Report No. 1 2962-POL Poland Urban Transport Review September 8, 1995 Energy, Environment, Transportation and Telecommunications Division Country Department II Europe and Central Asia Region Transport Division Transportation, Water and Urban Development Department Environmentally Sustainable Development 1~~~~~~~~~~ X S -.e_,.,''._.__...A c1 T., 2 I S1 hi -~~~~~ -U:O j~~~~~~~~~!,7 11 _, r ;jA7 J;M~~~~ ~~qpfi CURRENCY EQUIVALENTS AND GDP Currency unit = Zloty (ZI) Average 1992 exchange rate US$1 = ZI 13,861 Average 1993 exchange rate US$1 = ZI 18,145 1992 Gross Domestic Product (GDP) per capita = US$2,185 1993 Gross Domestic Product (GDP) per capita (est.) = US$2,270 ACRONYMS CUT Chamber of Urban Transport (Izba Gospodarcza Komunikacji Miejskiej) GDDP General Directorate of Public Roads GOP Agglomeration of Upper Silesia (Aglomeracja Gornoslaska) ISTEA Intermodal Surface Transportation Efficiency Act KZK Komunikacyjny Zwiazek Komunalny GOP (Communal Transport Association of GOP agglomeration) MPK Miejskie Przedsiebiorstwo Komunikacyjne (Local mass transport company); sometimes also shown as PKM; could be either a budgetary unit of the municipality, or a public-owned, corporate organization MTME Ministry of Transport and Maritime Economy MZK Miejski Zaklad Komunikacyjni (local transport operator with status of a municipal budgetary unit); sometimes also shown as ZKM PKP Polskie Koleje Panstwowe (Polish Railway Company) PKS State Bus Company for inter-city transport TCA Tri-City Agglomeration (Trojmiasto: Gdansk, Gdynia and Sopot) UITP International Union of Public Transport WPK Wojewodzkie Przedsiebiorstwo Komunikacyjne (Voivod Mass Transport Company) Table of Contents Page 1 of 3 POLAND URBAN TRANSPORT REVIEW TABLE OF CONTENTS Executive Summary . ............................... ..... i 1. Introduction ............................................. 1 The Context of the Study ..................................... 1 Objectives and Limitations .................................... 2 Readership and Organization of the Report .......................... 3 Field Work .............................................. 3 2. Urban Background ........................................ 4 3. Urban Transport Characteristics ............................... 5 Modal Split .............................................. 5 Mass Transport Organization and Technology ......................... 5 Automobile Ownership and Economics ............................. 6 Urban Road and Traffic Control Systems ........................... 8 Urban Transport Institutions ................................... 8 Mass Transport Finance ...................................... 9 Road Finance ........................................... 10 Urban Transport Planning .................................... 10 4. Urban Transport Problems and Innovations ....................... 11 User-side Problems ........................................ 11 Problems of Mass Transport Operators ............................ 12 Community-side Problems .................................... 15 Recent Innovations in the Sector ................................ 15 This report was written by Slobodan Mitric (Pr. Transport Specialist, TWUTD) on the basis of data collected in Poland through several visits from May through November 1993, and technical reports written in the field by Wojciech Suchorzewski (Consultant, Transport Planner), John Cracknell (Consultant, Transport Engineer), Jacek Malasek (Consultant, Transport Engineer) and Maria Mioduszewska (Consultant, Financial Analyst). Susanne Holste (Analyst, TWUTD) assisted with the collection, processing and analysis of data concerning cities and their public transport companies. Tim Hau (Economist, PRDPE) contributed valuable advice concerning the concepts and mechanisms of road use pricing. Stephen Stares (Sr. Transport Specialist, EA2EU) and Jit Bajpai (Urban Transport Specialist, EA1IN), were peer reviewers. Josephine Dugan-Cabezas was responsible for maps and Barbara Gregory assisted with figures. The report benefited from comments received from Polish city officials and professionals during and after a seminar held to disseminate this study in Krakow, January 18-19, 1995. Table of Contents Page 2 of 3 5. Elements for a Future Urban Transport Strategy .................... 17 The Role of Local Governments in Urban Mass Transport ................ 18 Evolution of Service Contracting ................................ 21 Company-internal Actions to Improve Performance and Reduce Cost ..... . . . . 22 Private Sector Involvement in Urban Mass Transport ...... . . . . . . . . . . . . . 23 Mass Transport Fare and Subsidy Policy .25 Pricing the Use of Urban Roads .29 Public Investment Policies in Urban Transport .35 Institutional and Legal Developments ....... . . . . . . . . . . . . . . . . . . . . . . 38 Urban Transport Finance .................................... 41 The Role of the State ....................................... 44 6. A Recommended Strategy ................................... 45 7. City-Based Action Program .................................. 48 City Actions Regarding Mass Transport Policies .49 City Actions Regarding Roads and Traffic .49 City Actions Regarding Future Projects and Policies .50 City Actions Directed at Matters Under State Jurisdiction .50 8. Looking for Allies and Instruments .51 FIGURES Figure 1 Auto Ownership in Poland and Selected Countries. 7 Figure 2 Auto Ownership in Major Polish Cities. 7 Figure 3 Passengers Carried by Mass Transport Companies .12 Figure 4 Vehicle-km of Service by Mass Transport Companies .12 Figure 5 Utilization of Rolling Stock .13 Figure 6 Staffing Ratios of Major Mass Transport Companies .14 ANNEXES Annex 1 City Profiles .53 Annex 2 A Survey of Urban Transport in Poland .69 Annex 3 Summary Tables .115 Annex 4 Operating Statistics of Mass Transport Companies, 1984-93 .137 Annex 5 Costs and Revenues of Mass Transport Companies, 1988-92 .149 Bibliography and References ..................... 163 Table of Contents Page 3 of 3 MAPS IBRD 25634 Poland IBRD 25635R Gdansk-Gdynia Agglomeration IBRD 25636 Upper Silesia Agglomeration (GOP) IBRD 25637 Warsaw IBRD 25638 Poznan IBRD 25639R Krakow IBRD 25640R Lodz IBRD 25641R Wroclaw POLAND URBAN TRANSPORT REVIEW EXECUTIVE SUMMARY Objectives i. This study grew out of the World Bank's analysis rban transport in Warsaw [World Bank 1992e]. which identified the critical importance of this sector for the well-being of urban residents and the economic growth of cities. It has two objectives: first, to provide a knowledge base and a strategic orientation for possible Bank lending in the urban transport sector in Poland; and second, to contribute an outside view to help Polish city authorities in their recent efforts to develop new approaches for the urban transport sector. ii. The brief of the study was to assess the current state of urban transport systems, identify trends, problems and issues, and outline a strategic framework for future policies and projects. The scope of work was limited to narrowly defined, key matters of urban transport policy, notably the regulation of mass transport services and the relations between mass transport and the private car. Field work for the study was done late in 1993 in four major Polish cities: Lodz, Krakow, Poznan and Wroclaw, and two agglomerations centered on Katowice and Gdansk. Information collected during the Warsaw study was updated. Thus, all Polish urban areas above 500,000 people have been covered. The data and analyses refer to the five-year period starting in 1988, coinciding with the introduction of profound political and economic reforms in Poland. Urban Transport Characteristics iii. Mass transport is the dominant urban transport mode in Poland, typically accounting for 70 percent of non-walk trips in major cities. The bulk of transport services is provided by public-sector companies, the majority of which are budget units of the city governments. Numerous small-size private transport companies have appeared since 1990, some operating on contract with city governments, others being freelance. The conventional, standard-size bus is the dominant vehicle in mixed traffic, but extensive tramway services operate in all major cities, often on street-based but segregated rights-of-way. The Polish State Railways (PKP) operate suburban rail lines serving all cities studied, but their role is significant only in Warsaw and the two agglomerations. City governments have jurisdiction over mass transport regulation, including fare levels, except for the state-mandated 50 percent discount given to retirees and students. Fare revenues at present cover 50 to 70 percent of total operating costs; the rest is an operating subsidy paid from municipal budgets, where it accounts for 12 to 18 percent of total expenditures. Capital subsidies for fleet replacement, generally low in the period analyzed in this study, are additional. Since 1990, municipalities have had wide resource generating and spending powers, though about 50 percent of their revenues still come from the state in the form of block grants. The state maintains its presence in the sector through ownership of major urban roads that carry a national or voivodship (regional) designation. Local roads are owned by municipalities. Accordingly, the general rule is that national and voivodship roads are financed out of the national budget, while municipal budgets pay for improvements on local roads; in practice this is more flexible. i Trends and Problems iv. Polish cities face an emerging urban transport problem, evident in several ways. First, urban road traffic is on the rise, especially in terms of passenger cars. This is a consequence of new economic activities that translated into increased motor vehicle ownership and use, demonstrated by both new and longer trips and by modal shifts. Nationally, there are now about 170 passenger cars per 1,000 people, with recent (1990-92) growth rates of about 11 percent per annum. In major cities, the level of ownership has already reached, and sometimes exceeded, the level of 300 cars per 1,000 people, equivalent to 60 percent of the highest West European rates. Urban auto registrations are growing at between 7 percent and 14 percent. Road networks in Polish cities are not ready for this; road structure and size as well as traffic control are insufficient. Congestion is still far from serious, but its increase appears unstoppable, as is also the case with air pollution. v. Second, mass transport companies are losing patronage and revenue. Total annual passengers carried by Polish urban transport operators fell from 9.1 billion in 1986 to 6.3 billion in 1991, indicating a 7 percent loss per annum; in 1992, it was just above six billion, roughly the size of the market back in 1975. The average mass transport trip rate fell from 500 trips per inhabitant per annum in 1986 to 336 in 1991. These numbers have to be treated with caution since they are synthesized from ticket sales, not from systematic traffic surveys. Thus, some claimed patronage losses may be disguised revenue losses due to fraud, which is believed to be widespread. Patronage losses are said to be the result of fares that are too high for low-income passengers, with additional losses from a shift to automobiles. The remaining passengers are worse off because the frequency and quality of services have deteriorated. This is a result of both having reduced the service frequencies and having defrayed the maintenance and replacement of vehicles and infrastructure. vi. Third, mass transport comnpanies are not efficient. This can be shown through fleet availability rates that are typically about 70 percent compared with above 90 percent for high- performing West European operators. Staffing ratios are in the range of 5 to 8 per vehicle in service, compared with 3 to 4 for well organized and equipped companies in the West, and commercial speeds are low, for example, under 15 km/h for tramways (in spite of their protected right-of-way). The major reasons for high staff ratios and low commercial speeds include aged and obsolete technology and organizational inefficiency tied to long-lived public monopolies, especially to public monopolies' inability to "downsize" in the face of falling demand. Indeed, the managers of Polish mass transport companies have operated in a tightly constrained environment. vii. Fourth, capitalfiunds are being sought by both road agencies and mass transport companies. The former wish to expand road capacity against rising congestion, notably by finishing urban expressways that were started years ago and that are now semi-abandoned for lack of funds. The latter are eager to renew their aging rolling stock and fixed plants; tramway tracks and power lines are in particularly poor shape, canceling the potential of the exclusive right-of-way to enable service excellence. Companies are eager to prevent further erosion in services and the consequent loss of patronage. Road spending by the state is variable from one year to the next, but with a steady downward trend in real terms, reflecting a general fall in public expenditures in the early years of this decade. In 1991 spending was less than one-third of what it was in 1986. Cities are not capable of providing capital funds for mass transport improvements because they are already stretched thin over current liabilities, including mass transport subsidies. Further fare increases in real terms may be difficult within the current policy framework in view of a high incidence of unemployment, and even poverty, in the urban population. Some 15 percent of the labor force is out of work, 26 percent . . of the population have expenditures under the minimum wage, and 14 percent are under the minimum pension, now defined as a poverty threshold. viii. The challenges facing urban governments are formidable, requiring that different group interests be reconciled within a political structure that is relatively new and still in flux. City governments are under pressure from some of their constituents to roll back fare increases and to improve mass transport services. At the same time, the dictates of the modest financial capacity exert pressure in the direction of a commercial approach to mass transport, indicating that in a market with falling demand, further fare increases and a reduction of fleet and staff will be necessary. These moves are staunchly opposed by both the low-income and captive travelers, and by the transport unions. There is an even stronger pressure to use scarce public funds for new roads and off-street parking, and also to rehabilitate and upgrade roads and traffic control systems. The pressure is being exerted against both city governments and the state as co-owners of urban roads, and is particularly strong regarding many partially finished, expressway-level road projects linked to inter-city and international networks. The two lobbies, pro-road and pro-mass transport, are not in complete opposition, since mass transport cannot operate well on poorly maintained and congested roads. Critical Action Areas ix. This study has identified ten critical action areas within its scope of work and has formulated recommendations which, taken together, will make up a coherent urban transport strategy. These are defined in the following paragraphs. They cover regulatory, jurisdictional, and institutional reforms, pricing policies, investment priorities, and finance. The task has been made easier because many worthwhile urban transport initiatives have already begun in Poland, though they are often limited to only a few cities. The recommendations made below incorporate and build on local ideas and developments. x. The Role of Local Governments in Mass Transport. Municipalities have taken over the ownership of erstwhile state-owned mass transport enterprises and now face two crucially different options. The first option is to maintain mass transport companies as budget units of municipalities. This would mean continuing the status quo of the government as a direct provider of monopoly services, as well as being the planner and regulator of the system. The second option is to separate the role of planner/regulator from that of operator, with the local government retaining only the first one, i.e., setting fare policy, planning service routes and networks, selecting and preparing investments, managing the contracting process, and monitoring performance. In larger cities, the regulating role is best achieved through a separate city institution, for example, a transport authority, such as those introduced in Wroclaw, Gdynia and Warsaw. Under this option, which is recommended here, the service provider is set up as an independently managed, joint-stock company, working under commercial law and operating under an explicit service contract signed with the city. Such a company is initially owned by the municipal government, but empowered to take in partners, issue stock, borrow, or be sold. This will, over time, result in a diversity of ownership structures, mixing public and private partners in accordance with local and national economic developments. The main reasons for recommending this option are that greater managerial independence is likely to bring immediate performance dividends, and that the introduction of the contracting approach is on the evolutionary path towards creating market relations in urban mass transport. The recommendation contradicts the actual trend since a large majority of cities have adopted the first option (transport companies as municipal budget units). iii xi. Service Contracting. Service contracts are, for the time being, mostly based on direct negotiations between a city and a single supplier, typically the city's own transport operator. The contract features agreed service requirements, remuneration and penalties for non-performance. Operators only take the cost risk, and the municipalities take the revenue risk. Remuneration is based on cost patterns dating from the preceding period of monopoly provision. This practice does little to pressure operating costs downward. Two improvements are recommended in this matter. First, assuming that contracts are awarded through direct negotiations with a single operator, specific productivity targets and incentives should be built into service contracts, based on cost arbitration and comparisons with other cities anr. countries. Incentives can also be agreed for the passenger (revenue) side of the ledger. Second, competition should be brought into the contract award process by inviting any qualified operator to tender for services on specified routes or networks, independent of his city of origin or type of ownership. The presence of multiple bidders will generate a strong downward pressure on bid prices without having to go through cumbersome monitoring of productivity targets. Open tendering should first be introduced in cities where multiple operators already exist. Bidders may initially be allowed to compete on price only, with all matters related to fares remaining in the hands of the authorities; a medium-term objective for operators is to assume both cost and revenue risks, whether or not the routes in question are expected to show profit or loss (in this connection, see the next action area). xii. Private Sector Involvement in Mass Transport. Generally, private mass transport operators can bring two major benefits to cities: (1) their equity capital, thus providing capital savings to the public sector, and (2) higher efficiency of service supply, thereby delivering lower costs and/or better services. The latter is not an attribute of the private sector as such, but results from the existence of pressures in a competitive market. Private operators currently working under contract in several Polish cities generally complement public-owned ccrmpanies in either a geographic dimension (new routes) or quality (seat-only services). The only private sector competition to date comes from some informal mini-bus services that give the markets a bad name through their predatory practices. Thus, the benefits that can be so far linked to the presence of private companies are limited to some modest-scale capital mobilization and the provision of supplementary services at zero subsidy. In the period under study, there have not been any sales of city-based mass transport companies to private investors, or to company employees through buy-outs. There have not been any vehicle or infrastructure leasing arrangements, or management contracts signed with specialized private firms. Likely reasons for such a low-level private sector activity in urban mass transport include a dearth of bank credits for an activity where profits may be low and risks high, and an underlying resistance from unions. Credits from the banking sector will gradually become more plentiful and terms will become more favorable, but a more active stance by local governments is also needed to activate the competitive advantages of the private sector. The quickest and simplest way to involve the private sector in the competitive provision of mass transport services is to introduce mandatory open bidding for service contracts, a recommendation that has already been made in the preceding section. Indeed, open bidding is likely to generate genuine competition only if some of the bidders are privately owned. Assuming 4 to 5 year contracts, one-fourth or one-fifth of the network should be up for bids every year. This will attract multiple bidders, both public and private, and lead to lower bid prices. xiii. Company-internal Opportunities to Improve Performance and Reduce Costs. While the processes of improving mass transport regulatory regime take their course, numerous opportunities exist to improve performance and reduce costs under the current set up. Among these, three are particularly recommended. First, inherited route networks and schedules reflect the vagaries of a politically dominated transport system and need to be revised along functional and financial criteria. iv This will involve some downsizing, akin to pruning weak limbs to make the entire tree stronger. In order to implement this recommendation, however, a serious effort to collect passenger data has to be made by companies and the municipalities. Second, existing operators are too large, therefore under-specialized. This is due to the combined effects of: (a) a past tendency to produce many goods and services internally, a reaction to poor outside markets, (b) outdated technology, (c) inefficient work practices, and (d) the past policies of maximizing employment. With the Polish product and service markets now being quite improved, mass transport companies should divest their non- operational departments and buy from external suppliers. They should also restructure/reduce staff as new operating technologies and practices are introduced. Third, several technological biases still remain from the past, some dictated by state policy rather than by decisions of company managers. For example, bus fleets tend to exclude midi- and mini-buses, and segregated rights-of-way are mainly given to tramways. We recommend more diversity in vehicle sizes and the creation of segregated, street-based rights-of-way for bus vehicles. xiv. Mass Transport Fare and Subsidy Policy. The current level of urban mass transport fares in Poland, as well as the emerging consensus to keep fares at a level sufficient for 50 percent cost recovery, are variously justified on the basis of affordability for low-income citizens and the retention of car-owning passengers. In fact, fares at the current level may be too high for the poor and irrelevant as a factor in modal split decisions; the latter is much more related to the quality of service and the price of the competing mode (private car). Segmentation of the mass transport market is clearly warranted and strongly recommended, Separate fare and subsidy policies should be developed for at least two groups of passengers: those whose low incomes indicate a rea1 need for subsidies, and all others. xv. Looking first at the needy passengers, the existing policy regarding fare discounts mainly benefits retirees and students. It is implemented by the transport operator. We recommend that the policy be refocused to benefit the unemployed and the poor, whose numbers are significant. The mass transport operator should be taken out of the subsidy loop; the redefined eligible groups should be helped directly through the e;:isting f?mily assistance, unemployment protection and social assistance programs. These are highly developed in Poland, with well-established and continuously improving eligibility criteria and delivery arrangements. The cost of this assistance should be borne by a combination of state, enterprise and municipality sources, depending on the exact category of eligibility and on who has decided to proffer the benefit. De-coupling "social" fare policies from those for the rest of the travel market will make it possible for the latter to be determined along commercial lines. Such a move would, therefore, go a long way towards increasing the managerial independence of mass transport operators. xvi. Subsidizing travelers who do not need social assistance can be justified using the second-best economic argument that the competing mode-the private car-is being subsidized indirectly (see the following section). Subsidies for these two competing modes should be linked dynamically, i.e., both should be reduced, and eventually eliminated. Given, however, that it is generally quite difficult to reduce subsidies to the private car, it is recommended that mass transport subsidies in Polish cities be maintained to the degree that motor vehicles are not correctly priced for the use of roads. What is not recommended, however, is to adopt an arbitrary 50 percent cost recovery level as a criterion for fare determination; cost recovery "milestones" should refer to elements of the mass transport cost structure. Once the social assistance market is separated from the rest, fares should, in the short run, be set to cover direct costs (working expenses) of mass transport operations, in parallel with adopting a city-based system for road use charges (see the following section). Increasing fares to meet capital v costs of the rolling stock and. subsequently, the capital costs of mass transport route infrastructure, should be done gradually and. as noted above, linked to the progress of the reform in charging the motor vehicles for long-run marginal costs of road use. Other relevant aspects should also be considered, such as the existence of increasing returns to scale and secondary benefits of mass transport, for example those accruing to property owners. xvii. The recommended approach should be supplemented by a programn targeting those travelers who have the option of using a private vehicle, the so-called "choice" market. Keeping them as mass transport users or re-attracting them, if the competing mode (automobile) is priced correctly, is best achieved through maintaining a high quality of mass transport supply and providing custom- tailored, higher-fare services where market research discloses the relevant potential. xviii. Pricing the Use of Urban Roads. Possibly the pivotal question in Polish urban transport today concerns the socially desirable role of automobiles in cities and the appropriate policy instruments. In the short run, the concern relates to the auto/mass transport modal split and the consequent use of existing urban roads. In the long run, the issue is how much to spend for expanding roads and mass transport capacity, and where the funds should come from. Modal choices result from a combination of individual preferences and the public policy on transport supply and prices. In Poland, the only price instrument related to the use of road infrastructure is the fuel tax, which in mid-1993 accounted for 66 percent and 57 percent of the retail price of gasoline and diesel, respectively. This could be said to be a road use charge in tibe sense that fuel consumed increases with distance traveled and the age of the vehicle, the latter being a proxy for environmental impact. In essence, however, this is a fuel tax, not a road use charge. The tax rate and the total revenue generated have nothing to do with either costs (road wear, pollution, congestion, accidents) caused by motor vehicles, or the funds spent for roads and related matters by diverse levels of government. The rate and allocation of proceeds are dictated strictly by the fiscal and budget criteria of the state. The dissonance between the fuel tax, a proxy for road use charge, and costs or public expenditures for roads is of essential importance during specific times (peak periods) and with specific road links (urban arterial roads). This poses a well-known and serious problem in congested cities: an individual decision to use an automobile in preference to urban mass transport for a given trip is based on under-estimated social costs. The term "social costs" refers to an all-inclusive definition of costs, i.e., adding congestion and pollution costs to all vehicle operating costs, travel time and other cost categories perceived by travelers when making travel decisions. In this sense, the use of automobiles in Polish cities is probably subsidized, at least for some roads and during some time periods. This should be true even though the total fuel tax yield in recent years has been about twice the amount that all levels of government spend for the upkeep of roads and new construction. If this situation persists, individual transport modes will be increasingly over-utilized relative to mass transport. Under these conditions, the existence of congestion cannot automatically be taken as an argument to expand road capacity, nor is it clear who should pay for this and how. xix. The conceptual resolution of this dilemma is to treat urban roads as public utilities, just as mass transport is being treated, and design an equitable and linked pricing system based on long-run marginal social costs. The term "marginal" refers to time- and place-specific increments to total costs due to an additional vehicle joining the traffic flow. "Long-run" means that the costs of expanding infrastructure are included. Road pricing covers an array of instruments. Those already in use include differential (peak/off-peak) tolls for bridges and road corridors, less often access charges for congested urban sub-areas, typically downtowns. A network-wide, high-technology based marginal cost pricing system has yet to be introduced anywhere in the world, but several cities are vi working towards it. Technological difficulties apart, the main obstacle has been political resistance by car users, since marginal cost pricing would cause welfare losses to many of them. To overcome this, the revenue from marginal cost pricing would have to be earmarked for road and mass transport improvements, a form of compensation for welfare losses. Given the untried nature of a rigorous marginal cost pricing approach, and the likely conceptual and implementation difficulties facing its application in Poland, it is recommended only as a medium-to-long term option. In the short-to- medium term, partial and approximate charging methods should be used in combination with non- price traffic restraints. These include parking charges, tolls for individual roads, and sub-area or city- wide access and use fees for motor vehicles. As noted in the preceding section, mass transport subsidies for capital costs should be maintained in the short term and reduced progressively as a function of headway made in implementing the road use pricing program. On the research side, as a prerequisite for developing charging schemes, it is recommended that studies be conducted to measure the full social costs of motorized urban transport. This is a new study area in Poland, until recently neglected in most countries as well, but rapidly acquiring political visibility and importance. xx. Investment Policies in Urban Transport. The adverse consequences of under-investment in urban ro, ss and mass transport are evident and, if left untended, will generate a much more serious transport crisis in Polish cities in the future. Many of the currently proposed investments, however, have been generated through an out-of-date system of transport planning and need to be revisited. This includes both the design and justification of individual investments, and the fact that the aggregate of proposed investments exceeds by drastic amounts even the most optimistic estimates of the financial capacity of cities and the state. xxi. On the mass transport side, the most pressing cases involve rehabilitation and upgrading of the route infrastructure on existing tramway sub-networks, probably with some reductions and structural alterations. Tramway lines are veritable backbones of mass transport networks in all large urban areas, and they suffer from long-neglected infrastructure repairs. This is best seen in the case of the 200-km PKT system serving the Upper Silesian agglomeration. High priority should also be given to the replacement of aged bus/tramway rolling stock. Expansion projects are of generally lower priority, requiring a high degree of selectivity. It appears that the most promising expansion projects are those whereby existing high-volume lines would be provided at-grade, but on a right-of- way segregated from other traffic. Also, some mass transport projects are at such an advanced stage of construction that the additional funds needed to complete the project will get high economic returns. The new tramway line in Poznan, for example, lingers very close to completion for a lack of modest capital funds. Stable, medium-density urban populations, the absence of very large cities, and reasonably abundant urban road space indicate that, in the near future, little underground construction will be necessary for mass transport purposes. In contrast, a gigantic task of converting to a more productive use the now-superfluous PKP spurs and secondary-line tracks in Wroclaw and other urban areas, may at least overlap with urban transport plans in these cities, helping to create segregated mass transport lines with modest expenditures of capital. xxii. Other highly recommended mass transport investments that are sophisticated and yet low cost are equipment and software aids to operations, maintenance, and management. These include, for example, devices for automatic vehicle monitoring to permit on-line operations management and priority of passage at signals, software for scheduling, hardware for ticket sales and validation, as well as information systems for management and passengers. vii xxiii. On the road side, investments are indicated in low-cost traffic engineering projects, as well as new infrastructure investments. Modernization of traffic control devices goes hand in hand with the above recommended measures to improve traffic conditions for mass transport vehicles. As for larger road works, particularly in agglomerations, provision of limited-access roads and missing links and bridges on the arterial network is clearly indicated. As discussed above, partially finished road projects are of special interest since they may bring high economic returns on marginal investment of capital. Efficient road transport is undoubtedly a vital ingredient in speeding up economic and spatial growth of cities, not least because most mass transport traffic takes place on urban streets and roads. Thus, many potential projects combine roads and mass transport interests. xxiv. In order for cities to advance in their search for investment funds, it is urgent that they carry out the basic urban transport studies, following an improved methodology, to ensure that the projects are technically sound and make the best use of scarce funds. First, old strategic investment plans have to be re-done in the light of the new and emerging patterns of urban economic and spatial development. Second, the methods used to prepare individual projects (in planning, evaluation, and design) have to be improved, particularly demand measurement and forecasting, generation of alternatives, and project evaluation. Third, the status of preparation of currently proposed projects is spotty. Most projects fingered as high-priority and urgent are not quite ready for tendering. This indicates the reverse of the usual maxim that well-prepared projects will always find funds, and probably results from a lack of experience and uncertainties regarding non-budgetary financing. Altogether, the imperative of using newer analytical approaches is clear, but what is even more important is placing transport planning into a realistic financial context, selecting priorities, and linking investment planning with pricing and other policies. xxv. Legal and Institutional Developments. The main unresolved question of jurisdiction concerns voivodship roads on city territory. (It is accepted that major international roads passing through cities will remain under state jurisdiction.) Generally, integrating urban transport regulation, planning, and budgeting across all modes means that cities should annex voivodship roads. More specifically, if city governments are to introduce urban road pricing (first in a partial form then evolving to full- network marginal cost pricing) arterial roads should become city property first. The mechanics of annexation are complicated by the existing Polish practice of financing voivodship roads from the national budget without a stable link to road-use revenues (fuel taxes) collected, i.e., through an explicit budget allocation formula. Several cities have begun a pilot program to take over the administration of voivodship roads. This matter should be studied at the national level, since the jurisdictional and financial questions would best be resolved in tandem. xxvi. Another question about jurisdiction concerns state or voivodship-owned regional mass transport services, for example, suburban rail services that PKP are keen to divest. It is recommended that these be transformed into corporate-status enterprises, initially owned by the involved municipalities and other local interests. In time, ownership patterns may change to reflect the presence of other potential investors. This recommendation is particularly applicable and urgent for the regional, tramway-based system of PKT Katowice, given current pressures to break it into several companies defined by municipal borders. xxvii. In the area of local government institutionsfor urban transport, multi-modal or even single- mode urban transport authorities in ail large cities are recommended. They would carry out the regulatory function retained by the local government, while trying to help evolve a mass transport viu market on the supply side, based on a combination of corporate-status, public-owned operators and private entrepreneurs. xxviii. Finally, following the above comments on the weaknesses observed in project preparation, it is recommended that a national effort be mounted to develop a new, mandatory planning system, including the definition of study types, sequencing, review and approval procedures, and links to the local budgeting process. Developing such a system should not be a city-based, but a country-based undertaking. It is recommended that a national commission be set up for this purpose. Its membership should include elected and career officials at both levels of government, as well as sectoral professionals. Consultations should be held with those groups, if any, involved with developing new planning systems for other urban service sectors, and/or for urban planning in general. A complementary effort will be necessary to upgrade both academic and post-academic professional training programs, particularly in hitherto neglected areas such as economics and finance. xxix. Urban Transport Finance. Faced with insufficient capacity of municipal governments to provide funds for mass transport subsidies, and in parallel with vastly diminished road budget allocations, the Polish mass transport industry and some cities have proposed emulating the French example of financing urban transport out of a dedicated employment tax. This approach is not recommended, not only because employment is a fragile and essential aspect of an economy undergoing drastic restructuring, but because it flies in the face of the essence of Polish economic reforms. Other possibilities exist that hold much more promise than new taxes. Several of these were included in the recommendations made above for the short-to-medium term: revision of mass transport fare policies to give the social safety net the responsibility for subsidizing travel by eligible lower-income citizens, fare increases for passengers belonging to mid-to-higher income levels, diverse actions to increase the production efficiency of mass transport provision, and charging fees for the use of urban roads. In the aggregate, these measures should generate considerable new revenues and cost savings. Since neither cities nor mass transport operators in Poland have any debts to speak of, our recommendation is to leverage these new internally-generated funds through long- term borrowing at a scale sufficient for investments deemed a genuinely high priority. In this respect, achieving credit-worthiness is critical for municipalities, not only for urban transport but for all municipal utilities. For the time being, until the domestic banking sector becomes stronger, the most promising sources of long-term loans are international development institutions. For the largest cities and projects, loans could be arranged directly between these institutions and client cities (see section on the role of the World Bank below). For the majority of cities, an alternative is now being considered by the Government of Poland, whereby a temporary municipal credit program and a parallel development agency would be set up to help cities prepare and get long-term loans. The credit program would be funded through a combination of external sources and inter-governmental transfer funds. In the longer term, a progressive introduction of full-scale road use pricing in cities, and a matching reduction of mass transport subsidies, would generate sufficient equity funds to pay for all current expenses, and permit cities to borrow more for expansion-type projects. The question of urban transport finance may also be linked to the future of fuel taxation and revenue allocation. The topic of fuel taxation is outside the scope of the current study, and clearly would require empirical and conceptual studies before an informed public debate can take place. xxx. The Role of the State. The state has formally withdrawn as owner and financier of urban mass transport, but is still present in the sector by virtue of its ownership of all major roads and its residual power over municipal finances, especially long-term borrowing. The absence of any explicit fr state interest or action related to mass transport is anomalous and leaves many worthwhile activities dangling. It is recommended that the Ministry of Transport and Maritime Economy should be re- engaged as the functional "sponsor" of mass transport. This would not be a return to old paternalistic ways and a purse-holding role, but would follow an agenda common to ministries of transport in industrial economies. Such an agenda would include relevant legislative activities, basic regulation, functional, safety and environmental standards for the rolling stock, development policy for vehicles relative to both imports and the domestic industry, labor relations, the collection and maintenance of sectoral data bases, design of transport planning procedures, and research and development. One- stop shopping at the state level is, of course, not possible. For other activities with more urban than transport content, for example, the planning system or urban finance, the Joint Commission of State and Local Governments and the Central Planning Office will remain key interlocutors of cities. A Recommended Strategy xxxi. The main strategic objectives for urban transport are to reach a socially and environmentally acceptable modal split in the short termn, and enough funds to expand the system according to the demand pressure in the longer term. Against the current background of the modal split shifting against mass transport and the strong pressure on the road network, the observed tendency in Poland is to emulate German and French models of large subsidies to both modes. Poland cannot afford to do this if it is to pursue the orientation towards higher spending by individuals and less spending by the state. While it is accepted that an auto-oriented modal shift may now be economically and socially beneficial, this will not be so for long; the underlying thrust of the strategy is to reconcile individual and collective interests with a minimum of command-and-control measures. xxxii. The urban transport strategy for Poland presented here has four key aspects: (a) it relies on the evolution toward market-supplied services by a mixed-ownership mass transport industry; (b) it treats urban road network as a public utility and focuses on its cost recovery through pricing; (c) it links pricing policies for mass transport and private cars, following the well-established economic concept of the second best, aiming to reduce and even eliminate subsidies for both modes; and (d) it relies on internally generated revenue leveraged by long-term borrowing to finance sectoral investments. It is therefore a counterpoint to a strategy wherein mass transport is a state-owned monopoly, the use of urban roads is subsidized (as is mass transport), infrastructure investment is the instrument of preference (as opposed to pricing), and sectoral investments and operating subsidies are financed from tax-generated budgets. xxxiii. The strategy is put together by taking recommendations made under individual headings in the preceding section, and arranging them along a time axis into three packages, depending on their urgency, feasibility and linkages. The listing of recommendations contained in each package, given below, is complemented by indicating expected outcomes. Whether a given action is in the short, medium or longer term package is not meant to be binding. Individual cities already differ in what and how much they have achieved since the 1990 Decentralization Law gave them the responsibility for mass transport, reflecting their political, economic or institutional situation. Cities already ahead in this dimension could, for example, reach directly for the medium-term part of the strategy, for example, a partial form of road pricing within a period of several months needed to commission and carry out preparatory studies. xxxiv. In the short term, while conceptual, data, legal and political conditions and requirements for urban road pricing are being progressively met, traffic restraint measures and parking charges should x be used to regulate modal and route choices. These, on the average, are not likely to produce more than modest revenues. On the mass transport side, actions to improve production-side efficiency of public-owned companies and initiate competitive tendering and other forms of private sector involvement should start generating cost savings. The reform of subsidy and fare policies, i.e., the detachment of subsidies for low-income travelers from company accounts and setting ordinary fares along cornmercial lines, will increase mass transport revenues. These improvements should suffice to reach a cost recovery at the level of direct operating costs (working expenses) without raising fares in real terms. No significant new sources of equity funds are likely to become available for mass transport, short of savings from within the sector itself. In acknowledgement of severe funding constraints, the investment policy would favor rehabilitation projects with exceptions made to complete selected expansion projects already at an advanced stage of construction. Cities should work to achieve credit-worthiness, permitting their equity funds to be leveraged through long-term borrowing, probably from external sources. In consequence, a major effort will be necessary to carry out preparation studies for priority projects meant to meet the technical standards of potential long- term creditors. xxxv. In the medium term, some five to six years hence, the legal, political and knowledge base to charge for the use of urban roads will be in place, including municipal jurisdiction over primary roads. It is recommended that cities start by introducing simpler pricing mechanisms first, for example, area licenses, cordon crossing fees and tolls on selected road links. Environmental charges, for example, vehicle registration based on emission producing characteristics (perhaps cross- referenced to time and place of use) can be defined in parallel or within the road charge program. The competitive bidding system for mass transport service contracts, now in its second cycle, will produce major cost savings. Fares can be set to achieve cost recovery at the level of rolling stock depreciation and financial charges. These new revenues from road and mass transport sources will go to enhance municipal equity funds available for transport purposes. Long-term lending sources will expand to include domestic credit institutions, currently still financially weak or not specialized for municipal borrowing. Investment budgets will be large enough to permit financing of expansion projects in addition to rehabilitation and replacement. A new transport planning system will be codified, and training programs will have borne fruit in terms of staff needed to undertake studies and implement programs recommended in this and the subsequent stage. xxxvi. In the longer term, a full, marginal cost-based road charge system will be introduced in Polish cities wherever conditions call for it, using, by that time, commonplace electronic vehicle sensing and charging technologies. Its revenues would be earmarked for urban transport uses. The only supplementary action needed regarding traffic restraint would be to protect environmentally sensitive sub-areas. Using marginal cost pricing for urban roads, and having removed social assistance fares from transport operators' concerns, will permit the introduction of a fully commercial fare policy in mass transport. Road use revenues and commercial pricing of mass transport services will help both modal systems approach self-financing, with expansion decisions made on the basis of the economically efficient traffic patterns. xxxvii. What Could Go Wrong? The risk that resistance to user charges, combined with less-than- rigorous traffic restraint practices in the short term, may lead to the permanent survival of a double- subsidy system now found in so many cities in the world. The mass transport industry may remain bound in old monopoly practices, creating a strong pressure to increase both subsidies and fares. Road traffic growth will be fed by increasing motorization, much of it coming from the gray economy and, thus, growing faster than tax revenues. In the ensuing competition for funds, roads xi being financed by the state are more likely to win than the mass transport mode financed by municipalities. This would accelerate the current trend in modal split, result in a large road expansion program, but shrink mass transport beyond what is economically efficient or socially desirable. An even worse scenario would be to have neither the roads nor the mass transport mode receive enough funds, resulting in a double bind of congested roads and poor mass transport, by no means a rare occurrence. Even if this eventually leads to a radical charging system for urban roads, such as envisaged here for the longer term, considerable damage will have been done to cities. Action Programs xxxviii. To help establish the link between recommendations and irnplementation, the strategy outlined above is now recast into several thematic action programs for cities and/or the state. Themes are easily linked to different levels of implementing institutions. Actions by the ensemble of cities vis-a-vis the state include political consensus building between the Association of Polish Cities, the Parliament, and the administration concerning national level reforms, i.e., incorporation of urban transport subsidies for the low-income and other eligible travelers into various programs available under the social safety net, re-engagement of the Ministry of Transport as the functional sponsor of the urban mass transport sector, changing jurisdiction over major urban roads in cities' favor, setting up groups to study road use charging and develop the planning system, and helping cities reach credit-worthiness. xxxix. Actions by individual cities vis-ei-vis their mass transport include: (a) new fare policies (assuming that low-income fares have been removed from the operators' agenda), (b) rationalization of service network and standards, (c) divestiture of non-operational functions, (d) organizational steps to improve internal efficiency of operators, (e) adoption of a corporate legal status for city-owned operators to increase their managerial independence, (f) introduction of productivity targets in service contracts, (g) introduction of mandatory tendering on a sub-network basis whenever current service contracts come up for renewal, and (h) steps to increase the proportion of exclusive rights-of-way for mass transport vehicles, with special attention to bus-based corridors. xl. Actions by individual cities related to roads and traffic include immediate intensification of work on traffic engineering improvements, selectively focusing on either capacity increase or restraint as the situation calls for, introduction/expansion of pay parking programs and other forms of parking management, and commissioning of studies aimed at getting basic data and relationships needed for a multi-phase introduction of road use charges. Once the studies are done, this category of actions should include implementation of road use charges. xli. Actions by diverse stakeholders concerning future projects and policies would go into three directions. In the first and most urgent direction, individual cities would commission studies meant to initiate the project cycle for highest-priority interventions: these would focus on internal improvements to mass transport companies, and on select road and mass transport investments. The second direction, would have individual cities update their urban transport data banks and strategic plans, and prepare investment projects for the medium term. The third direction consists of a national effort to develop a new mandatory planning system for urban transport, including a project preparation framework linked to the city budgeting process, with cross references to voivodship/ national road planning efforts. xii The Role of the World Bank xlii. The World Bank, alone or jointly with other international development institutions, has a potentizlly unique and catalytic role to play in implementing the above recommendations until the Polish banking system builds sufficient capacity and cities become commercially credit-worthy. Unlike projects financed from commercial sources, however, development projects have a double focus, linking physical investments with policy/institutional actions. Based on the preceding recommendations regarding investments and policies, the following paragraphs outline three potential designs for urban transport development projects in Poland. xliii. A city-based urban transport development project would include investments in sectors entirely under the jurisdiction of municipal authorities, i.e. local roads and traffic control systems, rolling stock and maintenance equipment of mass transport companies, as well as rehabilitation/ expansion of their exclusive-way infrastructure. Likewise, the policy content of such a project would be limited to those aspects over which municipal governments have decision-making power. A city would become eligible to borrow if it met standard banking criteria. These include sufficient capacity to provide equity investment and repay the loan, carrying out requisite planning and preparation studies, and agreeing to implement mass transport and traffic management policies and programs in line with the strategy recommended herein. Though some individual sub-projects may be large, the bulk of lending would be for medium-to-small projects, implying a multi-city, retail- type lending operation. xliv. A state-based, single-city or multi-city project would bring together the major policy objective in the sector with a client holding the relevant decision-making power. Such a project would have the following characteristics: (a) the state, acting through the Ministry of Transport and Maritime Economy, would be the borrower, with separate project agreements signed with participating cities, (b) the project would finance high-priority investments in urban roads presently under state jurisdiction, (c) the major policy objectives would include the re-design of "social" fares, the development of principles and enabling legislation for urban road pricing, and a re-involvement of the state in the urban mass transport sector, and (d) for roads in a specific city to be eligible for financing under this type of operation, in addition to carrying out standard strategic and feasibility studies, the city will have to meet the same conditions as those specified above for a city-based lending operation. xlv. The city-based project type has an obstacle in that municipalities have not yet reach credit- worthiness. The state-based project type has the disadvantage of leaving urban mass transport projects without funding. It may, therefore, make sense to have a third, integrated project design, adopting both levels of government as clients. The state may be more interested in providing a loan guarantee for city-based mass transport and traffic projects if the loan also included funds for major urban roads. xiii POLAND URBAN TRANSPORT REVIEW 1. INTRODUCTION The Context of the Study 1. Several large Polish cities seek new ways to finance their capital improvement programs in urban transport. In the past, capital was provided to cities and their mass transport companies by the state in grant form. The state was the de facto treasurer and major decisionmaker for urban infrastructure investments, but recently it has given up at least a part of this role. This new development follows from far-reaching economic, political and administrative reforms initiated by Poland in 1990. 2. Polish economic reforms have aimed to decentralize and otherwise transform the country's command economy into a market economy, featuring a sharply curtailed role of the state in economic matters, a reduction of subsidies, an increase of private ownership, and institution of both economic prices, and a stable, convertible currency. Political reforms at the national level introduced a multi- party parliamentary system. Reforms at the sub-national level involve decentralization-moving towards administrative and financial autonomy (coupled with appropriate responsibility) of local governments. Administrative reforms have had to do with transforming state and local institutions to suit their new roles, or to move many of their previous functions away from the government into the private sector. 3. The results have, so far, been positive both macro-economically and also for many individuals and firms. The recession during the first years of the reform has given way in 1993 to 4 percent growth in the Gross Domestic Product (GDP), spearheaded by smaller-scale manufacturing industries and the newly emerging private sector. Inflation has been brought down from a 600 percent level in 1990 to 35 eercent in 1993. One of the major problems is that restructuring, mainly down-sizing of the public s";tor has created a large pool of unemployed and retired citizens, making huge financial demands on the social safety net. 4. As economic transformation processes continue at varying speeds, local governments find themselves in a financial bind. They have quickly taken over jurisdiction, and therefore liabilities, for various local infrastructure and services, but resource generation has lagged behind. This is particularly so in larger cities, where municipal budgets are largely spent on current costs and leave little for investment. The hitherto habitual pay-as-you-go approach to financing infrastructure investments may have been sufficient when government expenditures were high. but not any more; it will have to be supplemented by borrowing. 5. Individual urban transport projects are best evaluated when the overall context and agenda within which project proposals were generated are fully understood. This requires taking a synoptic view of country-wide urban transport characteristics, trends, problems, and issues, and evaluating new orientations and policies-if any-adopted by the local governments, the state and the related institutions. This has not been done for urban transport in Poland since the process of abandoning past strategies and policies started and new approaches emerged. I 6. The current study is meant to fill this gap by making a sectoral diagnosis and suggesting a broad framework for country-wide and city-based actions. The study can also be seen as combining and extending World Bank technical assistance to Poland in two areas: the first has covered organization and financing of local governments and basic infrastructure sectors under their newly- acquired jurisdiction (housing, water, urban transport); the second concerns the general area of investment planning. This report should therefore be seen as one of a series of related and overlapping reports [World Bank 1992c, 1992d, 1992e]. 7. Urban transport in Poland was identified as an important field of study during the 1991 Strategic Investment Review because of (i) the large size of unfinished public investments in the sector, (ii) difficult and far-reaching issues related to an emerging shift of passengers from mass transport modes to the private car, (iii) the links among fare and subsidy issues in urban transport and unresolved problems of local government finance, and (iv) the complexity of transition in inter- governmental relations following the 1990 decision to decentralize. 8. A 1992 study focusing on the nation's capital, Warsaw Urban Transport Review, [World Bank 1992e], indicated a critical need for the Bank to support the budding policy reforms undertaken by city authorities, to help develop a new urban transport development strategy for Warsaw, to redefine the questionable metro project under construction since 1983, and to lend for a backlog of transport rehabilitation projects in the city. After the study was completed and disseminated, policy discussions with the local government were curtailed and overshadowed by a divergence of views concerning the construction of Warsaw Metro with its unique combination of historical, political, technical, economic, and financial factors. The current study is based on a wider sample of important Polish cities, where problems and action agendas are similar to those in Warsaw, but less encumbered by the mortgage of inherited, highly symbolic investments, such as the Warsaw Metro. This should permit broad and effective policy discussions with a plethora of local authorities. Objectives and Limitations 9. The study has two major objectives. Thefirst objective is to provide a knowledge base and a strategic orientation for possible Bank lending activities in the urban transport sector in Poland, as part of a broad program of supportfor the ongoing, economy-wide reform process in Poland. The study does so by offering an overview of the current situation in urban transport and identifying critical issues; these lead directly to an outline of a city-based urban transport strategy, subsequently recast into action programs. Municipal authorities in several cities are themselves involved in a similar effort, evolving their own, city-specific approaches. The second objective of the study is to assist the local strategy-making process by providing an outside view. 10. The field work for the study (see the section on field work below) and subsequent analyses covered all major aspects of urban passenger transport, but not at equal depth. The primary focus of the study is the mass transport mode: how it is set up within the institutional system, how it functions, how it is regulated, and how it interacts with its main competitor-the private automobile. The choice of focus follows directly from the primary objective of the study. The depth of coverage of other topics, or even their inclusion, most often was decided by how important their link with the main theme was. The selection of topics was also influenced by the fact that other specialized studies for the Polish transport and/or urban sector had already been completed or were planned, e.g., on environmental aspects, road planning, road maintenance, traffic safety, land use planning, economic development, and property taxation. 