note in Table 16). 5.13 Estimated expenditures on the project from January 1, 1968 to completion in 1972 are N.Din 2,637 million, or US$211 million equiva- lent (see Table 14), of which the proposed loan of US$50 million would cover 23.7 percent. An estimated disbursement schedule is given in Table 17. Of the total of US$211 million, US$37.5 million is for works not suitable for international competitive bidding and US$31.3 million is for works for which contracts have already been awarded after domestic competitite bidding (paras 5.20 and 5.21). This leaves a total of US$$142.2 million available for international competitive bidding (see Table 15). Of this amount, the estimated minimum and maximum foreign exchange components would be US$23.8 million and US$70.5 million (Table 16), or 47 percent and 141 percent, respectively, of the proposed loan. Financing of the Project 5.14 According to the Law on Participation of the Federal Government in Financing the Investment Works for the Completion of the Belgrade-Bar Railway line, dated July 1966, 85 percent of the total cost of the Project (without motive power and rolling stock and the extension of the port of Bar) will be provided by the Federal Government, 8 percent by the Republic of Serbia and 7 percent by the Republic of Montenegro, the latter two for investments in their territories. The proposed Bank loan to the Yugoslav Investment Bank would cover part of the Federal Government's contribution to the cost of the project. Agreement has been reached during negotiations that the Federal Government specifically undertakes to make arrangements satisfactory to the Bank to provide the Investors (see para 5.18) with any funds that might be needed to meet overruns of the estimated costs. 5.15 The procurement of motive power and rolling stock required for the operation of the line will be financed from the Railways' own funds. Part of the rolling stock would become available due to the reduced transport needs on other lines, but the balance to carry additional traffic would have to be procured under the Railways' Investment Program beginning in 1971. Agreement has been reached during negotiations that the Railways will make available the motive power and rolling stock needed during al1 stages of construction and on completion when estimated requirements are 44 electric main line locomotives, 8 diesel shunting locomotives, 6 light diesel railcar sets, 92 passenger coaches and 2,000 freight cars, having a total estimated cost of US$32 million. 5.16 Extension of the port of Bar to handle the expected transit traffic will be carried out by the port administration. The port facili- ties to be added include I1,400 m of berths for general cargo, 930 m for dry bulk cargo, 1,014 m of passenger berths for Italian ferry and coastal traffic, as well as silos, open and covered storage space, bulk handling equipment and cranes. Dredging is also planned. Financing has been arranged for most of the required investment in the course of the present Five-Year Plan. The estimated costs of the new facilities to be construc- ted by 1973 are N. Din 410 million, of which N. Din 310 million will be financed from funds of the Republic of Montenegro, and N. Din 100 million from funds of Oil Enterprises for new oil berths. Agreement has been reached during negotiations that financing of the port extension will be assured and that the work will be phased to coincide with completion of the line, so that the required port capacity will be available when the Belgrade-Bar line begins to operate. 5.17 The loan amount of US$50 million has been selected as the appropriate Bank contribution to the financing of the Project. It is proposed that the full amount be provided regardless of the outcome of the international tendering. Administration and Execution 5.18 According to the July 1966 Law the Federal Government has trans- ferred its right and obligations as an Investor to the Republics of Serbia and Montenegro for the sections of line in their territories. The Railway Transport Enterprise (RTE) Belgrade is acting as Investor on behalf of the Republic of Serbia and the RTE Titograd on behalf of the Republic of Montenegro; they will be responsible for the execution of works. After completion of the Belgrade-Bar line, 304.8 km of the line in Serbia will be administered and operated by the RTE Belgrade, and 171.3 km of the line in Montenegro by the RTE Titograd. 5.19 The design and supervision of works have been entrusted to the Railwayst Engineering Organization which is competent and has had extensive experience in such work. In addition, the Investors intend to employ foreign consultants for the supervision of certain civil engineering works, in particular for tunnelling and major bridges and viaducts. An agreement has been reached in negotiations on the extent of the employment of foreign consultants satisfactory to the Bank. ,.20 Of the 371.4 km from Vreoci to Titograd which remain to be constructed and/or to be completed, works have already started on several sections, totalling 107.6 km. They include: (i) sections on which train operations are planned to begin during 1968-1970; (ii) four tunnels, and other difficult construction works which each require a construction period of up to five years, and which would have delayed the entire project if contracts had not been let before the end of 1966; and (iii) construction works, located within the water reservoir of the Potpec hydroelectric power plant, which had to be done before the filling of the reservoir and completion of the plant in November 1966. 5.21 Contracts for the above works were awarded after domestic competitive bidding, at a total value of US$45.8 million equivalent. Minor construction works on 4.1 km of line, construction of buildings, and track laying are not suitable for international tendering. All other contracts for earthworks and structures on the remaining 259.7 km between Valjevo and Titograd, and all contracts for the supply of rails, points, crossings and accessories, for the supply and installation of signalling and telecommunication equipment, and for the supply and installation of electric traction equipment, would be subject to inter- national competitive bidding from 1968 until completion of the line. These contracts would be US$142.2 million equivalent or 63.1 percent of the total cost of the project, including contingencies (Table 15). The extent of contracts subject to international competitive bidding has been confirmed in negotiations. 5.22 It is proposed that the loan will be disbursed in the same way as the loans 361-YU and 395-YU, that is related to the progress at an agreed percentage of the total expenditures from January 1, 1968 until completion scheduled for 1972. The estimated disbursement rate is 23.7 percent, and a disbursement schedule is shown in Table 17. - 16 - 6. EcoNomic JUSTIFICATION v Economic-Geography of the_Belgrade-Bar Line'lZone of Influence 6.01 The Ljubljana - Belgrade ma3n line divides the railway network into two parts. The area north of the main line has a well developed network and good i.nternational connections with Italy, Austria and Hungary, and with Bulgaria and Greece (Flap 1). South of the main line the connec- tions with the Adriatic do not conveniently serve the traffic originating to the north and southeast of Belgrade, Belgrade itself, or new traffic which may be forthcoming from Montenegran and Western Serbian development. 6.02 The area of influence of the project line is potentially rich in mineral and timber resources. Sizeable deposits of minerals occur in the vicinity of the alignment; these will be brought into production primarily for internal consumption. Timber of commercial quality is important, the region having about 11 percent of the forest area of Yugoslavia (Map 2). Agriculture is also important though at present it is largely limited to local consumption because of the lack of transport facilities. There is considerable potential for increasing agricultural production including livestock and early fruit and vegetables if adequate transport facilities are provided (Map 3). 6.03 The zone of influence varies with each commodity, being affected by such factors as costs of transport to market and comparative costs of production. For forestry, the zone of influence is greater than for agri- culture and is estimated to encompass an area which had a population (1965) of about 1.2 million as compared with about 0.9 million for agriculture, accounting for between L&½ and 6 percent of the total population of Yugoslavia (19.5 million in 1965). Because industrialization is quite limited in the area, it is not useful to measure the population proportions applicable to an industrial zone of influence. 6.o4 In all the above cases, the area between Titograd and Bar and between Vreoci and Belgrade were not included, because the lines on these areas have been in operation since 1966. Consequently, traffic which could move within those portions already completed are not counted in the railway benefits, nor is their sunk cost included in the investment on which an economic return is calculated. But these areas will also benefit from the railway and provide a market for goods produced within the area of influence. 6.05 The present per capita income of the area to be served by the Railway is low relative to that of Yugoslavia as a whole, and also low compared with the per capita income within the republics which it serves. 1/ For details of "Calculation of Benefits; IMethodology" see Annex A, and of "Agricultural Situation and Prospects in the Zone of Influence" see Annex B. - 17 - In Serbia and Bosnia-Hercegovina, where 8 percent and 5 percent of the populations respectively are affected, the present per capita incomes are about 30 percent below the levels for Yugoslavia. In Montenegro, where over 3/4 of the population wTill be affected, the differential is only about 10 percent. 6.06 As part of the Five Year Plan, 1966-70, economic development of the area is to be promoted by better utilization of the region's natural resources in minerals, wood and agricultural land. The Railway will serve to reduce the cost of transport both for inputs used in production and for products shipped out. In mining, it will make possible the use of lower-grade ores which require proportionately more processing, thus extending the life of Imown ore deposits and possibly the utilization of minerals previously considered uneconomic. -These possibilities have been accorded little or no weight in the traffic projections but should be recognized as a factor which may cause mission projections to be under- estimates of actual future traffic, particularly for iron and non-metallics. 6.07 Similarly, for timber, reduced transport costs will have the effect of widening the economic marketing area and/or increasing the economic hauling distance for processing. Because some existing timber mills have unused capacity, such output expansion is especially feasible in the short run provided that investment in the feeder roads required further to open the forest resources is forthcoming. It is estimated that between 1967 and 1973 more than 500 km of additional forest feeder roads, at a cost of over uS$6.0 million,will be required to ensure a sustained expansion of forest production. In agriculture, the availability of good grass lands for livestock grazing with unused carrying capacity is a favorable factor. Improved transport for these grass lands and for crop lands will reduce substantially costs of inputs such as fertilizers, insecticides, etc., and reduce outward transport costs,, especially in such respects as weight loss for livestock and spoilage for fruits and fresh vegetables. These benefits will enable growers to tap profitable seasonal marlkets in large communities like Belgrade or in overseas export markets. 6.o8 Certain industries will benefit. Cement mills do not now exist in Montenegro or Bosnia. In Serbia there are two mills at a considerable distance from the nearest point in the Railway's area of influence. Further- more, these Serbian mills, though operating in excess of rated capacity in 1966 were unable to supply demand. The projected plants at Kosjeric (in southwestern Serbia) and Pljevlja (in Montenegro) would have consider- able transport advantages within the area and even extending into Bosnia. Certain important export industries, like magnesite refractories and copper and brass products will gain substantial advantages improving their competitive position. Existing paper and pulp plants winill also improve their position both in domestic and foreign markets. On the other hand certain industrial projects which will generate traffic for the railway will not be appreciably aided, for example the aluminum enterprise in - 18 - Montenegro, since its major raw materials and inputs can already be transported economically by the parts of the line already completed. 6.0o The pattern of fuel consumption will change substantially. At present, petroleum products are used in limited quantities in the area and are supplied from distant refineries (much of Montenegro is supplied by coastal imports from Rijeka, then transported by highway into the interior). Southwestern Serbia is supplied from a refinery several hundred miles away. A new refinery at Pancevo, 18 km northeast of Belgrade will, when completed, provide a less distant and more economical source of supply of petroleum products when the new railway comes into operation. Regular availability of fuel oil at lower prices will help industrial operations and will create a transport demand now latent. As incomes in the area increase this will likely find expression in increased industrial demands for fuel oil while better transport facilities on the highway will also increase demand for gasoline and diesel fuel. The Railway will also widen the competitive area to be served by the area's coal mines at Pljevlja and Ivangrad. The combined effect of an increased and more dependable supply of solid and liquid fuels at lower delivered costs will help exist- ing industries and may increase the attraction of sites in the area for new industrial plants. 