2 11. Should there be a Bank-financed transport project for one or several specific Polish cities, the current study is meant to be the point of departure for the process to define local strategies, and identify and prepare investment projects. A nationally oriented work, like this study, cannot be a substitute for detailed, city-specific studies addressing local policy and institutional issues. It is also no substitute for pre-investment studies. Readership and Organization of the Report 12. In line with the objectives stated above, this study addresses two audiences both in Poland and in the Bank, namely the readers at the decisionmaking level and the more technical readers. Also, as has been usual with all Bank sectoral studies, the data and analyses contained herein should permit cross-fertilization with other countries where similar urban transport issues and processes are to be found. This potentially wide, international readership has also been kept in mind. Such diverse readers would, of course, have different expectations of the selection of topics and the depth of treatment. An attempt has been made to suit different interests by selecting a modular format for the report. 13. Readers at the decisionmaking level, particularly the Polish ones, are favored by providing a summary that focuses almost exclusively on the critical action areas and recommendations at the expense of sectoral description. The main report also eschews description in favor of discussing future strategic options and making recommendations, which are mostly general rather than city- specific. For non-Polish readers, six short, self-contained city profiles are included in Annex 1, one for each urban area where major field work was done during the study. Other annexes also are meant for readers looking for more detail. A detailed overview of Polish urban transport is given in Annex 2; it includes historical and descriptive sections, a diagnosis of current urban transport problems, and a survey of recent actions by city and national governments to respond to these problems and otherwise reform the sector. Tables with comparative urban transport data for major cities are in Annex 3. Tables showing a time series (1988-92, or longer) of operating and financial characteristics for individual mass transport companies in major cities are in Annexes 4 and 5. Finally, the map section contains a map of Poland identifying cities where the field work was done and maps for these individual cities and agglomerations. Field Work 14. The study is based on extensive data collected for a small group of major cities. Apart from Warsaw, for which information collected for a 1992 study was updated. The main criterion for doing detailed field work in a city was its size. Urban transport ordinarily becomes a complex problem for local governments when cities reach about 500,000 people. The study therefore included all urban areas that fell into this category: Upper Silesian (GOP) agglomeration, centered on Katowice; the Gdansk-Gdynia-Sopot (also called the Tri-City) agglomeration; Lodz; Krakow; Poznan; and Wroclaw (Map IBRD 25634). Since the search for information was also thematic, examples from some medium-size cities, for example Bialystok, Lublin, and Olsztyn, were also used. 15. The field work was carried out in two phases. In Phase I (summer 1993), the study team collected the data and drafted case studies for the six selected urban areas, attempting to capture the common and particular situations and trends. Each case study has identified and evaluated: (i) the makeup of the existing transport system and its level of service; (ii) transport demand characteristics; (iii) the organization, performance and cost of public transport operators; (iv) the organization, role 3 and administrative or financial relations of the pertinent government institutions; (v) urban transport planning and implementation processes; (vi) major issues; and (vii) locally proposed investment projects. In Phase 2 (November 1993), the field work focused on discussions with local authorities, to clarify and expand the findings, particularly those concerning sector-wide major issues and city- based priority projects. The data collection effort focused on the preceding five-year period, 1988- 92. Though this edition of the report is being published about two years after the field work, the data herein were only corrected to reflect new inputs communicated by the cities for the original period of analysis. It was felt that data for the intervening years would not affect materially either the diagnosis or the recommendations offered. 2. URBAN BACKGROUND 16. Poland has just above 38 million inhabitants and a labor force of about 20 million. Population growth is low, down from 1 percent per annum in 1970-75 to an estimated 0.3 percent in the last five years. The urbanization rate is just under 63 percent. The largest concentrations of people are in the capital, Warsaw (1.7 million), and the GOP agglomeration, which has about 2.2 million people. The next size category, between 500,000 and one million, contains four mono- nuclear urban areas (Lodz, Krakow, Wroclaw, and Poznan), and the Gdansk-Gdynia agglomeration. Only three cities (Szczecin, Bydgoszcz, and Lublin) have between 300,000 and 500,000 people. All told, about 8.6 million people live in cities and agglomerations of 300,000 and above. Another 3.3 million live in cities between 300,000 and 100,000 inhabitants. In the post-war period, urban areas experienced several waves of migration, one wave from the countryside to re-build cities and new industries, another from the less developed east of the country to the west. Recently, urban growth rates have also fallen, from 2.1 percent per annum in 1970-75, to 1.0 percent in 1987-92, not least because of low residential mobility and the administrative style of decisionmaking in land use planning. In the period just preceding the start of economic reforms, urban plans for Warsaw, for example, envisaged a steady-state city population, with changes expected only in the intra-city distribution. 17. Average gross densities in Polish urban areas are low to medium, typically in the range of 2,000 to 3,500 people per square kilometer. A characteristic urban spatial pattern is different from that found in market economies in that, as one moves towards the periphery, densities tend to increase rather than fall; this is due to having expanded cities at the outer fringe by constructing discrete, single-function, high-rise housing developments, a sight familiar in all socialist countries. Large industrial estates are also located at the periphery. Leap-frogging has been endemic, indicating the absence of real estate markets. While short of being an urban sprawl, this pattern requires long trips for work and all purposes other than convenience shopping. Most large cities have well- preserved and still functioning historic centers of considerable beauty, as well as invaluable park- lands. 18. Poland has only two levels of elected government: the municipality and the state. Most cities consist of a single municipality, Warsaw being an exception with eleven, united under an urban government umbrella.' Agglomerations are not legally defined at present, but cities in an I Until July 1994, Warsaw consisted of seven municipalities. Under the new structure, the largest municipality, Warsaw Centrum (120 square kilometers, 957,000 inhabitants) is itself divided into seven districts, headed by councils. 4 agglomeration can form associations to provide mass transport services or other utilities that transcend municipal boundaries. The absence of an agglomeration or regional goverrnent is partially made up by "de-concentrating" state government to the regional level. For this purpose, Poland is divided into fifty regions, each with a state-appointed Governor, voivod, heading a regional (voivodship) administration. 19. Since 1990, following the passage of the Local Government Law, municipal governments have acquired much fiscal independence and ownership of infrastructure and jurisdiction over many local services. This includes mass transport and a portion of the road network. Municipal finances are in transition, with the share of local taxes rising and the block transfers from the state falling. The relative weight of the two sources is about equal at present. Since the state also spends directly for projects located on city territory, whether through voivodships or specialized national agencies, it still retains strong decisionmaking power in local matters. National finances are also in transition, abandoning a prior reliance on enterprise turnover taxes in favor of personal and enterprise income taxes and value-added taxes. Since 1989, private entry into economic activities has been greatly liberalized; by 1993, the private sector accounted for more than 50 percent of GDP, most private activities being due to newly founded companies and less to privatization of public sector companies. The commercial sector has attracted the majority of private funds, while most of capital-intensive manufacturing, some services and all utilities are still largely in public sector ownership. 3. URBAN TRANSPORT CHARACTERISTICS Modal Split 20. Overall mobility in Polish cities has been high in recent times, at daily trip rates of 2.0 to 2.5 per inhabitant. Mass transport and walking have dominated urban transport, though travel by private vehicles is on the rise. In the 1970s, it was typical to have 20 percent of all trips go by foot, 70 to 75 percent by mass transport, and 5 to 10 percent by automobiles. Walking's share increased in the 1980s to as much as 30 percent, due to severe economic crisis and gasoline rationing. In the early 1990s, walking seems to have kept its share, but mass transport is losing ground: the newest surveys done in Warsaw show 29 percent of travel on foot, 48 percent by mass transport and 22 percent by individual means (a 70/30 mass transport/auto modal split for non-walk travel). In some cities, it is suspected that mass transport has sunk to close to 50 percent of non-walk travel, but the evidence offered is partial or anecdotal rather than based on comprehensive surveys. The volume of bicycle travel, once limited to recreational purposes, is picking up, enough so that cities like Krakow and Poznan are introducing specialized facilities. Mass Transport Organization and Technology 21. About 260 Polish cities have mass transport services, supplied by about 130 companies. The number of transport operators is highly variable and on the rise, due to an ongoing process of breaking up and restructuring companies inherited from the state. Motives for this include the wish to match ownership with geographic area of service, divest auxiliary activities, or create a non- monopoly situation. Most companies are in the public sector, and are owned by municipalities in one of three legal forms: budgetary unit, public enterprise, or a corporate establishment. Some companies, like tramway-based PKT Katowice serving the GOP agglomeration, are still owned by its voivodship, it being difficult to break up a regional tramway network among the dozen cities 5 involved. Numerous, small-size private operators provide services ranging from informal, free- wheeling ones to those under contract with municipal authorities or municipal-owned companies. The Polish State Railways' (PKP) have extensive networks around and in most large cities and provide frequent inter-city and suburban services. Except in three cases (Warsaw and the two agglomerations), long-distance commuting by main-line PKP trains is much more important than that on PKP's suburban lines, the latter not being designed and managed to interface with urban transport networks. The PKP line serving the Gdansk-Gdynia corridor is particularly important, due to the linear structure of that agglomeration. Some long-distance commuters and regional travelers use coach services provided by companies belonging to the State Bus Company (PKS) umbrella. 22. Most companies operate buses only, but tramway lines are operated in thirteen cities, and trolley-bus lines in five cities. The tramway technology plays a major transport role in all large cities, led by Katowice (207 km network), Lodz (162 km), Warsaw (120 kIn), Wroclaw (88 km), and Krakow (80 kIn). Tramway lines are largely protected against street traffic, except at intersections, through a separate right-of-way (85 percent of the network in some cities). Bus and trolley-bus lines tend to operate in mixed traffic. Short of a 12-km segment of a planned 24-km line just completed in Warsaw after more than ten years of construction, there are no operational metros in Poland. Civil works for this project were mostly financed from the state budget, but the City of Warsaw started making contributions in the last two to three years of the construction period. The city treasury paid for the rolling stock and will provide the likely operating subsidies. A different arrangement is found in Poznan, where a fully-exclusive, at-grade, 7-km line planned for the light- rail technology is also approaching completion. Construction costs were paid for by the City of Poznan, with some recent and minor contribution by the state. 23. Public sector companies operate exclusively standard-size and articulated buses, while private operators tend to use smaller vehicles, both mini and mid-size. Most larger bus vehicles are of Hungarian and, to a lesser degree, Polish manufacture; recently, companies have started buying second-hand buses from North European markets. Private operators often import their buses, or use a variety of joint venture, Polish/foreign arrangements. Tramways are made by Konstal, a Polish firm located in the GOP agglomeration. Automobile Ownership and Economics 24. In the early 1970s, automobile ownership in Poland was fifteen vehicles per 1,000 people, insignificant compared with the highly industrialized countries in Western Europe (Figures 1, 2). By 1975 it had doubled, following the start-up of a joint venture with Fiat to create a domestic industry. From 1975 to 1990, the ownership grew at an average rate of 10.3 percent per annum, undeterred by the economic crisis of the 1980s. In 1990, it reached the level of 138 cars per 1,000 people, then moving to about 170 in 1992, the national fleet of automobiles just passing the 6.5 million mark. The 16 percent jump from 1990 to 1991 was due to a binge of second-hand buying abroad, after local currency became convertible and before the state imposed tariff barriers to protect domestic manufacturers. The ownership rate in Poland is lower than in Hungary or the former Czechoslovakia (over 200 vehicles per 1,000 people in 1992), but the gap between it and the current West European levels (400 to 500 vehicles per 1,000 people) has diminished considerably. Automobile usage, however, has been low; the annual average distance driven for passenger cars was reported at 10,000 km in 1980 and 11,000 km in 1989. Car ownership rates in cities have always been higher than the national ones, but the average distance driven has been lower, at about 8,000 km per annum. Many cities have now reached or exceeded the level of 300 vehicles per 1,000 people 6 Figure 1 Figure 2 Auto Ownership in Poland and Selected Auto Ownership in Major Polish Cities Countries Auo/1 000 Populaon Auto1 000 Popuon 350 WEm ,U -- USA 300 - a-_ Goo W. 250 _ /v O 5 970 1980 1"5 _1250 Km 400 Frae~~~~~~~~~~~~~~0 Jqm~~~~~~~~~~~~~~~~~~B 200 -- 150 > _ 2 3 T-1 1#0 1tll100 - 100 SDdLodz __Ism ___ 9_____________Iwo 1970 1960 1986 9 SouroiK Arow 3. T" 1 1. ~~~~~~~~~~~~Scuros -arx 3. Tabl 12. P8cml Pjbm S. TtaN 1., No. 1 Pand Urban Trwnport Reviw. No, 12962-OL and some have gone beyond that, for example Warsaw at 322 (details in Annex 3, Table 12). It remains to be seen whether and for how long the recent high rate of growth in city-based passenger cars (7 to 13 percent per annum in the 1990-92 period, with Katowice at the low end and Poznan at the high end of the range) can be sustained.2 Traffic growth has apparently been slower: volume counts on Warsaw bridges indicate a 5.5 percent growth per annum in the 1987-93 period, against about 8 percent growth in car registrations. Nationally, traffic growth has been forecast to grow between 7.5 and 9.5 percent annually through the year 2010. 25. It is still expensive to purchase a car. The small and popular Polski Fiat costs an equivalent of 30 combined average monthly wages. What drives automobile purchases is a combination of the wealth made by the newly emerging entrepreneurial class, the convertibility of the zloty and a relaxation of import laws, these last two having permitted Polish citizens to shop in the West European used-car markets. It is also expensive to run a vehicle. A liter of 98-octane gasoline cost ZI 9,000 (in March 1993). In nominal terms, this is equivalent to US$0.53, approximately twice the US price but half of the French price, the latter typical of European Union countries; when multiplied by 2 to reflect the purchasing power of the zloty relative to the exchange rate, the price just exceeds the West European price. Indeed, this is quite expensive when measured against average wages in Poland: driving the Polski Fiat 8,000 km per annum would take 11 percent of each month's wage for fuel alone. Urban Roads and Traffic Control Systems 26. Depending on the degree of destruction in the Second World War and subsequent reconstruction, roads in major cities range from generous to tight. Warsaw offers an example of the former case, Krakow and Wroclaw illustrate the latter. The striking feature of Polish urban roads 2 Trucks are another category of motor vehicles that appears to be growing rapidly, but differences between cities are large. For example, trucks registered in Wroclaw grew from 12,852 in 1990 to 21,331 in 1992; in Lodz from 19,200 to 21,700; and in Gdansk Voivodship from 34,400 to 40,200. In Poznan, over the same period, they actually fell from 23,700 to only 22,900. This is more likely to be a problem of data than anything else. 7 is a near-total absence of limited-access expressways, especially urban by-passes. Extensive urban expressway networks were planned in the 1970s to carry the then newly generated car traffic; many projects were started, but were stopped or proceeded very slowly because of the economic downturn of the 1980s. The landscapes of Warsaw and the two agglomerations are dotted with fragments of elevated roads, most often partially completed interchange structures. Sidewalks in central cities are plentiful, unless taken over by parked vehicles. Several cities, notably Krakow, are introducing bicycle paths. The state of roads ranges from reasonable (Warsaw) to poor (the GOP agglomeration), but there is a noticeable worsening trend. Traffic signals are widely used, but tend to be yesterday's technology (fixed-time rather than traffic-adjusted; coordinated along linear corridors rather than in sub-area networks). Generally, the use of traffic engineering methods is in evidence, but it is often out of date, and the enforcement is weak. Traffic or parking management was not used much in the past (there was little need for it), but it is now evolving rapidly (para. 49). Urban Transport Institutions 27. Municipal governments are currently the dominant institutions in urban mass transport. In addition to owning mass transport companies, cities have jurisdiction over mass transport services independent of who is the operator. Institutional arrangements that cities have evolved to discharge this duty differ from one place to another, ranging from a municipal department to special-purpose agencies. This is a dimension in which there has recently been much progress (para. 52 to 53). The regulative power extends over routes, service frequencies and fare levels. The authority to set fares is de facto limited to the public sector companies and private operators working under an agreement with the city; it is not being enforced over free-agent private operators. 28. The role of the state in urban mass transport is partial and indirect. For example, the state stipulates 50 percent fare discounts for retirees, students, and the handicapped. Also, the state (through Katowice voivod) still owns the PKT, a tramway company serving the GOP agglomeration, not to mention suburban services of the Polish Railways (PKP). Formally, however, the state appears to have withdrawn from this sector by virtue of turning the ownership of mass transport companies to municipal governments, in line with the 1990 Local Government Law. For example, there is no national agency or ministry whose scope of work includes urban mass transport. Similarly, there is no ministry of urban affairs. Cities work with the state by placing representatives on various national commissions, e.g., the Commission for Administrative Reform, or through various interest groups, e.g., the Association of Polish Cities, Polish Academy of Science, and the Chamber of Urban Transport (CUT), association of mass transport operators. The CUT is active in collecting industry statistics, developing sectoral pelicies, and lobbying the Sejm (parliament) in connection with various transport-related laws. 29. The situation is different for urban roads. Primary urban roads are in the domain of the state, at two levels. Urban roads belonging to the national network, i.e., most international and intercity roads, are under the stewardship of the General Directorate of Public Roads (GDDP), working through its 17 regional directorates. There are some 2,600 km of these. Road departments of voivodships are responsible for urban roads of regional importance (about 13,000 km), but they also act as execution agents for the GDDP to manage the construction and maintenance of national roads on urban territory; in fact, maintenance funds for these roads come from voivodship road budgets. The jurisdiction of municipal governments is limited to local roads, mainly secondary and tertiary networks. There are about 23,500 km of these roads, of which 10,000 km are paved. 8 30. This institutional arrangement for urban roads is in flux, with several cities (Krakow, Katowice, Wroclaw) participating in a pilot program to take over the administration of voivodship roads, or at least act as executing agents for voivodships. Changes are also taking place in the execution of road maintenance and construction. The former used to be done by force account, and the latter was bid out among state enterprises. Road industry is in the process of a changeover to a corporate legal form, on the way to divestiture. Private enterprises are already active in the sector. Mass Transport Finance 31. Past practice, prevalent until a few years ago, was to provide extensive services and charge low fares, making up the shortfall in the operating account of mass transport companies from the state budget. The state also financed capital investments. Cost recovery was at the level of 20 to 25 percent as recently as the late 1980s. Fares remained unchanged for years on end, e.g., a single- ticket price was Zl 0.5 in 1960 and Zl 1.0 in 1980. All this changed at the end of 1980s, when hyperinflation forced rapid fare adjustments. Eventually, the inability of public budgets to pay subsidies at habitual levels made fare increases in real terms unavoidable. Cost recovery reached a 40 to 60 percent range by 1990 and advanced to 50 to 70 percent by 1992 (Table 8, Annex 3). It would be higher if it were not for ticket fraud, which is said to have increased as fares have become more expensive. Anecdotal evidence is that fraud is of the order of 20 percent of the traffic, but numbers as high as 50 percent are also quoted. Cost recovery ratios cited here should be taken with caution, given the large jumps from one year to the next in the period under study, due to the difficulties of making discrete adjustments against an unstable inflation. Also, the cost base differs from one company to another, since the treatment of depreciation and tax depends on their legal status. Companies that are set up as budgetary units of the municipal government, for example, do not show the depreciation of fixed assets in their income statements. Finally, cost recovery ratios for Polish companies are not equivalent to those for transport operators in Western countries, since the former have not borrowed and hence do not have any financial expenses. It is safe to say that no major Polish mass transport company has as yet met its direct operating costs (working expenses) from the fare-box (please consult tables in Annex 5 for data on individual companies). 32. The shortfall in operating revenue is currently made up from municipal budgets. Payments to equilibrate the company accounts, and even provide for a small "profit" have been made with regularity, which means that mass transport operators have not had to go into debt to meet their current liabilities, nor have they accumulated large arrears. In 1992, operating subsidies ranged from ZI 170 billion (US$12.5 million) in Poznan to Zi 410 billion (US$30 million) in Warsaw. This accounted for about 12 to 18 percent of total municipal expenditures for that year. For cities above 300,000, the 1992 mass transport operating subsidy was Zl 180,000 to 370,000 (US$13 to US$27) per capita. Municipalities also pay for investments in rolling stock and fixed structures, but data on the magnitude of these payments were not available for this study. Judging from low levels of rolling stock purchases in recent years, capital subsidies have shrunk considerably. Overall, capital investments by municipal governments (1.3 percent of GDP in 1993) are half or less of what they may reasonably need. This, of course, mirrors the situation of capital spending at the state level. Road Finance 33. Construction of primary urban roads is financed out of the national budget. For the motorways and other roads designated as national, funds are channeled from the Ministry of Finance through the Ministry of Transport (i.e., through GDDP) to regional directorates. For other primary 9 roads, voivodships receive an earmarked budget, but have some leeway to make inter-sectoral adjustments. Voivodship budgets also include allocations for the maintenance of national roads passing through urban areas. Municipalities alone finance the maintenance and construction of local roads. This formal arrangement has not always been followed. For example, the GDDP may provide grants for specific non-national road projects in urban areas, or municipalities may pay for works done on voivodship roads from their own budgets, when they think the works are important and have some funds to spare. In the past, local enterprises have also contributed funds for road construction. 34. The fuel tax is conceived as a fiscal instrument, rather than a charge for road use. Its rate is decided by the Ministry of Finance, without any link to either costs of transport incurred by different classes of motor vehicles or with public expenditures for roads. Past attempts to define a part of fuel tax as a road use fee payable into a road fund, conceived by the sectoral authorities at times when road expenditures were starting to fall, failed because of the state's need to maintain the fuel tax as a stable source of revenue. At March 1993 prices, fuel tax accounted for about 66 percent of the gasoline price at the pump and about 57 percent for diesel. This translated into about Zl 300 to 500 (US$0.02 to US$0.03) per vehicle-km for the most common, Polish-made automobiles, and about Zl 875 (US$0.05) per km for standard-size buses. Poland has ownership- related taxes as well, e.g., excise taxes at the time of purchase, with proceeds going into the national budget. The only continuing road user charge other than fuel tax has been the annual vehicle registration tax, the level of which was set by the state, but which accrued to municipalities. At the time when field work for this study was done, the annual registration fee was in the range ZI 216,000 to 492,000 (US$12 to US$27) for the most common types of vehicles (engines up to 2,500 cc), but jumped to Zl 4.25 million (US$234) for vehicles with larger engines. It is understood that this fee is to be abolished, with a compensatory increase in fuel tax to be turned over to cities. 35. In 1987, revenues related to national roads amounted to approximately Zl 9,500 billion (US$823 million) in 1991 terms. The annual expenditure during this period was about US$1.3 billion. By 1991, however, road expenditures had dropped to approximately Zl 3,141 billion (US$273 million), with revenues of approximately Zl 11,000 billion (US$1 billion). This low level of expenditure in 1991 was only about 30 percent of the peak expenditures that had been experienced in the mid 1970s. Approximnately 80 percent of the 1991 expenditure was spent on maintenance. 36. From fragmentary road expenditure data available for this study, 1988-92 average annual road spending by cities (i.e., excluding other sources) ranged from about ZI 100,000 (US$7) per capita in Katowice to just above ZI 200,000 (about US$16) per capita in Wroclaw, in 1992 terms. When expenditures from municipal, voivodship, and GDDP sources are combined for the same period, the amounts approximately double. Urban Transport Planning 37. In post-war Poland, the process of urban transport planning was highly regulated and institutionalized. The mandatory planning instruments included 5-year plans, perspective plans with horizons of 10 to 15 years, and longer-term, directional plans. Characteristic of these plans, and the general urban, regional, and national plans with which they were supposed to cohere, was that they relied heavily on technical and political norms applied to the so-called voluntarist projections ("by the year 2000, suburb X will have 100,000 households, ...."). Polish urban transport planners kept up with planning techniques current in the West up to the early 1970s, but these could not be fully 10 transferred to an economic system where investments and subsidies were politically determined, as were prices. Thus, the notion of price-dependent demand, financial and economic evaluation o.f options, uncertainty, and ever-present consciousness of budget constraints were never absorbed into the Polish planning practice. The old Polish planning system is no longer formally applied, but the manners persist. The absence of a new planning legislation, in line with new economic and political thinking, has meant that cities are moving in different directions, with a strong leaning towards an ad hoc approach. 4. URBAN TRANSPORT PROBLEMS AND INNOVATIONS User-side Problems 38. Pedestrians have generous sidewalk facilities, but these are often overtaken by parked cars and suffer from poor maintenance. Bicycle users are only recently finding some cities willing to provide for non-recreational use of this mode. 39. Mass transport users have seen the quality and quantity of services tumble from previously high levels. It is reported that a drop in vehicle-km of transport services has been as much as 50 percent in some cities, which has meant fewer lines and a lower frequency of use. In-vehicle travel speeds are low, particularly for the older tramway systems, where they have fallen to under 15 km/h in spite of a reserved right-of-way. Slowdowns are due to worn-out tracks, while breakdowns most frequently occur because of over-age power supply systems. 40. Using mass transport has become much more expensive since fares have risen at rates above inflation. Paying for mass transport has become onerous for the unemployed and the poor unless protected by special discounts, as are students and retirees. Unemployment and poverty have surged in Poland as restructuring of the public sector of the Polish economy speeded up in 1990 [World Bank, 1994b]. Unemployment in early 1994 was 13 to 15 percent of the labor force, not counting people who left the labor market for the precarious status of retirees. In 1993, about 14 percent of the population (5.5 million people) were spending less than the minimum pension (Z1 1.23 million, US$68, per month), recently defined as the Polish poverty threshold; about 26 percent (10 million people) have expenditures less than the minimum wage (Z1 1.5 million, US$83, per month). Average monthly income (expenditure) of people under the poverty line is about ZI 1.05 million (US$58). The most important causes of poverty are low working incomes (60 percent of cases) and unemployment (35 percent of cases). Big cities account for only 8 percent of the poor, and medium cities account for 5 percent; rural poverty in general is a much bigger problem. Some cities are harder hit than others, particularly those living off one or two large enterprises condemned to down- sizing or bankruptcy. The emerging private sector has provided new jobs, but only in some categories, in some locations. These have not been enough in the aggregate to counter-balance the job loss. This trend only now shows signs of abating as the economic growth in Poland starts to pick up. 41. At December 1993 prices, it would take 14 to 34 percent of the average income under the poverty line to buy an all-inclusive monthly mass transport pass, depending on the city. It would take 19 percent of this income to buy fifty single tickets at the most frequently found fare of Zl 4,000, which does not allow transfers. If a poor person is a retiree, he or she would have a 50 percent fare discount. Using the minimum wage as the base, the equivalent percentages are 10 to 11 24 percent for the monthly pass and more than 13 percent for the 50 single tickets. Using the same fares against the average wage (ZI 3.34 million in 1993), the monthly pass would cost 4.5 percent of the average wage in Krakow, but 10.8 percent in Wroclaw; 50 single fares at ZI 4,000 would cost 6 percent of the average wage. In conclusion, fare levels are onerous for the low-income families, but affordable for the average citizen. 42. Car drivers and other motor vehicle users face growing congestion since urban road infrastructure, control systems and parking have not been built to support the currently experienced levels of traffic. The average peak hour traffic speeds in central Warsaw, which has the best urban road infrastructure in Poland, are still reasonable at 18 to 20 km/h, but spot blockages are an everyday occurrence. Urban expressways and bypasses are not in place to take either long or through-trips away from the arterial street network; in some cities, river crossings are in particularly short supply. Many road projects were started in the 1970s, but were stopped or moved at a very slow pace when funds dried out. Road surfaces are in distress, a combined effect of the pavements not having been designed for currently experienced traffic levels and axle loads, and maintenance budgets not being sufficient to repair the damage. Problems of Mass Transport Operators 43. Mass transport operators have problems on both demand and supply sides. On the demand side, they are facing a shrinking market. The CUT reports that total annual passengers carried by Polish urban transport operators fell from 9.1 billion in 1986 to 6.3 billion in 1991, indicating a 7 percent loss per annum; in 1992, it was just above 6 billion, roughly the size of the market back in 1975! The average trip making-rate fell from 500 trips per inhabitant per annum in 1986 to 336 in 1991. Most large operators report drastic drops in patronage (Figure 3) and have adjusted by reducing vehicle-km of service (Figure 4). For example, MPK Krakow reported carrying about 760 million passengers in 1985 and about 400 million in 1992; Lodz claimed about 825 million passengers in 1985 and 445 million in 1992. The PKP had reported a 33 percent drop in ticket sales from 1989 to 1991 for their Warsaw suburban network. To make matters worse, fraud is eating away at fare revenue. Though the downward patronage trend is unmistakable, it should be noted that Figure 3 Figure 4 Passengers Carried by Mass Transport Veh-km of Service by Mass Transport Companies Companies Thouands MElons MPK Loaw MPK( La N,001 -U-_X MPK Wnd 120 MPK9 WindS, MPK Ptowi MPK POUI 1.=0DO Gduic -o9* 60 -- «covo~~~~~~Z Gdyr M= eKf W~~~~~~VPK K_iAo ',,,,, O ,,,,,,.MZKX W, WPK Kom" 14 is _ i 1 m low 0 1084 106 106I8 1000 1902 - Spu Aainuc Ta I. 1*.3.S AraM 3. TWSI i& Pdu UbnTmPAMwftJ ZPi, 13L Pdw UfteTiluptd Rait Pt. iM42 L 12 that passenger statistics are not reliable. For the many passengers who use monthly passes or other multiple-ride tickets, the number of trips is obtained as a multiple of passes sold and "typical" trip frequencies, the latter based on infrequent surveys. 44. On the supply side, productivity levels leave much room for improvement. One of the most striking examples of low productivity is an unacceptably low proportion of inventory vehicles actually placed in service. This is about 70 percent for mass transport companies in the large cities, with some honorable exceptions, like PKM Katowice at 86 percent (Figure 5). Another is the average operating speed of tramways, commonly under 15 kmlh, which is much too low given their privileged location vis-a-vis street traffic. Key operator problems in this area are linked to an over- age and technologically backward fleet, including of the accompanying maintenance plants. For the largest eight urban companies, the average bus age is 6.7 years and only 11 percent of buses are in the 0 to 3 year age band. This might be adequate in a Western European technological environment, but it is worrisome in Poland, considering that all vehicles are of Polish or Hungarian manufacture that have only recently started to increase quality and longevity towards standards usual for western and northern neighbors of Poland. The same is true of at least some tramway fleets, all Polish-made: Warsaw and Katowice fleets have an average age of seventeen and fifteen years, respectively. In the case of tramways, track and power supply are in even worse shape than vehicles, due to defrayed maintenance and overdue rehabilitation: the low speed cited above is often due to worn out tracks. Figure 5 Major Polish Mass Transport Companies: Utilization of Rolling Stock 1992 Number of Vehicles 3,000 a Inventory 2,500 - Service 2,000 1,500 1,000 500 KT Katowice MPK Poznan MPK Lodz MZK Warszawa PKM Katowice ZKM Gdansk MPK Krakow MPK Wrodaw MZK Gdynla Source: Annex 3, Table 4, Poland Urban Transport Review, No. 1 2962-POL. 13 45. Staffing is excessive. This is often the case in falling-demand industries that cannot adjust by shedding labor. But there is more to it than falling demand for mass transport. Cities have inherited operating companies over-staffed when compared with the experience in countries such as France and Germany. This was partly because of the socialist policy of full employment, partly because companies produced internally many goods and services that their Western equivalents would buy on the market, and partly because labor/capital ratios in Poland differ from those in highly industrialized market economies. In the late 1980s, Polish companies have consistently had a level of five to eight staff per vehicle in service (Figure 6), compared with three to four staff per vehicle in service for better European companies. In recent restructuring and reorganization of the sector, some mass transport companies have taken steps to reduce staffs, but others have held steady: the staffing ratio of MPK Krakow went from 7.8 staff per vehicle in service in 1984 to 5.5 in 1992, a result of a 34 percent staff reduction over two years; MPK Lodz changed from 7.8 to 7.2 over the same period. WPK Katowice held its staffing ratio steady in the 8.2 to 8.4 range for years; when it was broken up in 1991, one of the successor companies, PKT Katowice, got saddled with all the extra labor, making it drastically over-staffed at twelve employees per vehicle in service. Needless to say, staffing ratios could improve significantly if the proportion of vehicles in service would increase from its present low levels. Figure 6 Staffing Ratios of Major Mass Transport Companies Staff per vehicle in service 12 - ZKM Gdansk -U*- 1 1 MZK Gdynia MPK Krakow 1 0 MPK Lodz 9 -8+- MPK Poznan 8 $-~ ~ /-/ MPK Wroclaw 7 MZK Warsaw WPK Katowice 6 _+ PKT Katowice PKM Katowice 0 4 1984 1985 1986 1987 1988 1989 1990 1991 1992 Note: WPK Katowice was broken up In 1991; PKT and PKM Katowice are among its sucoessor companies. Source: Annex 3, Table 13. Poland Urban Transport Review, No. 12962-POL. 14 Community-side Problems 46. These include external effects that are directly related to transport systems, such as urban growth, environmental pollution, and safety. Urban growth is affected by road networks since many Polish cities do not provide access to land considered best suited for development. In Wroclaw, for example, the desired (westward) direction of development cannot take place without new roads and particularly new bridges; therefore, development is proceeding without road and bridge links and new residents have grave problems of access to jobs and other activities. There are complexities involved in this matter since it is not clear in many cities that new development should be extensive, when so many empty lots exist closer in. Until land markets and value-based property taxation develop further, urban planning will still follow the habitual colored map approach. 47. Air pollution is generally high, a combined effect of industrial emissions, heating plants and motor vehicle traffic. Measurements are still few, but it has been estimated that motor vehicles contribute 30 to 45 percent of diverse pollutants nationally. In cities, these proportions are likely to be much worse. Vehicle fleets are much older than in Western Europe; mass transport vehicles are both older and of a technological vintage that is neither energy-efficient nor environmentally friendly. Polish leaded gasoline has more lead and diesel has more sulphur than the same type of fuels in Western Europe. 48. Traffic safety records in Poland have shown wide variations in recent years, but on the whole they are dismal, worse than in any other Central European country [Gerondeau et al, 1993]. Pedestrians are in particular danger on street crossings, the mid-block spot speeds (as opposed to average travel speeds) in Poland being unusually high. The severity of accidents reflects an explosive combination of small-size vehicles of Polish manufacture and the heavier imported vehicles. Traffic police activities are still very limited and low-profile, the authority of the police as a public institution having been tainted during the period of military rule. Recent Innovations in the Sector 49. Most large cities have taken some practical, low-cost, and reasonably successful steps to respond to the above discussed urban transport challenges within their current material and human resource means.3 On the traffic side, cities like Krakow, Poznan and Wroclaw have taken the lead in introducing automobile restraint policies to protect their priceless assets-the historic downtowns. Restraints were not developed as isolated actions, but as elements in new and wide-scope urban transport policy packages, developed at the request of, and approved by, city governments. Most visible restraints involve a combination of access prohibitions and parking management. Parking schemes have been carefully designed, with zonal and time fee variations aiming to discourage long- term occupancy and perhaps affect the modal split. Resident households and companies have special subscription rates. Hourly parking rates vary depending on duration; for parking longer than one hour, they are in the range of Zl 6,000 to 7,500 in the innermost zones, close to the retail per-liter price range of automotive fuels, ZI 6,700 (diesel) to ZI 9,000 (98-octane gasoline). Krakow stands out for its proposal to use smart-card technology to give mass transport fare discounts to users of peripherally located parking places. A weak legal basis has been an obstacle to the successful implementation of parking charge programs, particularly their enforcement. Parking management 3 This section is particularly short since most innovations are being discussed in the following chapter. A more detailed review of recent reforms and what individual cities have done is in Chapter 4 of Annex 2. 15 in Warsaw lagged behind other large cities precisely because of challenges to the legality of proposals to pay for the use of curb space. As with other cases of enforcement, the issue is not only legal but has to do with sentiments held by the public at this moment in Polish history: the citizens bridle against the removal of what they see as basic freedoms, just regained after nearly half a century of the omni-potent state. A breakthrough was made in Wroclaw, whose test case concerning parking fines went all the way to the highest court of the country. The success of programs implemented in some cities and the widespread pressure of parking congestion all contributed to a Spring 1994 decision by the Government to authorize cities throughout Poland to charge for on-street parking. Parking revenues will accrue to municipalities, which will have the decisionmaking power over rates, subject to a ceiling decided by voivods. Parking rates will be related to the per-liter retail price of the most expensive gasoline; an illustrative ceiling equivalent to the price of two liters of gasoline was cited. 50. On the mass transport side, initiatives have been taken to restructure operating companies with a view to improving their performance or reducing costs (or both). Several cities have turned their mass transport operators into corporate organizations, to be run under the Commercial Code; at present, they are still 100 percent owned by municipalities, but their managerial independence has been increased and they are seeking private partners and investors. Others, more numerous, have defined their operator as a budget unit of the municipality, and some have retained a public enterprise status. As the companies acquired their new legal status, they were slimmed down by divesting major non-operational functions, e.g., track maintenance or construction departments, which are being pushed into the market. Relations between operators and the municipalities are increasingly regulated through service agreements, based on fixed rates for agreed frequencies and vehicle-km of service, and explicit penalties for non-compliance. Cities like Wroclaw and Gdansk have established roving teams of monitors to check performance. Wroclaw deposits non-compliance penalties into a capital fund reserved for purchasing the rolling stock. 51. Private operators have appeared alongside the restructured municipal ones. Some are informal, profiting from quite liberal Polish 1989 laws on private economic activities, and follow the well-known cream-skimming approach. Others are entering into agreements with municipal authorities (or directly with operators) to provide complementary, often seat-only, mini-bus based services. Some private operators are taking the cost risk only, by using the municipality-issued tickets; others are taking the revenue risk as well. In at least one case (Olsztyn), the municipality is part-owner of the private operator. These arrangements represent a clear net gain to municipal authorities, especially if the private operator takes both cost and revenue risks. The biggest constraint on further growth of this sector has been the credit for buying the rolling stock. Excepting small- size, owner-operator situations, private fleets of 15 or more buses were either financed from abroad or made joint ventures with mixed Polish and foreign bus manufacturers. 52. On the institutional side, there are several promising advances. It is becoming usual for municipalities to retain the regulatory function in mass transport (service patterns, schedules, fares), leaving the management of operations to the company management. To carry out this role, a new, specialized agency-a mass transport authority-has been set up in several cities, e.g., Gdynia and Warsaw. In the GOP agglomeration, where some dozen companies overlap in the regional market, a group of cities have agreed on a joint mass transport authority, the Communal Mass Transport Association. In addition to the aforementioned standard functions of city-based transport authorities, this multi-city mass transport authority also arbitrates route and revenue allocation in what is starting to resemble a competitive market. 16 53. Cities are also setting up specialized agencies for road administration. In addition, as already noted in para. 30, several cities are experimenting with taking over of voivodship roads. In Warsaw, the new Roads and Traffic Authority, working alongside the Mass Transport Authority, has taken over the care of roads from the Warsaw Voivodship. The furthest advance in this direction has been made in Wroclaw, where the municipal government has set up an Urban Transport Authority: its jurisdiction is over all aspects of urban transport-roads, traffic, and mass transport. 5. ELEMENTS FOR A FUTURE URBAN TRANSPORT STRATEGY 54. Cities in Poland, as elsewhere, differ from each other in topographic, spatial and demographic patterns, economic base and prospects, financial capacity of the local government, the state of their transport infrastructure, institutional capacity to generate and implement new ideas, and even relations with the state and voivodships. What some cities have already done with regard to their transport problems is considerably different from what has been done by others; some have done more, others less. The future decisions and the speed of change are also likely to be location- specific. Still, there is some commonality of history, problems, attitudes, actions, and trends. Likewise, in thinking about the future, it has been possible to define strategic-level action domains common to all cities. 55. Based on the preceding review of urban transport problems and recent sectoral innovations, it is judged that a core urban transport strategy for Polish cities should encompass actions in ten crucial domains: (i) the role of local governments in mass transport; (ii) service contracting; (iii) the performance of public-owned mass transport companies; (iv) private sector involvement in supplying services; (v) pricing of mass transport services; (vi) pricing the use of urban roads by motor vehicles; (vii) public investment policies for mass transport and road infrastructure; (viii) legal and institutional developments; (ix) urban transport finance; and (x) the role of the state in urban transport. They will now be discussed in turn, following several clarifications. Many innovative urban transport developments have already taken place in the country, but have often been limited to one city or to a few cities. In the majority of cases, specific recommendations made under each heading below include and build on local ideas, experiments and initiatives; in a few cases, local proposals or practices have been taken as points of departure for a different recommendation. 56. The domains combine jurisdictional and institutional reforms, short-run and long-run actions concerning urban transport modes, and financial policy. The terms "short-run" and "long-run" are used here as defined in economic theory. In any sectoral context, short-run means that the capacity of the fixed plant is assumed as given, whereas long-run means that changes in capacity are being considered. In urban transport, for example, pricing policies for roads or mass transport combine short and long-run aspects. In the short run, pricing could be used to deal with the most immediate pressures, e.g., to reduce traffic congestion and related problems, to stimulate or discourage the use of mass transport, or to meet current financial requirements of transport operators. Pricing as a long-run instrument is meant to get traffic volumes to an efficient level and generate funds for expansion, thus affecting resource allocation decisions. Capital investments in new road and mass transport infrastructure and rolling stock are major long-run instruments. It is important to stress the distinction between the two, focusing particularly on pricing policies that have been traditionally neglected in Poland, capital investments having been favored as sector management and problem- solving tools. 17 57. The term "core strategy" is used above to signal that the list of ten action domains is by no means exhaustive. The selection was done following several criteria and constraints. Some action domains are likely to have a strong impact on the modal split, but were excluded because they fall outside the focus of this study, as stated in the introductory chapter of this report. For example, local policies regarding economic development planning, land use planning, and property taxation are as important for urban transport as any modal development strategy.4 So are environmental protection and energy efficiency policies, particularly in areas such as engine and fuel standards, domestic manufacture and imports, emission control, and related taxation. Each of these would require specialized studies of their own. Some other important areas were omitted from the list because the relevant studies or actions have already been undertaken by the Polish authorities; these include road maintenance, traffic safety and traffic management. Yet another criterion was that the existing institutions should have, or be able to acquire, jurisdiction and capacity to introduce recommended changes. The Role of Local Governments in Urban Mass Transport 58. Starting from a position where, a few years ago, they were served by state-owned mass transport operators enjoying a monopoly status, Polish cities have taken significant steps towards something new. Mass transport operators are no longer state-owned but city-owned; this move was legally mandated by the Decentralization Law and all cities had to comply (with few exceptions, such as the regional tramway system in the GOP agglomeration). How the law was implemented locally, however, and in which direction the mass transport is evolving, has varied between cities. Two major options have emerged, with strikingly different links between the legal form elected for the mass transport operator and the perceived role of the local government in this sector. 59. The Mass transport operator as a municipal department. In this option, adopted by most cities, the main change has been that the local operator has been turned into a budget unit of the municipal government and is under direct control of the council. In other words, the state-owned monopoly has been replaced by a city-owned monopoly. This state of things is not altered by the fact that, in some of these cities, private operators have started to provide informal transport services, whether in an unspoken symbiotic relation with the city-owned operator, or following predatory practices. The scale of the private operations is still too small to make much difference in the sector. Generally, the adoption of the budget-unit legal form by the majority of cities, when other options have been available, indicates a tendency to keep politicians as the ultimate managers of utility companies, combined with the fear of too many changes. The budget-unit option minimizes the decisionmaking scope of mass transport managers and masks the true cost of operations and infrastructure. 60. Mass transport operator as a corporate entity. An alternative direction was taken by a smaller number of cities, not because it was mandated by a national law, but through initiatives taken by local governments themselves. It consists of adopting a joint-stock, corporate form for the mass transport operator, subject to the Commercial Code. The new company provides mass transport services subject to a service contract signed with the municipality, which for the time being is also its owner. Under this arrangement, the managers of such a company make their own operational decisions within constraints of the service contract, including hiring and firing of staff; the company 4 For an excellent example of a new-generation, real estate based, economic development study, see Dowall et al, Transformation of the Warsaw Economy and Perspectives on its Future Growth, 1994. 18 can form partnerships, domestic or foreign; it can issue stock, borrow funds, and it can be sold. Importantly, the accompanying development is that there may be several such companies operating in the same city and that some of them may be privately owned. The key underlying change is that a redefinition of the role of the government has taken place. In the arrangement inherited from pre- reform days, and in the new budget-unit option, the government was both the provider of transport services as well as the planner and regulator of the sector. In the corporate-status option, local governments, as caretakers of the public interest, keep the role of the planner, policy-maker and regulator, but give up the direct provision of mass transport services. The former role can be vested in a separate transport authority, as it has been done in Gdynia and Wroclaw; or it can remain in the hands of the city council directly, with staff functions carried out by a municipal department, an arrangement well-suited for all but the largest cities. The latter is provided by professional suppliers of such services, working under a contract. Taking this option means pointing mass transport activities away from monopoly and towards the establishment of market relations. 61. Cities that have not done so should adopt the corporate form for their mass transport operators and move to develop this approach further, as discussed below. The retention of the budget-unit approach runs counter to other positive changes that have been adopted and it will be an obstacle to achieving better output performance and lower costs. At the very least, the separation of the regulatory role from the service provision role inherent in the corporate option will reduce political interference and allow mass transport managers to focus on improving service performance and efficiency in operations. If, however, it is accompanied over time by other reforms, some of which are recommended below, the choice of the corporate option will lead to the competitive provision of mass transport services in cities, with a high potential for cost reductions and improved performance.' 62. It is important to place the preceding discussion in a wider perspective. Similar developments toward creating urban mass transport markets on the supply side have occurred in many other countries, starting from different local situations and taking diverse approaches. In considering the Polish case, it is helpful to keep in mind the rich variety in local contexts, the nature of local problems that provided the impetus for reform, and the corrective steps taken in different world cities. Two examples of regulatory reform are particularly relevant, those from British and French cities. In the UK, public-owned, local bus monopolies had operated in an economic environment of increasingly dominant liberal capitalism. The major impetus for change was not the low level of service provided by mass transport operators, but an explosion of subsidies that threatened the solvency of local governments. Large subsidies may have been linked, in part, to having offered excessive services, but the major problem was the operating cost, specifically high costs of union- based labor. The main objective of the reform was to reduce subsidy payments.6 The reform 5 Discussions in various cities indicate that some of the regulatory and organizational changes already undertaken were not necessarily inspired by a clear vision of both the short-term and the ultimate objectives of the reforms. In some cities, for example, the fragmentation of the erstwhile monopoly operator has been inspired less by the thought of acquiring a legal or organizational form leading to markets (and hence to improved transport services) than by a desire to break up a combative union (as in Bialystok), or to match ownership and geographic area of service to avoid cross-subsidies between municipalities (as in the GOP agglomeration). 6 Of course, the developments in mass transport have to be seen in the wider context of reforms introduced by the Thatcher government. 19 consisted of breaking-up and selling large public-owned companies, and introducing tendering for service contracts, where both public-owned and private operators are free to compete. Private operators own their rolling stock and depots. The outcome of the bidding process has sometimes been in favor of private operators, but in other instances the public-owned operator won the service contract. Ten years into the reform, the main objective apparently has been achieved: subsidies on many bus routes have gone to zero and on other routes they are considerably lower. On the other hand, there have been negative effects on the level of service and cost to passengers, and losses of patronage. It appears that local governments, as representatives of the community interest, may have put too much trust in the ability of the market to deliver both low costs and good services. 63. In France, also a country with a capitalist economy, urban mass transport was threatened with extinction in the early 1970s. Faced with dwindling patronage, public-owned operators were unable to make ends meet and services were widely deteriorating, just as they had for their privately owned colleagues in the preceding swing of the regulatory pendulum. The approach taken nationally (by the socialist government then in power) was to introduce a local transport tax whose proceeds are dedicated to financing operating and capital subsidies of mass transport. A range of permissible tax rates was set by a state law, the actual rates being left to the discretion of each local government. The tax is charged against wage bills of medium and large local enterprises. The French urban mass transport system has developed as a hybrid public/private arrangement. Planning powers and ownership of mass transport vehicles and infrastructure have remained in the hands of special- purpose public authorities. The provision of services is by private operators, bound by service contracts awarded after a competitive tender. Private operators are really local outposts of mass transport management firms, belonging to 3 to 4 large concerns. Labor agreements are signed following a collective bargaining process between management firms and labor unions. This approach has helped maintain high quality mass transport in French cities and helped increase patronage, but at a high cost to enterprises paying the transport tax. One of the reasons for high costs appears to be over-investment, made possible by a combination of earmarked taxes and the technical dominance of management groups over the relatively inexperienced local mass transport authorities. 64. At this early stage, the Polish reform in mass transport, specifically the introduction of the joint-stock form of ownership, has some elements of both British and French approaches. It could evolve in either direction. It is important, therefore, to look again at the underlying transport problem, and the differences and similarities of the Polish situation from those in the UK and France. In the latter two countries, the modal split is much more skewed towards the private car. Road building is reaching its limits, public and private wealth and incomes are high (several times higher than in Poland), and private entrepreneurship is highly developed, with access to both equity capital and banks. The key similarity between the UK and France is that the governments have enhanced their role as regulators, and have given up direct provision of services. The key difference between them is the underlying motives and objectives of the reform. In the UK, the key objective was to reduce subsidies (tax-derived municipal expenditures), at the cost of some service deterioration; whereas in France the objective was to improve services, at the cost of increasing subsidies (i.e., ear- marked local taxes). In Poland, the key objective in the recent past has been to reduce public spending, across all sectors; now perhaps is the time when the objective of maintaining and improving the level of urban transport services is becoming more important, but surely not at the cost of increasing general taxes. The only unequivocal lesson of the French and British experiences for Poland is that the government should get out of providing mass transport services and that it should enhance its role as the regulator of the system. As for all other matters, it appears prudent 20 to take a mix-and-match approach. Because the inherited public sector system, based on monopoly supply, is not cost-efficient, Polish cities should move closer to the British example, meaning more service provision by the private sector and more competition-enhancing practices. In that the private sector in Poland is still weak and the existing prevalence of the public sector as owner of infrastructure and rolling stock is likely to be maintained (alongside the corporate-type organization), operators must be made more efficient. Even if most or all shareholders of mass transport companies are from the public sector, it will be worthwhile to tap the potential of private management, as in France. Finally, since tax-based spending must not be increased, the Polish mass transport system must find internal sources of funds (as discussed later in this chapter). All subsequent mass transport-related recommendations in this report follow from these positions. Evolution of Service Contracting 65. At this stage of events in Poland, whether we speak of private or public-owned, corporate service providers, service agreements are key instruments that local authorities have for achieving lower costs or better performance (or both).7 At the simplest level, the current agreements specify the operational task that the municipality wants carried out: target vehicle-km of service, lines, and schedules. They also spell out safety and other vehicle-related standards, arrangements for collection of fares, penalties for non-performance, and remuneration. This last is based on vehicle-km of service actually delivered. The municipality bears the revenue risk and the operator bears the cost risk, possibly with an agreed inflation clause. The main weakness of this simple approach, as it has been tried in a few cities, is that it has been mostly a direct-hire situation between two entities well known to each other. The remuneration is based on past cost patterns when the operator was a public enterprise. The past performance of urban mass transport operators in Poland has left much to be desired. Yet it is this very performance that is being built into service contracts. There are two ways to improve on this situation: one is to improve the design of service contracts as instruments, and the other is to improve the award process by bringing in competition. 66. Improving service contracts. Remuneration in future contracts should be based on cost arbitration, resulting in a set of specific contractual targets for increased productivity. Productivity categories for which targets are set involve relations between service outputs (vehicle-km, passengers carried, vehicles ready for service) and staff and vehicle inputs. Typical examples include revenue vehicle-km per vehicle, revenue vehicle-km per driver, proportion of active fleet placed in peak service, total, maintenance and administrative staff per vehicle placed in peak service, passengers per vehicle-km, and passengers per staff. The use of remuneration penalties for failing to achieve the targets is possible, but it is better to use pay incentives. Cost savings achieved through productivity improvements should be reflected in the next year's negotiated budget of the operator. Targets should be gradually tightened from one year to the next to exert a steady downward pressure on operating costs. The feasibility of this approach hinges on a good information system, which allows company managers to introduce and monitor productivity-oriented action programs, and allows the client (the transport authority) to follow progress or the lack thereof. 67. Bringing in competition. The term "competition" does not refer to daily tug-of-war for passengers as it now occurs between the regular and informal operators, for example in Katowice, ' Operators remaining as budgetary units of the local government can also sign service contracts, but these lack legal weight and are really no more than work orders. Still, the suggestions made here to improve contract documents hold for budgetarv units as well. 21 but to competition for the award of service contracts. Competition between several operators for the same route or network, especially when some of the bidders are privately owned, is a much more effective way to achieve productivity gains than any system of targets and incentives directed at a single, sole-source provider. Having different operators on different routes or sub-networks, even when all contracts are directly negotiated, will also help to bring the costs down. It will allow the regulating agency to make cost and performance comparisons between operators within the same urban, traffic and labor market environment, without having to go through detailed cost analyses. It will thus facilitate the job of setting productivity targets and contract negotiation. Warsaw, among larger cities, and Bialystok, among the smaller ones, already have this arrangement, though at this early stage in sector restructuring one cannot expect dramatic gains: the resemblance to competitive markets is still superficial. Indeed, direct negotiation with multiple operators is a distant second-best approach compared with formal competitive bidding. It is recommended that obligatory advertised bidding for service contracts be introduced in the short to medium term. Initially, bidders may be competing on price only, advancing later to a bid where they would take both cost and revenue risks. To avoid the loss of coherence and stability in mass transport services, as well as reduce social and political problems due to massive layoffs, mandatory bidding should be introduced gradually. Assuming four- to five-year service contracts, one-fourth or one-fifth of the network should be up for bids every year. As the British experience has shown, bidding is feasible on any given route, whether or not the expected financial result is a net gain or loss for the bidder. These reforms, if sustained and continued, will in time lead to a market-like environment for transport services, as well as for auxiliary inputs to the transport process. Company-internal Actions to Improve Performance and Reduce Costs of Mass Transport Operators 68. Short of having a functioning market, where the attention of city-based urban transport regulators would be reduced to perfecting the bidding process and monitoring performance of successful bidders, and aside from using productivity targets and incentives, additional measures can be taken by managers of public sector mass transport companies to improve their performance and reduce costs. In this respect, actions in three areas are warranted: service networks, auxiliary activities, and vehicle technologies. 69. The inherited route and line networks in major cities are quite extensive and service standards in terms of stops and frequencies are high. Both were adopted in the past on the basis of mainly normative as opposed to commercial criteria. Segments of the route or line network are sometimes redundant, over-complicated or simply unwarranted, having resulted from political interference and trading of favors. When these characteristics are combined with a bias toward larger vehicles, the resulting costs per passenger carried are likely to be excessive before even mentioning other factors. These weaknesses should be addressed even if the mass transport market were growing. In a service industry facing a diminishing market share, it is imperative to do so. Municipalities should work together with their mass transport operators to rationalize route and line networks, as a part of preparing for the next cycle of signing service agreements. Though the rationalization of services may include their reduction, the latter is not the prime objective of the process. The emphasis is on adapting the network and services to the new demand patterns. In this connection, given the earlier statement that available demand data suffer from inaccuracy and over-aggregation, it is strongly recommended that systematic and continuous patronage monitoring be organized as a preparatory step for the restructuring exercise. 22 70. Divestiture of non-operational departments. Another inheritance from the past is that mass transport companies still show traces of having tried to achieve self-sufficiency. They internally produce goods and services that in other countries would be readily bought on the market. This is best seen in comparing staffing ratios of Polish bus companies with those from, for example, comparable-size French cities. They tend to be two to three times higher in Poland. (Conversely, services purchased from outside represent a much higher proportion of operating costs in French mass transport companies than in their Polish counterparts). It is axiomatic that this situation holds much potential for cost reduction. Krakow and some other cities have started to divest non- operational activities of their mass transport companies, most often track maintenance, engine overhaul, and construction departments. In the transitional period, the divested units are organizing themselves as separate corporate-status companies owned by local governments, and are seeking their niche in the commercial market. Within a specified period, they are to be sold or liquidated. It is recommended that this approach be widely followed in the sector. 71. Technology. Rejuvenating the fleets and introducing up-to-date vehicle technology is foremost in the mind of most Polish mass transport operators, with funding being the major obstacle to implementation. But there are other less commonly agreed matters related to vehicle and right-of- way technology. The preponderance of larger vehicles was cited above, as was the observation that in Poland only tramways are considered worthy of an exclusive right-of-way. Only in Wroclaw were there attempts to experiment with bus use of protected tramway lanes and only private operators seem to "risk" using smaller buses. Operators should start introducing a greater variety of vehicle sizes into their fleets, and should expand their concept of exclusive right-of-way to include bus vehicles wherever possible. They should also search systematically for other similar ways to improve productivity and performance. Private Sector Involvement in Urban Mass Transport 72. Until now, private sector participation in urban mass transport in Poland has been very modest. This is quite unlike the rest of the Polish economy where, as previously noted, the private sector now accounts for more than 50 percent of the Gross Domestic Product. What private activity is taking place in this sector follows the pattern similar to that in the economy as a whole, in that private enterprises are new entrants as opposed to privatized, former state-owned companies. Also the degree of diversity in private sector involvement is low: there are no examples of employee buy- outs, large-scale equipment leasing, or management contracts with private firms. 73. At least one of the aforementioned private sector entry options, the sale of public companies, may occur in the near future. In Warsaw, for example, a 1993 study financed by the Ministry of Privatization recommended that MZK Warsaw be restructured into several corporate-status companies, one for operating tramway-based services, three bus-based operating companies, and several companies specializing in auxiliary activities, such as track repair or bus overhaul. The study also recommended a progressive privatization of MZK Warsaw through the sale of all subsidiary companies except the tramway-based one. The city has already taken steps to implement the first half of the recommendations; it remains to be seen whether it will complete the more difficult second half. The signs are that the unions are quite concerned about the possibility of the sale. Already the first-stage restructuring of the company offered a potential to cut about 2,400 positions, nearly a quarter of the total staff; privatization would be likely to go much further. Also in Warsaw, in mid-1994, the PKP issued a prospectus to privatize the Warsaw Commuter Railway, a 32-km radial line connecting Grodzisk Maz with central Warsaw. Since it uses tramway-like vehicles and a 23 different electricity supply, the line is physically and technologically separate from the rest of the PKP network, but carries only about 17,000 passengers per day. It is expected that major potential buyers would be local authorities and developers surrounding its suburban stations. 74. Regarding the acceptance of private operators, opinions of the interviewed city officials varied from one city to another, and appeared to depend on the way the private sector had entered the market. Opinions tended to be negative in cities where informal operators have engaged in predatory conduct and are seen as endangering the already precarious financial state of the existing municipal company. Where private operators worked within service agreements signed with the municipality, or when the latter have become members of a joint venture with the private investors, local views of the experience tended to be positive. Typically, the private partner has accepted to serve routes that the municipal operator could not cover or could not make cost-effective. Since these situations have not involved direct competition, there has been little conflict with vested interests. The benefits to all involved were clear: citizens received new or improved services (most often guaranteed seats and higher frequencies made possible by mini-buses), unemployment was reduced (since the private investor typically brought its own management team, but employed local drivers and mechanics) and the municipality did not have to spend its own capital funds to generate the new services. It has been estimated that in many cities the undersupply of services due to the capital squeeze is up to 25 percent. Thus, bringing in the capital and providing new services may be the foremost benefits of the private sector in the current view of the municipalities. 75. The majority of local officials interviewed expected that private operations will remain small- scale, judging that no rational investor would risk large equity funds for a problem-plagued and financially weak sector. Moreover, even if a potential private operator could come up with equity funds to make a down payment for purchasing vehicles, the main obstacle was the difficulty of borrowing supplementary funds. This may be an accurate view of the current situation, but it neglects the link between actions taken by local officials themselves concerning the business environment in their cities. Measures can be adopted to improve the financial health of the sector, including several recommended in this report, thus making mass transport more attractive to investors. 76. The largest potential benefit to the private sector, that of lowering the operating costs, remains untapped in Poland. This can be corrected only if the local authorities are persuaded that their current operators are far from efficient and start pursuing private sector opportunities vigorously, the resistance of unions and public-sector managers notwithstanding. Evidence for cost reduction potential is likely to come first from cities where multiple operators, including non-union private operators, are already in place. It should be emphasized that the private sector as such will not bring lower costs. A public monopoly should not be replaced by a private monopoly. It is a competitive environment that will bring the prices down. To re-iterate the recommendation made above, the most prudent approach is for cities to adopt mandatory competitive tendering of their service contracts and introduce it gradually, e.g., having annual bidding cycles on a sub-network basis. Given that the mobility of private entrepreneurs tends to be greater than that of their public competitors, repeated opportunities to bid are likely to attract private entrepreneurs in gradually larger numbers. The very presence of several bidders is likely to have some downward effect on bid prices. In the short run, the results may not be spectacular; over time, competition will build up, costs will go down and services will be better. 24 Mass Transport Fare and Subsidy Policy 77. Mass transport fare levels in Poland were quite low until the late 1980s, part of the social policy whereby low wages were compensated through low prices of basic foodstuffs, housing, and utilities. The corresponding cost recovery ratios in mass transport were low--20 to 30 percent. Fares have been increased in the intervening period, and cost recovery ratios have risen to 50 to 80 percent, depending on the company. Fares still fail to cover direct operating costs (working expenses) in most companies, while the subsidies paid to transport operators are not sufficient for replacing the rolling stock and maintaining the service levels. These same fares, however, have become onerous for low-income households, particularly large families where one or both parents are unemployed. Opinions among the local decisionmakers and their mass transport operators are converging to a position that fares should be set to recover about 50 percent of total operating costs; the reasons mentioned include both low incomes of many travelers and the need to restrict car use. This view reflects valid concerns, but the debate does not appear to have any coherent conceptual underpinning, nor has there been any attempt to make empirical studies of fares, either as instruments to lighten the load of poverty or to affect modal decisions. The cited 50 percent cost recovery objective is arbitrary. Moreover, depending on their legal status, mass transport operators are subject to different tax and depreciation regimes. In consequence, the term "total operating costs" means one thing to a budgetary unit of a municipal government and another to a corporate- status operator; it means one thing to a bus-only operator and another to someone who owns a sizeable route infrastructure for tramways. In other words, there could not possibly be just one fixed numerical target for the recovery of total operating costs (as opposed to working expenses) for all companies. 78. Affordability to lower-income travelers and impact on auto/mass transport modal splits are indeed valid criteria for urban mass transport fares under Polish conditions, as long as the resulting subsidy level is affordable. It is not at all plausible, however, that the two criteria will result in the same fare level. Fares that would suffice to keep people from switching to private cars are likely to be unaffordable to the poor. Conversely, if ordinary fares are set to be affordable to citizens receiving the minimum pension (the current definition of the poverty threshold), many passengers would be receiving the subsidy they do not need and possibly use mass transport more than they otherwise would. Moreover, the resulting deficit might bankrupt the operating company or the city treasury (or both). Even more likely, since city treasuries having a way to defend themselves against insolvency, the mass transport services offered would deteriorate to such a degree that the "choice" travelers would be pushed to use private cars. 79. In modal split considerations, the theoretical argument is that mass transport fares should be less than those needed to cover costs only if the use of the competing mode-the automobile-is not correctly priced. How much lower the fares should be is a complex question, depending on the magnitude of demand elasticities for mass transport and cross-elasticities between automobile and mass transport services under site-specific circumstances. In many highly motorized and high- income countries, particularly in Western Europe, fares have been kept low and service quality has been kept high to encourage mass transport ridership of the so-called choice travelers, i.e., people who could afford to buy and operate an automobile. Experience in these countries, particularly in France and Scandinavia, indicates that the quality of service can be as or more important than the fare in retaining and/or attracting passengers. In the long run, fare reductions can lose effect at the margin; or, as it happened in the UK, they hit the cost recovery barrier, since the fiscal capacity or political willingness to pay subsidies is exhausted. 25 80. In lower-income countries, automobile owners are relatively fewer and they rarely choose to use mass transport, no matter how low the fares. There, the affordability criterion typically has precedence over the level of service. Thus, most often, low fares appear in tandem with low-quality services. In some countries, the clash between a declared government policy to supply a higher level of service on the one hand and very real budgetary constraints on the other leads to excessive debts of mass transport companies and worse. 81. Regarding the urban travel market, Poland is a special case in several respects. It has already been noted that auto ownership is relatively high for a country at its level of wealth, particularly in cities (see Figures I and 2). Thus the "choice" travel market is quite large. On the other hand, there are also many low-income people, whether due to unemployment or low wages. Even though the incidence of poverty is currently much more a rural and small-city phenomenon, it has to be taken into account in large cities as well. The budgetary constraints at all levels of government are particularly tight as the economy evolves away from its high-tax, low-pay past. The Polish situation, therefore, resembles problems from both high-income and low-income countries. It would seem that the most promising approach lies in segmenting the travel market and developing fare and service policies for each. 82. At the low-income end of the market, it is important to separate two aspects. First, who should benefit from special fares? Second, how shall the program be administered? At present, retirees, school children, and students are major beneficiaries of mass transport subsidies in Poland. These are administered by operators directly. Positive sides of this arrangement are that eligibility is simple to establish and there is no need for a separate administration. A negative side is that other deserving individuals and households, specifically those at or under the poverty line, are not included. Moreover, some people among the retirees and students do not need travel subsidies; the social safety net, which imposes a crushing weight on the country's budget, is unnecessarily large in this case. Furthermore, when the mass transport operator subsidizes some of its clients directly and in turn seeks compensation from the government, it is difficult to separate losses due to subsidies from losses due to poor management or low productivity. At worst, mass transport operators hide their inefficiency behind low fare revenues. At best, they get blamed for what is essentially a revenue constraint imposed by a social policy. 83. It is recommended that improvements be made in both eligibility and administration of mass transport subsidies. First, in line with a principle already used in other aspects of the social safety net in Poland, a targeting approach could be used to ensure that assistance is provided only to those who are eligible and not to anybody else. The major thrust of the program should be towards those Poles whose incomes are at and under the poverty line.8 This would mean a shift of focus for subsidized fares from retirees to the working poor, the latter (and their households) accounting for 60 percent of all poor citizens [World Bank, 1994b]. The identification of eligible travelers and implementation of the program would be the task of city-based Social Assistance Offices; incremental administrative costs of the program would be low, since it would involve a minor expansion of the work already performed. In addition, mass transport discounts could be provided to the unemployed 8 Given that there is considerable bunching of the population just above the poverty threshold, defined as the minimum pension, it may be onerous for these people not to be eligible for mass transport subsidies. A graduated approach may have to be used, starting from a less strict eligibility level (the minimum wage for example) and moving over time to the minimum pension. 26 and school children. These could be added to the existing Polish programs of time-bound unemployment benefits and family allowances, administered through the Labor Fund and the enterprises, respectively. Just like in the existing programs, the subsidy could be in kind or in cash. One of the simple methods for implementing the mass transport subsidy in kind would be for safety- net agencies to purchase tickets or passes from operators at face values (or at whatever quantity discounts operators are willing to give based on their own calculations). The agencies would thereafter re-sell them to their constituents who meet eligibility criteria at whatever discount they deem necessary or affordable. As for retirees who do not fall into the poor category, mass transport operators should have the flexibility of offering them special arrangements, such as off-peak discounts, not as a legally mandated subsidy but as part of the operators' own commercially inspired fare policies. 84. There are several potential benefits with the recommended approach. First, assistance would be focusing on people who really need it and leakage to those who are better off would be reduced, even eliminated. Second, as policies and instruments of the social safety net evolve (e.g., to improve delivery, tighten up eligibility rules, and prevent leaks), and as economic conditions that affect the eligibility change, so would mass transport subsidies. Third, the need to subsidize the operator on the grounds of poverty-level travelers would be eliminated, permitting the mass transport managers to have a more independent fare policy. Fourth, the approach would provide the opportunity to develop more competitive relations in the mass transport sector, for example by having social safety net agencies use a bidding approach in purchasing mass transport services. Fifth, since the financial burden of the social safety net is shared between enterprises, municipalities, voivodships, and the state, it would be more equitable than the current system that relies entirely on municipal funds. 85. It is difficult to gauge the effects of this approach on individual cities or on the social safety net in the aggregate. Some cities have, or are likely to have, high concentrations of unemployment; for example, the GOP agglomeration and Lodz may see their transport subsidies go up. Gdansk and Gdynia, in contrast, have an exceptionally high proportion of retirees and would probably require lower subsidies. As for the aggregate, the likely impact should be in the downward direction. This follows from the fact that the 1993 income transfers for pensions alone amounted to 15 percent of GDP, whereas the rest of social safety net transfers, for unemployment, poverty and all other cases, amounted to 4 percent of GDP. Even if the macro-economic impact is likely to be positive, there may be resistance to burden sharing by voivodships and the state. In such a case, an alternative option is for municipalities to administer the entire fare discount program by themselves, finance it out of their own budget, and attempt to negotiate a corresponding increase in annual block transfers from the state. Thus, at least three of the above benefits would be retained. 86. For the rest of the mass transport market, fare policies should aim for a gradual increase in cost recovery from present levels, going hand in hand with policies for pricing of road-use by motor vehicles (discussed in the next section), irrespective of whether the passengers own cars or not. The current starting position is that of under-priced road use. For mass transport passengers who do own cars, subsidized fares would eliminate the pro-car bias in modal decisions. For those who do not own cars, the subsidy would compensate for losses due to street congestion and other externalities to which most mass transport passengers are exposed. As the price of road use increases towards an economically efficient price, so should mass transport fares. Another reason for a gradual increase of fare levels is to avoid a financial overload to individuals and households, as they are having to absorb multiple increases in user fees for municipal services. 27 87. Under present Polish conditions it is not possible to say which level of mass transport cost recovery corresponds to the current level of cost recovery for urban roads. Until such time as empirical research sheds more light on this matter, a sensible approach is to define fare targets cross- referenced to physical stages in cost recovery and use judgement as to when they should be reached in site-specific cases. The stage 1 fare level would correspond to covering the direct operating costs (working expenses) of mass transport operations; given current accounting data, this would correspond to a 100 percent cost recovery for budgetary units and 90 to 92 percent for corporate- status operators. Assuming that low-income travelers are taken care of through the social safety net, as recommended above, and that efficiency-oriented measures (discussed in next sections) succeed in lowering operating costs, there should be no question about this being achieved, given experience in many countries at the same or lower level of wealth as Poland. The only question is how quickly it can be done. The speed should depend on the introduction of other reforms, within and outside mass transport. It is safe to say that this level of cost recovery should not be tied to any progress in road use pricing. 88. The Stage 2 fare level would be to cover depreciation and financial costs (the latter is zero at the moment) for the rolling stock and maintenance equipment. This is also a realistic target, but one that should be conditioned by progress in road use pricing; the sooner it is achieved the better, given the replacement needs of mass transport fleets. Stage 3 would cover the depreciation and interest related to route and the depot infrastructure of mass transport modes on exclusive rights-of- way, e.g., the running track and its various equipments, including lighting, signalling, and power supply. It has been argued that lines using exclusive right-of-way contribute to property values in their corridors and that these costs should be recouped through real estate taxation rather than through fare revenues. As property markets develop, such an argument will make more and more sense in Polish cities. 89. The above approach to fare setting should be supplemented by a program targeting those travelers who have the option of using a private vehicle, the so-called "choice" segment of the market. Retaining them as mass transport customers (if the competing mode-automobile-is priced correctly) is best achieved through maintaining a high quality of mass transport supply and providing custom-tailored, higher-fare services, whenever market research discloses the relevant potential. 90. Finally, two simple but important aspects of fare policy require attention: fraud is one, and the regularity of fare adjustments is the other. All operators interviewed in field studies agreed that ticket fraud was common, though there was disagreement as to whether the rate was in the lower or upper end of the commonly quoted 5 to 20 percent range. There were also more pessimistic estimates. Some companies have made special efforts to measure and reduce the practice. Others have done neither. The failure to fight fraud tends to reduce the revenue and reflects badly on the operator. It should be corrected without delay. As for fare adjustments, it is vital that these be made regularly, given Polish inflation rates. Automatic indexing is not recommended, since this has the potential of passing operator inefficiency to passengers. Instead, formal fare reviews, coupled with a review of services and productivity (see next section) are recomnmended. These should be followed by public information campaigns to educate the public about the costs of transport services and the trade-offs involved in paying for costs through fares or subsidies. Pricing the Use of Urban Roads 91. Until very recently, it was common to find much attention in the public discourse on urban transport focused on pricing and cost recovery of urban mass transport services, and much less on 28 pricing and cost recovery for urban roads. At least some of the reasons for this have to do with the fact that it is a long and well-established tradition for governments to construct and maintain roads out of tax-generated funds and allow universal access to them. By contrast, access to mass transport services has nearly always been charged for, though the degree of cost recovery varied widely depending on whether the provider was a private entrepreneur or a public authority, not to mention the differences between capitalist and socialist economies. Finance and accounting terms have been habitual in mass transport debates, while the discussion of road use has fallen more in the domain of public economics; the former has tended to be more practical and the latter more theoretical. 92. It is a salient characteristic of road use economics that user-perceived transport costs differ from those perceived by the community. They differ both by the makeup of cost categories and the values they assign to individual cost items. Individual passengers make travel choices on the basis of their own travel time, out-of-pocket costs, quality of service, and safety. They do not include costs that they impose on other travelers (congestion), or costs imposed on the community (air pollution and noise). Moreover, the valuation of commonly included costs, e.g., travel time, may differ between individuals and the community. Because of this divergence in perceived costs, a socially optimal transport pattern is likely to be different from that obtained by aggregating travel decisions made by individuals. It follows that a range of public policy options regarding the modal split is bounded by these two extremes: a central planning approach where a desirable modal split is decided and enforced by the government, and a market approach where the primary concern of the authorities would be to determine economically correct prices of travel by diverse modes and then let the travelers decide what they want to do. 93. In the international experience, varied as it is, road pricing or pricing substitutes have been applied at two levels. The first level is national, whereby a tax levied on automotive fuels is treated as a substitute for charging for road use; the proceeds may be fully or partially earmarked for road- related expenditures (as in the United States) or fused with the general revenue (as in many other countries). Tax rates may be decided on the basis of fiscal considerations only. If they contain an explicit road charge element, its magnitude may be set so that the resulting revenue would cover expected operating (maintenance) expenditures of road agencies, or both operating and capital (capacity expansion) expenditures. The ratio of fuel tax yields to road agency expenditures has varied widely over the years for any one country, with a generally upward trend, and between countries in any given year: 1989-90 data for the United States and Western Europe indicate a range from 0.6 for the United States to 5.1 for the Netherlands [Pucher and Hirschman, 1993]. Paradoxically, this ratio has tended to be much lower in many developing countries, particularly those that are net exporters of petrochemicals, fuel prices at the pump often being kept under border prices. 94. Even at its best, e.g., a fuel tax designed to compensate for costs of road deterioration with a fine discrimination between vehicle classes, the national approach typically departs in two important ways from that recommended in the economic theory. First, some important costs are not included in the calculation, primarily the so-called negative external costs like traffic congestion, accidents and damage to the environment. Second, the national approach is based on the average rather than marginal costs of use, and thus does not suffice as an instrument to affect trip-level decision making. Even if the cost inclusion problem is resolved by including negative externalities, this approach will underestimate costs at specific locations and times. A major aggregate effect of these two shortcomings has been a net social subsidy to some categories of motor vehicles, notably the private car, resulting in short-run over-use of this transport mode to the detriment of alternative modes. The 29 damaging effects are particularly visible in urban areas, where the divergence between social and individual costs of travel, and between average and marginal costs is the largest. Just how large the difference can be is well illustrated by recent work done in St. Paul/Minneapolis (United States), which indicates that the difference between the marginal congestion cost of travel (excluding other external costs) and that perceived by users was US$0.49 per vehicle mile; only US$0.02 per vehicle mile was actually paid for road use through fuel taxes [Mohring and Anderson, 19941. In the UK, where in the last fiscal year fuel and motor vehicle taxes yielded about US$24 billion and road expenditures by public authorities were US$9 billion, external costs were estimated at nearly US$36 billion, detailed as follows: US$20 billion due to congestion, US$4 billion for air pollution, US$11 billion for accidents and US$0.9 billion for noise [The Economist, 19941. 95. In addition to the short-run overuse of private cars due to underpricing, there has been a long-run effect as well. Traffic planning has been driven by forecasts based on observed volumes, typically during peak hours. Since these have tended to be higher than they should be due to under- perceived costs in the short-run, thus sending the wrong demand "signals" to planners and decisionmakers, new road capacity has been justified on the wrong grounds and has contributed to the vicious spiral of traffic growth and a general proliferation of motor vehicles. In countries where this process has advanced through several cycles, governments have been continuously in a multiple bind, being asked to provide relief from congestion through road building and attempting to arrest and reverse the modal use shift away from mass transport, reduce accidents, and improve the environment. 96. The second level of short-run regulation of road use has been applied at the city level. To supplement the national approach based on fuel tax, cities have turned to micro-oriented traffic/parking management. Initially conceived in the United States as a way to squeeze as much traffic as possible through existing road networks, traffic management evolved towards the imposition of physical restraints (i.e., limits or outright prohibition of access or parking or both), and allocating some street space for exclusive use of mass transport modes and/or pedestrians. This low-cost approach must be termed quite successful in many cities in moderating congestion and other negative effects of traffic growth, particularly when combined with quality traffic engineering, parking control, and good mass transport services. It is, therefore, an essential part of a short-run urban transport strategy no matter where it occurs. Still, the approach has its limits, reached sooner or later as traffic growth continues. Its generic disadvantages are that it is inflexible and arbitrary regarding what trips are excluded and, significantly, that it does not generate revenue. 97. The concept of charging for road use has been applied frequently to specific roads and bridges in the form of a toll. The concept of congestion charging is also well known, often used to ration peak hour capacity on toll bridges, for example. It is also a common and well-accepted method in other public utilities, i.e., electricity, telephone, and water. Marginal cost based, time- and link-specific pricing for entire urban networks, however, has not been implemented anywhere as yet, though the relevant economic thinking is conclusively in favor [Hau, 1992a]. Reasons for this have included technical difficulties, uncertainty about impacts, equity issues, poor understanding of the accompanying measures needed, and interest group politics. This is in sharp contrast to parking, where pricing has been used extensively in central cities and near activity centers. Until very recently, the sole cities to consider network-wide pricing as a tool to combat congestion have been Hong Kong and Singapore [Hau, 1992b]. In both, immutable spatial limitations have tended to increase development density and to place a premium on road space. In Hong Kong, the attempt to apply the congestion pricing approach using electronic means failed, because of well-known 30 political difficulties. Alone among world cities, Singapore implemented an area licensing scheme in 1975, and later supplemented it by severe constraints on vehicle acquisition.9 Only in recent years, as more and more cities collide with spatial, financial or environmental barriers, has there been a coalescence of views in the diverse communities of interest, i.e., city officials, national policy makers, and transport planning professionals, that a pricing approach should be given a chance. It has helped that the crucial connection between urban road pricing and re-cycling the revenue back into the system to offset welfare losses is now better understood, potentially resolving both the conceptual and political obstacles [Hau, 1992a]. Also, the electronic technology of vehicle sensing and charging has been further developed, to the point of being commonplace. Several cities in Northern Europe have introduced partial pricing schemes, such as cordon pricing or area licensing, and others are working on more comprehensive schemes based on electronic vehicle identification and smart-card technology [Hau, 1992b; 1993]. Singapore is again in the forefront, planning to implement a full pricing system in 1997. 98. Where is Poland with respect to the just-described hierarchy of short-run methods to regulate and price the use of urban roads? The Polish case is special in that the urban road networks are comparatively uncongested, though this is changing rapidly. They are also underdeveloped. The problem is, therefore, perceived by local authorities in terms of a lack of money for new roads, not in terms of excessive social costs of urban road transport. If funds are secured through taxes or loans, it would be tempting for Polish cities to follow a familiar Western path of gradual road building, combined with mass transport subsidies. 99. The fuel tax in Poland is purely a fiscal instrument. Its rates are determined without any relation to expenditure levels of road agencies, much less social costs of travel by motor vehicles. Pricing as an instrument of transport policy does not appear to have been addressed until now. Past attempts to define a portion of the fuel tax as a road use charge were all meant to generate earmarked funds, not to affect travel behavior. At the time when field work for this study was being done, it was reported that a law introducing fuel tax based on average road costs had been drafted, but not yet discussed or acted upon by the Sejm. The tax was some 66 percent of the mid-1993 gasoline price at the pump, making automotive fuel cheaper by half in Poland than in most West European countries. Still, it is not subsidized, nor is it cheap relative to the local purchasing power. Is road use being subsidized? Going by the narrowly defined cost recovery for roads, the answer is no. The ratio of fuel tax revenues to road expenditures by all levels of government is presently 2:1. Data to calculate this ratio for years when road expenditures were three to four times higher than now are not available, but it may well have been much lower, perhaps less than 1: 1, especially given that gasoline rationing rather than pricing was used in the past. All that the present high ratio means, however, is that in the current squeeze on public expenditures, given that fuel tax is defined not as user charge, but as a tax only, roads are not a priority sector and are being starved for funds. 100. Following the principles outlined above, road expenditures are only a portion of the social costs of road provision and use. External costs of road transport have to be added in. Perhaps the present level of road expenditures in Poland is so low that even the inclusion of all relevant social costs would make the total still lower than the fuel tax yield. That, however, would only indicate 9 Singapore has also introduced severe restraints on purchasing cars, by requiring a permit to buy a vehicle and issuing a limited number of permits distributed through a lottery-like arrangement. This approach is not recommended, since it is a blunt instrument that would preclude many economic uses of motor vehicles in most countries. It indicates just how critical traffic congestion is in this city-state. 31 that roads are recovering their costs in the aggregate. For some congested roads or sub-networks, and at some time periods, the costs would surely exceed the revenues. Most such roads are to be found in large cities. 101. The question is now whether urban road pricing should be considered as a realistic option in Poland in the near future, even though the pressure of traffic congestion is far from that experienced in those world cities that are actively pursuing the pricing route. At the city level, past modal split policies were closer to the spirit of the central planning approach, though by no means pure, and have worked reasonably well until various economic and other processes described above upset the public resource base and, more recently, the ruling modal equilibrium. Polish urban transport planners have yet to fully face this new situation and develop coherent responses. Those cities that have tried recently to set new policies on the proper role of the private car, Krakow and Wroclaw, for example, have done so in terms of modal split targets for various urban sub-areas, and have started introducing short-run instruments including access control, parking capacity control and parking charges. Also, trying to arrest the erosion of mass transport use and the flight to private automobiles, they are opting to keep mass transport fares relatively low. There is no evidence that city-specific charging for road use is being considered. 102. The argumentfor road use pricing in Polish cities has several elements. First, the argument that congestion levels are still low is not definitive: road pricing does not equal congestion pricing, even if congestion represents a higher share of marginal costs than environmental, road damage, and accident externalities put together. In other words, marginal social costs are diverging from user- perceived costs even in the absence of congestion. Moreover, preventing congestion from building to excessive levels is an attractive proposition: why wait until Polish cities resemble Athens or Bangkok, or even London? Second, economic pricing of urban roads will ensure that the overall level of motor vehicle travel and particularly car/mass transport modal split are market-based. This will, in turn, have several positive impacts: it will permit evolution of mass transport fares towards commercial levels, thus reducing or even eliminating the related subsidies; plans for road expansion will be based on economically efficient traffic volumes, with consequent capital cost savings; future location decisions will be based on economic costs of transport, counteracting the tendency towards urban sprawl. Third, it makes little sense to permit the continuation of subsidies to motor vehicles, particularly private cars in urban use, when urban and intercity mass transport enterprises in Poland are under much pressure to increase user fees, reduce subsidies, and downsize. Fourth, economic pricing of urban roads will generate revenue, which is badly needed at the city level for both operating and capital expenditures in this sector (see section on transport finance below). In time, it can be envisaged that urban transport systems would approach financial self-sustainability, just like electricity, telephones, and other utilities are doing. This is very important in Poland, since neither the country nor individual cities command resources needed for practicing the Western approach of subsidizing both private cars and mass transport modes. 103. The argument against urban road pricing in the near future also has several elements. First, most Polish cities have yet to fully tap the potential of (non-price) traffic management methods to regulate the use of motor vehicles; these are low-cost, technically and institutionally much simpler than road pricing, and therefore should be given preference in the near future. Second, only a few cities have introduced charges for on-street parking. It may be over-ambitious to speak of road use pricing for moving vehicles, when most cities (including Warsaw) have yet to price the use of space for the stationary ones. Third, the level of motor vehicle use in Poland is still relatively low, and the reservoir of benefits is unlikely to have been exhausted. Automotive mobility undoubtedly has 32 significant advantages for individuals; moreover, there is a link between economic growth and motor vehicle use. At this sensitive stage of the country's economic reforms, pressing down on urban use of motor vehicles may negatively affect the growth prospects, particularly the evolution of inter- industry links characteristic of market-based societies. Also, the new, smaller-scale commercial and industrial enterprises locate in areas and at densities well suited for car travel. Fourth, urban road pricing would have to be introduced on a city-by-city basis, which might negatively affect the prospects of pioneering cities to attract new economic activities. Fifth, data, analytical, hardware, legal, and political requirements of road pricing are quite high. The basic laws permitting this type of innovation are not in place in Poland. Individual cities are not likely to be legally empowered to do this in isolation; in fact, legislative and other actions by the national government would surely be necessary. Judging from the difficulties experienced in Poland in trying to introduce a much simpler and common instrument of parking charges, the current capacity of relevant local and national institutions would not be up to the task. The country is tired of revolutionary reforms in just about every sphere of activity and yearns for stability; the last thing Polish citizens and elected officials would do is agree to be the test ground for yet another economic theory. 104. A careful reading of the above arguments pro e contra urban road pricing indicates that the dilemma as posed here may be artificial. It is not an either-or question in any given city. Nor is it necessary or appropriate to have a blanket answer for all cities. As long as the option of urban road pricing is available legally, it can be considered against other options in city-specific policy studies, where the full local context can be taken into consideration. In this respect, it is important to repeat that urban road pricing is not a single option, but a family of options. Some of them are corridor-oriented (toll facilities), others are area oriented (area licensing or cordon-crossing). Some are technologically complex, involving street-based and vehicle-based sensing technology, and monthly billing; others are as simple as having manned toll booths. Pricing schemes can be designed to stress impact on the travelers' choice of time-of-day, route and mode; or their objective may be to reduce emission of pollutants, or simply to earn revenue for transport-related public expenditures. Depending on which transport or traffic problem is the most acute, which objective(s) are chosen to be of primary importance, and the local institutional capacity, some cities may find road pricing necessary and feasible in the nearest future, others may not for years to come. For example, prime candidates for an early consideration of road pricing will be those cities that, like Krakow or Wroclaw, consist of a single municipality, have compact historic cores with an existing multi-modal transport authority, advanced traffic/parking management programs, and an agreement to take over voivodship roads. By contrast, agglomerations will have much greater difficulty moving in the direction of road pricing, because of excessively fragmented institutions and much space to build new roads. 105. All things considered, road pricing is conceptually sound and its time is coming [Kaageson, 1993; ECMT/OECD, 1994]. The pricing option should become a matter for near-term planning and consideration, and medium- and longer-term implementation. Meanwhile, programs to introduce charges for on-street parking, combined with physical traffic management methods, should be vigorously pursued in all cities. Parking charges have a great potential to affect mode choices, though they would not affect route and time-of-travel choices as much as road use charges would. 33 Nor would they generate nearly as much revenue.'° Also, the effectiveness of parking charges would vary very much from one city to another, depending on the proportion of local and through- trips on the network, the geometry of central areas, and the potential for privately provided off-street parking. 106. There are at least three steps that should be taken at any convenient opportunity (the sooner the better) to prepare the ground for road pricing whenever it makes its debut. First, there is a need to study urban road transport economics and finance under Polish conditions, to establish basic concepts and relationships, and estimate the values of the relevant parameters. What are congestion, environmental, and other external costs under conditions in various Polish cities? What is the divergence between average and marginal costs in various urban networks? What are the underlying values of travel time and elasticities vital to estimate impacts of pricing policies? At the outset, a pilot study of urban road economics should be carried out in one city where institutional capacity is high and the potentialfor road use pricing is greatest. On either ground, Krakow may be the most suitable candidate for this. It should be understood, however, that this would be a national test case and learning experience. The lead for the study should therefore come from a national body, e.g., The Association of Polish Cities working with Ministry of Transport. Second, a concept as new as road pricing could not be "parachuted" into Poland as a matter of foreign fashion, understood only by a few economists and engineers. It is necessary to educate the administrative and political communities in this matter, and then communicate the knowledge to the population. The study recommended along preceding lines could also map the road ahead with regard to public information. Third, a legal basis for charging motor vehicles for the use of urban roads should be created. To maximize the chances of passage of such legislation, it may be prudent to wait until the technical knowledge has been accumulated and disseminated in suitable form to the population. On the other hand, no opportunity should be lost to advance in this direction through other processes already underway in Poland. For example, it may not be too late to expand the current legislative action to empower cities to charge for on-street parking, seeking to adopt legal definitions flexible enough to cover the moving traffic as well as the stationary vehicles. Also, it is important to anticipate the need for a variety of charging instruments and make legal provision broad enough to include them all. Some instruments will be related directly to the amount of use, others to vehicle ownership, yet others to access on an annual or sub-annual basis. Unfortunately, the recently announced decision to eliminate annual registration fees charged hitherto by city governments is a step in the opposite 1° The following calculation may shed some light on the relative earning potential of parking charges and road use charges. Based on a mid-1993 monthly revenue from parking charges (Zl 250 million gross) and fines (ZI 150 million) in Wroclaw, the city could earn about Zl 4.5-5 billion per year, at current prices. If parking charges would increase to the full complement announced by the Government (hourly rate equivalent to a price of two liters of 98-octane gasoline), and parking usage stayed the same, the city could earn about twice that much, i.e., ZI 10 billion. The city currently has 1,700 parking places in the innermost zone A, all priced, and about 7,500 places in zone B, of which about 1,400 are priced; perhaps one could more than double the above estimate of revenue from parking by increasing the number of priced places in zone B. If, however, there was to be a road use charge equivalent to one quarter of the current fuel tax (Zl 1,500 in addition to Zl 9,000 paid for gasoline at the time), 145,000 automobiles registered in Wroclaw driving an average of 8,000 km per year on city streets, with fuel consumption of 9 liters per 100 km, would generate a revenue of just under 160 billion, not counting other motor vehicles. A supplemental fuel tax equal to one-half of the current tax (ZI 3,000) would generate revenue of about Zl 392 billion. (Keep in mind that the current ratio of road expenditures by all levels of govermnent and fuel tax revenues, nationally, is about one-half). By comparison, in 1992, Wroclaw spent about ZI 300 billion (in 1993 terms) for roads (municipal and voivodship contributions combined). 34 direction from that recommended herein, even if it is revenue-neutral for cities. " The concept of city-based annual registration is sound; it should be retained and be used in the future as a vehicle to carry a variety of charges related to local use, including both access and emissions-related fees. Public Investment Policies in Urban Transport 107. Investment planning as a pure long-run action should refer only to capacity expansion projects; here, we include also large-scale rehabilitation and replacement projects. The latter categories have sizeable capital requirements which, under current Polish conditions, could not possibly be financed out of operations and maintenance budgets. 108. All large Polish cities and some less-than-large ones have inherited ambitious investment plans for mass transport facilities and major roads. Regarding mass transport, one distinguishing feature of strategic urban transport plans in the pre-reform period has been the key importance assigned to constructing new rail-based systems in all several cities. In addition to the two projects started in the 1970s, i.e., the Warsaw Metro and Poznan Rapid Tramway, metros were to be constructed in Lodz and Krakow; rapid tramways or pre-metro projects were envisaged in Wroclaw and Szczecin; while more modest tramway modernization plans were made in Bialystok, Kielce, and Lublin. Each of these plans had some or all of the following major weaknesses. First, system choices were not based on a full comparison of options with reference to specific urban transport problems of the present and future, but on strong a priori correlation between city size and mass transport options conceived as pure vehicle technologies ("metro," "tramway," "bus"). Second, project evaluation methods eschewed economics and finance, relying more on matching the traffic volumes against "typical" capacities as criteria for recommending a particular design option. Third, there had been no consideration of whether a city in question had the budget capacity to pay construction costs of any one, much less all of the adopted projects. A corollary weakness was that decisions on what projects belonged to a priority program were not made. Fourth, there had been no consideration whether the city would be able to afford the perpetual operating subsidy, a sure thing under the prevalent fare policies. Fifth, long-term borrowing not having been practiced, financial planning in general did not enter into the scope of investment planning. The funds problem was to be solved through continuously lobbying the central government for capital grants. Sixth, there was a popular focus on one major project as "the solution" to the city's transport problems, e.g., metro in Warsaw; while they waited for the one-shot "solution" to their transport problems, cities neglected to invest into maintenance and upgrading of their existing systems. 109. In the road sub-sector also, the extensive network development plans share some of the same problems with mass transport plans: project evaluation methods were much stronger on the engineering (functional) side than on economics, and there appears to have been no explicit inclusion of budget constraints in the planning process. Furthermore, priority has not been well established; in fact some projects are directly competitive or mutually exclusive (e.g., expressways in the GOP). Road plans were particularly extensive in the two agglomerations, perhaps necessarily so because of the inter-city nature of some road links. As noted in the review chapter (para. 26), and unlike in mass transport, many road projects were started in the pre-reform period, and remain incomplete. 110. All of these weaknesses have become more and more evident after economic reforms began, and especially after fiscal independence of local governments made it necessary to start looking at Cities will be compensated for the loss of revenue through an increase in fuel taxes. 35 the actual financial capacity of one's own city and at the dilapidated condition of its mass transport infrastructure and the rolling stock. Faced with this new situation, cities have reacted in different ways. Most cities have not yet given up the long-held plans for major projects, whether road or mass transport, but have the advantage of no having started them. In Warsaw and Poznan, where construction of new mass transport lines was well-advanced at the time when economic reforms began, some painful decisions had to be made. Facing a similar dilemma, the two cities went in different directions. Warsaw, where the state had already spent more than US$600 million in 1992 terms, has continued with the original metro concept in spite of a grim demand outlook. Its potentially excellent on-street mass transport system remained underfinanced and today faces a large backlog of deferred maintenance and rehabilitation, as well as unsatisfied demands for expansion where urban growth proceeded in "unplanned" corridors (e.g., the north-east of the city). The state has re-confirmed its commitment to finance most of the infrastructure, but the City of Warsaw will have to pay for the rolling stock and subsequent operating subsidies. Poznan had a substantially smaller sunk investment (US$40 million in 1992 terms), paid for from local funds, in its Rapid Tramway project. The project was designed on a completely separate, open cut right-of-way in a major growth corridor, and was meant to use a light-rail, high platform technology, radically different from the rest of its extensive tramway system. Unlike Warsaw, Poznan has opted to change direction: the city authorities re-defined the Rapid Tramway project to make it compatible with the tramway system already in place, though still at an advanced technological level. The project will therefore be less expensive to complete, reduce passenger transfers, and will create a pull to upgrade the rest of the network. Even so, the city government lacks money to finish the project on its own, not to mention the additional needs for the rehabilitation program of its overall system. 111. Regarding urban roads, awareness of the need to re-study old plans in the light of new economic, administrative and political realities is spreading, but differs greatly from one city to another. In the two agglomerations, major road construction sites are idle or at low level of activity, but there is no sign that a re-evaluation of proposals will take place. By contrast, Krakow has undertaken a re-study of its transport development plan and has acknowledged, in the official policy statement, that many of the roads and mass transport facilities still kept on the books will never be built. 112. There is no doubt that investment opportunities abound in most large cities. On the mass transport side, the most pressing cases typically should not involve large capacity-adding projects, but rehabilitation and upgrading of existing networks and rolling stock, with some reductions and highly-selective, small-scale expansions. The entire PKT tramway system in the GOP agglomeration, a veritable "diamond in the rough" with a potentially great future, has the most obvious need for rehabilitation; in fact, most tramway networks do. As for the Poznan tramway line, however strong or weak economically its case might have been in a pre-investment analysis, the fact is that it lingers very close to completion, and would most likely prove to be an attractive incremental investment. A gigantic task of converting to a more productive use the now superfluous PKP spurs and secondary-line tracks in Wroclaw and other urban areas may partially overlap with urban transport plans in these cities. 