6.10 Apart from benefits arising from resources development there are considerable savings in distance to the Adriatic Sea from the major economic centers. At present, traffic to and from these main centers must move by extremely circuitous routing, incurring greater movement costs than would be the case if the Belgrade-Bar line were available. Map 1 shows that the nearest alternative port is Ploce, and comparable distances are given below: Distance in km Main Economic Center To Ploce To Bar Saving Belgrade 628 475 153 Zrenjanin 722 569 153 Nis 872 531 341 Kraljevo 823 391 432 Kosovska Mitrovica 950 522 428 Skopje 1,074 643 431 The building of the line would therefore go a considerable way towards rationalizing the transport network and reducing costs. 6.11 The building of the Sarajevo-Ploce line was undertaken having regard to the possibility of the Belgrade-Bar line being completed and there has been clear demarcation between the areas of influence of both railways. The Sarajevo-Ploce line does not rely on Belgrade-Bar traffic for its economic justification. 6.12 The highway network in the area of influence of the railway is being improved by links between Bar and Skopje, Bar and Belgrade, and - 19 - Belgrade to Kosovska Mitrovica. A comparison of vehicle operating costs in such mountainous territory with railway operating costs and the compo- sition of the expected railway traffic (mainly low value bulk commodities and semi-finished products) indicates that the roads will mainly complement the railway. It is expected that the highways will carry mainly short-haul traffic for which the railway is unsuitable, and also supply feeder traffic for the railway. 6.13 In order to handle the diverted and generated traffic, it is planned to develop the Port of Bar for full operations in 1973. The port was expected to handle about 600,000 tons in 1967, much of it to and from the steel plant at Niksic and the industries of Titograd. Expansion of annual capacity to 6 million tons is planned for 1973, enough to handle more than the expected traffic. 6.14 The expansion of the port will obviate the need for construction of additional capacity at Ploce which would be necessary if the line were not built. Similarly, the Port of Ploce will relieve congested facilities at Rijeka for the handling of large volumes of planned transit traffic to and from Rumania and Austria. Traffic on the Belgrade-Bar Railway 6.15 Traffic on the Belgrade-Bar line in 1973 is expected to be about 8 million tons, including 1.4 million tons which could be carried on sections already completed even if no further investment were made. This compares with total system tonnage in 1966 of 71.6 million tons (Table 10) and a forecast of 85.5 million tons in 1973 (Table 11). A breakdown of expected traffic on the new line is given below. BEILRADE-BAR TRAFFIC, 1973 (000 Tons) Export-Import via Bar: From area Diverted Domestic of influence from Ploce Total Percent Coal and Coke 925 - 25 950 11.7 Oil and Products 299 60 - 359 4.5 Ores and Concentrates 130 - 162 292 3.6 Non-metals 23 339 317 679 8.4 Metanllurgical Products 170 159 180 509 6.3 Timber, Logs and Products 421 125 10 556 6.9 Cement 564 - - 564 7.0 Building Material 210 100 30 340 4.2 Fertilizers 263 15 - 278 3.4 Phosphate Rock - - 949 949 11.7 Cereals 61 50 190 301 3.7 Other agricultural products 519 10 290 819 10.1 Other, including less than carload 1 214 72 200 1 486 18.4 930 2,353 0 100.0 Source: Mission estimates. - 20 - 6.16 The traffic is expected to include about 4.8 million tons moving within the area of influence, either newly generated or diverted from narrow gauge lines or trucks. Another 2.3 million tons will be imported or exported via the Port of Bar rather than the best alternative, the Port of Ploce, and about 0.9 million tons will move through Bar from or to the area of influence. One of the largest categories of traffic expected to move is agricultural produce, accounting for 10 per- cent of tonnage. This will consist of a variety of vegetables, fruit and livestock. Coal and coke are important, with a 12 percent share of the traffic, as is phosphate rock which will move from Bar to plants beyond Belgrade. 6.17 Freight traffic on the new line has been estimated by the Railways to double in 30 years and passenger traffic to increase by 24 percent. These growth rates appear reasonable, having regard to the expected growth of industrial and agricultural production, income and population. The annual average growth rate for freight in the first five years of the eco- nomic life of the project would be 4 percent per annum, falling to about 1.25 percent in the last 5 years. Passenger growth is expected to be 1 percent annually in the first five years and 0.3 percent in the last period. It has not been possible to forecast individual movements for the line beyond 1973 but overall orders of magnitude based on such growth rates for the Belgrade-Bar line can be expected to be: Freight Passengers I%Tet ton-km (millions) Passengoa-km (millions) 1973 2,329 900 1978 2,841 954 1983 3,284 985 1988 3,679 1,021 1993 4,029 1,044 Benefits 6.18 The benefits which will accrue from the project are of several kinds. They consist largely of savings which will occur from the use of lower cost transport as well as the inducement of traffic that cannot at present move because of prohibitive costs or the lack of any transport outlets. These, and other benefits, are tabulated below: - 21 - Benefits, First Year of Operations, 1973 % of First (N. Din millions) Year Benefits A. Freight (a) Diverted from: Truck transport 64.88 30.3 Belgrade-Ploce rail route 9.72 4.5 Danube-Ploce (via river and rail) o.34 0.2 (b) Generated, best alternative transport being: Truck transport 25.26 11.8 Narrow gauge railways 20.01 9.4 Danube-Ploce (via river and rail) o.17 0.1 B. Passengers (a) Diverted from bus transport 31.99 14.9 (b) Generated, best alternative transport being: Bus transport 15.99 7.5 C. Other benefits common to freight and passengers (a) Diverted from narrow gauge railways 36.76 17.2 (b) Electrification of existing sections 1.94 0.9 (c) Shorter sea transport distance to Bar 5.18 2.4 (d) Interest savings on working capital 1.71 0.8 213.95 100.0 6.19 The methodology used in the calculation of the benefits shown above is described in Annex A. One main point to be emphasized here is that while about 60 percent of the freight ton kilometers would otherwise be carried by the Belgrade-Ploce rail route, this traffic will provide less than 5 percent of the total railuay benefits because such savings per unit are very small as compared with the savings on diverted truck traffic or on generated traffic where the best alternatives are truck transport or narrow- gauge railways. 6.20 The largest class of benefits arises from the diversion of traffic from trucks to the railway (30 percent). Muach of this traffic is now moved over long distances at very high cost. Anticipated road improvements will not reduce costs sufficiently to make road competitive with rail transport for the forecast traffic. Additional benefits, not quantified, arise from the provision of all-weather rail transport through - 22 - an area subject to snow blockages on the highways. About 17 percent of the benefits will come from the diversion of freight and passengers from the narrow gauge railways which roughly parallel the new line for about one-third of its length. The operating costs alone on these lines is about three times the costs on the new electrified line and the benefits will be considerable. Passengers will benefit, transferring from the relatively high cost and slow buses, accounting for nearly fifteen per- cent of the benefits. 6.21 Traffic newly generated by the railway will contribute substantial benefits. In the absence of the railway the only alternatives would be relatively high cost road transport, narrow gauge railway lines or the Belgrade-Ploce railway route, depending on the location and characteristics of the traffic. Such generated traffic accounts for N.Din. 45 million in freight and N.Din. 16 million in passengers shown in the aboye table, or 28 percent of the first full year benefits. 6.22 Sections of the line will be opened for traffic in stages until completion in 1973. As this occurs the parallel narrow gauge lines in Western Serbia will be abandoned and much of the traffic will be trans- ferred. At the same time traffic which would otherwise move by bus or truck will be transferred. These benefits rise from N.Din 26 million in 1969 to N.Din 97 million in 1972 (Annex A). 6.23 Intangible benefits of a different nature will occur, such as the progress towards greater national cohesion with the connection of underdeveloped Montenegro with the richer Republics, the increased safety and reliability of an all-weather transport route and the saving in time which will occur for freight and passengers. 6.24 The tangible benefits described above have been projected for the economic life of the Railway by applying the traffic forecasts described in paragraph 6.17 above. l4aintenance costs of the line have been deducted from these benefits for each year of operation. 6.25 The tangible net benefits thus derived have been measured against line construction costs, including contingencies,to arrive at the economic rate of return which is 8½2 percent, calculated from January 1, 1968 to the end of the railway's economic life of 35 years. If the benefits and costs are measured from January 1966, the rate of return would be 7½2 percent. - 23 - 7. FINANCIAL ASPECTS Rates and Fares 7.01 The rate and fare policy of the Railways stems from the Federal Constitution of 1963 and the Law on the Organization of the Yugoslav Railways of January 1, 1966. The Office of Price Controls controls all rates and fares which are required to cover costs and to make a contributant to investment needs. Funds for new lines are provided as grants directly by the Federal Government and the Governments of the Republics; and these Governments also provide up to 50 percent of other capital needs. 7.02 An important problem confronting the Railways has been their inability to increase rates and fares promptly to offset cost increases, especially higher wages, because of delays in getting government authorization through the Office of Price Controls. Government subsidies were necessarily provided in 1964 and 1965 until passenger fares were belatedly raised in April 1965, and freight rates in September 1965, by amounts ranging from 32 to 40 percent. No general rate increases have been effected since then. 7.03 It was expected, during the appraisal of the second railway project in 1964, that the narrow legal limits within which rates and fares might vary would be sufficiently widened to permit their timely adjustment in accordance with changes in costs. WAhile this expectation was not realized, legislation is now being considered whereby the railways would be given greater freedom in fixing rates; and it was agreed during negotiations for the Belgrade-Bar project that the Government in the future would take such action as may be required to enable the Railways to adjust their rates and fares promptly in relation to costs and to make them effective promptly. 7.04 Prior to January 1, 1966 freight rates and passenger fares were on uniform bases for all of Yugoslavia; the operating revenues were first pooled and allocated to each enterprise on the basis of a formula designed to permit each to cover its terminal costs and to distribute the remainder on the basis of (i) work performed and (ii) differences in train-operating conditions. Beginning in 1966, each enterprise undertook to retain its own earnings, and to establish its own level of rates and fares, based on its own costs except for the railway transportation enterprises of Skopje and Titograd. These two enterprises were permitted to establish their rates and fares on bases lower than their relatively high costs; but they were also required to eliminate the divergence between rates and costs by the end of 1970. For the Skopje and Titograd enterprises, government subsidies are provided to meet the resulting deficiency in revenues from January 1, 1966 to December 31, 1970. - 24 - 7.05 All carload freight traffic moves at class rates subject to a uniform national classification. There are now eight groups of commodities, two less than in 1964 and 1965. The relationship between them ranges from 100 to 50 The relationship is reasonable. Lower than normal rates on lignite, fertilizer, bauxite ore, coal, firewood, fruits, vegetables and sea food were eliminated in 1966. There are two classes of passenger fares, first class being double second class fares. Reduced passenger fares are prescribed by the Government for national heroes, partisans, invalids, children and students, among others; the Government pays the railway enterprises for the amount of the reduction below normal fares. This payment amounted to N. Din 45.5 million (US$ 3.6 million) in 1966. Budgets, Accounts and Auditing 7.06 A separate budget is prepared annually by the Community of Yugoslav Railways for the entire system, based on separate budgets for each enterprise and coordinated with an overall working plan which consists of an estimate of traffic demand and the financial resources, for both capital and operating purposes, required to meet it. This coordination is completed after discussions between the Management Board of the Community of Yugoslav Railways and the Transport Committee of the Federal Assembly, The only approval required is that of the Federal Secretariat. 7.07 Accounts are kept on a sound basis in accordance with a uniform system prescribed for all commercial enterprises by the Federal Government. Some deviation from practices customary in Western Europe occurs principally because of (a) the decentralized organization, and (b) the periodic supplemental payments to workers which might be considered to be an allocation of net income. The accounts of the six enterprises have been properly consolidated and inter-enterprise duplications have been eliminated. The supplemental payments to workers, for the purpose of the present analysis, have been included in operating expenses as "wages and salaries", inasmuch as the accounts do not separately state the amounts of basic wages and supplementary payments and the latter are progressively becoming a smaller proportion of the total wage bill, 7.08 Straight-line depreciation is applied on all assets except land and permanent way substructures which consist of earthworks, culverts and everything below the ballast including supporting walls. Depreciation on permanent way (ballast, rails, etc.), motive power and rolling stock has been assessed also in some cases on functional bases whereby the rates of annual depreciation increase in proportion with intensity of use. In 1966, depreciation charges to operating expenses were 12.8 percent of gross revenues and accumulated depreciation was 53 percent of the value of gross operating fixed assets which were revalued in 1954, 1957, 1962 and in 1966, (see paragraph 7.19). Depreciation allowances are adequate. 