113. There is a need to overcome some technological biases, which have so far narrowed the scope of alternative analyses in Poland. The most visible one is a widely held view that only the 36 rail-based vehicle technology needs or deserves a segregated right-of-way. 12 This technical "reflex" has until now denied bus vehicles the option of operating away from street traffic, whether on own lanes, or sharing the segregated space with tramways. Similarly, the tramway technology has been chained to yesterday's concepts, not only because funds were lacking to turn classical trams into up- to-date light-rail vehicles, but also because tramway priority was not extended to street crossings whether through traffic control means, or by building multi-grade structures. The failure to upgrade tramways has pushed many people in Poland into believing that a metro would be needed in corridors whose passenger loads are half those achievable by modern light-rail systems. 114. It is necessary at this point to say another word on metros, that ever-popular and controversial urban transport mode. The term "metro" is used here as a synonym for "an urban railway, typically in an underground location." There is no general reason why a metro should not be constructed in any given city, in Poland or elsewhere, as long as it satisfied all of the criteria implied in para. 108, notably that studies of evident technical integrity have demonstrated that the metro would be the most attractive technical and economic response to a well-defined transport problem, and that its capital and operating costs were affordable to the local community. That said, a combination of conditions that would a priori indicate that a metro would be warranted, e.g., high development density, rapid population growth, travel corridors with volumes difficult to handle by existing medium-capacity modes, shortage of road space, and difficult topography, does not appear to exist in any major Polish city. On the contrary, what can be seen are medium-to-low population densities, stable urban populations, plentiful road space and moderate mass transport travel volumes in major corridors. Just how moderate corridor volumes are is illustrated by an example from Warsaw. In 1991, the peak hour flow in the possibly highest-demand urban corridor in the country, between the suburb of Mokotow and downtown Warsaw, where at that time Warsaw Metro had been under construction for some 8 years, was about 12,000 passengers in the maximum loaded section, and falling! The evidence of reasonably abundant road space, soon to be abandoned PKP railway tracks, and excellent past practices of placing medium-capacity modes into reserved and protected street space indicate that the most sensible modal development strategy for large Polish cities is to favor at-grade, medium-capacity modes. Tunneling or elevation appear warranted only in short, central city sections, and/or at critical intersections. An implication of adopting this approach would be to institute building height limits and/or other constraints on excessive land use densities and the peak travel demands derived therefrom. 115. Another type of highly recommended mass transport investment is of a much smaller scale than those for infrastructure and rolling stock. Reduced spending in this sector over recent years, 2 The cause-effect relations between the type of the right-of-way and the type of vehicle technology are anything but simple, as the following statements are meant to illustrate. In general, a segregated right-of-way is a condition for higher-quality and higher-capacity mass transport for any vehicle technology. A segregated right-of-way would make a bus-based system reach a level of performance ordinarily associated with rail-based modes. Today's rail-based systems are so expensive that it would not be cost-effective to use them in any mixed-traffic right-of-way. Still, some rail-based modes are used on purpose in mixed-traffic situations, e.g., light-rail technology fits surprisingly well in pedestrian zones, being perceived as aesthetically and environmentally benign. The use of rail-based vehicle technology such as a metro in a fully-segregated right- of-way maximizes the passenger throughput and quality of service potential of that type of right-of-way. Metros, of course, are indicated primarily for very high demand levels. If. however, the only space available to permit segregation of a mass transport line from other traffic is found underground, then the need to minimize construction and ventilation costs of tunnels would indicate electrically-propelled, rail-guided vehicles even if a bus-based system is functionally feasible. 37 and less-than-intimate contact of Polish operators with developments in Western Europe in this field have left domestic companies with a relative dearth of sophisticated but low-cost aids to operations, maintenance, and management. These include, for example, devices for automatic vehicle monitoring to permit on-line operations management and priority of passage at signals, software for scheduling, ticket sale and validation hardware, management information systems, and passenger information systems. 116. On the road side, particularly in agglomerations, provision of limited-access roads and missing links and bridges on the arterial network is clearly indicated. Efficient road transport is undoubtedly a vital ingredient in speeding up economic and spatial growth of cities, not least because most mass transport traffic takes place on urban streets and roads. Thus many potential projects combine roads and mass transport interests. 117. Several obstacles need to be overcome, however, before an improved urban transport project pipeline can start to function. The shortage of funds is universally agreed to be the most critical weakness (see separate section below), but it is far from being the only serious one. First, old strategic investment plans have to be re-done. The imperative to use newer analytical approaches and software is clear, but what is even more important is to place the transport planning into a realistic financial context and to select priorities. The above list of shortcomings of past studies constitutes a good reminder of what aspects must be covered in future studies. Second, the methods used to prepare individual projects have to be improved, particularly demand measurement and forecasting, generation of alternatives, and project evaluation. Third, the status of preparation of currently proposed projects is spotty, with most projects not ready for tendering. This appears to be a consequence of an anything-goes attitude developed in the 1980s, or reflects the primacy of financial means over planning priorities. 118. Several technical aspects of project preparation deserve a special mention. Though the socialist system had a strong devotion to collecting voluminous statistics on all topics, the currently available street traffic and particularly mass transport passenger counts do not appear to be as systematic as they need to be. Quality of traffic data is essential for good transport planning. In transport demand modelling, two useful innovations need to be imported into Poland. One is the capability to forecast consequences of not expanding road or mass transport capacity, including modal shifts and trip re-distribution; if this is not done, forecast impacts tend to be exaggerated. The other innovation seeks to correct for the absence of economic pricing of road use, which results in higher peak use of specific urban roads; this also leads to overestimation of future traffic volumes and more pressures to invest. The approach would be to insert "dummy" road use prices into the network model and trace the consequences on route choice and modal split. Institutional and Legal Developments 119. Actions in the institutional domain come in four different packages. First, it is necessary to re-allocate jurisdiction for different elements of the urban transport system between various levels of government, so as to improve the processes of short-run system management, planning, and resource allocation. Second, for a given jurisdiction, institutional arrangements must be found, suitable for Polish circumstances, for discharging management and planning functions in urban transport. Third, staff-level competencies need to be built up to a level suitable for many complicated sectoral tasks. Fourth, the planning system itself needs rebuilding. 38 120. Regarding jurisdiction, there are three problems to resolve: (i) responsibility for urban roads is fragmented; city authorities have it for local roads, voivodships for major urban roads and the GDDP for national roads passing through urban areas; (ii) the PKP owns the tracks and the rolling stock, operates suburban/regional services, and makes all the policy decisions; the cities served have no say in this matter; and (iii) in agglomerations, especially in the GOP, the preceding two cases are further complicated by having to deal with multiple city authorities; the ownership of the multi- city tramway company PKT Katowice, still in the voivod's hands, is also at stake. 121. The underlying dilemma is not ownership of public utilities per se, but the distribution of costs and benefits, or responsibilities and powers between various governmental units. To resolve the issue, the principle already used to allocate to the municipalities all activities whose costs and benefits were confined to local areas, should be applied here also. 122. In the case of urban roads, this principle would call for municipalities to get "ownership" over voivodship roads. National motorways passing through cities should stay under state jurisdiction, but a principle of road planning unity should be agreed upon, making possible a unified system of network planning for both capital and current expenditures. The GDDP also agree that urban roads should be under one authority [Suwara, 1993]. This principle would hold for road networks in agglomerations as well, but it may be most practicable to turn voivodship road departments into agglomeration road authorities, possibly fusing them with mass transport authorities into one regional organization. In line with this report's strong support of road use pricing in the medium term, it is reiterated that cities should take over voivodship roads in their territory. It would be difficult, though not impossible, to implement city-specific pricing with institutional responsibilities as they are now. Political accountability of voivodships is to the state, not cities; the mere possibility of revenue capture by the state in this context would be enough for citizens to turn the road pricing proposal down [Olson, 1994]. 123. The complicating factor in this recommendation would be the transfer of road budgets for urban roads from voivodships to municipalities. Changing jurisdiction would have little meaning without the transfer of financial resources needed for operations, maintenance, rehabilitation, and expansion of the road network. The difficulty is that historic road budgets have varied widely from one year to another, as a function of trends in public expenditures. This is of course related to the fuel tax not being designed as a road-use tax, and a consequent absence of a stable mechanism to allocate revenue between functional and geographic road classes. The problem of fuel tax and revenue allocation for road purposes is outside the scope of this study, but is clearly indicated as a matter of great importance for the sector. It may be that the entire subject of pricing road use in specific cities cannot be approached separately from a reconsideration of fuel taxation to be done at the national level. Under the prevailing circumstances, however, budget transfers would have to be agreed on a periodic basis, as it is now being experimented with in Krakow and Wroclaw. 124. As for the PKP's suburban lines, the fact that they are regional rather than based in a single municipality should not be used to retain them in state hands, i.e., to have the state continue to subsidize a clearly non-national utility. The PKP should divest these lines, making them into 39 corporate-form companies, with shares and board membership initially distributed among constituent cities or municipalities according to some agreed criterion, for example the length of the network on the individual city's territory. Later on, private shareholders can be added. This is approximately what is now being proposed for the WKD line in Warsaw. Track-related activities may or may not remain in the same company as transport operations. The former may be sold or leased to private entrepreneurs straight away, if such an opportunity arises. Service agreements would be signed between the owners and operating/track companies, just as it is now done with city-based mass transport companies. The PKP is itself planning major restructuring and network rationalization and will be keen to divest suburban or regional lines, including available but hitherto unused track in various cities. For suburban or regional lines that use the mainline PKP tracks, the route infrastructure should remain in the PKP ownership, but rolling stock and services should be divested into city or regional ownership, again separating ownership and regulation from the operating function. The use of tracks can be covered through a service contract between the PKP and the operating company. 125. The approach recommended here for the PKP's suburban lines is also applicable to the GOP- wide tramway company, PKT Katowice, now owned by the Katowice voivodship. PKT Katowice should become a corporate-form company, jointly owned by the cities served. Distributing its ownership among cities, however, should not be taken to mean that it should be cannibalized, as the tendency may be at present. This extensive system, whose operational unity is vital to the agglomeration, is very much in need of rehabilitation, in terms of infrastructure and vehicles as well as staff and organization. 126. Regarding city-level transport institutions, our analyses indicate that the moves already taken in several cities to set up specialized urban transport authorities are in the right direction, with adjustments made as dictated by experience. As noted above, in the section on the role of local governments in mass transport, the most important and recommended innovation has been to separate mass transport regulating functions from the management of mass transport operations, set the former as a mass transport agency and move the latter outside the local government structure. This is likely to sharpen focus on what is of public interest in this sector and how to get it served at the lowest possible cost. The further evolutionary step to create multi-modal transport agencies at the municipal and regional level is also recommended for all large cities. In smaller ones, it would suffice to have modal authorities set up simply as departments of municipal governments. 127. Regarding staff, the remarks already made above on the quality of investment plans, and the need for new concepts in policy concerning road and mass transport economics and finance, are indicative of the importance of training and re-training. In parallel with starting to develop a new planning system, steps should be taken to strengthen the competence of professional and technical staff in several disciplines, e.g., transport engineering and planning, regulatory transport economics and project economics, enterprise management and finance, and public administration. This would involve the transfer of the planning know-how through conventional academic and technical school programs and continuing education, in Poland and abroad. Many opportunities for financial assistance in this area, whether through grants or loans, are available through bi-lateral and multi- lateral institutions. 128. Finally, actions regarding the transport planning system are also warranted. By the term "planning system" is meant an agreed, indeed mandated by law, sequence of studies (or parallel study streams), review procedures and decision making, including public participation in both. A 40 typical sequence of studies would start with a diagnostic of how the present transport system functions and where the problems and issues are, move to forecasting trends, thence to generating and evaluating policy and project options, and culminate in ready-for-tendering implementation documents for new projects and operating improvements. Taking urban road sub-sector as an example, the sequence would include a strategic road network study as a first step, to be followed by feasibility studies in specific road corridors, inclusive of preliminary engineering and costing of options, leading to a study for detailed engineering and costing of selected option(s), and the production of tender documents. Weaknesses of existing urban transport investment plans, identified in the preceding section, are not only on the critical path to successful project implementation, but they also indicate that the old urban transport planning system has broken down. A new one has not been developed and the relevant technical skills are in short supply. The work on the new system should cover all stages of the planning and project cycle. It should define the relevant study types, data collection requirements and modelling levels; and draft model terms of reference for these studies. Though in this matter also there should be enough flexibility for individual cities to develop their own approaches, a task to develop a mandatory planning system cannot be undertaken separately by each city. A national effort is required, whereby a special-purpose commission or a task force would be assembled, with a membership combining city and state officials, academics,and practicing professionals. The commission should study recent international experience and draft a provisional transport planning code to be tested in several cities in Poland before being submitted for legislative action. It is particularly recommended that the task force should make a detailed study of the new transport planning system for metropolitan planning organizations, introduced in the US with the passage of the 1991 Intermodal Surface Transportation Efficiency Act [Transportation Research Board, 1994; U.S. Department of Transport, 1992; U. S. Department of Transport, 1993]. Urban Transport Finance 129. City governments are under considerable pressure from both road and mass transport sub- sectors to provide more funds for their current and capital (project) expenditures; the former is a reaction to growing traffic, while the latter needs to slow down or eliminate the loss of patronage. The state is under similar pressure from the roads establishment and automotive interests, and somewhat lesser pressure from mass transport lobbies. At present, Polish city governments finance their road expenditures and the cost recovery gap of mass transport companies from their own budgets. As for the state, their direct investment is limited to voivodship and national roads on city territory. Their involvement in financing mass transport is minor. The state has retained ownership of some larger networks, i.e., the PKP or PKT Katowice, but this is an interim arrangement that should be changed. Beyond these, there have been only two exceptional state grants for urban mass transport (the Warsaw Metro and Poznan Rapid Tramway), both involving projects that are carry- overs from the past; this practice is not expected to be replicated elsewhere. 130. Where could new money come from? From experience in other countries, the catalogue of possible funding sources in urban transport, in addition to internally generated cash and city budgets, includes the following: a share of national fuel taxes, locally-introduced charges on road use or on motor vehicles; charges against secondary beneficiaries (e.g., real estate owners and developers), special-purpose taxes, state operating or investment subsidies, direct state investments, city-issued bonds, loans from commercial banks, domestic or foreign, loans from development banks, manufacturers' credits, and direct private investment in mass transport and roads, e.g., private mass transport companies, or build-operate-transfer arrangements for urban roads. 41 131. It is worth collecting and repeating here all recommendations concerning finance made under separate headings above. These are that: (i) a city-based system of charging for the use of urban roads be developed, separate from and in addition to fuel taxes; (ii) the social safety net should take over fare subsidies for the eligible low-income travelers, meaning that at least a part of that load will be shared by other levels of government and that a more commercial fare policy be adopted; (iii) diverse productivity improvements for public-owned companies that, together with the fare reform will permit companies to cover their direct operating costs in the short term, with more ambitious objectives for recovery of investment costs introduced depending on the progress in road use pricing; and (iv) the capital-generating potential of the private sector be tapped to the maximum level possible. All of the above involve sector-internal finance. In the following paragraphs, the focus will shift to some external sources of funds. 132. Matters related to the size of city governments' ordinary budgets and/or the share of locally generated revenues versus transfers from the state are beyond the scope of this study, as is the question of allocation of fuel tax revenues to road budgets. A new approach to real estate taxation is being developed in Poland, likely to introduce variable rates and value assessments. This is likely to be the linchpin of the future local government revenue, but no rapid revenue increases can be expected from this side. 133. The option of state financing for urban mass transport is rejected here on principle, being counter to the essence of the Polish effort to decentralize decisionmaking for local services. This would leave two main options for sources of funds: special-purpose mass transport taxes and long- term borrowing. 134. The term "special-purpose tax" as used here does not refer to one-time local taxes to finance specific investment projects (for example, the sales tax approved by a referendum of local voters in the 1960s to pay for the construction of San Francisco Bay Area Rapid Transit System). It refers to a tax akin to a fuel tax, levied on some stable base not necessarily correlated with urban transport use, costs and benefits, but whose proceeds would be earmarked for mass transport. Such a proposal has been made by the CUT. It calls for a special-purpose, nationally introduced, mass transport tax, levied against a local wage bill. Wages were selected as a base for this tax because they are a relatively stable and predictable source of funds, and collection is easy. This approach emulates that used in France since 1973, where it has been credited with sparking a renaissance of urban mass transport. 135. Transplanting this particular French approach in Poland is not recommended. First, it contradicts the principle that users and secondary beneficiaries should pay for the provision of services. Second, if Polish cities were to adopt special-purpose taxes for each municipal utility, they would be returning to the system of low wages and near-free services that the country has given up since 1990. More generally, the tradition of turnover-based taxes, the basis of the state revenue in the past, has been abandoned and it should not return through a "small door" on any grounds. Third, concerning the tax base of this particular proposal, taxing employment would be particularly damaging at this moment in Poland, given the rampant unemployment and the size of the grey economy. Small enterprises would avoid paying this tax and large ones, in many Polish cities, are, even now, not paying their utility bills. Fourth, as noted in the above section on mass transport organization, it is difficult to import one aspect of the French experience unless other aspects and the economic and political environment are similar. The salary-based tax, versement transport, has contributed to an impressive comeback of mass transport in French cities, under quite different 42 conditions (a much wealthier economy than in Poland) and for different purposes (strictly modal split considerations). Also, it may have resulted in an over-supply of mass transport services in some French cities, something that Poland simply cannot afford at this time. 136. One possible option is for an existing tax to be used for mass transport purposes. If, for example, the system of fuel taxation were to be re-defined by a national law so that one tax component refers more explicitly to road use, and a mechanism were to be adopted to allocate the proceeds geographically, there are precedents to allow the use of such funds for local mass transport in addition to roads (in the United States, for example). We leave this possibility open, the resolution depending on the state-level debate concerning fuel taxation and roads, which has a long history and where diverse views are not likely to converge in the near future. 137. Long-term borrowing by cities is a hitherto under-explored option as far as urban transport is concerned, or urban infrastructure in general. Neither cities nor their mass transport companies have any but negligible debts. Moreover, all major cities have good and improving revenue generation, strong economic bases and not inconsiderable properties, mainly land and housing. Cities are aware of this and expect much (perhaps too much) from being able to borrow. (There is a tendency among both city officials and their transport operators to see long-term loans as grants, rather than as a way of transforming large, bunched capital expenditures into a long stream of smaller payments, at a cost. Also, it has not been fully understood that borrowing cannot be done at 100 percent, i.e., an investor's equity will always be required.) On balance, we see long-term borrowing as holding much promise in the Polish urban transport context, as a complement of the above recommended approach to improve internal revenue generation; the latter will be needed to provide the equity investment and repayments. 138. Two obstacles stand in the way of long-term borrowing. The first is creditworthiness. The cities may have good economic potential but they face problems typical of new entrants to borrowing markets: they lack credit history and instrumental knowledge about getting loans. The latter includes the mechanics of turning their properties into collateral, cleaning up their accounts to demonstrate financial capacity to repay loans, as well as the procedures to prepare projects at technical, economic and financial standards associated with commercial (or development) banking. It will take time to learn the necessary skills. 139. The second obstacle to long-term borrowing is lending capacity on the supply side. For various reasons, the young banking system in Poland is at present not satisfying demands for long- term loans, neither from private nor public entrepreneurs, much less from clients such as city governments or public sector mass transport companies. Until the domestic lending capacity has been built, foreign borrowing will be the likeliest source of funds. Some cities are already moving in this direction; Wroclaw, for example, reports some loans taken directly from foreign commercial banks, but these are small-scale. Other cities are looking for partners for funding very large transport facilities, e.g., urban expressways, through build-operate-transfer arrangements, but instances of this are and will remain rare. Also, they will typically be arranged for important national, not city, roads. Long-term bonds are also a possible option: it has not passed unnoticed in Poland that Prague recently became the first East European capital to float a US$250 millon bond issue, intended for the rehabilitation of its metro system, and that Budapest is exploring the same route. Again, only the best-off cities will be able to use this option to get financing. Manufacturers' credits are a frequently used source of foreign exchange, often through bilateral arrangements. 43 These credits may by-pass the problem of creditworthiness, but they are not long-term, and their scope in urban transport is typically limited to rolling stock purchases. 140. For most cities and projects, for the time being, foreign banks represent the main potential source of credit. Realistically, multilateral development institutions, whose raison d'etre includes making loans whose risks make them unsuitable for commercial banks, appear to be the most likely foreign partners, at least until a sufficient credit record has been built. At present, however, Polish cities cannot get such loans directly: they need a state guarantee. Warsaw has recently received such a guarantee for an externally funded mass transport project. This establishes a precedent that other cities may try to emulate. It is, however, only feasible for a few of the main urban areas and for the largest projects, not least because of the high administrative cost of loans made directly between individual cities and international development banks. An alternative that would be open to the bulk of cities, now being considered by the Polish government, is to create within the government a temporary institutional structure to act as intermediary between client cities and external sources of finance. This would involve setting up a municipal development agency to help cities prepare investment projects and meet financial requirements. Loan appraisal and the provision of funds would be the responsibility of a municipal credit program, set up within the Ministry of Finance, and funded through a combination of intergovernmental transfers and external loans. The scope of work of this tandem arrangement would not be limited to project financing, but would also include guaranteeing municipal loans from commercial sources and/or underwriting their bond issues. 141. In conclusion, this study recommends against special tax-basedfinancing for urban transport, relying instead on a combination of improved, sector-internal revenue generation and long-term borrowing. In the short term, this is likely to be state-assisted borrowing from development banks, until the creditworthiness of cities and domestic banking capacity have been established. The Role of the State 142. It would appear on the surface of things that, as a consequence of decentralization in Poland, the state has withdrawn from urban mass transport. This sector is now supposed to be a purely municipal matter. Except for a relatively massive capital grant to the Warsaw Metro project and small assistance to Poznan Rapid Tramway project, the state is not providing any assistance to cash- strapped urban mass transport companies and has no intention of doing so. 143. In fact, the state is very much present in mass transport, first by virtue of its jurisdiction over important roads in every city; it pays for all maintenance, improvements and new construction. Second, the state collects the fuel tax, which dwarfs all other use charges in urban transport. The state also holds the key to a possible introduction of city-based road use charges, including the use of the proceeds for mass transport purposes. Third, the state still controls municipal finance by deciding on the size of its block transfers of shared taxes and approving the rates of various local taxes. Fourth, as noted in the preceding section, until cities become credit-worthy, the state has control over their borrowing by accepting or refusing to issue sovereign guarantees for city loans. Taking all this into account, the fact that the state has dropped its formal sponsorship of urban mass transport is misleading and should be corrected. An urban transport department should be re- established in the Ministry of Transport and Maritime Economy without delay, to become the key locus of state activity in the sector. 44 144. In a recent document, the CUT has made a case for this formal re-involvement to take place and outlined subjects that the new department should include in its scope of work. These include national urban transport policy, financial relations in urban transport, mass transport regulation, functional, technical and environmental standards for mass transport vehicles, industrial and imports policy for vehicle technology, adaptation of Polish standards and practices to those of the European Union, and legislative activities concerning all of the preceding subjects. This is a valid proposal. The scope of activities, however, should be made much wider to include other duties typical to ministries of transport, such as the design of the statistical system, data collection and analysis of trends for mass transport operators, traffic and vehicles, oversight of the relevant professional and academic training institutions, the administration of an urban transport research and development program, follow-up of technical developments elsewhere, and international relations with other governments, multi-lateral and bi-lateral aid agencies, professional and academic organizations. 145. Other, vitally important roles of the state in urban transport have already been discussed in preceding sections, notably regarding urban transport financing and the development of a new urban transport planning system for Poland (para. 128). These are not functions typically included in the statement of mission for a ministry of transport. Short of having a Ministry of Urban Affairs in Poland, a state-level responsibility and initiative for work on financial policy and planning systems for local governments may have to be entrusted to one or several bodies whose current activities touch or overlap these subjects. For the time being, this points to the Joint Commission of State and Local Governments and the Central Planning Office. 6. A RECOMMENDED STRATEGY 146. In each of the action domains discussed in the preceding chapter, there was a range of potential options open to authorities. Some are already being pursued in Poland, while others are still outside professional and political debates. Alternative strategies can be formulated by mixing and matching different options. Actions by city governments will be required in most domains and action by the state will be required in some. There are therefore city-specific strategies and a national strategy. Selection of a strategy to follow in any given city (or country-wide) must be mindful of the requirement that actions in different domains should be coherent and most likely to lead to a desirable future in that site-specific (or the national) context. Future objectives have common categories from one city to another; only the relative weights would be different. Major objectives for city governments will typically include economic growth, efficiency in the use of available financial resources, social protection (basic needs, including access to jobs and other activities, of people who have been disadvantaged by economic reforms or otherwise), and protection of natural resources. An additional objective, very important for this moment in Polish history, has to do with democratic processes, i.e., public participation in framing the action agendas and decisionmaking. The strategic constraints refer to material, financial and human resources available to cities. 147. The strategy outlined below chooses from the actions recommended in the preceding section those judged the most important and arranges them along a time axis depending on their urgency, feasibility and links. It is divided into short-, medium-, and long-term packages. Each package has its short-run measures (e.g., prices or price substitutes), long-run measures (expansion investments), the accompanying financial arrangements, and institutional milestones. Given the differences in the economic or physical situation between cities in Poland, and in what individual cities have already done about improving their urban transport since the economic transition process started, the division 45 into time-defined packages should be treated as relative and flexible. Several cities could reach the medium-term part of the strategy, e.g., some form of road pricing, within a period as short as that needed to commission and carry out preparatory studies. 148. There are four key aspects of the strategy: (i) it relies on the evolution toward market-supplied services by a mixed-ownership mass transport industry; (ii) it treats the urban road network as a public utility and focuses on its cost recovery through pricing; (iii) it links pricing policies for mass transport and private cars, following the well-established economic concept of the second best, aiming to reduce and even eliminate subsidies for both modes; and (iv) it relies on internally generated revenue leveraged by long-term borrowing to finance sectoral investments. It is, therefore, a counter-point to a strategy where mass transport is a state-owned monopoly; the use of urban roads is subsidized as is mass transport; infrastructure investment is the instrument of preference as opposed to pricing; and sectoral investments and operating subsidies are financed from the tax- generated budget. 149. In the near term, it is accepted that the modal shift away from mass transport to private cars will continue, seeking a new equilibrium. This process is probably still in a socially beneficial stage, satisfying long-repressed demands for greater personal mobility. It should be accommodated to a degree, but also it must be slowed down by a combination of policies and investment actions meant to keep mass transport as a real and attractive alternative to private cars. 150. On the mass transport side, the policy of subsidized fares would be continued, but it would be reformed. The main thrust of the reforms would be to permit the removal of affordability issues away from the relation between city governments and mass transport operators and into the social safety net, financed directly by the state or municipalities. This would provide more flexibility in designing fares for the rest of passengers. On the supply side, there would be a strong effort towards service network rationalization, a greater production efficiency of public-owned companies, and mandatory tendering for service contracts to increase private participation and competition. It is quite likely that a combined package of fare reform, fraud reduction, production cost imnprovements, and competitive contract awards would suffice to move cost recovery upwards to approach the coverage of direct operating costs of mnass transport, without having to raise fares in real terms. 151. On the road side, acknowledging that cars and other motor vehicles are not paying their way on congested and soon-to-be-congested links, the approach would be to develop city-specific congestion management packages, consisting of parking charges, traffic restraint and mass transport priority measures. These will require supplementary actions to strengthen the enforcement capability of the police, or the creation of specialized traffic enforcement units, separate from the police. The investment element of this package would consist of projects deemed to be of top priority, which would have to be demonstrated through feasibility studies of evident integrity. For both modes, as noted above, the priority lists would include spatially extensive rehabilitation and modernization projects (to diffuse benefits over the population), adding the completion of a few exceptional, expansion-type projects already in advanced stage of construction (e.g., Poznan Tramway) and likely to give high benefits on the marginal investments needed. 152. Institutionally, the cities would continue the developments to separate transport regulatory functions from transport operations, foster the evolution of a multi-operator mass transport market in corporate and private formats, and set up sectoral management and planning agencies. No new 46 sources of financing would be used, short of gradual improvements in exploiting the real estate and other already available municipal tax bases, but a new mode of financing would be adopted-long term borrowing from domestic and foreign sources. Legal actions may be needed to permit this and work should be done towards acquiring legal powers for city governments to charge for the use of road space. Nationally, a conmuission would be set up to develop a new, mandated transport planning process. The same commission could also design education and extension programs for sectoral professionals. The matter of an improved fuel tax and revenue allocation mechanism would be prepared for public discussion by carrying out relevant studies, including the linked topic of jurisdiction over voivodship roads on city territory. The state would accept the responsibility of becoming formally re-involved as the sponsor of urban mass transport. The only aspect of the short- term program that would require a politically difficult decision would be the acquiescence of the state to fund fare discounts for eligible individuals within the social safety net. 153. Given the above observation that cities' investment projects are not at present prepared and justified at the level of quality and depth considered as standard by prime sources of long-term loans, e.g., the World Bank and other multi-lateral financial institutions, it would be necessary to mount two separate efforts. One track would consist of general and strategic studies that would provide data and a framework for improved project preparation efforts. These would include wide-scope demand surveys and land use and transport models, resulting in realistic long-term scenarios within which individual projects can be evaluated. They would, however, take years to complete, given the need to start with pilot studies to permit the transfer of the necessary know-how. Thus the second track would consist of studies to prepare projects for short-term implementation. These would include: (i) short-term transport policy and traffic management studies; (ii) short-to-medium term studies of mass transport company investment and management; (iii) multi-modal corridor studies and/or more detailed engineering-economic feasibility studies, with preliminary engineering options; and (iv) project execution studies, including detailed engineering designs and bid documents. These will be difficult to do, both because the data and future scenarios are lacking and domestic consulting firms are only starting to develop the requisite skills. Rather than compromise quality, it may be necessary for these first-batch policy and feasibility studies to be carried out by joint ventures built around foreign consultants experienced in working under these difficult conditions. 154. In the medium term, the cities will have acquired jurisdiction over all primary roads other than national ones, and the legal power to charge for road use. The menu of short-run measures would then be enriched by the simplest time- and place-based charging instruments, e.g., area licenses, cordon crossing charges and emission-related annual registration charges. Only if these are implemented should mass transport fares be increased so that the revenue would exceed direct operating costs and inch toward covering the rolling stock depreciation and financial costs. Together with the revenue from parking charges, an evolved ability to use borrowing and more sophisticated financing methods, and generally improved tapping of conventional municipal tax bases, will permit the investment part of the medium term package to include expansion projects for both urban roads and mass transport. Long-term lending sources will expand to include domestic credit institutions, currently still financially weak or not specialized for municipal borrowing. By this time, a new mandated transport planning system will be in place, as will a new generation of sectoral professionals. 155. In the longer term, conditions will be met for at least some cities to apply a consistent, public-utility approach to both mass transport and urban roads. In practical terms, this would consist of implementing a city-specific, long-run marginal cost pricing regime for both of these modes. The 47 progress in vehicle sensing and smart-card technologies, and experience already gained in other cities will make this much easier to adopt and implement than it would be now. Costs would be defined as social costs, i.e., costs of supplying the "road service" (including expansion) and external effects, such as congestion and pollution. Marginal costs would be variable by both the time period and the location of traffic service. Revenues would be used to improve the quality of service and expand the infrastructure, in accordance with efficient use patterns. Likewise, mass transport would no longer need to be subsidized, and would be provided and expanded along commercial lines of thinking. Modal splits will drift towards a market-based equilibrium, at least as far as the transport market is concerned. 156. If the recommended strategy is not adopted, traffic congestion will be the main regulator of road use, in and out of cities. The fuel tax system will remain as it is now, though rates may increase, and more of the yield may be allocated to road improvements than is done at present. As now, there would not be any explicit connection between fuel taxes, social costs of road travel, and road expenditures, the state reserving the right to dispose of fuel tax yields just as it does with other taxes. Action by cities vis-A-vis automobiles would be mainly in the form of damage control, much as it is now done in a few large cities. Central areas would have to be protected to the degree possible against congestion and its accompanying effects through a program of physical prohibitions or limitations to access, plus parking charges. Local capacity to fund the sector from internally- generated revenue will remain low since traffic restraint methods will earn no funds. Regarding mass transport companies, cities would pursue a policy of low recovery, with revenues probably not reaching the level of direct operating costs. As would also be the case with municipal roads, the capital for mass transport would continue to be very scarce. Whenever available, the capital would be used for vehicle replacement, and track and power supply maintenance, not expansion. At the limit, network expansion could be financed within new urban development schemes; some capital improvements could also be made to increase the extent of exclusive-lane, on-street facilities for both buses and tramways, to separate these from the likely explosion of road traffic congestion. Municipal budgets would provide modest sums for maintenance and rehabilitation of secondary roads, with a minimum amount available for new construction. 157. The best that one could hope for in this scenario is to have succeeded with area-protection and mass transport priority measures, getting a modest version of the Zurich case but at a higher modal share for mass transport (50 to 60 percent). Judging from what is happening in some Polish cities (Warsaw), the success of protective measures is far from assured. This could lead to a competition for funds between roads and mass transport, basically seeking funds from two different purse-holders. In many countries, the automobile lobby has been much more successful than groups supporting the mass transport; in such cases, cities end up with many new roads, but increasingly poorer mass transport. 158. Yet another possibility cannot be excluded, in which the current capital starvation continues for both road and mass transport modes, with traffic still growing, fueled by earnings from the grey economy. The result would be to have congested urban roads and inadequate mass transport as well. This, however, does not have to happen. 7. CITY-BASED ACTION PROGRAM 159. In recognition of the existing division of labor in local governments, this chapter takes the recommendations made in the two preceding chapters and arranges them according to theme or 48 function into several generic action programs for cities. This should help bring out the likely institutional responsibilities for each group of recommendations. As noted before, the priority assigned to individual actions and their sequencing may vary from city to city, not least because most large cities have already undertaken at least some of the recommended activities. City Actions Regarding Mass Transport Policies 160. These are locally oriented actions, dealing with topics that are entirely within the jurisdiction of the city government. The cities should: (i) adopt corporate legal/organizational status for their mass transport company (or companies), maximizing the managerial freedom in operations, while retaining policy and regulatory activities for the local government; (ii) set up study groups to look into cost-saving opportunities internal to mass transport operators, i.e., rationalization of route/line networks, service standards, fleet size/composition and staff size and structure; (iii) introduce productivity-oriented conditions in all service agreements signed with operators; (v) introduce obligatory bidding for service contracts in mass transport, to exert market- like pressure for higher cost-efficiency; (vi) seek ways to expand private participation for mass transport, to release own equity capital for other uses; (iv) encourage operators to diversify into the higher-quality, higher-fare domain of the service spectrum; (vii) introduce low-income support programs for mass transport fares separate from those for ordinary fares (see also para. 163 (i)); (viii) formalize annual fare and operator cost reviews, to ensure gradual adjustments due to inflation or cost reduction (or both); (ix) adopt an urgent, special-focus program to maximize the potential of reserved-way for mass transport vehicles, especially at intersections, and to extend the program to include bus vehicles; and (x) identify immediate-priority investment projects, such as track and power supply rehabilitation, extension of exclusive-way corridors, vehicle replacement, and maintenance equipment. City Actions Regarding Roads and Traffic 161. The cities should take actions meant to achieve the best use of streets and roads available now: 49 (i) develop a congestion management program featuring parking charges and physical traffic restraint measures; (ii) look into possibilities for expanding street space reserved for mass transport vehicles; (iii) strengthen traffic law enforcement (as a supporting measure for the preceding programs); (iv) introduce a special-focus program for traffic control systems, in support of the congestion management program and as concerns the priority treatment of mass transport vehicles at intersections; (v) identify immediate-priority investment projects, such as traffic control systems, roads in critical need of rehabilitation, and missing road links, including bridges; refer also to para. 162 (iii); and (vi) initiate city-based studies concerning a possible introduction of road use pricing in the medium-to-long term, in parallel or as a follow-up of similar national studies. City Actions Regarding Future Projects and Policies 162. In time, a mandatory urban transport planning system will emerge following a national effort. In the short term, each city should: (i) set up an interim transport planning system, including a formal project processing framework, allocation of institutional roles, public participation, requisite planning and evaluation studies, and a link to the municipal budgeting process; (ii) agree with voivodships/GDDP to integrate urban/agglomeration transport planning processes, without regard for jurisdictional boundaries, particularly as concerns economic evaluation for road projects on their territory; (iii) proceed immediately, in co-operation with the relevant state agencies, to initiate and carry out feasibility and engineering studies for priority mass transport and roads/traffic projects, to make them ready for consideration by the World Bank and other funding agencies, at technical standards established by these agencies; it can be taken for granted that the existing studies will have to be re-done; and (iv) in parallel, undertake general land use/urban transport studies, inclusive of wide-scope demand surveys, to provide a common basis for feasibility and engineering studies for future projects. City Actions Directed at Matters Under State Jurisdiction 163. Through their regular contacts with the Sejm, the Council of Ministers, Ministry of Finance and the MTME, the cities should lobby for: 50 (i) the transfer of the financial load for "social" fares from mass transport operators into the social assistance program funded by the state, or, failing that, city governments; (ii) the change of legal form and ownership of the suburban railway services of the PKP and the regional tramway line, PKT Katowice, currently state enterprises, to become corporate entities owned by client municipalities and professionally managed; (iii) the state to set up a department for urban mass transport in the MTME, to be a focus of national-level activities concerning urban transport policies, standards, planning systems and procedures, analytic tools, trends monitoring, training and international activities, research and development; (iv) the state, acting through the GDDP and the voivodship road departments, to initiate urban/regional strategic road studies, followed by feasibility studies of individual road sub-projects to become parts of city-based investment projects (action parallel with that recommended in para. 162 (iii) and 162 (iv)); (v) MTME to initiate national-scope studies to develop data, analytical, legal, and technological base needed to permit analyzing urban road use charges as realistic medium- and long-term options in site-specific contexts; and (vi) within or separately from the preceding studies, explore methods, costs and benefits for motor vehicle-oriented environmental protection programs on urban transport networks, including enforcement of emission standards, age-proportional registration fees, and access prohibition to worst polluters. 8. LOOKING FOR ALLIES AND INSTRUMENTS 164. It was concluded above that international development banks, such as the World Bank, have an important role to play in financing urban transport and other municipal utilities in Poland until the country's banking system develops the necessary capacity and/or cities become credit-worthy to borrow commercially. Development loans have an obvious importance as sources of both foreign and domestic currency to leverage local equity funds available to invest in works, equipment and studies under a given project. Development projects have also another crucial dimension, which complements and at best may transcend their financial importance: they have a double focus, linking physical investments with policy/institutional reforms to be undertaken by the client. A loan thus becomes also an instrument of leverage for reforms that would otherwise take a longer time to be accepted by the borrower's institutional and political decision makers. Traditionally, the World Bank and other sources of development loans have stressed policies and projects based on sound economics. This remains the dominant approach, but it has an increasingly strong environmental orientation. In the sense that urban transport patterns, particularly the auto/mass transport modal split, will continue to have major impacts on the environment in cities, an urban transport development project in Poland could be a vehicle to help develop and implement a new sectoral strategy which is both economically sound and environmentally oriented. 165. Looking at the backlog of urban transport investment projects in major Polish cities, as cited earlier in this report, there are several distinct categories of investments suitable for development 51 lending. First, there are fleet replacement and maintenance equipment investments in just about every city. Second, there are mass transport investments to rehabilitate, modernize or expand exclusive-way systems; these are typically tramway systems, e.g., in Katowice, Poznan, Krakow, and Wroclaw, but possibly also projects modifying or extending tramway platforms to accommodate buses and/or projects to upgrade the PKP network for suburban/regional travel. Third, there are arterial street and area improvement projects, typically including traffic signal systems and other traffic engineering measures. Fourth, there are major road projects, for example urban expressways, river bridges, or urban segments of national roads. The first three groups refer to projects of mass transport companies and/or municipal road/traffic departments; they range from quite small- to medium-size projects, with very few projects on the large side. The fourth group are large projects, almost always under jurisdiction of the GDDP. Roads currently under voivodship departments could fall into either arterial or expressway category. Any given project could be city-specific, multi-city, or have a national scope. 166. Matching the above investment categories with policy recommendations made in this study, cross-referenced to the scope of decisionmaking power of the relevant municipal/state authorities, a menu of three promising development project designs emerges. The first would be a city-based project, with the municipality as a borrower. Physical components of such a project would include investments entirely under jurisdiction of municipal authorities as it is currently defined: i.e., local roads and traffic control systems, rolling stock and maintenance equipment of mass transport companies, as well as rehabilitation/expansion of their exclusive-way infrastructure. Likewise, the policy content of such a project would be limited to those aspects over that municipal governments have full decisionmaking power. A city would become eligible to borrow: (i) if it met standard banking criteria, i.e., sufficient capacity to provide equity investment and repay the loan; (ii) by carrying out requisite planning and preparation studies; and (iii) by agreeing to implement mass transport and traffic management policies and programs in line with the strategy recommended herein. This could be a single-city project covering a combination of small and large investments, permitting in-depth involvement of the lender to demonstrate model practices. Or, it could be a multi-city, retail-type lending operation, maximizing the diffusion of loan funds. 167. The second project-type would involve either voivodship roads, or national roads within urban areas. Again such a project could be based in a single city, in several cities, or have a national scope. The state would be the borrower, with voivodships and/or the GDDP acting as executing agencies, but separate project agreements would be signed with participating cities, which would benefit from improvements to major roads on their territory. The cities would have to meet eligibility conditions listed under (ii) and (iii) in the preceding paragraph. The advantages of this project design would be to have a single borrower, whose jurisdiction extends over the three strategic policy recommendations made above: the transfer of subsidies for low-income mass transport travelers to the social safety net, re-involvement of the state in urban mass transport, and legislative developments to permit city-specific road use pricing. 168. The city-based project type has an obstacle in that municipalities have not yet reached credit- worthiness. The state-based project type has the disadvantage of leaving urban mass transport projects without funding. It may, therefore, make sense to have a third, integrated project design, adopting both levels of government as borrowers: the state may be more interested in providing a loan guarantee for city-based mass transport and traffic projects if the loan would also include funds for major urban roads in that city. 52 ANNEX 1 CITY PROFILES TABLE OF CONTENTS Profies Introduction ............................ 55 Profile A The Tri-City Agglomeration ............................ 57 Profile B Agglomeration of Upper Silesia (GOP) ......................... 59 Profile C Krakow ............................ 61 Profile D Lodz ............................ 63 Profile E Poznan ............................ 65 Profile F Wroclaw ............................ 67 53 ANNEX 1 CITY PROFILES INRODUCTION TO URBAN TRANSPORT PROFILES OF SELECTED CITIES Introduction and Context 169. The following sequence of brief city urban transport profiles is included as a supplement to the main report of Poland Urban Transport Review. The Review is based on data from four Polish cities and two conurbations: Lodz, Krakow, Wroclaw, Poznan, the GOP conurbation (around Katowice) and the Tri-City conurbation of Gdansk, Gdynia and Sopot (Map IBRD 25634). Warsaw data are used in the study, but no new field work was done in Warsaw since the 1992 Bank study [Warsaw Urban Transport Review]. The main report discusses the overall urban transport characteristics, problems and issues in Poland, whereas more detailed information is in Annex 2. Each of the following profiles summarizes city urban transport conditions, urban transport policy and plans, issues, priority projects as perceived by the city authorities. Each profile concludes with comments made by the study team. Profiles are included for all the six urban areas studied, but not for Warsaw which is amply covered in the 1992 study. To reduce repetition, a summary of common advantages and disadvantages is provided in this introductory profile. Limitations 170. It is necessary to clarify the priority projects cited herein, the major among which are shown on the maps attached to the report. These are based on statements made by city officials and transport planners in the interviews held in 1993. Since the printing of this report will occur more than a year after the field interviews were conducted, the municipal governments of the six cities were asked in March 1995 to indicate whether their investment priorities have changed. Gdansk/Gdynia, Krakow, and Wroclaw reported such changes as of March 1995, and these are recorded in the text. There is no guarantee that other cities have not introduced new proposals, or even that the most recent ones will not be dropped. All the priorities listed here should therefore be seen as indicative only, and do not imply any commitment by the municipal or voivodship governments. The same holds for the cost estimates cited, which appear to come from studies of variable quality. As noted below, most proposed projects lacked reliable feasibility studies. All costs are in mid-1993 terms, but the level of precision may vary from one estimate to another. They should be taken as order-of-magnitude estimates only. Common Advantages 171. Typical positive aspects of the transport system in Polish cities include the following. (i) Modal share of mass transport has started to decline but is still high in most cities-often 70 percent or more. Positive measures and policies for urban transport development can preserve the advantages that good public transport brings; car ownership and use have risen rapidly in recent years, but the levels reached (169 cars 55 Annex 1 Page 2 of 14 per 1,000 people nationally, and 200 to 300 in major cities) are still far from those that are plaguing West European cities. (ii) Most cities have well-developed tramway systems with some 50 percent to 85 percent of the track segregated from the street traffic. While there are undoubtedly technical, fmancial and ownership issues, the tramway systems are real assets that can be capitalized upon for at-grade, high-quality mass transport. (iii) Most cities have already taken measures to eliminate the worst effects of traffic in their historic and central areas, e.g., by introducing access controls and turning streets/areas to exclusive use by pedestrians. (iv) traffic management is widely applied. (v) Most large cities, recognizing the need for coordinated action are establishing specialized authorities with jurisdiction over all or most urban transport modes. Common Problems 172. Most cities have common problems that affect the development of the urban transport sector. While there are variations as to their degree of severity, the basic general problems faced by all cities include the following (i) Road networks have many missing links, and few limited-access facilities. Inter-city and urban long-distance trips are forced onto ordinary streets, with consequent traffic and environmental problems. (ii) Cities appear to have reduced road maintenance levels under the minimum necessary. (iii) Mass transport fleets and facilities are aged, technologically obsolete and environmnentally unfriendly; tracks and power lines are in particularly poor condition. (iv) The above indicate that the funds available for development of the sector are low. (v) coherence between investment plans for transport and funds availability is lacking. (vi) Traffic management is, as yet, somewhat unimaginative and lacks innovation; for example, little has been done to protect buses from traffic congestion. (vii) In spite of sharp fare increases, cost recovery by mass transport operators is low, indicating high operational costs. (viii)The institutional planning framework to develop the transport system has not been re- developed after the old system was dropped. (ix) The division of responsibilities and coordination between voivodships and municipalities and between municipalities in conurbations have not been settled. (x) Quantified, particularly economic and financial, evaluations of proposed investments are not routinely done. (xi) Staff possessing economic and financial skills needed for the development, management and operation of the sector are still in short supply. 56 Annex 1 Page 3 of 14 PROFILE A THE TRI-CITY AGGLOMERATION 173. City Context. The linear Tri-City Agglomeration (TCA) of Gdansk, Gdynia, Sopot and some smaller cities is located 350 km north west of Warsaw, along the Gulf of Gdansk on the Baltic Sea. In 1992, populations of the major cities were: Gdansk-462,000, Gdynia-250,000, and others-266,000. The TCA is a major port (including a container terminal) and center of shipbuilding. City governments are quite active in utilities planning, particularly in Gdynia. 174. Urban Transport System. The strategic road network of the agglomeration is sparse (Map IBRD 25635R). Two major intercity roads arrive from Katowice (E75/N1) and Warsaw (E77/N7), and enter downtown Gdansk just south of the historic Gdansk center, where they fuse with the central street system. E77 continues northwards through Sopot and Gdynia, roughly in parallel to the sea coast, as the sole road "backbone" of the agglomeration, while E75 continues to Nowy Port area. Some 6 to 8 km to the west, there is a north-south by-pass (E28/N6), which meets E77 north of Gdynia. Due to a difficult topography, including level differences of up to 200 meters between the coast and the hinterland, east-west connections are poor. This diminishes the utility of the by- pass for trips between the three cities, and overloads E77. Several unfinished attempts to construct higher-class roads in east-west direction attest to the degree of financial, technical and environmental difficulties encountered in trying to improve this situation. 175. Car ownership rates differ-in Gdansk about 87,300 cars (189 per 1,000 people) and in Gdynia 72,000 cars (288 per 1,000 people). Data on recent modal splits are not available. Both mass transport operators are budgetary units of their respective municipalities, but in Gdynia there is a Transport Authority (ZKM) acting for the city, e.g., to sign the service agreements and monitor performance. In Gdansk, ZKM provide services by tramways (261 total with 164 in operation) and buses (245 total with 176 in operation). In Gdynia, MZK provide services by trolley-buses (75 total with 52 in operation) and buses (195 total with 145 in operation). One private bus operator exists in Gdansk. Conventional traffic management techniques are applied in both cities. Gdansk has some coordinated signals; recently, moves have been made to introduce parking policies and access controls in Gdynia. 176. What the region lacks in roads is made up by railways. The total number of PKP's suburban railway lines is 139 km. The most important among them is the Rapid Railway Service (SKM), operated by PKP on separate tracks between Gdansk Main and Gdynia, alongside E77 road. This service has 14 stations over a distance of 22 km, and runs at 6-min peak headways. Another, shorter SKM line (7.2 km) connects Gdansk Main with the New Port area. Its daily patronage is about 280,000. In 1992, the SKM accounted for 80 to 90 percent of the 66 million annual passenger trips by rail made within the agglomeration, down from 147 million in 1988. 177. Transport Problems and Characteristics. Traffic congestion exists at specific junctions and in the centers of the cities, but average travel speeds are reported to be high at 25 km/h. Main congestion problems appear to arise from poor connection of Gdansk to the N-S by-pass road and congestion associated changes of work shifts at the Gdynia port and docks. South of Gdansk, the connection of E77 to the main Warsaw Road is a severe problem; the road was completed in the 1970s but due to faulty construction, structures are unsafe and need replacement. Public transport 57 Annex 1 Page 4 of 14 coverage is good throughout the agglomeration. The condition of road pavement is of increasing concern. Numerous half-finished roads and structures are present in the agglomeration. 178. Urban Transport Policy and Plans. A master plan for Gdansk was prepared in 1991, but its assumptions and methods were out-of-date. Currently, the city is seeking bi-lateral assistance to review and revise the plan. In Gdynia, no similar plan exists but a planning exercise was due for completion in late 1993. Gdynia's ZKM is in the forefront of concerns about establishing and improving the performance and cost-efficiency of the MZK Gdynia. 179. Priority Projects Perceived by the City. At the time of field interviews in 1993, the following projects were cited as priority. In Gdansk: (i) completion/ replacement of Road No E77/N7 (Elblaska Str.) southward from the city center to the city boundary (see above section on problems); works are in progress (US$22.5 million in 1993 terms, of which about US$10 million has been expended), (ii) completion of the east-west connection (Armii Krajowej) just south of Kartuska Street, between the city center and the by-pass road (7.4 km, US$80 million), (iii) upgrading of another east-west connection, along Slowackiego Street, through difficult terrain (6.3 km, US$26 million), (iv) management scheme for the bus and tramway company involving communications and vehicle location devices and, (v) area traffic control (US$2.5 million) and other traffic management schemes such as bus and tramway priority and controlled parking although these latter are only at a concept stage. In Gdynia: (i) extension of the trolley-bus system including vehicle replacement (approx US$18 million), for which bilateral aid/technical assistance is being sought, (ii) completion of a major inherited road scheme (Kwiatkowskiego Str.) which may cost US$20 to US$30 million (one flyover is completed but is unconnected to the network), (iii) upgrading of Wisniewskiego Street from the container terminal to Gdynia downtown (about US$3.3 million), and (iv) extension of the controlled access and parking scheme. 180. In recent correspondence, the list of priority projects for Gdansk included yet another east- west connection, route N14 along Spacerova Street, and-for the medium term-a new suburban rail line from the center of Gdansk towards south/south-west, just south of Armii Krajowej road (Map IBRD 25635R). In Gdynia, the list of priorities has been extended by adding a 4-km north-south road section from Gdynia Main, west of the railway tracks. 181. Issues in the Sector. Specific issues are: (i) the need to coordinate transport planning and operations within the agglomeration as a whole including development of a coherent directional transport plan and investment program; the Roads Department of Gdansk Voivodship is the major actor on the road side; (ii) the future ownership of the SKM, which is a truly regional facility of great value, again cutting across inter-city cooperation issue; and (iii) the need to increase innovation in the field of traffic management to increase efficiency and improve on-street public transport operations. 182. Concluding Comments. Doubts exist over both Armii Krajowej and Slowackiego Road proposals on combined grounds of environmental damage, high construction costs and low traffic volumes; upgrading of the existing road may be possible but again, traffic volumes do not appear high. In Gdynia, the same doubts apply to the Kwiatkowskiego Street project. Clearly a detailed review and consideration of alternatives is essential. The trolley-bus proposal may be justified but needs evaluation. While both cities are considering traffic management (Gdansk perhaps more than Gdynia), it is considered that a more imaginative approach to, for example, bus and tramway priority and parking controls should be sought. It is of concern that maintenance for tramways in Gdansk and for roads in both cities may not have received adequate attention. 58 Annex 1 Page 5 of 14 PROFILE B AGGLOMERATION OF UPPER SILESIA (GOP) 183. Urban Context. With 2.2 million inhabitants, the GOP, a poly-nuclear agglomeration centered on Katowice, some 300 km south-west of Warsaw, has the largest concentration of population and industry in Poland. Its industrial structure is skewed towards coal mining and heavy industry, but it also has strong administrative, educational, and commercial activities. Since the future of Polish heavy industry is in question, the GOP economy must be restructured and new investments in economically viable activities must be attracted. Environmentally, the GOP is suffering more than any other region in Poland. Its multi-city nature, given the absence of a regional government and centrifugal trends of individual cities, is not conducive to resolving the larger issues and problems. 184. Urban Transport System. Katowice is the focal transport node for the GOP. Major strategic railway lines and roads pass through the city; the latter include E75 (north/south), Road No 93 and Road No 914 (Map IBRD 25636). In part, the roads are routed along city streets and in some sections, trucks comprise nearly half the traffic flow. Urban roads are sparse. Car registrations in 1991 were 104,000 (289 per 1,000 people) in Katowice alone and about 451,500 in the GOP (205 cars per 1,000 people). The latest modal split data are from 1987, indicating a 90 percent share of mass transport, of which 23 percent is by tramway and 7 percent is by PKP's regional rail services. The voivodship mass transport company, WPK Katowice, was divided in 1991 into 12 bus-based, city-owned companies (PKMs) and the regional tramway operator, PKT Katowice, remaining in the voivod's ownership. PKM Katowice is the largest bus company, operating 247 buses (212 operational) over 357 km of network. PKT services are provided by 516 tramway cars (279 operational) over 207 kms of network (83 km segregated). Since many operators serve any one city, several voluntary transport associations were set up to coordinate and regulate the market; the largest of these is KZK in Katowice. Suburban rail plays a part in public transport within GOP, but the role is much too modest relative to its huge scale (1,100 km of tracks used by passenger trains); this is due to ill-adaptation of stations to regional demands in addition to a downward trend in services offered. Private sector bus/para-transit operators have entered the market but the scale of operations has not been quantified. Conventional traffic management techniques are applied in Katowice although less than "state-of-the-art" level; the center of Katowice is a pedestrian-only zone. 185. Transport Problems. Traffic congestion exists on major roads, due to structural deficiencies in the network that force inter-city passenger and truck traffic onto ordinary streets. The quality of the road pavement is poor, except on national roads, and is exacerbated by mining subsidence; this affects traffic operations and in particular tramway operations. The level of service of public transport is good with wide network coverage, less than crush-loading in peaks and relatively short wait times. 186. Urban Transport Policy and Plans. Katowice Voivodship has in the past played a role of regional transport planner. The last plan dates from 1990, and follows the old pattern of capital- intensive proposals. Cities have their own plans, but they also are based on outdated assumptions and procedures. Various diverse actions are now being considered. The original Katowice plan established, inter alia, alignments for major east-west (A4) and north-south (Al) motorways, parts 59 Annex 1 Page 6 of 14 of which have been constructed. However, the long established rights-of-way have been questioned and differences of view have arisen between GDDP, the voivodship, and the city over alignments. Additionally, for many years the voivodship has promoted a major east-west urban road (the DTS), envisaged as a grade separated urban expressway and which would generate, and be financed by, associated land development. The estimated costs are over US$520 million of which US$50 million has been expended although no sections are open to traffic. In the past, a "regional railway" (the KRR) was promoted by the voivodship and PKP and substantial sums were expended; the project has been suspended although proposals exist to continue. PKT (tramway) is in active negotiation with AEG (tramway division Germany) and Konstal (Polish tramway manufacturer) to rehabilitate the tramway system; various financing packages are under discussion but an investment of the order of US$75 million is involved. 187. Priority Projects. For the city of Katowice, these are: (i) rehabilitation of the PKT tramway system through a joint venture with AEG and Konstal, (ii) construction of DTS expressway, and (iii) completion of the north-south and east-west major highways. 188. Issues in the Sector. Issues include: (i) the lack of a coherent and realistic transport plan, with evident discord between various groups even concerning long-agreed roads; (ii) lack of clear priorities for road investments, in particular, the future of the DTS, in which considerable funds have been sunk, relative to the nearby planned A4 road; (iii) the future of the PKT tramway system, the pressures being exerted to divide it among the cities served; (iv) the future role of regional railways, proposals ranging from upgrading existing PKP lines to constructing a new system (KRR); (v) the viability of transport associations; and (vi) the role of voivodship as guardian of the GOP-wide interests. 189. Comments. The currently proposed projects are major investments. All would have major impacts on the GOP and those impacts do not appear to have been evaluated. Major issues include the alignment of strategic highways, the affordability of the proposals, inter-action between highway projects (notably DTS and A4), and the need for economic design and phasing. The projects are not placed within a coherent transport planning framework and comprehensive evaluations are required. The tramway proposal is somewhat different. It is a private sector initiative but factors such as the financial impacts on the city need to be identified. However, the future of the project probably lies outside city control as industrial policy (the future of Konstal) issues are involved. Although further investigations are required, it is probable that much can be done to improve the transport system through lower cost measures such as traffic management, operational improvements within the tramway company, and rehabilitation of the road pavement. 60 Annex 1 Page 7 of 14 PROFILE C KRAKOW 190. City Context. Krakow is the capital of the region of Malopoiska and is located 300 km south of Warsaw. The population in 1992 was 744,000 of which 220,000 were located in the district of Nova Huta. The old city of Krakow is an administrative and university center and, as a former capital of Poland, is of great historic and tourist significance. Nova Huta was developed in the 1950s and is a major center for the ailing metallurgical industry. Since the future of Polish heavy industry is in question, the city must attract new investments in sustainable economic activities and ensure a good social safety net. 191. Urban Transport System. Krakow is at the hub of the road network in SE Poland. Major strategic and regional roads pass north/south (Road No 7/E77) and north-west/south-east (Road No 4/E40) through the city and other major roads connect to regional towns (Map IBRD 25639R). There are no recent data on the modal split. Car registrations total 158,00 (212 per 1,000 people). Mass transport services are provided by MPK Krakow, a joint-stock company owned by the city, with 28 tramway lines (a network of 80 km of which 62 km on segregated track) and 77 bus lines (a 616 km network). In 1992, services were supplied by 622 buses (432 in operation) and 516 tramways (353 in operation). MPK has divested non-essential activities and reduced staff. Relations between the operator and the city are regulated through a service agreement, with charges based on a rate per vehicle-km supplied. Private sector bus operators have entered the market both for MPK and on their own account. Suburban rail exists but plays little part in the city transport system. In the area of traffic management, Krakow has implemented positive policies-the historic center of Krakow is a pedestrians-only area, parking zones with differential charges have been established and a bicycle network is under expansion. 192. Transport Problems. Localized and peak period traffic congestion exists on the "second" ring road, the approaches to the central area (reported travel speeds of 10 km/h) and crossing the River Wisla. Although the level of service is good, MKT tramway system suffers from lack of investment and standards of track and vehicles are declining. Road maintenance is an increasing problem. 193. Urban Transport Policy and Plans. In 1993, Krakow formulated a new urban transport policy. The main goals of the policy are to reduce rather than cater to road vehicle demands, promote energy efficient modes, reduce transport emissions, encourage increased vehicle occupancy and improve safety. Proposed instruments to achieve the policy include: further reduction of car access to congested areas, increased priority for mass transport (bus lanes etc), efficient traffic control, park-and-ride combined with mass transport discounts, and promotion of bicycles. Planning studies are still in progress, but the city's approach is to build and/or complete a system of ring roads and by-passes. It is understood that, in November 1994, the city council approved a new master plan, consistent with the above transport policies. 194. Priority Projects Perceived by the City In 1993, the city considered priority improvement projects to be. (i) rehabilitation and expansion of the tramway (estimated at more than US$200 million in 1993 terms), (ii) construction of the Third Ring Road (estimated at more than US$150 million) although there are environmental and engineering issues involved, (iii) completion of the A4 61 Annex 1 Page 8 of 14 (E-W) by-pass to the south of the city, (iv) completion of a massive multi-modal interchange and road scheme commenced by former administrations, and (v) construction of bicycle routes. Following the adoption of the new master plan in 1994, a prominent new feature on the list of priorities is that tramway improvements are now divided in two categories. Some smaller improvements refer to extension and/or rehabilitation of the conventional tramway lines. More ambitious is the proposal to upgrade sections of the existing system into a core, rapid tramway network, entirely on a segregated right-of-way (see map IBRD 25639R). 195. Issues in the Sector. (i) in spite of scaling down, proposals are still less than realistic relative to resources; and (ii) economic/financial feasibility of the inherited, large scale city terminal project. 196. Concluding Comments. While any of the projects will require evaluations and critical appraisal to ensure "value-for-money," if reduced in scale, the tramway proposals and the road program could be developed to provide sound investments. Productivity improvements of the MPK Krakow deserve stronger focus. While the approach to traffic management has been good, greater emphasis is now required on measures such as bus priority and signal control. Extending the current program of bicycle lanes appears quite promising, but action should be preceded by evaluation of the transport and other impacts of present schemes. The investment decision posing the greatest problems concerns the future of the multi-modal terminal. The project appears out of scale in the city and the benefits are not evident. There are, however, large sunk costs and a comprehensive re- appraisal is required to determine if rational transport use can be made of the past investments. Intuitively, the present proposals are unlikely to be viable. 62 Annex I Page 9 of 14 PROFILE D LODZ 197. City Context. Lodz, located 120 kms southwest of Warsaw, is a relatively new city, developed only in the late 19th century. The population in 1992 was 838,000. The city is a center of the textile industry, although unemployment in the industry is now severe. The city also possesses mechanical and electrical industries, many academic institutions and is the home of the world renowned Lodz Film Institute. 198. Urban Transport System. The city is at the confluence of numerous international and national roads, of which E75/Road I (Gdansk-Katowice) is of special importance (Map IBRD 25640R). Inter-city traffic is largely routed through the city road system with consequent traffic and environmental problems. Car registrations total 155,000 (185 per 1,000 people). Although data are scarce, it is estimated that public transport carries about 80 percent of mechanized trips with 50 percent of this by bus and 50 percent by tramway. MPK Lodz, a joint-stock, city-owned company operate buses and tramways under contract (service agreement) with its owner. Bus services are provided by 526 buses (376 operational) over a network of 314 km. Tramway services are provided by 622 tramway cars (417 operational) over a network of 162 km (about 85 km segregated). Although the PKS suburban rail lines are extensive (198 kin), it is reported that the system serves few intra-Lodz passengers. A limited number of private bus operators exist, both contracted to MPK and independent, but their impact in the sector is presently minimal. Conventional traffic management techniques are applied in Lodz including controlled vehicle access by time-of-day schemes, some pedestrian-only areas, bans on heavy vehicle and curbside parking controls (but no pay parking policy as of the late 1993). Traffic signal equipment is outdated. 199. Transport Problems and Characteristics. Traffic congestion exists at specific junctions, on narrower streets near the center with mixed tramway and car use, and as a result of routing of through traffic on city streets. However, average speeds in the city center are reported to be above 20 km/h and higher in outer areas. Public transport coverage of the city is good and wait times are low (5 mins in peak periods). Lack of car parking is seen as a serious problem by the city. The condition of road pavement is of increasing concern. 200. Urban Transport Policy and Plans. Transport master plans were prepared by previous administrations. Although these plans are now under review, no systematic development of new policies has been completed. Until recent years, the city was actively pursuing a 3-line metro system. Some right-of-way has been reserved but planning and design work has been suspended. A pragmatic approach to planning has been adopted and the city now places emphasis on schemes that are considered beneficial although no numerical evaluations have been carried out. 201. Priority Projects Perceived by the City. Major priority projects as of end- 1993 were (i) N-S and E-W national roads to reduce through traffic in the city; (ii) upgrading, rehabilitation and new cars for the tramway system (about US$34 million in 1993 terms); (iii) completion of a massive road/rail/tramway/pedestrian interchange near Lodz Kalinska Rail Station (about US$12 million of which about 40 percent to 50 percent has been expended); (iv) an area traffic signal control system; (the city is developing the equipment and control system with their own staff and resources and 63 Annex 1 Page 10 of 14 design group); and (v) various road widening on major arteries in the city (some of which are already in construction). 202. Issues in the Sector. Specific issues are: (i) lack of a long-term directional transport plan and a coherent transport investment program, (ii) the need to establish road construction priorities, (iii) the need to establish a policy for mass transit development and a final decision on a metro, and (iv) the need for increased traffic management to protect buses and tramways from congestion, to limit the growth of car use (at least a comprehensive parking policy) and to increase efficiency (by better signal control, etc.). 203. Concluding Comments. Although no evaluations are available, the N-S and E-W national roads to reduce through city traffic appear logical provided the opportunity is taken to reserve the road capacity released within the city to improve quality of the public transport system. Rehabilitation of the tramway system also appears advantageous as travel demand does not seem to justify a full metro. Little supporting data is available on which to base the decision, however. Doubts attach to the Lodz Kalinska interchange, although given the large sunk cost and the improved tramway alignment that will result, there may be no alternative but to complete the scheme. It should be examined critically to ensure that optimum design and phasing is achieved and to see if some elements can be eliminated (e.g., the Al/E75 flyover). A city the size of Lodz can clearly justify a centrally controlled signals system; it is, however, recommended that Lodz devote its professional energies to the preparation of a system for competitive bidding rather than attempt to develop the equipment. The work carried out by Poznan may assist Lodz. Maintenance for roads may not have received adequate attention. 64 Annex 1 Page 11 of 14 PROFILE E POZNAN 204. City Context. Poznan, located 275 km west of Warsaw, is the capital of the Wielkopolska region. The population in 1992 of Poznan was 583,000. The city is traversed north-south by the River Warta but most development is concentrated on the west bank. The city is an academic and university center, has some mechanical engineering and is the permanent site of the Poland International Fair. 205. Urban Transport System. Seven main national and international roads meet at Poznan including E30 and E261 (Map IBRD 25638). In large part, major roads are routed through the city with consequent traffic and environmental problems. Car registrations in 1992 were 168,000 (288 per 1,000 people). Public transport carries about 60 percent of mechanized trips with 24 percent by bus, 32 percent by tramway and 4 percent by suburban rail. MPK Poznan, a budgetary unit of the city, operates buses and tramways; bus services are provided by 333 buses (239 operational) over 253 kms of route; tramway services are provided by 370 tramway-cars (237 operational) over 57 kms of route (about 67 percent segregated). Although the PKS suburban rail lines are extensive (55 kin), the system serves few intra-Poznan passengers. There are no private sector mass transport operators in Poznan. Conventional traffic management techniques are widely used, but signals are outdated; a parking policy based on charges and strict controls has been applied to the limited area of the Old Town and there are few priority measures for public transport. The Old Town is in part a pedestrians-only zone, and partly limited to vehicle access. 206. Transport Problems and Characteristics. Traffic congestion exists at specific junctions, particularly on the approaches to the central area and during International Fairs, congestion is common. However, average travel speeds are still good and reported to be 24 km/h. There is local concern over road safety (62 deaths, 1,489 injured in 1992). Public transport coverage of the city is good, wait times are low (5 to 6 mins) and transfers also relatively low (1.35 per trip). The condition of road pavement is of increasing concern. 207. Urban Transport Policy and Plans. The city is currently revising its transport plans and policies developed during former administrations (in the mid- 1970s). Poznan has employed consultants both to develop a new transport plan and to develop specific projects. Transport planning in Poznan has been dominated by the proposal to construct a "Rapid Tramway Line" (PST) from the center to the north of the city (about 7 km). The scheme was to extend finally for a total of 25 km. Work was started on the first 7 km in 1980. At that time the scheme was seen as a pre-Metro or a Light Rail Transit (LRT) system and was to be completely separate from the existing tramway system. Physical works are now well advanced and estimated expenditures have been about US$45 million in 1993 terms. In 1992, recognizing that the scheme had not been made from the system's point of view, the concept was reviewed and revised; the PST will now integrate with the existing tramway system and use conventional tramway cars although the right-of-way characteristics of the LRT remain, namely full segregation from traffic. The revised scheme requires a further US$50 million for completion. Previous plans established a 3-ring road hierarchy and the city is pursuing various road proposals to complete the system (the total cost is estimated to be US$350 million). 65 Annex 1 Page 12 of 14 208. Priority Projects Perceived by the City. The major priority for the city as of end-1993 was to complete the first 7 km of the PST. Proposals exist, and the need is clear, to upgrade and rehabilitate the existing tramway system but proposals are only at an outline stage. The general roads policy is to complete the ring road system and within that policy, the completion of the Inner Ring (about US$10 million) is probably the city's first priority. The city's transport planners are developing specifications and bid documents for an area traffic control signal system. 209. Issues in the Sector. Issues include (i) the need to develop a realistic transport investment program particularly in light of the lack of financial realism in the overall road program; and (ii) road maintenance, both for roads and for the tramway system has not received adequate attention. 210. Concluding Comments. The desire of Poznan to complete the PST is understandable given the 50 percent sunk investment. The current economic and financial evaluation is not convincing, however, and much needs to be done before the project could seek external financial participation. A project to rehabilitate the existing network could be prepared very quickly, including evaluation. Poznan is fully aware that the level of proposed road investment is unrealistically high and is using standard transport planning procedures to determine priorities. The approach to the preparation of the area traffic control, signal system may assist other Polish cities; rather than negotiate with suppliers (as Wroclaw) or develop their own equipment (as Lodz), Poznan is following a path that could permit standard international bidding. 66 Annex 1 Page 13 of 14 PROFILE F WROCLAW 211. City Context. Wroclaw, located 350 km south west of Warsaw, is the most important city in the Lower Silesia region. The population of Wroclaw was 641,000 in 1992. It is traversed by several branches of the Odre River and the river crossings, concentrated in the old town, with a heavy influence of communications. The city is a center of engineering, electronic, and chemical industries and is a particularly important academic and university center. 212. Urban Transport System. Eight main international and national roads meet at Wroclaw including E67 (NE-SW, Warsaw-Prague), E261 (N to Poznan) and E40/A4 (E-W, Dresden-Kiev); the latter by-passes the city to the south (Map IBRD 25641R). In part, major roads are routed through the city, particularly to cross the River Odre. In 1992, there were 145,400 registered cars (227 per 1,000 people). Public transport carries about 75 percent of non-walk trips, with 30 percent by bus and a notable 45 percent by tramway, one of the highest tramway mode shares in Poland. There is a plethora of PKP rail lines in Wroclaw, but suburban services carry a low proportion of passengers. MPK Wroclaw, a budgetary unit of the city, operates buses and tramways. Bus services are provided by 432 vehicles (306 operational) over 374 km of network. Tramway services are provided by 451 tramway cars (318 operational) over 88 km of network (about 55 percent segregated). Private sector buses play little part in the system, operating only two contracted services for MPK. Traffic management techniques are being increasingly applied in Wroclaw and inter alia, in 1992, a zonal charged parking system was introduced, including a scale of charges that deter long-stay parking. The center of Wroclaw is a pedestrians-only zone. 213. Transport Problems and Characteristics. Traffic congestion exists at specific junctions, river crossings and in the central area, but network-wide, average travel speeds are reported to be high (24 km/h). The conditions of road pavement is of increasing concern. There is growing concern that increased motorization will adversely affect on-street public transport operations. Public transport coverage of the city is good although distances and the need to change make some journeys to and from the outer suburbs. Average tramway and bus commercial speeds are reported as 15 km/h and 20 km/h, respectively. The configuration of the tramway network, coupled with the radial road network, limits flexibility in tramway operations, however. The tramway system was neglected for years in expectation that a metro line would be constructed in one particular corridor. 214. Urban Transport Policy and Plans. A Master Plan, including transport, was prepared in the late 1980s for Wroclaw. The plans have been overtaken by events and new initiatives are required. As a first step, Wroclaw is preparing a policy statement for urban transport. The policy emphasizes traffic management, the need to increase the attractiveness of public transport, the need to stop road deterioration and to gradually develop the road system. Coherent development of transport policy is greatly helped by the creation of a Roads and Mass Transport Authority (ZDiK), a first in Poland; the ZDiK acts as the city's representative, inter alia, to sign service agreements with mass transport operators. Wroclaw is also a good case study of interplay between elected officials and civil servants. 215. Priority Projects Perceived by the City. In line with the Wroclaw transport policy guidelines, ZDiK are developing specific measures for (i) area traffic signal control (discussions with 67 Annex 1 Page 14 of 14 suppliers are nearing conclusion and a contract may soon be agreed); (ii) tramway system upgrading, involving short sections of new track connection to improve operational flexibility, improved turn radii, bus/tramway interchanges etc (estimated at US$6 million in 1993 terms); (iii) selected road projects (shown on the map IBRD 25641R) including completion of the south section of the Central Ring Road (US$6 million), construction of the western section of the Central Ring Road (US$23 million), including the viaduct Gadow (US$15 million), and completion of three bridges over the River Odre (US$4 million); and (iv) innovative traffic schemes such as cycle tracks, parking at multi modal interchanges, traffic calming and combined tramway and bus segregated rights-of-way (5 km at about US$5 million). Unlike many Polish cities, Wroclaw does not have massive, unfinished road projects-in-progress. 216. Issues in the Sector. (i) The procurement approach adopted for the area traffic control system has resulted in offers with vastly different bid prices, indicating confusion about functional requirements; (ii) the lack of a long term directional transport plan and the need to develop a continuing transport investment program; and (iii) the practice of floating investment proposals without evaluation; the absence of evaluated plans is best seen by co-existence of two competing projects to make use of PKP tracks, one proposing a new service on the existing system, the other lobbying for a new regional railway, WKR. 217. Concluding Comments. The type and scale of the priority program advanced by Wroclaw is realistic and well directed although, at this stage, the investment proposals are not supported by conventional indicators and evaluations. However, there is a strong case for the types of proposals made and, furthermore, the proposals appear to be have been developed while taking a realistic view of the likely resources available for investment. Some concerns exist in that maintenance, both for roads and for the tramway system, has not received adequate attention. It is noteworthy that Wroclaw is the only city considering the use of segregated systems for combined bus and tramway operations. 68 ANNEX 2 A SURVEY OF URBAN TRANSPORT IN POLAND TABLE OF CONTENTS 1. The Cities ......................... 71 Demographic and Spatial Aspects ......... ................ 71 Wage and Price Policies ......................... 73 Urban Government ......................................... 74 The Planning System ......................... 75 2. Urban Transport Characteristics ........... .............. 76 Urban Transport Demand: Mobility and Modal Split .76 The Suppliers of Mass Transport Services .77 Characteristics of Mass Transport Systems .78 Mass Transport Fares .79 Urban Roads ............................................. 81 Road Institutions and Expenditures .82 Cost Recovery for Road Users .83 Private Automobiles and Traffic .84 Recent Trends in Mass Transport Usage .85 3. Current Urban Transport Problems .86 Approach .86 Transport Problems as Seen by Users .87 Problems of Mass Transport Operators .91 Community-side Problems .98 4. Recent Reforms and Innovations .99 Change of Legal/Organizational Status of Mass Transport Companies .100 The Creation of a New Institution-Urban Transport Authority .101 Break-up of Public sector Companies .101 Multi-city Transport Associations in the GOP Agglomeration .103 Entry of Private Operators .103 Service Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Traffic Restraint and Parking Management .107 Scaling Down Unrealistic Transport Plans .108 Emergence of New Policy Approaches ..... . . .................. . . . . 111 69 ANNEX 2 A SURVEY OF URBAN TRANSPORT IN POLAND 1. THE CITIES Demographic and Spatial Aspects 218. Nearly 24 million people of Poland's 1992 population of 38 million live in about 850 cities and towns, some 37 of which have at least 100,000 residents (Table 1).' Warsaw, with about 1.7 million people within its administrative boundary and 2.5 million in the metropolitan area, is in a class by itself. (It should be noted that no formal administrative boundaries exist in Poland for metropolitan areas.) Outside the capital, the size hierarchy is headed by two conurbations: the Upper Silesia Industrial District (GOP) has 2.2 million people in 15 constituent cities, Katowice being the largest at 360,000; and the conurbation of Gdansk, Gdynia, Sopot (Three-City Agglomeration-TCA) and some smaller towns, arranged linearly along the Baltic coast, has about 800,000. Four cities in the half-million to one million population range (Lodz, Krakow, Wroclaw and Poznan) are classic mono-nuclear agglomerations, as are three cities (Szczecin, Bydgoszcz, and Lublin) with populations between 300,000 and 500,000 inhabitants. 219. Both the structure and growth of the largest Polish cities has depended much on their fate in World War II. There appear to be five distinct types: (i) multi-purpose historic towns, some dating from medieval times, and possessing great aesthetic and functional quality; (ii) transitional, medium- to-high density mixture of residential, administrative and commercial buildings, on orthogonal street networks, dating from the pre-war period; (iii) early post-war residential blocks along the traditional street pattern; (iv) the newer, single-function, "socialist" developments built on the periphery-industrial estates or high-rise residential quarters, the latter built on huge parcels of land; and (v) largely illegal developments where the city blended with the countryside, on small, mostly unserviced private lots [French and Hamilton, 1981; Ryder, 1992].2 In any given city, the relative proportions of historic, intermediate and socialist areas depend largely on the degree of destruction in the war and the subsequent reconstruction. The presence of parks is notable, even in central areas, as is the extent of empty lots, left behind as a consequence of a voluntarist rather than market approach to real estate. The density pattern is similar to that in many socialist countries, with high- rise housing developments 10 to 15 km from the city center creating a jump in the density gradient, whereas cities in capitalist environments would show a smooth downward transition from low-density urban uses to agricultural land [Bertaud and Renaud, 1994]. Reflecting all of the above, net housing densities have been (and still are) high, but gross densities are medium-to-low: Warsaw has 3,400 inhabitants per square kIn; Lodz about 2,900; Krakow, Poznan and Wroclaw about 2,200, and so on. This has the disadvantage of providing little living space for urban residents (average dwelling size in cities is 54 square meters), with an overall pattern generating low travel volumes and thus Unless otherwise noted, all referenced tables are in Annex 3. 2 See bibliography. 71 Annex 2 Page 2 of 43 expensive to serve. Densities in city centers, however, reach as high as 20,000 people per km square, and are even higher in some blocks. 220. Urban areas in countries at a similar level of income, particularly those in Asia and South America, have in the past 20 years most often shown explosive rates of population growth, due to a combination of natural growth rate and job-seeking in-migration from the countryside. Poland, in contrast, has low birth rates and low migration. The national population pattern in 1987-92 has been growth at the rate of 0.3 percent per annum, a decrease from 1 percent per annum in 1970-75. Polish cities, likewise, have relatively stable populations, with a visible slowdown in growth rates, from 2.1 percent per annum in 1970-75 to 1.0 percent in 1987-92. Warsaw's recent growth rate is even lower, at 0. I percent per annum [Dowall et al, 1994]. Urban areas, however, did benefit from several migratory cycles after the war [Iwanicka-Lira, 1981; French and Hamilton, 1981]. Poland's urban population went from 39 percent of the total in 1950, to 55 percent in 1977 and 63 percent in 1991. In the immediate post-war period, people moved westward and northward to re-populate and re-construct cities devastated by war. For example, Warsaw grew from 162,000 in 1945 to 1,315,000 in 1970, of which in-migration accounted for 800,000 [Weclawowicz, 1970]. Also, after 1950 people moved from all over Poland to cities where the state had decided to locate large-scale, growth-pole industries. Krakow, for example, where the state founded the gigantic Lenin Steel Works and the associated new town of Nowa Huta, grew from 250,000 in 1939 to 750,000 in 1990 [Ryder, 1992]. Finally, in the 1960s, there was shorter-distance migration from the countryside and smaller cities to nearby large centers of industry and better life. The state tried to discourage and block this process, both administratively and by investing in smaller cities. 221. A major characteristic of Polish urban areas, visible particularly in those places where the latter-day "socialist" urban planners have been more active, is the discreetness of land uses, as opposed to organic intermingling. New residential areas are just that, as are the industrial estates; only downtowns preserved a mixture of residential, service, commercial, educational, administrative, and light-industrial uses. Though improvements in urban design were visible over four decades of the socialist experiment, grand plans for achieving an ordered hierarchy of activities throughout urban areas stayed largely at the level of theoretical discussions. 222. Another aspect of spatial organization in Poland has been that housing arrangements were most often not handled through the market, but administratively. In the 1988 census, only 1.67 (about 24 percent) million urban dwelling units were in private ownership, out of a total of about 7 million; others were owned or built by cooperatives (37 percent), the state/municipal government (28 percent), or enterprises (12 percent) [World Bank, 1993b]. This has meant that individuals and households could not trade off desired location and other attributes against housing costs; the turnaround rate of housing and thus residential mobility has been very low. The consequences included job-and shopping-related travel, longer and more frequent than would otherwise have been the case. 223. Among other factors influencing travel patterns in Polish cities, three are of particular interest, especially since they are both likely to change in the near future, if they haven't already. The first is communications, potentially a substitute for many business and non-work trips. Poland has had low diffusion rate of telephones: the national average is 93.1 per 1,000 people, but some provinces containing the largest cities have higher rates: 159 telephones per 1,000 people in Lodz province, 132 in Krakow province, and 120 in Wroclaw province. The GOP, however, has only 70 telephones per 1,000 people. This is likely to change in the near future. The second factor has to 72 Annex 2 Page 3 of 43 do with the structure of industry. The Polish economy has had a bias towards heavy industry and against consumer-oriented industries and services. This has meant that transport needs of many urban industrial enterprises were skewed towards a large-scale transport of material inputs and products exchanged over the inter-city network, between huge industrial plants located at urban peripheries, rather than moved within urban areas. This is likely to change and is probably already changing, as smaller industrial and service firms emerge in new urban locations and generate more intra-urban freight and passenger travel, along new spatial and temporal patterns. 224. The third factor is related to the preceding one; it has to do with differences between cities in terms of structure of their economic base. Some have had unusually high concentrations of particular industries and others were more diversified. For example, the economy of cities in the GOP region has been based on coal mining and heavy industry; Krakow's on the steel industry, Gdansk's on ship-building, and Lodz's on textiles. Many of these industries are in deep crisis and some do not face good prospects. The shrinking of many large enterprises, and subsequent restructuring of urban economies taking place at present already has had visible impacts on urban transport origin-destination patterns, volumes, and modal distribution. The process is far from over, since the state has assisted the worst hit industries, lest the resulting social impacts derail the entire reform. Wage and Price Policies 225. Polish workers were paid low wages, but were provided generous and inexpensively priced basic infrastructure and services, such as housing, residential utilities, mass transport, education and health. Income distribution was flat and unemployment negligible. Just how low the salaries were, and how low-priced some basic amenities were, will be seen from the following. The data for 1989, just as the transition process was starting, show an average monthly income per person of Zl 84,500 for pensioner households, Zl 106,500 for blue-collar, and Zl 134,900 for white-collar households [World Bank, 1993a]; this is equivalent to about US$60, US$74, and US$94, respectively, at the then official exchange rate of Zl 1,439 per dollar; using the purchasing power parity concept, these translate into US$148, US$186, and US$236, respectively. Food dominated household expenditures, averages being 41 percent for white-collar households, about 49 percent for blue-collar households and about 54 percent for pensioners; housing accounted for only 3.3 percent for blue-collar workers and pensioners and 4.8 percent for white-collar households; the share of transport and communications was 5.3 percent for blue-collar, 7.5 percent for white-collar and 4.3 percent for pensioner households. 226. Energy prices were generally low, particularly heating, in part because of abundant domestic coal and cheap imports of oil from the Soviet Union. The price of electricity in the 1980s was one- fifth of its resource cost [Ryder, 1992.1. In 1989, it was still low, about 25 to 67 percent of the West European price for industrial users, the upper part of the range referring to exchange rates using purchasing power parity; it was substantially lower for households [Meyers et al., 1993]. In that same year, gasoline and diesel prices in Poland were less than half of west European prices, using nominal exchange rates, but exceeded West European them in terms of purchasing power parity. Unrealistic prices meant that there was little focus on energy efficiency in either industrial, institutional, or household use. A related aspect is that there was very little attention to waste emissions, with serious results for the pollution of air, soil, and water. 73 Annex 2 Page 4 of 43 Urban Government 227. There are only two levels of elected government in Poland: the state and the municipality (gmina). There are some 2,460 municipalities. The state administration has two levels: national (the Prime Ministry, thematic and sectoral ministries) and regional. There are 49 regions. The state offices at the regional level are headed by governors, called voivods, appointed by the Council of Ministers; the term voivodship refers both to the administrative apparatus and the geographic extent of the regions. 228. Cities above 100,000 people, some 37 in number, account for 53 municipalities.3 Since Warsaw alone has 11, very few other cities contain several municipalities.' Still, the problem of managing and expanding joint facilities and services does exist even outside Warsaw, for example in multi-city agglomerations, such as the GOP and the TCA, and also between urban municipalities and the surrounding rural municipalities. Municipalities therein may and do enter into associations, which take over the jurisdiction of agreed service sectors, such as mass transport or water supply. Depending on the urban area, the processes taking place today can be integrative, or evolve in the opposite way, i.e., fragmentation. For example, Warsaw has what amounts to an urban area government, with an elected 16-person council, and a President, the latter heading a city administration with a wide scope of responsibilities. The GOP-the larger and the more complex of the two agglomerations-appears to be moving in the opposite direction. 229. Until 1990, cities were governed and developed through interplay among three actors: (i) the state, directly and through voivodships, (ii) municipalities, and (iii) local, but state-owned, industrial enterprises. Permeating all three and acting as arbiter of conflicts was the country's sole political party. Since the party was hierarchical, it follows that local authorities served largely to transmit downward and implement state decisions. Municipal authorities financed their current and capital expenditures through a combination of transfers from the state budget and turnover/ wage taxes paid by state-owned enterprises located inside the municipal boundary. The state, acting either directly or through voivodships, also made direct contributions to both current and capital investments, drawing on special-purpose funds, for example, housing or sewerage funds. User participation in cost recovery was very modest. 230. In 1990, a new Local Government Law gave the municipalities fiscal independence and responsibility for a wide array of local services. Municipalities became owners of local fixed infrastructure and other equipment (hitherto owned by the state enterprises providing local services), as well as of residential and commercial real estate. Their jurisdiction now extends over local mass transport, roads designated as local, street lighting, heating, garbage collection, water and sewerage, and recreation. Voivodships are still responsible for maintaining, rehabilitating, and expanding roads designated as regional, typically the most important urban arterials, while the state has direct 3 This reflects the reorganization of Warsaw adopted in July 1994, whereby the capital urban area changed from seven to eleven municipalities. ' Since the field work for this study was completed in December 1993, Warsaw has been re-structured administratively into Warsaw Central (957,000 inhabitants) and ten other municipalities. Warsaw Central Municipality is itself divided into seven districts. The umbrella urban government (Rada Warszawy) has been retained. 74 Annex 2 Page 5 of 43 jurisdiction over roads designated as national, through a separate network of road agencies. While the state has thus retained a strong hand in matters concerning urban roads, it has entirely given up all presence in the area of urban mass transport. Indeed, there is at present no legally stipulated duty or authority of the state in this respect, an extreme break with its past dominance of the sector. 231. The objective of the fiscal reform has been to increase the share of user charges and other own-source revenue, while reducing the share of enterprise taxes and contributions from the state. The process of establishing exact jurisdictional boundaries, transforming the financing structure of municipalities, and building financial capacity is continuing. Data for 1992 indicate that 49 percent of local government revenues countrywide came from own sources, and 51 percent came from the state budget, including a share of national taxes and block grants [Pigey, 1993]. 232. The magnitude of total revenues and expenditures per capita varies both by city and over time, as do proportions of different sources and applications of funds. Main locally-generated revenue sources at present are real estate taxes and rents obtained by leasing municipal property (Table 2). Country-wide average municipal revenue per capita was about ZI 1.7 million (US$125) in 1992, with expenditures slightly lower. Capital expenditures accounted for about 23 percent of total expenditures. Revenues per capita were, of course, higher for bigger cities. For example, Gdynia's 1992 revenues were about Zl 2.5 million (US$183 at the 1992 average exchange rate) per capita. Capital expenditure per capita was about Zl 0.5 million (US$34), about 19 percent of all expenditures. Krakow, for which only 1993 projections were available for this study, planned total expenditures per capita at Zl 2.8 million (US$138), but only Zl 0.4 million (US$20), about 14 percent, was budgeted for per capita capital expenditures. Again, it should be noted that some major infrastructures, notably arterial roads, were still financed by voivodships, and actual jurisdiction over other activities varied from city to city. The Planning System 233. Two major modes of Polish planning were by economic sector and by hierarchically arranged spatial units [Fisher, 1966]. All major decisions were made by central planners in Warsaw, tightly linked to the political power structure. Sub-national plans mapped out the consequences of central decisions into terms of space and land-use mixes using established standards and norms. The planning system, as designed, contained feed-back loops from the local level to the center. It failed, inter alia, because of the sheer cumbersomeness of the planning process and a progressively larger divergence between plans, resources, and outcomes, which meant continuous re-planning. Its last stage, in the 1980s, has been characterized as neither-central planning-nor-market [Lane, "Transforming Poland's Economy..," 1992]. As elsewhere in Eastern Europe, the focus of Polish central planners was on physical output. There was a strong bias towards infrastructure, primary activities, and heavy industry, and against consumer industries and services. A major characteristic of Polish planning at any level was that accounting prices bore little relation to resource costs. Operating costs were routinely neglected in investment decisions, as was the timing of cost and revenue streams. Projects were evaluated against targets rather than in terms of costs and benefits. Implementation was accomplished by parceling the tasks around rather than by competitive bidding. Finally, there seemed to have been no connection between project proposals, decisions and the overall resource capacity; budgets and financial planning overall did not figure in the process [World Bank, 1992c]. 75 Annex 2 Page 6 of 43 234. At the sub-national levels, planning was done for economic regions, voivodships and cities (municipalities). In many cases, planning for municipalities was not satisfactory, since both problems and public facilities extend over municipal borders. For some years at least, but not at present, Polish planning law defined yet another spatial level of planning-that of agglomerations. These corresponded to what in the US would be metropolitan planning areas, and provided for formal planning at that level also. The absence of formal agglomeration planning today may pose a formidable obstacle to agree on regional policies and investment programs for joint public infrastructures, particularly for such areas as the GOP and the TCA. The 1990 Law on Local Governments does allow that municipalities associate themselves for the purpose of operating any service over which they have individual jurisdiction. 235. Legal stipulations concerning plan instruments changed several times in the post-war period. Excepting detailed engineering plans, used at the project execution stage, the general tendency was to have plans with three time horizons: five-year, action-oriented plans; ten- to 15 year perspective plans; and longer-term, directional plans, without specific time ranges. Urban transport plans followed the same pattern. Transport planning methodology was well-established; it had a strong quantitative approach, including the use of conventional transport network models to simulate traffic flow. Unfortunately, planning practice was plagued by rigid determinism and over-use of norms, and almost excluded financial and economic aspects. 236. Planning activities were carried out through a network of planning bureaus and institutes, established in almost all large cities and agglomerations. Though planning bureaus were agencies of the local/voivodship governments, they were getting work not only in the city where they were located, but from other Polish cities and abroad. (Polish spatial and transport planners, in fact, achieved a considerable international reputation, particularly in developing countries). Urban planning, like all other planning sectors, had a sponsoring ministry which provided general supervision, channelled investments, financed research, development and planning guidelines, and sometimes approved plans. The assignment of sectors to ministries changed from time to time. The Ministry of Construction and Physical Planning was the last to have jurisdiction over urban master plans and urban infrastructure. The Ministry of Transport was the last to have jurisdiction over agencies dealing with urban mass transport. Planning organizations are now being reduced in size, disbanded or pushed into the market. 2. URBAN TRANSPORT CHARACTERISTICS 237. This section is based on data collected during field work in five major cities and two agglomerations. Tables 3 and 4 show some basic characteristics of these cities, including population, vehicle registrations, road infrastructure, and mass transport companies. Urban Transport Demand: Mobility and Modal Split 238. High trip rates and the dominance of mass transport have been the distinguishing characteristics of urban travel in post-war Poland. For example, the trip rate for non-walk modes in Warsaw was 1.67 trips per person per day in 1987. Modal share of mass transport modes was estimated to lie in the 80 to 90 percent range in the late 1970s (Table 5); it was even higher in cities where suburban/regional rail services were available (Katowice had a 96 percent share in 1977). The private automobile accounted for only 10 to 15 percent of non-walk modes, a situation exactly the 76 Annex 2 Page 7 of 43 reverse of that in the United States and some other highly industrialized countries in Western Europe. Modal relations continued at these levels until very recently. 239. Behind the dominant role of mass transport in Polish cities has been an array of characteristics related to spatial and economic organization, and to wage and price policies. Two of these have been the most important: first, an extensive, well-served, and low-priced mass transport system, and second, relatively low auto ownership and various economic and physical constraints on the use of autos. The Suppliers of Mass Transport Services 240. About 260 Polish cities have scheduled mass transport services. Mass transport operators have traditionally been public-sector monopolies. Until recently, they were state-owned enterprises belonging to one of four categories defined by service area (city/suburb or voivodship) and modal criteria (e.g., city or voivodship multi-modal enterprises). In line with the decentralization reforms, they have now become the property of local authorities, in a variety of legal forms. In the process of the change of ownership, companies have been (or are being) split into components defined by geographic service area, limiting service only to the owner-municipality, by vehicle technology, or by function, e.g., transport, track maintenance, and/or engine overhaul. Thus, the number of public- sector urban mass transport companies in Poland has grown from 61 in 1980 to 108 in 1989 and to 118 in 1992, and it continues to grow. 241. Public-owned operators still dominate the field, but private companies have started coming into the market since December 1988, when entry was liberalized. In some cities, the new private companies act as a complement to the public-owned operator, under contract with the city government, or with the public-sector operator. In other cities, particularly smaller ones, private operators are the sole providers of service. 242. Intercity carriers are also present in urban transport, in a combined complementary and competitive role with urban operators. Finally, an undetermined number of long-distance commuters are carried by own-account (company) buses; their role is only reflected in modal split data when household travel surveys are supplemented by job-based surveys, as in Warsaw. 243. The intercity carriers include the state Bus Company (PKS), recently divided into 200 independent companies, and the Polish State Railways (PKP). The latter have extensive networks in most major urban areas, but the network configuration and location of stops is most often not suitable for suburban or regional services. Only in three locations (the GOP, the TCA, and Warsaw), do PKP operate extensive suburban and cross-urban services. According to data from before the transition, they accounted for 60 percent of all PKP's suburban traffic and 80 percent of all revenues. The contrast between the size of the network and its role in city and regional transport is well illustrated by an example from the GOP region. In 1989, the voivodship-wide mass transport company (WPK Katowice) served 40 cities and towns, transporting 80 percent of passenger trips; the PKS carried just above 10 percent and the PKP carried just above 9 percent. Peculiarities of administrative arrangements are well illustrated by the fact that the PKP's Warsaw network includes one commuter rail line, connecting the center of Warsaw with Grodzisk Maz (32-km away), which uses rolling stock of the light-rail type. 77 Annex 2 Page 8 of 43 244. Taxis, though not str-3ya mass transport mode, are mentioned here for completeness. This sector has been deregulated, since access to the market is unconstrained and fares are agreed by taxi association rather than by the government. The industry is a mixture of taxi companies and individual owner-drivers, the former also including public-owned companies. Fares and classes of service proliferate, making it difficult to distinguish ordinary taxis from those indulging in predatory behavior. Characteristics of Mass Transport Systems 245. Basic data for public-sector mass transport operators are published annually by the operators' association, the Chamber of Urban Transport (CUT). While the present study focuses on major cities, it is of interest to sketch the overall size of the sector, based on the CUT 1992 statistics [Izba Gospodarcza, 1992]. Of some 120 company members of the CUT, there are only 38 with fleets which exceed 100 vehicles; all of them are found in cities above 100,000 people. They account for 83 percent of all vehicles in service, 61 percent of total network length and 90 percent of all passengers carried. 