7.09 An audit of the accounts of the individual enterprises is made at least once a year by the Service of Social Accounting, a department of the National Bank. These enterprises are required to submit quarterly as well as annual reports to the National Bank which issues a statement annually, indicating the extent to which, if at all, the accounts have not been properly kept in accordance with the prescribed uniform regulations, and ordering remedial action, as required. The statements for 1966 have been received. It has been agreed that the financial statements of each of the Railway Transport Enterprises will be certified annually by the Service of Social Accounting, and that these statements and copies of the reports pertaining to the certification will be promptly forwarded to the Bank. Earnings 7.10 As with the two prior Bank loans for the Railways, the subject of finances in this report covers the financial experience and prospects of the six railway transport enterprises (the railway operating units) to the exclusion of about 70 "a xiltary enterprises" which perform for some railway enterprises such services as track, car and locomotive repairs, trucking operations, construction, railway restaurants and holiday resorts, designing and engineering, etc. Each auxiliary enterprise has a separate accounting system and many of them serve industry generally as well as the railways. The use of the accounts of only the six "operating" enterprises makes the analysis more conservative inasmuch as the net income of the 70, which amounted to about N. Din 32 million in 1966, is not included. Part of this net income was derived from non-railway operations. 7.11 The 1963 and 1964 loan documents did not include a specific rate or revenue agreement. Financial forecasts were given resulting from the Bank's appraisal of the projects; but these forecasts have not been achieved, as shown in detail in Table 18. The forecasts and actual achievements in 1964, 1965 and 1966 are summarized below (in N. Din millions): 1964 1965 1966 Forecast Actual Forecast Actual Forecast Actual Operating revenues 2,320 2,432 2,430 3,766 2,530 4,389 Operating expenses 2,080 2,437 2,150 3,916 2,230 4,157 Net operating revenues (loss) 240 ( 5) 280 ( 150) 300 232 Net income 90 103 120 138 130 261 Operating ratios 90 100 89 104 88 95 Rates of return 1/ (loss) 4.0 (0.1) 4.7 (2.4) 5.0 2.7 1/ Net operating revenues or (loss) as a percentage of net fixed assets in use. - 26 - 7.12 The disappointing results in 1964 and 1965 were due in the main to delays in obtaining government authorization to increase rates and fares in order to offset higher costs. Had actual payments by Government in lieu of the withheld rate increases been considered as part of operating revenue, the operating ratios in 1964 and 1965 would have been 92 and 95, respectively. As shown above, the actual results in 1966 were also less favorable than expected; and 1967, based on the first nine-months' experience when net income, after all fixed charges but before debt repayments, was actually a loss of N. Din 46 millions, is expected to be less favorable than 1966. This situation requires immediate action to improve earnings and this matter is discussed in paragraph 7.16. 7.13 Future earnings, as estimated by the Railways and adjusted by the Bank on the criteria stated in paragraph 7.15 (b), are set forth in detail in Table 19 and summarized below, in millions of N. Din. Net Percent Operating Operating 1/ Operating Operating Rates of Year Revenues Expenses Revenues Net Income Ratios Return 1967 4,119 4,101 18 70 99 0.2 1968 4,266 4,075 191 210 95 1.6 1969 4,475 4,091 384 375 91 3.0 1970 4,589 4,100 489 438 89 3.6 1971 4,900 4,089 811 715 83 5.8 1972 5,061 4,184 877 785 83 6.1 1973 5,555 4,462 1,093 998 80 6.8 1974 5,720 4,569 1,151 1,016 80 6.4 1975 5,909 4,681 1,228 1,096 79 6.6 Note 1: Operating expenses include depreciation and all income payments to workers. 7.14 Operating ratios would improve progressively from 99 in 1967 to 79 in 1975; times interest earned would be no lower than the five times estimated for 1967 and debt service would remain good, improving progressive- ly from 5.4 times in 1967. The return on the average net fixed assets would progressively range upward from 0.2 percent in 1967 to 6.0 percent in 1972 and to 6.6 percent in 1975. The return calculations are related to fixed- asset data as revalued in 1966. 7.15 The forecast of earnings is based on a number of important assumptions: (a) for 1968 and thereafter, the traffic forecasts discussed in paragraphs 3.14 through 3.16; (b) an increase in revenues, through rate and fare adjustments, equivalent to 3 percent as of December 1, 1968 and an additional 5 percent as of January 1, 1971; - 27 - (c) the labor force reduction discussed in paragraph 3.05; (d) annual increases in payments to workers of one percent beginning in 1971 reflecting higher supplementary payments over and above basic wages which are at constant 1967 levels; (e) constant 1967 prices for materials and supplies; (f) any additional increases in operating costs would be promptly offset by increases in rates and fares as necessary to achieve the specified financial objectives. 7.16 The increases in revenues referred to in paragraph 7.15 (b) are required, on the basis of present estimates, for the Railways to earn an adequate rate of return on their net operating fixed assets. To this end, it has been agreed that the Railways will introduce an increase in rates and fares during the course of 1968 so as to produce additional gross operat- ing revenues of N. Din 111 million in 1969 based upon the estimates of 1969 traffic agreed during negotiations (this is approximately equivalent to the 3 percent increase referred to in paragraph 7.15 (b); and that the Railways will take whatever additional measures may be required, whether increases in rates or reductions in expenses, to earn 3.5 percent in 1970 and at least 6.0 percent in 1975 and thereafter. Finances 7.17 The Railways, as all economic dnterprises in Yugoslavia, pay the Government for the use of fixed assets assigned to them. For industry gene- rally, the charge is six percent; but the Railways, as other public utility enterprises, pay 1.7 percent on operating property (excluding land, permanent way and structures such as tunnels), and six percent on social standard assets, such as workers' housing. 7.18 Balance sheet data as of December 31, 1964/1966 and as of June 30, 1967 are shown in Table 20. The ratios of current assets to current liabi- lities were about 1.5:1. The liquid ratios (current assets less stores to current liabilities) were 1.1:1 at the end of each year, and 1.4:1 as of June 30, 1967. Operating cash as of December 31, 1964 and 1965 was only seven and four percent, respectively, of annual cash operating expenses (excluding depreciation). While the liquid ratios and operating cash were generally inadequate, ten percent of cash operating expenses, which may be considered adequate, was available on December 31, 1966; and this improved by June 30, 1967. The debt/equity ratios and debt service coverage have been good. - 28 - 7.19 The latest revaluation of the Railwzayst fixed assets in 1966 increased the value by more than 50 percent as shown below: Millions of New Dinars As of As of Percent 6/30/66 7/1/66 Increase Increase Gross operating fixed assets 141,36 21,815 7,679 54.3 Accumulated depreciation 7,625 11,715 4,090 53.6 Net operating fixed assets 6,511 10,100 3,589 55.1 7.20 It has been agreed that the Railways will continue to revalue their assets from time to time in the future to reflect realistic values. 7.21 The future finances of the Railways are shown in the balance sheet projections, Table 21, and in the cash flow estimates, Table 22. The ratio of current assets to current liabilities would remain at about 1.6:1 and the liquid ratio would remain at about 1.3:1 throughout the period 1967-1975. The debt-equity ratio is estimated to remain good, ranging from 13/87 in 1967 to 19/81 in 1969 and improving thereafter to 13/87 in 1975. 7.22 The future earnings and finances of the Yugoslav Railway transport enterprises would improve sufficiently to permit the Railways to establish a modernization fund beginning in 1971 with a contribution of about N. Din 122 million in that year. The sum would grow to about N. Din 667 million by 1975 as shown in Table 21. This amount could be used for additional motive power, rolling stock and electrification, among other needs, in the 1971-1975 period. 7.23 The Railways' cash needs and sources of funds, in the period 1968-1973 are set forth in Table 22 and summarized below: New Dinars (Millions) Cash Requirements Capital investments 13,058 Debt service 1,772 Working capital 53 Increase in cash position 640 Total cash requirements 15,523 Cash Available Railways 13,008 Banlk loan 493 Other loans 2,022 Total cash available 15,523 - 29 - 7.24 Internally generated funds would amount to N. Din 13,008 million, and after covering debt service and working capital requirements of N. Din 1,825 million there would remain some N. Din 11,183 million. Of this N. Din 10,543 million would be applied toward capital investments amounting to N. Din 13,058 million, N. Din 493 million being covered by the second railway project of 1964 and N. Din 2,022 million by foreign and domestic loans as well as grants from republic and city governments. The overrun total N. Din 640 million, the amount whereby the cash position would be improved during this period, could be used for the purpose of financing the major part of the capital investments referred to in paragraph 7.22. It has been agreed that the Railways will contribute at least 50 percent of their capital needs from internally generated funds. 8. CONCLUSIONS AND RECONMDATIONS 8.01 The Belgrade-Bar Railway Project will significantly improve, and substantially complete, the railway transport network of Yugoslavia and permit more economical access between the developed central regions and the coast. It is well planned and technically sound and the cost estimates, which include adequate allowances for contingencies, are considered to be reliable. The economic return on the investment is somewhat less than is customary in Bank- financed projects, but in view of the important contribution of the project to the integration of the area served by the Railway with the remainder of the country, the project is considered to be justified. The Government and the Investors are well able to execute the project effectively. 8.02 Funds for the project will be provided from budgetary sources, the largest share to be provided by the Federal Government and the remainder by the Republics of Montenegro and Serbia. 8.03 During negotiations agreement was reached with the Yugoslav authori- ties on the following principal issues: (i) staff reductions (paragraph 3.05); (ii) satisfactory arrangements to provide the Investors with any funds that might be required to meet overruns of the estimated costs (paragraph 5.14); (iii) adjustment of rates and fares in relation to costs (paragraph 7.03); (iv) targets for rate of return (paragraph 7.16) and revaluation of fixed assets (paragraph 7.20); and (v) contribution to capital needs from internally generated funds (paragraph 7.24). 8.04 The Project provides a suitable basis for a Bank loan to the Yugoslav Investment Bank of US$50 million equivalent for a term of 25 years, including a grace period of 6 years. March 6, 1968 Table 1 YUGOSLAVIA Freight Tranport Mode of Transport, 1256-1966 (millions of net ton-km) Inland Coastal Year Total Railways Vaterways Shipping Enterprises AccoLni. 1956 n.a. 11,869 928 208 206 n.a. 1957 15,615 12,984 1,257 226 349 799 1958 16,284 13,031 1,491 257 560 945 1959 17,949 13,974 1,636 499 816 1,022 1960 20,534 15,191 2,009 390 1,016 1,928 1961 20,986 114,941 2,085 370 1,382 2,208 1962 21,575 15,033 2,212 358 1,615 2,357 1963 25,469 17,345 2,569 376 2,024 3,155 196h 28,559 18,258 3,108 370 2,399 h,424 1965 30,170 18,036 3,313 410 3,029 5,382 1966 31,495 17,491 3,853 459 3,616 6,o49 Average Distance Hauled 1965 241 360 84 14 1966 245 363 91 n.a. Percentage Shares 1956 100 - - - 1957 100 83.2 8.1 1.4 2.2 5.1 1958 100 80.0 9.2 1.6 3.4 5.8 1959 100 78.8 9.1 2.8 4.6 5.7 1960 100 74.0 9.8 1.9 4.9 9.4 1961 100 71.2 9.9 1.8 ".6 10.5 1962 100 69.7 10.3 1.6 7.5 10.9 1963 100 68.1 10.1 1.5 7.9 12.4 1964 100 63.9 10.9 1.3 8.4 15.5 1965 100 59.9 11.0 1.3 10.0 17.8 1966 100 55.6 12.2 1.5 11.5 19.2 Source: Federal Institute for Statistics, Belgrade. October 26, 1967 Table 2, YUGOSLAVIA Freiaht Traffic by Mode of Transport, 1956Q1966 (million tons) Inland Coastal Truck Year Total Railways W a te ajS LLnM Enterprises 1956 64o1 52.1 2.8 4.1 5.1 1957 71-5 5606 3e6 4L8 6.5 1958 7h03 57.2 403 5.2 7.6 1959 817 60o7 .08 6.1 1001 1960 91o0 65o2 5.6 78 12.l4 1961 93.0 6h42 5.9 8.3 1h06 1962 95.7 63.6 547 9o1 17.3 1963 lllo9 71-8 6.9 9° 23.8 1964 124.8 76o5 8.2 9.7 30o)4 1965 130.6 74.8 9.2 1lo6 360o 1966 133.0 71.6 10i6 39°7 Percentage Shares 1956 100 81.3 1.4 6.4 7o9 1957 100 79.2 500 6.7 9o1 1958 100 77.0 508 7.0 10.2 1959 100 7142 5.9 7,5 12.4 1960 100 71A6 6o2 8.6 13.6 1961 100 69.o 64 8.9 15.7 1962 100 66-5 6.o 9°5 18.0 1963 100 6h42 6.1 8.4 21.3 196h 100 61o3 6.6 7A8 24h3 1965 100 57.3 700 8.1 27.6 1966 100 53.8 8.0 8.4 29.8 Source: Federal Institute for Statistics, Belgrade. October 26, 1967 Table 3 YWOSLAVIA Passenger Traffic, by Mode of Transport, 1956-1965 (millions of passenger-km) _ ighways Maritime Passenger Coastal Inland Year Total Railways Buses CarslJ Air Shipping waterways 1956 8,817 7,314 966 220 48 248 21 1957 10,095 8,059 1,346 325 53 285 27 1958 11,492 8,877 1,760 425 60 340 30 1959 12,502 9,250 2,231 580 82 333 26 1960 14,574 10rA49 2,826 810 111 348 27 1961 14,893 10,089 3,139 1,180 136 326 23 1962 15,187 9,908 3,315 1,425 165 354 20 1963 16,780 10,673 3,876 1,655 267 293 16 1964 19,698 12,308 4,843 1,875 366 293 13 1965 n.a. 12,800 6,025 n.a. 480 323 10 1966 n.a. 12,196 8,1140 n.a. 538 295 10 Average Distance Hauled 1965 54.2 27.6 65.9 71.4 1966 57.2 27.3 76.2 90.9 Percentage Shares 1956 100 82.9 11.1 2.5 0.5 2.8 0.2 1957 100 79.8 13.4 3.2 0.5 2.8 0.3 1958 100 77.3 15.3 3.7 0.5 3.0 0.2 1959 100 74.0 17.8 4.6 0.7 2.2 0.2 1960 100 71.7 19.4 5.5 0.8 2.4 0.2 1961 100 67.7 21.1 7.9 0.9 2.2 0.2 1962 100 65.3 21.8 9.4 1.1 2.3 0.1 1963 100 63.6 23.1 9.9 1.6 1.7 0.1 1964 100 62.5 24.6 9.5 1.8 1.5 0.1 1965 100-n.a. 1966 100-n.a. Source: Federal Institute for Statistics, Belgrade. 