246. Mass transport networks in major cities are extensive, and arranged in a reasonable functional hierarchy, though passengers, as always, want more direct connections, to reduce the transfers. In Warsaw, for example, nearly half of surveyed passengers walked less than 200 m to a stop at the home end of their journey and only about one-quarter walked more than 400 m; the situation was even better at the work end of the trip, with tramway passengers having somewhat better service than bus passengers [Atkins, 1992]. Services are frequent: six-minute service headways are common on major lines; actual frequencies are much higher because the ratio of line length to network length is large (2.8 for the entire Warsaw network, 3.7 for tramways alone), indicating that many corridors are served by several lines [BCEOM et SOFRETU, 1992]. Networks are strongly radial, but an effort has been made to provide lines that connect peripheries either through the downtown or directly. Average operating speeds in the 10 largest networks are in the 14 to 25 km/h range [Izba Gospodarcza, 1992]. 247. Technology-wise, the street bus is the universal and main urban transport mode. In 1992, members of the CUT owned about 16,500 vehicles, of which about 72 percent (11,800) were buses. The in-service fleet had 11,500 vehicles, of which about 8,500 were buses, 2,900 tramways, and 170 trolley-buses. In the 37 larger networks, 6,500 buses accounted for 68 percent of all mass transport vehicles in service; 525 million bus-km accounted for 71 percent of aggregated mass transport distance run. Vehicles are either standard-size (for 56 to 72 passengers) or articulated (94 passengers); smaller buses (mid- or mini-size) have not been favored. Buses are largely confined to city streets, which they share with other traffic. Exclusive bus lanes are an exception, rather than a rule, and there are no exclusive busways. In fact, among the Polish transport professionals, there appears to be a mis-identification of bus technology with on-street operation. Many bus corridors, particularly in Warsaw, have volumes in the range of 60 to 90 buses per hour, and higher, indicating that bus lanes would be warranted. At present, service differences between bus lines are due entirely to operational strategies; in addition to ordinary local lines, which feature frequent stops, there are numerous rapid (skip-stop) lines, as well as express (direct origin-destination) operations, and special night services. 248. Thirteen cities have tramway networks integrated with bus networks; this makes for some 900 network km of mostly two-way track. The book fleets aggregate to 4,370 vehicles. Of the 14 78 Annex 2 Page 9 of 43 systems, five are under 30-km long and play second fiddle to the street bus mode in their cities, but most others perform vital trunk-line services. The most important is the network of PKT Katowice, an all-tramway company with 207 route-kmn, serving 15 cities in the GOP agglomeration. This company was an integral part of the old WPK Katowice which was broken up along modal/depot lines in 1991, and is the only remaining one with a GOP-wide service network. 249. Though most lines are located on-street, many enjoy a separate, exclusive right-of-way, in the mid-street or lateral placement. They are affected by the street traffic only at intersections. For example, 86 percent of Warsaw's 130-km long tramway network enjoys exclusive lanes; these proportions are 78 percent in Krakow, 55 percent in Wroclaw and 67 percent in Poznan, for the 80- km, 88-km and 57-km networks respectively. The unique PKT Katowice has 40 percent of its network protected from street traffic. Low operating speeds on tramway networks (14 to 16 km/h) are due to excessive age and thus poor condition of vehicles, power lines, and particularly of the track, plus the high-step boarding standard for pre-light-rail tramway technology. 250. Five cities have trolley-bus lines, adding up to a combined network of less than 160 km and a total book fleet of 257 vehicles. Only two networks are of any significant size: Gdynia with a 75 km network and 75 vehicles, and Lublin with a 27 km network and 93 vehicles. 251. There are no rapid transit systems in Poland, but a metro has been under construction in Warsaw since 1983; the first 12-km long section of the 24-km long Line I has been largely finished and may start operations as early as the end of 1994. The purchase of rolling stock was not yet concluded at the time when the field work for this study was being done (November 1993), but an agreement has been reached since with a Russian manufacturer from St. Petersburg. Warsaw Metro, formerly designated a Central (state) project, has been placed under the authority of the Warsaw Voivod, even though it does not extend beyond the city limits. The original long-range plan envisaged two additional metro lines for Warsaw. Metro lines were also included in long-range transport plans for several cities, Krakow and Lodz, for example; these plans are still on the books, the new realities of transport demand and resource limits having yet to be fully translated into different approaches and plans. Plans for converting abundant rail tracks for urban/regional use and/or to construct entirely new regional rail lines have been put forward in the GOP and Wroclaw. 252. Until very recently, the rolling stock of urban mass transport operators has been exclusively of domestic and/or East European origin. At the end of 1992, nearly 45 percent of all buses owned by the members of the CUT were Hungarian-made Ikarus (280 and 260 models). Polish-made Jelcz M 1I and PR-1 IOV accounted for another 45 percent. Half of the trolley-bus fleet was also Polish made (Jelcz PR-Il lOE and PR-i lOT), the other half being Soviet-made ZIU98, with a few Ikarus- made vehicles. All tramways were made in Poland by the Konstal factory in Chorzow (105N, 102N and N models). All these vehicles can be considered technologically outdated, whatever their actual age. Rather than buy into western technology by importing new buses (which at present is prohibitively expensive), several Polish urban operators have been buying secondhand buses. The Polish vehicle manufacturers are leaning towards joint ventures with foreign suppliers, whether it be by putting together new vehicles, modernizing major assemblies, or buying secondhand. Mass Transport Fares 253. Urban mass transport fares in Poland are typically flat, based on a generous zonal system, privileging longer travel. Transfers, however, are not allowed for passengers with single tickets, 79 Annex 2 Page 10 of 43 which penalizes some longer-distance travelers. Different fares apply to different classes of service, e.g., regular vs. express lines, city vs. suburb, day vs. night network. (Table 6). Daily and weekend rates are available and regular passengers are given the opportunity of buying monthly tickets. Many do; 1991 data from MZK Warsaw show monthly tickets to account for about 45 percent of fare revenues. A standing law requires that deep discounts of 50 percent or more off single tickets are made available to pensioners, school children, and university students. 254. Many companies have their tickets sold by news and tobacco kiosks or other agents, who receive discounts of 5 to 7 percent. Polish urban transport companies use an honor fare system, complemented by random inspections. Fines are of the order of magnitude of one monthly ticket and increase if not paid on the spot. It is believed that non-payment or use of fake tickets is widespread. The revenue loss estimates are cited in the range of 20 to 30 percent of revenue. 255. In line with the public policy of pricing basic infrastructure and services, urban mass transport fares were traditionally low and did not change for long periods of time. For example, average fare was Zl 0.5 in 1960-65 and ZI 1.0 in 1970-80 (Table 7). Until 1989, individuals would pay only about 1 to 2 percent of their monthly income for fares. The literature cites 18 percent cost recovery for MZK Warsaw in 1980 [France, 19911 and about 25 to 30 percent in the mid-1980s [Ryder, 1991J].5 256. Likewise, intercity transport carriers charged low and flat fares on suburban networks. For example, in 1991 the PKP charged a single fare for its regional network centered on Warsaw, Zl 2,250 for single tickets and Zl 90,000 for a monthly pass; this was slightly higher than the PKP's fare for the 21 to 30 km distance category. Intercity fares were also quite inexpensive. This, coupled with low residential mobility, meant that significant numbers of people travelled to work from the surrounding region, but also from more distant cities. For example, in 1978 some 190,000 people commuted to Warsaw, 96,000 to Katowice, and 67,000 to Krakow. 257. As the fiscal crisis intensified in the late 1980s and ownership of mass transport enterprises changed from the state to municipal authorities, including the authority to set fares, the policy of low cost recovery could not be maintained. In some sectors, housing for example, the change in controlled rents has been slow, mindful of the fact that real wages and employment were falling, the emphasis of reform apparently being on ensuring that new construction is produced and bought using market processes. In urban mass transport, by contrast, fares have gone sharply up, with cost recovery in the 40 to 60 percent range by 1990, and reaching the 50 to 80 percent range by 1992 (Table 8). As for the PKP, it is indicated that it is breaking even on intercity services, but the ratio of revenues to operating costs for regional services is 0.5 to 0.7 and for local services about 0.2. ' Absolute values of cost recovery ratios cited in this study are not directly comparable to those from the United States or West European countries. The main differences are that Polish mass transport companies have had no debts, capital having being provided by the State, and that many are not obliged by law to record depreciation. Maintenance outlays are sometimes treated as capital investment and investments are hidden in balance sheets, there being no separate statement of sources and utilizations of funds. Nor are Polish cost and cost recovery data from pre-reform years comparable with recent Polish ones, due to rampant distortions in pricing factor inputs, particularly energy, in the former period. Accounts also reflected the fixed infrastructure and staff of numerous non-functional departments, e.g., health clinics, recreation and vacation facilities and other, all operated by large enterprises. The price, tax and accounting systems are all being reformed at varying speeds. 80 Annex 2 Page 11 of 43 258. By mid-1991, single fares were typically Zi 1,200, but jumped to ZI 2,000 by the end of the year (Table 7). Estimating a monthly transport expenditure as equal to 50 such fares, this meant a jump from 3 percent to 6 percent of the average monthly income. In mid-1993, single-fare, first- zone tickets in most major cities cost ZI 4,000 (US$0.22 at the 1993 average exchange rate); Poznan and Gdansk were half that much, but only for trips of under 10-min duration (Table 6). Prices of all-network monthly passes were mostly in the range of Zi 200,000 to 300,000 (US$11 to US$16.50). Some were lower, e.g., ZI 150,000 (US$8.25) in Krakow; and others considerably higher, e.g., ZI 410,000 (US$22) in Gdansk. Single-line monthly passes would cost less. Thus, 50 single fares would account for 6 percent of a the 1993 average wage of Zl 3.3 million (US$184) [The World Bank, 1994a]; a monthly pass would account for 4.5 to 12 percent of the average wage, depending on the city.6 259. Taxi fares were much higher by comparison. In Katowice, for example, the first kilometer cost Zl 16,000, subsequent kilometers cost Zl 6,000 each, and an hour of waiting is Z1 60,000. At night and for trips going beyond city limits, fares are double. Urban Roads 260. Urban roads in Poland are reasonably developed, but less so than mass transport networks and certainly not in step with recent traffic growth. This of course varies from city to city, depending on the degree of war-related destruction. Warsaw, for example, has wide and well-spaced arterials, while Krakow has a much more sparse network. The reconstructed old city in Warsaw can be easily by-passed by traffic and is not employment-intense; Krakow and Poznan, blessed with well-preserved, dense, mixed-use old city centers, have to go to drastic measures to prevent or at least minimize either entry or passage of motor vehicles. 261. Traffic engineering measures are in evidence, both in terms of geometry and traffic control. For example, roundabout designs are used for some major intersections and tram track turns have been eliminated to the degree possible. Traffic signals are ubiquitous, but are limited to out-of-date technology. For example, all of Warsaw's 280 signalized intersections are based on flxed-time control, and updating effort is on the low side; 50 percent are interconnected in groups ranging from 2 to 17, but there is no central control [Suchorzewski, 1994]. 262. Urban road networks have two distinguishing and related characteristics. First, there are very few limited-access, higher-speed, higher-capacity roads, i.e., urban expressways (Table 3). In fact, this is a country-wide characteristic. The Polish network of national roads has only 245 km of motorways and about 1,000 km of roads with expressway elements, e.g., divided carriageway or limited access [Danish Road Directorate, 1992.1 Second, ring road and city by-pass sections of national roads have not been constructed, the latter feeding directly onto the urban street system. 263. That urban expressways were not developed in Poland has not been for want of trying. Extensive plans for such roads were made in each city in the 1970s, at a time when they were not 6 These fares were introduced in 1992, when the average wage was ZI 2.5 million (US$183 at the then exchange rate of Zl 13,631 per $1); transport expenditure-to-wages ratios in local currency were higher. It should also be noted that wages differ from income, the latter being larger due to various transfer payments. For example, data for 1989 indicate that, for worker households, average wages were 82 percent of total income; for the lowest income decile, this becomes 68 percent [World Bank, 1993a]. 81 Annex 2 Page 12 of 43 really needed, but when Poland was anticipating a Western-like traffic scenarios for Polish cities. A brief spurt of construction activity peaked in 1977, but the subsequent two waves of economic crises prevented this sector from reaching high expenditure levels again. Several limited-access road projects were started, but only a few short links were implemented and are in use. One of the more visible such roads is Armii Ludowej (People's Army) Expressway in Warsaw, with an average peak hour operating speed of 65 km/h. More often these unfinished projects can be seen, notably in the TCA, the GOP, and in Warsaw, in the form of eerie, disconnected structures, stopped in mid-air or continued at a snail's pace when the public investment budgets dried up. Road authorities are now searching for ways to finance many of these proposals, whether for partly-constructed or entirely new roads. Road Institutions and Expenditures 264. Institutional responsibility for roads is divided three ways. The state is responsible for the 45,500 km long national road network, working through the General Directorate of Public Roads (GDDP) and its 17 field offices. Some 2,600 km of these are urban roads. The GDDP is a state agency under the tutelage of the Ministry of Transport and Maritime Economy. Voivodships are responsible for about 129,000 km designated as regional, of which only 14,000 km are in built-up areas (about 13,000 km paved) including most arterial roads in cities. Some voivodships, however, have more than half of their roads located in urban areas (Katowice and Lodz). Municipalities are responsible for about 170,000 km of local roads, of which 24,000 km are in urban areas (10,000 km paved). What this means in a given city will be illustrated using Warsaw as an example: of the total of 1,839 km of paved roads, 203 km are national roads, 470 km are voivodship roads and 1,166 km are municipal roads. 265. One exception to this division of responsibility is that municipal governments in about 100 larger ("presidential") cities are also responsible for the maintenance of national roads passing through their territory. There is a standing law requiring that maintenance be done by force account. The state has retained the responsibility for the construction of new roads belonging to this category, or reconstruction of the existing ones. This effectively means that in a given city, there may be three institutions dealing with the road network. 266. The road construction industry used to consist of nine large national road construction enterprises and more numerous and smaller local road construction firms, all in the public sector. They have now been re-organized into joint-stock companies operating under commercial law, and plans to privatize at least some of them are in the making. All but the smallest contracts are subject to competitive bidding, the threshold being at about Zl 100 million in 1993 terms. 267. Only local roads are financed out of municipal budgets. The maintenance and construction of the non-local network are financed out of the national budget, through voivodships and the GDDP. In some cities, local industries have in the past contributed to road construction funds. In the GOP agglomeration, contributions are significant, since the mining industry has had to make up for sinking and other mining-related damage. Voivodships often act as executing agencies for new construction on national roads passing through cities; moreover, the maintenance budget for these roads is a part of the voivodship road budget received from the Ministry of Finance. In turn, execution of works on voivodship roads is sometimes turned over to cities. There have also been cases where municipalities have actually paid for works done on voivodship roads from their own budgets, apparently because they thought the works were important and had some funds to spare. Moreover, 82 Annex 2 Page 13 of 43 several cities are participating in a pilot program to take over the administration of voivodship roads, with a de facto transfer of the annual budgets. 268. From fragmentary road expenditure data available to this study, 1988-92 average annual road spending by cities (i.e., excluding other sources) ranged from about ZI 92,000 (close to US$7) per capita in Katowice, to about Zl 216,000 (about US$16) per capita in Wroclaw in 1992 terms (Table 9). When expenditures from all three sources are combined for the same period, the amounts approximately double. 269. As noted above, road expenditures in Poland have gone through periods of rise and fall. The period 1960-77 was a rise, from under US$500 million (in 1992 terms) in 1960 to about US$1 billion in 1970, then rising steeply (9.6 percent per annum) to about US$1.9 billion in 1977 [Suwara, 1993]. The economic downturn starting soon after brought these expenditures to about US$1.2 billion in 1982-83, from which level they fell as the economic reforms gathered speed to the current US$500 million (also in 1992 terms) per annum. Little more than a half of this goes for national road network. Cost Recovery for Road Users 270. Domestic road users pay the usual charges: purchase (turnover) taxes, annual registration fees and fuel taxes, all of which accrue to the state budget. Driver's license fees are part of these charges; they accrue to municipalities. An additional source of revenue is from international road concessions. Automotive fuel is under-taxed in Poland relative to West European countries. Fuel taxes include a customs tax and a border tax; combined, they amount to a tax rate of about 234 percent for 94-octane and 98-octane gasoline, and 150 percent for diesel (Table 10). In March 1993, the retail price of 98-octane gasoline was Zl 9,000 (US$0.53 equivalent) per liter, roughly half of what is standard in Western Europe. Of this, the border price accounted for 28.4 percent, state taxes for 66.4 percent, the remaining 5.2 percent being intermediary add-on costs. For diesel, the price per liter was Zl 6,700 (US$0.40). The border price accounted for 37.8 percent, state taxes for 56.7 percent and intermediary add-ons for 5.5 percent of the total. 271. Data on total quantities of fuel sold and tax yields per year are not published. The amounts quoted in available sources are widely disparate and may not refer to the same thing. For example, it has been estimated that total road user charges for 1991 amounted to about Zl 11,000 billion (US$1 billion), 90 percent of which came from the fuel tax [World Bank. 1993b]. Another source quotes a figure of Zl 2,500 billion (US$0.14 billion) for 1993 [Rzeczpospolita, 8 March 1994]. 272. Neither vehicle ownership taxes nor fuel taxes were designed with cost recovery in mind. Nor are there any explicit connections between fuel taxation and road expenditures, either in total, or in attempting to match the sources and utilizations of tax revenues by, say, geographic criteria. Fuel taxes are not road user charges, but taxes, pure and simple. Several attempts have been made to change this. In the late 1970s, just as road expenditures started their downward slide, the GDDP proposed a user-fee nourished road fund linking road wear with maintenance expenditures [Suwara, 1993]. In the mid-1980s, legislation was passed to create a Motorway Construction Fund. The subsequent economic crisis prevented any moneys going into it and the fund was dissolved [Suwara, 1993]. At the time when field work for this study was being completed (December 1993), there was mention of yet another effort to draft a national law concerning a new road tax to be added to fuel tax. The matter has evidently progressed to a parliamentary and public debate [Rzeczpospolita, 8 83 Annex 2 Page 14 of 43 March 1994 and 6 May 1994], but the new law has not yet been adopted, in part because of disagreements on compensation for Poland's four million disabled drivers. 273. In the meantime, the current tax yields exceed by significant amounts the funds spent for road maintenance, rehabilitation and construction. The amounts cited above indicate that, in recent years, total expenditures for all roads (on the order of US$500 million) are about a half of the tax yield. This level of expenditure is quite low and goes largely for maintenance. For example, maintenance accounted for some 80 percent of US$273 million spent in 1991 for roads in the national network [Suwara, 1993; World Bank. 1993b]. Unfortunately, tax yields are not available for those years when road expenditures were several times the current level in constant terms. The current disparity between fuel tax yields and road expenditures cannot be taken to mean that "roads cover their costs," but that there is no relationship between the two. In any case, road expenditures by the government are but a part of the total social cost of road transport. These should include several other categories, the so-called "external" costs: e.g., congestion, pollution, and accident costs. Whether or not these correctly defined costs in the aggregate exceed fuel and other motor vehicle related taxes is relevant but not sufficient to establish cost recovery for roads: different relationships would obtain on congested individual roads and sub-networks, particularly in cities as opposed to uncongested rural roads. Private Automobiles and Traffic 274. Auto ownership was quite low in Poland until 1970, when the state adopted a policy of low- priced, small passenger cars, mass-produced in cooperation with Fiat. Country-wide ownership rates per 1,000 people moved from about 15 in 1970 to about 67 in 1980 (Table 12). As usual, auto ownership grew faster in cities in the same period: Poznan had 12 autos per 1,000 people in 1960, moving to 46 in 1970, 89 in 1975, and 159 in 1980. Similarly, residents of Warsaw had 46 autos per 1,000 people in 1970, reaching 157 in 1980. Already the 1980 ownership rates were higher by a factor of two or more relative to other countries at similar levels of GNP per capita, for example Algeria and Tunisia [Mitric, 1993]. The usage of automobiles, however, was low. For example, Warsaw data from the late 1980s indicate an average annual usage of about 8,000 km only; nationally, the usage was slightly higher, just under 10,000 km [Meyers, 1993]. This compares with 9,000 km/car in Italy, but is substantially lower than the Northern European countries (15,000 to 17,000 km/car) [Korver et al, 1993]. The main reason for low usage in the 1980s was that fuel was rationed; moreover, fuel and other vehicle operating costs were high relative to the disposable income of households. Also, cities were planned assuming that commuting would be largely by mass transport, thus the absence of parking and other facilities in city centers; automobiles were used mainly for recreation and for specialty shopping. 275. The situation has rapidly changed in recent years, with both ownership and usage of automobiles rising quickly. At the same time, mass transport operators have been plagued by sharply reduced public spending. The latter has resulted in reduced mass transport services, higher operating costs and very much higher fares. The national rate of automobile ownership per 1,000 people reached 98 in 1985, 138 in 1990 and 169 in 1992 (Table 12), growing at an average rate of 8.5 percent per annum in 1985-92 and at about 11 percent in the last two to three years. (Note that the former East Germany went from 150 vehicles per 1,000 people in 1970, to 237 in 1989, and 372 in 1992, a 16 percent growth since the unification [Pucher, 1994]). From 5.26 million passenger cars in 1990, new registrations jumped by 1.25 million over two years. A forecast made recently envisages 10.7 million cars in 2010 and 13.5 million in 2020 [Suchorzewski, 1993]. In Poznan, the 84 Annex 2 Page 15 of 43 rate reached 183 autos per 1,000 people in 1985, 222 per 1,000 people in 1990, and 284 in 1992, a 6.9 percent per annum growth rate for the 1985-92 period, and 13 percent in the last two years. It was 282 in Warsaw in 1990 and 322 in 1992; 44 percent of all households now own at least one automobile. In some well-to-do urban districts it has reached 400 automobiles per 1,000 people. These rates are approaching those in countries of Western Europe, where rates are in the 300 to 400 range. 276. Auto ownership and use are still expensive. The smallest, domestically produced automobile (Polski Fiat, equipped with a 2-cylinder 704 ccm engine, produced in the Bielsko FSM plant) cost just under ZI 100 million in 1993; this is equivalent to about 30 average monthly wages of Zl 3.3 million; a 4-cylinder version would cost about 30 percent more. Assuming an annual distance of 8,000 km and fuel consumption of 6 1/100 km, driving this car would cost about Zi 0.36 million per month, 11 percent of the average wage. 277. Traffic has also picked up, though not at the same rate as auto ownership. Unfortunately, there has been little attempt at a systematic follow-up of traffic growth. It is known that private gasoline use increased by 17 percent between 1990 and 1991 [Meyers et al, 1993]. Traffic surveys done on radial routes in Warsaw indicate a 30 percent increase between 1982 and 1991. Counts on bridge crossings in Warsaw indicate a 5.5 percent growth per annum in the 1987-93 period [Suchorzewski, 1994]. It has been forecast that, nationally, vehicle-km will increase at between 7.5 percent to 9.5 percent per annum in the period 1992-2010 [Suchorzewski, 1993]. Recent Trends in Mass Transport Usage 278. There is general agreement and some hard evidence that the use of mass transport has fallen since the late 1970s and has kept falling, though it is still in the 65 to 80 percent range, depending on the city. In Warsaw, where travel surveys have been more regular than in other cities, the mass transport share of non-walk trips fell from 81 percent in 1980 to 79 percent in 1987, and to 68 percent in 1993. The share of the private car went from about 18 percent in 1980 to about 31 percent in 1993. The trip rate, though, appears to have increased, from 1.67 trips per person per day in 1987 to 1.77 in 1993. In Poznan, recent data indicate an even sharper fall in mass transport's share of daily travel: from 67 percent in 1986 to 56 percent in 1993. Car use in Poznan has gone from 20 percent to 35 percent. 279. Nation-wide, based on the experience of public-sector operators, there have been evident reductions in both the supply and use of mass transport. The number of buses owned by members of the CUT decreased from 15,090 in 1986 to 13,410 in 1991 and to 11,880 in 1992. Total mass transport vehicle-km declined from 1,100 million in 1987 to 950 million in 1991, and the number of passengers per vehicle-km went from 8.3 in 1986 to 6.9 in 1990 and 6.1 in 1991. It follows that the number of passenger trips experienced an even sharper drop. Indeed, the CUT reports that total annual trips carried by urban mass transport fell from 9.1 billion in 1986 to 6.3 billion in 1991, a 7 percent loss per annum. It was just above 6 billion in 1992, roughly at the 1975 level. Frequency of mass transport use in the aggregate, fell from about 500 trips per inhabitant per annum in 1986 to 336 in 1991. In Krakow, the local mass transport operator carried about 760 million passengers per annum in 1985, against about 400 million in 1992; Lodz carried 870 million passengers in 1986, falling to 444 million in 1992 (Table 13). A similar trend is seen in travel by suburban rail. The PKP has reported a 33 percent drop in ticket sales for the 1989-91 period in its Warsaw-centered network and claim a 50 percent reduction in work-related travel by rail [Atkins, 1992]. PKP travel 85 Annex 2 Page 16 of 43 volumes have been estimated at 149 million in 1989, 120 million in 1991 and forecast at 105 million for 1992 [BCEOM et SOFRETU, 19921. 280. These numbers are approximate for three reasons. First, operators' passenger statistics are not based on systematic counts of passenger volumes, but on estimates based on tickets and passes sold and "typical" usage coefficients, the latter based on all too infrequent and non-systematic passenger surveys. This tends to overestimate usage, perhaps by considerable amounts. Second, trips by the emerging private sector are not included. Third, cheating is thought to have greatly increased. Nevertheless, it is accepted that the trend is clear: mass transport use is falling, and the use of automobiles is rising. 3. CURRENT URBAN TRANSPORT PROBLEMS IN POLAND Approach 281. During the field work for this study, key persons in each city were asked for their list of the most important problems in local transport. In some cases, answers were phrased in terms of over- age mass transport vehicles, and missing links or bridges in the road network. The implication was that there was no money to buy all the necessary items. In other cases, money was mentioned directly as the most serious urban transport problem. Indeed, available funds are much smaller than they were a decade ago: subsidies to mass transport operators have shrunk to almost half and state expenditure on roads has fallen to less than half of what they were. But the same 'problem" occurs in Los Angeles, a very rich city, and in Zurich as well. If only the city governments had more money, urban transport would be much better than at present. The truth is that the shortage of funds is not an urban transport problem, but a constraint. 282. This study takes a different concept of urban transport problems. In this view, urban transport is a service organized for city residents-the client-by an institutional system (local government and state government) through its agents-transport operators, road builders, traffic engineers, the police, etc. Analysis must always start with what the client, the people of the city, see as problems, i.e., a set of shortcomings in the delivery of transport service. Once identified, client-perceived problems should be traced, through a mesh of cause-effect chains, to circumstances and actions (or the absence thereof) by the govermment institutions and their agents. Only then can one diagnose the problems fully. The next stages in this approach consist of developing strategies and policies, and looking at an array of corrective actions, within constraints imposed by the exogenous circumstances, and human and material resources. If this is not done, if the analysis has not adopted a strong pro-client view, understood cause-effect relations, and taken a realistic view of constraints, it will not be possible to properly evaluate the proposed corrective actions, have the means to implement those adopted by the decision-makers, or succeed in improving the situation even if the chosen action has been implemented. 283. This section focuses on problem identification. It is divided into three parts, according to the point of view and scope of activity: first of the city residents, by modal category, then mass transport operators and road agencies, and finally the urban community as a whole, represented by local government. 86 Annex 2 Page 17 of 43 Transport Problems as Seen by Users 284. Pedestrians. Walking in Polish cities has been well provided for, as far as the structures are involved. Sidewalks are universally available, as are well-marked street crossings, pedestrian subways at major intersections and frequent underpasses where streets cross in-city railway lines. Pedestrian-only areas exist in most historic city centers. Unfortunately, the maintenance of pedestrian facilities is below par. Another visible problem is sidewalk obstruction by parked cars. More seriously, habitually excessive driving speeds on city streets and increasingly low driver respect for red lights in Poland are endangering pedestrians as well as other vehicles [Atkins, 1992]. 285. Bicycle riders. Polish cities have not in the past gone out of their way to develop facilities dedicated to bicycle use, or to ensure that joint use of street space is physically possible and safe. The severe winter climate may have something to do with this. Both personal and public views are changing in this matter and several Polish cities (Krakow, Wroclaw) are actively pursuing the development of bike-only routes meant to go beyond the recreational use of bicycles. 286. Mass transport passengers as a group. Mass transport passengers, still a majority of citizens in Polish cities, have been accustomed to good services. They are now seeing these services erode in both quantity and quality. Based on recent sample surveys in Warsaw, 47 to 60 percent of the respondents were primarily interested in service frequency and reliability. A much lower percent of respondents (33 percent) were concerned about fares. Both the service and fare situation have deteriorated in recent times, judging from the doubling of cost recovery ratios and a considerable drop in vehicle-km of service, sometimes by 50 percent (see the preceding chapter's section on recent trends). It is clear from the preceding discussion that vehicle-km have decreased, which must have affected service frequencies. At the same time, fares have sharply increased, starting in 1992, at rates higher than inflation. Operators also report breakdowns and slowdowns in service, directly affecting reliability; these are caused mainly by overage power supply or exceptionally bad state of tracks. Worn-out tracks also figure as factors in a noticeable degradation of passenger comfort. In- vehicle travel speeds, ranked important by passengers, are still at reasonable levels for bus passengers (18 to 23 km/h in the large cities), but have shrunk for tramways to low levels (under 15 km/h). 287. If there has been deterioration on the service side, passenger problems on the demand side have been even more serious. Sharply increased fares and car ownership, as reviewed above, are key factors behind the falling usage of urban mass transport in Poland. People who leave mass transit to become automobile drivers or passengers presumably do so because they feel they will be better off. This is not the case at the lower end of income distribution, where travel reductions induced by higher fares are caused by two difficult, inter-related phenomena: unemployment and poverty. Both have increased because of the fall in the national economic growth and subsequent transition processes. 288. Mass transport passengers-the unemployed and the poor. Throughout the economic crisis of the 1980s, characterized by two falls in the level of the Gross Domestic Product and then years of low-growth recovery, the Polish economy continued the policy of full employment. There was some shedding of labor by early retirement. The start of the reforms in 1990 meant a break with that policy. An initial stage, in which a fall in employment was due to recession, has been followed by the second stage, where shrinking of the public sector is being counterbalanced in part by the growth of the private sector. There were about 2.5 million unemployed in 1992, about 13 to 14 87 Annex 2 Page 18 of 43 percent of the labor force, mainly due to first-stage adjustment processes (Coricelli et al, 1993]; this reference is the main source for all numbers in this paragraph]. Unemployment has increased since then, edging closer to 2.8 million people and a rate of 15 percent, and may go on increasing, along with second-stage transition processes. This stage is still continuing and it is believed that the Polish economy has turned the corner on its road to recovery. The numbers should be treated with caution, not only because of statistical and definition changes and complications, but also because some of the new private sector employment is in the gray economy. Also, it should be remembered that the shrinking of the labor force also took place, because of retirements (700,000 in the first two years of the transition). Other moves included a reduction of overtime and/or paid leave. Within the retirement wave, disability and old-age retirements were much more significant than regular retirements. 289. Of the 2.5 million unemployed in 1992, 70 percent were in urban areas, indicating that cities were harder hit than the countryside (reference to the 63 percent urbanization rate in Poland). As much as 90 percent of the unemployed are under 44 years of age, meaning that they must actively seek work. Cities over 100,000 had one-third of the unemployed, though larger cities generally had lower unemployment rates than smaller ones. The transition has been the least painful in cities which have had a diversified local economy, educated labor force, universities, and good international connections; for example Warsaw, Wroclaw, Poznan, and the TCA [Prud'homme, 1992]. Hardest hit have been the cities relying on few, or even a single, large employer. Some of the largest cities, e.g., the GOP and Krakow, which have dominant concentrations of doomed industries (coal mining, steelworks), have managed to soften the blow, but still face a difficult future. It is in such cities that urban transport policy will have to walk a careful path between a low-income orientation and attempting to assist economic growth. 290. Until recently, the poverty threshold in Poland was defined in terms of a minimum subsistence consumption basket per person, the "social minimum," which differs by household size and type (e.g., worker, retired, farm) [World Bank, 1993a].' At the start of the economic crisis in 1978, there were about 3.4 million people below this social minimum. In 1987, before the tranMsition and the explosion of unemployment started, there were 8.3 million under the minimum, more than a fifth of the country's population. Some 71 percent of these people were located in urban areas. It has been argued that these joint increases in joblessness and poverty led to the fall of the previous regime and the introduction of reforms [Milanovic, 1992]. The Government instituted various social safety net programs, including unemployment benefits and social assistance, but this has fallen short of providing support based on the criteria reflected in the "social minimum." Recently, poverty threshold has been re-defined at the level of the minimum pension [World Bank, 1994b]. In 1993, about 14 percent of the population (5.5 million people) were under this new threshold (ZI 1.23 million, US$68, per month). About 26 percent (10 million people) have expenditures less than the minimum wage (Zl 1.5 million, US$83, per month). Average monthly income (expenditure) of people under the poverty line is about ZI 1.05 million (US$58). The most important causes of poverty are low working incomes (60 percent of cases) and unemployment (35 percent of cases). Big cities account for only 8 percent of the poor, and medium cities account for 5 percent; rural poverty, in general, is a much bigger problem. Some cities are harder hit than others, particularly those living off one or two large enterprises condemned to down-sizing or bankruptcy. The emerging private sector has provided new jobs, but only in some categories, in ' The social minimum was about US$47 for a 4-person worker household in 1990, corresponding to an annual household expenditure of about US$2,260 [World Bank, 1993a.]. 88 Annex 2 Page 19 of 43 some locations and not enough in the aggregate to counter-balance the job loss. This trend only now shows signs of abating, as the economic growth in Poland starts to pick up. 291. It is customary to express typical monthly expenditure for mass transport fares as a percentage of income at various levels of the income distribution curve. In Poland, most regular passengers buy a monthly pass, therefore its price is a ready-made indicator of monthly transport expenditure. Prices of monthly passes, however, vary widely between cities and there are several types of monthly passes in any one city. On the other hand, the price of a single ticket is stable between cities, being typically Zi 4,000. It was thought useful to make a "hypothetical" monthly travel budget of 50 single Zi 4,000 fares, assuming 25 traveling days and 2 trips a day, and use this in the following analysis in addition to the monthly pass budget.8 At December 1993 prices, it would take 14 to 34 percent of the monthly income at the poverty threshold to buy an all-inclusive monthly mass transport pass, depending on the city. Most poor are bunched at just under (and just above) the minimum pension threshold, so the range is several percent points wider on both tail-ends. The "hypothetical" travel budget would take 19 percent of the threshold income. If a poor person is a retiree or a student, he or she would have a 50 percent fare discount. Unfortunately, most people under the poverty threshold are the working poor: for them, the current fares are onerous. 292. It is also interesting to repeat the above affordability analysis at progressively higher levels of income. At the minimum wage level, a monthly pass would take 10 to 24 percent of a person's income, depending on the city; the "hypothetical" travel budget would take 13.3 percent. This is still above 12 percent, an informal but widely used benchmark for the limit of what is reasonable expenditure for mass transport. At the average wage level (Z1 3.34 million in 1993), the monthly pass would represent 4.5 percent of monthly income in Krakow, but 10.8 percent in Wroclaw; the "hypothetical" travel budget would represent 6 percent. Fare levels are therefore affordable for the average citizen. 293. Private vehicle drivers/passengers. At the opposite end of the users' spectrum from the unemployed and the poor is a group of users whose point of view is becoming increasingly important in Poland. It consists of drivers and passengers of cars, buses, and freight vehicles. The importance of this group at the present moment is unusually high: it is not so much their income or political power, but the likelihood that individual vehicle users are the main actors in the revival of the Polish economy. This is probably even more true of urban freight transport than of passenger transport. 294. In trying to evaluate the level of service to individual vehicle users, it was found that a practice of routine surveys of the service aspects of urban roads appears not to have taken hold in Polish cities. Judging from limited site visits, interviews and the available literature, basic urban road networks in Poland are reasonable, but have obvious and easily corrected shortcomings such as the following: (i) There are unnecessary delays at signalized intersections, indicating that traffic control is out-of-date. There is some signal coordination along arterials, based on fixed-time programs, but no area traffic control and little traffic actuation or real-timne optimization. 8 Single tickets do not allow transfers between lines. 89 Annex 2 Page 20 of 43 (ii) The state of road surfaces is variable, in part because the maintenance effort has been underfunded. On some well-used roads, there is much "grooving" degradation, indicating that prevalent pavement design standards and highway materials are not up to increasing levels of traffic and increasing axle loads. This last is due to the influx of foreign-made vehicles, particularly trailers. Only some national roads have the bearing capacity of 10 tons per axle and even this is less than standards for EU countries. (iii) Traffic safety is low, partly because the fleet features a volatile mixture of sizes and engine powers, but even more so by dangerous driving practices; this last may have something to do with years of the low-key profile of traffic police, which is mainly seen in cities enforcing the respect of traffic signals at major intersections, while anti- speeding and other selective enforcement campaigns are not in evidence. (iv) Parking infrastructure is on the low side in all cities: in Warsaw, it is estimated that 160,000 vehicles park on sidewalks (out of some 530,000 total). Efforts to manage parking vary between cities. Some have made considerable progress, whereas chaos reigns in others (see next chapter on corrective measures taken). (v) Network structures lack limited access facilities, both purely intra-urban roads as well as the by-passes for through- traffic. These are characteristically designed to provide higher speeds and capacities than ordinary urban arteries, take longer trips away from the at-grade street network, permit by-passing of city centers by intra-urban trips, and permit by-passsing of urban areas by inter-city and regional traffic. Their absence in Poland has been forcing longer trips onto the ordinary street network and routing too much long-distance traffic through city centers. This is only now emerging as a major problem, due to a recent spurt in traffic growth. (vi) In several large cities, urban development has proceeded far ahead of road building, whether or not specific roads had been planned. Thus, one finds networks with clearly missing arterial roads and bridges, notably in Wroclaw and the TCA. 295. Beyond the above observations on the supply and quality of the road plant from the user point of view, the main topical question concerns the existence of traffic congestion. Absent traffic studies to provide evidence to the contrary, traffic congestion in cities like Warsaw, Katowice or Wroclaw appears negligible compared with cities like London, Munich, or Paris, or mega-cities like Cairo, Mexico City and Bangkok. One recent, limited attempt to survey the traffic in Warsaw found that average peak hour travel speeds on main city streets were in the 18 to 20 km/h range in the central area and 23 to 40 km/h outside [BCEOM et SOFRETU. 19921; this is quite reasonable. Still, interviews with local government officials consistently brought up the existence of congestion; also, all cities have long lists of proposed or partially built road projects, which would seem to indicate that congestion and possibly the lack of direct origin-destination routing were acute problems. Limited and casual site visits by authors of this study hand indicated the existence of long peak hour delays at major intersections in several cities, with queues extending hundreds of meters, and even involving gridlocks (particularly in Warsaw). Just how much congestion there is, of what duration, whether the trends in network travel speeds and spot delays are precipitous, and what the underlying causes and costs are simply cannot be ascertained short of very basic but extensive traffic data collection. It is not by chance that the preparation studies for urban road projects currently being 90 Annex 2 Page 21 of 43 proposed in various cities tend to justify these projects typically in terms of road/land use interaction, network structure, and link capacity, but not in terms of economic benefits, calculated on the basis of vehicle operating costs and driver/passenger travel times. Economic considerations have not yet entered into normal technical and decision-making practice. Problems of Mass Transport Operators 296. The problem of falling demand for urban mass transport has already been covered from the point of view of those who made a modal shift to automobiles and those, less fortunate, who have difficulties paying fares. To make things more difficult, a shrinking market confronts Polish mass transport operators also plagued by production-side difficulties. Passenger data in Table 13, already quoted in the preceding section on recent trends, indicate patronage drops in some cities in the order of 30 to 50 percent since the mid-1980s. Low operating speeds, which also increase production costs and reduce service frequencies, often reflect a poor operating environment, for example the impact of traffic congestion on street-based public transport vehicles. Low revenue, mostly due to decreased patronage, may also be caused by inadequate fare design and collection. Poor reliability of offered services and their low level of comfort indicate overage plants, which in turn indicates weak financial standing of operating companies. A combination of high fares (at least fares perceived by passengers as being high) and low cost recovery ratios may indicate that mass transport operators in Poland are not efficient in the production of services. The following paragraphs deal with these problems, ending with the financial aspects since they provide a combined overa!l measure of the problem. 297. Operating speed of mass transport vehicles and friction with street traffic. The operating speed of mass transport vehicles is both a measure of quality of service to passengers and an important factor of internal efficiency. For a given fleet size, higher operating speed means better utilization and better service, this last potentially leading to more passengers; for an expected passenger load, higher operating speed means having to buy a smaller fleet. Typically, high operating speeds are associated with an exclusive right-of-way. This aspect of mass transport in Polish cities shows several anomalies. (i) As stated in the background chapter, many tramway lines in Polish cities operate on exclusive right-of-way, typically a mid-street or lateral platform protected by a low curb. The only time when these vehicles have to give way to street traffic is at intersections. All of these are signalized and have special tramway indications. Unfortunately, priority of passage either has not been programmed, or programming is not good, or other vehicles do not respect the signal. The result is that tramways experience crossing delays which extend into minutes. (ii) The tramway route infrastructure (tracks, power supply) has not been well maintained and replaced on time. Nowhere is the financial squeeze of the last fifteen years more evident than in worn out tramway tracks in the GOP region, or in Warsaw. This has meant speed restrictions, service interruptions, excessive wear of vehicle wheel flanges, and low comfort to passengers. (iii)The impact of the above on average operating speed of Polish tramways has been nothing short of staggering. Systems operating on as much as 85 percent exclusive right-of- way, normally expected to provide better service than any mode operating in street traffic, post speeds of 13 to 16 km/h! Thus the invaluable resource of the separate 91 Annex 2 Page 22 of 43 right-of-way is wasted, with serious consequences for fleet utilization, not to mention poor service to passengers. (v) The privilege of own-use lanes is normally accorded to tramways, almost never to buses and trolley-buses. The latter vehicles are therefore subject to normal traffic friction while in motion, and also have to fight illegally parked cars at street-side stops. It is paradoxical that even under these conditions, the CUT statistics indicate that bus lines consistently post much higher operating speeds than tramways, 17 to 25 km/h for the larger operators. 298. The above does not lead to the conclusion that tramways should be deprived of their privileged position, or even eliminated as a vehicle-technology, but that, first, the enormous efficiency/service potential of protected lanes should be maximnized and, second, that the privilege should be extended to other vehicle types. Extended discussions with local transport operators and planners indicate a strong mis-identification of bus technology with on-street operation, to a point of outright denial of well-known experiences in South American countries, Japan and elsewhere [Gardner et al, 1991]. Wroclaw is an exception to this finding, local planners being very keen on testing exclusive-platform busways. From another aspect, tramway (or rather light-rail) vehicle technology has given good results in on-street operation, when environmental and safety considerations are paramount, e.g., in pedestrian precincts and in-park placements. 299. Fares and fare collection. Having to pay an additional fare each time a passenger has to transfer to another line (for single-ticket holders) or change from PKP to a local carrier (for passengers holding seasonal passes) indicates that fare systems are behind the times. In addition to penalizing passengers for faults of the system, and probably losing potential passengers in the process, the lack of evolution in this aspect of operations works against a well-functioning system of multiple operators. This may not have meant much in the past, with most cities having a single operator enjoying a monopoly position. Now, multiple operators have emerged in the GOP region and also in several single-center cities in Poland. Fare coordination and revenue sharing will be difficult under the present circumstances. 300. A related problem is cheating by passengers. This takes various forms, from not having a ticket to using counterfeit tickets. Estimates of fraud rates vary from 2-4 percent to 15-20 percent, the higher range reported by MZK Warsaw and MPK Krakow. Some companies cite fraud rates as high as 40 percent, but appear to have been reluctant to invest resources in measuring the size of this problem. To resolve the problem of disinterested, in-house ticket inspectors, several companies have hired private inspectors, working with result-based remuneration. Unfortunately, temporary success tends to drive external inspectors out of business, and violations pick up again thereafter. In any case, fraud is a problem with a potentially large impact on company revenue and will need attention. 301. Fleet age. The average age of bus fleets for the largest eight companies in 1992 was in the range of 5.5 to 7.1 years (Table 14). When all eight companies are grouped together, the average age is 6.7, reflecting the weight of the largest operators (Warsaw, Poznan, Lodz), which have older fleets. Accepting that the normal bus age in Poland is about ten years, these bus fleets can be considered old. Nationally, based on CUT 1992 data, the average age is six and a half years, indicating that smaller operators have somewhat younger fleets. 92 Annex 2 Page 23 of 43 302. Whatever bus age or model, they are technologically out-of-date and generally of poor quality. Typical shortcomings include rapid rusting, low energy efficiency and emission levels twice as high as the current European standards. Seven-year old buses produced in Eastern Europe are often found to be at the end of their useful life. In Krakow, 12 to 17 year old buses, bought second hand in Northern Europe, reportedly cost 50 percent less to operate on vehicle-km basis then standard-make buses. 303. Fleets are overage because replacement programs have been weak in recent years, due to the shortage of capital. Based on a ten-year economic life, one would expect to have about 30 percent of the fleet or more in the zero to three years age band; instead, Table 14 shows the actual proportion of new buses to be about 11 percent. The practice of buying used buses from the Scandinavian and West European countries is not unique to Krakow: of the 141 buses purchased in 1992 by the eight large operators shown in Table 14, 66 percent were secondhand. In addition to benefits due to better technology, the labor/capital mix varies significantly between Eastern and Western Europe, considerably reducing the optimal replacement age of buses in the latter group of countries. Polish trolley-buses are generally newer (Table 15), particularly in systems like Gdynia's and Lublin's, but these fleets are quite small and few relative to bus fleets. 304. The situation is somewhat better for tramways in the aggregate, but there are greater differences between operators (Table 16). The habitual economic life for tramways is about 25 to 30 years. Excluding tramways above 30 years old, since these would distort results for systems such as Szczecin's, the average age of Polish tramways by operator varies from 6.4 years to 17.4 years. Aggregating all tramways, the average age is 13. 1 years. Of the three largest fleets, Lodz is comparatively well-off, with an average age of 10.4 years, whereas Warsaw and Katowice show 17.4 and 15.0 years, respectively, and need massive vehicle acquisition campaigns. If Polish tramway operators replaced 20 percent of their fleets every five years, as the above cited economic life suggests, there would have been some 870 tramways in the zero- to five-years age band; instead, there are only 630. Only 43 tramways were bought in 1992 (36 of which were new), merely 1 percent of the national fleet of about 4,340 vehicles. Age is not the only factor here. As noted in the review chapter above, even the newest Polish-made tramways are technologically a generation behind light-rail vehicles common in industrialized countries, both in terms of operating costs and service characteristics. Key deficiencies are that the understructure (bodies) is too heavy and poor in shock absorption, they use electro-mechanical controls (read: long down-times for maintenance), and they have low energy efficiency. 305. Efficiency of production of mass transport operators. For a given service schedule, low internal efficiency means high costs, therefore low cost recovery. Are Polish mass transport operators efficient? 306. It is generally difficult to separate the impact of exogenous from internal factors on performance of urban transport companies. International comparisons are particularly difficult since exogenous conditions vary widely between countries, even if a country were not going through atypical, intertwined and destabilizing economic/political events, as Poland has been experiencing. This analysis must therefore be read with much caution; it is at best an attempt to place the performance of Polish urban transport companies on an international map and to look into variations of efficiency indicators among Polish companies. For consistency, most comparisons will be made with frequency distributions available for an aggregate of companies which are members of the International Union of Public Transport (UITP) [Harrison, 1987]. Additional comparisons will be 93 Annex 2 Page 24 of 43 made referring to a World Bank publication [Armstrong-Wright and Thiriez, 1987.1. The following comments are based on indicators calculated from cross-sectional, 1992 data (Table 17), to get an idea of variation among companies. The comments should be treated with caution, not least because 1992 was a year of structural changes in the sector. Time series data are indispensable for an accurate picture of performance and testing cause/effect relationships. 307. The simplest measure of productivity is annual vehicle-km per inventory vehicle. The sample companies from Poland have mixed scores: (i) For buses, the range is from about 45,000 km per inventory bus per annum (MZK Warsaw, MPK Poznan, PKM Gliwice), which is just above the 50th percentile of the UITP distribution and therefore low, to a high of 73,000 km for PKM Katowice, well in the top 10 percent of UITP members. As an additional comparison, both BKV of Budapest and HHA of Hamburg achieve about 64,000 km per bus per annum. When the same indicator is calculated per bus in service, the results are in a narrower range, 75,000 to 86,000 km. This is quite acceptable, though many efficient firms in Asia achieve 90,000 to 100,000 km per annum, reaching as high as 125,000 km [Armstrong-Wright and Thiriez, 19871. The labor/capital ratios and work conditions in Asia are, of course, quite different from Europe. (ii) For tramways, all Polish operators are in the range 35,000 to 40,000 km per inventory tramway per annum, which is under the 50th percentile of the UITP distribution. Tramways in both Budapest and Munich achieve about 54,000 km per annum. Again, tramway-km per vehicle in service are considerably better, particularly for PKT Katowice. 308. The two indicators of vehicle use measure different things: one reflects the quality of technology and the maintenance effort, and the other the performance of the operations department. Judging from the above data, the combination of technological characteristics and maintenance services is not good. This is well confirmed by low ratios of vehicles in service to vehicles owned. For both buses and tramways this is typically about 70 percent, give or take 1 percent. Some "outlyers" are on a significantly higher performance side, for example PKM Katowice at 86 percent, but more often on the low side, like PKM Gliwice (60 percent) and PKT Katowice (54 percent), this last for operating tramways only. Efficient urban transport companies achieve an 85 percent or better proportion of vehicles in service, with the best ones reaching 93 to 94 percent. Low Polish scores are due to length of time vehicles have to spend in maintenance/repairs (owing to age and technology), but also to unusually high reserve contingents. Finally, the falling demand may have to do with fewer vehicles being placed in service. 309. Looking at staff-related productivity, the 50th percentile of the UITP sample is 84 staff per million vehicle km for mixed-technology modes; the best 15 percent achieve it with about 60 staff. Of the ten Polish urban transport companies shown in Table 17, three are grouped about 70 staff per million vehicle-km (MPK Krakow, PKM Katowice and PKM Gliwice), which is considerably better than UITP's 50th percentile of 84. Most others are in the 77 to 112 staffing range, PKT Katowice holding a negative record at 145 staff per million veh-km. An alternative staffing statistic, staff per vehicle, gives essentially the same picture. A medium-to-low range of five to eight staff per vehicle in inventory gives way to an inferior range of five to 12 staff per vehicle in service. That these figures indicate overstaffing is clear. Judging from more detailed studies of MZK Warsaw, the 94 Annex 2 Page 25 of 43 majority of excess staff are found in non-operational departments [World Bank, 1992e]. It should be remembered that Polish companies are slowly coming out of the era where they bought relatively few services on the market, producing many things in-house, thus the presence of numerous non- operational employees. Finally, it should be remembered that Polish workers had and still have modest wages. Thus labor intensity does not necessarily translate into higher operating costs, as would be the case in Western Europe or the United States. In 1992, most Polish urban transport companies in our sample showed wages and social benefit payments to be about 40 to 50 percent of total operating costs (Table 18), compared with 50 to 70 percent in Western Europe. MPK Poznan was an exception at 62 percent. 310. Since 1988, most Polish urban transport companies have taken steps to reduce staff (Table 13, further details in Annex 4). MPK Krakow, for example, went from 7,114 staff in 1984, to 6,460 in 1990 and 4,345 at the end of 1992; this last is a decrease of 34 percent over two years. MPK Lodz went from about 7,216 staff in 1984 to 5,800 in 1992 (Table 13), and reports to have gone to 4,160 in mid-1993, a decrease of 42 percent. MZK Warsaw reduction has been smaller, 12 percent since 1987. MPK Wroclaw reduced its staff from 3,686 in 1984 to 3,539 in 1990, but then increased to about 4,100 staff in 1992, while bus-km fell by about 11 percent over the same period. 311. Productivity in combined terms of services offered (in veh-km) and passengers carried, gives the following results: (i) Among single-technology companies, PKT Katowice carries ten passengers per tramway-km, compared with 11.4 for the 90th percentile of the UITP members, which can be considered respectable. PKM Katowice and PKM Gliwice carry seven and five passengers per bus-km, respectively, compared with 4.4 for the 90th percentile of the UITP curve. (ii) For mixed-technology companies, the range is 6 to 7 passengers per veh-km, with MZK Warsaw low at five; the median of the UITP curve is 3.7, and the 90th percentile is 8.2 passengers per veh-km. (iii) An alternative indicator, passengers per vehicle per day, gives similar results: MZK Warsaw and PKM Gliwice are under-utilized at approximately 950 passengers per vehicle/per day, and PKM Katowice does well at 2,155 passengers per tramway/per day. Other companies are in the not-so-loaded range of 1,300 to 1,500. 312. Finally, combining staff and passenger data: (i) PKM Katowice and MPK Krakow are far ahead of other companies, with 93,000 and 92,000 passengers per staff, respectively. This is very good for PKM Katowice, but mediocre for MPK Krakow, which runs both buses and tramways. The 90th percentile of the UITP curve is 109,000 passengers per staff in mixed-mode companies. (ii) The remaining companies are in the range of 65,000 to 82,000 passengers per staff, except for Poznan which is low at 54,000. 95 Annex 2 Page 26 of 43 313. The internal efficiency of Polish mass transport companies leaves much room for improvement. The key areas for attention are fleet utilization and staffing. The same or higher level of supply could be achieved with smaller fleets and fewer employees. In this last respect, PKT Katowice seems to be in a particularly difficult situation. Conversely, PKM Katowice is doing very well in most respects. 314. Financial situation. Company accounts reflect and in part explain the above problems faced by urban transport companies. This will now be illustrated, drawing on 1992 financial statements provided by six mass transport companies from major cities included in this study. The original Polish documents were converted into standard-form operating income statements and balance sheets; a summary of the most important indicators is given in Table 19. Because these data refer to one year only, it was not possible to do a full cash flow analysis. This may not be a great shortcoming, since the companies had few investments and financial transactions. A word of caution is necessary before proceeding. The six companies in question, like most mass transport companies in Poland, have gone through sudden changes of legal status, organization and size, the process that was under way in 1992 and in fact still continues. They had all been state-owned enterprises. Three of six had gone through ownership changes: MPK Poznan and MPK Wroclaw became budgetary units of their city administrations and MPK Krakow had already become a limited-liability, joint-stock company owned by the city treasurer. The remaining three were still state-owned: PKM Katowice and PKT Katowice had just been created by splitting WPK Katowice, a GOP-wide, mixed-mode company; MPK Lodz was in the process of liquidation in 1992. Their status changed again in 1993. Different status means different tax and depreciation liabilities. For example, the budgetary units do not pay tax on net income (profit) and depreciate only the "social assets"-vacation homes, in-house training centers, cafeterias, clinics, etc. Different tax status did not have much impact in 1992, since all companies had accounting losses, but depreciation did. The accounts, therefore, reflect this unsettled state in the sector and can be used only for a coarse-grained overview. It should also be noted that there are differences between cost and revenue data in the audited accounts and those reported in the CUT's yearly statistical bulletin. 315. The above said, the following financial characteristics, summarized in Table 19, come out of the audited accounts: (i) All companies but one registered accounting losses in 1992. With subsidies included as revenue, operating ratios were in the range 99 to 103 percent, meaning that in most cases subsidies did not fully cover the shortfall between total operating costs and sales revenues. Only MPK Wroclaw had a small accounting profit, which would disappear if the company were to depreciate more than its fixed assets. (ii) When subsidies are excluded from revenues, substantial differences between companies emerge. PKM Katowice had the lowest operating ratio (120 percent), indicating that this newly formed organization did well in the restructuring process and could in the near future approach breaking even. PKM Katowice is the only one of these six companies that operates buses only, i.e., it has no route infrastructure to maintain. At the opposite end was PKT Katowice, an all-tramway company, showing a staggering operating ratio of 245 percent. Evidently, this company inherited all the excess staff of the old WPK Katowice and has to take care of maintaining an extensive, overage tramway network. The remaining four companies, which operate 96 Annex 2 Page 27 of 43 both buses and tramways, had similar levels of financial losses, with operating ratios grouped in the range of approximately 165 to 180 percent. (iii) Not one company had sales revenue sufficient to cover direct operating costs (working expenses), i.e., wages, fuel, spare parts and other purchased goods and services.9 The pattern of direct cost recovery ratios follows their technological make-up. Single-mode companies are at the top and bottom of the list. PKT Katowice covered only 44 percent of costs and PKM Katowice covered 88 percent. MPK Lodz reached 65 percent, while Krakow, Poznan and Wroclaw companies were between 55 percent and 60 percent. (iv) No company had debts, either short- or long-term. (a) Four of the six companies (Krakow, Poznan, Wroclaw, and especially Lodz) had cash problems and delayed paying their suppliers, as indicated by current ratios in a low range 0.56 to 0.90. PKM and PKT Katowice were better off, with current ratios of 1.54 and 1.57, respectively. (b) Generally the net fixed assets were low, considering the plant sizes. The structure of fixed assets was highly skewed towards buildings. Building values for several companies were four to five times the value of transport equipment. As could be expected, PKT Katowice represents an extreme case of this, with buildings accounting for above 80 percent and the rolling stock only for about 14 percent of total assets. The balance sheet of MPK Krakow showed fixed assets of ZI 11,742 million (about US$0.9 million), negligible for a company with about 800 buses and tramways in daily service; this was a result of the transitional legal status, valid only in 1992, whereby the local government retained the ownership of the plant, as has been done in most French cities. (c) Four of six companies had 50 percent or more of their gross fixed assets depreciated. Two were in the 30 to 35 percent range. 316. Financial indicators show the same overall picture which came out in the preceding, partial analyses of productivity and other problems. It is clear that Polish urban transport companies need to reduce their operating costs, improve performance (particularly tramway performance), increase fare revenue, divest some of their non-transport fixed assets, and invest to rejuvenate their rolling stock. It is a positive feature that they have no debts, but their currently high operating ratios and their cash flow problems would discourage potential creditors. 9 Given a great variety of depreciation write-offs claimed by urban transport companies in Poland (a consequence of different legal status and inflationary experience in the last 15 years) plus the fact that companies have no financial costs, the use of direct operating costs (working expenses) instead of total operating costs makes comparisons of cost recovery between companies more meaningful. Sales revenues used to calculate recovery ratios in this paragraph were reduced by the amount of turnover tax, which is strictly speaking a cost; this has had no tangible effect on results. 97 Annex 2 Page 28 of 43 Community-side Problems 317. Local governments represent all citizens and they deal with all other institutional actors active in the urban transport context. Two transport-related problems, though not limited to either transport or cities, are experienced by all citizens: degradation of the environment due to air pollution and noise from traffic sources, and low traffic safety. A third problem mentioned here involves the relation of transport and land development. It is noted that the shortage of funds is not listed as a problem here. Not having enough funds is not a problem, it is a universal condition. The topic of local government finance, as it relates to urban transport, is an important issue and will be covered in the main report. 318. Environmental problenms. Poland has had a poor record of environmental protection, much of the air pollution coming from industrial and energy-producing sources, particularly coal burning. Traffic, unfortunately, is also much to blame. According to a 1990 study by the Warsaw-based Motor Transport Institute, transport sources are responsible for about one-third of all lead, hydrocarbons and nitrogen oxides emitted into the air, 40 percent of carbon monoxide and 45 percent of asbestos [Walsh, 1990]. These are national aggregates; it is likely that vehicles are considerably more responsible for pollution in urban areas. The situation must be even worse now than in 1990, in both relative and absolute terms. Vehicle ownership has increased drastically and average use is rising, while pollution from industrial sources may be decreasing with the demise of some heavy industries in Poland and the introduction of pollution-control devices in others. 319. Many factors underlay environmental problems. (i) The Polish vehicle fleet is comparatively older than those in Western European countries, average vehicle age being higher by as much as 5 years. In Krakow, for example, 48 percent of the 1992 private automobile fleet had been manufactured before 1983. (ii) Domestically produced vehicles use leaded fuel, the emphasis having been on low fuel consumption rather than low emissions. Also, many secondhand automobiles were bought in recent years from Germany and Switzerland, when these countries were outlawing vehicles operating on leaded gasoline. In 1990, only 1 percent of gasoline sold was unleaded. In the late 1980s, unleaded fuel was priced 30 to 40 percent more than leaded, but this has since been corrected. (iii) Polish gasoline has two to three times more lead and diesel fuel has two to two-and- one-half times more sulphur than fuels used in Western Europe. (iv) Buses operated in Poland, produced in former COMECON countries, have engines weaker by 25 percent or more than functionally necessary, requiring operation at high smoke-producing pressures. (v) Government interest in the matter has not been strong, as seen from the sparse efforts to measure the problem, or to organize and enforce the requisite inspection programs. 320. Most if not all corrective measures are in the jurisdiction of the state government. The potential for converting the existing fleet is low, since the most popular Polish automobile, Fiat 98 Annex 2 Page 29 of 43 Polski, does not have enough space to house a catalytic converter. The Government is strengthening its control programs for the existing vehicle fleet, but the economic situation has not been such to permit the adoption of stronger medicine, i.e., age-graduated vehicle registration fees. As for new vehicles, Poland has adopted laws mandating catalytic converters by mid-1995; small vehicles (under 700 cubic centimeters), however, are exempted until the end of 1996. 321. Safety. Safety records in Poland have shown wide variations in recent years; there was a surge in accidents in the 1989-91 period, followed by a visible drop in 1992-93 [Gerondeau et al. 1993. Road Safety in Central Europe.]. On the whole, safety is low in Poland. The fatality rate of 14.6 deaths per 100 injury accidents is higher than in any other Central European state. Urban rates are of course lower: about four to seven deaths per 100 accidents in large cities, with Warsaw contributing the high end of the range (7.2 deaths per 100 accidents). Pedestrians are in particular danger on street crossings, the mid-block spot speeds (as opposed to average travel speeds) in Poland being unusually high. The severity of accidents also reflects an explosive combination of small-size vehicles of Polish manufacture and the heavier imported vehicles. Traffic police activities are very limited and low-profile. 322. Land development. Road networks, as they are now, do not provide access to land considered by cities as best to be developed. In some cases, notably Wroclaw, the desired (westward) direction of development cannot take place without new roads and particularly new bridges; alternately, development is proceeding without road and bridge links. There are complexities involved in this matter. It is not clear in many cities that new development should be extensive, when many empty patches show evidence of the old-style leap-frogging. Until land markets and property taxation develop, urban planning is still following the habitual colored map approach. 4. RECENT REFORMS AND INNOVATIONS 323. Keeping in mind the plethora of problems identified above and various critical statements concerning the heritage of the previous political and economic system in Poland, it is interesting to review the urban transport initiatives taken by the new urban governments in the last three to four years in response to problems as they saw them. These new city councils, mayors, and deputy mayors were the first to be elected after the passage of the 1990 Local Government Law. Their terms are set to expire by mid-June 1994, when new elections are scheduled. Their record is largely positive and promising, if cautious. In addition to strong actions to improve cost recovery through fare increases, already discussed in Chapter 3, there have been several innovative developments, whose scope and impact varies from city to city. These will now be reviewed. Some have to do with local-level organizational and regulatory consequences of new national laws, to which city authorities have added their own ideas: change of legal/organizational status of mass transport companies, separation of transport operations function from policy and service planning, introduction of service contracts between operators and public authorities, and increasing reliance on markets. Other developments are based entirely on city initiatives, include budding new approaches to traffic restraint, more realistic investment planning, and attempts to formulate new, wide-scope urban transport policies. 99 Annex 2 Page 30 of 43 Change of Legal/Organizational Status of Public-owned Mass Transport Companies 324. Before 1990, urban mass transport enterprises were owned by the state, though their "founding organ" typically had not been the state itself (i.e., not a ministry), but voivodships or local governments. Most were under the functional tutelage of the Ministry of Transport or, in the case of multi-functional enterprises, the Ministry of Construction and Physical Planning. The March 1990 Law on Local Self-Government and its May 1990 companion, the Regulation on Implementing the Law on Local Government Staff, turned the ownership over to municipalities and required that by the end of 1991 (postponed to the end of 1992) they had to choose one of several possible legal/organizational forms. Legislation defining a full scope of legal alternatives for companies performing municipal services was subsequently delayed in the Sejm (parliament), so actual options available to cities were four: budgetary unit (zaklad budzetowy) of the municipality, public enterprise (zaklad uzytecznosci publicznej), joint-stock company (spolki prawa handlowego) or limited-liability company. The second one is identical to pre-reform state-owned public enterprises, except that now they can also be owned by local governments. According to the CUT, the term "public utility company" is in widespread use though a specific public utility option has not been defined in laws as they now exist. The last two entities are "corporate" forms, operating under the Commercial Code. At this time, city governments remain 100 percent owners of mass transport companies, no matter which legal/organizational form they chose to adopt. This, of course, need not remain so. 325. The clearest differences among these legal options are between being a budgetary unit and a corporate one. In the former, mass transport is performed by a department or agency of city administration and its management is subordinate to city managers in all matters. Employees are civil servants, they are protected from losing jobs, and follow the relevant pay scales, and they receive salaries independent of the financial outcome of activities. Budgetary units follow accounting rules for government institutions (no balance sheet), have numerous tax privileges, and depreciation of fixed assets (other than the so-called "social assets") does not appear in their operating cost statements. They can sub-contract private companies to provide auxiliary or transport services, but cannot sell shares. In short, political control over mass transport activities is at maximum, while the potential for improving performance is on the low side. In a corporate option, the city government retains its full say on important matters, such as service requirements and fare levels, through its participation in the board of directors of the company and by signing a service agreement with the company. For all other matters, even if the company is fully-owned by the city, its management is, in principle, free to make its own decisions. The company would have its own purchasing policies, make its own sub-contracts for auxiliary services and sub-contract transport services from another operator, like in the budget-unit option, but it could also, over time, change the structure of ownership, including partial or total privatization. It could borrow funds, change capital/labor proportions, hire and fire workers. It would follow standard commercial accounting procedures, reflecting the full cost of operations, fixed assets, and capital structure. It would be liable for taxation like any other commercial enterprise, pay dividends to owners and also could be subjected to bankruptcy. 326. In this reform cycle, most cities appear to have made their choices guided by one set of strategic considerations, i.e., the desire to keep full control of mass transport companies and, generally, minimize risks of the unknown, rather than seek performance gains through increased independence of company managers: 80 companies out of 128 (63 percent) chose to have mass transport activities carried out through a budgetary department of the city, among them Warsaw, Poznan, Wroclaw, Gdansk, and Gdynia. Thirty-one companies (24 percent) opted for the public 100 Annex 2 Page 31 of 43 enterprise status, including all companies in the GOP region; and 17 (13 percent) opted for a joint- stock company operating under the Commercial Code (including Krakow and Lodz). An important factor in the decision apparently was the desire to avoid paying the tax on excess wages in the public sector (popiwek). This pattern of choice of the new legal status is in contrast to the water companies, the majority of which chose the limited-liability option [World Bank. 1993c]. Needless to say, it will take time for the full impact of the new organizational/legal forms to be felt; whatever the form chosen, the changes so far have been largely superficial, especially when it comes to the prerogatives of the companies' management. The Creation of a New Institution-Urban Transport Authority 327. Going beyond the change of legal status relative to their new owner, mass transport companies in some cities have been restructured so as to separate the regulatory from operational functions. Wroclaw, Gdynia, and Bialystok have advanced the farthest in this, but the process is also underway in Warsaw and elsewhere. Typically, the planning department of the old company, in whole or in part, has become the Public Transport Authority, while the old operations and technical departments have constituted the new company. The authority defines the route network, service standards and fares; it also has the operational control function, to ensure compliance with the agreed performance, as well as longer-range planning functions. 328. Institutional design differs from one city to another. In Warsaw, the new Mass Transport Authority, the ex-planning department of the old MZK Warsaw, exists in parallel with a Road and Traffic Authority, newly taken from the Warsaw Voivodship. In Gdynia, there is no Roads and Traffic Authority, the voivodship still having jurisdiction over roads. Wroclaw, by far the most ambitious and advanced effort, has created one Urban Transport Authority which combines mass transport, road, and traffic matters, with the full scope of short-term and long-term responsibilities. Break-up of Public-sector Companies 329. The process of changing legal status and ownership of mass transport companies has been accompanied in many instances by a break-up of these companies into several new organizations. Based on the underlying motives for the break-up and the resulting organizational pattern, three different situations have arisen. 330. Non-operational departments become separate companies. The simplest case has been for the mother company to have given birth to another mass transport operator plus one or more companies specializing in an auxiliary activity, typically track maintenance or engine overhaul. For example, MPK Krakow was transformed into four corporate-option companies: a mass transport operator (the new MPK Krakow), and three companies specializing in bus repair, tramway repair, and tracks/power maintenance and construction, respectively. All of them are joint-stock companies fully owned by the city government. The initiative for this transformation apparently came from within the local government; the main motive was the separation of activities which the city will continue to subsidize (transport operations) from those which should pursue a commercial orientation. It may also be that the non-operational departments had spare capacity, which they can now offer wherever there is demand for their services. It is envisaged, if favorable conditions arise, that these companies can take in private partners and/or be sold. At present, they provide their usual services to MPK Krakow under contract, and have started looking for other business opportunities. Conversely, specialized companies located in other cities have expressed interest in bidding for track 101 Annex 2 Page 32 of 43 and vehicle maintenance. It is too early to call this a competitive market, but the process is certainly going in that direction. 331. Multiple transport operators. Another variant of the break-up is to de-construct the mother company into several mass transport operators, with or without also creating other companies for performing auxiliary services. This has, for example been done in Bialystok, where the old MPK was divided into three urban transport enterprises, each now being a joint-stock company 100 percent owned by the municipality. They have signed service agreements with the Municipality of Bialystok to provide the usual mass transport services in the city, but are also free to offer their services outside the city area; their technical departments can offer maintenance and repair services to external clients. In addition, the Municipality has commissioned other transport operators, one private and one voivod-owned. The initial motive apparently has been to destroy the power of the union to immobilize the city, as has happened during a 3-month strike in mid-1991. The result, in the longer run, may be to create functioning markets in both mass transport and bus maintenance. 332. A similar process is taking place in Warsaw. In 1992, the old MZK was first transformed into a budgetary unit of the Warsaw City Government and its planning department became the Warsaw Transport Authority in 1992. Now the company is being further broken up into two companies, to operate buses and tramways, respectively, plus a non-transport company. This appears to be just the first stage of implementing recommendations of a 1992 study by expatriate consultants, financed by the Ministry of Privatization. Subsequent stages may involve further fragmentation of operating units and the creation of several companies for auxiliary services; the new companies would be first "corporatized", i.e., adopt a statute of joint-stock companies in public ownership, then offered for sale. Altogether, the consultants have recommended that the private sector be given a more significant role in mass transport than it now holds, being limited to six small-size operators. The declared motive for the break-up of the MZK Warsaw has not been to fragment the union, but to improve efficiency through creation of smaller, easier to manage organizations. As of this writing, however, the unions are contesting the break-up, concerned that their job security, wages, and work conditions would all deteriorate with the new set-up. 333. Transformation of multi-city operators. For companies that had served more than one municipality/city, as was the case with voivodship-based companies, the process of changing legal status coincided with their fragmentation in order to match service area and ownership. The GOP region offers a striking example of this. The mother company, WPK Katowice, had been owned by the Katowice voivodship and served all the cities in the GOP region. Since there was no agglomeration government to turn the WPK over to, the company was broken into 13 new transport companies, plus two companies specializing in non-operational functions. Of these, 12 are city-based companies, all but one operating buses only; all have opted for the budgetary unit legal option. Only the WPK's multi-city tramway network was left intact. It also became a separate company, owned by the Katowice voivodship. The initial reason behind the break-up of the WPK Katowice was probably to wrest control from the state, represented by the voivodship, as part of the decentralization-linked reforms. However, the process of fragmentation of companies in the GOP does not appear to be over, with turf sentiments looming larger than concerns for economically sensible approaches. 102 Annex 2 Page 33 of 43 Multi-city Transport Associations in the GOP Agglomeration 334. Due to the multi-city nature of the GOP agglomeration, institutional evolution was forced yet another step farther than in other cities. The inter-city travel market is nearly half of the total passenger market in the region. By moving from monopoly to a plethora of transport operators, problems arose as to the division of the regional service network among the successor companies, the coordination of services and fare systems for inter-city routes, and the division of revenues. Katowice alone is being served by seven bus companies and the tramway company, in addition to PKP, intercity bus companies (heirs of the PKS) and private operators. Using the provisions of the 1990 Local Government Law, whereby municipalities can associate themselves for the purpose of regulating and providing a service which transcends municipal borders, cities in the GOP could join to create a transport association, with whom municipal mass transport companies would sign service agreements. They did this following a well-established German model pioneered in Hamburg [Topp, 1989], but taking the concept in a slightly different direction. They created no less than a patchwork of six multi-city transport associations, some following the transit federation concept and others functioning much more like transport authorities in other cities. As another sign of diversity produced by political democracy in Poland, two major GOP cities (Gliwice and Bytom) have so far stayed out of any common arrangement. 335. The largest and most important association in the GOP is the Communal Transport Association (Komunikacyjny Zwiazek Komunalny, KZK), located in Katowice. The KZK owns the service infrastructure on common routes, which was transferred to it when the old WPK Katowice was dismembered. In addition to developing, signing, and supervising service agreements with individual companies from some 18 GOP cities, the functions of the KZK include: routing and location of stops, fares, revenue collection and allocation among operators (including subsidies from member cities), maintenance of common infrastructure, marketing and demand studies, and development planning. KZK is governed by an assembly composed of the mayors of member cities. Entry of Private Operators 336. A door to private sector participation in Polish urban transport was opened as early as the end of 1988, with the passage of the pre-reform Law on Economic Activities. Following stipulation of that law, no concession is needed for a private transport operator to enter the market; a simple registration with the municipality suffices. Today, private transport operators are present in just about every large Polish city, albeit in different forms. 337. Possibly the most frequent mode of operation is for private operators to offer services without any formal arrangements. This is a classic para-transit approach, with drivers waiting close to a major transport terminal or activity center, until enough passengers have boarded their bus to make the trip worthwhile. In addition to standard-size buses, mini- and micro-buses are also being used. These "informal" mass transport operators tend to follow routes of the municipal company and use its stops (without permission and against prohibition), but they also stop on demand. Buses operate largely on a seat-only basis, charging fares close to, and higher than, the municipal buses, sometimes 25 percent higher. Both fare and destination are displayed on the bus. An example of this operation is found in the GOP, on a busy traffic corridor between Katowice via Sosnowiec to Huta Katowice. It is estimated that private operators take about 10 percent of the total mass transport market in the GOP, but up to 40 percent on this particular route. 103 Annex 2 Page 34 of 43 338. A step up from the above arrangement is for small-scale private operators to sign a service contract with the city's own mass transport company, for service on given routes at agreed minimum frequencies. Typically, the private sub-contractor accepts tickets issued by the municipal operator and competes only on cost grounds. An example of this operation is found in Krakow, where 11 private operators provide services on MPK's network, based on an agreement with MPK. Private bus vehicles are most often mini- or mid-size, and mostly secondhand, bought abroad. In Warsaw, private operators bought reconditioned buses from MZK Warsaw itself. 339. A variation on the preceding model is when the service contract is signed with the transport authority or transport association, as in Bialystok or Katowice, respectively. Warsaw is heading in this direction, now that it has formed its own transport authority. Service agreements between private operators and authorities or associations thus parallel similar agreements between the authority and public sector operators. 340. Finally, an arrangement is emerging where a private operator goes into partnership with the municipal company. In Olsztyn, a city of 165,000, located south-east of Gdansk, the municipal operator (PKM Olsztyn) was facing a shortage of buses in service, since only 66 percent of its fleet of 160 buses was operational. There was an evident demand pressure on several routes. Though PKM's cost recovery was relatively high (83 percent in 1992), there were no prospects to generate enough funds internally to replace its fleet, nor could Olsztyn Municipality provide the funds. PKM, therefore, entered into a joint venture with a foreign entrepreneur, sharing capital costs on a 90/10 basis, to supply vehicles and services initially on two routes, 11 km each, from which municipal buses would be withdrawn and re-deployed elsewhere. The foreign partner has supplied the management team and the initial fleet of 15 mid-size (21-seat) buses, to be increased to 45 within a year; drivers were hired locally. Services are seat-only, at a fare of Zl 6,000, compared with MPK Olsztyn's fare of ZI 2,400 for ordinary services, and Zl 4,800 for express services (as of autumn 1993). After the first five months of operation, at loads of about 5,000 passengers per day, the results are considered satisfactory from both service and financial aspects. 341. Similar arrangements are in the making for other cities, notably Lublin (population 350,000). Since these new services are complementary rather than competitive with the existing operations, local authorities, operators and even unions are positively inclined. The apparent difficulty is that proposals are coming from private entrepreneurs with an equity base too low to attract bank loans needed to purchase the rolling stock. Service Contracts 342. Whether the urban transport operator is a budgetary unit of the municipality, or a joint-stock company, or a private operator, relations between the municipality and the operator(s) are now regulated by the means of service agreements or legal contracts. These have been developed, signed and implemented in Krakow, Wroclaw, Gdynia, Warsaw and many other Polish cities, some starting in 1992, others in 1993. 343. The common features of all service agreements signed through 1993 are that the municipalities (transport authorities): 104 Annex 2 Page 35 of 43 (i) specify all the service requirements (routes, lines, frequencies, vehicle types and number available for service) in detail, including the quality of service in terms of punctuality, reliability and vehicle condition; and (ii) set, or at least agree to, the fares charged. It is interesting that in Wroclaw, even the above duties have been allocated within the local government structure: the City Council retains the political aspects of decision-making (fares and subsidies) and the Transport Authority has jurisdiction over service requirements. 344. Where service agreements differ is in the degree of commercial risk taken by the operator. In this respect, there appear to be three types of service agreements: (i) low-risk i.e., the operator takes only the risk involving direct operating costs of service (working expenses); (ii) medium-risk, where the operator takes the risk of total operating costs (working expenses and capital recovery); and (iii) high-risk, where operator takes on both cost and revenue risks. 345. Low-risk. The most frequent type of agreement is between the municipality, acting directly or through the transport authority, and the operator-typically the former monopoly-holder transformed into one of several legal/organizational forms described above. The key feature of this type of agreement, in addition to those cited above, is that the municipality retains the ownership of the plant (rolling stock, equipment and facilities), and the decision making power concerning their replacement and/or expansion. It also decides fares, sells tickets, and inspects passenger compliance. The operator is concerned with meeting the agreed service schedule, the required quality of service, and maintaining the plant in good condition. The only risk the operator takes is that of direct operating costs, inclusive of vehicle maintenance, repairs and overhaul. The operator may execute infrastructure rehabilitation and upgrading projects, other plant-related construction, and fleet replacement, but only at the order and at the expense of the Transport Authority. Operators are generally allowed to undertake other tasks on contract. They are generally not allowed to hire other mass transport operators (e.g., a private entrepreneur) as their sub-contractors, this privilege is being reserved for the transport authority. 346. The remuneration is proportional to vehicle-km of service actually performed, subject to an agreed annual total vehicle kilometers. The implicit assumption here is a linear total cost curve, valued at zero for zero activity. This is not plausible when the operator has a large fixed-size plant, which is the case in all large Polish cities with tramway networks. The rates are specified for different vehicle types, but are subject to quarterly correction for changes in fuel/energy prices, exchange rates and newly introduced taxes. The agreement signed in April 1993 between the Warsaw Transport Authority and MZK Warsaw includes rates in the range of Zl 11,100 per km for standard buses to ZI 14,200 per km for tramways. Using the second quarter exchange rate as published by the National Bank of Poland (Zi 16,900 per US$1), these translate into US$0.66 per bus-km and US$0.84 per tramway-km. In an earlier agreement (February 1993), tramway-km were priced about 6 percent lower than bus-km. 105 Annex 2 Page 36 of 43 347. The Warsaw documents do not reflect any attempt to introduce better performance and/or passenger attraction through adoption of specific targets and incentives in the service agreement, but an "award fund" can be defined in the financial plan of the operator, presumably to stimulate efficiency. The per-km rates appear to have been set to match a forecast operational budget of the MZK Warsaw. It should be said that the content of service agreements is evolving, the Warsaw documents of 1993 being substantially more complex and quantitative than the first agreement adopted in 1992. 348. The Transport Authority is obliged to inspect the operator's compliance with the service agreement. The sampling rate in the Warsaw agreement is 50 percent of the scheduled runs departing in the morning peak, involving some 900 checks over 24 hours. Monitoring is being done by a 10-strong staff in the field, plus three staff to process data; this is on an order of magnitude lower than ticket inspection, which in Warsaw employs 150 people. In Wroclaw, monitoring is done in 120 locations, by a staff of five, generating about 3,000 observations per month. 349. The compliance is measured in terms of both quantity and quality of service, and vehicle condition. Quantity has to do with revenue vehicle-km of completed services by a specified type (size) of vehicle. If a scheduled run is interrupted and not completed within a specified interval, only the vehicle-km before interruption are accepted as "completed." Quality is measured in terms of punctuality (relative to the agreed schedule), respect for stops, passenger information, vehicle state, and accuracy of vehicle statistics. Annexes to each agreement include detailed schedules of penalties for non-compliance. These can be expressed in percentages of the vehicle-km based remuneration up to a set ceiling, or as discrete sums per infraction. In the 1993 Warsaw agreement, for example, the ceiling is 4 percent of the total vehicle-km based remuneration. In Wroclaw, where accounting between the Transport Authority and the operator is done differently, up to 20 percent of the subsidy can be charged as penalty, though so far the maximum charged has been 10 percent. In both cities, the funds derived from penalties are fused with the capital fund for plant replacement. 350. Medium-risk. The fundamental differences between the above type of service agreements and those which some Urban Transport Authorities have developed for use when the operator is a private enterprise are below. (i) The operator uses own rolling stock and maintenance facilities. The negotiated price therefore includes a reflection of capital costs. (ii) The contract specifies conditions of non-performance and other conditions under ,,which'tht contract will be tenninated before its normal expiry. 351. This type of agreement is much easier to develop and price, since the onus is on the private operator to estimate his costs and bid accordingly. It is interesting that the model agreement of this type as developed in Warsaw, includes formulae to correct for inflation. The correction is applicable to 80 percent of operating costs, implying fixed costs of 20 percent. 352. High-risk. This is a situation where the operator takes a revenue risk as well, as it was described a4ove in the Olsztyn case. The Olsztyn municipality had the last word on the type of services to be offered and the fare level, but it had been the private operator who proposed both. It should be noted that the Olsztyn case features a different type of service (seats only) and different vehicle size (midi-bus). This approach has yet to be introduced by other cities. There are several 106 Annex 2 Page 37 of 43 cases where there have been both interest by local authorities and offers from candidate private operators, but the latter have not succeeded in securing loans for buying the rolling stock. Lublin is a recent exception to this, where a joint venture of expatriate and Polish manufacturers, operators and local government had its loan application approved by a Polish bank. Traffic Restraint/Parking Management 353. Whereas the innovative actions concerning mass transport companies were set in motion by a state law that required the change of ownership and adoption of a new legal status by a certain date, developments related to urban traffic management were grass-roots. They depended entirely on the initiative of citv governments and the ideas of technical staff of city administration, arising as a response to local conditions. Problems, of course, were many, experienced in direct proportion to the rise in automobile ownership and use, for which Polish cities were not prepared. The responses varied from one city to another, ranging from an activist program of traffic restraint and parking management (notably in Krakow, Poznan and Wroclaw) to a neglect of management methods in favor of a capacity-building program for parking, as in Warsaw. 354. In Krakow, following the adoption of a transport demand management policy (see section on new policies below), the central city was divided into three zones, with progressively tighter car access and higher parking fees as one moved towards the heart of the city. It should be noted that Krakow has an old town of exceptional beauty and value, largely unchanged since the 13th century. Two inner zones are inaccessible by car unless one is a resident or by exception. The third, circular zone has pay parking for up to two hours. Fees in 1993 were nominal for residents of the inner zones: Zl 100,000 per annum for individuals and Zl 1,200,000 per month for resident companies. In the outermost zone, residents paid even less (Zl 50,000 per annum), but visitors have to pay 240,000 for weekly parking and Zl 800,000 per month. Short-term parking fees were of the same order of magnitude as in the US: Zl 4,000 for the first half hour, Zl 6,000 for up to an hour, and Zl 15,000 for up to two hours (US$0.22; US$0.33; and US$0.83, respectively). Longer-term parking is possible outside the restricted area. A park-and-ride approach is being used, whereby holders of parking tickets (credit card type) are given a discount for use of mass transport services, and vice versa. 355. In Wroclaw, parking management has been a part of a comprehensive program of central area traffic management. Its objectives and elements were: (i) use of the available parking capacity in the central area to be shifted from commuters to short-term parkers; (ii) pedestrians to regain space on sidewalks, hitherto occupied by parked cars; (iii) walking and parking facilities to be modified to permit use by handicapped people; (iv) the use of bicycles to be promoted, inter alia, through introduction of bike lanes and parking areas equipped with bike stands; and (v) public transport vehicles to get maximum priority in the use of street space. 107 Annex 2 Page 38 of 43 356. Some progress has been achieved with all five of these, but the most successful has been the parking pricing element. A privately operated two-zone parking management system was introduced early in 1992, with pay parking available in both zones. In the inner zone, all 1,700 parking places are metered, compared with only 20 percent metered spaces in the next zone, out of a total of 7,500 spaces available. Wroclaw rates are lower than in Krakow, having been corrected downward after the first half-year of experience: ZI 2,000 for the first half hour and ZI 4,000 for up to an hour, in the inner zone, rising to ZI 6,000 an hour for longer stays. Only the residents of the inner zone can buy seasonal parking tickets therein. These rates are considered "right," since previously observed empty slots have disappeared. Parking rotation has increased, indicating that usage has shifted towards shorter-term users. The program returns ZI 400 million per month (US$220,000) in revenue, of which ZI 150 million in fines; this is reported to be three times its full operating cost. The Transport Authority is aiming to achieve and maintain one-to-one correspondence between hourly parking fees and the price of a liter of gasoline. 357. The Wroclaw case is particularly interesting because of its legal history. Polish law had not clearly allowed local governments to charge for unguarded, on-street parking places, or prohibit parking on sidewalks. In Warsaw, for example, legal problems are said to have prevented the introduction of on-street parking management. When the parking program was first introduced in Wroclaw, violations were numerous, as were refusals to pay fines. The matter ended up in the courts, going all the way to the Polish supreme court. The ruling was in favor of the city, thus establishing a legal precedent for other cities. A penalty for non-payment of parking fees is a full day's fee, enforceable against city residents owing to a computerized data base of locally registered vehicles. There are still some problems to be resolved, including the prosecution of out-of-town drivers. The success of programs implemented in some cities and the widespread pressure of parking congestion contributed to a recent decision by the Economic Council of the Government to authorize cities throughout Poland to charge for on-street parking; the revenues will go into municipal treasuries. It remains to be seen whether this decision will have the necessary legal weight. Scaling Down Unrealistic Transport Plans 358. One of distinguishing features of strategic urban transport plans in the pre-reform period was the key importance assigned to constructing new rail-based systems in several large and medium-size Polish cities. In addition to an already-started project in Warsaw, metros were to be constructed in Lodz and Krakow; rapid tramways or pre-metros in Poznan, Wroclaw and Szczecin; and ordinary modern tramway (light-rail, LRT) in Bialystok, Kielce and Lublin. These plans had two major weaknesses. First, system choices were not based on a comparison of options with reference to specific urban transport problems of present and future, but on strong a priori notions on the link between city size and mass transport technology. Second, there had been no consideration of whether a city in question had financial capacity to construct and operate the proposed systems. The latter problem was to be solved through continuous lobbying of the central government for adequate funds. 359. Both of these weaknesses became evident once economic reforms started and especially after fiscal independence of local governments made it necessary to start looking at the actual financial capacity of one's own city. Faced with this new situation, cities reacted in different ways. Some may still be dreaming of a metro; the standing long range plans in several cities include these projects. But, if they are not yet giving up on the idea that a metro is "the most appropriate long term solution to the local transport problem" (an oft-heard statement), officials and planners in these cities do know that it is not financially affordable in the foreseeable future. In Warsaw and Poznan, 108 Annex 2 Page 39 of 43 where large-scale construction had been well-advanced when reforms of the country's economic system started, some painful decisions had to be made. Facing a similar dilemma, the two cities went in opposite directions. 360. In Poznan, the project under execution was a rapid tramway line, located in a radial, north- south corridor linking the downtown Poznan with new residential areas north of the city (Map IBRD 25638), with about 110,000 people. It followed from the 1975 master plan for Poznan, which featured radial corridors for both rail-based mass transit and urban roads, fanning out from the center until points of contact with the regional/national system of motorways. Because the existing tramway system was bogged down in street traffic, it was decided to go for a completely exclusive right-of- way, built entirely in open cut or on a viaduct. To this was added an improved tramway vehicle technology incompatible with the existing street-based tramway due to its high-platform loading, also requiring new power lines, substations, and a depot. The construction of the first 7-kin long phase started in 1980 and proceeded very slowly due to small and irregular allocation of funds from the city's treasury, with insignificant contributions from the state in 1986-87. Since 1986, project preparation and implementation activities have been managed by a separate agency. 361. By 1993, having spent about US$40 million in 1992 terms, earthworks and structures had been finished, including six stations and six above-grade crossings. Between this project and the improvement of various radial roads to connect the city with new bedroom communities, no funds were left for other aspects of urban transport. The price for downtown Poznan has been high, especially for the neglected bus/tramway system. It took 12 years and intensifying criticism by some Polish urban transport experts for the city authorities and planners to accept that they had not made a good choice. 362. In 1992, the city reconsidered and adapted the 1975 master plan, abandoning the extensive pattern of urban growth, opting instead for the densification of already developed areas. A new urban transport policy was adopted in the same year (see details in the following section). A major decision was made to alter the concept of the Rapid Tramway, letting it become an integral part of the existing tramway system and a part of that system's rehabilitation plan. An up-to-date tramway vehicle will be used, but it will have low floors, for street operation, and it will be compatible with the existing track and power arrangements. The project needs about US$25 to US$30 million and another 3 years to complete. In 1993, as a second exception to its practice of non-assistance to urban mass transport in cities, the state awarded the city a Zl 70 billion (US$3.9 million) grant, double- matching the local contribution of ZI 35 billion (US$1.9 million), making it possible to bring life back to the project. 363. In Warsaw, the city authorities did not dare do what their counterparts in Poznan have done, though admittedly the situation in the capital faced much more difficult and less clear-cut circumstances than in the latter city. The construction of a 12-km Stage 1 of the Warsaw Metro, about a half of the planned 23-km Line 1, started in 1983, after decades of plans and false starts. The Stage I section starts in Kabaty at the southern edge of the city, ending about 2 km south of the heart of the downtown district, close to the Warsaw Polytechnic (now Warsaw University of Technology) (Map IBRD 25637R). In 1992, nearly ten years later, the project had expended more than US$500 (in 1991 terms), all from the state budget. Most tunneling for Stage I was completed and two-thirds of the station works as well. A depot complex at the southern edge of the line was among the first sub-projects to be completed, together with workshops and test tracks. Works were continuing on the remaining stations, with about a year's worth left. What remained to be done, 109 Annex 2 Page 40 of 43 other than works, was to purcha-' *ie traffic control system and the rolling stock, both delayed for a lack of funds. Just like in Poznan, the city authorities faced a watershed decision in 1992. There had been enough critical voices from a part of the Polish community of urban transport planners to cast doubt on the overall project justification and to suggest a re-study of how best to continue under the new circumstances. Tunneling had not yet reached the downtown. There was a question of how far to continue along the remaining 12 km northern section of Line 1. 364. At that time, the World Bank was asked to look at the project as a potential financier, within a more general review of urban transport in Warsaw. The resulting report concluded that the metro project could not be said to have either economic or financial justification relative to other options in the same corridor [World Bank. 1992. Warsaw Urban Transport Review]. As for the important question of whether the metro could be afforded by the City of Warsaw or the nation, the bank study found that it had never been posed. The evidence regarding project justification did not come out of detailed and complex analytical evaluations done by the Bank team, but was founded on the observation that the current, surface-based mass transport system in Warsaw had no capacity problems in the metro corridor, years after the metro was supposed to be operational. It was estimated, assuming a 1994 start of operations, that the Metro would initially carry on the order of 12,000 peak hour passengers in the most loaded section, much too low for this category of urban mass rapid transport given the alternatives, of which the study suggested several. A radical alternative to explore was to bring the tunnel to the surface in the quickest manner feasible and to change vehicle technology from the standard, high-platform metro cars to a flexible-step light rail vehicle capable of operating both on stations in the tunnel section, as well as on streets; the underlying idea was to integrate the partially finished project with the existing surface tramway system, subject to the rehabilitation of the latter. An even more radical option would have been to moth-ball the works until such time when both demand and financial capacity of the city made the continuation feasible; the funds thus released would have been used for much needed upgrading of the existing mass transport system. Accepting to re-study the project, of course, would not have pre- judged its destiny. The re-study might well have shown that continuing the project was to be preferred after all. What the re-study would have done was create a solid technical, economic and financial base for continuing in whatever form gave best results for the city, a powerful argument with potential lenders. 365. As is usual with large-scale, highly visible urban transport projects, the technologies and politics intermingle in various ways. A technical option may be shown to have the best prospects in terms of aggregate welfare of the urban community, but its impacts on various sub-communities of interest may be quite variable. Which option gets chosen depends on the mapping of its differential impacts onto the political power structure. Warsaw Metro, after ten years of construction, was a heavy mortgage on local and national officials. After an initial acceptance of a re-study, and having already developed its detailed terms of reference, the city authorities in consultation with the central government decided that the original plan for a full Line 1 metro and the standard vehicle technology would be retained. What was still left open for a re-study were relatively minor routing options and an examination of the need to continue underground beyond the northern (Gdansk) PKP terminal. The central government accepted sharing the remaining capital costs with the city, but the city alone was left to finance the rolling stock and future subsidies once the metro starts operations. The search for funds continued, and the Kabaty-Warsaw Polytechnic section opened early in 1995. The construction of tunnels is continuing northwards. 110 Annex 2 Page 41 of 43 366. The experience with the Warsaw Metro project illustrates well the deficiencies and contradictions of the Polish practice of planning, much more so than the rapid tramway line in Poznan. Its planners have claimed to have used all the standard "Western" methods of project evaluation and overcome obstacles placed in their way by the then Polish government. Seen from outside, the approach appears to have been exactly the opposite: its planning was characterized by a rigid approach to possible futures and a mechanical treatment of technical alternatives. The project was designed partly as a show-case for the capital city and partly as a possible atomic shelter. Its long construction and chaotic cost experience were due to a combination of factors: the crisis of the Polish economy in the 1980s; the budgetary squeeze in the transition period since 1990. The break- up of the COMECON trade arrangements, and the more recent shift of project "ownership" from the state to the City of Warsaw. Nor has the construction management been what such complex projects would require. 367. As in Poznan, Warsaw Metro siphoned off the funds, leaving the existing bus-and-tramway mass transport system starved for funds. Over the 1987-91 period, the average annual capital expenditure for urban transport in Warsaw, US$109 million, was divided as follows: US$30 million (28 percent) went for roads, US$13 million (12 percent) for MZK, and US$66 million (61 percent) for Warsaw Metro [World Bank, 1992e]. The results are particularly visible to tramway passengers: old tramway cars, worn out tracks, and breakdowns of power lines. Emergence of New Policy Approaches 368. Wherever the above described innovative actions took place, they did not happen in isolation, but as part and parcel of emerging urban transport policies. While each of the five cities and two agglomerations analyzed in this study has taken some significant steps to deal with transport problems, in three cities the progress has gone the farthest and the approach taken has been more comprehensive than elsewhere. In these cities (Krakow, Poznan, and Wroclaw), combined teams of transport planners, civil servants and elected officials have worked out the principles of new urban transport policies and strategies and submitted these as proposals to the political decision makers. In Krakow and Poznan, the proposals have been formally approved, while in Wroclaw formal approval had not yet taken place, but the decisions taken and implemented indicate that the political system has accepted the submitted ideas. The distance between general principles and specific policy and resource-linked actions is of course great. Only time will show how successful these cities will be in implementing their new ideas. 369. Only Krakow policies are summarized here in some detail, supplemented by those elements from other cities or sources which complement the Krakow case. The Krakow strategy starts with a diagnostic of "permanent economic crisis," the damaged environment, and the ascendance of the automobile in the city, and then puts forward the following. (i) Recent economic changes have undermined the knowledge basis for planning in urban transport; it will be necessary to undertake extensive field research into new economic activities, new spatial linkages, and new travel behavior patterns. (ii) Motorized mobility will have to be limited, the automobile being seen as a major source of air and noise pollution, and a waster of energy, space and capital. The city will be divided into areas with variable accessibility by 111 Annex 2 Page 42 of 43 automobiles, with little or no access to the old town. Specific modal split mixes will be adopted for each area. (iii) Road development will focus on by-passes of the central city, inter-modal transfer facilities (particularly auto-mass transport, including park-and-ride), and access to new developments. (iv) Incentives will be provided for the use of energy-efficient modes and vehicles. (v) It is a strategic objective to stop the downward trend in mass transport patronage by at least maintaining services at the current level. This will be done through: (i) investments to upgrade rolling stock and tracks, (ii) priority on the street through traffic control and re-allocation of street space, (iii) introducing multiple operators, including public and private ones, and their combinations, and (iv) setting fares so as to maintain a 50 percent level of cost recovery, with favorable treatrnent of frequent users, while letting single fares reach economic levels. (vi) Policy decision-making and operational functions will be separated, with the municipality retaining only the former. (vii) Pedestrian and bicycle facilities will be given special attention. (viii) A policy of mixing up land uses (instead of making them homogeneous) will be pursued in new developments. (ix) The jurisdiction over roads should be united, to replace the current three-way split between the state, voivodship and the city. (x) Though preference is expressed for making maximum use of the available infrastructure, long-term investments have been estimated at about US$1 billion (for 40 km of new roads, 46 km of motorways, 70 km of new tramway tracks and 200 km of bicycle paths). (xi) Since the above much exceeds the current financial capacity, a financial reform will be needed, including new sources of finance (vehicle taxes, fuel taxes, road fees, parking fees) and new financing methods (borrowing); for these to be implemented, the city will lobby for new national legislation." (xii) Proposed investments will have to be subjected to cost-benefit analyses to select and prioritize the investnent program; a four- to five-year program will be developed by the municipality to supplement its usual one-year budget. '° Total current and capital spending of Krakow Municipality in 1993 was forecast at about Zl 2,000,000 million (US$110 million at the 1993 average exchange rate of Zl 18,145 per US$1); capital spending was about 14 percent of that. However, it was said that the total of all 1992 transport investments in Krakow, whatever the source of finance, was about US$15 million. 112 Annex 2 Page 43 of 43 370. The CUT-proposed policy. While policy approaches of Wroclaw and Poznan, and of other cities to a lesser degree, resemble that of Krakow, the CUT have elaborated a different policy document [Izba Gospodarcza Komunikacji Miejskiej, 1993b]. It is worth noting that the CUT and the Polish Academy of Sciences are the only institutions engaged in developing a national urban transport policy. In line with the state policy of devolving all responsibility for urban transport to cities, the national transport policy document, recently drafted by the Ministry of Transport, barely mentions this sub-sector. 371. The CUT, being an association of all Polish mass transport operators, are primarily interested in the well-being of the industry, which they equate with well-being of cities. Their ideas have four main thrusts. (i) The state should have an important role to play in the sector. It should charge the Ministry of Transport to re-engage in this field, to develop an urban transport policy and pursue a host of activities, such as: regulatory laws, laws on urban transport funance, vehicle specifications and standardization, industrial policy relative to domestic production and imports of mass transport vehicles and other plants, adaptation of Polish practice to EU standards, and trend forecasting; (ii) Legislation concerning alternative legal/organizational forms of mass transport companies should be further developed. The CUT is particularly supportive of establishing a category of municipal utility companies (not limited to mass transport), meant to combine the flexibility of management by an independent board with tax privileges not available to Commercial Law companies. (iii) The 1989 Polish Law on Private Economic Activities should be corrected to eliminate unconstrained entry into urban mass transport market, which has led to predatory behavior by informal operators. (iv) An employment tax, modeled approximately on the French "versement transport" should be legislated to provide funds needed for operating and capital subsidies of urban mass transport. 