1J Assumes that each passenger car travelled about 6,000 km annually in intercity traffic, with an occupancy rate of 2.5 persons per car. "O-tober 26, 196? Tabl e L YUGOSLAVIA Passenger Traffic, by Mode of Transport. 1956-1966 (millions of passengers) CoAstal Inland Year Total Railways Buses Air Shippin2 Waterways 1956 202.46 159 37 0.09 5.52 0.85 1957 228.73 171 51 0.11 5.74 0.88 1958 25h.44 184 63 0.13 6.25 1.06 1959 279.56 191 81 0.17 6.75 o.64 1960 321.00 212 101 0.23 7.24 0.53 1961 31.52 195 109 0.27 6.65 0.60 1962 322.20 193 122 0.31 6.17 0.72 1963 354.59 201 147 0.44 5.62 0.53 1964 414.69 226 182 0.54 5.76 0.39 1965 459.67 236 218 o.63 4.90 0.14 1966 515.57 213 298 0.59 3.87 0.11 Percentage Shares 1956 100 78.7 18.3 0.0 2.7 0.3 1957 100 74.8 22.2 0.1 2.5 o.4 1958 100 72.4 24I.8 0.0 2.4 o. 1959 100 68.4 28.9 0.1 2.4 0.2 1960 100 66.o 31.4 0.1 2.3 0.2 1961 100 62.6 35.0 0.1 2.1 0.2 1962 100 60.0 37.8 0.1 1.9 0.2 1963 100 56.7 41.h 0.1 1.6 0.2 1964 100 54.5 43.8 0.2 1.4 0.1 1965 100 51.3 147.4 0.2 1.1 0.0 1966 100 41.3 57.8 0.1 0.8 0.0 Source: Federal Institute for Statistics, Belgrade. October 26, 1967 Table 5 YUOOSaVIA Expenditure on Investments in Fixed Assets of the Socialized Sector, by Sector, Percentage of Total, Selected Years 1960-1965 1960 1962 126 1965 Total 100.0 100.0 100.0 100.0 Transportation 17.6 13.2 12.9 11.7 Manufacturing and mining 35.1 38.3 35.3 36.2 Agriculture and forestry 13.5 11.3 10.2 9.4 Construction 2.5 2.6 2.4 1.7 Trade, catering and handicrafts 6.4 5.7 7.2 6.1 Housing and cammunal development 15.0 16.0 21.0 24.2 Cultural and social Instiktions 6.1 7.2 6.6 6.7 Government 3.7 5.5 4.1 3.9 100.0 100.0 100.0 100.0 Source: Statistick: Bilten, recurrent October 26, 1967 * 0 4 ~ ~~ ~ ~~~~ 0 0 S,4' 0 C - 0 -0.010' Co -.- .4* O-~ C- !% -e .1,- 4 ~~Io . 0 - N~~~~0o 4 4 ' %o 0a4N0 ~ ~ J ~~~a 4Nc a - - - -.- -0 00-- - -- - - - - - - - - - - - - - - - - - ----N - -- - - - -- - - -0- - 0% 0%~~~~~~~~~ - -----. ----- -- - - - - - -NO C N - -N- -N. - -'..-4- - N N * . C .-~~~~~~~~~~CFi N.4N 0 N 41% - - ---C- - - - - - - - - -- N--- - - - - - - - -N - - - - - - - - - - - - - - - - - * … … … … … … … … 0~~~~~~~'a . .C0O%Ni3 - NU% C~~~~ - -6 -, Nle51% 0 C z-N. .O .CC.-CCN C.CO C C. .C C . .- N '1 0 10%LJCC YUGOSLAVIA Yugoslav Railways Railway Network and Traffic Density, 1925-1966 1925 1950 1961 1962 1963 1964 1965 ,96j St.G. N.G. St.G. N.G. St.G. N.G. St.G. N.G. St.G. N.G. St.G. N.G. St.G. IN.G. St.G. N.S. 1. N-TsORK (end of the year) Route-kilometer of lines, km 6,700 2,187 8,429 3,112 9,162 2,705 9,174 2,618 9,276 2,580 9,273 2,581 9,311 2,528 9,437 2,183 Route-kilometer of lines, total standard plus narrow gauge, km 8,887 11,541 11,867 11,792 ii,856 11,854 11,839 11,58t Double track lines, km n.a. n.a. 633 _ 728 2 728 3 724 3 724 3 733 3 733 3 Electrified lines, km - - 103 - 235 - 310 - 310 - 432 - 472 - 483 _ II. TRAFFIC DENSITY Passenger-km per km of line, (000) n.a. n.a. n.a. n.a. 1,008 319 997 292 1,071 288 1,247 289 1,280 324 n.a. n.a. Passenger-km per km of line, average standard and narrow gauge (000) 18[ 718 850 8Lc0 900 1,038 1,081 Freight-net-ton-km per km of line (000) n.a. n.a. n.a. n.a. 1,191 472 1,560 329 1,796 361 1,902 376 1,869 370 n.a. n.a. Freight-net-ton-km per km of line, average for standard and narrow gauge(OOO) 2h3 861 1,274 1,287 1,484 1,569 1,549 1I ;- e St.G. * Standard Gauge; N.G. = 'iarrow Gauge. Changes in the network from 1965 to 1966: The 19L km standard gauge line Sarajevo-Ploce has been opened for traffic; 68 km of standard gauge and 385 km of narrow gauge lines have been discontinued diuing 1 j66. October 26, 1967 YUGOSLAVIA YUGOSLAVIA RAILWAYS MOTIVE POWER AND ROLLING STOCK. YEARLY AVERAGES 1961 - 1966 19 61 1962 1963 1926 4 196 1966 St. G. la/ N.G. la St. G.' N.G.' St.G.' N.G.' St.G.' N.G.' St.G.' N.G." St.G.' N.G.'. I. MOTIVE POWER Steam locomotives In Fleet (nos.) 1,722 565 1,693 534 1,650 511 1,629 505 1,604 487 1,573 468 Available (hos.) 1,285 373 1,204 367 1,220 370 1,214 366 1,252 381 1,143 323 Available (%) 75 66 71 69 74 72 75 72 78 78 73 69 Diesel locomotives In Fleet (nos.) 110 - 151 - 169 - 188 - 212 - 243 Available (nos.) 90 - 132 - 142 - 158 - 175 - 200 - Available (%) 82 - 87 - 84 - 84 - 83 - 82 - Electric locomotives In Fleet (nos.) 27 - 29 - 41 - 47 - 53 - 55 - Available (nos.) 23 - 25 - 35 - 39 - 43 - 45 - Available (%) 85 - 86 - 85 - 83 - 81 - 82 - Diesel railcar sets b/ In Fleet (nos.) 108 5 160 5 194 5 230 5 229 4 248 4 Available (nos.) 75 3 112 3 142 3 172 3 179 2 194 2 Available (%) 69 60 70 60 73 60 75 60 78 50 78 50 Electric railcar sets J In Fleet (nos.) 4 - 4 - 4 - 5 - 7 - 22 - Available (nos.) 2 2 _ 2 - 2 - 5 - 17 - Available(%) 50 - 50 - 50 - 40 - 71 - 77 Total H.P. of Motive Power Units Steam (000) 1,3114 167 1,235 160 1,239 165 1,263 164 1,220 159 1,200 131 Diesel (000) 240 2 262 2 280 2 299 2 327 2 384 2 Electric (000) 96 - 113 - 141 - 177 - 182 - 210 - II. ROLLING STOCK Passenger cars J In Fleet 5,254 1,007 5,355 995 5,226 991 4,930 989 4,739 965 4,624 849 Available (%) 92 90 90 90 90 90 90 90 90 90 91 90 Total seating capacity (000) 231 24 240 26 242 23 237 23 235 22 239 19 Freight cars In Fleet 63,480 9,0114 63,588 8,796 63,796 8,741 64,221 8,619 64,018 8,422 63,532 7,706 Available (%) 92 94 93 94 95 95 95 95 95 95 95 96 Total carrying capacity (000 m ton) 1,275 109 1,294 106 1,349 105 1,375 103 1,378 102 1,378 91 Average capacity per car (m ton) 20.1 12.1 20.3 12.1 21.5 12.0 21.4 12.0 21.5 12.1 21.7 11.8 Note: a/ St.G' = Standard Gauge; N.G.' = Narrow Gauge J/ Units of powered cars and trailers J/ Excluding railcar trailers, but including restaurant, sleeping and service cars, and baggage and mail vans February 29, 1968 YUGOSLAVIA YUGOSIAV RAILWAYS AGE OF MOTIVE POWER AND ROLLING STOCK TOTAL NUMBER PERIOD OF MANUFACTURE PROCUREHENT IN FLEET END IN PERCENT OF THE TOTAL 1965 SINCE IN 1966 TYPE OF 1965 BEFORE 1920 1920-1929 1930-19W, 1944 UNITS Steam locomotives, St.G. 1s528 25 30 35 10 _ nv n , N.G. 467 5 23 12 11 19 Diesel locomotives, St.G. 235 - - - 100 43 , N.O. 1 - - - 100 - Electric locomotives, St.G. 53 - - 32 68 - Diesel railcar sets, St.G. 238 _ - 3 97 1-4 n it , NG* 4 - - 100 - 1 Electric railcar sets, St.G. 10 - - 20 80 17 Passenger cars, St.G. 3,807 a/ 18 13 7 62 4 axle 77 2 axle 104 " " ,N.G. 739 55 33 10 2 - Freight cars, St.G. 64,018 32 24 19 25 275 b/ CD Note: St.G. - Standard Gauge; N.G. - Narrow Gauge a/ without service cars, baggage and mail vans o/ including 10 service cars otober 26, 1967 Table 10 YUGOSLAVIA Principal Commodities Carried by Yugoslav Railways, 1952 and 1962-1966 (thousand tons) Metal- a) Building a) lurgical Material Year Total Coal Oil Ores Products Wood and Cement Cereals Other 1952 37,939 10,447 885 2,379 1,237 6,155 7,876 2,332 6,628 1962 63,588 18,800 2,030 7,036 3,722 4,852 10,384 2,080 14,684 1963 71,777 21,199 2,135 7,253 4,262 5,264 11,249 2,766 17,649 1964 76,527 22,464 2,280 7,570 4,269 5,391 12,587 2,240 19,726 1965 74,781 21,881 2,026 7,524 4,137 5,147 12,116 2,634 19,316 1966 71,618 20,179 2,076 6,072 6,223 5,092 11,315 3,173 17,488 1967* 68,730 16,863 2,080 7,249 6,028 4,567 12,162 2,497 17,284 Percentage Shares 1952 100.0 27.5 2.3 6.3 3.3 16.2 20.8 6.2 17.5 1962 100.0 29.6 3.2 11.1 5.8 7.6 16.3 3.3 21.7 1963 100.0 29.5 3.0 10.1 5.9 7.3 15.8 3.8 24.6 1964 100.0 29.4 3.0 9.9 5.6 7.1 16.5 2.9 25.8 1965 100.0 29.3 2.7 10.1 5.5 6.9 16.2 3.5 25.8 1966 100.0 28.2 2.9 8.5 8.7 7.1 15.8 4.4 24.4 1967 100.0 24.5 3.0 10.5 8.8 6.6 17.7 3.6 25.1 Source: INDEX Mont-hly Review of Yugoslav Economic Statistics (Recurrent) * Preliminary a) Note: These groups include "non-metals" which is separately shown in Table 11. Data for 1966 and 1967 may not be strictly comparable with previous years. Table 11 YUGOSLAVIA Yugoslav Railway System Freight Traffic Projection, 1966-1975 Tons Net Ton-Km Average Length Year (000) (millions) of Haul, km 1966 (Actual) 71,618 17,491 245 1967 (Preliminary) 68,730 16,390 238 1968 70,496 16,993 241 1969 72,300 17,430 21 1970 74,292 17,915 241 1971 76,851 18,358 239 1972 79,9948 19,119 239 1973 86,199 21,324 248 1974 89,257 22,160 248 1975 93,095 23,078 248 Tonnage By Commodity Group (Million Tons) Metal- Building Non lurgical Materials Year Total Coal Oil Ores Metals Products Wood & Cement Cereals Other 1966 71.6 20.2 2.1 6.7 2.2 3.4 5.1 31.3 3.2 17.4 1967 68.7 16.9 2.1 7.2 2.1 3.9 4.6 12.2 2.5 17.2 1968 70.5 17.4 '2.2 7.5 2.2 3.9 4.7 12.3 2.5 17.8 1969 72.3 17.9 2.2 7.6 2.3 4.1 4.8 12.6 2.6 18.2 1970 74.3 18.4 2.3 7.9 2.3 4.2 4.9 13.0 2.6 18.7 1971 76.9 19.0 1.3 8.2 2.7 4.3 5.1 14.0 2.7 19.6 1972 79.9 19.8 1.2 8.4 2.8 4.5 5.3 14.6 3.0 20.3 1973 86.2 21.3 1.4 8.8 3.0 4.7 5.6 14.9 3.0 23.5 1974 89.3 22.1 1.4 9.1 3.0 4.8 5.8 16.1 3.3 23.7 1975 93.1 23.1 1.5 9.5 3.1 5.0 6.0 16.8 3.5 24.6 Source: Yugoslav Railways Table 12 YUGOSLAVIA Yugoslav Railway System Passenger Traffic Projection, 1966-1975 No. Passenger-Km Average Length (000) (million) of Journey 1966 213,207 12,196 57.2 (Actual) 1967 195,380 10,746 55.0 1968 197,432 10,918 55.3 1969 201,183 11,185 55.6 1970 205,407 11,461 55.8 1971 210,131 11,788 56.1 1972 215,959 12,158 56.3 1973 228,485 12,886 56.4 1974 233,283 13,204 56.6 1975 238,182 13,529 56.8 February 29, 1968 Source: Yugoslav Railways YWOSLAVIA YUGOSLAV RAIIWAYS Original and Revised Railway Investc.nt Program 1964 - 1970 and Preliminary Program 1971 - 1975 Revised Program 1964 - 1970 l Original Program Actual Expenditure Estimated Expenditure Total Expenditure Preliminary Program 1964 - 1970 1964 - 1966 1967 - 1970 1964 - 1970 1971 - 1975 Number of New Din. Number of New Din. Number of New Din. Numbof New Din Nu=ber of New Din. Item units million unit s million units million units million units million 1. Reconstruction and Modernization Program - 1,277.6 - 316.4 _ 1,712.7 - 2,029.1 _ 261.0 2. Additional works in connection with Modernization Program _ 296.3 - 41.5 - 180.0 - 221.5 - - 3. Rehabilitation of track and stations 3.1 Through lines km 1,071 600.0 386 275.2 685 480.0 1,071 755.2 250 200.0 3.2 Other first class lines km 716 331 191.2 385 270.0 716 461.2 800 560.0 3.3 Other lines km 1,234 890.0 324 103.9 910 460.0 1,234 563.9 1,300 715.0 3.4 Reconstruction, substructure, and stations - 278.1 - 192.9 - 240.0 - 432.9 - 475.0 Subtotal 3: 3,021 1,768.1 1,041 763.2 1,980 1,450.0 3,021 2,213.2 1,950.0 4. Motive Power 4.1 Electric locos. 250 590.1 - 55.0 215 716.3 215 771.3 125 464.o 4.2 Diesel 328 446.5 106 252.0 112 i69.4 218 421.4 260 858.o 4.3 Steam - - (76) 29.4 - _ 176) 29.4 - - Subtotal2 4: l ob a/i 336.4 327 oS.7 43y 1,222.1 385 1,322.0 5. Passenger Rolling Stock 5.1 Passenger cars cars 1,601 530.9 600 199.7 619 288.8 1,219 488.5 450 360.5 5.2 Diesel railcar sets (4-car-sets) sets 42 118.0 3 6.6 11 26.0 14, 32.6 20 70.0 5.3 Diesel rail bumes (2-car-sets) 66 37.5 26 19.4 46 36.8 72 56.2 50 39.0 5.4 Electric railcar seta (4-car-sets) 32 89.6 25 90.0 3 36.5 28 126.5 40 180.0 Subtotal 5: 776.0 315.7 3d8.l 703.o l 649.5 6. Freight cars cars 22,000 869.8 2,882 135.2 7,235 381.1 10,117 516.3 29,500 2,320.4 7. Reconstruction of junctions - - 773.5 - 110.2 - 180.0 - 290.2 - 979.0 (not included in item 1, 2 and 3) 8. Mechanization of lmding - - 112.3 - 23.4 - 160.0 _ 183.4 _ 375.5 9. Other Investoents - - 147.0 - 211.9 - 108.5 _ 320.4 _ 160.6 T 0 T A L New Dinar million - - 7,057.2 - 2,253.9 - 5,,446.1 7 7,700.0 _ 8,018.0 Total US$ million equivalent 940.7 approx. 222 435.7 approx. 658 641.4 Exchange rate, New Dinar per us$ 1.00 b/ 7.5 7.5/12.5 12.5 7.5/12.5 12.5 Note: a/ includes only diesel and electric locomotives. b/ exchange rate 7.5 before, and 12.5 since July 27, 1965 February 29, 1968 7DGOLSAVIA Belgrade-Bar Railam ProJect Cost Estirate and Schedule of Expenditure Section Length Actual Ependiture from January 1966 to completion Etboated Expenditure E&pendit-re New Dinar Million Janouary 1968 - 1972 until Dece=ber Actal B_ _ti d t d from - to 31, January 1 July 1 Total kn 1965 1966 - June 30 - Decerber 1968 1969 1970 1971 1972 1966 N Dinar US$ million N Dinar 1967 31, 1967 -1972 Million Equialent _illion I 1. (Belgrade) Resnik-Vreoci (51.5) 37.3 50.o4 _ _ 1.570 14.480 10.930 1.270 - - 28.250 26.680 2.13 2. Vrecei-Valjevo 40.2 6.01 0 .410 0.150 20.920 19.050 24.040 5.610 _ _ 70.180 48.700 3.89 3. Valjevo-Kosjeric 41.6 60.07 9.493 7.931 22.670 53.940 54.546 11.560 1.600 0.800 162.540 122.446 9.80 4. Koajeric-Pozega 22.6 0.57 0.450 0.220 0.590 15.000 49.580 20.040 21.580 4.430 111.890 10. 630 8.85 5. Pozega-Titovo Dzic. 22.1 1.39 0.505 - 0.620 12.000 45.190 43.400 5.615 6.720 114.050 112.925 9.03 6. Titovo Uzice-PriboJ 64.5 22.15 5.849 5.226 18.275 40.000 42.000 73.000 101.000 183.590 46891940 439.590 35.17 7. Priboj-PrijepolJe 27.6 14.73 24.140 1.751 2.758 22.060 22.694 54.332 10.545 21.980 160.640 131.621 10.53 8. Prijepolje-Gontun 34.7 0.20 0.380 0.210 0.789 - 2.000 31.578 59.510 92.423 186.510 185.511 14. 84 9. Gostun-Bijelo Polje 12.1 0.30 0.350 _ - - 4.500 12.850 18.260 25.603 61.563 61.213 4.90 10. GiJelo PolJe-MoJkovac 23.4 14.53 4.120 2.104 8.112 9.846 34.120 40.738 42.076 24.864 165.980 151. o 12.13 21. Mojkov -Mateseso 24.2 1.05 0.504 - - 5.000 33.734 51.772 72.040 87.625 253.420 250.171 20.01 12. Matesevo-Titogred 58.6 10.01 1.4.398 2.588 24.336 49.5114 69.306 82.1400 97.404 185.118 522.320 483.742 38.70 13. Titoerad-Bar .. 53.0 li6 216.91 _ _ _ 18.4 20 .31.197 4.9.617 49.617 3.97 Total (Belgrade-) Reonik-Bar (1476.1)1461.9 297.99 60. 