113 ANNEX 3 SUMMARY TABLES Table I Polish Cities Above 100,000 Population Table 2 1992 Aggregated Municipal Revenues and Expenditures for Large Cities Table 3 1992 City Data Table 4 Urban Transport Company Sununary Data (1992) Table 5 Modal Split for Non-Walk Journeys (%) Table 6 Fall 1993 Mass Transport Fares in Major Cities Table 7 History of Urban Transport Fare Levels Table 8 Cost Recovery of Mass Transport Companies Table 9 Road Expenditures in Major Cities Table 10 Price Structure of Automotive Fuels Table 11 Auto Ownership in Selected Countries Table 12 Population and Auto Ownership in Poland and Major Cities Table 13 Operating Trends of Selected Mass Transport Companies Table 14 Age Structure of Buses Owned by Mass Transport Companies Table 15 Age Structure of Trolley-Buses Owned by Mass Transport Companies Table 16 Age Structure of Tramways Owned by Mass Transport Companies Table 17 1992 Performance Indicators of Urban Transport Companies Table 18 Operating Cost Structure and Unit Costs of Selected Urban Transport Companies (1992) Table 19 Financial Indicators for a Sample of Urban Transport Companies (1992) 115 Annex 3 Page I of 19 POLAND URBAN TRANSPORT REVIEW Table 1: POLISH CITIES ABOVE 100,000 POPUIATION 19921 1992 CITY POPULATIOIN CITY POPULATION OR AGGLOMERATION (1,000) OR AGGLOMERATION (1,000) GOP AGGLOMERATION 2,209 CMES WITH 100,000 TO 300,000 POP. of which: Katowice 367 Bialystok 273 Sosnowiec 259 Czestochowa 259 Bytom 232 Radom 230 Gliwice 216 Kielce 215 Tvchv 139 Torun 202 Bielsko Biala 184 THREE-CIrY AGGLOMERATION 764 Olsztyn 165 of which: Rzeszow 155 Gdansk 467 Walbrzych 141 Gdynia 252 Opole 129 Elblag 127 LARGE MONO-CENTRIC CMES Plock 125 Gorzow 125 Warszawa 1,653 Wloclawek 123 Lodz 845 Tamow 122 Krakow 751 Zielona Gora 115 Wroclaw 644 Koszalin 110 Poznan 590 Kalisz 107 Szczecin 414 Legnica 106 Bydgoszcz 384 Grudziadz 103 Lublin 352 Slupsk 102 Jaworzno 100 Sub-total 8,606 Sub-total 3,317 TOTAL 11,924 POLAND 38,400 Source: Izba Gospodarcza Komunikacji Miejskiej, KOMUNIKACJA MIEJSKA W LICZBACH ZA ROK 1992. Warszawa, Kwiecien 1993 Note: individual city data in this table may differ from population data used in subsequent tables, which were obtained from cities 117 Annex 3 Page 2 of 19 POLAND URBAN TRANSPORT REVIEW Table 2: 1992 AGGREGATED MUNICIPAL REVENUES AND EXPENDITURES FOR LARGE CITIES (in 1992 Zl billion) l POPULATION CATEGORY (in millions) >1 a 0.8-1.0 b 0.3-0.8 c TOTAL OPERATING REVENUE 2578.2 2287.7 8117.1 General subsidy 0.7 38.5 819.8 Shared Taxes 1468.4 401.8 1855.5 Real estate tax 0.0 194.2 1529.8 Agriculture tax 0.0 2.1 8.5 Transportation tax 0.0 49.7 302.4 Stamp duties 0.0 94.4 624.9 Grants for commissioned tasks 838.2 978.8 1362.8 Other revenues 271.0 528.3 1613.5 TOTAL OPERATING EXPENDITURES 790.9 1971.1 7128.7 Wages 43.0 380.6 1337.9 Other expenditures 747.9 1590.5 5790.8 NET OPERATING REVENUE 1787.3 316.6 988.4 % of operating revenue 69.3 13.8 12.2 CAPITAL EXPENDITURES 1492.6 369.3 1441.5 CAPITAL GRANTS 0.0 124.5 216.2 NET CAPITAL EXPENDITURES 1492.6 244.8 1225.3 TOTAL EXPENDITURES 2283.5 2215.9 8354.0 NET SURPLUS OR DEFICIT 294.7 71.8 -236.9 Memo item: POPULATION 1654531 844858 4333352 Memo item: MASS TRANSPORT OPER. SUBSIDY 410.0 259.7 1472.0 e % of operating expenditures 52 13 21 %of total expenditures 18 12 18 REVENUES PER CAPITA (in 1992 ZI) 1558266 2707792 1873169 in U.S. S 114 199 137 TOTAL EXPENDITURES PER CAPITA (in 1992 Zl) 1380149 2622808 1927838 In U.S. $ d 101 192 141 TRANSPORT SUBSIDY PER CAPITA (in 1992 Zi) 247804 307334 339691 In U.S. $ d 18 23 25 Sources: (1) Municipal revenues and expenditures from D. Greytak and J. Pigey, "Development of a Municipal Credit program to Finance Infrastructure Investments in Poland", report to USAID, September 1993 (based on Ministry of Finance, Fourth quarter budget report fro 1992) (2) Mass transport subsidies from Izba Gospodaroza Komunikaci Miejskiej, 'Komunikacja Miejska w Liczbach za Rok 1992", Warszawa, Kwiecien 1993 Notes: a Refers only to the City Govemment of Warsaw (excludes constituent gmina transactions) b Lodz c Krakow, Wroclaw, Poman, Gdansk, Katowice, Szczecin, Bydgoszcz and Lublin plus Mokotow, one of seven municipalities constituting Warsaw, with 365,000 population d 1992 exchange rate was ZI 13,631 per $1 e include subsidies paid to PKT Katowice (regional tramway system) and a dummy subsidy for Mokotow based on subsidy paid to MZK Warsaw pro -rated by population C:tDATA\POLGREYVAUNFIN 118 26J9 POLAND URBAN TRANSPORT REVIEW Table 3: 1992 CITY DATA Tri-cityAgg Gdansk Gdynia GOP Katowice Krakow Lodz Poznan Wroclaw Warsaw General characteristics population 877,80 461,70D 250,200 2235,0Q0 359,900 744,00D 838,400 582,9(0 640,700 1,656,00( area (sqkm) 515 262 136 1,186 165 327 292 261 293 487 gross density (pop/area) 1,708 1,762 1,839 1,884 2,181 2,277 2,840 2,258 2,188 3,400 employment a 299,200 <== <== 678.400 150.600 279,7Q0 219,245 na 198,10( 617,000 f 1992 Vehicle registrations total 324,000 d 112,000 87,400 532,363 135,783 180,300 188,8(0 203,300 176,5&S 614,500 g passenger cars 228,7Q0 87,300 72,400 451,487 103,513 157,800 155,2Q0 167.800 145,441 533,000 motorcycles 30,200 n.a. 6,500 28,478 15.040 5,200 8,800 10,400 5,958 10,000 buses b 3,200 n.a. na 4,682 1,191 2,800 1,700 1,200 1,734 5,000 trucks 40,200 n.a. 8,500 43,970 15,754 12,800 21,700 22,900 21,331 63,000 tractors 21,700 n.a. na 3,746 285 1,700 1,400 1,000 2,121 3,500 Paved road network (km) total 1504 755 377 1271 483 981 1080 876 1367 1870 controlled-access 7 2 5 11 5 11 0 19 other primary 281 224 21 854 55 169 100 100 103 230 collector and local 1216 529 351 417 418 807 980 765 1264 1621 Traffic safety accidents na 751 335 na 380 1,468 1,801 1,285 694 3,300 h injured na 877 355 na 400 1,747 2,135 1,459 755 3,300 h fatal na 38 36 na 39 57 102 62 48 232 h accidents per 10,000 vehicles na 67 38 na 28 81 95 63 39 54 fatalities per 10,O00vehicles na 3.4 4.1 na 2.9 3.2 5.4 3.0 2.7 3.8 Mass Transport 1992 fleet in service c na 340 197 na 491 e 785 793 476 624 1,864 i 1992 passengers ('000) na 151,600 100,375 na 339,740 e 399,250 444,296 209,098 318,139 1,232,0(X i population/vehicle in service na 1,358 1270 na 733 e 948 1,057 1,225 1,027 888 i passenger tripsrinhabitant na 328 401 na 944 e 537 530 359 497 744 Source: Information provided by municipalities Notes: (a) public sector only (b) includes buses used by companies for own transport (c) un-weighted sum of different types of vehicles (d) Gdansk voivodship (e) includes both PKM Katowice and PKT Katowice (f) employment datum is from 1991 , (g) only the 1992 passenger car registrations are exact; others are approximations cited in Malasek, 'Transport Problems in Warsaw - Possible Solutions, 1994 O t (h) These are 1993 data, cited to be about 10% lower than in 1992 [Malasek, Transport Problems in Warsaw - Possible Solutions', 19941. (i) Mass transport data for Warsaw are limited to MZK, i.e. they exclude PKP and PKS services CADATAWTQGREYECT11fl POLAND URBAN TRANSPORT REVIEW Table 4: URBAN TRANSPORT COMPANY SUMMARY DATA (1992) ZKM MZK PKT PKM PKM MPK MPK MPK MPK MZK ~ Gdansk Gdynia Katowice Katowice Gliwice Krakow Lodz Poznan Wroclaw Warszawa (JQ System Characteristics CD CD bus network (km) 242 331 0 357 450 616 314 253 374 842 O trolley-bus network (km) 0 76 0 0 0 0 0 0 0 13 tramways network (km) 50 0 207 0 0 80 162 57 88 119 bus routes (km) 439 962 0 1,121 912 1,347 553 443 708 2,253 trolley-bus routes (km) 0 146 0 0 0 0 0 0 0 13 tramway routes (km) 104 0 360 0 0 312 411 201 266 427 Fleet Characteristics Buses inventory 245 195 0 247 162 622 526 333 432 1,682 operation 176 145 0 212 98 432 376 239 306 1,229 vehicle-kIn/year (million) 14 12 0 18 7 38 31 18 24 98 vehicle-hours/year 797,321 604,238 0 773,079 367,008 2,111,934 1,712,537 1,100,000 1,199,534 5,501,800 average operating speed (km/h) 18 19 0 23 20 18 18 17 20 18 Trolley-buses 0 inventory 0 75 0 0 0 0 0 0 0 42 operation 0 52 0 0 0 0 0 0 0 23 vehicle-kmtyear (million) 0 3 0 0 0 0 0 0 0 2 vehirle-hourstyear 0 212,142 0 0 0 0 0 0 0 98,300 average operating speed (km/h) 0 16 0 0 0 0 0 0 0 19 Tra ways inventory 261 0 516 0 0 516 622 370 451 900 operation 164 0 279 0 0 353 417 237 318 612 vehirle-kml/year (million) 13 0 23 0 0 26 30 16 22 40 vehicle-hours/year 810,798 0 1,440,736 0 0 1,752,311 1,951,431 1,200,000 1,514,497 2,694,500 average operating speed (km/h) 16 0 16 0 0 15 15 14 15 15 Employees total 2,088 1,230 3,346 1,288 534 4,345 5,772 3,862 4,081 9,441 bus drivers 378 337 0 445 217 1,152 1,011 699 721 3,109 trolley-bus drivers 0 123 0 0 0 0 0 0 0 49 tramway operators 185 0 529 0 0 501 692 463 515 733 technical staff 1,264 645 2,281 667 245 1,909 3,157 2,197 2,299 4,994 administration 261 125 536 176 72 783 912 503 546 556 average salary (zl '000) 3,920 4,088 3,151 3,532 3,406 3,671 3,282 3,498 3,409 3,950 1992 Passengers total ('000) 151,600 100,375 219,500 120,240 34,460 399,250 444,296 209,098 318,139 1,232,000 bus passengers ('000) 81,712 75,281 0 120,240 34,460 n.a. 219,435 110,822 n.a. 801,000 trolley-bus passengers ('000) 0 25,094 0 0 0 0 0 0 0 12,000 tramway passengers ('000) 69,888 0 219,500 0 0 n.a. 224,861 98,276 n.a. 419,000 Source: zba Gospodavz Komtunikai Micjsidej, Komunuikaca Miejsa W licztdh za Rok 1992, Warmawa, Kwieden 1993 C:\DATAFOLREYGCOIM ANY 26-J,m-9S Annex 3 Page S of 19 POLAND URBAN TRANSPORT REVIEW Table 5: MODAL SPLIT FOR NON-WALK JOURNEYS (%) Bus Tram SubRail Total MT Taxi Auto Bike Katowice 1977 51.6 29.0 15.0 95.6 0.2 4.0 0.2 1987 58.2 26.2 6.8 91.2 0.2 8A 0.2 Kalkow 1975 - - - 85.7 - 12.6 1.7 1985 - - - 83.6 - 14.8 1.6 Lodz 1974 40.0 57.0 - 97.0 - 3.0 - 1991 40.0 40.0 - 80.0 - 20.0 - alt 1991 42.5 42.5 - 85.0 - 15.0 - Poznan 1968 23.0 58.8 5.1 86.9 2.6 7.6 1.6 1986 29A 37.4 5.3 72.1 6A 20.4 1.1 1990 28A 36.0 4.6 69.0 2.6 27.0 IA 1993 23.9 32.2 4.1 60.2 2.9 35.1 1.8 Wroclaw 1986 26.7 49.5 - 76.2 8.8 14.0 1.0 1990 30.5 46.0 - 76.5 8.5 14A 0.6 1992 29.6 44.8 - 74.4 7.5 17.1 1.0 Warszawa 1980 - - - 80.8 - 17.8 - 1987 - - - 79.1 - 20.9 - 1993 - - - 68.1 - 30.6 0.9 MT stands for mass transport Source: Information provided by cities based on studies of variable age and scope Notes: - Suburban railway services are operated by Polish State Railways (PKP) - 1991 modal split for Lodz is not based on a survey, but is a rough estimate of a range - 1993 data for Warsaw include trips by PKP in the mass transport category, trip definition includes travel with either origin or destination outside Warsaw boundary C.TAULAOMYNOMPIZF 121 26-J-9 Annex 3 Page 6 of 19 POLAND URBAN TRANSPORT STUDY Table 6: FALL 1993 MASS TRANSPORT FARES IN MAJOR CITIES 1993 FARES ON URBAN NETWORK (in current Zi) Company Basis Single Discounted Monthly Express Night Fine ZKM Gdansk time 2,000 a 1,000 410,000 b double 8,000 c 250,000 MZK Gdynia 4,000 2,000 150,000 d 6,000 10,000 200,000 PKT Katowice 4,000 2,000 200,000 6,000 PKM Katowice 4,000 2,000 270,000 3,000 PKM Gliwice zonal 4,000 200,000 MPK Krakow 4,000 2,000 150,000 e 6,000 12,000 150,000 MPK Lodz 4,000 2,000 200,000 f 8,000 12,000 200,000 MPK Poznan time 1,800 g half 200,000 h double double 150,000 i MPK Wroclaw 4,000 2,000 360,000 j 6,000 12,000 150,000 k MZK Warszawa zonal 4,000 2,000 240,000 1 4,000 12,000 200,000 L _ _ ______ ___ 180,000 m SOURCaE: Izba Gospodarcza Komunikacji Miejskiej, KOMUNIKACJA MIEJSKA W LICZBACH 9 MIESIECY 1993 ROKU, Warszawa, Listopad 1993, except for MZK Warsaw monthly fares obtained directly from company Notes: (a) up to 10 minutes (b) for entire network (ZI 360,000 without express lines) (c) up to 30 minutes (d) entire network (e) entire network (f) entire network (g) up to 10 minutes (h) entire network (i) fne for no ticket, fine for exceeded time is 100,000 zI (j) entire network, non-personal ticket (k) fine for immediate payment, for later payment 180,000 zl (1) entire network, including night and suburban lines; discount rate Zl 120,000 (m) one line; discount rate ZI 90,000 C:ADATA\POLGREWARES 26-Jun-95 122 Annex 3 Page 7 of 19 POLAND URBAN TRANSPORT REVIEW Table 7: HISTORY OF URBAN TRANSPORT FARE LEVELS . Monthly fare b Av. monthly Fare over Single fare a Date expenditure income income Year (in current ZI) introduced (in current ZI) (in current ZI) (%) 1960 0.5 25 1,560 2 1965 0.5 25 1,867 1 1970 1 50 2,235 2 1980 1 50 6,040 1 1985 3 150 20,000 1 1986 6 300 24,100 1 1987 9 450 22,900 2 1988 15 c March 1 750 53,100 1 1989 30 c April 1 1,500 206,800 1 1989 60 c Oct 1 3,000 206,800 1 1989 120 c Dec 1 6,000 206,800 3 1990 240 c Feb 1 12,000 1,030,000 1 1990 480 c April 1 24,000 1,030,000 2 1990 600 c Dec 1 30,000 1,030,000 3 1991 1,200 c March 1 60,000 1,756,000 3 1991 2,000 c Sept 1 100,000 1,756,000 6 1992 4,000 c April 1 200,000 2,439,000 8 1993 4,000 c 200,000 3,100,000 6 1994 6,000 c 300,000 - - Sources: fare data supplied by companies Consumer Price Index from World Tables 1993, for 1980-1991 and Monthly Economic Summary (issued by RMPOL) for 1992-93 Notes: (a) national average unless otherwise noted (b) assumed to equal the purchase price of 50 single tickets (c) MZK Warsaw data C:\DATA\POLGREY\PAREWST 123 2-ht-95 Annex 3 Page 8 of 19 POIAND URBAN TRANSPORT REVIEW Table 8: COST RECOVERY OF MASS TRANSPORT COMPANIES OPERATING COSTS, REVENUES AND SUBSIDIES in million current zlotys 1988 1989 1990 1991 1992 ZKM Gdansk Revenues a 2,335 7,271 54,954 95,299 135,727 Subsidies 7,720 14,586 75,106 154,300 157,624 Costs b 6,758 19,204 109.701 203,051 287,190 Acctcost recovery(%) c 149 114 119 123 102 Revenues/costs (%) 35 38 50 47 47 MZK Gdynia Revenues a n.a. 3,718 36,893 67,771 100,983 Subsidies n.a. 5,700 26,766 39,368 45,783 Costs b n.a. 20,593 60,482 110,032 150,952 Acct cost recovery (%) c n.a. 46 105 97 97 Revenues/costs (%) n.a. 18 61 62 67 WPK Katowice Revenues a 13.403 33,806 177,706 471,500 d Subsidies 17,591 52,340 310,410 562,500 d Costs b 31,505 86,031 459,641 948,470 d Acct cost recovery (%) c 98 100 106 109 d Revenues/costs (%) 43 39 39 50 d MPK Krakow Revenues a 6,444 19,582 n.a. 248,155 349,633 Subsidies n.a. 30,630 n.a. 227,620 264,000 Costs b 16,083 51,858 263,616 470,806 628,313 Acct cost recovery (%) c n.a. 97 n.a. 101 98 Revenues/costs (%) 40 38 n.a. 53 56 MPK Lodz Revenues a 5,499 16,325 113,739 220,694 426,065 Subsidies 11,601 36,770 205,067 214,410 259,654 Costs b 15,437 50,346 307,425 455,891 734,674 Acct cost recovery (%) c 111 105 104 95 93 Revenues/costs (%) 36 32 37 48 58 MPK Poznan Revenues a 3.456 9,735 66,819 145,158 230,234 Subsidies 7,625 20,290 106,484 155,900 169,641 Costs b 9,955 28,189 176,651 302,832 410,616 Acctcostrecovery(%) c 111 107 98 99 97 Revenues/costs (%) 35 35 38 48 56 MZK Warsaw Revenues a 11,934 29,800 350,479 854,603 1,330,527 Subsidies 18,583 62,015 348,727 317,720 410,000 Costs b 28,008 78,592 577,669 1,153,664 1,656,586 Acct cost recovery (%) c 109 117 121 102 105 Revenues/costs (%) 43 38 61 74 80 MPK Wroclaw Revenues a 4,192 12,140 92,030 193,181 304,945 Subsidies 7,482 24,570 157,000 209,393 238,500 Costs b 9,922 30,672 197,357 354,969 528,992 Acct cost recovery(%) c 118 120 126 113 103 Revenues/costs (%) 42 40 47 54 58 Source: Annex 5 Notes: a: revenues include ticket revenues and other earned revenues b: these are total operating costs, but rules for including depreciation vary from one yrar to another c: revenues plus subsidies divided by total costs d: WPK Katowice, the old voivodship-based company, split into several companies in 1992 C-xDATATOLGREYMTREIEV 124 26-,|n, 9 POLAND URBAN TRANSPORT REVIEW Table 9: ROAD EXPENDITURES IN MAJOR CITIES ANNUAL EXPENDITURES TAVGE ANNUAL EXP. 1992 ANNUAL ROAD EXP. IF in (ZL nPllion) in '92 terms Urban PER CAPITA _ 1988 1989 1990 1991 1992- ZI million US S million Population in '92 ZL in '92 US $ Gdansk current n.a. n.a. n.a. 58947 94829 '92 terms n.a. n.a. n.a. 84294 94829 89562 6.6 461700 193982 14 Gdynia current n.a. .3058 11085 21977 26864 '92 terms n.a. 51072 26992 31427 26864 34089 2.5 250200 136246 10 Katowice City current 505 1744 3164 35171 48948 '92 terms 29613 29127 7704 50295 48948 33137 2.4 359900 92074 7 Katowice Voivodship current 342 1701 6912 19379 27083 '92 terms 20055 28408 16831 27712 27083 24018 1.8 Katowice GDPR current 114 894 11081 9879 26635 '92 terms 6685 14931 26982 14127 26635 17872 1.3 Krakow current n.a. 10386 38674 73633 85465 '92 terms n.a. 173457 94171 105295 85465 114597 8.4 744000 154028 11 _ Lodz current n.a. 78210 67250 n.a. n.a. '92 terms n.a. 1306185 163754 n.a. n.a. 734969 53.9 838400 876633 64 Poznan current 3686 11188 21310 45963 75554 '92 terms 216147 186851 51890 65727 75554 119234 8.7 582900 204553 15 Warszawa Voivodship current 15812 42544 258707 347000 n.a. '92 terms 927216 710527 629952 496210 n.a. 690976 50.7 1656000 417256 31 Wroclaw City current 2900 8200 40700 103100 139100 '92 terms 170056 136948 99105 147433 139100 138528 10.2 640700 216214 16 Wroclaw Voivodship current 2400 6400 59800 62100 79700 '92 terms 140736 106886 145613 88803 79700 112348 8.2 Wroclaw total current 5300 14600 100500 165200 218800 '92 terms 310792 243835 244718 236236 218800 250876 18.4 640700 391566 29 CPI multiplier to get '92 prices 58.640 16.701 2.435 1.430 1.000 Source: municipalities Notes: 1992 exchange rate was ZI 13,631 per US$ 1 Krakow data do not include expenditures for the motorway by-pass CAS)ATAIOWLRLOADEG Annex 3 Page 10 of 19 POLAND URBAN TRANSPORT REVIEW Table 10: PRICE STRUCTURE OF AUTOMOTIVE FUELS PRICE (ZUI) a PRICE ELEMENT Gas-94 octane Gas-98 octane Diesel Border price : 2,457 2,557 2,535 Duty 15% 15% 35% Fuel tax 180% 190% 85% After-tax price 7,912 8,529 6,331 Net sale price b 8,190 8,611 6,210 c Wholesale profit 220 189 330 Wholesale price 8,410 8,800 6,540 Retail profit 190 200 160 Retail price 8,600 9,000 6,700 Source: Costs and Tariffs in Road Transport, March 1993. (report submitted to Polish Ministry of Transport by BCEOM team) Notes: a Average prices March 1993 (1993 average exchange rate ZI 18,145 per $1) b Sales price of state-owned company CPN to wholesalers c Diesel is sold at a loss C:ADATA\POLGREY\TUELCOST 126 26-Jun-95 POLAND URBAN TRANSPORT REVIEW Table 11: AUTO OWNERSHIP IN SELECIED COUNTRIES (autos per 1,000 population) |(Year_|| 0 USA WGermany France Japan ;$pain UK EGermany Poland Czechoslov. (a) (b) (b) (c) (d) 1970 436 230 242 84 70 214 68 15 58 31 1971 448 247 261 100 82 225 74 17 1972 464 260 269 107 94 236 82 20 1973 275 278 132 109 249 91 23 1974 480 280 286 144 122 251 101 27 1975 500 289 290 150 140 253 110 32 102 55 1976 510 308 299 162 149 262 122 37 1977 525 326 321 174 162 260 133 44 1978 530 346 333 185 177 264 143 52 1979 367 346 196 191 268 151 60 1980 537 377 357 204 202 277 160 67 149 95 1981 385 348 209 211 284 168 73 155 103 1982 391 348 215 220 307 175 79 159 110 1983 400 377 221 228 319 181 87 163 118 1984 540 412 379 226 231 305 189 92 171 126 1985 552 420 386 230 240 320 200 98 176 135 1986 562 441 385 237 249 325 208 105 145 1987 575 450 397 241 258 333 216 112 175 156 1988 574 472 403 251 276 352 225 120 192 169 1989 576 480 410 265 295 368 237 127 200 175 1990 572 483 417 283 308 376 296 138 207 184 1991 490 419 299 324 384 355 160 214 195 1992 504 421 313 335 390 415 169 222 200 Sources: For Poland - the Ministry of Transport and Maritime Economy For other countries, compiled from: OECD/ECMT (1995), Urban travel and sustainable development OECD Environmental Data Compendium 1993 United Nations, Annual Bulletin of Transport Statistics for Europe, 1994 International Road Federation, World Road Statistics 1989-1993 American Automobile Manufacturers Association, World Motor Vehicle Data, 1994 Edition > Notes: (a) some sources give about 650 cars per 1,000 people for USA in 1990; this includes light trucks (b) For the former West and East Germany, 1989- 1992 data are from Pucher (1994) > (c) Pucher (1995) gives 46 cars per 1,000 people for Czechoslovakia in 1970 (d) Pucher (1995) gives 22 cars per 1,000 people for Hungaryin 1970 C:\DATA\POLGREEY\AUTOINTL 26- Jui -95 POLAND URBAN TRANSPORT REVIEW Table 12: POPULATION AND AUTO OWNERSHIP IN POLAND AND MAJOR CITIES _ Annual compound growth rate (%) 1970 1980 1985 1990 1992 1970-92 1985-92 1990-92 CD Poland population (000) 32660.0 35730.0 37300.0 38183.0 38400.0 1.2 0 reg. autos (000) 479.0 2383.0 3671.0 5261.0 6505.0 8.5 11.2 autos/1000 pop 15 67 98 138 169 Warszawa population (000) 1316.0 1585.0 1610.0 1651.0 1656.0 1.1 reg. autos (000) 60.5 248.9 309.9 466.0 533.1 8.1 7.0 autos/1000 pop 46 157 192 282 322 Lodz population (000) 762.0 835.6 848.0 848.3 838.4 0.4 reg. autos (000) 19.6 76.6 99.7 133.6 155.2 6.5 7.8 autos/1000 pop 26 92 118 157 185 Krakow population (000) 589.5 715.7 740.1 n.a. 744.0 1.1 reg. autos (000) 18.7 74.2 106.0 n.a. 157.8 5.8 n.a. autos/1000 pop 32 104 143 n.a. 212 Wroclaw population (000) 526.0 617.7 637.2 643.2 640.7 0.9 reg. autos (000) 18.0 (1971) 73.0 (1982) 85.0 120.2 145.4 8.0 10.0 autos/1000 pop 34 118 133 187 227 _ Poznan population (000) 469.6 552.9 575.1 590.2 590.0 1.0 0c reg. autos (000) 21.6 87.8 105.3 131.2 167.8 6.9 13.1 autos/1000 pop 46 159 183 222 284 Gdansk population (000) 364.6 456.7 468.6 465.1 461.7 1.1 reg. autos (000) n.a. 48.8 56.8 72.2 87.3 (a) 6.3 10.0 autos/1000 pop n.a. 107 121 155 189 Katowice population (000) 322.5 355.1 365.8 366.8 359.9 0.5 reg. autos (000) 11.2 47.0 62.0 90.0 103.5 7.6 7.2 autos/1000 pop 35 132 169 245 288 Gdynia population (000) 191.5 236.4 246.5 251.1 250.2 1.2 reg. autos (000) 6.4 23.3 27.7 58.9 72.4 14.7 10.9 autos/1000 pop 33 99 112 235 289 Bialystok population (000) 160.6 224.1 n.a. 270.1 274.1 2.5 reg. autos (000) 13.9 18.5 n.a. 36.4 44.4 n.a. 10.4 autos/1000 pop 87 83 n.a. 135 162 Source: information provided by cities and the Ministry of Transport and Maritime Economy Notes: (a) 1992 Gdansk auto registrations estimated from 1992 motor vehicle totals and 1990 detailed breakdown C:VATA?OLGREY\AUTOPOL 26-Juz-95 Annex 3 Page 13 of 19 POLAND URBAN TRANSPORT REVIEW Table 13: OPEIRATING TRENDS OF SELECTED MASS TRANSPORT COMPANIES SERVICE AND PATRONAGE TRENDS 1984 1985 1986 1987 1988 1989 1990 1991 1992 ZKM Gdansk Bus fleet in service a 494 502 504 491 - 191 174 161 176 Tram fleet in service 173 166 161 162 - 159 162 158 164 Bus-km run (million) 38 39 41 41 - 16 16 14 14 Tram-km run (million) 14 13 14 15 - 13 12 13 13 Staff 5,485 5,551 5,592 5,321 - 2,548 2,401 2,166 2,088 Passengers (million) 443 455 428 - - 220 176 141 152 MZK Gdynia Bus fleet in service a a a a a 231 169 143 145 T-bus fleet in service a a a a a 82 58 49 52 Bus-km run (million) a a a a a 15 15 13 12 T-bus-km run (million) a a a a a 4 3 3 3 Staff a a a a a - 1,372 1,265 1,230 Passengers (million) a a a a a 116 106 80 100 WPK Katowice Bus fleet in service 1,239 1,227 1,214 1,212 1,676 1,629 1,094 966 b Tram fleet in service 340 326 325 321 538 541 333 286 b Bus-km run (million) 126 124 126 124 125 120 110 106 b Tram -km run (million) 30 28 29 28 29 28 29 24 b Staff 13,205 13,009 12,990 12,588 n.a. n.a. 10,421 10,286 b Passengers (million) 985 982 989 n.a. n.a. n.a. 948 920 b MPK Krakow Bus fleet in service 476 490 493 497 503 497 492 455 432 Tram fleet in service 434 441 442 432 421 407 418 383 353 Bus-km run (million) 42 43 44 43 45 43 44 41 38 Tram-km run (million) 34 36 36 35 34 32 32 29 26 Staff 7,114 6,843 6,821 6,714 6,599 6,390 6,459 4,503 4.345 Passengers (million) 741 764 740 741 724 616 467 383 399 MPK Lodz Bus fleet in service 456 467 476 475 480 475 486 451 376 Tram fleet in service 465 510 517 525 516 502 500 479 417 Bus-km run (million) 38 39 n.a. n.a. 45 43 45 37 31 Tram-km run (million) 40 38 n.a. n.a. 38 37 37 32 30 Staff 7,216 7,147 6,992 6,890 n.a. n.a. 6,625 6,323 5,772 Passengers (million) 836 825 870 n.a. 867 925 722 499 444 MPK Poznan Bus fleet in service - 322 n.a. 303 304 289 297 240 239 Tram fleet in service - 363 n.a. 331 321 320 295 253 237 Bus-km run (million) - 26 n.a. n.a. n.a. 27 28 21 18 Tram-km run (million) - 22 n.a. n.a. n.a. 19 19 18 16 Staff - 4,154 n.a. 3,880 n.a. n.a. 4,053 3,888 3,862 Passengers (million) - 438 n.a. n.a. n.a. 322 247 213 209 MZK Warszawa Bus fleet in service n.a. 1,307 1,274 1,177 1,257 1,177 1,229 Tram fleet in service n.a. 623 610 617 636 581 612 T-bus fleet in service n.a. 20 20 15 18 19 23 Bus-km run (million) n.a. 115 111 100 102 96 98 Tram-km run (million) n.a. 48 44 43 44 40 40 Tbus-km run (million) n.a. 2 2 1 1 1 2 Staff n.a. 11,941 11,660 10,695 10,825 10,597 9,441 Passengers (million) 1,969 1,521 n.a. 1,443 1,277 n.a. n.a. 1,232 MPK Wroclaw Bus fleet in service 347 357 369 350 336 330 327 317 306 Tram fleet in service 350 336 337 327 324 318 311 314 318 Bus-km run (million) 27 28 29 27 28 27 26 24 24 Tram-km run (million) 21 20 20 20 21 21 22 22 22 Staff 3,686 3,755 3,895 3,960 n.a. n.a. 3,539 3,746 4,081 Passengers (million) 401 416 457 n.a. 431 404 353 315 318 Sources: (1) operating statistics data made available by companies (Annex 4) (2) For 1992 data, lzba Gospodarcza Komunikacji Miejskiej, Komunikacja Miejska W Liczbach za Rok 1992, Warszawa, Kwiecien 1993 When the two sources disagreed for 1992, Izba Gospodarcza data were used Notes: a: A single company served Gdansk and Gdynia until 1989, thus Gdansk bus data before 1989 include trolley-buses b: WPK Katowice, voivodship-based company, was broken into 8 companies in 1992 C. WATAMFO.ORRB'nO?TND 129 Annex 3 Page 14 of 19 POLAND URBAN TRANSPORT REVIEW Table 14: AGE STRUCTURE OF BUSES OWNED BY MASS TRANSPORT COMPANIES Number of buses owned on Dec 31, 1992 by age group Average Total Bought in 1992 0-3 3-6 6-10 >10 age (years) Bus Fleet total new years years years years (calculated) MAJOR CITIES ZKM Gdansk 241 7 4 17 98 121 5 6.2 MZK Gdynia 197 9 5 36 77 75 9 5.6 PKM Katowice 248 10 5 45 96 104 3 5.5 MPK Krakow 625 34 14 50 241 273 61 6.6 MPKLodz 469 15 15 66 127 230 46 6.6 MPK Poznan 329 15 - 54 74 128 73 7.1 MZK Warszawa 1,655 50 50 164 398 896 197 7.0 MPK Wroclaw 426 1 - 23 116 272 15 6.9 SU;3-TOTAL 4,190 141 93 455 1,227 2,099 409 6.7 CITIES UNDER 100,000 2,725 139 75 353 970 1,250 153 6.2 NATIONAL TOTAL 11,867 486 260 1,529 3,543 5,813 983 6.5 Source: Izba Gospodarcza Komunikacji Miejskiej, Komunikacja Miejska w Liczbach za rok 1992, Warszawa, kwiecien 1993 Notes: (1) National total refers to al companies listed as 1992 members of the Urban Transport Chamber of Commerce, with mninor exceptions for data not reported, or reported with evident discrepancies (2) Average fleet age was calculated from the data in this table using mid-points of each age category; for buses older than 10 years, 12.5 was used. C:OATA\POLGREYBUSAGE 130 26-Jun-95 POLAND URBAN TRANSPORT REVIEW Table 15: AGE STRUCTURE OF 'ROLL,EY-BUSES OWNED BY MASS TRANSPORT COMPANIES Number of trolleybuses owned on Dec 31. 1992 bv age group Total Bought in 1992 0-5 5-10 10-15 15-20 20-25 25-30 >30 Average age (a) L____ T-bus fleet total new years ycars years___ years years years years -- _c)]| MZK Gdynia 76 8 8 44 28 4 0 0 0 0 4.9 4.9 MPKLublin 92 5 5 46 29 17 0 0 5.9 5.9 MZK Slupsk 26 0 0 10 16 0 0 0 0 0 5.6 5.6 'PKM Tychy 21 2 2 3 11 7 0 0 0 0 8.5 8.5 iMZK Warsaw (d), 31 11 0 20 0 0 0 0 0 11 13.1 2.5 LTOTAL _ 246 26 15 123 84 28 0 0 (0 11 6.7 5.5 Source: Izba Gospodarcza Komunikaeji Miejskiej, Komunikacja Miejska w Liczbach za rok 1992, Warszawa. kwiecien 1993 Notes: (a) Average age calculated from data in this table, using mid-range values for each age category (b) average includes all age categories (c) average excludes trolley-buses older than 30 years (c) In 1992, MZK Warsaw bought from the company SAVER 11 trolley-buses older than 30 years plus 8 bus "trailers" CA\DATA\POLGREY\TBUSAGE 26-J,-X u POLAND URBAN TRANSPORT REVIEW Table 16: AGE STRUCTURE OF TRAMWAYS OWNED BY MASS TRANSPORT COMPANIES >- Number of trams owned on Dec 31, 1992 by age group Total Boughtin 1992 0-5 5-10 10-15 15-20 20-25 25-30 >30 Averageage a. Tram fleet total new years years years years years years years b. c. ZKM Gdansk 261 0 0 38 95 88 40 0 0 0 10.0 10.0 PKT Katowice 515 0 0 28 100 90 220 35 39 3 15.1 15.0 MPK Krakow 515 8 8 91 169 89 40 81 0 45 12.8 10.9 MPK Lodz 620 0 0 110 183 177 142 1 0 7 10.6 10.4 MPK Poznan 357 3 0 50 38 98 104 35 23 9 14.5 14.0 MZK Warsaw 900 12 12 163 135 0 87 282 232 1 17.4 17.4 MPK Wroclaw 450 4 0 67 97 108 98 80 0 0 12.8 12.8 MZK Szczecin 319 16 16 32 30 43 65 16 0 133 20.9 12.6 MZK Bydgoszcz 149 0 0 16 67 50 16 0 0 0 9.7 9.7 MZK Czestochowa 67 0 0 16 16 16 13 6 0 0 10.8 10.8 MZK Torun 61 0 0 0 38 18 5 0 0 0 9.8 9.8 MZK Gorzow WLKP 55 0 0 4 20 22 1 0 0 8 13.0 9.6 w MZK Eblag 44 0 0 14 6 8 0 0 0 16 15.9 6.4 MZK Gdudziadz 26 0 0 2 16 8 0 0 0 0 8.7 8.7 Countrytotal 4339 43 36 631 1010 815 831 536 294 222 14.1 13.1 Source: Izba Gospodarcza Komunikacji Miejskiej, Komnunikacja Miejska w Liczbach za rok 1992. Warszawa, kwiecien 1993 Notes: a. Average age calculated from data in this table, using mid-point values of each age category b. average age including all age groups c. average age excluding tramways older than 30 years CMATAWOLAWWWTRAMAGE 2_-_- POLAND URBAN TRANSPORT REVIEW Table 17: 1992 PERFORMANCE INDICATORS OF URBAN TRANSPORT COMPANIES Companies ZKM MZK PKT PKM PKM MPK MPK MPK MPK MZK Indicators Gdansk Gdynia Katowice Katowice Gliwice Krakow Lodz Poznan Wroclaw Warszawa Employees/million vehicle-km (a) 77 82 145 72 72 69 95 112 88 67 Total veh-km/employee 12,931 12,195 6,874 13,975 13,858 14,499 10,516 8,959 11,394 14.840 Drivers/nillion veh-km 21 31 23 25 29 26 28 34 27 28 Employees/inventory vehicle 4.1 4.6 6.5 5.2 3.3 3.8 5.0 5.5 4.6 3.6 Employee/vehicle in service 6.1 6.2 12.0 6.1 5.4 5.5 7.3 8.1 6.5 5.1 Bus availability (%) (b) 72 74 0 86 60 69 71 72 71 73 Trollcy-bus availability(%) 0 69 0 0 0 0 0 0 0 55 Tramway availability(%) 63 0 54 0 0 68 67 64 71 68 Fleet availability(%) 67 73 54 86 60 69 69 68 71 71 Bus km/fleet bus 57,143 61,538 0 72,874 45,679 60,289 59.125 55,255 56,481 58,502 Bus-km/bus in service 79,545 82,759 0 84,906 75,510 86,806 82,713 76,987 79,739 80,065 Trolleybus-km/fleet trolley bus 0 40,000 0 0 0 0 0 0 0 45,238 Trolley bus- km/trolley bus in service 0 57,692 0 0 0 0 0 0 0 82,609 Tramway-km/fleet tramway 49,808 0 44,574 0 0 49,419 47,588 43,784 49,002 44,222 w Tramway-km/tramway in service 79,268 0 82,437 0 0 72,238 70,983 68,354 69,497 65,033 Passgr. trips/staff 72,605 81,606 65.601 93,354 64,532 91,887 76,974 54.142 77,956 130,495 (e) Passengers/veh-km 5.6 6.7 9.5 6.7 4.7 6.3 7.3 6.0 6.8 8.8 Passengers/day/fleet vehicle 821 1,019 1,165 1,334 583 961 1,060 815 987 1,286 Passengers/day/vehicle in service 1,222 1,396 2,155 1,554 963 1,393 1,535 1,204 1,397 1,811 Unit cost per passenger (1992 ZI) (c) 1,894 1,504 1,854 1.765 3,203 1,574 1,654 1,964 1,663 1,345 Unit km cost (1992 ZI/veh-km) (c) 10,637 10,063 17,690 11,790 14,915 9,973 12,103 11,868 11,376 11,824 Unit km cost (S/veh-km) (d) 0.78 0.74 1.30 0.86 1.09 0.73 0.89 0.87 0.83 0.87 Source: Calculated using operational statistics from Izba Gospodarcza Komunikacji Miejskiej, Komunikacja Miejska W Liczbach Za Rok 1992, Warszawa, Kwiecien 1993 (reproduced in Table 4) and cost data from Annex 5 Notes: (a) all vehicle-km are simple (unweighted) sums of all modal vehicle-km (b) availability: inventory vehicles/vehicles in service (c) in 1992 Zlotys (Q (d) exchange rate in 1992 was ZI 13,631 per $1 (e) unusually high C \DATA\P0L0REYUND1C92 26-J,,-95 \ ~ POLAND URBAN TRANSPORT REVIEW Table 18: OPERATING COST STRUCTURE AND UNIT COSTS OF SELECTED URBAN TRANSPORT COMPANIES (1992) w 0 COSTS IN MILLION CURRENT ZLOTYS MPK Lodz PKM Katowice PKT Katowice MPK Krakow MPK Poznan MZK Warsaw MPK Wroclaw Staff costs 326180 79012 184630 280775 253639 752580 255259 % of DOC 50 42 43 46 62 45 47 % of TOC 46 39 40 45 62 45 47 Energy and fuel 127860 32647 47663 111105 734.30 261497 9.3438 %ofDOC 20 17 11 18 18 16 17 %ofTOC 18 16 10 18 18 16 17 Materials 140502 26760 88589 77951 57120 323293 122205 % of DOC 22 14 21 13 14 20 22 % of TOC 20 13 19 13 14 19 22 Other expenses 52981 51151 110690 144112 26151 320249 76870 % of DOC 8 27 26 23 6 19 14 % of TOC 8 25 24 23 6 19 14 Direct operating costs 647523 189570 431572 613943 410340 1657619 547772 % of TOC 92 94 93 99 100 100 100 Depreciation 57582 12724 34190 5508 152 1373 345 % of TOC 8 6 7 1 0 0 0 TOTAL OPERATING COSTS 705105 202294 465762 619451 410492 1658992 548117 VEHICLE-KM (million) 60.7 18.0 23.0 63.0 34.6 140.1 46.5 UNIT COSTS (ZlVeh-kr) 11616 11239 20251 9833 11864 11841 11787 UNIT COSTS (Sheh-km) 0.85 0.82 1.49 0.72 0.87 0.87 0.86 Sources: For cost data: audited 1992 company accounts. THESE MAY DIFFER SUBSTANTIALLY FROM THOSE SHOWN IN ANNEX 5. For vehicle-km, Izba Gospodarcza Komunikacji Miejskiej, Komunikacja Miejska W Liczbach za Rok 1992, Warszawa, Kwiecien 1993 Notes: DOC = direct operating costs (working expenses) TOC = total operating costs There were no financial costs Low depreciation write-offs in most cases indicates that compary is a budgetary unit of the city government; for comparison, depreciation was 7.4% of total operating costs for MZK Warsaw in 1990 and 4.2% in 1991 Vehicle-km are sums of bus-km and tramway-km, the latter multiplied by ratio of nominal capacities Exchange rate in 1992 was ZI 13,361 to $ 1 CrDATA?OLGMEY'CS15nR 26-hu-95 POLAND URBAN TRANSPORT REVIEW Table 19: FINANCIAL INDICATORS FOR A SAMPLE OF URBAN TRANSPORT COMPANIES (1992) l__ __ MPK Lodz PKM Katowice PKT Katowice MPK Krakow MPK Poznan MPK Wroclaw NET FIXED ASSETS (million 1992 Zl) 474,358 51,686 403,240 11,742 457,770 431,916 % 100 100 100 100 100 100 Buildings 251,367 23,766 324,199 1,151 370,233 275,179 % 53 46 80 10 81 64 Transport equipment 199,370 24,046 58,113 5,975 65,091 79,506 % 42 47 14 51 14 18 Other 23,621 3,874 20,928 4,616 22,446 77,231 % 5 7 5 39 5 18 ACCUMULATED DEPRECIATION (%) 55 62 51 35 29 50 1992 DEPRECIATION (million 1992 ZI) 57,582 12,724 34,190 5,508 152 345 as % offixed assets 12 25 8 47 0 0 OPERATING RATIO (%) including subsidies 103 101 103 100 103 99 excluding subsidies 167 121 245 175 181 175 CURRENT RATIO 0.61 1.54 1.57 0.93 0.56 0.57 Source: calculations based on 1992 audited accounts provided by companies NOTES AND DEFINITIONS (1) Exchange rate in 1992 was ZI 13,631 to $ 1. (2) Accumulated depreciation is shown as % of gross fixed assets (3) 1992 depreciation shown here is the writeoff for 1992 from the operating income statement (4) Operating ratio is operating costs divided by operating revenues (5) Current ratio is current assets divided by current liabilities (6) MPK Krakow also uses fixed assets owned by the municipality, valued at ZL 600,000 million; this may also be the case with PKM Katowice 0 E 2 C::DATA\?OLGREY\>D4lN 26-J.a-95^, ANNEX 4 OPERATING CHARACTERISTICS OF MASS TRANSPORT COMPANIES Table 1 ZKM Gdansk Table 2 MZK Gdynia Table 3 MPK Krakow Table 4 MPK Lodz Table 5 MPK Poznan Table 6 MPK Wroclaw Table 7 WPK Katowice (until 1991) Table 8 PKT Katowice (from 1992) Table 9 PKM Katowice (from 1992) Table 10 MZK Warsaw 137 Annex 4 Page 1 of 10 POLAND URBAN TRANSPORT REVIEW TABLE 1: ZKM GDANSK ____________________________ 1 1984 1985 1986 1987 1988 1989 1990 1991 1992 Network (km) bus 575 590 601 604 304 242 tramway 50 46 50 46 44 50 Lines (km) bus 1,294 1,271 1,314 1,320 618 439 tramway 129 128 132 117 105 104 No.passengers p.a. (000) 443,042 454,953 427,773 219,700 175,911 141,339 151,600 bus 319,227 334,322 312,598 81,712 tramway 123,815 120,631 115,175 69,888 Fleet in inventory bus 662 646 671 648 307 298 267 245 tramway 234 226 232 246 259 262 263 261 Fleet in operation bus 494 502 504 491 191 174 160 176 tramway 173 166 161 162 158 162 157 164 Vehicle -km per year (million) bus 38 39 41 41 16 16 14 14 tramway 14 13 14 15 13 12 13 13 Vehicle-hours per year bus 797,321 tramway 810,798 Average operating speed (kmph bus 21 21 18 tramway 19 17 16 No. employed total 5,485 5,551 5,592 5,321 2,401 2,166 2,088 drivers 412 366 378 tramway operators 179 183 185 technical staff 786 1,336 1,264 administration 345 281 261 Average salary (000) zi 19 22 26 30 1,175 2,300 3,920 Investment (million zi) total 18,320 rolling stock 18,320 bus 7,750 tramway 0 own means other means 7,750 other forms of acquiring Note: ZKM Gdansk also served Gdynia through 1988, thus for that period all numbers involving buses include trolleybuses as M in 1989, Gdynia depot became MZK Gdynia C\DWATALORMOPCHAR 139 Annex 4 Page 2 of 10 POLAND URBAN TRANSPORT REVIEW TABLE 2: MZK GDYNIA 1989 1990 1991 1992 Network (km) bus 128 33 t-bus 31 76 Lines (km) bus 458 962 t-bus 61 146 No.passengers p.a. (000) 106,421 79,979 100,375 bus 75,281 t-bus 25,094 Fleet in inventory bus 234 212 204 195 t-bus 85 76 76 75 Fleet in operation bus 231 169 143 145 t-bus 82 58 49 52 Vehicle -km per year (million) bus 15 15 13 12 t-bus 4 3 3 3 Vehicle-hours per year bus 604,238 t-bus 212,142 Average operating speed (kmph bus 24 24 19 t-bus 20 19 16 No. employed total 1,372 1,265 1,230 drivers 376 342 337 t-bus drivers 123 technical staff 717 663 645 administration 164 145 125 Average salary (000) zl 1,060 2,667 4,088 Investment (million zl) total 15,014 rolling stock 15,014 bus 9,421 t-bus 5,593 own means 1,288 other means 13,726 Ct\DATATOLWRSMYCH }140 Annex 4 Page 3 of 10 POLAND URBAN TRANSPORT REVIEW Table 3: MPK KRAKOW 1984 1985 1986 1987 1988 1989 1990 1991 1992 Network (km) bus 419 449 458 478 485 505 616 tramway 80 78 79 79 79 79 80 Lines (km) bus 907 894 934 997 1,014 1,064 1,347 tramway 296 279 279 268 268 268 312 No.passengers p.a. (000) 741,314 763,510 740,388 741,000 723,800 616,300 467,000 383,000 399,250 bus 311,352 320,675 310,963 tramway 429,962 442,835 429,425 Fleet in inventory bus 686 674 683 664 668 673 622 tramway 543 543 539 489 537 516 Fleet in operation bus 476 490 493 497 503 497 492 455 432 tramway 434 441 442 432 421 407 418 383 353 Vehicle-km per year (million) bus 42 43 44 43 45 43 44 41 38 tramway 34 36 36 35 34 32 32 29 26 Vehicle -hours per year bus 2,111,934 tramway 1,752,311 Average operating speed (kmph bus 18 tramway 15 No. employed total 7,114 6,843 6,821 6,714 6,599 6,390 6,459 4,503 4,345 drivers 1,120 1,105 1,152 tramway operators 514 510 501 technical staff 3,669 2,058 1,909 administration 1,156 831 783 Average salary (000) zl 19 22 25 31 3,671 Investment (million zi) total 970 1,662 1,830 2,342 23,701 rolling stock 10,163 bus 3,042 tramway 7,121 own means 121 other means 10,042 other forms of acquiring 19,691 141 CoDATApOLORMY\OPCRAR 26 - Jun-95 Annex 4 Page 4 of 10 POLAND URBAN TRANSPORT REVIEW TABLE 4: MPK LODZ 1984 1985 1986 1987 1988 1989 1990 1991 1992 Network (km) bus 338 434 441 472 485 527 314 tramway 169 166 167 167 168 168 162 Lines (km) bus 655 691 697 749 787 831 553 tramway 452 444 442 427 430 444 411 No.passengers p.a. (000) 835,530 824,789 869,709 867,100 925,100 722,408 499,484 444,296 bus 418,811 415,885 435,455 219,435 tramway 416,719 408,904 434,254 224,861 Fleet in inventory bus 631 658 640 638 626 617 618 607 526 tramway 688 695 695 695 680 650 653 648 622 Fleet in operation bus 456 467 476 475 626 617 486 451 376 tramway 465 510 517 525 680 650 500 479 420 Vehicle-km per year (million) bus 38 39 45 43 45 37 31 tramway 40 38 38 37 37 32 30 Vehicle-hours per year bus 1,712,537 tramway 1,951,431 Average operating speed (kmph bus 22 22 18 tramway 16 18 15 No. employed total 7,216 7,196 6,992 6,890 6,625 6,323 5,772 drivers 1,190 1,154 1,011 tramway operators 715 743 692 technical staff 3,640 3,450 3,157 administration 1,080 976 912 Average salary (000) zl 19 22 26 32 1,101 1,843 3,282 Investment (million zi) total 30,379 rolling stock 22,888 bus 22,888 tramway 0 own means 22,888 other means other forms of acquiring CAnATAPOLGREYOPCAR 142-J-9 Annex 4 Page 5 of 10 POIAND URBAN TRANSPORT RFVIEW TABLE 5: MPK POZNAN l ______ ___ =__84 1985 - 1986 1987 1988 1989 199( 1991 ___ i Network (kin) l_ l bus 521 545 557 253 tramway 57 57 57 57 Lines (km) buis 862 903 995 443 tramway 221 238 248 201 No.passengers p.a. (000) 437,995 322,100 246,726 212,504 209,098 bus 144,458 110,822 tramway 293,537 98,276 Fleet in inventory bus 457 436 441 429 369 333 tramway 470 454 446 438 402 370 Fleet in operation bus 322 303 431 297 240 239 tramway 363 331 445 295 253 237 Vehicle-km per year (million) bus 26 27 28 21 18 tramway 22 19 19 18 16 Vehicle-hours per year bus 1,100,000 tramway 1,200,000 Average operating speed (kmph bus 16 16 17 tramway 17 17 14 No. employed total 4,154 3,880 4,072 3,826 3,862 drivers 824 716 699 tramway operators 450 420 463 technical staff 2,224 2,174 2,197 administration 574 516 503 Average salary (000) zi 21 31 961 2,249 3,498 Investment (million zl) total 23,000 rolling stock 5,000 bus 5,000 tramway 0 own means other means 5,000 other forms of acquiring .__ _- 143 26J 95 C:\DATA'POLOREY\OPCHAR 2-..9 Annex 4 Page 6 of 10 POLAND URBAN TRANSPORT REVIEW TABLE 6: MPK WROCLAW 1984 1985 1986 1987 1988 1989 1990 1991 1992 Network (km) bus 334 357 358 360 365 366 374 tramway 88 88 88 88 88 88 88 Lines (km) bus 582 614 619 621 641 691 708 tramway 239 260 270 270 270 271 266 No.passengers p.a. (000) 401,J93 415,960 456,946 430,700 404,200 352,993 314,847 318,139 bus 136,033 141,010 243,095 tramway 265,360 274,950 213,851 Fleet in inventory bus 502 543 595 537 512 485 475 478 432 tramway 519 515 501 499 499 477 468 451 451 Fleet in operation bus 347 357 369 350 517 497 327 317 306 tramway 350 336 337 327 497 489 311 314 318 Vehicle-km per year (million) bus 27 28 29 27 28 27 26 24 24 tramway 21 20 20 20 21 21 22 22 22 Vehicle- hours per year bus 1,199,534 tramway 1,514,497 Average operating speed (kmph bus 22 21 20 tramway 16 16 15 No. employed total 3,686 3,755 3,895 3,960 3,539 3,746 4,081 drivers 703 728 721 tramway operators 406 462 515 technical staff 1,765 2,000 2,299 administration 665 556 546 Average salary (000) zl 19 21 26 31 1,037 2,136 3,409 Investment (million zi) total 32,178 rolling stock 720 bus 720 tramway 0 own means 720 other means other forms of acquirinR Note: t990 and 1991 staff categories do not add up to reported totals 144 CMDfATA\POWREMOPCHAR Annex 4 Page 7 of 10 POLAND URBAN TRANSPORT REVIEW TABLE 7: WPK KATOWICE (till 1991) ____________________________ 1984 1985 1986 1987 1988 1989 1990 1991 Network (km) bus 2,581 2,629 2,677 2,695 2,756 2,771 tramway 218 218 218 218 218 218 Lines (km) bus 12,999 13,504 8,456 7,956 8,196 8,406 tramway 378 372 371 374 374 373 No.passengers p.a. (000) 984,842 982,050 988,674 1,017,300 1,018,000 947,801 920,000 bus 632,336 637,034 647,837 tramway 352,506 345,016 340,837 Fleet in inventory bus 1,856 1,676 1,732 1,709 1,635 1,624 1,618 1,535 tramway 523 531 535 536 544 541 535 530 Fleet in operation bus 1,239 1,227 1,214 1,212 1,676 1,629 1,094 966 tramway 340 326 325 321 538 541 333 286 Vehicle-km per year (million) bus 126 124 126 124 125 120 110 106 tramway 30 28 29 28 29 28 29 24 Vehicle-hours per year bus tramway Average operating speed (kmph bus 26 26 tramway 18 18 No. employed total 13,205 13,009 12,990 12,588 10,421 10,286 drivers 2,545 2,551 tramway operators 487 489 technical staff 5,659 5,631 administration 1,699 1,580 Average salary (000) zl 21 25 29 34 998 2,194 Investment (million zi) CkDATATPOLOREY\OPCHIAR 145 2J-9 Annex 4 Page 8 of 10 POLAND URBAN TRANSPORT REVIEW TABLE 8: PKT KATOWICE (from 1992) ____________________________ T 1992 l-VI.1993 !Network (km) 207 207 Lines (km) 360 360 Passengers p.a. (000) 219,500 85,800 lTramway cars in inventory 516 515 Tramway cars in operation 279 285 Vehicle-km per year (million) 23 12 Vehicle-hours per year 720,066 lAverage operating speed (kmph 16 16 Number employed total 3,346 3,504 operators 529 568 technical staff 2,281 2,368 administration 536 568 Average monthly salary (000) zi 3,151 3,885 Investment (million zl) l C:\DATA\POLGREY\0PCHAR 146 26-Jun-95 Annex 4 Page 9 of 10 POLAND URBAN TRANSPORT REVIEW TABLE 9: PKM KATOWICE (from 1992) 1_ 1992 I-VI1993 Network (km) 357 357 Lines (km) 1,121 1,121 Passengers p. a. (000) 120,240 I Buses in inventory 247 247 Buses in operation 212 177 Vehicle-km per year (million) |I 18 7 Vehicle-hours per year 773,079 395,691 Average operating speed (kmph;: 23 18 Number employed total 1,449 1,299 drivers 445 454 technical staff 667 666 administration 176 179 Average monthly salary (000) zl 1 3,533 4,079 Investment (million zl) total 2,522 rolling stock 1,997 own means 1,97 147 Annex 4 Page 10 of 10 POLAND URBAN TRANSPORT REVIEW TABLE 10: MZK WARSAW 1987 1988 1989 1990 1991 1992 1993 Network (km) bus 812 842 tramway 119 119 trolley-bus 13 13 Lines (km) bus 2,478 2,565 2,521 2,605 2.578 2,253 2,286 tramway 423 423 470 460 460 427 427 trolley-bus 13 13 13 26 26 13 13 No.passengers p.a. (000) 1,232,000 bus 801,000 tramway 419,000 trolley- bus 12,000 Fleet in inventory bus 2,011 1902 1,811 1,747 1,732 1,682 1,670 tramway 930 9's 908 908 908 900 900 trolley-bus 34 34 32 30 31 42 39 Fleet in operation bus 1,307 ',2C- 1,177 1,258 1,178 1,229 1,253 tramway 623 611 617 636 581 612 630 trolley-bus 20 20 15 18 19 23 24 Vehicle-km per year (million) bus 115 99 96 98 98 tramway 47 44 39 40 40 trolley-bus 2.2 1.5 1.6 1.9 1.8 Vehicle-hours per year bus 5,501,800 tramway 2,694,500 trolley- bus 98300 Average operating speed (kmph bus 17.6 17.1 17.9 18.1 tramway 14.5 14.4 14.8 14.9 trolley-bus 20.5 19.9 19.3 20.4 No. employed total 11,941 11,660 10,695 10,825 10,564 10,474 9,798 bus & t -bus drivers 2,900 2.760 2,583 2,828 2,999 3,190 3,061 tramway operators 636 607 602 659 688 744 716 technical staff & others 6,427 6,319 5,640 5,600 5,273 4,973 4,607 administration 1,978 1,974 1,870 1,738 1,604 1,567 1,414 Average monthly salary (000) zi 3,950 | Investment (million zI) 178,376 Note: staffing data shown here for MZK Warsaw come from a consistent set obtained from the company. However, staffing numbers for 1992 differ considerably from those shown in Table 4, Annex 3 of this report. Staffing total here is 10,474 and only 9,441 in Table 4 of Annex 3. The difference is probably due to one source using annual average staffing, and the other using end-of-year staffing. Since data for all companies in Table 4, Annex 3 come from the same source (Izba Gospodarcza Annual Report for 1992), the method of calculation is consistent across companies and has been retained. C:\DATATOLGREY«OPCHAR 148 26-J-95 ANNEX 5 OPERATING COSTS AND REVENUES OF MASS TRANSPORT COMPANIES 1988-92 Table 1 ZKM Gdansk Table 2 MZK Gdynia Table 3 MPK Krakow Table 4 MPK Lodz Table 5 MPK Poznan Table 6 MPK Wroclaw Table 7 WPK Katowice (until 1991) Table 8 PKT Katowice (from 1992) Table 9 PKM Katowice (from 1992) Table 10 MZK Warszawa 149 Annex 5 Page I of II POLAND URBAN TRANSPORT REVIEW OPERATING COSTS AND REVENUFS OF MASS TRANSPORT COMPANIES 1988-1992 TABLE 1: ZKM GDANSK -Costs in million currentzl __ 1988 __ 1989_ 199(0 _ _1991 _ 1992 Wages 1,915 7,291 34,364 67,887 103,335 Fuel 624 2,010 13,876 17,851 24,958 Electricity 360 1,015 9,055 13.221 19,343 Spare parts 920 1,547 14,907 23,385 30,855 Other 2,407 6,734 28,811 68,149 108,691 SU BTO'[AL: Direct operating costs 6,226 18,597 101,013 190,493 287,182 Depreciation 532 607 8,688 12.558 8 TOTAI COSTS 6,758 19,204 109,701 203,051 287,190 Inflator 58.64 16.70 2.44 1.43 1.00 C.osts i million 1992 zl = _ =___ - ] Wages 112,296 121,;67 83,676 97,078 103,335 Fuel 36,591 33,569 33,788 25,527 24,958 Electricity 21,110 16,952 22.049 18,906 19,343 Spare parts 53,949 25,836 36,299 33.441 30,855 Other 141,146 112,465 70,155 97,453 108,691 Depreciation 31,196 10,138 21,155 17,958 8 'IOTAL. COSTS 396,289 320,726 267,122 290,363 287.190 Annual veh-km (million) na 29.1 27.8 26.5 27.0 cUnitosts (92zl/veh-km) Wages na 4,179 3,010 3,663 3,827 Fuel na 1,152 1,215 963 924 Flectricity na 582 793 713 716 Spare parts na 887 1,306 1,262 1,143 Other na 3,859 2,524 3,677 4,026 Depreciation na 348 761 678 0 'lotal unit costs na 11,006 9,609 10,957 10,637 KRevenues in million current zl Ticket revenues 1,939 5,969 45,447 79,321 121,114 Other earned revenues 396 1,302 9,507 15,978 14,613 SUBTOTAL: Earned revenues 2,335 7,271 54,954 95,299 135,727 Subsidies 7,720 14,586 75,106 154,300 157,624 TOTAL REVENUES 10,055 21,857 130,060 249,599 293,351 Inflator 58.64 16.70 2.44 1.43 1.0(J Revenues in million 1992 zl 'ricketrevenues 113,703 99,682 110,891 113,429 121,114 Other revenues 23,221 21,743 23,197 22,849 14,613 SUBTOTAL.: Earned revenues 136,924 121,426 134,088 136,278 135,727 Subsidies 452,701 243,586 183,259 220,649 157,624 TOTAI. REVENUES 589,625 365,012 317,346 356,927 293,351 Indicators (%) _________ __ ___ Wages/total costs 28% 38% 31% 33% 36% Depreciation/total costs 8% 3% 8% 6% 0% Earned revenues/direct op. costs 38% 39% 54% 50% 47% Earned revenues/total op. costs 35% 38% 50% 47% 47% C:\DATA\P0LGREY\COSTREV 151 26-Jun-95 Annex 5 Page 2 of 11 POLAND URBAN TRANSPORT REVIEW OPERATING COSTS AND REVENUES OF MASS TRANSPORT COMPANIES 1988-1992 TABLE 2: MZK GDYNIA I Costs in million current zl 1988 1989 1990 1991 1992 Wages na 3,476 17,467 40,538 61,054 Fuel na 1,646 11,200 16,057 25,147 Electricity na 752 4,949 8,157 7,409 Spare parts na 1,727 2,950 3,270 6,500 Other na 12,752 19,725 35,598 50,842 SUBTOTAL: Direct operatingcosts 0 20,353 56,291 103,620 150,952 Depreciation na 240 4,191 6,412 TOTAL COSTS na 20,593 60,482 110,032 150,952 Inflator 58.64 16.70 2.44 1.43 1.00 Costs in million 1992 zl Wages na 58,049 42,619 57,969 61,054 Fuel na 27,488 27.328 22,962 25,147 Electricity na 12,558 12,076 11,665 7,409 Spare parts na 28,841 7,198 4,676 6,500 Other na 212,958 48,129 50,905 50,842 Depreciation na 4,008 10,226 9,169 0 TOTAL COSTS na 343.903 147,576 157,346 150,952 Annual veh-km (million na 18.5 18.0 16.0 15.0 | Unit costs (92 zl/veh-km) Wages na 3,138 2,368 3,623 4,070 Fuel na 1,486 1,518 1,435 1,676 Electricity na 679 671 729 494 Spare parts na 1,559 400 292 433 Other na 11,511 2,674 3,182 3,389 Depreciation na 217 568 573 0 TOTAL UNIT COSTS na 18,589 8,199 9,834 10,063 | Revenues in million current zl Ticket revenues na 3,691 30,954 59,381 93,247 Other earned revenues na 27 5,939 8,390 7,736 SUBTOTAL: Earned revenues na 3,718 36,893 67,771 100,983 Subsidies na 5,700 26,766 39,368 45,783 TOTAL REVENUES na 9,418 63,659 107,139 146,766 Inflator 58.64 16.70 2.44 1.43 1.00 I Revenues in million 1992 zi Ticket revenues na 61,640 75,528 84,915 93,247 Other earned revenues na 451 14,491 11,998 7,736 SUBTOTAL: Earned revenues na 62,091 90,019 96,913 100,983 Subsidies na 95,190 65,309 56,296 45,783 TOTAL REVENUES na 157,281 155,328 153,209 146,766 | Indicators (%) Wages/total costs na 17% 29% 37% 40% Depreciation/total costs na 1 % 7% 6% 0% Earned revenues/direct op. costs na 18% 66% 65% 67% Earned revenues/total op. costs na 18% 61% 62% 67% C:\DATATPOLGREYCOSIREV 152 26-Jun-95 Annex 5 Page 3 of 11 POLAND URBAN TRANSPORT REVIEW OPERATING COSTS AND REVENUES OF MASS TRANSPORT COMPANIES 1988-1992 TABLE 3: MPK KRAKOW Costs in million current zI 1988 1989 1990 1991 1992 Wages 6,640 26,656 na 186,476 277,358 Fuel 1,726 5,887 na 49,304 71,139 Electricity 946 2,855 na 32,130 39,968 Spare parts 3,815 8,641 na 65,830 77,949 Other 1,723 6,152 na 137,066 156,299 a SUBTOTAL: Direct operating costs 14,850 50,191 na 470,806 622,713 Depreciation 1,233 1,667 na - 5,600 TOTAL COSTS 16,083 51,858 263,616 470,806 628,313 Inflator 58.64 16.70 2.44 1.43 1.00 Costs in million 1992 zl Wages 389,370 445,155 na 266,661 277,358 Fuel 101,213 98,313 na 70,505 71,139 Electricity 55,473 47,679 na 45,946 39,968 Spare parts 223,712 144,305 na 94,137 77,949 Other 101,037 102,738 na 196,004 156,299 Depreciation 72,303 27,839 na 0 5,600 TOTAL COSTS 943,107 866,029 643,223.0 673,253 628,313 Annual veh-km (million) 78.0 65.0 na na 63.0 Unit costs (92 zlhveh -km) Wages 4,992 6,849 na na 4,403 Fuel 1,298 1,513 na na 1,129 Electricity 711 734 na na 634 Spare parts 2,868 2,220 na na 1,237 Other 1,295 1,581 na na 2,481 Depreciation 927 428 na na 89 TOTAL UNIT COST1S 12,091 13,324 na na 9,973 Revenues in million current zl Ticket revenues 5,369 16,938 na 243,177 348,717 Other earned revenues 1,075 2,644 na 4,978 b 916 b SUBTOTAL: Earned revenues 6,444 19,582 na 248,155 349,633 Subsidies na 30,630 na 227,620 264,000 TOTAL REVENUES 6,444 50,212 na 475,775 613,633 Inflator 58.64 16.70 2.44 1.43 1.00 Revenues in million 1992 zl 'Ticket revenues 314,838 282,865 na 347,743 348,717 Other earned revenues 63,038 44,155 na 7,119 916 SUBTOTAL: Earned revenues 377,876 327,019 na 354,862 349,633 Subsidies na 511,521 na 325,497 264,000 TOTAL REVENUES 377,876 838,540 na 680,358 613,633 LIndicators (% Wages/total costs 41% 51% na 40% 44% Depreciation/total costs 8% 3% na 0% 1% Earned revenues/direct op. costs 43% 39% na 53% 56% Earned revenues/total op. costs 40% 38% na 53% 56% C:\DATATPOUGFREYwCOSTREV 153 26-Jun-95 Annex 5 Page 4 of 11 POLAND URBAN TRANSPORT REVIEW OPERATING COSTS AND REVENUES OF MASS TRANSPORT COMPANIES 1988-1992 TABLE 4: MPK LODZ Costs in million current zl 1988 1989 1990 1991 1992 Wages 2,671 11,331 53,954 86,890 123,056 Fuel 1,463 4,190 32,138 41,274 52,728 Electricity 858 2,754 27,975 35,172 47,061 Spare parts 6,574 20,362 123,531 168,832 374,433 c Other 3,021 10,641 53,995 78,197 91,722 SUBITOTAL.: Direct operating costs 14,587 49,278 291,593 410,365 689,000 D)epreciation 850 1,068 15,832 45,526 45,674 TOTAL COS'ITS 15,437 50,346 307,425 455,891 734,674 d Inflator 58.64 16.70 2.44 1.43 1.00 Cosis in million 1992 zl Wages 156,627 189,228 131,648 124,253 123,056 Fuel 85,790 69,973 78,417 59,022 52,728 Electricity 50,313 45,992 68,259 50,296 47,061 Spare parts 385,499 340,045 301,416 241,430 374,433 Other 177,151 177,705 131,748 111,822 91,722 Depreciation 49,844 17,836 38,630 65,102 45,674 TOTAL COSTS 905,226 840.778 750,117 651,924 734,674 Annual veh-km (million) 83.2 80.2 82.6 69.5 60.7 Unit costs (92_z/veh -km) __________ l__________________________________ Wages 1,883 2,359 1,594 1,788 2,027 Fuel 1,031 872 949 849 869 Electricity 605 573 826 724 775 Spare parts 4,633 4,240 3,649 3,474 6,169 Other 2,129 2,216 1,595 1,609 1,511 Depreciation 599 222 468 937 752 I'OTAL UNIT COSTS 10,880 10,484 9,081 9,380 12,103 Revenues in million current zl I Ticket rcvenues 5,235 15,866 110,503 218,791 320,684 Other earned revenues 264 459 3,236 1,903 105,381 SUBTOTAL: Earned revenues 5,499 16,325 113,739 220,694 426,065 Subsidies 11,601 36,770 205,067 214,410 259,654 'FOTAL, REVENUES 17,100 53,095 318,806 435,104 685,719 Inflator 58.64 16.70 2.44 1.43 1.00 Revenues in million 1992 zl 1icket revenues 306,980 264,962 269,627 312,871 320,684 Other earned revenues 15,481 7,665 7,896 2,721 105,381 SUBTO'I'AL: Earned revenues 322,461 272,628 277,523 315,592 426,065 Subsidies 680,283 614,059 500,363 306,606 259,654 I'O'T'AL REVENUES 1,002,744 886,687 777,887 622,199 685,719 [Indicatorst% _ _ _ _ _ _ - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Wages/total costs 17% 23% 18% 19% 17% Depreciation/total costs 6% 2% 5% 10% 6% Earned revenues/direct op. costs 38% 33% 39% 54% 62% Earned revenues/total op. costs 36% 32% 37% 48% 58% C;:DATA\LjGREY\C0STREV 154 26-Jun-95 Annex 5 Page 5 of 11 POLAND URBAN TRANSPORT REVIEW OPERATING COSTS AND REVENUES OF MASS TRANSPORT COMPANIES 1988-1992 TABLE 5: MPK POZNAN Costs in million current zl 1988 1989 1990 1991 1992 Wages 2,809 10,573 47,110 104,010 168,279 Fuel 1,006 3,556 31,673 36,212 42,243 Flectricity 544 1,753 16,447 25,159 31,187 Spare parts 1,998 3,531 19,879 46,520 57,120 Other 2,922 7,914 47,866 79,944 111,635 SU13TO'FAL: Direct operating costs 9,279 27,327 162,975 291,845 410,464 Depreciation 676 862 13,676 10,987 152 TOT'AL COSTS 9,955 28,189 176,651 302,832 410,616 Inflator 58.64 16.70 2.44 1.43 1.00 LCosts in million 1992 zl ____ Wages 164,720 176,569 114,948 148,734 168,279 Fuel 58,992 59.385 77,282 51,783 42,243 Electricity 31,900 29,275 40,131 35,977 31,187 Spare parts 117,163 58,968 48,505 66,524 57,120 Other 171,346 132,164 116,793 114,320 111,635 D)epreciation 39,641 14,395 33,369 15,711 152 'TO'TAI COS'IS 583,761 470,756 431,028 433,050 410,616 Annual veh -km (million) na 45.8 47.0 39.0 34.6 | Unit costs (9 z2lveh -kmz Wages na 3,855 2,446 3,814 4,864 Fuel na 1,297 1,644 1,328 1,221 Electricity na 639 854 922 901 Spare parts na 1,288 1,032 1,706 1,651 Other na 2,886 2,485 2,931 3,226 Depreciation na 314 710 403 4 ['OTAL UNIT COSTS na 10,279 9,171 11,104 11,868 Revenues in_million current zl _________________________I____________________ 'licket revenues 2,744 8,114 58,407 129,871 206,251 Other earned revenues 712 1,621 8,412 15,287 23,983 SUBrTO'TAI: E.arned revenues 3,456 9,735 66,819 145,158 230,234 Subsidies 7,625 20,290 106,484 155,900 169,641 TOTAL REVENUE-S 11,081 30,025 173,303 301,058 399,875 Inflator 58.64 16.70 2.44 1.43 1.00 Revenues in million 1992 zi _l_ _ _ lickct revenues 160,908 135,504 142,513 185,716 206,251 Other earned revenues 41,752 27,071 20,525 21,860 23,983 SUBTOTAL: Earned revenues 202,660 162,575 163,038 207,576 230,234 Subsidies 447,130 338,843 259,821 222,937 169,641 'I'OTAI. RElVENUIS 649,790 501,418 422,859 430,513 399,875 [Ind icators_ff) =_ __ _ Wages/total costs 28% 38% 27% 34% 41% Depreciation/total costs 7% 3% 8% 4% 0% Earned revenues/direct op. costs 37% 36% 41% 50% 56% Earned revenues/total op. costs 35% 35% 38% 48% 56% C: J)ATAo01GREYMCoSTREV 155 26-Jun-95 Annex 5 Page 6 of 11 POLAND URBAN TRANSPORT REVIEW OPERATING COSTS AND REVENUES OF MASS lRANSPORT COMPANIES 1988-1992 TABLE 6: MPK WROCLAW Costs in million currentzl 1988 1989 1990 1991 1992 Wages 1,390 5,710 29,874 53,944 84,721 Fuel 984 3,424 24,347 33,609 45,624 Electricity 515 1,782 17,382 25,068 33,562 Spare parts 4,815 13,711 86,505 171,998 281,347 c Other 1,525 5,137 27,486 56,591 83,738 SUBTOTAL: Direct operating costs 9,229 29,764 185,594 341,210 528,992 Depreciation 693 908 11,763 13,759 0 e TOTAL COSTS 9,922 30,672 197,357 354,969 528,992 f Inflator 58.64 16.70 2.44 1.43 1.00 | Costs in million 1992 zl Wages 81,510 95,357 '72,893 77,140 84,721 Fuel 57,702 57,181 59,407 48,061 45,624 Electricity 30,200 29,759 42,412 35,847 33,562 Spare parts 282,352 228,974 211,072 245,957 281,347 Other 89,426 85,788 67,066 80,925 83,738 Depreciation 40,638 15,164 28,702 19,675 0 TOTAL COSTS 581,826 512,222 481,551 507,606 528,992 Annual veh-km (million) 48.9 48.3 47.3 45.4 46.5 | Un~it costs (92 zl/heh -kmn)l Wages 1,667 1,974 1,541 1,699 1,822 Fuel 1,180 1,184 1,256 1,059 981 Electricity 618 616 897 790 722 Spare parts 5,774 4,741 4,462 5,418 6,050 Other 1,829 1,776 1,418 1,782 1,801 Depreciation 831 314 607 433 0 TOTALUNITCOSTS 11,898 10,605 10,181 11,181 11,376 | Revenues in million current zl 'licket revenues 3,111 9,209 69,432 143,794 245,366 Other earned revenues 1,081 2,931 22,598 49,387 59,579 SUBTOTAL: Earned revenues 4,192 12,140 92,030 193,181 304,945 Subsidies 7,482 24,570 157,000 209,393 238,500 TOTAL REVENUES 11,674 36,710 249,030 402,574 543,445 Inflator 58.64 16.70 2.44 1.43 1.00 [Revenues in million 1992 zi Ticket revenues 182,429 153,790 169,414 205,625 245,366 Other earned revenues 63,390 48,948 55,139 70,623 59,579 SUBTOTAL: Earned revenues 245,819 202,738 224,553 276,249 304,945 Subsidies 438,744 410,319 383,080 299,432 238,500 TOTAL REVENUES 684,563 613,057 607,633 575,681 543,445 Indicators (%) Wages/total costs 14% 19% 15% 15% 16% Depreciation/total costs 7% 3% 6% 4% 0% Earned revenues/direct op. costs 45% 41% 50% 57% 58% Earned revenues/total op. costs 42% 40% 47% 54% 58% C:\DATATOLGREYCOSTREV 156 26-Jun-95 Annex 5 Page 7 of 11 POLAND URBAN "RANSPORT REVIEW OPERATING COF IS AND REVENUES OF MASS TRANSPORT COMPANIFS 1988-1992 TABLE 7: WPK KATOWICE (until 1991) ('Csts in million current zi 1988 1989 1990 1991 1992 Wages na na na na IIICI na na na na Electricity na na na na Spare parts na na na na Other na ina na na SUB'1OT(AI: Direct operating costs na na na na l)epreciation na na na na I'OIAI. ('COSTS 31,505 86,031 459,641 948,470 Intlator 58.64 16.70 2.44 1.43 Costs in million 1992 zA - __ -. - _ ___= Wages na na na na Fuel na na na na Electricity na na na na Spare parts na na na na Other na na na na D)epreciation na na na na 'IO'I'AI. COSTS 1,847,453 1,436,718 1,121,524.0 1,356,312 Annual veh-km (million) 153.6 147.8 138.1 127.7 Unit costs(92 zlveh-km)__ _ Wages na na na na Fuel na na na na Flectricity na na na na Spare parts na na na na Other na na na na Depreeiation na na na na TOTAL UNI'I'COSTS 12,028 9,721 8,121 10,621 LRevenues in million current zl Ticket revenues na na na na Other earned revenues na na na na SUllTOTAI.: Earned revenues 13,403 33,806 177,706 471,500 Subsidics 17,591 52,340 310,410 562,500 T'FAI. REVENUES 30,994 86,146 488,116 1,034,000 Inflator 58.64 16.70 2.44 1.43 Revenues in million 1992 z! ________________ Ticket revenues na na na na Other earned revenues na na na na SUBTO'TAL: Earned revenues 785,952 564,560 433,603 674,245 Subsidies 1,031,536 874,078 757,400 804,375 TOTAL RE.VEINUES 1,817,488 1,438,638 1,191,003 1,478,620 Indicators_(%i ___ ____ _1__ _ __ ._ __ = Wages/total costs na na na na D)epreeiation/total costs na na na na Farned revenues/direct op. costs na nia na na Earned revenue/total op. costs 43% 39% 39% 50% C:DATA,POLCREY,COSREV 157 26-Jun-95 Annex 5 Page 8 of 11 POLAND URBAN TRANSPORT REVIEW OPERATING COSTrS AND REVENUES OF MASS MTANSPORT COMPANIES 1988-1992 TABLE, 8: PKT KATOWICE. (from 1992) Costs in million current zl 1988 1989 __ 199() 1991_ 1992 Wages 35,856 Fuel 0 Electricity 36,316 Spare parts 204,863 c Other 103,311 SUBTOTAL: Direct operating costs 380,346 Depreciation 26,534 TOTAI COSTS 406,880 Inflator 58.64 16.70 2.44 1.43 1.00 Costs in million 1992 zi Wages 35,856 Fuel 0 Electricity 36,316 Spare parts 204,863 Other 103,311 Depreciation 26,534 TOTAL COSTS 406.880 Annual veh-km (million) 23.0 lUnit costs (92 zl/veh-km) Wages 1,559 Fuel 0 Electricity 1,579 Spare parts 8,907 Other 4,492 Depreciation 1,154 TOTAL UNIT COSTS 17,690 Revenues in million current zl Ticket revenues 125,360 Other earned revenues 1,745 SUBTOTAL: Earned revenues 127,105 Subsidies 260,493 Ticket revenues 387,598 Inflator 58.64 16.70 2.44 1.43 1.00 Revenues inmillion1992z ___ Ticket revenues 125,360 Other earned revenues 1,745 SUBTOTAL: Earned revenues 127.105 Subsidies 260,493 picket revenues 387,598 Indicators (%) _ D_= Wages/total costs 9% Depreciation/total costs 7% Earned revenues/direct op. costs 33% Earned revenues/toptal op. costs 31% C:DATA\POLGREY\COSTREV 158 26-Jun-95 Annex 5 Page 9 of 11 POLAND URBAN TRANSFORT REVIEW OPERATING COSTS AND REVENUES OF MASS TRANSPORT COMPANIES 1988-1992 TABLIF 9: PKM KIATOWICE (from 1992) Costs_milnonu rrn 19__88__89_1_i9900 1991 1992 _ Wages 77,992 Fucl 28,835 Flectricity ( Spare parts na Other 92.687 SUB'I'OTAL: Direct operatingcosts 199,514 Depreciation t 2,714 TOTAL COSTS 212.228 Inflator 58.64 16.70 2.44 1.43 1.00 Costs in m_illio 1992 zl ___ ______ Wages 77,992 F'uel 28,835 I'lectricity 0 Sparc parts na Other 92,687 D)epreciation 12,714 'I'OTAL COSTS 212,228 Annual veh-km (million) 18 LUnit costs (92 zl/veh -km) Wages 4,333 Fuel 1,602 Electricity 0 Spare parts na Other 5,149 Depreciation 706 TOTAL UNIT COSTS 11,790 L Reven ues in million current zl Ticket revenues 143,676 Other earned revenues 33,404 SUBTOTAL: Earned revenues 177,080 Subsidies 27,428 TOTAI. REVENUES 204.508 Inflator 58.64 16.70 2.44 1.43 1.00 Revenues in million 1992 zi_________ T icket revenues 143,676 Other earned revenues 33,404 SUBTOTAL: Earned revenues 177.080 Subsidies 27,428 TOTAI REVENUES 204,508 In dcators (0--) Wages/total costs 37% Depreciation/total costs 6% I.arned revenues/direct op. costs 89% Earned revenues/total op. costs 83% CADATATPOLGREY\COSTREV 159 26-Jun-95 Annex 5 Page 10 of 11 POLAND URBAN TRANSPORT REVIEW OPERATING COSTS AND REVENUES OF MASS TRANSPORT COMPANIES 1988-1992 TABLE 10: MZK WARSZAWA Costs in million currentzl 1988 1989 1990 1991 1992 Wages 7,130 26,254 237,357 441,656 752,580 Fuel 3,480 8,487 73,346 102,609 151,125 Electricity 1,107 3,575 67,860 104,574 110,372 Spare parts 4.599 9,071 84,232 192,208 323,293 Other g 9.509 28,292 71,868 264,354 317,843 SUBTOTAL: Direct operating costs 25,825 75,679 534,663 1,105,401 1,655,213 Depreciation 2,183 2,913 43,006 48,263 1,373 TOTAL COSTS 28,008 78,592 577,669 1,153,664 1,656,586 Inflator 58.64 16.70 2.44 1.43 1.00 | Costs in million 1992 zI Wages 418,103 438,442 579,151 631,568 752,580 Fuel 204,067 141,733 178,964 146,731 151,125 Electricity 64,914 59,703 165,578 149,541 110,372 Spare parts 269,685 151,486 205,526 274,857 323,293 Other g 557,608 472,476 175,358 378,026 317,843 Depreciation 128,011 48,647 104,935 69,016 1,373 TOTAL COSTS 1,642,389 1,312,486 1,409,512 1,649,740 1,656,586 Annual veh-km (million) 156.3 144.4 147.7 137.0 140.0 l Unit costs (92 z/veh-km) Wages 2,675 3,036 3,921 4,610 5,376 Fuel 1,306 982 1,212 1,071 1,079 Electricity 415 413 1,121 1,092 788 Spare parts 1,725 1,049 1,392 2,006 2,309 Other 8 3,568 3,272 1,187 2,759 2,270 Depreciation 819 337 710 504 10 TOTAL UNIT COSTS 10,508 9,089 9,543 12,042 11,833 | Revenues in million current zi Ticket revenues 11,934 29,800 252,119 632,812 1,028,833 Other earned revenues 0 0 98,360 221,791 301,694 SUBTOTAL: Earned revenues 11,934 29,800 350,479 854,603 1,330,527 Subsidies 18,583 62,015 348,727 317,720 410,000 TOTAL REVENUES 30,517 91,815 699,206 1,172,323 1,740.527 Inflator 58.64 16.70 2.44 1.43 1.00 I Revenues in million 1992 zl Ticket revenues 699,810 497,660 615,170 904,921 1,028,833 Other earned revenues 0 0 239,998 317,161 301,694 SUBTOTAL: Earned revenues 699,810 497,660 855,169 1,222,082 1,330,527 Subsidies 1,089,707 1,035,651 850,894 454,340 410,000 TOTAL REVENUES 1,789,517 1,533,311 1,706,063 1,676,422 1,740,527 | Indicators (%) Wages/total costs 25% 33% 41% 38% 45% Depreciation/total costs 8% 4% 7% 4% 0% Earned revenues/direct op. costs 46% 39% 66% 77% 80% Earned revenues/total op. costs 43% 38% 61% 74% 80% CDATATPOWREYOXoSTREV 160 26-Jun-95 Annex 5 Page 11 of 11 POLAND URBAN TRANSPORT REVIEW OPERATING COSTS AND REVENUES OF MASS TRANSPORT COMPANIES 1988-1992 Sources of tables in Annex 5: (1) For all companies except MZK Warsaw for years 1988 -89, data provided by companies (2) For MZK Warsaw, years 1988-89: World Bank, Poland Urban Transport Review. 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