600 20.180 100.640 21.0.890 392.610 428.550 448..050 66g4350 2,355.900 2,174..480 173.96 The above total consiats of the saJor groups of works a. A to F belo A. Earthworks and Structures 51.190 15.590 73.520 190.820 277.570 349.420 342.270 265.500 1,565.880 1.425.580 1114.06 B. Tracks - - 13.810 29.930 40.000 25.450 10.000 139.500 288.690 274.880 22.00 C. Buildings - 0.500 2.130 5.200 12.430 50.000 70.260 70.260 5.57 D. Signalling amd Teleco-omielction a _ _ 12.350 35.960 7.750 6.000 79.160 141..220 141.220 11.31 E. Electric Traction - - - 2.820 11.110 15.050 30.000 96.000 158.000 158.000 12.65 F. Others (acqu.iititon of land, 9.410 4.590 13.310 4.470 22.840 25.690 17.350 34.190 131.850 104.540 8.37 engineering. =uper-ii.on. etc.) Total 297.99 60.600 20.180 100.640 240.890 392.640 428.550 448.050 664.350 2.355.900 2.174.480 173.96 Contingencies _ - - - 32.038 65.178 85.381 103 .948 176.053 h62.S98 h62L.598 37.01 Grand Total 60.60 6 20.180 100.640 272.928 457.818 513.931 551.998 840.403 2.818.498 2.637.078 210.97 Percentage of Contingencies Average Averge Average to Total: ( - - - 13.3 16.6 19.9 23.2 26.5 19.7 19.7 19.7 Note, 1. Expenditure prior to Janoary 1, 1966 is not included in the enstioted total coet of the proJect. 2. Contingencise for imneraee in quantities, unforeseen items, and price increases are added to the estirnted e-penditores from 1968 to 1972 in arounts and percentages as shown above. 3. Completion of the project is eohs.&led by the investors as follows: Rennik-Vreoci and Titograd-Bar : in operation sioee 1959 ithout electric trwtion and final engineering. Vreoci-Valjevo : end of 1968 without electric traction and final engineering. Reonik-Vrsoci-Valjeve-Titovo aic. end of 1970 ith final signalling. do. : end of 1972 aith electric traction. Titovo Unice-Titograd-Bar end of 1972 with electric traction and final signalling. Table 15 YUGOSLAVIA Belgrade-Bar Railway Project Scope off International Co]~etitive Bidding 1966-1972 Amounts in New Dinar million unless otherwise indicated. Works not yet started not suitable { to be subject Works for intorna- to interna- Item started tional com- tional com- Total as of Sept petitive- petitive ___302 1967 bidding I bidding A. Earthw-orcs and structures 452,39 13.33 1,100o16 1,565,88 B. Traclks 1l Procurement or rails, points, crossings and-accessories - -i 86.60 86.60 2. P"ocurement oI sleepers and ballast ,and laying of tracks _ 202.09 _ 202.09 C. Buildings 70o26 70,26 Soply and installation of aig- D. nailing and telecomminication _ 1122 141.22 cn np r,pnt _ _ __ _ _ _ _ _ ._ __ _. __ _ _ _ __ _ _ _ Supply and installation of E. electric traction equipment 158.00 158.00 F. Others/s 26o01 105o84e - 131.85 Total !78A:11O 391.52 1,lM85.98 2,355.90 Contingencies, averne of 19. 7% 9914O 76.80 291Q70 462.60 Grand Total 5 S72050 h68032 1,,777.68 29818,50 New Dine.r willion I_ US$ million equivalont 45.680Ž/ 37.14 | 1L2.21 225.48 ) I v20.3 16 6 63.1 100 Foreign EXchange Componont US$ million equivalent mini.mum 3. 46R/ 1.33 669.590 23 69 maximx 3un6 __1_73 66-57 71:36°° Note. a/ includes New Dinar 10o75 million (U3$ 860,000) for employ'ment of .Loreign consultants for design and supervision of civil engineering works. b/ oetitod Y331,o29 million in tho pGriod 1%68-19720 _/ Cet2OUned WS32046 rSa-. it to d ootimntcd US323079 Diml5oLn f I GatiLtcCd U3?07006 Dimioin "I February 29, 1968 YUGOSI&VIA Table 16 BELGRADE-BAR RAILWAY FROJECT ESTIMATED SCHEDULE CF FOREIGN EXCHANGE EX1ENDTURFES 1968-1972 Total Total Item 1968 1969 1970 1971 1972 1968-1972 196&-1972. US$ million Amounts in New Dinar million equivalent I. Minimum Foreign Exchange Component a. Earthworks & Structures 15.27 22.21 27.95 27.38 21.24 114.05 9.12 b. Tracks c. Buildings 0.02 0.06 0.16 0.37 1.50 2.11 o.17 d. Signalling & Telecommunication 3.45 10.92 2.45 1.80 23.75 42.37 3.39 e. Electric Traction 1.41 12.07 12.52 5.00 48.oo 79.00 6.32 F. Others 0.70 1.87 2.60 1.68 3.90 10.75 o.86 Total 20.85 47.13 45.68 36.23 98.39 248.28 19.86 Contingencies 2.77 2.83 9.09 8.41 26.07 149.17 3.93 Granxi Total I 23.62 49.96 54.77 44.64 124.46 297.45 23.79 II. Maximum Foreign Exchange Component a. Earthworks & Structures 52.40 87.50 118.30 119.10 88.90 466.20 37.29 b. Tracks 9.97 13.00 8.64 13.14 41.85 86.60 6.93 c. Buildings 0.02 0.o6 0.16 0.37 1.50 2.11 0.17 d. Signalling & Telecommunication 6.89 21.83 4.91 3.60 47.50 84.73 6.78 e. Electric Traction 1.41 7.07 7.52 15.00 48.00 79.00 6.32 f. Others 0.70 1.87 2.60 1.68 3.90 10.75 o.86 Total 71.39 131.33 142.13 152.89 231.65 729.39 58.35 Contingencies 9.48 21.80 28.28 35.47 56.39 151.42 12.11 Grand Total II 80.87 153.13 170.41 188.36 288.04 880.81 70.46 III. Sum arvo Estimated orig Exchange Expenditure, in US.$ Equivalent (I) Minimum 1.89 4.00 4.37 3.57 9.96 23.79 (II) Maximum 6.47 12.25 13.62 15.07 23.o4 70.46 Note: The minimum foreign exchange component represents the costs of equipment and materials to be imported for: (i) contracts not subject to international competitive bidding; (ii) earthworks and structures if only domestic contractors are successful in intermational competitive bidding; (iii) signalling and telecommunication if only domestic manufacturers are successful in international competitive bidding for supply and installation; (iv) elec- tric traction, if a blend of foreign and domestic manufacturers and contractors are successful in international competitive bidding for supply and erection and related services in the same percentage as in the case of the Modernization Program (Loan 395-YU); and (v5 cost of employment of foreign consultants for the design and super- vision of civil engineering works, shown in item I. f "Others" in the above table. The maximum foreign exchange component represents the cost of: (i) equipment and materials to be imported for contracts not subject to intemational competitive biddirg; (ii) imported equipment and materials and services for earthworks and structures if only foreign contractors are successful in bidding; (iii) rails, points, crossings and accessories if foreign manufacturers are successful in bidding; (iv) imported sigpalling and telecommunication equipment and the foreign exchange cost of the installation if only foreign manufacturers are successful in bidding; (v) imported electric traction equipment and materials, if a blend of foreign and domestic manufacturers and con- tractors are successful in international competitive bidding for supply and erection and related services, in the same percentage as in the case of the Modernization Program (Loan 395-YU), also sane as in the minimum; and (vi) em- ployment of foreign consultants, same as in the minimum. Figures in the above table are based on previous experiences in Yugoslavia. Percentages are summarized below: Proportion of Foreign Exchange and Local Currency Costs of Contracts When Executed by Domestic Contractors When Executed by Foreign Contractors Item Foreign Exange Local Currency % Foreign Exchange % Local Currency% Earthworks and Structures o 92 40 60 Tracklaying - 100 Supply of track materials - 100 100 Buildings 3 97 Signalling and Telecommunication 30 70 60 40 Electric Traction 50 50 50 50 *) Not subject to international competitive bidding. February 29, 1968 YUGOSLAVIA Belgrade-Bar Railway Project Estimated Disbursement Schedule 1968-1972 Total Units 1968 1969 1970 1971 1972 1968-1972 Total Expenditure New Din. million 24o.89 392.64 428.55 4h8.o5 66h.35 2,17h.48 Contingencies " " if 32.o4 65.18 85.38 103.95 176.05 [62.6o Total Basis for Disbursement New Din. million 272.93 457.82 513.93 552.00 810.0 2,637.08 do. US$ million equiv. 21.83 36.63 hi.11 4h.16 67.23 210.97 Disbursement (23.7% of US$210.97 US$ million 5.20 8.70 9.80 104.0 15.90 50.00 million) Foreign Exchange Component: Minimum US$million equiv. 1.89 4.00 4.37 3.57 9.96 23.79 % of disbursement % 36.3% 46.0% 4h.6% 34.3% 62.6% 47.0% Maximum US$million equiv. 6.07 12.25 13.62 15.07 23.0h 70.h6 % of disbursement % 124% 140% 139% 145% 145% 141% December 29, 1967 YUGOSLAVIA COMMUNITY OF YUGOSLAV RAILWAYS RAILWAY TRANSPORT ENTERPRISES REVENUE, EXPENSE AND NET INCOME 1961 - 1966, AND FIRST 6 MONTHS 1967 (Millions of New Dinars) 1964 1965 1966 1966 1967 T045o T0451(a) Jan 1 - Zept.3u 1961 1962 1963 Forecast Actual Forecast Actual Forecast Actual Actuil Operating Revenues Passenger 490 517 600 610 593 630 827 650 895 669. 719 Freight 1,546 1,565 1,770 1,840 1,957 1,930 2,288 2,000 2,854 2,284 2,012 Mail 1/ 22 23 20 20 23 30 23 30 23 - Other 369 489 660 690 659 690 707 700 691 466 478 Gross Operating Revenues 2,427 2,594 3,050 3,160 3,232 3,280 3 , 3,380 , Less Inter-enterprise Items -474 658 800 840 800 850 79 850 74 30 67 Total Operating Revenues 1,953 1936 2,250 2,320 _2,32 2,730 3,766 2,530 MO389 MU359 Operating Expenses (net of Inter-enterprise items) Wages and Salaries 561 550 675 680 885 710 1,228 740 1,557 1,187 1,086 Fuel and Electric Power 282 294 325 330 350 340 452 340 493 355 328 Materials and Supplies 43 49 .80 80 103 80 128 90 135 249 96 Services - - - - - - 271 - 159 184 238 Other Expenditures - - - - - - 627 - 510 173 436 CurrentMaintenance and Purchase Taxes 6 11 20 20 17 20 - 20 - - - Miscellaneous Expenses 52 67 80 70 103 70 116 70 112 85 85 Depreciation 199 208 260 500 512 530 538 570 570 423 474 Investment Maintenance, Renewals 556 552 550 400 467 400 556 400 621 464 384 Total Operating Expenses 1,699 1,731 1,990 2,080 22,150 ,2,230 4,157 ,17 Net Operating Revenues (Loss) 254 205 260 240 ( 5) 280 ( 150) 300 232 269 15 Miscellaneous Revenues 46 33 20 10 45 20 43 20 48 3 20 Allotments from Federal Budget - - - - 220 - 352 - 74 - - Net Revenue before Interest (Deficit) 300 238 280 250 260 300 245 320 354 272 35 Interest 5 13 10 10 17 20 17 20 26 18 26 Income before Deductions (Deficit) 295 225 270 240 243 280 228 300 328 254 9 Deductions from Income: Payments to Government for use of fixed assets 99 101 60 70 70 70 70 70 67 50 55 Payments to social investment funds 26 19 10 30 70 40 4 50 - - - Appropriated to Modernization Fund - - 50 50 - 50 16 50 - - - Total Deductions from Income 125 120 150 10 90 .170 677 S U 6 Net Income (Deficit) 170 105 120 90 103 120 138 130 261 204 4 46) Ratios: Operating 87 89 88 90 100 89 104 88 95 92 99 Times Interest Earned 60 18 28 25 15 15 14 16 14 15 1 Rates of Return 5.2 3.7 4.4 4.0 - 4.7 - 5.0 2.7 - Note 1/ - Mail revenues for 9 months periods 1966 and 1967 are included in passenger revenues. February 29, 1968 YW1GOSLAVIA RAILWAY TRANSPORT ENTERPRISES REVENUES EXPENSES AND NET INCOME ACTUAL 1966, ESTIMATED 1967 BASED ON 9 M)NTHS ACTUAL ESTIMATED 1968 TO 1975, INCLUSIVE (millions of New Dinars) ACTUAL E S T I M A T E D 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 Operating Revenues Passenger 895 861 875 896 923 956 977 1,043 1,069 1,096 Freight 2,854 2,651 2,748 2,819 2,897 2,970 3,098 3,489 3,615 3,763 Mail 23 23 24 24 24 24 24 24 24 24 Other 691 660 680 695 700 700 700 700 700 700 Gross Operating Revenues 7; 3 ,195 ,327 4 ,434 4, 4 ,650 o ,799 ,22 5,583 Less Inter-enterprise items 74 76 70 70 70 70 70 70 70 70 Subtotal 4,389 4,119 4 ,257 4 M,474 4 ,580 4 ,729 518 5,338 5,513 Increased Revenues through Rate Adjustments (See Note 1) - - 9 111 115 320 332 69 82 396 Total Operating Revenues 4,389 4 ,19 4 ,266 757 4 T,900 5,06 5 5 , 720 5,909 Operating Expenses (excluding inter-enterprise items) Wages and Salaries (See Note 2 1,557 1,502 1,467 1,453 1,434 1,406 1,432 1,484 1,527 1,571 Fuel and Electric Power 493 428 420 402 408 342 352 391 4°5 427 Materials and Supplies 135 120 123 125 129 132 136 136 139 141 Services Purchased 159 267 240 220 210 200 196 210 212 214 Current Maintenance and Other Expenses 510 527 530 531 544 558 572 602 617 632 Miscellaneous Expenses 112 100 101 102 104 105 105 108 109 no Depreciation 570 655 684 733 751 851 893 1,001 1,017 1,036 Investment Maintenance,Renewals 621 502 510 520 495 498 530 543 550 Total Operating Expenses 4,157 4 ,101 4 ,075 4 4 , 100 1 44,18,6 4,681 Net Operating Revenues 232 18 191 384 489 811 877 1,093 1,151 1,228 Non-operating Revenues 122 145 150 127 97 58 59 60 13 16 Net Revenues Before Interest 354 163 341 511 586 869 936 1,153 1,164 1,244 Interest 26 32 46 48 57 60 54 54 46 44 Income Before Payments to Government 328 131 295 463 529 809 882 1,099 1,118 1,200 Payments to Government for Use of Fixed Assets 67 61 85 88 91 94 97 101 102 104 Net Income 261 70 210 375 438 715 785 998 1,016 1,096 Ratios: Operating 94-7 99 6 955 91.k 89.3 83 .4 82.7 80.3 79.9 79.2 Times Interest Earned 13.6 5.1 7.4 10.6 10.3 14.5 17.3 21 25.3 28.3 Rates of Return % 2.7 0.16 1.60 2.96 3.58 5.80 6.o5 6.75 6.39 6.57 Note 1: Freight and passenger revenues have been increased by 3 percent as of December 31, 1968 and by an additional 5 percent as of January 1, 1971, weighted on the basis of estimated traffic for each year 1968 to 1975, inclusive. Note 2: Wages and salaries include all personal income payments. February 29, 1968 TABLE 20 YUGOSLAVIAI CCMMUNITY OF YUGOSLAV RAILWAYS RAILWAY TRANSPORT ENTERPRISES BALANCE SHEET DATA, 1964, 1965 AND 1966 (Millions of New Dinars) AS OF DECEMBER 31 JUNE 30, 1964 1965 1966 1967 ASSETS Current Assets Cash - Operating 138 138 392 524 Investment 2 14 304 32 Total 4177 452 6 o53 Accounts Receivable 66 51 106 133 Other Current Items 528 584 787 1,814 Materials and Supplies 287 66 365 279 Total Current Assets 1,298 1 1.954 3,079 Fixed Assets Land - Railway 68 69 68 70 Permanent Way & Structures 7,960 8,189 16,113 16,045 Rolling Stock 4,271 4,406 6,614 6,253 Buildings 1/ 687 720 -- __ Other Operating Property 575 567 181 599 Gross Operating Fixed Assets 13,5b6 13,951 22,976 22,967 Less Accumulated Depreciation 7 287 7 689 12,178 12,230 Net Operating Fixed Assets 6 6 10,798 10,737 Work in Progress 413 374 881 983 Net Social Standard Fixed Assets 388 430 143 137 Total Net Fixed Assets 7,075 7,066 11,822 11857 TOTAL ASSETS 8,373 8,519 13,776 14,936 LIABILITIES AND EQUITY Current Liabilities Accounts Payable 240 195 273 291 Current Accounts - Wages,Other Items 662 734 1,162 1,625 Accrued Debt Service 49 24 4 25 Total Current Liabilities 951 9 1,91 Long-term Debt for: Working Capital 70 30 13 12 Operating Fixed Assets 573 656 958 972 Social Standard Property 154 186 98 44 Total Long-term Debt 797 -872 1. 01,028 Total Liabilities 21,748 2,969 Total Equity 6,625 6,694 11,268 11,967 TOTAL LIABILITIES AND EQUITY 8,373 8,519 13,776 14,936 1/ In 1966 and 1967 buildings are included in Permanent Way and Structures. Oct^b,br 26, 1967 YUGOSLAVIA COMMUNITY OF YUGOSLAV RAILWAYS RAILWAY TRANSPORT ENTERPRISES ESTIMATED BALANCE SHEET DATA, 1967-1975 (Millions of New Dinars) E S T I M A T E D A S O F D E C E M B E R 31 ASSETS 1967 1968 1969 1970 1971 1972 1973 1974 1975 Current Assets Operating Cash 520 520 500 556 550 550 550 550 550 Capital Investment Cash 107 142 140 100 90 80 70 60 50 Total Cash 627 -R7 656 -&bE 630 620 610 600 Accounts Receivable 106 107 87 88 88 88 92 84 84 Other Current Items 800 806 720 726 736 741 766 771 776 Materials and Supplies 376 380 335 340 355 360 367 370 380 Total Current Assets 1,909 1,955 1,872 1,910 1,3519 1,819 T U1 17 Railway Contingency Funds - - - - 122 297 349 415 667 Fixed Assets Land Railway 69 69 69 70 70 70 75 76 76 Permanent Way and Structures 17,024 17,999 19,470 - 19,939 20,368 20,960 23,797 24,415 25,059 Rolling Stock and Buildings 6,879 7,185 7,485 7,704 8,427 9,023 9,762 10,596 11,317 Other Operating Property 229 278 330 383 437 503 713 798 891 Gross Operating Property 24,201 25,531 27,3354 72,096 29,302 30-,5 37,3V47 7 3 Less Accumulated Depreciation 12 671 13,192 13 772 14 354 15 071 1 16 680 17 512 18,353 Net Operating Fixed Assets 11, 53 12,339 13,582 13 742 13 I1435 17 67 183 9 9 Work in Progress 1,075 1,059 696 876 826 766 721 729 715 Social Standard Assets 244 343 444 544 664 794 933 1 133 1,334 Total Fixed Assets 12,519 13,741 11,722 15,162 15,721 16,295 19,321 20 ,235 21039 TOTAL ASSETS 14,758 15,696 16,504 16,972 17,662 18,411 21,515 22,485 23,546 LIABILITIES AND EQUITY Current Liabilities Accounts Payable 300 302 263 264 265 271 276 280 285 Current Accounts 916 924 841 843 845 853 858 860 861 Accrued Debt 16 12 11 9 8 7 7 - - Total Current Liabilities 1,232 1,23 1,115 1,116 1,1 1,11 1,14 Long Term Debt For: Working Capital 15 15 15 15 15 15 15 15 15 Operating Fixed Assets 1,692 2,471 2,749 2,737 2,710 2,724 2,741 2,766 2,804 Social Standard Property 100 110 120 140 140 140 140 140 140 Total Long Term Debt 1,07 2,596 7 2,86592 T 2,879 2,9 ,921 2,99 Equity 11,719 11,862 12,505 12,964 13,679 14,401 17,478 18,424 19,441 TOTAL LIABILITIES AND EQUITY 14,758 15,696 16,504 16,972 17,662 18,411 21,515 22,485 23,546 RATIOS: Current Assets to Current Liabilities 1.55 1.58 1.60 1.62 1.63 1.61 1.62 1.61 1.61 Current Assets (less stores) to Current Liabilities 1.24 1.27 1.30 1.32 1.31 1.29 1.30 1.29 1.27 Long-term Debt - Equity 13/87 18/82 19/81 18/82 17/83 17/8' 14,'86 14/86 13/87 February 29, 1968 YUGOSLAVIA COMMUNITY OF YtWOSLAV RAILWAYS RAILWAY TRANSPORT ENTERPRISES CASH FLOW DATA ACTUAL 1966, ESTIMATED 1967-1975 (millions of New Dinars) Actual E S T I M A T E D Total 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1968-1975 Percent I. Capital Reqirements Caia Ivestments Railways 921 1,496 1,534 1,356 1,060 1,300 1,4oo 1,808 1,800 1,710 11,968 Social Standard 71 100 100 100 100 120 130 140 200 200 1,090 Total Capital Investments 992 1,561 3 1,4 1,230 2,000 1,910 87.7 Debt Service Interest 26 32 46 48 57 60 54 54 46 44 409 Repayments 103 105 131 165 182 202 178 163 170 172 1.63 Total Debt Service 129 137 177 213 239 217 1,772 11.9 Changes in Working Capital ( 133) 232 4 ( 28) 21 13 ( 3) 26 2 18 53 0.4 Total Cash Requirements 988 1,965 1,815 1,641 1,420 1,695 1,759 2,191 2,218 2,144 14,883 100.0 II. Cash Available Net Income Before Interest 287 102 256 423 495 775 839 1,052 1,062 1,140 6,042 40.6 Depreciation 570 655 684 733 751 851 893 1,001 1,017 1,036 6,966 46.8 Loans IBRD Second Railway Project 66 241 254 180 59 - - - - _ 493 Republics, Cities and Commercial Banks 53 156 160 83 31 - - - - - 274 Loans and Credits - Home and Foreign 257 496 - 496 200 100 175 192 180 195 210 1 78 Total Loans 910 3 190 175 192 -T= 195 210 2 16.9 Cash SErls, Beginning of Year Operating Funds 392 542 520 520 500 556 672 847 899 965 Capital Investment Funds 305 400 107 142 140 100 90 80 70 60 Total Cash Beginning of Year 962 6 62_ - go56 762 927 % 99 1,02 Total Cash Available 1,930 2,592 2,477 2,281 2,076 2,457 2,686 3,160 3,243 3,411 15,523 104.3 Cash Position at End of Year 942 627 662 640 656 762 927 969 1,025 1,267 Increase in Cash Position During Year 640 4.3 February 29, 1968 ANNEX A Page CALCUIATION OF BENEFITS: METHODOLOGY 1.01 The building of the Belgrade-Bar railway will result in substantial cost reductions for traffic which is diverted to it after its opening from existing means of transport, which may be either alternative rail- way routes or highways. Reductions in transport costs, if passed along to the shippers, can be expected to result in new traffic which could not move without the railway either because of the total absence of trans- port or because of prohibitive transport costs. This new business is generally called generated traffic. The true value of the new traffic is the value it adds to the national economy, but such calculations often pose great difficulties such as insufficient data. For this reason another method of calculating benefits is used (see para 1.07). 1.02 The specific benefits of the Belgrade-Bar railway were given in para 6.18 of the main report as follows: ANNEX A Page 2 BENEFITS OF BELGRADE-BAR RAILWAY (N. Din Millions) Value of Benefits % of First Year Benefits I. First Full Year of Operation, 1973 A. Freight (a) Diverted from: Truck transport 64.88 30.2 Belgrade-Ploce rail route 9.72 4.5 Danube-Ploce river/rail route .34 0.2 (b) Generated, best alternative transport being: Truck transport 25.26 11.8 Narrow gauge railways 20.01 9,4 Danube-Ploce river/rail route .17 0.1 B. Passengers (a) Diverted from bus transport 31.99 14.9 (b) Generated, best alternative transport being: Bus transport 15.99 7.5 C. Freight and Passengers (a) Diverted from narrow gauge railways 36.76 17.2 (b) Electrification of existing sections 1.94 0.9 (c) Shorter sea transport distance to Bar 5.18 2.4 (d) Interest.savings on working capital 1.71 0.8 Additionally there will be benefits accruing before the line is fully operative: II. Prior to Full Opening Freight and Dismantled Narrow Year Freight Passengers Passengers Gauge Materials Total 1968 _ - -_ 1969 2.63 - 12.75 10.70 26.08 1970 2.96 10.23 12.88 _ 26.07 1971 20.37 10.23 29.41 13.00 73.01 1972 22.99 39.36 29.69 5.10 97.14 1.03 The calculation of these benefits is explained further by the table following. Calculation of Benefits to Freight Traffic Gross ton-km Cost per Gross ton-km Total Cost Savings Benefitsi/ (000) N. Din (N. Din millions) By Best By Alternative Belgrade- Alternative Belgrade- Alternative Belgrade-Bar Transport Bar Transport Bar Diverted from: Truck transport2/ 786,110 725,376 0.11 0.02 86.47 14 51) 64.88 64.88 Belgrade-Plo rail routed 3,688,646 2,628,800 0.01222 0.01345 45.08 35.36 9.72 9.72 Danube -Ploce river/ rail route y 156,556 116,620 0.01222 0.01345 1.91 1.57 0.34 0.34 Generated, best alternative being: Truck transport./ 632,220 555,936 0.11 0.02 69.54 11 12) 50.53 25.26 Narrow gauge railwaysi 170,521 135,588 0.3250 0.1153 55.42 15.40 40.02 20.01 Danube-Ploce river/ - rail route2J 156,556 116,620 0.01222 0.01345 1.91 1.57 0.34 0.17 Notes: 1/ 50% of full benefits for generated traffic, see text para 1.07. | Compares operating costs of trucks with operating costs of rail. 3/ Compares traction costs of alternative rail routes. /Pfck up and delivery costs, and additional truck transport to rail of wood products, etc. from Pljevlja and Ivangrad to railhead. 0 : J Net ton-hm. A detailed breakdown net of indirect costs is not available for narrow gauge lines and therefore costs for the Belgrade-Bar line have been calculated on the same basis. ANNEX A Page 4 1.04 Freight diverted from trucks The largest single class of benefits results from the diversion of traffic from trucks to the new railway. Although the road system will be greatly improved by 1973 whien the railway will be fully open, road transport costs will still be high because of the mountainous territory with its steep grades and many curves. On the other hand, railway operating costs will be much lower because, among other things, there will be 353 tunnels and many bridges and viaducts meaning low grades and minimum curvature. Truck operating costs were originally calculated for typical trucks now operating in the area for long distance transport, i.e. with a carrying capacity of 22 tons and operating over good and bad roads. Fuel taxes do not now cover the highway maintenance costs, therefore the amount allowed for taxes was doubled to take this factor into account. Construction costs were not allowed for because there is now a network of roads in the area which will be improved by 1973 whether or not the line is constructed. The cost thus obtained was N.Din 0.11 per gross ton-km. This was checked with three large truck operating enterprises in the Belgrade-Bar region. Very detailed accounting figures were obtained from one of those enterprises and a weighted average for the fleet showed the cost to be N.Din 0.115 for present operations in the area. The for- mer cost was used. Railway operating costs for the Belgrade-Bar line were cal- culated by the Yugoslav Railway Ehgineering Organization and agreed by the Ivssion to be N.Din 0.02015 per gross ton-km. This excludes line maintenance costs which are accounted for in other calculations (para.1.12). The main expenses included are those related to traction, stations and depreciation of motive power and rolling stock. The above table illustrates the following steps: (a) The traffic forecasts for 1973 were estimated by the mission. (b) The origin and destination points of the traffic, and vehicle gross operating weights gave the estimate of gross ton-kin, 786 million for trucks and 725 million for the railway. (c) The gross ton-km, multiplied by N.Din o.ll for trucks and N.Din 0.02 for rail gave the costs for the traffic, N.Din 86.4 million for trucks and N.Din 14.51 million for railway. (d) Because road transport must still be used to carry goods to the railway (an average distance of 15 km was assumed), as well as movements from such distant places as Ivangrad and Pljevlja, additional pickup and delivery costs were added to the rail costs to give savings of N.Din 64.88 million. ANIEX A Page 5 1.05 Freight traffic diverted from Belgrade-Ploce rail route A great deal of traffic now moves to and from Ploce from south- eastern Yugoslavia and from regions north of Belgrade by the best alter- native rail route. By 1973 this will be the fully operational Belgrade- Sarajevo-Ploce line, If the Belgrade-Bar railway is built, however, it may be expected to attract this traffic because of lower costs. It will be seen from the above table that the costs per gross ton-km will be higher on the new line (because of mountainous terrain) but the kilo- meters are fewer, resulting in savings of N. Din 9.72 million. In this instance the savings will be the traction, or movement, costs only as overhead costs will be the same on each line. The Belgrade-Ploce rail- way has the capacity to handle the traffic expected to be diverted and so full savings have been taken as benefits. 1.06 Danube-Ploce river/rail route Export and import traffic to and from the Belgrade river port on the Danube wuuld, in the absence of the Belgrade-Bar line, move via Ploce. Such traffic will consist of manufactured articles such as cars and other consumer durables, farm and industrial equipment, fertilizers and foodstuffs. By 1973 the Danube port will have gained considerably in importance for international traffic because of new navigational facilities such as the Iron Gate Dam near Belgrade and the port facilities in Belgrade are being expanded accordingly. The savings of N. Din 0.34 million have been calculated as the difference between total traction costs on the Belgrade-Ploce route as compared with the Belgrade-Bar route. 1.07 Freight-generated At the present time traffic in the zone of influence is not fully developed because of prohibitive transport costs. Estimates of traffic which would develop by 1973, if the Belgrade-Bar line were available, were made by the Mission. The benefits were then measured by estimating the transport cost savings which could be realized if the Belgrade-Bar line were used rather than the best alternatives. These values were then halved to avoid overstating benefits, which could only be realized when transport cost reductions are reflected in delivered prices. Traffic which would develop between 1968 and 1973 even without the railway was regarded as normal rather than generated. 1.08 Passengers diverted and generated bus transport alternative The assumption was made that automobile and air transport pas- sengers would not be diverted to the Belgrade-Bar line and so no benefits were credited to them. The best alternative transport to the line was assumed to be the road system in the zone of influence, it being also assumed that passengers would not use the alternative railway route to the Adriatic from Belgrade to Ploce. (Bar not being a substitute for ANNEX A Page 6 Ploce for passengers in the same way as it is for freight.) Based on considerations of regional income, population and Yugoslav experience the Mission expects that 15 million railway passenger journeys will be made in 1973 on the Belgrade-Bar line, (12.2 million diverted from buses and the remainder from narrow gauge lines) and the average journey will be 60 km. The difference between the bus and rail costs, multiplied by the number of passenger-km, gives the total savings. Bus operating costs are N. Din 0.90 per passenger-km compared with rail costs of N. Din 0.228. Based on traffic counts it was then assumed that half of the traffic would have moved by road even without the railway line, and half would be generated. 1.09 Freight and Passengers - diverted from narrow gauge lines Actual cost data are available for the narrow gauge lines which are to be abandoned, and since so many of the costs are common to both passengers and freight they were treated together. Narrow gauge lines are three times more expensive to operate than the new line would be because of large staff requirements and low efficiency. The lines now carry high volumes of traffic resulting in the large saving of N. Din 36.76 million in 1973. 1.10 Other savings About 100 km of the Belgrade-Bar line are already in diesel ope- ration. Wihen the line is completed, but not before, it will be advantageous to convert this 100 km to electric traction, resulting in savings. Another saving is in the shorter steaming distance that will be necessary for ships in taking on or discharging cargo at Bar rather than at Ploce. Based on the steaming time involved, ships' costs and the quantity of traffic, the savings are estimated to be N. Din 5.18 million in 1973. These savings have been applied only to Yugoslav ships in Mediterranean trade. A further small saving is the reduced interest on capital tied up in transporting commodities via the Belgrade-Bar rather than the Belgrade-Ploce route. 1.11 Benefits accruing before full opening The line will be constructed in stages resulting in a gradual transfer of traffic from roads as well as newly generated. At the same time the parallel narrow gauge lines will be dismantled and the scrap materials sold. 1.12 Line Maintenance Costs From the benefits thus derived line maintenance costs were deducted to arrive at annual net benefits. ANNEX A Page 7 1413 Construction Costs Construction costs for the line were estimated by the Yugoslav Railways and checked by the Mission. The Mission thought that a contin- gency factor should be added to allow for unforeseen circumstances. This has been included in the calculations* Allowances for possible price escalation have been excluded from the rate of return calculations, however, as all benefits and costs have been measured in constant prices. In order to realize the full benefits of the railway it will be necessary to complete conversion to standard gauge of a narrow gauge section from Cacak to Pozega in order that traffic from south-east Yugoslavia can pass 50 km to the south of Belgrade, Although these costs are not in the project they have been included in the rate of return cal- culations as theee benefits could not be obtained if this expenditure were not made. Similarly, maintenance costs for this section have been included. 1.14 M?tive Power and Rolling Stock Costs The railway will require additional motive power and rolling stock to handle the expected traffic. The capital cost of this can be treated in two ways, either by treating it in the same way as construction costs to be measured against the net benefits, or by regarding the costs as depreciation and included as operating costs. The latter method was used because depreciation costs are more accurately known from experience on the Yugoslav railways. 1.15 Port of Bar Costs The extension of the Port of Bar to handle expected traffic is included in the project, though the estimated costs of N. Din 410 million are not to be financed by the Bank. Normally the costs of construction and operation would be included with the railway costs in order to cal- culate the rate of return on the entire project. In this case, however, such is not necessary. If the railway line is not built the best alter- native route for export/import traffic would be via the Belgrade/Ploce route. The Port of Ploce is already congested and would need similar expansion to Bar to handle the forthcoming traffic, at appraximately the same cost. This being so, the construction and operating costs of the alternative ports offset each other and can be left out of the calculations. 1.16 When all net benefits and construction costs were calculated for each year from January 1, 1968 to the end of the economic life of the line, 2007, the resulting benefit and cost streams were discounted to present value, giving a rate of return of 83 percent. ANNEX B Page 1 YUGOSLAVIA BELGRADE-BAR RAILWAY LINE AGRICULTURAL SITUATION AND PROSPECTS IN THE ZONE OF INFLUENCE Background 1.01 Agriculture has long occupied an important position in the economy of the zone of influence. Despite the development of industry following World War II, it still provides the principal means of occupation and liveli- hood, with some 60 per cent of a population of 940,000 engaged in agriculture producing some 30 per con t of the total national income of the region. 1.02 The agricultural zone of influence of the proposed railway line has been determined as a belt of agricultural area following the planned alignment of the railway line, varying in width from 30 to 100 km. Its general direc- tion is from north to south beginning in Vreoci and ending south of Titograd. The borders of the zone of influence were adjusted to the prevailing conditions of the mountainous terrain running either along the respective watersheds or following administrative borders of communes as determined by the market or- ientation of current agricultural traffic. Detailed adjustments to the border were made during an extensive field trip which was concluded by an inspection from the air. (Map 3) 1.03 About one-half of the agricultural zone of influence is agricultural land comprising approximately one million hectare, of which 26 per cent is arable land, five per cent orchards and vineyards while the rest is under meadows and permanent pastures. The terrain is predominantly mountainous with only some 15 percent of the area in river valleys. The soils of the northern region of the zone of influence are more productive than the remainder. The climate is mainly continental, with warm summers, cold winters, sufficient precipita- tion but a seasonal lack of rain during summer in the south. A Mediterranean climate prevails only from the region around Titograd towards the Adriatic coast. Basic data on the agricultural zone of influence are given in Table Be1. 1.04 The major portion of the agricultural land is hilly terrain rising to 1,200 meters. Extensive meadows and up-land pastures make possible live- stock raising which besides fruit and potato provides some surplus for the market. The lower slopes and river valleys are devoted mainly to cereal production. 1.05 Land tenure and agricultural production falls into two sectors, social and private. The social sector comprises social estates, farms, agro- industrial enterprises and general cooperatives and occupies about four per cent of the agricultural area. This proportion is only about one-third of the national average. The general cooperatives are important because they represent the sole source from which private farmers may obtain, on a con- tractual basis, credit, machinery, inputs, other services and technical advice. ANNEX B Page 2 l.O6 The private sector is composed of owner farmers who work the major portion of the agricultural area and who are largely self-sufficient0 Their holdings are small and average four to five hectare in size of agricultural land and are often fragmented. 1.07 Output levels for major crops and livestock products over the years have remained at or below the overall Yugoslav averages. Yields are largely governed by climatic effects which account for their fluctuations from year to year. Crop yield trends in the private sector are shown in the following table: YIELDS OF SOME COMMODITIES (in 100 kg per ha) 1/ COMMDITY SFRJ SEBBIA. Montenegro Wheat 1955/64 15.9 16.3 12.8 1964 17,6 18.2 17.8 1965 20.5 22.8 21.3 Maize 1955/64 20.8 22.2 13.3 1964 28.6 31.9 17.3 1965 23.1 25 10.1 Potato 1955/64 93.6 74.1 54.9 1964 86.3 79.1 59.8 1965 73.2 75.1 42.1 Meadows (hay) 1955/64 19.3 114.8 11.4 1964 20 16.3 13.8 1965 19.4 16.2 10.9 1.08 1964 and 1965 were average to relatively poor crop years. As a result of general development efforts yield levels have been raised slightly also in the zone of influence in the past few years. Yields in the social sector which has to date received the largest part of new inputs are about 80 to 100per centhigher than on private holdings. Crop production levels in the private sector are similar to those achieved in other South European countriesp with small holding structure. Refers to total Serbia minus Vojvodina and Kosovo-Metohija. ANNEX B Page 3 1.09 Fruit and livestock production show a siitilar pattern of growth during past years, but yields of milk, meat and wool per animal are lower in Montenegro than in the northern region of the zone. 1 10 The agricultural zone of influence of the proposed railway line is self-sufficient in meat, milk products, fruit and vegetables including pota- toes; it is deficient in cereals, sugar and cattle feed (Table Bo2)o Fruit (fresh, dried and processed) followed by vegetables and meat represent the important items of marketable surplus, while foodgrains, maize and animal feed are the main commodities imported into the region. Some part of the marketable surplus, in particular fruit, fruit products, meat and potatoes is exported to Western Europe and Mediterranean countries. ],.&U The use of fertilizers in the region is estimated to have reached about 155 kg per hectare of cultivatable area which is approximately 60 kg below the Yugoslavian average, Fertilizer usage is particularly low in Montenegro compared with the Serbian region of the zone. Improved varieties of wheat and maize for general cultivation and high yielding grass-clover mixtures for meadow melioration and improved planting material for orchard renewal, have been introduced more widely in the Serbian part of the zone of influence than in Montenegro. The introduction of well adapted cattle, pig and sheep breeds from foreign countries and the use of artificial insemin- ation is also more advanced in Serbia than in Montenegro which still depends largely on local breeds with low productivity. Agricultural draught power is mainly supplied by horses and cattle while the tractor density is only one tractor for each 220 ha of arable land. Stagnation in Agriculture 1.12 The main routes of communication in Yugoslavia have been conditioned by the country's terrain. They have followed the easy paths and have avoided the mountain barriers in Serbia and Montenegro. As a result, the predominantly mountainous agricultural area of the two republics which falls in the zone of influence has been relatively isolated from the country's communication system, except in the northern part near Belgrade. The secondary and other low grade roads and few narrow gauge lines which predominate in this area of difficult communication are inadequate to satisfy present needs for agricultural de- velopment. Access to markets is limited both for supply of inputs and dispo- sal of agricultural output. As a result, agriculture in the zone of influence is still backward in comparison with other areas of Yugoslavia. Modern tech- niques are not uniformly applied; fertilizer use continues to be low and crop yields are static, The agricultural stagnation, which has been overcome in other parts of the country, has continued in large areas of the zone of influence. The region is a deficit area for some basic agricultural produce despite the fact that agricultural land per capita is higher than the national average at 1.1 ha and 0.74 ha respectively. Scope for Development 1.13 A comparison between crop and livestock productinn data in the social and private sectors shows a large potential for increasing yields on the private ANNEX B Page 4 farms which predominate in the zone of influence. This potential can be tapped by greater use of industrial inputs, in particular fertilizers, farm machinery, improved seed and animal feed and by raising the productivity of existing livestock through imported breeding material. There is little scope for increasing the area under cultivation. 1.14 Urban settlements have grown fast in recent years in the zone of influence and there has been a steady movement of population from agricultural to non-agricultural activities. Despite this movement a part of the rural population is still considered to be underemployed and official opinion is that further transfer from agriculture would be possible without adversely affecting agricultural development. lel5 The general cooperatives which have been established in the area during recent years appear to be effective institutions through which to foster the agricultural development. Some enlargement of the areas cultivated by cooperatives is possible by acquiring land from out-going farmers and ex- tending cooperatively managed fruit plantations and pastures. An important contribution to increasing agricultural production could come from extending the system of contracts between the general cooperatives and the private sector. This contract system gives to private farmers the opportunity to buy needed inputs; it provides machinery on loan and promotes better manage- ment through its extension service. The general cooperatives coordinate the production of many small units, collecting, processing and marketing their produce. They are also instrumental in pooling a part of farmers' savings and could be the main suppliers of necessary farm working capital. General cooperatives have produced quick results in other parts of the country. 1el6 Other institutional arrangements including agricultural research and education facilities and a number of well equipped food processing enter- prises are already established in the area. Their current capacity is sufficient to support the beginning of an incraased rate of development. The capacity of one of the larger processing units is at present underutilized, due to lack of supplies. 1;17 A further incentive to increase agricultural production and to over- come the inherent stagnation in agriculture would be achieved by improving the underdeveloped communication system and by providing adequate transport facilities to markets which now can only be reached at prohibitive cost. Pro- vision of relatively cheap transport through the proposed Belgrade-Bar rail- way line is considered essential to stimulate the increased use of agricul- tural inputs and to promote increased production of fruit and bulk vegetables, including potatoes, for which growing conditions in the area are very suit- able. In particular, early vegetables and fruit produced in the southern region of the zone would be benefited. The market advantage of an early growing season, which is one to four weeks earlier than in the rest of the country could then be fully exploited. 1.18 Rural road construction is the responsibility of the local admin- istration and is undertaken to a varying extent in the majority of communes within the zone of influence. Minimum plans are generally to have gravelled ANNEX B Page 5 access roads by 1970, permitting the passage of a seven ton truck from all settlements in the area to administrative and marketing centres. Provision of finance for rural road construction seems to be adequate. Grants and loans are available from the federation and the respective republics, supple- ir,ented from the comiiunest own funds and free labor supplied by farmers through coo-arative effort, Several coamiune officials indicated that investment in rural road construction would be stepped up and permanent paving of roads undertaken to facilitate heavier traffic immediately the construction of the Belgrade-Bar railway line is decided. Current activities and future plans to improve the access and feeder road system inside the zone of influence appear to be satisfactory to serve the needs of expected agricultural development. 1.19 Information on the value of investment in the important private sector in the zone of influence is scanty. Better data is available from the social sector and it is roughly estimated that this sector absorbs some 60 per cent of the total agricultural investment available. Investment in the social sectors is shown in new Dinars per ha of agricultural area in the following table for Montenegro and Yugoslavia as a whole: Agricultural investment in the social sector (new dinars) Montenegro Yugoslavia 1961 32.89 72.43 1962 33.20 80.08 1963 30.88 96.89 1964 34.24 U15.75 The level of social sector investment in Montenegro is thus stagnant and very low in comparison with the overall average hectare investment rate. The main reasons for this comparatively low investment rate, according to official opinion, is the remoteness of the area resulting in a lack of viable projects. Investment performance in the Serbian part of the zone of influence is esti- mated to have been slightly higher but is also below the country's average. 1.20 The authorities have plans to make up the leeway but sufficient investment is likely to be provided only when it is assured that the Belgrade- Bar railwray line comes into operation. Under this condition the Federal Agricultural Investment Bank, which arranges 95 per cent of the current in- vestment, would be prepared to make available 530 million new Dinar for each of two three-year development periods, or on an average 175.70 new Dinar annually per ha. This approximately corresponds with the current investment rate in Vojvodina, which is estimated to grow further during coming years. 1;21 Available resources are to be devoted to farm machinery and equip- ment and livestock purchases, meadow melioration, orchard rehabilitation, farm buildings, rural and forestry roads, food processing facilities, slaughter houses, storage and refrigeration installations plus land melioration and irrigation mainly in Montenegro. While the planned investment targets for agriculture in the zone of influence appear to be rather ambitious compared with past performance, provided appropriate measures are taken, the invest- ment targets in the agricultural sector seem feasible. ANNEX B Page 6 Changes in Agricultural Pattern 1.22 The operation of the proposed Belgrade-Bar railway line and other improvements of the infrastructure supported by the planned agricultural in- vestment are expected to bring about changes in the current land use pattern. The important change which can be expected is the extension and intensifica- tion of forage, vegetable and fruit production at the expense of other crops, which are now mainly grown for home consumption. Cereal cultivation with probable higher yields resulting from better use of inputs is likely to be retained only when rotational considerations and the equalization of farm work load during the season require it. The area under cereals is now approx- imately 170,000 ha in the zone of influence. It can be expected that at least 70,000 ha of this area could be made available for forage, vegetable and potato cultivation. The healthy climate in hilly regions is well suited to extend the cultivation of seed potatoes. 1.23 An increase in the area under permanent fruit plantations, mainly plums, is also feasible by replanting suitable land which is now used as pasture. By tapping the reserves of such land it appears to be possible to dauble the present area under orchards from approximately 49,000 to 100,000 ha. A beginning in this direction has already been made through cooperative effort. 1.24 The tangible increases of expected agricultural output would, however, come from the intensification of agriculture through the increased use of in- puts, the improvement of forage cultivation and preservation, improvement of livestcck and the introduction of better management through extension work. Expected increase in output 1.25 Considering the agricultural potential, the probable and adequate investment provisions and the possible changes in the agricultural pattern it seems likely that the current agricultural gross output could be increased by 50 per cent by 1973. The marketable surplus needing commercial transporta- tion over longer distances would more than double. After that period a normal growth rate of agricultural output similar to other comparable areas could be expected for the zone of influence. Fertilizers and other Inputs 1.26 Yugoslavia's fertilizer consumption is moderate compared with that of neighbouring countries (Tables B.3 and B.4). The planned growth rate in consumption is in proportion to past performance and it is possible that the set targets can be reached. It can be expected that fertilizer con- sumption in the zone of influence will follow a similar trend and it is con- servatively estimated that by 1973 200,000 tons of fertilizers will be used, provided rail transport is available. This would represent an increase in fertilizer usage of some 200 kg over current levels to 350 kg per hectare of cultivalable land. It compares with an application of 400 kg per hectare anticipated by the Agricultural Development Plan for Yugoslavia as a whole at the same period. In estimating future fertilizer consumption account was ANNEX B Page 7 taken of farm supplies in plant nutrients coming from animal dung and the expected high percentage of fodder legumes grown on the arable land and meliorated meadows, which need less nitrogen than other field crops. 127 The estimation of future animal feed requirements is rendered more difficult because current average consumption levels of livestock, which are almost totally confined to the private sector, are not readily available. The basic feed for pig fattening, which is an important activity in the zone of influence, is cereals and it is estimated that the major portion, after satisfying human consumption, of current cereal production is utilized this way. Concentrates for cattle fattening and milk production, particularly protein, are also needed. A rough estimate which includes the current cereal production minus what is used for human consumption, shows that there is a shortage of approximately 80,000 tons of animal feed including concentrates in the zone of influence. It is likely that the deficit would reach 160,000 tons by 1973 if railway transport with relatively low freight rates were available. Agricultural Produce needing Transport 1.28 It has been stated earlier that the marketable surplus of agri- cultural produce in the zone of influence is expected to more than double as a result of the impact of the proposed railway line and related develop- ment efforts, A detailed estimation for the major surplus produce based on data collected from communes is given in Table B.5. The targets for marketable commodities are rough estimates, They reflect approximately what could be produced and are within the possibilities of the agricultural potential in the zone. Like fertilizers and animal feed it is expected that bulky commodities such as vegetables including potatoes and the major portion of less perish- able produce, in particular processed food and meat, would be transported by rail. On the other hand, early vegetables and fruit which have to reach markets quickly are likely to take the road. It is difficult to estimate exactly the distribution of goods between the two major carriers. Consider- ing the difficult terrain through which roads in the zone of influence run, as well as the transport work, it is assumed that not more than 50 percent of the agricultural produce would go by road transport and that the remaining half would be transported on the proposed Belgrade-Bar railway line. 1.29 The expected development of agriculture would not only generate traffic for the railway but also improve the earnings from agriculture. The opportunity to produce competetively more of high value livestock products and of early vegetable and fruit crops would increase returns from farming considerably. These possibilities were not considered in the economic pro- jections of the railway but may be regarded as an important benefit to the economy of the zone. YUGOSLAVIA TABLE B.1 BELGRADE - BAR RAILWAY LINE A. BASIC AGRICULTURAL DATA 1964/65 Zone of Influence Yugoslavia Serbia V Montenegro Total Serbia Montenegro AGRICULTURAL AREA ('000 ha) Total 14,800 3,469 584 1,024 586 438 Arable 7,610 1,988 66 266 215 46 Orchards, vineyards 696 234 10 49 44 5 Meadows 1,950 493 114 310 216 94 Pastures 4,500 672 399 404 111 293 LIVESTOCK (head per 100 ha) Cattle and horses 46.3 49.3 32.2 - - - Pigs 48.5 64 5.9 _ _ Sheep 66.6 81 98.1 - - - MILK (in kg per cow, 1965) 1,184 1,185 804 - - - WOOL (in kg per sheep, 1965) 1.37 1.55 1.36 - - - TRACTORS Total .45,364 8,228 315 - _ _ Per 100 ha arable land 0.6 0.4 0.5 - - - GROSS RECEIPT OF AVERAGE Peasant Holding (US$, 1964) 504 424 388 - - - B. METEOROLOGICAL DATA 2) VALJEVO TITOVO UZICE SJENICA TITOGRAD NIKSIC Altitude (in m) 176 440 1,015 52 201 Precipitation (in mm) 782 760 672 1,622 1,789 Average Annual Temperature (in °C) 10.8 9.7 6.3 15.4 10.9 Average Relative Humidity (in percent) 75 76 77 63 69 Show Fall (days per annum) 43 51 90 9 38 1 Serbia minus VOJVODINA and KOS. MET. 2) Averages 1953 to 1962 Source: Statistical Year Book 1966. October 26, 1967 YUGOSLAVIA BELGRADE - BAR RAILWAY LINE SURPLUS OR DEFICIT FOR MAJOR AGRICULTURAL PRODUCE 196$ - ZONE OF INFLUENCE Production Surplus/Deficit Total Serbia Montenegro Total Serbia Montenegro Meat (net slaughtered) 31,600 25,600 6,000 + 5,200 + 8,900 - 3,700 Cereals (as flour of wheat, maize) 223,580 200,180 23,400 -27,800 +23,500 -51,300 Fruit (plums only at 10 kg per tree) 147,000 13?,000 15,000 +87,600 +94,400 - 6,800 Vegetables (potatoes only) 212,850 162,250 50,600 +85,100 +81,400 + 3,700 Sugar - - - -18,900 -12,000 - 6,900 Other foodstuffs (milk, fats,etc) 88,000 60,000 28,000 + 4,000 + 7,000 - 3,000 Cattle Feed 1/ - 40,000 40,000 -80,000 -60,000 -20,000 NOTE: The production is based on data available for communes; human consumption is,the annual average per capita for Yugoslavia as a whole; animal feed consumption is an estimated 100 kg per adult head. 1/ Rission's estimate Source: Statistical Yearbook 1966. October 26, 1967 YUGOSLAVIA BELGRADE - BAR RAILWAY LINE CONSUMPTION OF FERTILIZERS IN YUGOSLAVIA (in metric tons) Fertilizers Plant Nutrients Year Total Nitrogen Phosphate Potash sE Total N PI05 K 0 25 2 1957 805,600 298,072 378,632 128,896 179,754 61,105 63,610 55,039 1958 1,000,202 369,875 460,093 170,234 229,766 75,865 77,296 76,605 1959 1,147,356 390,101 585,151 172,104 259,853 79,971 98,305 81,577 1960 1,197,724 538,976 419,203 239,545 283,681 109,412 71,265 103,004 1961 1,092,555 502,576 437,022 152,957 262,466 107,952 74,921 79,593 1962 1,434,331 634,800 661,143 138,388 325,191 134,577 111,733 78,881 1963 1,896,125 733,012 880,502 282,611 443,775 152,100 149,069 142,606 1964 1,904,005 807,262 754,397 342,346 460,768 166,942 127,343 166,483 1965 2,010,523 811,325 917,007 282,191 455,132 166,322 151,214 137,596 Plant Food Ratio 1965 N P 0 : K 0 = 1 0.9 : 0.8 2 5 2 Source: Statistical Yearbook SFRJ, 1966, page 146. October 26, 1967 TABLE B.4 YUGOSLAVIA Comparative Fertilizer Consumption per Hectare of Agricultural Land V 1964/65 (in kg/ha) Continent/Country Total N p2 5 20 Yugoslavia 30 11 10 9 (60) (22) (20) (18) Austria 112 37 33 42 Italy 52 22 22 8 Greece 22.5 10 11 1.5 1/ Includes arable land, gardens, permanent crops, meadows and pastures. Source: Statistical Yearbook SFRJ 1966; FAO Bulletin March 1967. ( ) = expected 1973. October 26, 1967 YUGOSLAVIA BELGRADE - BAR RAILWAY LINE COMPARATIVE ESTIMATES OF IAJOR AGRICULTURAL PRODUCE AND INPUTS NEEDING TRANSPORT (in metric tons) ZONE OF INFLUENCE COMMiODITY 1967 1973 RAILWA.Y TOTAL TRANSPORT Foodgrains and Flour 60,000 70,000 35,000 Sugarbeets 1O,000 15,000 7,500 Oilseeds 3,000 3,000 1,500 Oilcakes 3,000 5,000 2,500 Vegetable oils 2,500 6,000 3,000 Vegetables includinEg potatoes 105,000 220,000 110,000 Fruit (fresh and processed) 145,000 290,000 145,000 Meat, live weight 17,000 48,500 24,250 slaughtered and canned 2,000 8,000 4,00 Milk products 10,000 15,000 7,500 Tobacco 300 °00 200 OtheL Produce 56,000 70,000 35,000 Fertilizexs 97,000 200,000 200,000 Aninal Feed 80,000 16o,ooo 160,000 590,800 1,110,900 735,450 Note:Estimates are based on information collected from communes within the zone of influence during July 1967. 8961 AbYIVNVr 27001 0209 O. . it P .- a~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~UlffgO 001 a a I V j, a SOuL,*'> uoISfl4 uoS IPUO- ...II -4l - - -- t> U , !N,S, I 5311W uoslamguoa wapun 0 6z 0 1.310q# _ ___J t = \ C z , ,, 00,~~~~~~~~~~oo de 03 OD 6I O GD}2vl pO4000d 7fflfl Sh313,Ol,OuII. 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ExI st n rai wa ,,__;, . , @ , _ _,~~~~~Tunel * ~ ~ ~ ~~~~~~~~~ Loats o' -.l ';'sia r v~ ~ ~~~~~~~~ ~~Procestsigpat NOVEMBER 1967 1000-2037 YUGOSLAVIA BELGRADE-BAR RAILWAY AND MAIN TRANSPORT ROUTES IN ZONE OF INFLUENCE O0i.jk Somb-r S.boti-o Saeg.d Znjanin zrenjanin MAP 3 B h teht D*ov Vi.ore§ 0 ;. 20 ... 40. 5 K,,,>7~ >eptwcBr t c AD~~~~~~~~~~~~~EGAD Oi a obj ijijn 4bo Bijj 4 ri c A a? ~ ~ ~ ~ ~~~~ --, 5 B | A W\g 2 ~ ~~~~~~~~~~~~~~~~~~~ .,.oo Per,o t ., . - ,- z. o , Pi'n ; -'I3 F ,g1 e upon M 9 T E N E G 4O Doboj JtN1ke ba *Ololin DANU1g5 s i _ r i.BE L r~~~~~~~~~~~~t eootvoC ^$- r.u crauedrr >mooi I ~ ~ ~ ~ ~ ~ . *.... . 5~~~~~~~~~~v Il __Proect li%4sRAS\ <7\SOJ SARAJEVO L',0ce 0 rOIjCvO ~~~Stoo 4 a~~~~~~~~~~~~~~~~~~~~~~ St .daE R K.uge, Ao : Standa~~~~~~~~~~~~~r.,aue.g-t ===CassIoJ,ay ner costuti. M 0 -P,.nj % - Opuen-Zupnnja HiRbwa R o lko - Les 0 Bile& v ell, Po ' lvatQ'od~~~~~~~~~~~~~~~~esoa JANUARY 196H IBPDT-O21RAP RAILWAYS ~~~~~~~~Agricultural zoae of .nfluence be Project lint,ROD Standard gauge, double track- - CassOPighay Standard gauge, single track Class I higbways under co-structioni -*--- arrow gauge Ulcn Opu.ee-Zupanja Higlotay Project . -Other lines under construction ) Gsia JAIWaRY 1968 IBRD - 2143R